Friends – well, I was going to write today about MedMen’s recent argument that some of its leases are unenforceable because they violate Federal law (stay tuned for that future Cannabis Musings), but something much more interesting happened today in the world of cannabis. In case you didn’t hear the collective squeal of glee coming from the Sonoma County Fairgrounds where industry insiders are gathered today for Hall of Flowers, President Biden announced today that he will be issuing pardons for Federal convictions for simple cannabis possession, urging state Governors to do the same.
All of this right after Yom Kippur, the Jewish day of atonement. Such a blessing!
This news is a long time coming, as the industry has been patiently awaiting some sort of action from the Federal government on convictions. Kudos to those who have lobbied tirelessly to change hearts and minds in order to get this done. It’s a big step towards changing the narrative when you’ve got the President acknowledging the reality of Federal cannabis possession laws.
The more curious part of Biden’s statement has to do with Federal regulation. He’s ordering Federal agencies “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” (The Congressional Research Service issued a report a while back explaining that the President doesn’t have the authority to unilaterally change the scheduling) The great news is that this is the first time we’ve ever heard a President talk about cannabis scheduling. Already that’s a huge step forward.
The not-so-great news is that no one really has any idea what it means. What I do know is that, if cannabis were rescheduled into a lower Schedule controlled substance, it would still be a controlled substance, meaning that cannabis would effectively still only be Federally legal for pharmaceutical and research purposes, and definitely not for adult use. So, let’s say that happens. We’d then presumably have four separate markets competing for cannabis customers:
Federally-licensed cannabis companies, not subject to 280E, dispensing pharmaceutical cannabis pursuant to prescriptions from doctors who are licensed to dispense controlled substances. Oh, and that cannabis would presumably be covered by medical insurance.
Legacy state-licensed medical companies that probably won’t be allowed to also hold Federal licenses because they’re also still operating illegally under federal law (this is a guess, but it seems weird to me that the Federal government would issue a controlled substances license to a business that’s openly breaking Federal law (that’s not legal or investment advice)).
Legacy state-licensed adult-use companies that also continue to operate illegally under Federal law.
The illegal market.
Oy vey. Let’s hope for descheduling instead; however, I don’t see any practical possibility of the Department of Justice descheduling cannabis without a full Federal regulatory framework in place. The Federal government almost certainly is not going do this without having a way to collect taxes, and a proper mechanism for oversight by the FDA and the ATF (similar to alcohol). So, don’t get your hopes up for quick action or a light touch.
Finally, a political note. All this while, I wondered if President Biden was holding off publicly stating a cannabis policy in order to avoid creating even more of a wedge issue for the opposition, and to possibly give more of a chance of passage of some sort of reform in the Senate. It’ll be interesting to see how that plays out.
Be seeing you.
© 2022 Marc Hauser and Hauser Advisory. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. Subscribe to Cannabis Musings at hauseradvisory.com.