Up in Smoke? Analysis of the Cannabis Administration & Opportunity Act


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Up in Smoke? Analysis of the Cannabis Administration & Opportunity Act provides an unbiased review of the draft federal cannabis reform legislation presented in the United States Senate on July 14, 2021. The study reviews the proposed legislation’s industry impact across a range of issues including the de-scheduling of cannabis, federal tax structure, designation of regulatory agencies and governance policies, and expungement of cannabis convictions.

The analysis concludes that the anticipated stimulative effects of legalization under the proposed legislation would advance the legal cannabis industry, enabling businesses to operate and thrive in legal, regulated environments, while also benefitting local economies. Conversely, the report also highlights the likely effect of taxes across the supply chain, presumably to be passed on to consumers, and ultimately expected to result in a comparatively less competitive market than the illicit one.

Key Report Findings:

  • Political Dynamics: The legislation will most-likely face opposition from bothprogressive Democrats and Republicans, jeopardizing passage without significant changes.
  • Federal Taxation: The proposed federaltax schedule, while eliminating the high taxburden of U.S. Code 280E,will imposeburdensome compliance requirements for cannabis businesses while significantly increasing retail costs for consumersvia the 25% federal tax rate.
  • FDA Oversight: The potential issues raised by FDA oversight of cannabis products were largely unaddressed despite the significant impact on the industry.
  • Social Equity Incentives: The legislation proposes record expungement of 500,000+ cannabis-related arrests annually, and funds business incentives for those most impacted by cannabis prohibition, yet state participation is not mandated.