Marijuana Law, Policy & Reform

Press reporting key US Agency (HHS) is recommending moving marijuana from Schedule I to III

This new Marijuana Moment piece report that "the U.S. Department of Health and Human Services (HHS) is officially recommending that marijuana be moved from Schedule I to Schedule III under federal law — a historic development that means the top health agency no longer considers cannabis to be a drug with high abuse potential and no medical value."  Here is more on this significant federal marijuana reform news:

After completing a scientific review into cannabis under a directive from President Joe Biden last year, HHS is now telling the Drug Enforcement Administration (DEA) that it believes marijuana should be placed in Schedule III of the Controlled Substances Act (CSA). The recommendation is not binding, and DEA has the final say, but the scientific analysis combined with growing political support for cannabis reform may well influence DEA to make the change.

As a Schedule III drug, cannabis would still remain federally prohibited. However, the rescheduling would have major implications for researchers who’ve long criticized the Schedule I classification that creates significant barriers to access for studies. Moving cannabis to Schedule III would also unlock marijuana industry tax opportunities that are currently unavailable.

“We can confirm DEA received a letter from the Department of Health and Human Services providing its findings and recommendation on marijuana scheduling, pursuant to President Biden’s request for a review,” a DEA spokesperson told Marijuana Moment on Wednesday. “As part of this process, HHS conducted a scientific and medical evaluation for consideration by DEA. DEA has the final authority to schedule or reschedule a drug under the Controlled Substances Act. DEA will now initiate its review.”

The Food and Drug Administration (FDA) under HHS led the scientific review that led to the Schedule III recommendation. According to Bloomberg, which first reported the development, HHS Assistant Secretary for Health Rachel Levine, who advocated for medical cannabis as Pennsylvania’s health secretary before joining the Biden administration, sent a letter to DEA on Tuesday about the Schedule III recommendation that referenced FDA’s review. The development comes two months after HHS Secretary Xavier Becerra told Marijuana Moment that his agency was aiming to wrap up the review by the end of the year.

A White House spokesperson told Marijuana Moment on Wednesday that the “administrative process is an independent process led by HHS and DOJ and guided by the evidence,” so president’s team will not be commenting on the agency’s recommendation at this time....

There would be both practical and political implications of a Schedule III reclassification if DEA goes along with HHS’s recommendation. For researchers, this would mean that they would no longer need to go through the onerous registration process with DEA in order to access cannabis for studies as a Schedule I drug.... For the industry, the reclassification would allow them to make federal tax deductions that are currently prohibited for businesses involved in the sale of Schedule I or II drugs. Because of this prohibition, the cannabis industry has faced a significantly higher effective tax rate, and state governments have taken it upon themselves to provide state-level tax relief for their regulated markets.

Politically, moving marijuana from Schedule I to Schedule III would allow the president to say that he’s helped accomplish a major reform, facilitating an administrative review that may result in rescheduling more than 50 years after cannabis was placed in the most restrictive category as the federal government launched a war on drugs. This could also bolster momentum for congressional efforts to further reform federal cannabis laws. As lawmakers come back from the August recess and continue to try to pass cannabis banking legislation, they will be able to point to the HHS recommendation as evidence of the urgency to normalize the industry....

Of course, advocates’ highest hopes for the HHS review was that it would lead to a descheduling recommendation, where marijuana would be completely removed from the CSA and treated the same as alcohol in the eyes of the government. Some have also voiced concerns that a Schedule III reclassification could negatively impact state markets, with FDA potentially assuming a more hands-on role with respect to cannabis.

"A Second Amendment Angle of Cannabis Prohibition: Are State-Compliant Marijuana Users Being Denied the Right to Keep and Bear Arms?"

I continue to be excited to post some the latest papers from the on-going series of student papers supported by the Drug Enforcement and Policy Center in order to highlight great work by OSU law students and recent graduates on many important and cutting-edge topics.   The title of this post is the title of this paper authored by Katie Schaefer, who is in her final year as a student at The Ohio State University Moritz College of Law.  Here is its abstract:

Although individual states have not necessarily legislated that possessing a gun is unlawful for state compliant marijuana users, cannabis’s federal illegality produces this result.  The process for obtaining a gun – regardless of what state the individual resides in – requires the individual to fill out the Federal Bureau of Alcohol, Tobacco, and Firearms’ Form 4473.  Form 4473 question 21g, as mandated by 18 U.S.C. § 922(g)(3), disqualifies cannabis users from purchasing a firearm.

Consequently, individuals who are fully in compliance with the marijuana laws in their home state are being stripped of their Second Amendment right, regardless of if the plant is being used for medicinal or adult use purposes.  Therefore, marijuana users who wish to possess a gun have three options: stop using marijuana entirely, stop using state compliant marijuana and instead obtain it from an illicit source, or lie.  Although ATF agents and prosecutors report that due to limited resources, they are not inclined to prioritize the nonviolent crime of lying on a form over more serious charges, lying on the form and obtaining a gun while being a cannabis user remains a federal felony offense.

In the wake of Bruen, litigation on this matter has so far been leaning in favor of gun rights activists.  But there remain many unanswered questions in this area.  The implications of either a legitimization of state-legal marijuana use on the federal level (while the plant remains on schedule I), or of an acknowledgement that the gun control/background check process can be changed, could be massive.

"Ending Federal Marijuana Prohibition Through Administrative Action"

The title of this post is the title of this notable new paper authored by Scott Bloomberg, Alexandra Harriman and Shane Pennington.  Here is its abstract:

In October 2022, President Biden requested that the Secretary of Health and Human Services and the Attorney General initiate a procedure to review how marijuana is scheduled under the federal Controlled Substances Act (“CSA”).  The announcement was historic.  After more than fifty years of federal prohibition, decades of advocacy and litigation from reform groups, and dozens of stalled efforts in Congress, a President finally decided to wield the Executive Power with an eye towards rescheduling or descheduling marijuana.  But just how far does that power go?

That question has been severely underexplored in legal scholarship.  Indeed, our Article is the first to fully navigate the thicket of statutory and administrative law that dictates the scope of the President’s power to unilaterally reschedule or deschedule marijuana.  In doing so, we conclude that the CSA’s administrative drug-scheduling procedure is much broader than prior scholarship has led on.  We identify several avenues for the President to move marijuana to a less restrictive schedule and highlight a narrower pathway to deschedule marijuana entirely.

These findings are of immediate relevance.   They can help guide the Executive Branch as it reconsiders how marijuana is scheduled and will prove useful to courts when the Biden Administration’s eventual decision is, inevitably, subjected to judicial review.

Officially, Ohio voters will get to consider legislative ballot initiative to fully legal marijuana in November 2023

As reported in this local news piece, "It's official: Ohioans will decide this fall whether the state should legalize recreational marijuana." Here is more:

The Coalition to Regulate Marijuana Like Alcohol secured enough signatures to put its proposal before voters on the Nov. 7 ballot, Secretary of State Frank LaRose's office announced Wednesday. Advocates worked for over a year to hit this milestone as the GOP-controlled Legislature refused to go further than the current medical marijuana program.

Now, the coalition faces a new challenge: Getting Ohio voters on board and staving off opposition from the state's top leaders....

“We are grateful to the thousands of Ohioans who helped us get to this point and are excited to bring our proposal to regulate marijuana like alcohol before Ohio voters this coming election day,” Coalition to Regulate Marijuana Like Alcohol Tom Haren said in a statement Wednesday.

The proposed statute would allow Ohioans age 21 and older to buy and possess 2.5 ounces of cannabis and 15 grams of concentrates. They could also grow up to six plants individually and no more than 12 in a household with multiple adults.

Products would be taxed 10%, with revenue going toward administrative costs, addiction treatment programs, municipalities with dispensaries and a social equity and jobs program. A certain number of cultivator and dispensary licenses would be reserved for participants in that program, which aims to help those who are disproportionately affected by the enforcement of current marijuana laws.

The measure is an initiated statute, which means the Legislature could modify or repeal the law if it passes in November. Gov. Mike DeWine and Senate President Matt Huffman, R-Lima, are staunchly opposed to adult-use marijuana, but Haren said previously that he expects lawmakers to respect the will of the voters.

It remains to be seen how much time and energy opponents will invest to defeat the proposal. Some critics of recreational marijuana, such as the Center for Christian Virtue, will be focused on keeping an abortion-rights amendment out of the state constitution.

Having both issues on the ballot in November could also generate significant turnout among progressive Ohioans in an odd-year election. A recent USA TODAY Network/Suffolk University poll found 58% of likely voters support legalizing marijuana for adults 21 and older, and the number was even higher among young voters and Democrats.

"What Tax Revenues Should Ohioans Expect If Ohio Legalizes Adult-Use Cannabis? (2023 Report)"

The title of this post is the title of this updated data analysis now available via SSRN and authored by Jana Hrdinova and Dexter Ridgway with the Drug Enforcement and Policy Center.  This report builds off a prior effective effort to estimate likely state revenues if Ohio legalizes marijuana,  Here is this latest report's abstract:

Advocates for cannabis reform in Ohio and in other states often stress the tax revenue that can be raised through legalization.  If a citizen-initiated statute were to reach the November 2023 ballot, Ohio voters are likely to hear from reform advocates about the potential tax revenue a new cannabis industry could bring to the Buckeye State.  The purpose of this policy paper is to provide an updated estimate of potential cannabis tax revenue in Ohio that is informed by tax revenue data and trends from a select group of other adult-use states.

Based on our analysis, we are using Michigan FY 2021 data on cannabis tax revenue as our focal point for Ohio cannabis tax revenue estimates given the demographic and tax structure similarities; we are using three different scenarios for rate of diminishing retail sales growth through year five of an operational legal adult-use program; we are using state population figures as our basis for calculating per capita cannabis tax revenue rates; and we are modeling for three different Ohio pricing scenarios.  Given these assumptions, the updated potential annual tax revenue from adult-use cannabis in the state of Ohio ranges from $276 million in year five of an operational cannabis market to $403 million in year five of operations.

"Marijuana Tax Revenues and Distributions in Recreationally Legal States"

I continue to enjoy the timely and informative work being published in the on-going series of student papers supported by the Drug Enforcement and Policy Center.  The latest paper in this series, by OSU law students and recent graduates on many important and cutting-edge topics, share the title of this post.  Specifically, this new paper is authored by Aaron Larson, who is about to start his final year as a student at The Ohio State University Moritz College of Law.  Here is its abstract:

An area of the law often forgotten regarding marijuana legalization is the tax and revenue portion of the statutory or constitutional legalization.  Each state that has legalized recreational use marijuana generates profit for their state. How much profit are these states making?  More importantly, how are the tax revenues being distributed?  Many Americans' wonder where their tax money goes.  For marijuana revenues, the majority of states divide their tax revenues through a required statutory scheme.  While if may be tough to find out where your income tax is divided, marijuana tax revenues are much easier to see, legally.