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Budding Legislation – The Cannabis Administration and Opportunity Act

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Sterne, Kessler, Goldstein & Fox

On July 14, 2021, Senate Majority Leader Chuck Schumer, together with Senate Finance Committee Chair Ron Wyden and Senator Cory Booker, released a discussion draft of the Cannabis Administration and Opportunity Act (the “CAOA”), comprehensive legislation that proposes, among other things, removing cannabis from the Controlled Substances Act (CSA), empowering states to implement and control their own cannabis policies, transferring agency functions with respect to regulation of cannabis products, and providing for restorative justice.  The legislation also provides proposals for restorative justice and opportunity programs, aimed at ending decades of harm to communities of color because of current policies.
 
If implemented, the Food and Drug Administration (FDA) would be recognized as the primary federal regulatory authority on the manufacturing and marketing of cannabis products, and the Alcohol and Tobacco Tax and Trade Bureau (TTB) would regulate taxation of cannabis products and trade practices of cannabis enterprises. The agencies would have dual jurisdiction regarding certain aspects of product labeling, packaging, advertising, and other consumer information.
 
The proposed legislation also provides for the establishment of the Center for Cannabis Products in FDA, adding a new chapter to the Federal Food, Drug, and Cosmetic Act (FFDCA) for regulating cannabis in foods, dietary supplements, drugs, and cosmetics. The Center for Cannabis Products would regulate all cannabis-ingredient products except those directed at treatment and prevention of disease in people and animals, which would be regulated by other FDA Centers and subject to FDA drug approval requirements. Under this discussion draft, cannabis ingredient foods that are not classified as drugs would be regulated as dietary supplements. And manufacturers of such products would be permitted to claim beneficial attributes of products the way that dietary supplements do currently, provided they supply reliable scientific evidence and include on the label of such products a notice indicating the FDA has not evaluated the statements.
 
A few other things to consider: while the legislation would end the federal prohibition on cannabis, certain federal standards would be established, including a minimum age of 21 to purchase recreational marijuana products and a maximum weight of 10 ounces per transaction. In addition, individual states would still control cannabis policies within their states, with some exceptions as to interstate commerce such as prohibiting transportation of cannabis across state’s borders into a state for purposes of lawful sale. The legislation also makes available crucial services to cannabis businesses, including bank accounts and loans.
 
The very detailed proposals and seemingly altruistic goals of the legislation are yet another positive example of the desperate desire and need for guidance as to the regulatory roadmap from those interested in and already participating in the cannabis industry. Because of the regulatory maze, those businesses already familiar with this bureaucratic entanglement are likely to have an advantage and thus, likely to expand into this industry themselves, including in branding and efforts to register their brands at the federal level. Still, no need to feel beaten out by the “big guys” yet – they, like anyone interested in this field, are beholden to the current laws, including federal trademark laws which still currently prohibit federal registration for cannabis-ingredient consumables or those that might fall under the FFDCA.


This article appeared in the July 2021 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.