Pot Legalization Bill Faces Uphill Battle in U.S. Senate
Cannabis stocks have been surging on the word that the long-touted and much-delayed U.S. Senate bill to federally legalize marijuana could be presented in the legislature as early as this week.
The Cannabis Administration and Opportunity Act was drafted by Senate Majority Leader Chuck Schumer and Senators Cory Booker and Ron Wyden. Among other things, the legislation from these three Democratic senators would remove marijuana from the list of drugs penalized in the Controlled Substances Act. (Source: “Cannabis Administration & Opportunity Act,” Senate Democrats, last accessed July 20, 2022.)
The bill would also create grants, loans, and other benefits to aid communities and individuals who have been the most impacted by marijuana prohibition. For instance, there would be grants to help state and local officials create equitable licensing programs for cannabis businesses and make loans to small businesses in the legal marijuana industry.
The Cannabis Administration and Opportunity Act would also remove federal penalties for cannabis and expunge nonviolent marijuana-related convictions from criminal records.
The odds that this marijuana bill will get enacted aren’t great. Most bills need 60 votes to get passed in the Senate, and even some Democratic senators have opposed decriminalizing marijuana.
While the Cannabis Administration and Opportunity Act is unlikely to pass in its current form, it does open the door for deliberation, which could point to some kind of reform over the next 12 months.
Moreover, if the bill does get passed, individual states could still make up their own embargoes on cannabis production and distribution.
A draft version of the marijuana bill was released last year and raised a few eyebrows. Industry experts were concerned about the proposed national 10% tax on cannabis products, which would increase to a whopping 25% over a three-year period. That’s the kind of taxation that could embolden pot smokers to keep sparking it up on the black market. (Source: “Schumer Proposes Federal Decriminalization of Marijuana,” The New York Times, July 14, 2021.)
Booker said the new version of the legislation will be “very similar” to the draft released in 2021 and that some “very important changes” have been made. (Source: “Senate Democrats to Roll Out Weed Decriminalization Bill Next Week,” The Hill, July 14, 2022.)
Will it be enough? Politicians are always sensitive about the possibility of losing their jobs, and the next U.S. Senate election is in November.
Support in the U.S. for marijuana legalization is at record levels. A 2021 report showed that 60% of U.S. adults said cannabis should be legal for both recreational and medical use and that 31% of U.S. adults said it should be legal for medical use only. (Source: “Americans Overwhelmingly Say Marijuana Should Be Legal for Recreational or Medical Use,” Pew Research Center, April 16, 2021.)
Just eight percent of U.S. adults in the 2021 report said marijuana shouldn’t be legal for use by adults.
Analyst Take
As mentioned earlier, it could be just a matter of days before the Cannabis Administration and Opportunity Act is introduced in the U.S. Senate.
The marijuana bill faces headwinds, but it at least opens the door to dialogue. Even some senators who have long opposed decriminalizing cannabis have been warming up to new legislative options.
While the marijuana industry has been flooded with companies, the ones that will perform the best in the early days of U.S. federal legalization will be the U.S. multistate operators and the Canadian businesses that have been quietly expanding into the U.S. market.
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