Granting permissions in AWS lake formation

This happens when you are not logged in as a data lake admin. Only a data lake administrator can grant Create_Database permission on your catalog.

Please find the policies required for a data lake admin here - https://docs.aws.amazon.com/lake-formation/latest/dg/initial-LF-setup.html#create-data-lake-admin

Once you create a data lake admin, in the navigation pane, under Administrators, choose Administrative roles and tasks. In the Data lake administrators section of the console page, choose Add. In the Add administrators dialog box, under Access type, choose Data lake administrator. Choose the IAM user that you created and save.

Now log in as a data lake admin to grant Create_Database permission on your catalog.