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Dept. of Health and Human Services Calls On DEA to Reclassify Cannabis as Schedule III
Reclassification to Schedule III would be a rare, major change; however cannabis would remain federally prohibited.
An official at the Department of Health and Human Services recommended to the Drug Enforcement Agency (DEA) that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the Controlled Substances Act in a leaked letter.
HHS Assistant Secretary for Health Rachel Levine sent a letter dated Aug. 29 to DEA Anne Milgram, recommending that cannabis be reclassified. The HHS confirmed on Tuesday that a representative sent its findings to the DEA. “Following the data and science, HHS has expeditiously responded to President Biden’s directive to HHS Secretary [Xavier Becerra] and provided its scheduling recommendation for marijuana to the DEA on August 29, 2023,” an HHS spokesperson said.
The move was called “historic,” sent cannabis stocks soaring, but was also called insufficient in ending cannabis prohibition as it would remain a controlled substance, albeit with fewer restrictions.
Last October, President Joe Biden requested that the HHS secretary and attorney general conduct a review of the classification of cannabis under federal law. Cannabis currently falls under Schedule I, meaning the DEA considers it a drug “with no currently accepted medical use and a high potential for abuse.”
The DEA defines a Schedule III substance as “drugs with a moderate to low potential for physical and psychological dependence.” The DEA says that the potential for abuse of Schedule III drugs is less than Schedule I and Schedule II drugs—but more habit-forming than Schedule IV (Xanax, Valium) and Schedule V drugs (Robitussin AC). Examples of Schedule III drugs include pills and drugs with less than 90 mg of codeine per dosage unit (Tylenol 3), ketamine, anabolic steroids, and testosterone.
It’s important to note that under Schedule III, cannabis would still be federally prohibited although it would open doors for researchers. Some leaders in Congress applauded the move, while others said it’s not enough.
What Happens Now?
NORML reports that the HHS recommendation now heads to DEA, to conduct its own scientific review. The DEA adopted its own five-factor test to determine if cannabis should be rescheduled, and it’s different from the HHS’ criteria. But the DEA determined that cannabis failed to meet its five criteria four times.
“It will be very interesting to see how DEA responds to this recommendation, given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law,” NORML Deputy Director Paul Armentano said. “Further, for decades, the agency has utilized its own five-factor criteria for assessing cannabis’ placement in the CSA—criteria that as recently as 2016, the agency claimed that cannabis failed to meet. Since the agency has final say over any rescheduling decision, it is safe to say that this process still remains far from over.”
Senate Majority Leader Chuck Schumer (D-NY) said in a statement that HHS had recommended that cannabis be moved from a Schedule I to a Schedule III controlled substance. “HHS has done the right thing,” Schumer said. “DEA should now follow through on this important step to greatly reduce the harm caused by draconian marijuana laws.”
Is Schedule III Enough?
“This is a step in the right direction but it is not sufficient, Congressman Earl Blumenauer (D-OR), founder and co-chair of the Congressional Cannabis Caucus said in a statement. “I hope it is followed by more significant reforms. This is long overdue.”
Cannabis coalitions applauded the move as historic, while it would not fully decriminalize cannabis at the federal level.
“The Biden Administration just took a major step toward ending our nation’s failed war on cannabis,” stated Adam Goers, co-chair of the Coalition for Cannabis Scheduling Reform. “For decades, cannabis has been a Schedule I controlled substance, on par with heroin and above fentanyl and meth. This was completely baseless, and we now know that the FDA and Department of Health and Human Services agree.
“The federal government is now on track to recognize cannabis as medicine, regulated alongside Schedule III drugs such as Tylenol with codeine which have demonstrated medical uses and low risk of abuse. Our ultimate goal is full legalization of cannabis, and we believe that rescheduling is a key step on the way there.
Cannabis Stocks Soar
The news impacted cannabis trading. ETF.com reports that the AdvisorShares Pure US Cannabis ETF soared 21%. Other cannabis-related funds, including FMG Alternative Harvest ETF and Global X Cannabis ETF were up 10.79% and 7.44% respectively. Eight cannabis-related ETFs are traded on U.S. markets, with total assets under management of $630.76M.
Publicly traded cannabis companies also saw spikes based on the news. Canopy Growth rose 13%, Tilray Brands soared by nearly 9%, and Aurora Cannabis rose by 6%.
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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