Cannabis Musings - August 25, 2023
So much more rescheduling goodness
Friends, recently we talked about cannabis rescheduling, having been treated to a masterclass in the subject by Shane Pennington, Partner at Porter Wright in D.C. The topic is the gift that keeps on giving - earlier this week, I had the pleasure of participating in a panel arranged by Aaron Edelheit’s Mindset Value (another industry newsletter I highly recommend), alongside Shane and Howard Sklamberg, a Partner at Arnold & Porter and former Deputy Commissioner at the FDA. The discussion expanded beyond the nuances of the rescheduling process, with a lot of focus on the role of the FDA.
A couple of additional thoughts on that.
First, I think the chances that cannabis is descheduled (i.e., removed from the controlled substances list) in the review are infinitesimally small. This perspective, made by others in the talk, should come as a surprise to just about nobody, but my reasoning is slightly more cynical. Does anyone really think that the DEA is going to unilaterally, (effectively) legalize cannabis without an entire federal regulatory and taxation structure in place? Only Congress has the power to put that into action, establish taxes on the product, and fund the agencies for enforcement. There’s simply no way the federal government is going to allow cannabis to be sold outside of the Controlled Substances Act and not tax it. Anyone who thinks otherwise is meshugeh.
Second, the conversation veered a bit into the murky waters of cannabis interstate commerce, a favorite topic around here. Shane’s and Howard’s perspectives on Attorney General Merrick B. Garland’s history as a judge, and how that might guide a possible Cole Memo redux, are sobering, particularly as California reportedly continues to move forward towards authorizing interstate commerce. The states that are looking to open up interstate commerce are hoping for guidance, ideally somewhere in writing, from Garland on whether the Department of Justice would oppose it.
Just as cannabis rescheduling may turn on whether the DEA gets comfortable with further violating international treaties, interstate commerce beginning to emerge may turn on whether AG Garland eats some bad kreplach. The industry should be focusing its lobbying resources on these keystones.
Finally, this panel, together with the earlier Musings on rescheduling, really highlight the point that, to truly understand this industry, you need to find and listen to the policy, regulatory, and industry experts (who usually aren’t the same people). There’s so much misinformation that’s based on normative outcomes, willful blindness towards federal political realities, industry hype, (justified) impatience, and a lack of appreciation for history. A nar hot a sheyne velt. (“A fool’s world is a paradise.”)
It’s a criticism of the industry I’ve had for a long time, and I think it’s still a problem (although the hype has died down). There’s a lot of smart subject-matter experts working in this space (Hauser Advisory of course being one of them). It’s worth your time (and your money) to engage with them.
Be seeing you!
Hauser Advisory provides advice and strategy on business lifecycle events and cannabis industry navigation, tapping into a deep, national network and twenty-five years of dealmaking and capital markets experience.
© 2023 Marc Hauser and Hauser Advisory. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.