DEA not rescheduling cannabis—Anyone surprised?

While still a Schedule I controlled substance, cannabis will see increased scientific research

A week ago today, the Drug Enforcement Administration (the “DEA”) announced its decision to deny two petitions to reschedule cannabis under the Controlled Substances Act (the “CSA”). It had been widely speculated (and hoped for) across the industry that the DEA would reschedule cannabis from Schedule I to Schedule II under the CSA.

Both Schedule I and II drugs are deemed to have a "high potential for abuse," but the latter category (which includes opiates like codeine and stimulants like cocaine) are deemed to at least have some medical use. The decision leaves cannabis lumped in a category that includes heroin and hallucinogenic substances like LSD.

Though the DEA refused to reschedule cannabis, federal authorities have said they are increasing the amount of marijuana available for legitimate research. For cannabis entrepreneurs and other industry advocates, this offers some slim silver lining to the overall announcement.

In spite of the DEA ruling, state legalization momentum continues across the nation. Currently 40 states have approved cannabis in some form for medicinal use, while four states have approved legislation allowing for the recreational use of cannabis. This November, there are 16 voter initiatives to further legalize cannabis, including California with its initiative for the legalization of recreational use.

"We expect state legalization momentum to continue," said Shannon Soqui, Head of Cannabis Investment Banking at Ackrell Capital. “With Gallup polls favoring cannabis legalization near 60%, we believe that the November voting cycle will add more states to the legalization movement – which in turn will continue to increase pressure to legalize cannabis at the federal level.”

What do companies in the industry feel about the ruling? We asked executives to comment:

Joe Hodas, CMO at Dixie Elixirs, said, "Should we be surprised? Absolutely not. History has proven that quite often our government and its various departments are well out of lockstep with public opinion. But, I also believe that the implications of making the change were too vast and thus the easier answer was to kick the can down the road a little longer. Its unfortunate, however, that such a shortsighted approach has to be taken, despite public sentiment and all of the information that contradicts the Schedule I status. It’s a decision that directly impacts thousands who could benefit from access to cannabis."

"In terms of our business, it just means status quo. And as more and more states choose to take common sense, and the health/well being of their citizens into their own hands through state level legislation and ballot initiatives, our federal government and the DEA will have to begin tugging at the thread that will unravel what seems to be a conundrum of tax, banking and regulatory challenges for them. The good news is that it gives companies like Dixie more time to really prove to the DEA, our government and those still on the fence about legalization that it can work and it can be done responsibly and for the improvement, not detriment, of our communities."

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Larry Lisser, SVP of Business Development at HelloMD, wrote, "Even as an entrepreneur in the medical cannabis industry, the truth is I paid little attention to the [DEA's] cannabis classification discussion of the last few months. For one, whatever was written was purely rumor-based. And secondly, I get up every morning to build a business that will educate millions on the wellness benefits of medical marijuana -- and I will continue to do so regardless of what the DEA says."

"Yet when the news of the DEA decision recently broke, I found myself bitterly disappointed to again see numerous headlines that compared, or in some ways even equated, medical cannabis to heroin or LSD. Despite years of anecdotal evidence to the contrary, years of death-less cannabis consumption, and now 25 states offering legal access to medicinal marijuana - somehow the federal government chose to reaffirm their position that cannabis compares to heroin and LSD in medicinal value and in its ability to do harm. What?"

Continue reading Lisser's statement here.

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Sara Batterby, CEO at HiFi Farms, said, "In light of the progress made by now 24 states on the establishment of legal medical cannabis, and by a few states on the establishment of recreational cannabis, the DEA's decision seems out of step with both public opinion in the US, and the reality of cannabis as a healthcare option and a viable industry in many states."

"The concern is always that federal policy is being influenced by special interests, notably a privatized prison system which benefits from ongoing criminalization, and big pharma which, data demonstrates, stands to loose from the ability of people to access cannabis, outside of their purview, as an alternative to pharmaceuticals. It's hard to view the DEA decision as an objective appraisal of the medical and economic benefits of cannabis, so we find ourselves wondering what is really going on. It just doesn't seem like the best options and outcomes for the American public are driving DEA decision making around cannabis."

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Adam Greenberg, CEO at iUNU, said, "It wasn’t really news as the majority expected it. The DEA, as a federal agency, doesn’t want to get ahead of the 50 states if most of them haven’t legalized it. Once the majority of states are on board, the federal agencies will have an easier time getting comfortable with making changes. The order of operations for any dominos to fall is key and no one wants to be the one to step out of line."

"It gets more interesting as you go deeper. CNN chief medical correspondent Sanjay Gupta says the issue bothers him, too: 'How can the government deny the benefits of medical marijuana even as it holds a patent for those very same benefits?'"

"One underlying aspect of note is the asset forfeiture program within the DEA that should be looked at as it misaligns incentives with cleaning up our nation’s drug issues and how the DEA gets funded. They make millions of dollars off of keeping it [Schedule I]. If we don’t tie agency compensation to asset forfeiture, that may make the decision easier."

"As for the business, this decision won’t affect us."

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Paul Armentano, Deputy Director at NORML, said, "For far too long, federal regulations have made clinical investigations involving cannabis needlessly onerous and have placed unnecessary and arbitrary restrictions on marijuana that do not exist for other controlled substances, including some other schedule I controlled substances."

"While this announcement is a significant step toward better facilitating and expanding clinical investigations into cannabis’ therapeutic efficacy, ample scientific evidence already exists to remove cannabis from its schedule I classification and to acknowledge its relative safety compared to other scheduled substances, like opioids, and unscheduled substances, such as alcohol. Ultimately, the federal government ought to remove cannabis from the [CSA] altogether in a manner similar to alcohol and tobacco, thus providing states the power to establish their own marijuana regulatory policies free from federal intrusion."

"Since the DEA has failed to take such action, then it is incumbent that members of Congress act swiftly to amend cannabis’ criminal status in a way that comports with both public and scientific opinion. Failure to do so continues the federal government’s ‘Flat Earth’ position; it willfully ignores the well-established therapeutic properties associated with the plant and it ignores the laws in 26 states recognizing marijuana’s therapeutic efficacy."

More from NORML here.