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Senate Legislation to End Federal Cannabis Prohibition Introduced Today

S. 420 would deschedule cannabis and create a federal excise tax on legal cannabis products; companion legislation would bring federal laws more in line with legal states and eliminate existing burdensome tax penalties for cannabis businesses

 

WASHINGTON, D.C. – Legislation that would effectively end federal cannabis prohibition was introduced in the Senate today by ranking Senate Finance Committee member Sen. Ron Wyden (D-OR). The Marijuana Revenue and Regulation Act, or S. 420, would remove cannabis from the Controlled Substances Act (CSA), set an excise tax for state-legal cannabis producers, and regulate the substance similarly to alcohol.

 

“Momentum is clearly building for comprehensive cannabis policy reform in Congress, and this legislation will help push lawmakers closer to ending federal prohibition in the near future,” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “It is time to let states to determine their own cannabis policies without fear of interference and allow regulated businesses to replace the illicit market.”

 

The Marijuana Revenue and Regulation Act is part of a larger legislative package that will address a variety of cannabis policy issues in Congress this year. The Responsibly Addressing the Marijuana Policy Gap Act would remove most federal criminal penalties for cannabis businesses that are in compliance with state law, create a national expungement process for cannabis-related criminal records, and address issues related to travel, housing, veterans, and Native American tribes. The Small Business Tax Equity Act would amend section 280E of the federal tax code to allow legal cannabis operations to take the ordinary business deductions afforded to other industries.

Removing cannabis from the CSA and fixing the 280E tax code issue would be a significant benefit for the cannabis industry, but advocates are concerned that the excise tax could be problematic if it is set too high or escalates too quickly, and could trade one overly burdensome tax for another.

“This legislation would be a boon for the cannabis industry and for states that have enacted effective laws, but it is vital that the federal tax rates be established in a way that does not incentivize the continuation of the illicit market,” continued Smith. “It is equally important that small businesses, which would be disproportionately impacted by heavy federal taxes of any sort, be allowed to stay competitive in the industry. We will continue to work with lawmakers to find a rate that is fair to all parties.”

NCIA’s guide for sensible and equitable federal taxation can be found here.

The National Cannabis Industry Association (NCIA) is the largest cannabis trade association in the U.S. and the only organization broadly representing cannabis-related businesses at the national level. NCIA promotes the growth of a responsible and legitimate cannabis industry and works toward a favorable social, economic, and legal environment for that industry in the United States.

Published: February 08, 2019

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