The Biden Announcement and What This Could Mean for Cannabis Nationwide

On October 6, 2022, President Biden announced three steps he is taking to end the government’s failed approach at cannabis reform.[1] First, President Biden pardoned all prior federal offenses of simple possession charges in an effort to help the thousands of people with cannabis convictions who may be denied employment, housing, or educational opportunities as a result. Second, he urges State Governors to take the same pardon action for State based convictions. Third, President Biden asks the Secretary of Health and Human Services and the Attorney General to review how cannabis is federally scheduled.

President Biden pardoning all minor federal cannabis possession convictions is a necessary step to right the wrongs created by President Nixon’s War on Drugs. This is a sign of good faith. It validates all of the prior expungement efforts focused on achieving this redress. The momentum created by this restitution will encourage a new era of acceptance for cannabis.

President Biden’s third step, in asking the Secretary of Health and Human Services to review the federal scheduling of cannabis, raises questions and concerns. Essentially, there are two ways this review could go: (1) cannabis can be re-scheduled, meaning it would be placed in Schedule 2 rather than Schedule 1 of the Controlled Substances Act; or (2) cannabis can be de-scheduled, meaning it is removed from the Controlled Substances Act altogether.

If the Secretary of Health and Human Services returns an opinion that results in cannabis being re-scheduled to Schedule 2 of the Controlled Substances Act, rather than de-scheduled, state-legal businesses would be offered little no relief from their current struggles operating in a legally gray area. Although re-scheduling cannabis is not likely to change the federal government’s tolerance of state-legal recreational cannabis businesses as they currently operate[2], every medical cannabis program would be required to evolve into licensed and regulated pharmacy programs. Dispensaries and other ancillary businesses selling medical product would be required to become a licensed pharmacy under strict DEA scrutiny. Re-scheduling would not eliminate the issues of Section 280E of the federal tax code, nor would it solve the dichotomy between federal and state law as states do not have the authority to establish their own regulatory policies on Schedule 2 substances.[3]

Some people argue that there is an upside to re-scheduling: that businesses would then be able to receive federal funding to conduct cannabis-related research, and they would have access to federal credit, banking, stock market trading, and interstate commerce[4]…but these perks only come with the businesses that applied for and were granted a Schedule 2 license, not state-legal recreational businesses operating in the same legally gray areas they are forcefully subjected to now.

The better option would be for the Secretary of Health and Human Services to return an opinion that encourages the de-scheduling of cannabis. The de-scheduling of cannabis would give cannabis businesses access to federal credit, banking, private research opportunities with federal oversight, and the States would retain their right to control their own cannabis laws. With cannabis de-scheduled, it would be regulated more akin to alcohol and tobacco rather than pharmaceuticals. De-scheduling cannabis would allow private companies to create original and proprietary formulas of cannabis product that could then be legally tested in FDA-approved controlled clinical trials.[5] Most importantly, de-scheduling cannabis solves the discrepancies between federal and state law precluding the current cannabis industry from truly blossoming.

The clear answer here is the one that would remove the federally illegal perimeter around state-legal cannabis businesses without imposing onerous DEA requirements and numerous other hoops to jump through. If we were to see cannabis become a Schedule 2 substance, we may witness an industry striving for equal access become yet another privilege for the wealthy when only the largest cannabis companies have the resources to receive Schedule 2 licensing. The answer is to de-schedule cannabis to create an open market managed by governmental regulation while allowing the current state-legal medical AND recreational cannabis programs to step out of the legally gray area precluding the market from booming.

Only time will tell whether cannabis will be re-scheduled or de-scheduled, and while you are navigating these gray waters that are the current cannabis industry, do so with a skilled professional behind you. Give our office a call if you have any questions regarding what your cannabis-related business can and cannot do in this current legal landscape.

[1] https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/06/statement-from-president-biden-on-marijuana-reform/

[2] https://www.brookings.edu/blog/fixgov/2016/05/27/clearing-up-misconceptions-about-marijuana-rescheduling-what-it-means-for-existing-state-systems/

[3] https://www.wikileaf.com/thestash/cannabis-schedule-2/

[4] https://mjbizdaily.com/pros-and-cons-of-rescheduling-marijuana/

[5] https://norml.org/marijuana/fact-sheets/how-to-end-marijuana-prohibition-with-regard-to-the-controlled-substances-act/#:~:text=By%20contrast%2C%20descheduling%20cannabis%20would,bringing%20such%20products%20to%20market.