Senate Democrats Introduce Bill to Federally Legalize Cannabis

The dust has yet to settle from news that broke April 30 that the Drug Enforcement Administration (DEA) plans to reclassify cannabis as a Schedule III substance, but that did not stop Senate Democrats from introducing a federal cannabis legalization bill on May 1.

Majority Leader Chuck Schumer, D-N.Y., Senate Finance Committee Chairman Ron Wyden, D-Ore., and fellow Sen. Cory Booker, D-N.J., reintroduced the Cannabis Administration and Opportunity Act (CAOA), legislation to end federal cannabis prohibition by removing it from the Controlled Substances Act (CSA).

The bill also aims to empower states to create their own cannabis laws; ensure federal regulations protect public health and safety; and prioritize restorative and economic justice, according to the Senate trio.

While the DEA’s move to reclassify cannabis is a “necessary step” that’s “long overdue,” it’s not the end of the story, Schumer said during a press conference to reintroduce the CAOA legislation on May 1.

“It’s not all we need to do,” he said. “It’s time for Congress to wake up to the times and do its part by passing the cannabis reform that most Americans have wished for. It’s past time for Congress to catch up with public opinion and to catch up with the science.”

Schumer, Wyden and Booker first introduced CAOA last Congress, when it picked up two additional co-sponsors: Sens. Patty Murray, D-Wash., and Gary Peters, D-Mich. The senators took feedback from industry organizations and stakeholders for two months before officially filing the legislation in July 2022. But the bill never advanced in committee.

In addition to those five senators, this week’s reintroduced legislation includes another 13 co-sponsors: Sens. Jeff Merkley, D-Ore., Kirsten Gillibrand, D-N.Y., Elizabeth Warren, D-Mass., Edward Markey, D-Mass., Michael Bennet, D-Colo., Tina Smith, D-Minn., John Hickenlooper, D-Colo., Ben Ray Luján, D-N.M.., Alex Padilla, D-Calif., Peter Welch, D-Vt., Raphael Warnock, D-Ga., John Fetterman, D-Pa., and Laphonza Butler, D-Calif.

While the legislation would grant states the power to keep or administer their own oversight programs, it would transfer federal jurisdiction over cannabis from the DEA to the Food and Drug Administration (FDA) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) within the Treasury Department, implementing a regulatory regime similar to alcohol and tobacco.

“I believe what happened yesterday is really a kick in the pants in terms of, ‘Hey, Congress, get going to deal with this particularly to not just reschedule, but deschedule,’” Wyden said during the press conference.

“And my own view is that descheduling is kind of a Republican's dream,” he said. “This is a monument to states’ rights, and sometimes I think Republicans go out and give speeches and talk about states’ rights, but what they really mean is, well, it'll be states' rights if they think the state is right. And that’s not how [we] look at this. We really believe in states’ rights, and this is a perfect example.”

For Schumer, Wyden and Booker, the question is no longer whether cannabis should be legal: The question is whether cannabis should be subject to the same high regulatory standards that apply to alcohol and tobacco—neither of which are scheduled under the CSA.

Federal cannabis regulation is long overdue to not only ensure that products are as safe as possible and that safeguards are in place to prevent youth use and impaired driving, but also to ensure future harm is avoided for those adversely impacted by the drug war, they said.

Booker said the push to enact cannabis reform has been a long journey for him personally.

“As a young 20-something knocking on thousands upon thousands of doors in one of America's lowest income census tracks, I was very jarred because I had just come from Yale Law School and had seen from my high school years in a middle-class-to-affluent community, to my college years, to my graduate school years, to my law school years: Marijuana use was ubiquitous and had no consequence,” he said. “People used marijuana, they knew who to buy from, which was often other students, and there was no consequence.”

That lens changed when he got involved in politics.

“But when you go to a community like the one I've lived in for the last quarter century, you see that it has had a devastating consequence,” Booker said. “You see people arrested for things that people in other communities do routinely with no fear of arrest.”

The bill also incorporates a federal excise tax structure on cannabis products that would start at 5% for small and mid-sized producers and 10% for larger cannabis businesses, and then gradually increasing to maximum rates of 12.5% and 25%, respectively.

In part, this tax revenue will help repair the harms of prohibition, including the arrest disparities associated with enforcing cannabis laws: The legislation directs funding to reinvest in people and communities that were disproportionately targeted by the drug war. It also includes a framework to help states foster diversity and inclusion in their regulated marketplaces.

“What people don’t realize is [the drug war] has a destructive impact,” said Booker, who referenced difficulties related to jobs, housing, school and health care for those with criminal arrests. “It has a devastating impact. And what is extraordinary is that this enforcement of our marijuana laws does not make Americans safer. If anything, it makes us less safe when you drive large portions of a population into poverty because of those criminal convictions.”

CAOA’s introduction comes at a time when U.S. support for legalizing cannabis is at a record high, including 70% of U.S. adults who favor ending federal cannabis prohibition, according to a November 2023 Gallup poll. As of 2024, there are 38 states that have legalized medical cannabis in manners that do not severely limit access to patients, while 24 states and Washington, D.C., have legalized adult-use cannabis.

The bill’s introduction also comes as various incremental reform efforts are taking shape, including the DEA’s Schedule III rescheduling proposal—which now must be reviewed by the White House Office of Management and Budget—and the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which would reduce risks for financial institutions wishing to service the cannabis industry and provide state-legal cannabis companies access to additional capital, bank accounts and small business loans.

Schumer, Wyden and Booker are co-sponsors for the SAFER Banking Act, which Schumer said in March was one bill among a short list he’s prioritizing for advancement this year. The DEA’s Schedule III proposal does not change this, the majority leader said in a press release on April 30.

“It is great news that DEA is finally recognizing that restrictive and draconian cannabis laws need to change to catch up to what science and the majority of Americans have said loud and clear,” Schumer said. “While this rescheduling announcement is a historic step forward, I remain strongly committed to continuing to work on legislation like the SAFER Banking Act as well as the Cannabis Administration and Opportunity Act.”

While the SAFER Banking Act aims to address the lack of access to traditional banking services in the cannabis industry, and reclassifying cannabis to Schedule III would eliminate IRC Section 280E burdens by allowing licensed cannabis companies to deduct standard business expenses when filing their federal taxes, provisions included in the CAOA would also accomplish those reforms.

Below are some of the key provisions for public health, public safety, regulation and taxation, research, entrepreneurship and restorative justice, and workers’ rights included in the CAOA legislation:

Public Health

• Establishes a Center for Cannabis Products within the FDA to regulate the production, labeling, distribution, sales and other manufacturing and retail elements of the cannabis industry.
• Instructs the FDA to establish standards for labeling of cannabis products, including potency, doses, servings, place of manufacture and directions for use.
• Establishes programs and funding to prevent youth cannabis use, including through media campaigns.
• Prohibits electronic cannabis product delivery systems from containing added flavors.
• Funds state programs to prevent youth use and cannabis-impaired driving, including enforcement, education and data collection.
• Increases funding for comprehensive opioid, stimulant and substance-abuse disorder treatment.
• Requires Veterans Affairs (VA) and Indian Health Service (IHS) to provide recommendations and opinions regarding the medical use of cannabis by VA and IHS patients.

Public Safety

• Removes cannabis from the Controlled Substances Act and eliminates federal prohibition in states that have chosen to legalize medical cannabis, or adult-use cannabis for people aged 21 and older. Retains federal prohibitions on trafficking of cannabis in violations of state law, or in states that have not legalized cannabis.
• Retains federal prohibitions on trafficking of cannabis in violation of state law, or in states that have not legalized cannabis.
• Implements robust anti-diversion rules, including a track-and-trace system, and adopts quantitative limitations on retail purchases.
• Establishes a grants program through the Department of Justice to assist small law enforcement departments in hiring officers, investigators and community outreach specialists to combat illicit market cannabis production and distribution.
• Requires the Department of Transportation to create a standard for cannabis-impaired driving within three years to be adopted by states.
• Directs the National Highway Traffic Safety Administration (NHTSA) to collect data on the number of cannabis-impaired drivers through a national roadside survey and conduct further research into how cannabis use and multi-substance impairment affects drivers.
• Directs the NHTSA to create educational materials on “best practices” for preventing cannabis-impaired driving that can be distributed to states.
• Directs NHTSA to carry out media campaigns intended to prevent cannabis-impaired driving, including a campaign specifically targeted at drivers under the age of 21.
• Incentivizes states to adopt cannabis open container prohibitions.

Regulation and Taxation

• Transfers federal jurisdiction over cannabis from the Drug Enforcement Administration (DEA) to the Food and Drug Administration (FDA) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) within the Treasury Department; implements a regulatory regime similar to alcohol and tobacco, while recognizing the unique nature of cannabis products.

• Eliminates the tax code’s restriction on cannabis businesses claiming deductions for business expenses, and implements an excise tax on cannabis products:
• For small and mid-sized producers, the excise tax would begin at 5% and gradually increase to a maximum of 12.5%.
• For larger cannabis businesses, the excise tax would begin at 10% and gradually increase to a maximum rate of 25%.
• Establishes market competition rules meant to protect independent producers, wholesalers and retailers and prevent anti-competition behavior.

• Ensures regulatory bodies and law enforcement have the resources and tools they need to protect the integrity of the legal cannabis marketplace.

Research

• Requires the Government Accountability Office (GAO) to study and report on metrics that may be impacted by cannabis legalization, including traffic-related deaths and injuries, hospitalizations and poison center calls, violent crime rates, employment statistics, rates of cannabis use and various other criteria.
• Requires the U.S. Department of Health and Human Services (HHS) and the National Institutes of Health (NIH) to conduct or support research on the impacts of cannabis, including its effects on the human brain, the impact on various health conditions, and identification of potential medical benefits and uses of cannabis.
• Requires the VA to carry out a series of clinical trials studying the effects of medical cannabis on the health outcomes of veterans diagnosed with chronic pain and post-traumatic stress disorder (PTSD), including long-term observational studies.
• Requires the Bureau of Labor Statistics to regularly compile and publicize data on the demographics of business owners and employees in the cannabis industry.
• Directs the HHS to increase the diversity and availability of cannabis products for research purposes.
• Establishes grants to build up cannabis research capacity at institutions of higher education, with a particular focus on minority-serving institutions and Historically Black Colleges and Universities.
• Expands programs to increase the supply of cannabis available for research purposes.

Entrepreneurship and Restorative Justice

• Uses federal tax revenue to fund an Opportunity Trust Fund to reinvest in communities and individuals most harmed by the failed drug war.
• Establishes a Cannabis Justice Office at the Department of Justice’s Office of Justice Programs, to administer the Community Reinvestment Grant Program.
• Establishes the Community Reinvestment Grant Program to issue grants to community-based organizations in order to serve individuals harmed by the failed drug war, including job training, reentry services, legal aid, literacy programs, youth mentoring and health education.
• Establishes the Equitable Licensing Grant Program to provide states, tribes or localities funding to implement licensing programs that minimize barriers to cannabis licensing and employment for individuals adversely impacted by the drug war.
• Establishes the Cannabis Restorative Opportunity Program to provide loans and technical assistance to small businesses owned and controlled by socially and economically disadvantaged individuals in cannabis-legal states.
• Establishes a 10-year pilot program for intermediary lending from the Small Business Administration (SBA), in which SBA would make direct loans to eligible intermediaries that in turn make small business loans to startups, businesses owned by individuals adversely impacted by the drug war, and socially and economically disadvantaged small businesses.
• Establishes expedited FDA review of drugs containing cannabis manufactured by small businesses owned by socially and economically disadvantaged individuals.
• Provides grants to Community Development Financial Institutions and invests in minority depository institutions to expand lending and investment in low- and moderate-income areas, especially those harmed by the failed drug war.
• Directs the Secretary of Housing and Urban Development (HUD) to establish a grant program to provide communities whose residents have been disproportionately affected by the drug war with additional funding to address the housing, economic and community development needs of such residents.
• Initiates automatic expungement of nonviolent cannabis offenses and allows an individual currently serving time in federal prison for a nonviolent cannabis offense to petition a court for resentencing.
• Disallows the denial of any benefits or protections under immigration law to any noncitizen based on his or her use or possession of cannabis.
• Prevents discrimination in the provision of federal benefits against people who sue cannabis.

Workers’ Rights

• Removes unnecessary federal employee preemployment and random drug testing for cannabis, while preserving appropriate drug testing for certain sensitive categories of employees where continued testing is determined necessary, including national security, law enforcement and commercial transportation.
• Ensures worker protections for those employed in the cannabis industry by strengthening requirements that permitted cannabis businesses comply with the National Labor Relations Act, the Fair Labor Standards Act and the Occupational Safety and Health Act.
• Establishes grants for community-based education, outreach and enforcement of workers’ rights in the cannabis industry and requires the National Institute of Occupational Safety and Health to study how legalization of cannabis impacts the health and safety of workers.