When Senate Majority Leader Chuck Schumer (D–N.Y.) Chuck Schumer (D-N.Y.), Senate Majority Leader, presented a “discussion Draft” for a marijuana legalization legislation last July. He stated that he was trying to open a dialogue that could eventually lead to legislation that resolves the conflict between state laws that permit medical and recreational cannabis use. His 163-page Cannabis Administration and Opportunity Act contained unnecessarily controversial provisions, which seemed to be likely to cause discord among potential Republican allies. A bill unveiled today by Rep. Nancy Mace (R–S.C.) It attempts to resolve this problem by presenting a more simple and straightforward approach to the issue that involves less federal involvement, less taxes and more deference to state policies.
Mace’s bill, the States Reform Act, has five initial co-sponsors: Reps. Tom McClintock (R–Calif.), Peter Meijer (R–Mich.), Don Young (R–Alaska), Kenneth Buck (R–Colo.), and Brian Mast (R–Fla.). Americans for Prosperity, The Cannabis Freedom Alliance and Global Alliance for Cannabis Commerce endorse the proposal.
Mace claims the bill was designed to address state marijuana laws, which can range from total prohibition to legalization of adult use. Mace said in a release that every state is unique. She pointed out that South Carolina allows medical use of non-psychoactive CBD for medicinal purposes, while California and other states allow the commercial production and distribution. All of these factors must be considered when cannabis reform is proposed at the federal level. It’s time for federal law to codify this fact.
36 states have legalized medical marijuana, and 18 other states allow for recreational use. Gallup’s latest poll showed that 68% of Americans favor legalization. That is nearly the same percentage as last year. Mace stated that Washington needs to create a framework to allow states to take their own decisions about cannabis. This bill accomplishes that.
Geoffrey Lawrence was the Reason Foundation’s director for drug policy. He provided technical feedback to Mace on his drafts and model language. He hopes the States Reform Act will prove more appealing to Republicans than Schumer’s bill, which so far has not attracted any GOP support, and the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which the Democrat-controlled House approved last December with support from just a handful of Republicans. Lawrence says that “The States Reform Act” is an easy bill, which gets at the heart of most people’s agreement on legalizing marijuana at the federal level.
Mace’s bill, which is 131 pages long, is only 20% shorter than Schumer’s and includes many similar provisions. Both would take cannabis out of the CSA’s list of controlled substances. They would also establish a minimum age for purchasing marijuana in America. Both bills would mandate automatic extinguishment of federal criminal records for nonviolent marijuana offenses. They also bar the Small Business Administration from discriminating against state licensed cannabusinesses. Veterans Health Administration doctors could recommend medical marijuana. While both would allow states to prohibit marijuana, they would also ban interference in shipments from legal cannabis-producing countries.
A big difference between the two is how much federal taxation. Schumer’s bill would have a federal tax on marijuana that would start at 10 percent, and rise to 25 percent in the fifth year. That would come along with often significant state and municipal taxes. It would either be determined by the wholesale price per an ounce of marijuana or for any THC-measurable product, the price per grams. Mace’s bill on the other hand would simply impose an excise tax of 3 percent, and it would stay at that level at least for ten years.
Mace summarizes the bill as saying that the 10-year suspension on increasing the excise taxes is intended to ensure “competitive footing” in the market. This means that legal marijuana companies will be able to compete against black-market sellers who don’t collect taxes by having a low tax rate.
Schumer’s bill uses revenue from marijuana taxes to fund three grant programs that are aimed at “economically disadvantaged people” and those who have been adversely affected in the War on Drugs. Mace’s bill creates a Law Enforcement Retraining and Successful Second Chances Fund that would channel marijuana tax money into three programs already in place: Crisis Stabilization and Community Reentry Grant Program and Edward Byrne Memorial Justice Assistance Grant Program. A portion of the money could also go to veterans’ mental health, state opioid epidemic responses, and prevention of underage marijuana use. The SBA would support newly licensed small businesses. [marijuana]Businesses through the various programs.
Schumer’s bill would allow state-licensed marijuana companies, already regulated by local and state governments, to be monitored by the Food and Drug Administration, the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms, and Explosives. Mace’s bill envisions similar roles for each of these agencies. It states, however, that FDA would have the “same authorities regarding cannabis products as it has for alcohol”, such as label regulations for certain beverages.
Summary: This provision states that marijuana products sold in interstate commerce “will be treated as alcohol” and will prevent regulatory problems that have harmed the CBD-derived industrial hemp industry from being repeated in cannabis. To ensure patients’ continued access, the bill “grandfathers” “designated state medicinal cannabis products,” which are those that have been produced in accordance with state law. FDA may still provide serving sizes and certify state-designated medical cannabis products under ministerial duties. It can also authorize or approve new drug uses to make new pharmaceutical-grade products. However, it cannot prohibit cannabis use in other non-drug applications such as in dietary supplements or foods or beverages.
The TTB will be the main regulator for cannabis products within interstate commerce, while ATF will support the work of the TTB, just as it did in the alcohol sector. The Department of Agriculture will regulate cannabis crops the same as it regulates raw materials used in alcoholic beverages like grains and hops. This bill applies to cannabis the same requirements for recordkeeping, labeling, accountability, reporting and packaging.[s]The Internal Revenue Code applies to the alcohol industry. It would also prohibit advertising cannabis to minors that is false or misleading.
Mace extolled the States Reform Act’s positive aspects without alienating Democrats. A poster she used at today’s press conference says the bill, in addition to descheduling marijuana and regulating it “like alcohol,” imposes a low excise tax, “protects kids,” “protects veterans,” “protects each state’s unique laws & reforms,” and implements “safe criminal justice reform.”
Mace’s summary of the bill explains that this Act provides opportunities for reentry to non-violent, unrelated cannabis offenders. This is consistent with President Trump’s policies for clemency for cannabis offenders. Mace could also have pointed out that Trump supports drug sentencing reform, and unlike his successor said he was in favor of reconciling federal and state marijuana laws.
Lawrence notes that “The States Reform Act complete removes federal prohibition, and allows states compete and decide how to treat cannabis.” Federal tax penalties are removed from marijuana-related businesses. It also opens banking. Because legal markets are expected to be competitive with black market prices, the 3 percent excise and $10,000 licensing fees it charges is reasonable. The final step is to extend these changes by extinguishing criminal records for those who were arrested for cannabis offenses that have not been violent.
Lawrence said that rather than going too far and including elements that distort the area of agreement, Lawrence believes that “the beauty” of the States Reform Act was that it is both straightforward and fairly comprehensive. The States Reform Act is a bipartisan tool that allows for major social changes.