Only one day after reports surfaced that the Drug Enforcement Administration (DEA) will proceed with rescheduling cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA), Senators Charles Schumer (D-NY), Cory Booker (D-NJ), and Ron Wyden (D-OR) reintroduced the Cannabis Administration and Opportunity Act (CAOA or the Act), a nearly 300-page bill that would create a framework for the comprehensive regulation and taxation of cannabis in the United States. Then, on May 16t, the Department of Justice issued its notice of proposed rulemaking to reschedule cannabis to Schedule III. Administrative and legislative approaches to cannabis reform each have their own strengths and weakness that must be carefully considered. In addition, these competing approaches offer an opportunity to highlight the political differences between administrative and legislative policy reform at the federal level.
Legislative Reform through the CAOA
The CAOA takes a holistic approach to federal cannabis reform by addressing a wide breadth of regulatory issues, including public health and safety, regulation and taxation, research, entrepreneurship, restorative justice, and workers’ rights. For example, in addition to removing cannabis from the CSA entirely (making cannabis legal), the Act would establish the Center for Cannabis Products as a department within the Food and Drug Administration (FDA), which would be responsible for regulating all manufacturing and retail elements of the cannabis industry, including production, packaging and labeling, distribution, and sales.
The Act would eliminate the federal prohibition in states that choose to legalize some form of cannabis, but would maintain the prohibition for non-legal states, leaving the choice of the legal status of cannabis to the states. The Act would also eliminate the application of 26 U.S.C. § 280E to cannabis businesses, establish an excise tax on cannabis and cannabis products, and require the Department of Health and Human Services and the National Institutes of Health to “conduct or support research on the impacts of cannabis, including its effects on the human brain, the impact on various health conditions, and identification of potential medical benefits and uses of cannabis.”
In many ways, the CAOA would be the superior approach to cannabis reform as compared to administrative rescheduling. It takes a holistic stance by addressing a variety of cannabis-centric issues that states have grappled with for over a decade. As legislation, it is subject to debate by elected officials and so is less susceptible to legal challenge than administrative actions. However, the realities of federal politics in the U.S. make the Act’s passage through the Senate, especially during an election year, questionable at best.
The CAOA, first introduced in 2022, originally stalled due to opposition on both sides of the isle. Some Democratic lawmakers refused to support the bill due to its more limited equity provisions when compared to bills like the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, not to mention the lack of support among Republicans. Also, the SAFER Banking Act, which was originally introduced in 2017 and has passed through the House of Representatives seven times since then, still has not passed the Senate. The SAFER Banking Act has the benefit of a much narrower scope and significantly more bipartisan support than the CAOA, and yet it has remained in legislative limbo. These examples illustrate not only the sad reality of the state of American politics, but also spell doom for comprehensive reform bills like the CAOA.
Administrative Rescheduling through the DEA
Administrative rescheduling, on the other hand, is a severely limited approach when compared to legislative reform. Executive agencies generally have the benefit of not being subject to the same political pressures as Congress, meaning that an administrative change to the legal status of cannabis would be much easier for the Biden administration to make, rather than passing legislation. However, the scope of administrative actions is much narrower than the potential scope of legislation, and it’s a fair bet that a politically controversial administrative decision, like rescheduling cannabis, will be subject to a variety of legal challenges.
Other than relocating cannabis to Schedule III, rescheduling would make no other changes to federal law, and would not make marijuana legal outright. There are a few clear benefits of rescheduling, including tax relief for businesses and better access to cannabis for researchers. Outside of those changes, rescheduling would not, by itself, do anything to address the current conflicts between federal and state cannabis laws. States could arguably amend their medical cannabis programs to bring them into compliance under federal law, and assuming FDA-approved cannabis products are being sold through prescriptions, state medical programs could become compliant. However, these changes to state regulatory structures would take time to implement, so state-legal medical programs would continue to violate federal law for the immediate future. In addition, FDA does not typically approve plants as products, but instead approves products manufactured with plant materials, meaning that it is unlikely that FDA would approve smokable cannabis flower itself.
However, no state action would address the conflict between state and federal laws with respect to recreational cannabis. Since that conflict would continue, administrative rescheduling would not properly incentivize banks, credit unions, or insurers to offer traditional services to the industry. Rescheduling would do nothing to address the harm done by the war on drugs to disproportionality impacted communities, nor would it address the rights of federal employees to use cannabis, including veterans.
Conclusion
While the CAOA may be a more “perfect” solution in this case, industry players must remember not to “let the perfect be the enemy of the good.” The Act removes cannabis from the CSA entirely and addresses a much wider array of cannabis-related issues than rescheduling could. However, the political realities of the federal legislative process make an administrative rescheduling decision easier and faster, although less legally sound. Under either approach, it is important to recognize that these actions represent a substantial departure from the federal government’s past approach to cannabis regulation. While rescheduling would be a more limited approach, it represents an important mindset shift that will likely lead to much greater reforms in the future. Our Cannabis Communications newsletter will continue to provide updates on federal cannabis reform.
