Senate Democrats unveil plan for federal marijuana legalization

Legal cannabis sales in the U.S. surpassed $17.5 billion in 2020

Senate Majority Leader Chuck Schumer, D-N.Y., Senate Finance Chairman Ron Wyden, D-Ore., and Senator Cory Booker, D-N.J., introduced a discussion draft on Wednesday for the Cannabis Administration and Opportunity Act, which aims to legalize marijuana at the federal level.

"This is monumental because at long last we are taking steps in the Senate to right the wrongs of the failed War on Drugs," Schumer said at a press conference. "The war on drugs has really been a war on people, particularly people of color."


According to a detailed summary of the discussion draft, the legislation would remove cannabis from the federal list of controlled substances. It would also establish 21 years of age as the minimum age required to purchase cannabis and would limit retail sales transactions to no more than 10 ounces of cannabis or the equivalent amount of any cannabis derivative.

"We have all seen the agony of a young person arrested with a small amount of marijuana in his or her pocket and because of the historical over-criminalization of marijuana they have a very severe criminal record they have to live with their whole lives," Schumer said. "The waste of human resources because of the historic over-criminalization has been one of the great historical wrongs for the last decades. We are going to change it, we are going to fight hard to change it."

Within one year of enactment, the legislation would expunge any arrests and convictions for non-violent federal cannabis offenses.

"Law enforcement resources all over this country are desperately needed to solve crimes that are hurting other Americans … but yet instead we have our precious resources being used to lock up majority Black and Brown people for doing things that presidents and senators and congressmen have done," Booker argued. 

The proposal would also direct the Comptroller General to conduct an evaluation on the societal impact of legalization by states with adult-use of cannabis, direct the Department of Health and Human Services to conduct or support research on the impacts of cannabis, and direct the Department of Transportation to collect data on cannabis-impaired driving and continue research to enable the development of an impairment standard for driving under the influence of cannabis.


In addition, the Cannabis Administration and Opportunity Act will create three grant programs aimed at ensuring small businesses and communities of color are not left out as marijuana is legalized and sold across the United States. 

"It defies common sense that small businesses now living in areas where cannabis is legal cannot deduct their business expenses or access the banking system," Wyden said. "What we're going to do is make small businesses and minority entrepreneurs a fixture at the table, a place where they have always been sidelined and shut out."

Similar to alcohol and tobacco, marijuana would face an excise tax. Marijuana's excise tax would be 10% in the first year, which would then grow to 25% over five years. After that, the tax would be levied on a per-ounce rate in the case of cannabis flower, or a per-milligram of THC rate in the case of any cannabis extract, determined by the Treasury Secretary equal to 25% of the price of cannabis sold in the U.S. the prior year.

Small cannabis producers with less than $20 million in sales annually would be eligible for a 50% reduction in their tax rate, via a tax credit. Producers with more than $20 million in sales would be eligible for a tax credit on their first $20 million of cannabis sold annually, with sales above that amount subject to tax at the full rate.

Schumer clarified that rather than force states who haven't legalized cannabis to do so, the legislation will "give impetus" to the states and to their populations that are strongly for it.


According to the National Conference of State Legislatures, 18 states, two U.S. territories and Washington, D.C., have legalized marijuana for recreational use to date. 

While Schumer noted that approximately 70% of Americans currently support adult use of marijuana, he acknowledged the current proposal does not have the votes in the Senate needed to pass. The next step for the trio will be to meet with stakeholders, their colleagues, and the White House to get input on the legislation by Sept. 1.

"It's time for the country to engage in this discussion and update our federal laws not only to reflect popular wisdom but science," Schumer said. 

In April, the House of Representatives passed a cannabis banking bill, which would allow banks to provide services to cannabis companies in states where it is legal. However, Schumer, Booker and Wyden argued the bill does not go far enough and would only benefit the wealthy and large corporations.  

"I will lay myself down to stop an easy everything I can stop an easy banking bill thats going to allow these corporations to make a lot more money off of this as opposed to focusing on the restorative justice aspects," Booker said. 

The House has also pushed for a similar bill called the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which was backed by Amazon in June


Cannabis stocks are down sharply following the announcement.

Ticker Security Last Change Change %
ACB AURORA CANNABIS INC. 5.75 0.00 0.00%
CGC CANOPY GROWTH CORP. 7.13 -0.09 -1.25%
TLRY TILRAY BRANDS INC. 1.79 -0.04 -2.19%

Legal cannabis sales in the U.S. surpassed $17.5 billion in 2020, an increase of 46% compared to $12.1 billion in 2019, according to Boulder-Colo.-based research firm BSDA. BSDA forecasts U.S. cannabis sales could reach $41.3 billion in 2026.