Cannabis

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In May, the U.S. Department of Justice (DOJ) issued a notice of proposed rulemaking to transfer cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA), a change that could significantly affect current state cannabis programs. In response, the Cannabis Regulators Association (CANNRA) submitted a detailed comment letter to the DOJ requesting clarity on how rescheduling will impact these existing regulatory structures. An examination of CANNRA’s public comment offers insights for state-legal businesses into what the future may hold for the joint regulation of cannabis at the state and federal levels.

I. Today’s Marijuana Landscape

Despite marijuana’s continued federal classification as a Schedule I controlled substance,[1] 26 states and the District of Columbia have passed laws at least partially decriminalizing marijuana possession and recreational use.[2] A majority of Americans now live in states where marijuana is legal for recreational use,[3] and nearly three-quarters of Americans live in states that have legalized marijuana for either recreational or medical sales and use.[4] Currently, 14 states have only legalized medical use,[5] while 24 states and the District of Columbia have implemented regulatory schemes for both medical and recreational use.[6] Of the remaining 12 states where marijuana is still illegal, possession is decriminalized in two states.[7] The map below illustrates these categories.[8]

The federal rescheduling of marijuana has been a topic of conversation within the marijuana industry since President Biden’s statement requesting that the secretary of health and human services (HHS) and the attorney general (AG) “initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.”[1] However, the Supreme Court’s recent decision overturning the Chevron doctrine adds an additional layer to an already complicated process. While the exact impact of Loper Bright Enterprises v. Raimondo[2] on the cannabis industry remains to be seen, this article explores the way in which it may impact the pending rescheduling.

On May 16, 2024, the Department of Justice (DOJ) issued its Notice of Proposed Rulemaking (NPRM) related to the transfer of marijuana from schedule I of the Controlled Substances Act (CSA) to schedule III, consistent with the recommendation provided by the Department of Health and Human Services (HHS) in August 2023. The CSA requires that…

Among the two most widely reported federal changes to cannabis regulation are the Department of Justice’s (DOJ) proposed regulation for the federal rescheduling of marijuana (the Proposed Rescheduling) and amendments to the 2018 Agricultural Improvement Act (the Farm Bill). The Proposed Rescheduling would result in the transfer of marijuana from Schedule I[1] of the Controlled Substances Act (CSA) to Schedule III[2] of the CSA.[3] The proposed amendments to the Farm Bill would change the definition of “hemp” to remedy a loophole currently utilized by hemp manufacturers who manufacture and sell intoxicating cannabis products.

The rapid evolution of intoxicating cannabinoids has brought forth significant changes and challenges to both the agricultural and commercial cannabis sectors across the U.S. These new cannabinoids have exposed gaps in state and federal regulatory frameworks, allowing intoxicating substances to be marketed without the stringent level of oversight applied to state-legal cannabis products. These hemp-derived cannabinoids are often sold in gas stations and convenience stores, posing significant risks to consumers, especially minors. The lack of clear federal guidelines has left state attorneys general (AG) grappling with this gray market, leading to calls for legislative action to address the issue comprehensively.

Introduction

The medicinal and recreational use and popularity of marijuana has continuously grown throughout the U.S. since Oregon became the first state to decriminalize marijuana in 1973. To date, thirty-eight states and the District of Columbia have implemented medical marijuana programs, twenty-five of which have also expanded into adult-use.

Across states, lawmakers often embrace “medical” marijuana as a precursor to establishing a “recreational” marijuana market. Although marijuana remains illegal at the federal level — and would remain illegal even under the proposed rescheduling — federal regulators also recognize the therapeutic potential of certain marijuana-adjacent substances. At the federal level, the U.S. Food and Drug Administration (FDA) has approved one drug product derived from the cannabis sativa L. plant and three synthetic cannabis-related drug products. At the same time, 38 states and Washington, D.C., have established legal frameworks for access to medical marijuana. Comparing these frameworks to FDA’s drug approval process reveals fundamental differences between state and federal approaches to determining whether cannabis is “therapeutic.”

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 16th, 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.

The landscape of tobacco product and cannabis flavor bans or restrictions varies significantly across the country. In both industries, some states restrict all or some flavors in all types of products, while other states restrict all or some flavors in some, but not all, products. Below, we provide a high-level overview of the flavor ban and restriction landscape in both industries. As we will discuss, there is a wide disparity between cannabis and tobacco product flavor bans or restrictions and, where they exist, there appears to be more flexibility among cannabis flavor restrictions than for tobacco product flavor bans or restrictions.