DEA

On May 16, the Drug Enforcement Administration (“DEA“) published its 92-page notice of proposed rulemaking (“NPRM“) to move marijuana from schedule 1 on the Controlled Substances Act (“CSA”) to schedule 3 (ironically, the proposed rule itself only takes up a couple of paragraphs on the last two pages of the NPRM). On the same day, the DEA released an opinion from the Office of Legal Counsel (within the Department of Justice (“DOJ”), which prepares legal opinions of the U.S. Attorney General “and provides its own written opinions and other advice in response to requests from the Counsel to the President, the various agencies of the Executive Branch, and other components of the Department of Justice”) in response to questions from the U.S. Attorney General’s office about schedule 3 marijuana (the “Opinion”). While the NPRM represents the proposed DEA rule that moves marijuana from schedule 1 to schedule 3, the Opinion is essentially the OLC’s roadmap for fending off legal and administrative challenges to this historic move.

The biggest legal shift in the cannabis industry in decades just occurred on the heels of the Drug Enforcement Administration’s (DEA) proposal today for cannabis rescheduling. Specifically, as many anticipated, the DEA will exercise its authority to reschedule cannabis from a schedule I controlled substance to a schedule III controlled substance on the Controlled Substances Act (CSA). This cannabis rescheduling comes in part from the recommendation of the Department of Health and Human Services to reschedule cannabis from a I to a III on the CSA. The DEA’s proposal must now go before the White House Office of Management and Budget (OMB) for review and approval. The OMB’s primary functions relate to budget formulation and execution, legislative coordination and clearance, executive orders and proclamations, information and regulatory affairs, and mission-support areas and management initiatives. OMB will very likely review this DEA proposal for budget impact, regulatory impact, and legislative coordination.

Between LinkedIn, Twitter, the media, and diehard marijuana investors, there is more noise and froth in the industry about a marijuana reschedule than I’ve seen since Washington and Colorado legalized it back in 2012. When speculation about the Feds starts to explode in the industry, I usually ignore most of it as fairly useless hearsay backed by a lot of hope, negativity, and/or hypotheticals.

This time, the tea leaves surround the number one question in the industry, will there be a 2024 marijuana reschedule from the Drug Enforcement Administration (DEA) on the back of the Department of Health and Human Services (HHS) schedule III recommendation? Namely, is a marijuana reschedule imminent that could change the entire course of success for the industry?

In October 2022, President Biden asked the Department of Health and Human Services (HHS) and the Attorney General to review how marijuana is scheduled under federal law. In August 2023, the HHS marijuana recommendation went to the Drug Enforcement Administration (DEA). In October 2023, HHS released a heavily redacted copy of its recommendation to DEA. And until last Friday, no one outside of Bloomberg News and choice government insiders had seen the totality of the HHS marijuana recommendation. However, thanks to a Freedom of Information Act legal battle by lawyer Matt Zorn, the public can now see all 252 pages of (and related to) HHS’s marijuana recommendation to DEA.

The Table is Set on Marijuana Rescheduling

On October 6, 2022, President Biden made a statement in which he asked the Secretary of Health and Human Services (HHS) and the Attorney General to review how marijuana is scheduled under federal law. In his statement, the President appeared to express disappointment that marijuana is listed in the same schedule as “drugs that are driving our overdose epidemic” (Id.). It was highly anticipated that this review would lead to the rescheduling, or even de-scheduling, of marijuana. On August 29, 2023, HHS submitted its recommendation to the Drug Enforcement Administration (DEA) that marijuana be rescheduled from Schedule I to Schedule III.

National law firm Husch Blackwell is pleased to announce that Hilary Bricken has joined the firm as a partner in the Los Angeles office and as a member of its Food Systems industry group.

Bricken is a highly regarded cannabis law attorney who joins Husch Blackwell’s nationally recognized Cannabis practice team. She has more than a decade of experience in guiding clients of all sizes in cannabis licensing; marijuana and industrial hemp regulatory compliance; mergers and acquisitions; corporate and transactional matters, including negotiating management services agreements, fee slotting agreements, cultivation supply agreements, and intellectual property licensing agreements; receiverships; dissolution and wind downs; and financing and debt restructuring.

On January 15, 2021, the United States Department of Agriculture (“USDA”) published its final rule (the “Final Rule”) regulating the production of industrial hemp under the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”). The Final Rule modifies regulations set forth in the interim final rule published on October 31, 2019 (the “Interim Rule”). The modifications are based on approximately 5,900 public comments submitted to the USDA over three public comment periods.

The Final Rule contains the following key provisions:

On August 20, 2020, the Drug Enforcement Administration (“DEA”) published an Interim Final Rule on industrial hemp and hemp derivatives (the “Interim Rule”), which immediately went into effect, to conform DEA regulations with the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”).

As we previously discussed, the 2018 Farm Bill effectively removed industrial hemp from the definition of “marijuana” in the Controlled Substances Act (CSA). Additionally, tetrahydrocannabinols contained in industrial hemp, such as Cannabidiol (commonly known as CBD), were also removed from the purview of the CSA.

Yesterday the DEA published a final rule providing for a new drug code for “Marihuana Extract” .  The DEA states that this will allow them to track quantities of “Marihuana Extract” separately from marijuana to aid in the compliance with relevant drug treaties.  This new rule is set to become effective on January 13, 2017.  The…