The public commentary period on cannabis rescheduling has ended, marking a key turning point in the ongoing debate over cannabis regulation. On July 22, the commentary period officially closed, with more than 43,000 comments submitted. The overwhelming majority of comments favored complete cannabis descheduling rather than rescheduling to Schedule III.
While cannabis rescheduling to Schedule III would provide significant tax relief, especially in terms of the 280E provision, it would not resolve many of the legal conflicts between federal and state cannabis laws. A report from the Congressional Research Service emphasized that cannabis sales without a valid prescription would still be subject to federal criminal law, and recreational sales would remain illegal at the federal level. This underscores the limitations of rescheduling as opposed to full descheduling, which many stakeholders view as a more comprehensive solution.
Now that the public commentary period has ended, the Drug Enforcement Administration (DEA) is tasked with reviewing and responding to the feedback. This process is crucial, as the DEA must consider all relevant materials presented during the comment period, including scientific data, expert opinions, and facts accumulated throughout the pre-rule and proposed rule stages. The DEA is required to address significant issues raised in the commentary and explain the rationale behind its final decisions. The final rule will only take effect once the DEA signs off and any necessary administrative hearings are conducted.
The DEA has now scheduled a hearing to consider differing expert opinions on the Justice Department’s proposal to federally reschedule marijuana—an extra procedural step that will take place after the November election. Now that the DEA has reviewed more than 40,000 submissions received during the 60-day public comment period, it agreed to an administrative hearing, as requested by several supporters and opponents of the reform. The hearing will be held on December 2.
Once the DEA completes its review, the final rule will be published in the Federal Register and will typically become effective 30 days later. However, implementation of the final rule may face legal challenges, potentially delaying the process. The recent Supreme Court ruling in Loper v. Bright could further complicate matters. This ruling, which reduces the power of regulatory agencies to set and enforce rules, provides rescheduling opponents with another avenue to challenge the DEA’s decisions in court. The judiciary, now empowered to scrutinize the decisions of regulators without deferring to their expertise, may play a significant role in the fate of cannabis rescheduling.
Given these complexities, it is likely that federal courts will be involved in any new rulemaking, and the process will be anything but swift. Cannabis rescheduling, while a step forward, is just one piece of a larger, ongoing legal and regulatory puzzle.
Operators must stay vigilant and proactive when navigating the shifting regulatory landscape. While rescheduling may resolve some significant issues like 280E, it will not address all challenges facing the industry. Operators should seek counsel on potential tax implications and for preparing for the operational changes rescheduling might bring.
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