The Cannabis Administration and Opportunity Act Fatal Flaw

The Cannabis Administration and Opportunity Act (CAOA), yet another bill to legalize Marijuana Federally, is going to be introduced to the Senate this session by Senate Majority Leader Chuck Schumer (D-NY). The comment period is open until September of this year: “While the Sponsoring Office will accept comments at any time, they encourage stakeholders to submit comments in writing by September 1, 2021, in order to ensure time for offices to consider comments before introducing a final legislative draft. Comments may be submitted to [email protected].”

I’ve written about the MORE Act to legalize here, here, here, here, here, and here; this one is basically the same. However, both suffer from one very serious flaw: after 84 years of lies and mismanagement, the Federal is profoundly addicted to Marijuana.

Well, not Marijuana per se, but rather the notion that it needs to stick its nose into what Justice Clarence Thomas called a wholly intRAstate transaction well beyond the purview of the Federal thanks to the Tenth Amendment. The way the MORE and CAOA bills satisfy their craven addiction is by mandating a Federal excise tax on producers, 25% in the case of CAOA. As a “reward” for the Federal’s profound mismanagement of Cannabis for the last 84 years it wants a 25% tax to finally do the right thing, which could be as much as $10 Billion annually. That’s a $10 Billion bribe to the Feds to stop devastating a half-million families annually and society itself over what DEA itself called “one of the safest therapeutically active substances known to man.” Ten Billion Dollars is about ten times more than DEA spends enforcing marijuana laws.

Even FDA was in on the hoodwink: for 51 years it promoted the lie of Schedule 1, that despite over 26,151 studies on Federal-funded PubMed, Cannabis has “no medical value.” Just like during the 32 years under the Marihuana Tax Act of 1937, the government doesn’t actually think weed is bad, it just wants to tax it. Drug laws are ultimately mere economic crimes, not “dangerous” drugs causing wanton immorality and destruction; criminalize the drugs of choice of those you wish to oppress. The Federal National Institute on Drug Abuse even sells Marijuana, for $2,497 per kilo.

But despite the hollow ring of this flavor of Federal “legalization,” the fatal flaw is this: even a mere 0.0001% tax demands an armed bureaucracy prepared to use all its powers and might to enforce its mandate under penalty of your death at the end of a qualified immunity gun. A bureaucracy’s prime motive is to grow and increase power and staff, so it’ll only get bigger and demand an ever-higher tax. If we don’t push back now, they will do it later.

A Federal excise tax means it’ll never really be legal, rather it’ll be like the old “Revenooer“ days of G-men raiding unlicensed alcohol stills in the woods. Dogs a’howlin’ and guns a’blazin’ and the birth of NASCAR fleeing the scene, except now it’ll be dank bud growing in those woods.

With any Federal tax, thousands will be hired to arrest solely under this “legalization” law tens or hundreds of thousands, just like now but not for a Controlled Substance, but instead like the old Marihuana Tax Act days for the purely-economic crime of not having a certain special little stamp the government sells. It’s a fabricated legal fiction, just like alcohol taxes and the stamp they affix to every bottle of booze. No stamp = “illegal.” They’ll use the same SWAT teams, tactics, and brutality, there will just be different initials on the windbreakers: “TTB” instead of “DEA.” TTB was formerly the Bureau of Alcohol, Tobacco, and Firearms (BATF); alcohol tobacco firearms Marijuana… which one has never killed but instead treats countless medical conditions?

Sin tax? God gave us this plant, as it’s in the Bible (KNH BSM) healing people it can hardly be considered a sin unless Jesus was a sinner every time He healed. Consider: “The Lord has created medicines out of the earth; and he that is wise will not abhor them. With such does He heal men and take away their pains.” (Ecclesiasticus 38:4)

Taxes on alcohol and tobacco are meant to financially alleviate some of their harms, whereas Marijuana doesn’t kill but instead heals. If anything it should be subsidized, not taxed like booze and smokes. The net total social cost of alcohol abuse is massive and not covered by taxes on it. The Center for New Revenue says “even a 10-percent reduction in alcohol abuse accompanying the doubling in Marijuana use could be a net win for society.”

Another reason for no Marijuana tax at the Federal or even state level is to encourage harm reduction, switching from dangerous and addictive drugs and alcohol: “[T]hese studies provide strong evidence that raising alcohol taxes is an effective strategy for reducing excessive alcohol consumption and related harms.” “Today’s non-indexed tax of $13.50 per proof gallon has far from kept up with inflation. Since the early 1990s, that nominal rate has lost about 60 percent of its real impact. … Alcohol taxes are too low to cover social externalities and deter use.”

In “Key Findings of the RAND Report on Marijuana“ is: “Marijuana Policy Is Not a Binary Choice Between Prohibition and the For-Profit Commercial Model. Marijuana policy should not be viewed as a binary choice between prohibition and the for-profit commercial model we see in Colorado and Washington. Legalization encompasses a wide range of possible regimes, distinguished along at least four dimensions: the kinds of organizations that are allowed to provide the drug, the regulations under which those organizations operate, the nature of the products that can be distributed, and price.” Thus a Federal excise tax is not the only route to legalization and is unneeded as well as undeserved.

As for the 25% excise tax, that’s where our “Friends of Cannabis” Reps Polis (D-CO) and Blumenauer (D-OR) misused the Overton Window against us: a few years ago they proposed BATF and 50%. Instead we got BATF (TTB) and 25%. That’s how the OW works, they should have started at 5%. Even the MORE Act was far better at 5% and yet many still howled, despite losing 280E in the process thus having a dramatically lower net tax rate than 5%. It is a bit like “I refuse to pay 5% so that I can deduct my operating expenses which are 7 times more,” cutting off one’s nose to spite one’s face. For all the Herer devotees and his “not one dollar,” you already pay way more because of 280E, so this is actually give far less money to the Feds than today.

All the work funded by the Federal excise tax on Marijuana can be done better at the state level anyway. The same Federal government cool with spraying Paraquat knowing we’d smoke it and putting us away for life over a plant it says has no medical value doesn’t need to do much now except get the hell out of the way, after four generations of gross mismanagement of a deeply unpopular law with explicitly racist origins and enforcement.

Seriously, after 84 years of bumbling the Feds just need to politely apologize and step away from the Prohibition and taxing medicine. Perhaps we’ll even get “our” DSHEA or XXIst Amendment? But the Federal should not get even one cent as a bribe to free the citizen-hostages from the tyranny of Schedule 1. Since the Federal doesn’t add value, that’s essentially what the excise tax is, a bribe to do the Right Thing, to do what 91% of citizens want.

The Feds will gain as much as fourteen times more than the proposed 25% tax anyway, just from the enforcement and criminal justice system savings. With a new tax to extract from people not used to having a tax extracted from them for growing Marijuana, all those unneeded DEA agents will become TTB agents and bring their ill attitude to a new agency. Same drug war, different badges.

And then there’s the increase in newly-declared income taxes from Marijuana that the IRS will get after legalization, income taxes on about $100 Billion in sales. The same for state income taxes. Plus, all the jobs now under the table will start paying payroll taxes. Even without a 25% excise tax, the Feds are coming out waaaay ahead on this.

Therefore, all this begs the question: “why should an excise tax should be in the legalization bill at all?” After all, the Feds are the wrong ones to be doing new programs for drug war victims. After all these years of its brutal war against the plant and its fans, I can’t see these DARE-brainwashed bureaucrats turning on a dime and suddenly embracing legalization without a ton of friction politically, legally, and operationally. I fear little will actually change, they’ll still arrest, prosecute, and oppress people including patients and their caregivers, now under a new set of laws, Prohibition 2.0. We’ve seen that in northern California, where growing is now treated as a zoning violation enforced by SWAT teams and a $30,000/day fine.

A hammer only sees nails and Congress only sees regulation and taxes, it’s natural. The idea that it belongs with booze, smokes, and guns is ingrained in their tax-addled brains. But we have to disabuse them of that notion, it’s time to draw a line in the sand over this. For an industry made up of people long used to laboring under the profound risk of Marijuana laws, we need to assert backbone over this issue with the Feds. They are on thin ice and we have the public, science, logic, and justice on our side. The only way for the Feds to fix this is to wash their hands of the whole mess they created and gracefully and quietly slink away, no excise tax.

Like in the MORE Act, in this bill Congress is trying to fix the state’s mismanagement of the licensing system, and the obvious racism and lack of drug war victims participating. It’s turned into an ugly pay to play scheme favoring mostly the wrong people, a sad joke corrupting many public officials in many states.

But a Federal excise tax is itself contrary to the intent of Social Equity, namely correcting the harms of the past. By mandating a tax enforced by the end of a gun, instead of healing the damage done to drug war victims it will just create new ones. We’ll be trading yesterday’s Controlled Substances Act criminal for tomorrow’s excise tax criminal. That’s what happened to Chicago gangster Al Capone, he was prosecuted not for a long list of violent crimes but for violating tax laws.

If there must be a producer excise tax it should be implemented in as innocuous a way as possible and not involve TTB. We have to be careful not to deschedule but then create an equally inhospitable environment due to taxation enforcement.

So then, where should the money to implement legalization come from, if not excise taxes? I say take it from the massive law enforcement and criminal justice cost savings due to legalization, more than fourteen times greater than the tax would be. When any agency has its mission and operations drastically reduced it sees a cut in budget, same as a business. In 2018, the DEA budget was $2.086 billion and $445 million was spent on international enforcement, while $1.627 billion was spent on domestic enforcement. That includes attempting to disrupt foreign and domestic sources of supply ($1.0149 billion) via domestic cannabis eradication/suppression; domestic enforcement; research, engineering, and technical operations; the Foreign Cooperative Investigations Program; intelligence operations (financial intelligence, operational intelligence, strategic intelligence, and the El Paso Intelligence Center); and drug and chemical diversion control.

Once legal Federally and regulated at the state level, DEA will have little reason to investigate Marijuana growers as interstate diversion will be eliminated by legalization. Therefore:

  • Re-deploy 10% of DEA’s ~$1 billion Marijuana enforcement budget ($100 million) to USDA to help Hemp and Marijuana farmers through a new Cannabis Division.
  • Re-deploy another 10% of DEA’s ~$1 billion Marijuana enforcement budget ($100 million) to FDA to assist Hemp and Marijuana dietary supplement, cannabinoid, and food producers through a new Office of Cannabis.
  • Re-deploy another 10% of DEA’s ~$1 billion Marijuana enforcement budget ($100 million) to the Small Business Administration (SBA) to assist Hemp and Marijuana companies start and succeed, including a drug felon rehabilitation program teaching business and farming skills.
  • Re-deploy another 5% of DEA’s ~$1 billion Marijuana enforcement budget ($50 million) to SAMHSA for opioid addiction treatment and especially harm reduction using Marijuana products for pain management.
  • Re-deploy another 5% of DEA’s ~$1 billion Marijuana enforcement budget ($50 million) to the Department of State to lobby for change of Cannabis laws and punishments in other countries, reversing 60 years of policy. For decades the U.S. pushed other nations to criminalize the plant.
  • Re-deploy another 5% of DEA’s ~$1 billion Marijuana enforcement budget ($50 million) to water districts to better manage water access, rights, and supply issues for Marijuana and Hemp growers.

More suggestions:

  • Make explicitly legal the right for citizens to grow at home especially for patients, delivery services even interstate, banking Marijuana money, teaching Cannabis in institutions that receive Federal money, interstate transport, and ex/imports.
  • End the practice of seizing assets before adjudication and conviction of a crime in a court of law.
  • FDA creates the Office of Cannabis similar to its Office of Dietary Supplements to regulate commercial Cannabinoid products that it approves for interstate and export, with a low level of regulation much like botanicals and foods today. Products should not be required to undergo the FDA drug approval process, IND, ODD, pre-market review, pre-market authorization, nor GRAS or NDI Notification before marketing.
  • Remove all references to Marijuana as reasons impacting school admission or continuance, employment, moral turpitude clauses, SEC requirements, banking, insurance, organ transplant, medical care, entrance to the United States, immigration status or reason for deportation, pre-trial supervision, probation, parole, custody of children, addiction, security clearances, loans and grants, firearm registration, boating, pilot and driver licensing, use by military and police, and fitness of a parent or nurse, physician, attorney, teacher or other licensed person.
  • End drug tests for all but the most-sensitive of positions and then only for good cause. Mandate that tests have minimum thresholds appropriate for a state of impairment, and not the mere presence of metabolites. End per se drug test thresholds for drivers, measure impairment not molecules.
  • Like the Marihuana Tax Act before it Marijuana put in Schedule 1 was unconstitutional from Day One, thus fruit of the poison tree. In a functioning Constitutional system there should be no prosecution derived therefrom. Plus the New Normal today for the Federal is to seize assets but not prosecute, thus preserving marijuana laws from higher judicial scrutiny and possible overturning. It reduces enforcement costs but evades the Constitutional right to due process and right to a speedy trial. If the owner complains or is an activist, then they’ll file charges but have three years to do so.
  • Expungement posthumously upon the request of anyone, to clear a family member or friend’s name and legacy.
  • DEA must end intelligence gathering of Marijuana growers.
  • Cancel every state Controlled Substance Acts regarding all Cannabis products, and if not then object to the Federal excise tax registration on Fifth Amendment grounds.
  • As for that U.N. Single Convention Treaty on Narcotic Drugs mandating only one agency handle Cannabis because it is soooo dangerous, the international law requiring criminalization of non-medical Cannabis, just do what Canada, The Netherlands, and Uruguay do: ignore it. Or you could just proclaim All Use Is Medical and thus exempt, or accomplish it by mandating non-decarboxylation testing, and of Delta-9 THC only. Hemp growers will like that also.
  • The Feds have no compelling interest in proscribing age limits, like with alcohol, guns, tobacco, marriage, or the age of consent instead just leave it to the states. With the proposed Federal minimum age of 21, it’s higher than many states have for alcohol. Our nation routinely sends 18-year olds into battle but won’t let them treat the PTSD with Cannabis when they get home. It’s medically- and ethically-flawed.
  • The FDA pre-market review (PMA) in the CAOA for Cannabis products is absolutely not needed, as it’s the most-stringent tool FDA uses to analyze a medical device like a pacemaker or ventilator. It is a very expensive process, and gives FDA many ways to sabotage the product introduction. Plus once one company successfully completes the first PMA, all the others can ride in on that, so companies have a disincentive to do so. Like with Manitoba Harvest and GRAS status for Hempseed products, it did the heavy lifting in 2018 and everyone else got the benefit. PMA is usually used for hardware like vape pens, patches, or inhalers but not pills, tinctures, or extracts; and for new tobacco products such as eCigs. If FDA gets this then they should grandfather all the products currently on the market as the “predicates,” thus saving the industry a ton of money not stating the obvious after 12,000 years of safe continuous use around the world.

Click here for a primer on state Marijuana taxes from the Tax Policy Center.

And while we’re at it, let’s fix Hemp; after all Marijuana laws are Hemp’s biggest problem:

Cannabinoid Facts
  • FDA accepts that CBD and Hemp flower are ingredients existing before the 1994 DSHEA cut-off, thus are GRAS and legal in foods and products. FDA creates the Office of Cannabis similar to its Office of Dietary Supplements to assist commercial Cannabinoid products. Hemp cannabinoid products should not be required to undergo the FDA drug approval process, IND, ODD, pre-market review, pre-market authorization, nor GRAS or NDI Notification before marketing. FDA should mandate disclosure of the 12 major cannabinoids and 5 terpenes on the product label.
  • Remove the drug felon ban and they go to the head of the line in a SBA rehabilitation program teaching business and farming skills.
  • Mandate 1% max Delta-9 THC and testing via a non-decarboxylating method since Marijuana is legal now, and only test products (such as found in Sen. Rand Paul’s H.E.M.P. bill). Do not require testing of AOSCA or OECD approved or certified varieties, government certification should count for something.
  • Require pollen management plans for applicable Hemp and Marijuana operations, to protect female Cannabis from genetic trespass or contamination.
  • Remove the requirement of a criminal check and fingerprinting for farmers; it’s an ag not a drug crop.
  • Allow Hemp to be grown on national lands under permit.
  • Do not require registration if the plot is under two acres, or if grown for fiber only and harvested before flowering is finished, or if solely for soil remediation or erosion control.
  • Fund USDA programs designed to encourage regional co-op formation, equipment purchase, and value-added processing.

There’s your Overton Window in action.

Leave Your Reply