It has been more than 50 years since the Controlled Substances Act was signed into law, designating marijuana as a Schedule I illegal narcotic drug “with no currently accepted medical use and a high potential for abuse.”

During that time, millions of Americans were arrested and jailed for nonviolent crimes
Criminalize plants, destroy lives and tear apart families.

Now, congressional leaders want to make amends.

Senate Majority Leader July 2021 Chuck SchumerAlong with Senators Cory Booker and Ron Wyden, introduced the Cannabis Administration and Opportunity Act (CAOA), which would remove marijuana from the Schedule I list, effectively legalizing it nationwide.

The bill allows states to set their own cannabis policies, but will also enforce federal regulations.

While the bill is indeed groundbreaking and marks legalization closer than ever, the CAOA faces an uphill battle.

In addition, many industry professionals and advocates care about certain components and wonder if passing will fail operators.

“This is a very strong indicator of a paradigm shift in attitudes towards cannabis,” said Evan Nison, NisonCo PR founder NORML and SSDP board member.

“While the bill may not get the votes it needs to pass this time around, it’s a clear sign that legalization is imminent.”

But how exactly will the bill affect the industry and what must professionals in the field say? Cannabis and Technology Today Break down the CAOA debate.

big picture

The Cannabis Regulation and Opportunity Act is the most comprehensive cannabis reform legislation to date. In addition to lifting the federal ban on the factory and its derivatives, the 163-page bill touches on everything from interstate commerce to social justice.

Here are some key takeaways:

Federal Sales Tax Implementation – The CAOA mandates a federal sales tax on the sale of cannabis products on top of state-imposed taxes. For companies that meet the annual sales threshold, the initial tax rate is 10%, gradually increasing to 25% over five years.

Delete criminal record – Under the CAOA, thousands of Americans will be eligible to vacate nonviolent marijuana-related convictions. Federal penalties will also be lifted.

Add research – Peer-reviewed research on the cannabis plant and its effects remains extremely limited due to criminalization. CAOA devotes funding to research, specifically brain health as an area of ??focus.

Restorative Justice— The bill calls for the establishment of three unique grant programs designed to support communities most affected by the war on drugs. This includes funding for job training and other return to services for previously incarcerated marijuana offenders.

280E Relief— One of the biggest challenges facing cannabis operators is 280E, a part of the tax code that prohibits companies that touch the plant from deducting business expenses. The CAOA will correct this, allowing cannabis companies to receive tax credits they are not currently eligible for.

Industry responses were mixed, with many calling for revisions to the first draft

A number of advocates, nonprofits and industry trade groups weighed the bill ahead of a Sept. 1 deadline for public comment. Opinions and suggestions flooded in, with suggestions for revisions in everything from consumer rights to entry barriers for new operators.

The National Cannabis Industry Association (NCIA), one of the largest trade groups in the field, submitted a nearly 30-page letter to bill sponsors after reviewing feedback from its members.

“The CAOA is a good starting point for conversations in the Senate about how best to end the ban, repair the harm it causes, and effectively regulate this substance at the federal level,” said Morgan Fox, NCIA’s director of media relations.

“As a bill, it still needs a lot of work.”

Fox noted that the group’s members have questioned the tax model proposed in the CAOA, arguing that the current structure is unworkable.

“In most cases, the tax portion of the draft would be worse than the status quo, undermining the viability and potential of a regulated cannabis market,” he explained.

“This tax structure will disproportionately hurt small businesses and will incentivize an unregulated market.”

Consumer advocacy groups are pushing for more language to protect cannabis users, especially medical patients. American For Safe Access is calling on lawmakers to address barriers to housing assistance for drug users and increase medical marijuana education for federal officials.

NORML also calls for a focus on restorative justice while maintaining the integrity of existing markets and operators.

The sponsors of the bill will review the submissions and introduce a formal version Senate in the near future.

CAOA’s prospects dim, but reform is near

Despite Senate Majority Leader Chuck Schumer’s enthusiasm for marijuana reform, it remains to be seen whether the Marijuana Regulation and Opportunity Act will reach the 60 votes needed to pass.

Combined with President Joe Biden’s lukewarm approach to marijuana, it could spell disaster for the bill — at least for now.

That’s not to say federal legalization won’t come. Industry professionals and analysts believe it’s not a question of if but when.

“90% of Americans think marijuana should be legal, and politicians tend to listen to their constituents,” Nissen said. “This has become a mainstream issue and is very important in this regard.

“I’m betting to see federal reform in the next four or five years.”

This article originally appeared in the Fall 2021 issue of Cannabis & Tech Today.Read the full question here.