June 6, 2023
By Kyle Jaeger
As federal agencies work to complete a marijuana scheduling review at the president’s direction, a new coalition of major cannabis companies and advocacy organizations has launched, aiming to advance the conversation in a way that embraces the potential benefits of an incremental rescheduling move even as they push for broader legalization.
The Coalition for Cannabis Scheduling Reform (CCSR), which detailed its plans exclusively to Marijuana Moment ahead of an official launch on Tuesday, will be working with advocates, stakeholders, lawmakers and administration officials to promote education about the need to remove marijuana from Schedule I of the Controlled Substances Act (CSA). Unlike other leading advocacy groups focused on full descheduling and legalization, however, its members are also united around the idea that moving cannabis to Schedules III, IV or V of the CSA would represent “historic progress” that shouldn’t be discounted. But while there’s general agreement that such a move would resolve key federal tax issues for the industry and ease research restrictions, some advocates have cautioned against anything short of complete removal of marijuana from the CSA, insisting that a mere rescheduling would effectively capsize existing state markets and give way to further big business control of the industry. It’s unclear when the administrative review that President Joe Biden ordered late last year will be completed. First, the U.S. Department of Health and Human Services (HHS) must complete a scientific review into the risks and benefits of marijuana, then its recommendations will be sent to the Drug Enforcement Administration (DEA) for a final scheduling decision. Agency heads have emphasized that they are working “expeditiously” to that end.
In the meantime, the newly formed CCSR says it will be engaging federal officials in various departments to make the case for rescheduling or descheduling, and that will involve collaborations with lawmakers, experts and officials at the state and federal level. Some of the largest names in cannabis have joined the effort for the launch. That includes Acreage Holdings, American Trade Association for Cannabis & Hemp (ATACH), Columbia Care, Cresco Labs, Curaleaf, Dutchie, Green Thumb Industries, Marijuana Policy Project, National Cannabis Roundtable, Scotts Miracle-Gro, US Cannabis Council, Weldon Project, Vicente LLP.
Bryan Barash, co-chair of CCSR and the vice president, deputy general counsel and external affairs at the cannabis industry technology company Dutchie, told Marijuana Moment in a phone interview on Monday that members have “all unified around the idea that we support scheduling reform.”
“Our goal—I think everyone in this coalition’s goal—is federal legalization of cannabis. We strongly support descheduling,” he said. “And we also believe rescheduling to Schedule III, IV or V would be historic progress towards ending federal prohibition.” “There’ll be a wide range of advantages over what is currently an unacceptable status quo, morally, medically, legally, ethically,” Barash added. “Let’s be real here. This would be—regardless of whether it was descheduled or rescheduled to III, IV or V—the first major shift in federal cannabis policy in 100 years. We would certainly welcome any of those outcomes.” Of course, rescheduling and descheduling would have different impacts, with advocates widely preferring the full removal of marijuana from the CSA because it would mean the general elimination of federal criminal penalties over the plant.
But transferring marijuana to Schedules III, IV or V would be symbolically and practically meaningful in other ways. It would mean, for example, that the federal government is abandoning its long-held position that cannabis must stay in Schedule I because it is a seriously dangerous drug with no medical value. The move could help promote research by removing onerous federal rules that scientists must currently follow in order to conduct studies involving Schedule I controlled substances. And for the industry, it would mean finally being able to take certain federal tax deductions like any other traditional businesses because they’d be free from the controversial Internal Revenue Services (IRS) code known as 280E, which bars such deductions for entities that sell Schedule I and II drugs. A congressional bill filed by Rep. Earl Blumenauer (D-OR) in April also seeks to address that specific issue.
“At the end of the day, it doesn’t pass muster, the idea that cannabis belongs in Schedule I or Schedule II alongside drugs like heroin, cocaine, fentanyl, opium,” Barash said. “We’re asking for a sensible scientific and medical and legal redefinition here that aligns with, honestly, basic commonsense.”
It is a timely undertaking, as congressional lawmakers again take up a number of modest marijuana reform bills and the administration considers a federal scheduling change. While advocates would like to see that review to ultimately produce a descheduling decision, there’s sizable skepticism about that possibility, even if polling shows that actual legalization is what a majority of Americans want.
Still, despite the potential benefits of rescheduling cannabis, there are some who feel that such a reform could inadvertently cause unintended harm for the legal markets that states have established across the country under federal prohibition. In a recently published memo, for example, National Cannabis Industry Association (NCIA) Board Chair Emeritus Khurshid Khoja argued that placing marijuana and THC in a lower schedule could inadvertently upend the industry by shifting regulatory and enforcement responsibility from DEA to FDA, which he said could subject cannabis products to rigorous and expensive approval processes that are in place for conventional drugs under the Food, Drug & Cosmetic Act (FDCA).
While DEA has rarely prosecuted people over low-level cannabis offenses under recent administrations—and the agency is barred under a congressional appropriations rider from using its funds to interfere in the implementation of state medical cannabis programs—Khoja suggests that rescheduling could embolden FDA to exercise its own regulatory and enforcement authorities under FDCA, which he says would be “hardly an improvement on the status quo.”
A shift to Schedule III “could permanently freeze access to interstate and international markets for current state-licensed cannabis businesses, reserving those markets for well-capitalized pharmaceutical companies capable of navigating the [New Drug Approval] process,” Khoja, who is also the founder of Greenbridge Corporate Counsel, wrote.
Without additional statutory protections, such as a whole flower cannabis “carve-out” under FDCA, he said that the “sad irony of opening up the regulated interstate market to medical cannabis through rescheduling is that the resulting application of the FDCA could lead to foreclosing access to the interstate market for the vast majority of state-licensed cannabis industry operators.” But that argument has faced pushback from other legal experts in the space, including attorney Shane Pennington, who published a detailed analysis on the issue late last year. Pennington said he wanted to “refute the widespread myth that rescheduling to schedules II-V would do more harm than good.”
“While rescheduling is not the best result we can hope for, it certainly wouldn’t be a bad thing,” he argued, adding that the modest reform “would be a historic event with concrete benefits for cannabis stakeholders, regulators, and the public at large. Arguments to the contrary rest on fallacious reasoning and assumptions that can’t withstand the slightest scrutiny.”
CCSR’s Barash, for his part, told Marijuana Moment that rescheduling cannabis “would have no impact on FDA’s existing authority to regulate cannabis and state-legal cannabis businesses.”
“It would also not change FDA’s resources or authority to take compliance action, nor would it change the legal status of cannabis under the FDCA,” he said. “Rescheduling to Schedule III, IV or V can provide tremendous benefits without disrupting existing state markets. FDA can provide further clarity by issuing enforcement guidance that it will continue to not take enforcement action against state-legal products and activities.”
In the next few weeks, CCSR will be releasing a report that will provide a comprehensive overview of the coalition’s mission and perspective on the rescheduling debate, seeking to lay out the practical benefits of scheduling reform, even if that doesn’t immediately involve doing away with prohibition altogether.
That said, the coalition recognizes that rescheduling may need to be accompanied with additional action to ensure that the policy change achieves the desired outcomes without unintended consequences.
CCSR said that it will be working with lawmakers and officials—including governors, attorneys general and mayors—as they work to advance scheduling reform, but representatives declined to disclose the names of those politicians who are endorsing the effort at this stage. In terms of direct engagement with officials at federal agencies like DEA, Barash said that he couldn’t “get into the specifics of how we’re going to be working with specific stakeholders.” However, he said that “we will be actively partnering with folks across the spectrum—administration officials, elected officials, scientific medical and legal experts,” and CCSR is “certainly going to be putting things out for public consumption, both through the press and through our website, in our white paper, to make the case clear. And we believe that administration officials will certainly be receptive to hearing those points of view.”
“Everybody wants full legalization. It all depends on what the administrative opportunity is,” Barash emphasized. “If there’s still opportunity through this administrative process to keep doing things, then the coalition could continue to do that. But with or without the coalition, everybody will continue to push for full legalization.”
Toi Hutchinson, president and CEO of MPP, said in a press release that “every day, we see the crushing burden that cannabis’s Schedule I status places on regulated cannabis businesses—particularly small and social equity operators—and communities impacted by the war on drugs.”
“The Coalition for Cannabis Scheduling Reform strongly agrees with President Biden that it’s time for the US to adopt a modern, evidence-based and equitable approach to cannabis,” she said.
The other initial members of CCSR are: Arnold & Porter Kaye Scholer LLP, Bada Bloom, The Bronx Community Foundation, ConBud, Hemp for Victory, Hero Grown, Holistic Solutions, Housing Works, Justus Foundation, Kush Culture Industries, Major Bloom, Majority Minority Group, Marcu Enterprises, New York CAURD Coalition, Perkins Coie LLP, PharmaCann, Physicians Research Center, LLC, Queen City Remedies, Simply Pure Trenton, Smacked, Union Square Travel Agency, Valley Wellness, Verano Holdings and Wyld.