Steve Helber/AP Photo
A worker arranges juvenile cannabis plants at the Greenleaf Medical Cannabis facility in Richmond, Virginia, June 17, 2021.
Last November, South Dakota voters approved recreational and medical marijuana ballot initiatives. Chuck Schumer was so impressed by the victories that he gave a shout-out to the state at last Wednesday’s unveiling of the latest congressional plan to legalize pot. If one of the most conservative places in the country could legalize marijuana, the Senate majority leader intoned, fists clenched, the Senate should be able to as well.
Flanked by his Senate backers, including cannabis commonsense proselytizer Ron Wyden of Oregon and restorative justice proponent Cory Booker of New Jersey, Schumer laid out a few factoids: Marijuana arrests exceeded all arrests for violent crimes in 2019, and presidents and members of Congress have admitted to smoking marijuana, while ordinary citizens go to jail.
Then Schumer came clean. He doesn’t have the votes.
The tragedy is that the Cannabis Administration and Opportunity Act draft is as comprehensive a framework for federal marijuana regulation as Americans are likely to get from the legislative mortuary that is the United States Senate.
Where does that leave cannabis legalization on the roulette wheel of American miscarriages of justice that members of Congress keep spinning?
Like the Marijuana Opportunity Reinvestment and Expungement Act, which the House passed in 2020 even as the Senate studied ceiling tiles, the new draft bill ticks the necessary boxes. It deschedules marijuana by taking the drug out of the federal Controlled Substances Act and puts it on the same regulatory footing as tobacco and alcohol. States and tribal governments can devise regulations to conform with their own laws and cultural sensibilities. If Nebraska and Idaho do not want to legalize pot, and it seems they don’t, that is a choice that federal law allows in this plan.
Under the draft bill, the Drug Enforcement Administration cedes criminal investigations like large-scale trafficking to Alcohol, Tobacco, Firearms and Explosives (ATF). The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau handles revenue and commerce. A new Food and Drug Administration Center for Cannabis Products oversees edibles, beauty products, and the like.
One factor working in legalization’s favor is that Big Weed money is now pouring into politics.
Restorative justice measures are key to the plan. Any nonviolent arrests and convictions for federal marijuana offenses would be expunged. Similarly, recipients of federal public benefits like housing would no longer lose them for cannabis use. There is grant funding for community job training, small-business programs, and other measures to benefit low-income and communities of color.
The biggest public gain under a smart federal regime comes on the lucrative frontier of taxation. Cannabis revenues helped persuade reluctant states like South Dakota to move on from the drug wars. The state stands to pull in $10.7 million next year and nearly $20 million in 2023. That’s big money for a state with fewer than one million people. Voters don’t erupt over high sin taxes as they might on income or sales taxes hikes, so state lawmakers have fewer problems passing steep increases on alcohol and tobacco or setting up a new regime with similar rates to handle marijuana.
The Schumer plan’s taxation scheme is a nod to the creeping dominance of Big Weed and the pace of consolidation already under way in an industry dominated by rich white men with unfettered access to capital. Companies with annual sales of $20 million or more would get a tax credit on the first $20 million of annual sales; sales above that amount would be taxed at the full rate. Smaller firms with yearly takes under $20 million would get tax credits equal to a 50 percent reduction in their tax rate.
As for federal excise tax levies:
The general rate of tax would be 10 percent for the first year of legalization enactment and the first full calendar year afterwards. The rate would increase annually to 15 percent, 20 percent, and 25 percent in the following years. Beginning in year five and thereafter, the tax would be levied on a per ounce rate in the case of cannabis flower, or a per-milligram of THC rate in the case of any cannabis extract.
The fight under way now on Capitol Hill is an anomaly in one respect: There are clear avenues for certain compromises. Many Republicans who reject legalization outright are ready to bow to state-level realities and loosen banking rules for a cash-based industry selling a product that is illegal under federal law. Others agree that regulatory liberalization is overdue but have little use for restorative justice provisions. Only five Republicans joined the Democrats last year in passing the MORE Act, which contained similar criminal justice, economic, and social reforms.
Measures like the Secure and Fair Enforcement Banking Act (SAFE) are more palatable for Republicans. The House bill, with 106 Republicans on board, passed 321 to 101 this spring. SAFE would regularize cannabis business dealings and enable firms to use banks just as other businesses do. Businesses that supply pot shops would also have prohibitions on their activities removed.
Another bill, the Common Sense Cannabis Reform for Veterans, Small Businesses and Medical Professionals Act, introduced in May by Republican Reps. Dave Joyce of Ohio and Don Young of Alaska, removes pot from the Controlled Substances Act. This is the first-ever legalization bill filed by Republicans.
The calculus isn’t straightforward for Democrats. There still are Democrats wedded to the “gateway drug” paradigm, that marijuana use leads to usage of more dangerous drugs. For his part, Booker made crystal clear that restorative justice provisions were nonnegotiables and that he’d fight a banking bill. His senatorial colleague Sherrod Brown of Ohio likes SAFE, but he also wants sentencing reforms.
At the White House, Vice President Harris, the co-sponsor for the MORE Act during her Senate tenure, apparently hasn’t made any headway persuading President Biden to come around. His concession to “decriminalization,” moving marijuana to Schedule 2, facilitates research but little else. Rescheduling pot by moving it into the same category as cocaine is a distinction without much difference on the drug-war battlegrounds in communities of color.
One factor working in legalization’s favor is that Big Weed money is now pouring into politics. The industry spent $8 million on lobbying efforts in 2020, according to a Wall Street Journal analysis.
Meanwhile, despite the voters’ verdict in South Dakota, Republican Gov. Kristi Noem, a Trump acolyte, went ballistic after the November vote. She gave up trying to undo the legalization of medical marijuana after its supporters pushed back, but she went to the mat against adult recreational use. She filed suit against it, and a circuit court struck down recreational marijuana as unconstitutional. The case is now pending before the state supreme court.
With close to 70 percent of Americans supporting the removal of prohibitions, marijuana legalization is one of the few unifying issues left in this conflicted country. Medical marijuana is legal in 37 states and the District of Columbia; 19 states have allowed recreational pot for adults. Not surprisingly, amid social unrest, political instability, and the pandemic, cannabis sales totaled a record $17.5 billion in 2020, a nearly 50 percent jump over 2019.
