Tuesday, May 17, 2022
As mentioned in a prior post, the tail end of a busy semester means I can now catch up on posting a lot of recently produced papers that are part of the on-going series of student papers supported by the Drug Enforcement and Policy Center. So, the title of this post is the title of this paper authored by Jake Avetisian, a rising 3L at The Ohio State University Moritz College of Law. Here is its abstract:
The relationship between cannabis and federal law has never been an amicable one. However, the recent slew of state legislation legalizing cannabis (whether medical or adult-use) across the country has made things even messier at the federal level. Although the federal government has attempted over the years (somewhat) to take up a policy of non-enforcement relative to states where cannabis is legalized, it is still a Schedule I drug in the United States under the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970 (the “CSA”). This has various implications for legal cannabis businesses nationwide, but they aren’t the only ones effected by this classification – although they may be taking the brunt of those effects. Retaining this classification for a drug that is legal at the state level has caused unintended issues in the context of its intersection with other federal legislation and codes, and the financial services that cannabis businesses need to survive. Many entities who do business with legal cannabis enterprises are putting the well-being of their own business on the line, creating a chilling effect on financial institutions transacting with state legal cannabis businesses. This paper will examine cannabis’s continued classification as a Schedule 1 drug, and how this classification adversely affects financial advisory industries that are essential to any successful business – not just a cannabis business. Specifically, this paper will scrutinize the effects of the liabilities indirectly created by the Schedule 1 classification of cannabis on financial institutions participating in the industry, as well as the secondary consequences of these effects on cannabis businesses themselves and their consumers. Additionally, this paper will look forward to potential solutions, including one that is already in motion, that could rectify some of these major issues for a quickly growing (no pun intended) industry in the United States.