Senator Cory Booker recently indicated the Cannabis Administration and Opportunity Act (CAOA) will be introduced sooner rather than later. The Senator suggests the language of the Act might be revealed as soon as the end of April.
If everything goes as planned, Booker along with Senate Majority Leader Chuck Schumer and Senate Finance Chair Ron Wyden will soon release the legislation designed to put an end to cannabis prohibition on the federal level. There is also hope that the cannabis legislation will be a boon to communities negatively impacted by the decades-long War on Drugs.
The CAOA’s Seeds Were Planted In July
Rewind to July and the roots of the CAOA were established when Senators Schumer, Wyden and Booker debuted a discussion draft of the legislation. The discussion draft contained language that would decriminalize marijuana on the federal level, setting the stage for states to determine if recreational and medical use would be legal within their respective borders.
The discussion draft also contained language to expunge nonviolent marijuana crimes. Furthermore, the legislation would establish taxes that would be used to assist communities that suffered setbacks as a result of the War on Drugs.
Lawmakers have since shaped the legislation based on feedback from members of the community and cannabis industry. Fast forward from July to February and Senator Schumer announced he would introduce the legislation. Recent reports indicate the majority of the bill’s language is written. Some media outlets indicate the legislation will be formally introduced on April 20. However, the Senate will be in recess through the third week of April so the introduction of the legislation is more likely to occur in the final week of the month.
Booker Targets A 4/20 CAOA Introduction
In somewhat of an ironic twist, Senator Booker has revealed federal lawmakers have engaged in conversations about introducing the CAOA on April 20. April 20 is an important day in the context of marijuana as it is the unofficial holiday for the plant.
Though the House approved the MORE Act on the first of April, that Act is unlikely to pass in the Senate. However, there is widespread hope that the CAOA will pass into law at some point in the year ahead. If the CAOA passes, it will undoubtedly be a boon for cannabis investing.
Even mere rumblings about the CAOA potentially passing into law will likely send cannabis stocks higher. As a result, cannabis investors should prepare their portfolios for a potential introduction of the CAOA in April. At worst, the proposed legislation is likely to debut as late as May or June.
Will Taxes Be A Point Of Contention?
The suggested federal cannabis tax of 25% added onto the already high state tax rates is arguably punitive. In fact, some industry veterans insist taxation at this level would cause the industry to fail in many states, inevitably leading to a return to black market sales in which there is no state or federal tax.
There is also disagreement in regard to jurisdiction. The draft discussion noted above proposed that the Food and Drug Administration (FDA) have primary jurisdiction. Most cannabis industry players refer for primary jurisdiction to be with the Tax and Trade Bureau as opposed to the FDA.
There is also debate as to whether cannabis should be regulated in a manner similar to alcohol. Though the CAOA is not guaranteed to pass on the first go-round, the legislation has the potential to become law after support is gradually built. There is a good chance CAOA becomes the law of the land at some point in 2022 or 2023.