This past week, U.S. Senator Schumer introduced a draft of The Cannabis Administration & Opportunity Act (“CAOA”) – legislation that is being referred to as the most comprehensive bill designed to end the federal prohibition of cannabis. If passed, the legislation would legalize recreational cannabis, recognize state laws decriminalizing the possession of marijuana, and permit the production and distribution of cannabis. The bill would also create grant programs for those harmed by the war on drugs, design a federal taxation schedule and allow cannabis businesses access to expanded financial services.

The legislation contains a strong social and economic equity component, providing for the expungement of certain cannabis criminal offenses, establishing grant programs designed to address the damages caused by the war on drugs and providing funding for small businesses in the cannabis industry owned by socially and economically disadvantaged individuals.   Moreover, the CAOA prohibits federal agencies from denying Americans any federal benefit, immigration status or security clearance on the basis of prior cannabis convictions.

The legislation establishes a regulatory scheme for businesses participating in the cannabis industry, requiring registration with the FDA, setting certain record-keeping requirements and operational standards, creating a number of advertising and labeling prohibitions, and enacting a permitting system for producers, retailers and distributors.  Notably, the bill discourages vertical integration of the cannabis industry – prohibiting exclusive sale agreements and certain commercial bribery and market incentives.  The bill would also transfer enforcement jurisdiction over cannabis from the Drug Enforcement Agency to the Food and Drug Administration (FDA), Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

If passed, the CAOA would align federal policy with those states that have already legalized recreational cannabis. Doing so would end the long-standing dichotomy between federal and state standards, and expand the banking, interstate distribution and multi-state operation opportunities available to cannabis businesses.

The bill is sponsored by Sens. Ron Wyden (D-OR) and Cory Booker (D-NJ). If the House passes the bill, at least 60 senators must approve before it would make its way to President Biden’s desk.  Whether or not the CAOA survives the Senate voting process, the bill represents a significant step towards aligning state and federal interests and putting an end to draconian cannabis laws.

Summer Associate Shelbi Moulin contributed to this article.

This alert does not purport to be a substitute for advice of counsel on specific matters.

Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.