As industry patience wanes for Sen. Chuck Schumer and company to formally file a Democratic-led bill to end federal cannabis prohibition, a new player in the reform discussion emerged with alternative legislation Monday afternoon.
South Carolina Republican Rep. Nancy Mace, a rookie U.S. House member who assumed office at the beginning of the year, unveiled the States Reform Act (SRA) during a during a press conference along with stakeholders, veterans and law enforcement members on Nov. 15 at the U.S. Capitol. The legislation is cosponsored by Reps. Ken Buck, R-Colo., Brian Mast, R-Fla., Tom McClintock, R-Calif., Peter Meijer, R-Mich., and Don Young, R-Alaska.
“The States Reform Act would create a competitive and diverse American cannabis industry,” said Rezwan Kahn, president of the Global Alliance for Cannabis Commerce and DNA Genetics, the Nov. 15 press conference. “This proposed legislation is comprehensive, deliberate, purposeful and intentional in its drafting and its function.”
“I know that this bill goes far in the right direction,” added Steven Hawkins, president and CEO of the U.S. Cannabis Council (USCC). “It recognizes the need for expungement, it releases those who are being kept in federal custody for their cannabis convictions and it opens the door for tremendous opportunity for all.”
The federal reform effort comes at a time when 69% of Americans support legalizing adult-use cannabis, according to an April 2021 poll from Quinnipiac University, and when 91% of U.S. adults support federal legalization of medical cannabis, according to an April 2021 survey conducted by the Pew Research Center.
“Today, only three states lack some form of legal cannabis,” Mace said in a release ahead of Monday’s press conference. “My home state of South Carolina permits CBD, Florida allows medical marijuana, California and others have full recreational use, for example. Every state is different. Cannabis reform at the federal level must take all of this into account. And it’s past time federal law codifies this reality.”
Mace’s 131-page draft bill offers an alternative to other federal reform efforts put forth by her colleagues on the other side of the aisle. Specifically, SRA proposes a 3% federal cannabis excise tax and would give state governments the power to regulate cannabis products through health-and-safety oversights of their choosing. But no state would be forced to change its current cannabis policies.
The 3% tax on cannabis products comes with a 10-year moratorium on excise tax increases to ensure “competitive footing” in the market, according to the bill’s text. The tax revenue would fund law enforcement, small businesses and veterans’ mental health initiatives, according to Mace’s office.
“This bill supports veterans, law enforcement, farmers, businesses, those with serious illnesses, and it is good for criminal justice reform,” Mace said. “Furthermore, a supermajority of Americans support an end to cannabis prohibition, which is why only three states in the country have no cannabis reform at all.”
SRA not only offers a lower tax option to what Democrats have proposed (25%), but it also moves to put the Alcohol and Tobacco Tax and Trade Bureau (TTB), which operates under that U.S. Department of the Treasury, in charge of federal regulation for cannabis products in interstate commerce, and for the Food and Drug Administration (FDA) to oversee medical use.
The Alcohol, Tobacco, Firearms and Explosives Bureau (ATF) will serve as the primary law enforcement agency supporting the TTB’s work, exactly as it does in the alcohol space, according to the bill’s text. Meanwhile, the FDA would have no more of a role with respect to cannabis than it does with alcohol.
Alternatively, a Democratic-led charge in the upper chamber for the Cannabis Administration and Opportunity Act (CAOA) would levy a 25% federal cannabis sales tax on any products produced in or imported into the U.S. by the fifth year of removing cannabis as a controlled substance, and it calls for the FDA to serve as the cannabis industry’s primary regulatory arm.
Majority Leader Schumer and fellow Sens. Ron Wyden and Cory Booker first issued a joint statement Feb. 1 on CAOA, and unveiled a preliminary draft of their bill in mid-July. Industry stakeholders had the opportunity to weigh in on the draft bill by Sept. 1, with many of those stakeholders calling for the TTB to serve as the industry’s primary regulator instead of the FDA.
“The FDA has certainly a role, but the Tax and Trade Bureau would be a better fit,” U.S. Cannabis Council CEO Steve Hawkins said during the feedback period. “It plays that role with respect to alcohol and tobacco, and we feel it would be the space to have primary jurisdiction. We understand that the FDA would still have a role with any kind of specific medical use of cannabis, as well as food additives.”
Despite the industry feedback period closing more than two months ago, Schumer, Wyden and Booker have yet to formally file the CAOA in the Senate.
CAOA offered industry advocates and reform organizers renewed hope with Senate Majority Lead Schumer at the helm—after previous federal legalization attempts in the form of the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act have come up short in previous Congresses.
But Mace’s pursuit at broad cannabis reform provides a unique view—Republican sponsorship from a fresh set of eyes on Capitol Hill that attempts to reach across party lines in Washington. In addition to a lower tax rate and states’ rights, SRA calls for criminal justice reform with the federal release and expungement for those convicted of nonviolent, cannabis-only related offenses, according to a bill overview obtained by Cannabis Business Times ahead of Monday’s press conference.
The expungement portion of the bill does not include cartel members, agents of cartel gangs or those convicted of driving under the influence. Approximately 2,600 releases will be expected at the federal level, while state-level releases and expungements will be left to each state to determine.
According to Mace’s office, other highlights from the bill include:
No state or local government will be forced to change its current cannabis policies. Federally decriminalizes cannabis from Schedule I and defers to states over prohibition or regulation.Ensures the safe harbor of state medical cannabis programs and patient access while allowing for new medical research and products to be developed.Protects military veterans by ensuring they will not be discriminated against in federal hiring for cannabis use or lose their VA health care benefits.Protects children and young adults under the age of 21 from cannabis products and advertising nationwide. Incentivizes states to make cannabis illegal for anyone under the age of 21, with a medical exception for prescribed use. Provides funding to Substance Abuse and Mental Health Services Administration to ensure protections for minors are being consideredProtects medical cannabis for the following uses: arthritis, cancer, chronic pain, sickle cell, HIV/AIDS, PTSD and other medical uses per a state’s specific cannabis regulations.
“The States Reform Act takes special care to keep Americans and their children safe while ending federal interference with state cannabis laws,” Mace said. “Washington needs to provide a framework which allows states to make their own decisions on cannabis moving forward. This bill does that.”
Digital Editor Eric Sandy, Senior Digital Editor Melissa Schiller and Assistant Editor Andriana Ruscitto contributed to this report.