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Hope for regulatory change on the federal level for cannabis prohibition now hinges on a review underway of the scheduling of cannabis under the U.S. Controlled Substance Act.
With the SAFE Banking measure now dead in the $1.7 trillion omnibus spending bill in Congress, attention is now shifting to President Joe Biden’s review of cannabis as a Schedule I drug.
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With Republicans taking control of the U.S. House and the Democrats holding on to a slim majority in the Senate after the midterm elections in November, expectations for fresh cannabis legislation on Capitol Hill remain muted.
Under federal law, cannabis is classified in the same bucket as heroin and worse than other drugs such as fentanyl.
If the review places it in another classification, or potentially results in removal from the U.S. Controlled Substance Act under the Drug Enforcement Administration, industry advocates say it could reduce or eliminate many of the regulatory burdens on legal cannabis companies operating on a statewide level.
Matt Karnes, founder of cannabis consulting and research firm GreenWave Advisors, said the data that will result from the recently-enacted Medical Marijuana and Cannabidiol Research Expansion Act will shape the debate around the de-scheduling effort.
“This act facilitates the scientific study of cannabidiol and cannabis for medical purposes and establishes a path for the Food and Drug Administration to approve the commercial availability of cannabis,” Karnes said in an email to MarketWatch.
“Short of an act by Congress to end federal prohibition (two bills currently on the table), more robust research is a necessary step for re-scheduling which we think is a more viable path for reform (than relying on Congress ) because it is less dependent on bipartisan support,” Karnes said.
Anthony Coniglio, CEO of NewLake Capital Partners, a specialist in sale-leaseback transactions with state-licensed cannabis operators, said a re-scheduling of cannabis should include some form of assurances to the banking community that their ability to service the industry is not in violation of any law.
Such assurance could come from the U.S. Treasury Department or another federal regulatory body, or potentially an act of Congress such as the Safe Banking bill, he said.
“Clarity for banks is important,” Coniglio said. “If you look at the hemp industry, it shows that legalization alone may not generate the certainty banks need to jump in. We saw many hemp companies continue to have issues with access to banking for two-to-three years after hemp was legalized in 2018. The more clarity from regulators, the better.”
On Oct. 6, Biden asked Attorney General Eric Garland and Health and Human Services Secretary Xavier Becerra to start the process of reviewing how marijuana is scheduled under federal law.
” We classify marijuana at the same level as heroin – and more serious than fentanyl. It makes no sense,” Biden said in a Tweet.
Currently, cannabis is regulated as a dangerous illegal drug, and is ranked worse than cocaine and opioid medicines.
At last check, the Drug Enforcement Administration has cleared seven applicants to conduct research on cannabis:
- Biopharmaceutical Research Company LLC
- Groff NA Hemplex LLC
- Irvine Labs, Inc.
- Maridose, LLC
- National Center for Development of Natural Products
- Royal Emerald Pharmaceuticals Research and Develop
- Scottsdale Research Institute
The Controlled Substances Act (CSA) places all substances into one of five schedules, based on the substance’s medical use, potential for abuse, and safety or dependence liability.
