Weed Legalization Bill: High Taxes and FDA Regulations

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A long-awaited cannabis legalization bill, sponsored by three top Senate Democrats, was finally introduced on Thursday. The bill, which is unlikely to pass, contains several provisions that would particularly affect people who vape cannabis or use hemp-derived cannabinoids.

Co-sponsored by Senate Majority Leader Chuck Schumer (NY) and Senators Cory Booker (NJ) and Ron Wyden (OR), the Cannabis Administration and Opportunity Act (CAOA) would remove cannabis from the Controlled Substances Act, decriminalize possession and use, would tax cannabis products at the federal level and create a new FDA center to regulate products. It would also erase low-level federal cannabis convictions.

Senator Schumer is an odd choice to serve as the face of cannabis legalization. While Sense. Wyden and Booker have been consistent opponents of cannabis prohibition and punitive drug laws, Schumer was, until recently, a cheery supporter of the war on drugs. (He has also been a consistent and vocal supporter of all of the nicotine vaping bans and restrictions proposed in Congress.)

The CAOA took a long time to come. A 163-page draft version of the bill was shared last summer and has now nearly doubled in size. The final version is 296 pages, which includes 71 pages of federal regulations cannabis businesses must follow, in addition to the state rules they already face.

Because passing the bill through the Senate would require 60 votes, and Democrats only have 50 seats (plus the vice president’s deciding vote if necessary), the bill is unlikely to pass. , especially with many Republicans still debating whether cannabis should be legalized at all. The CAOA, by the way, would not require any state to legalize cannabis sales; many will likely maintain the ban.

But even as a starting point for negotiations, the CAOA has many flaws that will be particularly apparent to current cannabis vapers and anyone who has seen the FDA regulate tobacco and vaping products.

This article is not a complete summary of the CAOA, but rather a summary of the questionable parts of the bill, largely from a vaper’s perspective. For a more in-depth look at the many elements of this complicated bill, there are excellent articles in Marijuana Moment and Cannabis Business Times. Jacob Sullum’s article Reason, while not a comprehensive overview, is also a must read.

How does the FDA Center for Cannabis Products sound?

The CAOA turns cannabis regulation over to the Food and Drug Administration (FDA), creating a new FDA center similar to the Center for Tobacco Products (CTP). The new FDA Center for Cannabis Products would establish product and labeling standards and determine permitted advertising and marketing rules.

For Senator Schumer, that’s a no-brainer, because he believes federal bureaucrats should control almost every aspect of our lives. But for vapers who have watched in horror as CTP messed up every aspect of tobacco and nicotine product regulation, the thought of FDA regulation of cannabis will be terrifying.

The new FDA center could also “impose other restrictions on the sale and distribution of cannabis products, including restrictions on access, advertising, and promotion of the cannabis product.” This gives the FDA complete control over what can be sold, even allowing the agency to ban certain products if it deems necessary, which it likely will.

The FDA would use the same standard when applying new rules for cannabis that it currently uses for nicotine products: “appropriate for the protection of public health.” You don’t have to be a visionary to imagine how an FDA center charged with regulating mind-altering drugs might handle the job.

In 2014, when the CTP released its draft vaping product regulations, the vaping industry was serving a thriving consumer-driven market dominated by thousands of small vape shops run by proud entrepreneurs. Then the FDA imposed totally unnecessary regulations that were unaffordable to almost everyone except the big tobacco companies. Today, the nicotine vaping market is beginning to morph into a collection of black and gray market products, sold primarily in convenience stores.

Nothing is more likely to encourage the marijuana black market to stay strong – or get stronger – than giving the FDA the responsibility to regulate the legal market. The more the FDA tackles an already complex legal market, the more selection rules, unnecessary paperwork and additional compliance costs, the greater the demand for high-quality illegal weed.

Cannabis vape flavors would be banned from day one

The bill wastes no time in addressing the flavors of vaped cannabis products; that would banish them from the start. Although the bill only refers to “characterizing flavors” and cites several examples like menthol, mint, chocolate, and various fruit flavors, the wording says, “shall not contain any artificial or natural flavor (other than cannabis) which is a characterizing flavour’.

In cannabis oil processed for vaping with solvents like butane and CO2, natural terpenes and flavonoids are extracted from raw cannabis. Without adding flavors after processing, the resulting product has no flavor. Manufacturers usually add natural terpenes from other sources to add flavor to their vape carts.

Are terpenes added after extracting the oil from the plant considered characterizing aromas? Some have recognizable lemon, orange or berry flavors. We don’t know the answer, but we do know who would decide whether the Schumer bill passes: the FDA.

Delta 8 would be treated by law as marijuana

The 2018 Farm Bill legalized hemp (and all of its extracts and parts) as long as it contains 0.3% or less of delta 9 THC. This has allowed a small industry to grow and thrive, selling products made with legal hemp-derived cannabinoids like delta 8 and delta 10 THC and HHC. A recent Federal Court decision confirmed that these substances are legal hemp products. But Schumer’s bill would change that.

The CAOA would redefine hemp to allow up to 0.7% THC, but would include everything THC and THC isomers in this calculation. This means that if you add all the THC (not just delta 9) in a substance, and the total amount is greater than 0.7%, then the product would fall into the regulated cannabis space and be subject to the same rules as marijuana flower and products containing delta 9.

The bill specifically names delta 8, delta 10, and THCA, but gives regulators enough leeway that any hemp-derived cannabinoid with similar effects could fall under federal regulation. This is bad news for many people in states where marijuana is illegal and for people in legal states who cannot afford the high prices of cannabis dispensaries.

High taxes would keep the black market thriving

The CAOA includes heavy federal taxes on cannabis products that will create a huge advantage for black market cannabis producers and sellers. The illegal cannabis market is already doing well, and there is nothing in Schumer’s bill that would threaten its continued success.

The proposed tax structure under the CAOA is different for small and large businesses, but with the FDA in charge of regulation, small businesses likely won’t survive long anyway. In a nutshell, here’s how the proposed taxes work:

For large manufacturers, the federal excise tax would be 5% in the first two years after the law is passed, 15% in the third year, 20% in the fourth year, and 25% thereafter. For small manufacturers, the tax rate is half that, reaching 12.5% ​​after four years.

This means that consumers of legal cannabis products in states with already high tax rates (many have tax rates of 15% or more; Washington’s is 37%!), the price of legal cannabis could more than double overnight – and that’s not even factoring in state sales taxes.

If CAOA were passed, many buyers would simply continue to source weed from the black market, where taxes are low (zero) and regulations few (none). The burdens on legal cannabis businesses, between adding new taxes to their costs and implementing complex and costly FDA regulations, would threaten their ability to compete with a thriving black market, which already exists.

Smokers created vaping without help from the tobacco industry or anti-tobacco crusaders, and I believe vapers have a right to continue innovating to help themselves. My goal is to provide clear and honest information about the challenges vaping faces from lawmakers, regulators, and misinformation brokers. I am a member of the CASAA Board of Directors, but my opinions are not necessarily those of CASAA, and vice versa. You can find me on Twitter @whycherrywhy

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