Federal Government about to make a big change to Marijuana rules

Federal Government about to make a big change to Marijuana rules

It could come today, or in a few weeks, maybe within the next month.

Whenever it happens, rescheduling marijuana under the Controlled Substances Act – which regulates what drugs are considered illegal and just how illegal they are – would be the biggest step the federal government has taken toward marijuana legalization since it was first outlawed nearly 100 years ago.

It's the cap of a nearly 15-month process that began in October 2022, when President Joe Bidden tasked the Department of Health and Human Services with reviewing how marijuana is scheduled. In August, the department formally recommended rescheduling the drug, formally filing its recommendations with the Drug Enforcement Administration, which has the final say.

But when the HHS released documentation concerning its rationale for rescheduling, it sparked a renewed debate: Does rescheduling marijuana go far enough?

Here's a breakdown of the issues ahead of the DEA's anticipated decision.

What does rescheduling marijuana actually mean?

Currently, cannabis is a Schedule I drug which means the federal government determines there's no medicinal value. Other Schedule I substances include heroin, LSD and ecstasy.

In 2022, Biden recommended that cannabis be rescheduled as a Schedule III substance, like ketamine, testosterone, anabolic steroids or Tylenol with codeine. Schedule III substances are determined to have a low to moderate potential for addiction, according to the DEA.

What does that mean for me?

Cannabis businesses currently fall under Section 280E of IRS tax code, which forbids businesses involved in the "trafficking" of Schedule I and Schedule II substances from deducting "ordinary and necessary" business expenses from their taxes.

It's a huge burden. In 2022, cannabis businesses paid $1.8 billion in additional federal taxes than "ordinary businesses," with payments expected to balloon to $2.1 billion this year, according to a report from cannabis market research firm Whitney Economics. For retailers, effective tax rates often exceed 70%, the report stated.

By rescheduling cannabis, Section 280E would no longer apply to cannabis businesses. That huge tax relief could mean a more competitive price point, said Adam Goers, senior vice president of the Cannabist Company, which operates two dispensaries in South Jersey.

"It's really hard for these cannabis businesses to keep their heads above water," said Goers, who also co-chairs the Coalition for Cannabis Scheduling Reform. "They're at a huge competitive disadvantage against the thing they were set up to stop – the traditional, illicit market.''

So why are cannabis advocates so critical of rescheduling?

Rescheduling is a smaller, incremental move that leaves many of the biggest issues unaddressed.

Most importantly: Weed will remain illegal on the federal level. There are comparatively few federal marijuana arrests every year, but those would continue – as would arrests in states that haven't legalized weed.

"It's a step in the right direction but, in terms of its practical direction, it's really more symbolic," said Morgan Fox, political director for the National Organization for the Reform of Marijuana Laws, the country's oldest cannabis legalization advocacy group. "Rescheduling isn't going to resolve the conflict between state and federal law when it comes to cannabis."

Resolving those conflicts have been seen as key stepping stones toward full-scale legalization. In recent years, Congress has come close to passing bills that would protect federally insured banks that take on cannabis clients and protect consumers and businesses in legal weed states from enforcement of federal law.

Those conflicts can only be addressed by descheduling marijuana – completely removing it from the Controlled Substances Act, Fox said. Descheduling advocates have said cannabis is more akin to alcohol and tobacco products – which are subject to federal and state regulation, but not included in the Controlled Substances Act – than heroin, ecstasy and even drugs listed as low as Schedule V.

"The Biden Administration has a window of opportunity to deschedule marijuana that has not existed in decades and should reach the right conclusion – consistent with the clear scientific and public health rationale for removing marijuana from Schedule I, and with the imperative to relieve the burden of current federal marijuana policy on ordinary people and small businesses," a group of 10 senators, including Sen. Cory Booker, D-N.J., wrote in a letter to Attorney General Merrick Garland and DEA Administrator Anne Milgram.

Isn't Biden pardoning people for marijuana crimes?

When Biden formally recommended cannabis to be rescheduled, he also issued a presidential pardon to anyone convicted of simple marijuana possession under federal law, including those arrested on federal lands and in Washington, D.C.

In December, he expanded those pardons to include attempted possession.

Those certificates started arriving late last year.

"It feels good to have something other than a case that says 'United States v. Chris Goldstein,'" said Chris Goldstein, a regional NORML organizer who was arrested during a legalization protest in Philadelphia in 2014. "It's the first time a president has done something tangible in declaring peace on cannabis consumers, at least a little bit."

That's a big deal, right?

For someone who has this kind of marijuana arrest on their criminal record, a presidential pardon is a huge deal. It's not an expungement, in which the charge is completely erased from the record (as is the case in New Jersey and numerous other legal weed states). But it does clear an important hurdle for those applying for a job, housing, college admission or federal benefits.

Viewed in context, though, those pardons constitute little more than a drop in the bucket.

According to the U.S. Sentencing Commission, only 145 offenders were sentenced federally for simple possession of marijuana in 2021, down from 2,172 in 2014.

The vast majority of marijuana arrests – from simple possession to distribution – occur on the state level.

In the year before weed became legal, New Jersey police officers made nearly 20,000 marijuana possession arrests – more than 54 per day. In 2017, there were nearly 38,000 arrests, according to the American Civil Liberties Union of New Jersey – more than one marijuana bust every 15 minutes.

Those trends continue in other states. In neighboring Pennsylvania, where only those with medical cards can legally purchase weed, there were more than 12,000 marijuana possession arrests in 2022, according to a NORML analysis of FBI crime data.

"Although the pardons are a real, tangible first step, they're also the smallest step," Goldstein said.

Will the U.S. ever legalize weed?

Advocates are hopeful, but it doesn't look like marijuana will be legalized on the federal level anytime soon.

The issue isn't necessarily a lack of support in Congress. The problem is that legal weed is up against more top-line priorities.

While cannabis legalization has become more of a bipartisan issue, it's still largely drawn along political lines. Democrats are more concerned with top-line issues, such as reproductive rights. And a senator or representative spending time on incremental cannabis moves could be shaped as an elected official taking time away from such priorities.

"The American people need to see Congress is capable of legislating, instead of just fighting for power or trying to get good talking points on social media," Fox said. "This is something that can be pointed to as a sign that Congress is actually still capable of making laws that directly affects the American people."

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