The public comment period for the DEA’s proposed rulemaking to reschedule cannabis from a Schedule I controlled substance to a Schedule III drug has ended. Approximately 43,000 comments were submitted! As Headset reports, this is the most comments received in response to a DEA proposed rule, and the comments were overwhelmingly in favor of cannabis either being moved to Schedule III or being de-scheduled and fully legalized altogether. According to Headset, 9 out of 10 comments were in favor of removing cannabis from Schedule I, with 35% of commenters supporting rescheduling and 57% supporting de-scheduling. Of course, many of the proponents of de-scheduling would support rescheduling as opposed to leaving cannabis under Schedule I. In contrast, just 7% of commenters advocated no change.
“Duane Morris helps clients across all sectors of the multi-faceted legal cannabis industry. The group has extensive experience with the wide array of issues attendant to legal cannabis business activities, including licensing for cultivation, processing and dispensing; litigation; banking and finance; raising and deploying capital; protecting intellectual property; real estate development and leasing; public company representation and SEC filings; land use and zoning; healthcare and research; taxation; and cross-border transactions.”
The Legal 500 2024 has also placed the Cannabis Industry Group in Tier 1 nationally, with clients noting that “Duane Morris’ cannabis practice is simply the best in the country. They have the most thorough knowledge of our ever-changing industry and its regulatory landscape.”
“What makes Duane Morris unique among peer firms is the entrepreneurial spirit of the cannabis practice, backed up by extensive institutional knowledge and experience of business. They created laws, regulations and precedents that govern and protect the cannabis industry today and advised businesses how to operate within them.”
Clients also acknowledged “the passion and commitment of Duane Morris’ lawyers to serve businesses and entrepreneurs.” The Legal 500 named partners Seth Goldberg and Michael Schwamm “Leading Lawyers” in the Cannabis Industry – as well as recognizing Tracy Gallegos, Paul Josephson and Justin Santarosa for their work.
“The firm has acted as a pathfinder through a constellation of state laws and regulation – many of which the firm’s cannabis practice has helped shape.”
There are countless strains of the plant Cannabis sativa L. Depending on the strain, the plant will contain a range of different chemicals called cannabinoids. New cannabinoids are still being discovered. Some of those, such as delta-9 tetrahydrocannabinol (D-9 THC), can cause psychoactive effects, while others such as cannabidiol (CBD) do not cause psychoactive effects. Nonpsychoactive cannabinoids like CBD can be chemically altered to become substances, such as delta-8 tetrahydrocannabinol (D-8 THC), that cause psychoactive effects.
In 2018, Congress passed a Farm Bill that defined “hemp” as:
[T]he plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
Recently, FDA announced issued an alert warning consumers that a brand of ingestible chocolate bars, cones, and gummies called Diamon Shruumz has been linked to a variety of severe heath symptoms, including seizures, central nervous system depression (loss of consciousness, confusion, sleepiness), agitation, abnormal heart rates, hyper/hypotension, nausea, and vomiting. As the name suggests, Diamond Shruumz products are marketed as a product that allows consumers to microdose – take in small doses – psilocybin and other psychoactive chemicals in mushrooms. These products are not subject to strict federal and state regulations, and can be purchased in gas stations and c-stores, or online by anyone who passes a simple age-gate. They are marketed with names that could easily be confused by consumers as products that do not contain intoxicating chemicals, such as “Hawaiian punch,” “cookies & cream,” “birthday cake,” and “cookie butter,” and their packaging is colorful and attractive. It seems obvious that intoxicating products like these need to be regulated in the interest of public safety. Regulation does not mean prohibition. It means safeguards that enable consumers to use products without unnecessary health risk, and they can protect manufacturers and supply chain participants from liability risk.
Multiple news sources reported today that the DEA will be recommending rescheduling cannabis to a Schedule III drug. The recommendation will then lead to a public comment period and then a Final Rule will be issued, so the actual reclassification of cannabis is months away. However, as with recent moves toward rescheduling, such as the HHS recommendation and President Biden’s directive to study whether to reschedule, today’s news and the forthcoming recommendation will boost the cannabis market, as operators and investors look forward to a better performing industry resulting from the reclassification. The actual reclassification will have an immediate impact on operator profitability, as IRS Code 280E, which prevents cannabis operators from deducting normal business expenses, will no longer apply to cannabis businesses. This is just one of the very significant changes to the industry that will spur more capital and more growth. Banks and other sources of capital that have been reluctant to enter the space may finally get off the sidelines and join the game, which would obviously be the shot in the arm the industry has needed for some time.
More than 75% of the U.S. population lives in states that have legalized cannabis for adult and/or medical use. Pursuant to a 2022 directive from President Joe Biden, a 2023 recommendation of the U.S. Department of Health and Human Services, and a scientific review released in January supporting the HHS’s recommendation, the U.S. Drug Enforcement Administration is now evaluating whether to reclassify cannabis as a Schedule III drug.
In a letter to Congress, 20 state Attorney Generals urge steps be taken in the upcoming Farm Bill to correct the loophole in the 2018 Farm Bill’s definition of hemp that has been exploited by those producing and distributing products chemically synthesized from hemp that are just as intoxicating, if not more so, than the cannabis sold under state-regulated cannabis programs. Noting the public health and safety concerns of such hemp-synthesized intoxicants (HSIs), and the fact that their legalization was not intended by way of the 2018 Farm Bill, the AGs suggest the Farm Bill expected this year explicitly reserve for the states the power to regulate HSIs.
Public health and safety concerns about delta-8 THC appear to be on the rise. A study published by JAMA this week showed that approximately 11% of all 12th graders in the US reported using products containing D-8 THC, with a higher prevalence in states that do not have existing D-8 THC regulations., and a related JAMA editorial, entitled “The Public Health Challenge of Δ8-THC and Derived Psychoactive Cannabis Products,” noted that D-8 THC products pose a risk to public health and safety because they are largely unregulated, in contrast to state-regulated medical and adult use marijuana. As the authors of that editorial explain:
“The weak regulatory infrastructure for Δ8-THC has led to manufacturing, advertising, and sales practices that are inconsistent with public health and safety.Δ8-THChas been marketed to consumers as a low-risk medicinal cannabinoid product despite limited evidence for effectiveness. It has also been sold directly to minors through brick-and-mortar and online vendors, some of which do not restrict sales based on age. Inaccurate content labeling and potentially harmful adulterants are serious problems in the unregulated cannabinoid market. Products sold under the Δ8-THC designation vary considerably with regard to dosing and constituent ingredients.13 In an analysis of 20 commercial products marketed as Δ8-THC, authors observed that 5% of the products did not contain Δ8-THC and, among samples that did contain Δ8-THC, the quantities in each product varied markedly from advertised values.13 There is also evidence that products sold as Δ8-THC contain unlabeled constituents that may be dangerous for consumers.14 It is not known whether the constituents were added during manufacturing processes or whether they were added intentionally or because of poor quality control procedures.”
The editorial’s authors note the need for more rigorous manufacturing, advertising, and sales standards for D8-THC and other intoxicating cannabis-related products, and encourage federal legislators to use the next Farm Bill to address the loophole in the 2018 Farm Bill that has resulted in the proliferation of D8-THC and other intoxicating substances chemically synthesized from hemp:
“Given the potential harms posed by the widespread availability of Δ8-THC and other derived psychoactive cannabis products, more rigorous standards for manufacturing, advertising, and sales are warranted. The 2018 Agriculture Improvement Act is set to expire in September 2024, and legislators may take the opportunity to strengthen the regulatory infrastructure for derived psychoactive cannabis products or exclude certain derivative products from the statutory definition of hemp.”
Citing the facts that Pennsylvania (i) is bordered almost entirely by states that have legalized cannabis for adult use; (ii) loses millions to the black market for cannabis annually; and (iii) projects hundreds of millions in annual revenue gains, in his budget address for 2024 Pennsylvania Governor Josh Shapiro called on Pennsylvania’s legislature to deliver by July 1, 2024, legislation that would legalize cannabis for adult-use in Pennsylvania:
“Well, last year, 57 percent of voters in Ohio supported an initiative to legalize recreational marijuana. And now, Ohio, New York, New Jersey, Delaware, and Maryland – practically all of our neighbors – have legalized marijuana. We’re losing out on an industry that, once fully implemented, would bring in more than 250 million dollars in annual revenue. And our failure to legalize and regulate this only fuels the black market and drains much needed resources for law enforcement. It’s time to catch up. I ask you to come together and send to my desk a bill that legalizes marijuana. But that bill should ensure the industry is regulated and taxed responsibly. That we create jobs and build wealth here in Pennsylvania, especially in the communities that have been disproportionately harmed by criminalization. And that those who have been convicted for nonviolent possession of small amounts of marijuana have their records expunged. Let’s stop hamstringing ourselves and start competing.”
Governor Shapiro’s urgency is not surprising. Pennsylvania should have been leading the way in legalizing cannabis for adult-use, given its successful medical marijuana program, but instead other states have spring-boarded ahead of Pennsylvania. Those states are now enjoying the revenues, job growth and overall economic benefits of legal cannabis, including even profiting from Pennsylvania residents crossing the border to buy their cannabis. It truly is time for Pennsylvania “to catch up” and “start competing” in the legal cannabis market for the good of all Pennsylvanians.
