When Senate Majority Leader Chuck Schumer (D–N.Y.) unveiled a "discussion draft" of a marijuana legalization bill last July, he said he wanted to start a conversation that would eventually produce legislation resolving the longstanding conflict between the Controlled Substances Act (CSA) and state laws that allow medical or recreational use of cannabis. But his 163-page Cannabis Administration and Opportunity Act was full of unnecessarily contentious provisions that seemed likely to alienate potential Republican allies. A bill unveiled today by Rep. Nancy Mace (R–S.C.) tries to address that problem by outlining a simpler and less burdensome approach that entails less federal involvement, lower taxes, and greater deference to state policy choices.
Mace's bill, the States Reform Act, has five initial co-sponsors: Reps. Tom McClintock (R–Calif.), Peter Meijer (R–Mich.), Don Young (R–Alaska), Kenneth Buck (R–Colo.), and Brian Mast (R–Fla.). It is endorsed by Americans for Prosperity, the Cannabis Freedom Alliance, and the Global Alliance for Cannabis Commerce.
Mace says the bill is designed to accommodate state marijuana policies, which range from complete prohibition to general legalization for adult use. "Every state is different," Mace says in a press release, noting that her own state, South Carolina, has gone no further than allowing medical use of the nonpsychoactive cannabinoid CBD, while "California and others" allow commercial production and distribution of marijuana for recreational use. "Cannabis reform at the federal level must take all of this into account. And it's past time federal law codifies this reality."
Thirty-six states have legalized marijuana for medical use, while 18 states, accounting for more than two-fifths of the U.S. population, also allow recreational use. The latest Gallup poll found that 68 percent of American adults favor legalization, which matches last year's record level of support. "Washington needs to provide a framework which allows states to make their own decisions on cannabis moving forward," Mace says. "This bill does that."
Geoffrey Lawrence, director of drug policy at Reason Foundation (which publishes this website), provided model language for the bill and technical feedback on Mace's drafts. He hopes the States Reform Act will prove more appealing to Republicans than Schumer's bill, which so far has not attracted any GOP support, and the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which the Democrat-controlled House approved last December with support from just a handful of Republicans. "The States Reform Act is a relatively simple bill that gets to the heart of what most people can agree on when it comes to legalizing cannabis at the federal level," Lawrence says.
At 131 pages, Mace's bill is just 20 percent shorter than Schumer's, and it includes several similar provisions. Both bills would remove cannabis from the CSA's schedules of controlled substances, and both would establish a nationwide minimum purchase age of 21. Both would require automatic expungement of federal criminal records related to nonviolent marijuana offenses, bar the Small Business Administration (SBA) from discriminating against state-licensed cannabusinesses, and allow Veterans Health Administration doctors to recommend medical marijuana. Both would leave states free to ban marijuana but would bar interference with shipments between jurisdictions where cannabis is legal.
One big difference is the level of federal taxation. Schumer's bill would impose a federal excise tax on marijuana starting at 10 percent and rising to 25 percent by the fifth year, which would be in addition to frequently hefty state and local taxes. The tax would be based on either the wholesale price per ounce or, for "any THC-measurable cannabis product," the price per gram of THC. Mace's bill, by contrast, would impose a straightforward 3 percent excise tax, which would remain at that level for at least 10 years.
According to Mace's summary of the bill, the 10-year moratorium on raising the excise tax is meant to "ensure competitive footing in the market." In other words, a relatively low tax rate will help legal marijuana businesses compete with black-market dealers, who do not collect taxes.
Schumer's bill would use revenue from the marijuana tax to create three new grant programs aimed at helping "economically disadvantaged individuals" and "individuals adversely affected by the War on Drugs." Mace's bill would create a Law Enforcement Retraining and Successful Second Chances Fund, which would funnel marijuana tax money to three existing programs: the Crisis Stabilization and Community Reentry Grant Program, the Edward Byrne Memorial Justice Assistance Grant Program, and the Community-Oriented Policing Services Program. Some of the money also would be assigned to "veterans' mental health," "state opioid epidemic responses," "preventing underage use of cannabis," and the SBA "for supporting newly licensed small [marijuana] businesses through its various programs."
Under Schumer's bill, state-licensed marijuana businesses, which already are regulated by state and local governments, would also be supervised by the Food and Drug Administration (FDA), the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB), and the Justice Department's Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Mace's bill likewise imagines roles for all of those agencies, but it says the FDA "shall have the same authorities with respect to cannabis products that it has with respect to alcohol," such as label regulation for certain beverages, "and no more."
According to the summary, that provision "ensures that cannabis products in interstate commerce will be treated like alcohol and that the regulatory issues harming the industrial hemp-derived CBD industry will not be repeated in the cannabis space." The bill also "grandfathers 'designated state medical cannabis products,'" including "those produced consistent with state law," to ensure "continued access" for patients. The FDA "may still prescribe serving sizes, certify designated state medical cannabis products as a ministerial duty, and authorize new drugs or approved new uses of drug applications to create new pharmaceutical grade products, but may not prohibit the use of cannabis or its derivates in non-drug applications, such as in designated state medical cannabis products, dietary supplements, foods, beverages, non-drug topical solutions, or cosmetics."
Continuing the analogy to alcohol, the TTB "will be the primary regulator of cannabis products in interstate commerce," while the ATF "will serve as the primary law enforcement agency supporting the TTB's work, exactly as it does in the alcohol space." The Department of Agriculture would regulate cannabis crops in the same way it regulates raw materials for alcoholic beverages, such as grain and hops. The bill "applies to cannabis the same recordkeeping, liability, reporting, packaging, and labeling requirement[s]" that apply to the alcohol industry under the Internal Revenue Code. The bill would prohibit cannabis advertising that is false, misleading, or aimed at minors.
Mace is playing up the aspects of the States Reform Act that should appeal to her fellow Republicans without alienating Democrats. A poster she used at today's press conference says the bill, in addition to descheduling marijuana and regulating it "like alcohol," imposes a low excise tax, "protects kids," "protects veterans," "protects each state's unique laws & reforms," and implements "safe criminal justice reform."
Mace's bill summary elaborates on that last point, noting that the States Reform Act "provides opportunities for reentry for non-violent, non-DUI cannabis offenders who had no relation to a foreign drug cartel and pose no further threat to society, consistent with the policies of the Department of Justice under President Trump for clemency for non-violent cannabis offenders." Mace also could have noted that Trump supported drug sentencing reform and, unlike his successor, said he favored reconciling state and federal marijuana laws.
"The States Reform Act completely removes federal prohibition and allows states to compete and decide how they wish to treat cannabis," Lawrence notes. "It removes federal tax penalties against marijuana companies and opens up banking. It recognizes that legal markets must compete with black markets on price and therefore charges only a 3 percent excise tax, along with licensing fees not to exceed $10,000. Finally, it extends these changes back in time by expunging the records of those who have been arrested for nonviolent federal cannabis crimes."
Rather than "going too far in any direction by including elements that splinter the realm of agreement," Lawrence says, "the beauty of the States Reform Act is that it's both simple and reasonably comprehensive. Enacting major social change requires broad, bipartisan agreement, and the States Reform Act checks that box."