(This is a developing story that will be updated.)
Legislation to remove the decades-old federal ban on marijuana was at long last introduced Thursday by Senate Majority Leader Chuck Schumer, and cannabis industry leaders were gleeful over the milestone, even though it’s a long shot that the legalization bill will become law.
“The introduction of comprehensive cannabis reform legislation in the Senate, by none less than the majority leader himself, is the strongest sign yet that cannabis prohibition in America is nearing its end,” Steve Hawkins, the CEO of the U.S. Cannabis Council, said in a statement regarding Schumer’s Cannabis Administration and Opportunity Act (CAOA).
Schumer and colleagues including U.S. Sens. Cory Booker of New Jersey and Ron Wyden of Oregon have been working on the 296-page measure mostly behind closed doors since early 2021.
A draft of the bill was circulated last year.
“The question today is no longer whether cannabis should be legal – many states have already made that decision on their own initiative. The question is whether cannabis should be subject to the same high regulatory standards that apply to alcohol and tobacco,” Schumer, Booker and Wyden said in a joint statement released Thursday.
According to a synopsis from Schumer’s office, the new bill would:
- Remove marijuana from the list of federally controlled substances.
- Allow states to continue taking the lead on regulating the industry but also maintain prohibition in states that have not legalized.
- Establish a “regulatory regime similar to alcohol and tobacco” from the federal government.
A variety of industry trade groups offered feedback last fall on changes they’d like to see in the measure – including lowering the proposed national marijuana tax rate, which was partially implemented in the newer version.
The newly introduced bill does appear to have some notable revisions, but it doesn’t contain many major changes from the draft document.
For instance, the bill still includes a 10% national tax on all marijuana products for the first two years if the bill becomes law, and that tax would gradually ramp up to 25%, a provision staunchly opposed by marijuana trade groups.
But in the newer version, that tax rate will only apply to “larger cannabis businesses,” while the excise tax for “small and mid-sized producers” would be only half the rate, starting at 5% and ramping up to 12.5% over five years, according to a synopsis of the bill from Schumer’s office.
Pablo Zuanic, an investment analyst at New York-based Cantor Fitzgerald, thinks the revised bill is “bullish for cannabis stocks,” especially considering values have been depressed, “the recent rally notwithstanding.”
“If Sen. Schumer’s cannabis reform bill (as filed this morning) were to be passed by Congress, it would be a watershed event for U.S. cannabis stocks,” Zuanic wrote in a research note Thursday morning.
“But we are doubtful it will have 60 votes in the Senate, so we will closely monitor his comments and those of Republicans in the coming days,” including the willingness of the bill sponsors to compromise, Zuanic wrote, echoing a long-held analysis from Congressional observers.
Zuanic added that he sees the bill as more than just midterm “election posturing” and instead a serious effort to develop what could be historic legislation.