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Cannabis Industry Client Alert
The United States Drug Enforcement Administration (โDEAโ) has announced its intention to reclassify cannabis from a Schedule I to Schedule III drug, a move with quite significant potential consequences. This reclassification would profoundly alter the risk of use of cannabis, which, as a Schedule I drug, is currently deemed to be in the same category as heroin. Reclassification would not make cannabis legal under federal law. It would, however, reduce the penalties for illegal use. However, because a substantial number of states have authorized the use of medical cannabis and/or recreational cannabis under their respective state laws, and federal authorities have respected the statesโ decisions to do soย [1], particularly as it applies to the regulated use of medical cannabis, it is possible that reclassification may incentivize some states that have not yet permitted either medical or recreational cannabis use to reconsider whether to do so.
Moreover, federal banking laws have to date impeded the growth of the cannabis industry in that many banks have refused to handle funds generated as a result of cannabis sales. Reclassification may have the collateral effect of encouraging Congress to adopt legislation that would reduce, or eliminate entirely, the reticence of banks to handle cannabis funds.
The DEA announcement is only a first step. The reclassification process requires a sign-off by the White House, a public comment period, and then publication in the Federal Register. The timeline is uncertain. Additionally, reclassification may be further complicated by the Presidential election this November.
The Cannabis Practice Group of Wiggin and Dana is a multidisciplinary team of attorneys across a variety of key practice areas in the firm, including regulatory compliance, which advises clients in the cannabis and cannabis-adjacent space, helping them navigate through the ever-changing and complex federal, state and local regulations governing one of the fastest growing industries in the United States.
[1]ย Cannabis Prosecution Not a Priority for the U.S. DOJ (natlawreview.com)
