Big On Biz, Light On Equity: The Koch-Endorsed, GOP Cannabis Legalization Bill is Here

The ethos behind U.S. Rep. Nancy Mace’s federal cannabis legalization bill released on Monday is captured in a recent tweet from the rising Republican that reads, simply, “LFG.”

The letters stand for “let’s fucking go,” a call to action of sorts for multistate cannabis operators, or MSOs, which are the emerging multimillion dollar businesses that aim to run America’s budding industry. This Mace tweet was in response to a cannabis investor’s tweet last week, exuberant about the news that Mace would release her bill. 

The bill released Monday is called the States Reform Act, and it is the most comprehensive legalization plan to emerge from the Republican party. The bill, which Mace said was nine months in the making, is already attracting early Republican cosponsors. The bill is endorsed by Americans for Prosperity—which was formed and funded by David and Charles Koch—and its affiliated cannabis-focused groups, the ​​Cannabis Freedom Alliance and the Global Alliance for Cannabis Commerce.

On Monday, Mace was joined outside of the Capitol building by several speakers, including Jeremiah Mosteller, senior policy analyst for Americans for Prosperity and Steve Hawkins, president and CEO of the U.S. Cannabis Council (and also the executive director of the Marijuana Policy Project).  

Mace said during the news conference that she would “categorize” the plan as a “compromise bill,” and said that it draws from legislation previously filed by both Democrats and Republicans. 

“This legislation, I believe, has something good for everyone, whether you are a Democrat or a Republican,” Mace said. 

On the Democrat side, Sens. Chuck Schumer, Cory Booker, and Ron Wyden released the Cannabis Administration and Opportunity Act (CAOA) earlier this year, the most comprehensive plan to emerge from the party. While CAOA has been released only in “discussion draft” form, Mace said Monday that she planned to formally file her bill that afternoon. 

While both plans would cannabis, or, in other words, end its federal criminalization by removing it from the Controlled Substances Act, their details on taxation and regulation would pave two very different paths for the future of legal cannabis in America.  

Democrats narrowly control Congress, but any cannabis legislation requires GOP buy-in to pass. Further, it’s unclear which party will take control after next year’s midterm election. In the event that Republicans make gains, a GOP legalization bill could become the primary one in play.  

The differences between the two plans begin with the messaging. Mace emphasizes that her bill “keeps Americans and their children safe,” enables a “free and open market,” and provides for “safe criminal justice reform.” Schumer, Booker, Wyden, on the other hand, have put criminal justice reform and ending the drug war front and center, and Booker went so far as to say he would “lay” himself “down” to “stop” a bill “that’s going to allow all of these corporations to make a lot more money off of this, as opposed to focusing on the restorative justice aspect.”

On the regulatory front, both bills leave it up to states on whether to maintain cannabis prohibition, but Mace goes further, noting that “no state or local government will be forced to change its current cannabis policies.” The bill language also explicitly treats cannabis “like alcohol.” While the U.S. Food and Drug Administration is at the core of CAOA—an approach that drew the strongest pushback from the cannabis industry in public comments—it has little power in Mace’s plan. Instead, Mace proposes treating cannabis as “raw barley” or “hops,” under the purview of the U.S. Department of Agriculture. 

And regulation and enforcement related to products in interstate commerce would mirror what’s in place for alcohol, and would be up to the Treasury Department’s Tax and Trade Bureau (TTB), with support from the Alcohol, Tobacco, Firearms, and Explosives Bureau (ATF).

The FDA would, though, have to allow for existing medical cannabis products that are available at the state level. The FDA has not, to date, recognized these products as legitimate medicines, as they have not undergone clinical trials. Further, the FDA would not be able to prohibit any cannabis products, such as foods, beverages, and supplements. This is also noteworthy, as the FDA has been at work for years on developing rules for products containing cannabinoids, with a current focus on obtaining safety and quality control data, as these products would be used or consumed by humans. 

On taxation, Mace’s plan sets a 3% excise tax on cannabis products, and freezes it there for ten years. In CAOA, the tax is set at 10 percent, and would rise to 25% by year five. 

Mace said that the low tax rate was intentional. 

“I want to make sure it’s very low. It’s got to be under 4% in order to reduce the opportunity for illicit markets, for black markets in different states, depending on how they’re legalized,” Mace said. 

Mace’s plan would create a “Law Enforcement Retraining and Successful Second Chances Fund.” The majority of the funds, 40%, would go toward three different law-enforcement focused grants and programs, while 30% would go toward the Small business Administration. From there, 10% is focused on veterans, five% is focused on the opioid crisis, and 5% is focused on preventing youth consumption. Mace’s bill sets the legal age at 21.

CAOA, on the other hand, creates an “Opportunity Trust Fund,” which would then support “three grant programs aimed at creating opportunity for those harmed by the War on Drugs”: the Community Reinvestment Grant Program, the Cannabis Opportunity Program, and the Equitable Licensing Grant Program. 

Both plans call on federal districts to expunge federal non-violent cannabis and convictions, with one primary difference: Mace’s plan would exclude from this any arrests or convictions that had to do with driving while impaired.     

“I know that this bill goes far in the right direction. It recognizes the need for expungement. It releases those who are being kept in federal custody because of their cannabis convictions. And it opens the door again for tremendous opportunity for all,” Hawkins said Monday. 

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