Congress Report Provides Considerations For Cannabis Economic Development
Following Biden’s call to reschedule cannabis, the US Congressional Research Service has produced a report containing considerations for Congress if it decides to proceed with the rescheduling.
The Drug Enforcement Agency (DEA) is currently reviewing the rescheduling of cannabis following Biden’s request as well as a suggestion from the Health and Human Services (HHS) to reschedule the plant from Schedule I to Schedule III.
The report – Recreational Marijuana and Economic Development – provides several considerations for Congress concerning economic development opportunities for the market.
It highlights that while many advocate that descheduling or legalising cannabis at the federal level would create economic benefits from taxes and jobs, assessing the economic effects of adult use cannabis is difficult as the industry is still young.
In this regard, it recommends that if Congress needs to collect further data it should “consider directing BLS, BEA, or other agencies to develop and collect metrics related to marijuana”, as obtaining information from nonpartisan sources “could help provide context for any potential legislative pursuits.”
Additionally, it suggests several actions Congress could take regarding the rescheduling of cannabis including:
- Descheduling or rescheduling cannabis under the Controlled Substances Act and/or repeal associated criminal provisions.
- Congress could encourage the enforcement of the Controlled Substances Act and push for federal law enforcement to dismantle state recreational cannabis programmes.
- Congress could also take no action.
The report also suggests that Congress should consider the consequences of imposing high taxes as this could turn citizens to the black market.
The report reads: “If Congress were to decide to de-schedule or reschedule marijuana or otherwise allow for a federal system of legalised recreational marijuana, there may be questions of whether and how to impose a federal tax on marijuana.
“By way of comparison, the federal government imposes excise taxes on tobacco. Recreational marijuana’s tax structure could affect its economic development potential. For example, some research has suggested that high marijuana tax rates — and resulting high recreational marijuana prices — may contribute to the risk of turning potential consumers toward the untaxed black market, in turn jeopardising recreational marijuana’s economic potential.”
However, it also suggests that a benefit of high taxes would be to deter new customers from the market, which may be more in line with public health goals.
Finally, the report highlights uncertainty in the market due to the lack of access cannabis businesses have to financial services.
In this regard, the report notes: “In the 118th Congress, the SAFER Banking Act would, among other things, restrict federal regulators’ ability to terminate a deposit account for a recreational marijuana business and create a safe harbor from federal law for transactions with a state-sanctioned recreational marijuana business and any entity handling that business’s proceeds.”
