In a groundbreaking move that has the potential to reshape the landscape of cannabis regulations, the U.S. Department of Health and Human Services (HHS) has taken a bold step by formally recommending the reclassification of marijuana from Schedule I to Schedule III under federal law. This historic decision signifies a seismic shift in perspective, indicating that the nation’s premier health agency no longer views cannabis as a substance with high abuse potential and zero medical value.

Following an intensive scientific investigation into cannabis, which was conducted as a response to a directive from President Joe Biden, the HHS has conveyed its verdict to the Drug Enforcement Administration (DEA): cannabis should be repositioned from the confines of Schedule I to the more accommodating Schedule III of the Controlled Substances Act (CSA). Although this suggestion isn’t binding, the amalgamation of thorough scientific analysis and a growing swell of political support for cannabis reform may wield substantial influence over the DEA’s final decision

By classifying cannabis as a Schedule III drug, the plant would still remain prohibited at the federal level. However, this recalibration would have far-reaching consequences, particularly for researchers who have long decried the burdensome barriers erected by the Schedule I categorization, which impedes access for critical studies

An HHS spokesperson elaborated on this significant development: “Grounded in data and scientific exploration, the HHS promptly heeded President Biden’s directive to Secretary Becerra, furnishing its recommendation for rescheduling cannabis to the DEA on August 29, 2023.” The spokesperson emphasized the efficiency of this administrative procedure, which was accomplished in less than 11 months, underscoring the department’s collaborative spirit and commitment to expeditiously complete a comprehensive scientific evaluation for wider dissemination.

This shift to Schedule III would also have the power to unlock tax incentives within the burgeoning marijuana industry that are currently off-limits.

Confirming this milestone, a DEA spokesperson conveyed, “DEA has received a communiqué from the Department of Health and Human Services, sharing its conclusions and suggestions regarding marijuana scheduling, in line with President Biden’s request for a review.” As part of this process, the HHS diligently carried out a comprehensive scientific and medical assessment, a foundational aspect of the DEA’s ultimate authority to reclassify or retain the classification of a drug within the Controlled Substances Act. The DEA is now poised to embark on its evaluation process.

The vital scientific review that paved the way for the Schedule III recommendation was spearheaded by the Food and Drug Administration (FDA) under the HHS’s guidance.

According to initial reports from Bloomberg, the HHS Assistant Secretary for Health, Rachel Levine, who ardently advocated for medical cannabis during her tenure as Pennsylvania’s health secretary prior to joining the Biden administration, dispatched a letter to the DEA that explicitly referenced the FDA’s meticulous review.

This momentous stride comes after a mere two months since HHS Secretary Xavier Becerra revealed to Marijuana Moment that the agency aimed to conclude the review by year’s end.

A spokesperson from the White House emphasized the independent nature of the administrative process: “The administrative process is independently managed by HHS and DOJ, driven by evidence. Thus, the President’s team will not offer commentary on the agency’s recommendation at this juncture.”

White House Press Secretary Karine Jean-Pierre reiterated this point during a recent briefing, highlighting the president’s stance on the issue. She affirmed that President Biden sought an independent administrative review conducted by the HHS and DOJ, underscoring that the forthcoming decisions would be rooted in evidence and the best interests of public health.

This move to reclassify marijuana from Schedule I to Schedule III holds significant practical and political ramifications, contingent on the DEA’s alignment with the HHS recommendation.

For researchers, this change would signal the end of the cumbersome DEA registration process, a requirement for accessing cannabis for studies as a Schedule I drug. Notably, Director Nora Volkow of the National Institute on Drug Abuse (NIDA) has expressed concerns about these barriers, and it is reported that NIDA has endorsed the HHS’s recommendation for rescheduling marijuana.

From a business standpoint, this reclassification would empower cannabis enterprises to claim federal tax deductions—an option currently out of reach for businesses engaged in the sale of Schedule I or II drugs. The higher effective tax rate imposed on the cannabis industry could potentially diminish with this shift, a change that various state governments have already taken the initiative to address through state-level tax relief measures.

On the political front, such a reclassification could serve as a crowning achievement for the president, who would be credited with overseeing a monumental reform. This administrative evaluation, which could lead to rescheduling over five decades after cannabis was initially categorized as a Schedule I drug during the “war on drugs,” could also lend momentum to congressional endeavors aimed at further reforming federal cannabis laws. As lawmakers return from the August recess, they could point to the HHS’s recommendation as tangible evidence of the urgency to normalize and regulate the cannabis industry.

The HHS spokesperson emphasized the final stages of this process: “While HHS’s scientific and medical evaluation is binding on DEA, the scheduling recommendation is not.” The DEA, equipped with the ultimate authority to schedule, reschedule, or remove a drug from scheduling within the CSA, will undergo a meticulous rulemaking process, complete with a period for public input, before finalizing any scheduling decisions.

Despite the aspirations of advocates for a complete descheduling of cannabis, the HHS review’s outcome is a reclassification from Schedule I to Schedule III. This, however, has raised concerns about whether the FDA could take a more hands-on role in the regulation of cannabis. A former top FDA official, Howard Sklamberg, who previously chaired the agency’s Marijuana Working Group and foresaw the Schedule III recommendation, dismissed such fears, asserting that the FDA and DOJ have adopted a largely non-interventionist stance with the burgeoning legalization movement even while cannabis remains a Schedule I substance. Sklamberg contended that it defied reason to presume the agencies would abruptly intensify enforcement actions if cannabis were shifted to a less restrictive category.

In a separate development, Rep. Matt Gaetz (R-FL) has pressed DEA Administrator Anne Milgram for clarity regarding the president’s directive on the marijuana scheduling review. Gaetz seeks a copy of the letter allegedly sent by President Biden to the attorney general and HHS secretary, along with an update on any communication between Milgram and HHS regarding the evaluation timeline.

The journey toward reclassifying marijuana from Schedule I to Schedule III is replete with implications that extend across multiple dimensions—practical, political, and scientific. This momentous decision marks a significant stride towards cannabis normalization and underscores the dynamic interplay between scientific inquiry, political will, and regulatory evolution.

Source: Marijuana Moment

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California’s legal marijuana industry is facing significant challenges, with high taxes and regulatory obstacles driving entrepreneurs towards the illicit market, according to the state’s Attorney General Rob Bonta. In a recent event held in Fresno, Bonta highlighted the excessive barriers to entry and operational costs as major roadblocks for businesses operating within the legal framework. He suggested that temporary tax reductions could be beneficial to ease the burden on legitimate operators.

Bonta emphasized the need to reduce the regulatory burden for compliant businesses while focusing efforts on combating the illicit market that undermines them. He unveiled a new initiative aimed at assisting local jurisdictions in addressing illegal marijuana activities through administrative enforcement and nuisance abatement. He expressed concern over the persistence of fly-by-night operators evading legal requirements and taxes, undermining the regulated industry’s integrity.

The newly introduced program, known as the Cannabis Administrative Prosecutor Program (CAPP), is designed to support cities and counties in their efforts to combat illegal cannabis activities. Fresno became the first city to participate in CAPP, receiving legal support from the California Department of Justice (CADOJ) to pursue administrative actions against illicit operators. The initiative aims to encourage voluntary shutdowns of illegal operations and, if necessary, enforce cessation through legal means, while recovering enforcement costs.

Attorneys provided by CAPP will collaborate with local authorities to implement administrative sanctions and expedited enforcement procedures. The program aims to be self-funded, with costs recovered through fines, administrative orders, settlements, and abatement liens. Bonta highlighted that any surplus funding generated through the program will be retained by the participating city.

Bonta also explained that administrative actions are more favorable than criminal penalties for low-level offenders. By utilizing the administrative process, officials can effectively address non-compliance without treating minor offenders as criminals, ultimately supporting the licensed cannabis industry.

The attorney general’s support for legislative measures such as AB 1684, aimed at empowering local governments to impose fines on unlicensed cannabis activities, further demonstrates his commitment to addressing the issue.

The challenges facing California’s legal marijuana industry are multifaceted. High startup and operational costs contribute to the presence of illegal grow sites. Additionally, many jurisdictions within the state prohibit legal cannabis businesses, creating demand for illicit products due to limited access to regulated options. To counter this, California regulators have initiated grants to expand retail access to underserved areas, thereby reducing the demand for illegal products.

Addressing health and safety concerns associated with unlicensed products, Bonta highlighted the environmental risks posed by illegal cannabis operations. Such operations often disregard environmental laws and utilize prohibited pesticides, contributing to ecological degradation. This issue gained attention when the U.S. Fish and Wildlife Service linked illegal pesticide use in California’s marijuana cultivation to the endangerment of spotted owl species.

In an attempt to curb the illicit market, California eliminated its cannabis cultivation tax. However, the state is also exploring avenues for expanding its legal cannabis market beyond its borders. Regulators have sought legal guidance to determine whether interstate cannabis commerce would expose the state to federal enforcement actions. This move aligns with Governor Gavin Newsom’s aspiration to federally legalize marijuana, enabling California to supply legal cannabis products nationwide.

California’s legal marijuana industry is grappling with significant challenges, including high taxes and regulatory hurdles. Attorney General Rob Bonta’s initiatives, such as the Cannabis Administrative Prosecutor Program, demonstrate the state’s commitment to addressing these issues and supporting compliant businesses. The complex interplay between legal and illicit markets, coupled with environmental concerns, calls for a comprehensive and balanced approach to ensure the success and integrity of California’s legal cannabis industry.

Source: Marijuana Moment

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