Cannabis Musings - May 1, 2024
Squirrel!
Friends, two quick thoughts on yesterday’s news about the DEA reportedly agreeing to reschedule cannabis to a Schedule III controlled substance. I’m not going to rehash the news, because, being the avid reader of these Cannabis Musings that I know you are, you already know just about everything you really want to know about the topic.
First, I wanted to correct the Associated Press’ reporting. They noted in their scoop:
“Critics point out that as a Schedule III drug, marijuana would remain regulated by the DEA. That means the roughly 15,000 cannabis dispensaries in the U.S. would have to register with the DEA like regular pharmacies and fulfill strict reporting requirements, something that they are loath to do and that the DEA is ill equipped to handle.”
My correction is to change the “would have to” in the second sentence to “theoretically maybe I guess could, but almost most definitely certainly won’t so I wouldn’t expect it, require them to”. We dispelled this notion this back in January. In theory, post-rescheduling, a state-licensed cannabis dispensary I suppose could apply to the DEA for a permit to legally (federally) dispense Schedule III cannabis. But, in order to do that, it would necessitate the existence of FDA-approved cannabis that’s dispensed under prescription from a doctor with the proper controlled substance licensing, and that’s not gonna happen any time soon. In other words, you can’t just apply to the DEA for permission to dispense any ol’ not-FDA-approved controlled substance.
Instead, just expect the status quo.
Second, and this is a bit more of a controversial position, I’d suggest that the House Committee on Agriculture’s announcement today that the 2024 Farm Bill markup is going to start in late May could potentially have bigger implications for the industry than rescheduling. We’ve talked a fair amount recently about hemp-derived cannabinoids and the brewing civil war between hemp and non-hemp cannabis. If the 2024 Farm Bill were to change federal law’s treatment of hemp-derived cannabinoids, it could patshkeh the nascent “intoxicating hemp” (I still haven’t warmed up to that term) industry. If it were to leave the current definition of hemp alone, the existential threat to state-licensed, non-hemp cannabis posed by these products would continue to grow.
We don’t know yet today what the bill will look like (based on the summary of priorities issued by the Committee), but either result will greatly impact the future of state-licensed, non-hemp cannabis across the country. We’re going to know fairly soon how this is going to play out.
Don’t get me wrong – I won’t downplay the impact of Schedule III. It will help thousands of companies with 280E tax relief (unless they’re already utilizing 471(c), in which case, the difference will be minimal), it’ll help bolster medical research, and it continues to change the narrative in the country about cannabis (which is invaluable to the cause). But, having to compete with intoxicating hemp products (in the states that still allow them and over the internet) is yet another blow to an industry already competing with an unlicensed market.
If I were the non-hemp cannabis industry, this is where I’d focus my attention and lobbying dollars right now.
Be seeing you!
© 2024 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.