Democrats introduce bills to legalize and tax marijuana at federal level

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Senator Ron Wyden, D-Ore., and Rep. Earl Blumenauer, D-Ore., have introduced legislation to legalize cannabis and prevent legal marijuana businesses from being hit with punitive tax bills.

The Senate version of the bill, S. 420, the Marijuana Revenue and Regulation Act, aims to responsibly legalize, tax and regulate marijuana at the federal level. The legislation is part of a broader package that is being introduced in the Senate by Wyden, the ranking Democrat on the Senate Finance Committee, and in the House by Blumenauer, a senior member of the tax-writing House Ways and Means Committee.

The legislative package aims to preserve the integrity of state marijuana laws, while offering a path to responsible federal legalization and regulation of the marijuana industry. The Path to Marijuana Reform also includes the Small Business Tax Equity Act, which would treat state-legal marijuana businesses like other small businesses by repealing the tax penalty that singles out marijuana businesses and prohibits them from claiming deductions and tax credits.

The legislation comes at a time when more states are legalizing consumption and sales of marijuana for medical and recreational uses, even as marijuana remains outlawed at the federal level. “The federal prohibition of marijuana is wrong, plain and simple,” Wyden said in a statement. “Too many lives have been wasted, and too many economic opportunities have been missed. It’s time Congress make the changes Oregonians and Americans across the country are demanding.”

The Path to Marijuana Reform package was also introduced in the previous congressional term by Wyden and Blumenauer, but they hope to make more headway now that Democrats control the House. The package includes the Small Business Tax Equity Act, along with the Responsibly Addressing the Marijuana Policy Gap Act and the Marijuana Revenue and Regulation Act.

The legislation would reduce the gap between federal and state laws by removing federal criminal penalties and civil asset forfeiture for individuals and businesses complying with state laws. The bills would also reduce barriers for state-legal marijuana businesses by allowing access to banking, bankruptcy protection, marijuana research and advertising. It would protect individual marijuana consumers in states that have legalized marijuana by providing an expungement process for certain marijuana violations, ensuring access to public housing and federal financial aid for higher education, and ensuring that a person cannot be deported or denied entry to the U.S. solely for consuming marijuana in compliance with state law. Finally, it would ensure that veterans have access to state-legal medical marijuana and protect Native American tribes from punishment under federal marijuana laws.

The bills would also de-schedule, tax and regulate marijuana, imposing an excise tax on marijuana products similar to current federal excise taxes on alcohol and tobacco, escalating annually to a top rate equal to 25 percent of the sales price. Marijuana producers, importers and wholesalers would be required to get a permit from the Treasury Department, and the marijuana industry would be regulated similarly to the alcohol industry. Strict rules would prohibit sale or distribution of marijuana in states where it is illegal under state law.

“Oregon has been and continues to be a leader in commonsense marijuana policies and the federal government must catch up,” Blumenauer stated. “The American people have elected the most pro-cannabis Congress in American history and significant pieces of legislation are being introduced.”

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Marijuana industry Finance, investment and tax-related legislation Ron Wyden