Acting Attorney General Todd Blanche has signed an order immediately placing both “FDA-approved drug products containing marijuana, and medicinal marijuana products subject to a qualifying state-issued license” in Schedule III. The action is taken “under his authority to reschedule drugs to carry out the United States’ obligations under the Single Convention on Narcotic Drugs,” according to a press release from DOJ. “This action recognizes the longstanding regulation of medical marijuana by state governments and the need for a common-sense approach to this reality,” the release states.
The order states:
“State medical marijuana regulatory systems have matured significantly since California first authorized medical use in 1996, and today the vast majority of States maintain comprehensive licensing frameworks governing cultivation, processing, distribution, and dispensing of marijuana for medical purposes. These state regimes have developed robust infrastructure for preventing diversion, ensuring product safety, maintaining records, and conducting facility inspections—functions that fulfill the objectives of federal registration and recordkeeping requirements. The Attorney General has reviewed the operation of these state systems and finds that, taken as a whole, they demonstrate a sustained capacity to achieve the public-interest objectives that underlie the CSA’s registration framework, including protecting public health and safety and preventing the diversion of controlled substances into illicit channels.”
According to Marijuana Moment, DOJ is moving to end a prior administrative hearing process on the rescheduling proposal that stalled near the end of the Biden administration amid litigation from pro-reform parties that alleged improper agency communications and witness selection decisions.
Beginning on June 29, there will be a new expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III. Terry Cole, administrator of the Drug Enforcement Administration (DEA), said that the agency is “expeditiously moving forward with the administrative hearing process—bringing consistency and oversight to an area that has lacked both.”
The proposed amendments establish “a new registration pathway for state-licensed medical marijuana entities seeking federal DEA registration as manufacturers, distributors, and/or dispensers.” The regulation creates an expedited review process under which the Administrator must take action in 60 days.
“The Acting Attorney General further notes that, as a consequence of this rule, state licensees will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code, which applies only to businesses engaged in trafficking in controlled substances… in a schedule I or II…qualifying state licensees should consult with tax counsel regarding the applicability of Section 280E to their specific circumstances.”
But there are limitations. The order states, “Pursuant to a 2018 OLC opinion, DEA must buy marijuana crops from registered manufacturers, be the seller of that marijuana to any eligible registered purchaser, and establish prices for such purchase and sale. Marijuana growers must pay DEA an administrative fee for such transactions. These actions are necessary for the United States to meet its obligations under articles 23 and 28 of the Single Convention.”
Rescheduling from Schedule I (“no accepted medical use”) to Schedule III won’t federally legalize cannabis, but it could remove barriers to research and allow cannabis businesses, as well as federal tax deductions currently barred under IRS code 280E. It could have other benefits for patients in the areas housing, employment, and medical care, where discrimination against medical cannabis users continues.
Cal NORML will be closely monitoring the effect of this announcement and subsequent actions on state laws and regulations, and exploring possible future legislation to advance patients’ rights. Join us at the Cannabis Unity Coalition Lobby Week May 12 – 14 in DC to meet with Congressmembers and their staffs on reforms at the national level, including pending bills to allow VA doctors to recommend cannabis, and more.
NORML first sued the DEA to reschedule marijuana in 1972.
This is a developing story. Check back for updates.
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