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Sen. Kirsten Gillibrand (D-NY) is calling on the Drug Enforcement Administration (DEA) to act with “great urgency” to reschedule marijuana in line with a recommendation from the U.S. Department of Health and Human Services (HHS).

In a letter sent to DEA Administrator Anne Milgram last week, the senator said that while she remains “under the strong conviction that marijuana should be descheduled entirely,” the agency should, “at a minimum,” move cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA).

That’s the recommendation HHS delivered to DEA following an 11-month scientific review into marijuana that it carried out under a directive from President Joe Biden last year. DEA should take the health agency’s assessment “into full consideration when determining the rescheduling of marijuana,” Gillibrand wrote in the letter, which was first reported by Finger Lakes Daily News.

“Schedule I is the same classification used for heroin and LSD, and an even higher classification than medical fentanyl and methamphetamine—the drugs that currently pose a serious public health crisis in our communities,” she said.

It's time to end decades of injustice and harm.

I still fully believe that marijuana should be legalized and descheduled entirely — but I called on @DEAHQ to, at a minimum, consider rescheduling marijuana from a Schedule I to a Schedule III substance. pic.twitter.com/XwOAh2OYuC

— Sen. Kirsten Gillibrand (@gillibrandny) November 17, 2023

The scheduling classification of cannabis has also “severely hindered our ability to gather the necessary data to make well-informed decisions regarding its legal status,” the senator said.

“Marijuana is considered to have a lower potential for harm compared to Schedule I substances like heroin. The acute health risks and potential addiction associated with marijuana use are lower than the risks associated with substances like cocaine or heroin, with it being virtually impossible to fatally overdose on marijuana alone.”

Months before Biden announced his marijuana scheduling directive, as well as a mass cannabis pardon, Gillibrand and five of her Senate colleagues sent a letter to Biden, Attorney General Merrick Garland and HHS Secretary Xavier Becerra, urging the administration to deschedule marijuana and issue large scale relief for people with federal cannabis convictions.

While the health agency’s Schedule III recommendation falls short of descheduling, Gillibrand said in the new letter that the modest reclassification would move marijuana “closer to being legally available by prescription” and “encourage investments and research into its medical uses.”

“Medical marijuana has been proven to effectively address chronic pain, nerve pain, and post-traumatic stress disorder—among other uses,” she wrote. “Rescheduling marijuana to Schedule III will foster scientific research that can help further safe and effective marijuana use and marijuana-derived therapeutic benefits.”

She said the Biden administration should be commended for its “commitment to addressing the systemic and racial injustices of federal marijuana policy,” adding that punitive policies “have deliberately stigmatized marijuana and disproportionately targeted minority communities for decades.”

“Selective policing and racial profiling have led to higher arrest rates among people of color, particularly among Black and Brown communities, even when marijuana usage across different racial groups remains comparable. These disparities extend into our judicial system where harsher sentences disproportionately affect people of color. Criminal records for marijuana possession impose needless barriers to employment, housing, and educational opportunities, contributing to cycles of multigenerational poverty.”

“The DEA should move with great urgency to align themselves with the reported recommendations of the FDA and HHS to reschedule marijuana from a Schedule I to Schedule III substance,” the letter concludes. “We appreciate your attention to this critical issue and stand ready to work collaboratively to correct the decades-long policy that has not only slowed the medical research of the substance, but also resulted in the deep racial disparities bringing harm particularly to Black and Brown communities.”

Gillibrand, who mounted a run for the 2020 Democratic presidential nomination, has long advocated for legalization coupled with reforms to address the harms of the drug war. The senator unveiled a plan to that end in 2019, and she’s also sponsored comprehensive legalization legislation.

In 2018, she also pushed then-Attorney General Jeff Sessions, a vociferous opponent of cannabis reform, to sit face-to-face with her constituents who have been arrested for marijuana or otherwise caught up in the war on drugs.

With respect to the ongoing administrative marijuana scheduling review, Gillibrand isn’t the only lawmaker putting pressure on DEA to support a significant policy change.

A coalition of 31 bipartisan House lawmakers sent a letter the DEA administrator last month, urging her to take into account congressional and state marijuana legalization efforts as the agency carries out its scheduling review. They also criticized the limitations of simple rescheduling as they push for complete a complete removal of marijuana from the CSA.

The letter serves as a counterbalance to other recent messages DEA has received from congressional opponents of reform and former DEA and White House drug czars who argue that even moving marijuana to Schedule III would go too far.

Fourteen Republican congressional lawmakers recently urged DEA to “reject” the top federal health agency’s recommendation to reschedule marijuana and instead keep it in the most restrictive category under the CSA.

Two GOP senators, including the lead Republican sponsor of a marijuana banking bill that cleared a key committee in September, have also recently filed legislation to prevent federal agencies from rescheduling cannabis without tacit approval from Congress.

Rep. Pete Sessions (R-TX) separately submitted an amendment for a spending bill that would prevent the Justice Department from using federal funds to reschedule or deschedule marijuana.

Advocates and lawmakers who support cannabis reform, meanwhile, marked the one-year anniversary of Biden’s mass marijuana pardon and scheduling directive by calling on him to do more—including by expanding the scope of relief that his pardon had and by expressly supporting federal legalization.

What’s also unclear is the timeline for when DEA will complete its cannabis review. For what it’s worth, however, a former Food and Drug Administration (FDA) official says he’d be “shocked” if DEA doesn’t reschedule marijuana by next year’s presidential election.

Read the senator’s letter to the DEA administrator on marijuana scheduling below: 

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Photo courtesy of Philip Steffan.

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South Dakota’s attorney general issued a draft explanation on Friday for a second proposed ballot measure to legalize recreational marijuana in the state. Unlike a separate would-be initiative filed earlier this year, the new proposal includes plans for licensed, regulated retail sales to adults in addition to legalizing possession and home cultivation.

The measure, sponsored by Rapid City resident Emmett Reistroffer, “allows individuals 21 of age or older to possess, grow, ingest, and distribute marijuana or marijuana paraphernalia,” the draft attorney general’s statement says, adding that adults could possess up to three ounces of marijuana and grow up to six plants, with no more than 12 plants per household.

The Department of Health would be authorized to issue dual-use licenses to existing medical marijuana dispensaries to begin adult-use sales. Local governments couldn’t prohibit dual-use licensees entirely, but they could limit the number of licenses available within their jurisdictions.

“The measure legalizes marijuana-derived substances considered felony controlled substances under State law,” the explanation says. “Marijuana remains illegal under federal law.”

An attached copy of the proposed ballot initiative also specifies that adults could possess up to 24 grams of concentrated cannabis as well as other non-concentrated cannabis products containing less than 2,400 milligrams of THC.

The @SDAttorneyGen's Office has released the explanation for a draft initiated measure, proposed by Emmett Reistroffer of Rapid City, that would legalize recreational marijuana and create dual-use licenses for medical marijuana dispensaries.https://t.co/mw31ihynRO pic.twitter.com/He6lbE38RP

— SD Attorney General (@SDAttorneyGen) November 17, 2023

Plants would need to be kept at a person’s private residence within a locked space and not within public view, and individuals would be able to possess any marijuana produced by those plants.

The measure also says adults could transfer marijuana to other adults “without consideration,” which presumably refers to gifting marijuana.

By contrast, the other legalization measure, which is backed by South Dakotans for Better Marijuana Laws (SDBML) and for which the attorney general’s office issued a final summary in August, says that adults 21 and older could “distribute” cannabis, though it was revised from its initial form to omit the word “sell.”

“Judicial or legislative clarification of this measure may be necessary,” the attorney general’s summary of that measure said.

In a statement to Marijuana Moment on Friday, Reistroffer, who is the director of operations at the medical marijuana company Genesis Farms, detailed some of the differences between his new proposal and the prospective SDBML legalization measure.

While his plan includes licensing and regulation through the Department of Health, Reistroffer noted, the SDBML proposal is silent on those matters. The state also wouldn’t get any taxes under the competing plan, while Reistroffer’s would provide a path to legal sales that would be subject to state sales tax.

In general, the key difference is that the SDBML plan focuses on noncommercial legalization, Reistroffer said, while his plan’s core focus is legal sales and regulations.

“If South Dakotans want to make cannabis legal for adult use, there needs to be regulations and licensing in place,” he said. “I’m optimistic that a majority of South Dakotans support legalization, and it makes sense for adult use to build off the current regulatory program in place for medical cannabis.”

“My initiative is robust and well-written thanks to the careful attention to detail and legal consideration put into it by a team of drafters, including expert attorneys and retired lawmakers,” he said, noting that unlike the competing measure, the attorney general’s explanation for his proposal “did not indicate ‘judicial or legislative clarification may be necessary.'”

Friday’s press release from Attorney General Marty Jackley (R) says the public now has 10 days to provide written comment, or until the close of business on November 27. A final explanation is then due to the Secretary of State on December 7.

“The initiated measure would require 17,509 valid petition signatures to qualify for the 2024 general election ballot,” it says.

Two other proposed ballot measures in South Dakota would affect the legal status of cannabis in the state. One would repeal the state’s medical marijuana law, while the other would keep federally banned substances from ever being legalized by voters. The state attorney general finalized the ballot explanation for the medical marijuana repeal measure in August.

SDBML recently said the repeal measure should be thrown out, however, due to an alleged error in how the proposal was filed, failing to include a full list of the state statutes it would seek to undo.

South Dakota voters rejected an adult-use cannabis legalization ballot measure last year after approving an earlier version in 2020 that was ultimately invalidated by the state Supreme Court. If either legalization campaign does secure a spot on the 2024 ballot, organizers will need to win over hesitant voters.

Ahead of last year’s election, a poll found that 51 percent of South Dakotans planned to vote against the legalization measure, while 40 percent said they’d be supporting it and 10 percent remained undecided. That was the third poll in a row showing the legalization measure behind.

After voters approved medical cannabis legalization in 2020, Gov. Kristi Noem (R) tried to get the legislature to approve a bill to delay implementation for an additional year. But while it cleared the House, negotiators were unable to reach an agreement with the Senate in conference, dealing a defeat to the governor.

In response, Noem’s office started exploring a compromise, with one proposal that came out of her administration to decriminalize possession of up to one ounce of cannabis, limit the number of plants that patients could cultivate to three and prohibit people under 21 from qualifying for medical marijuana.

In the 2022 legislative session, the House rejected a legalization bill that the Senate had passed, effectively leaving it up to activists to get on the ballot again.

A Marijuana Interim Study Committee, headed by legislative leaders, was established to explore cannabis policy reform, and the panel in November 2021 recommended that the legislature take up legalization. The House-defeated legislation was one of the direct products of that recommendation.

Currently more than 11,500 people in South Dakota hold medical marijuana cards—nearly double the 6,000 cardholders that state officials expected to enroll in the program by 2024.

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Photo courtesy of Mike Latimer.

The post New South Dakota Marijuana Legalization Ballot Initiative Would Let Dispensaries Launch Adult-Use Sales appeared first on Marijuana Moment.

New York’s governor has signed legislation that to provide tax relief to New York City marijuana businesses that are currently blocked from making federal deductions under an Internal Revenue Service (IRS) code known as 280E.

About five months after the Senate and Assembly approved the proposal, and less than a week after both chambers formally transmitted their identical bills to Gov. Kathy Hochul (D), she signed them into law on Friday.

While Hochul signed a separate budget bill last year that included provisions allow state-level cannabis business tax deductions—a partial remedy to the ongoing federal issue—New York City has its own tax laws that weren’t affected by that change. The new measure is meant to fill that policy gap.

“This bill would allow a deduction for business expenses, incurred by taxpayers authorized by the Cannabis Law to engage in the sale, distribution, or production of adult-use cannabis products or medical cannabis, for purposes of the unincorporated business tax (UBT), the general corporation tax (GCT), and the corporate tax of 2015, commonly referred to as the business corporation tax (BCT),” a summary says.

A section of the city’s tax code would be amended to add sections allowing the deductions “in an amount equal to any federal deduction disallowed by section 280E of the internal revenue code.”

“This modification to income is appropriate because, while the expenses of cannabis-related business cannot be deducted for federal purposes, New York law permits and encourages these businesses akin to any other legitimate business occurring in the State,” a memo attached to the bill says. “The City’s business taxes should similarly encourage these business activities.”

It also notes that the reform legislation has the support of New York City Mayor Eric Adams (D).

Lawmakers in several states have pursued the tax workaround as congressional marijuana reform legislation continues to stall, leaving state-licensed cannabis businesses with significantly higher federal effective tax rates under prohibition.

Last month, for example, the Pennsylvania House approved a large-scale tax reform bill that contains language to provide state-level relief to medical marijuana businesses. The reform has drawn the ire of Republican members—who normally champion tax cuts—as a Democratic giveaway to the cannabis industry.

In August, the governor of Maine signed legislation to decouple the state tax from the federal policy for cannabis businesses.

The governor of Illinois also signed a budget bill in June that includes provisions that will allow licensed marijuana businesses to take state tax deductions that they’re currently prohibited from utilizing under the IRS code.

That same month, the governor of Connecticut also signed budget legislation that includes provisions to provide state-level tax relief to licensed marijuana businesses as a federal 280E workaround for the industry.

Also, the governor of New Jersey signed legislation in May to allow licensed marijuana businesses to deduct certain expenses on their state tax returns as a partial IRS 280E fix. Lawmakers in Iowa and Virginia have similarly pursued tax relief for each of their state’s marijuana markets.

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At the congressional level, Rep. Earl Blumenauer (D-OR) reintroduced a bill in May that would amend the IRS code to allow state-legal marijuana businesses to finally take federal tax deductions that are available to companies in other industries.

He told Marijuana Moment that he’s “absolutely convinced when we are able to fully deduct their business expenses that there actually will be more revenue collected because people will comply fully with the law.”

For the time being, the marijuana industry continues to face tax policy challenges under the umbrella of prohibition. And as the Congressional Research Service (CRS) noted in a 2021 report, IRS “has offered little tax guidance about the application of Section 280E.”

IRS did provide some guidance in an update in 2020, explaining that while cannabis businesses can’t take standard deductions, 280E does not “prohibit a participant in the marijuana industry from reducing its gross receipts by its properly calculated cost of goods sold to determine its gross income.”

The IRS update seemed to be responsive to a Treasury Department internal watchdog report that was released in 2020. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”

The industry’s 280E problem could also be resolved if the Drug Enforcement Administration (DEA) accepts the recommendation of the U.S. Department of Health and Human Services (HHS) and moves marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA).

New South Dakota Marijuana Legalization Ballot Initiative Would Let Dispensaries Launch Adult-Use Sales

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“Businesses that choose to participate in Missouri’s marijuana industry do not get to decide which rules and which parts of [the constitution] they want to follow.”

By Rebecca Rivas, Missouri Independent

The state’s Division of Cannabis Regulation is revoking the marijuana manufacturing license of Delta Extraction after accusing the company of illegally importing “marijuana product” from out-of-state and adding it to Missouri-grown marijuana products.

The revocation will take effect on December 2.

The Robertsville-based company is at the center of Missouri’s massive marijuana recall that was issued on August 14. The state recently rolled back part of the recall, but the fate of more than 45,000 recalled products—and those of dozens of marijuana businesses facing a steep financial loss if the products must be destroyed—is still pending.

The recall will be debated during a hearing before the Administrative Hearing Commission in December, where Delta’s appeal on its license revocation will also likely be heard.

“We must be clear on this: Businesses that choose to participate in Missouri’s marijuana industry do not get to decide which rules and which parts of [the constitution] they want to follow,” Amy Moore, director of the division, said in a press release Thursday announcing the decision.

Delta Extraction has denied accusations that it illegally imported marijuana into the state by arguing it actually imported a non-psychoactive hemp product, THC-A, that was converted into the psychoactive delta-9 THC once in Missouri. Hemp is not a federally controlled substance.

“The department’s actions are illegal and unfounded,” said Chuck Hatfield, attorney for Delta Extraction. “The issue stems from Delta using legal hemp products in its legal marijuana products, which passed state testing before it was sold to consumers.”

In its appeal, Delta argues that the Missouri didn’t specifically ban adding hemp-derived THC-A to marijuana products until the state’s final rules went into effect on July 30.

Hatfield said the division never communicated that adding the hemp product was against the rules until the company’s license was suspended on August 2.

In an interview with The Independent, Hatfield pointed to an email that Adam Whearty, a compliance team supervisor with the division, sent two days before Delta’s suspension, which was uncovered during the appeals process. Hatfield said it shows that Whearty and compliance officer Heather Bilyeu—who was Delta’s main contact in the compliance office, Hatfield said—were confused about whether what the company was doing was allowed.

“Heather thinks they found a loophole in the [emergency] rules, prior to 7/30, as does not think THC-A fell into the category of not being able to be used,” until the final cannabis rules took effect on July 30, Whearty wrote. “Heather and I are concerned about what we were to tell [Delta] about modified product in their inventory…”

However, during the appeals process, the state has argued that the emergency rules filed on January 20 prohibited the practice.

Carole Iles of the Administrative Hearing Commission sided with the state in an August 29 order. The only thing the cannabis regulating agency added to this line in the final rules, she wrote, was the clause “such as THC-A …”

“We agree with the department that language added to the permanent rule…did not change the requirement of the emergency rule that THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed cultivation facility,” the order denying a stay on Delta’s suspension states.

A hearing on Delta’s appeal of the recall and license revocation will be held next month.

Delta’s use of the hemp THC-A was not the only reason for revocation, Moore said in the press release Thursday.

“While Delta Extraction’s use of out-of-state cannabis in our regulated system has been well-publicized and is a critical issue, DCR also found numerous other violations of rules at this facility,” Moore said.

The division also said Delta did not properly maintain video surveillance footage or have necessary safeguards to prevent intrusion at the facility. The division argues that Delta falsified product tracking records, and regulators could not ensure the product was properly tested.

In a letter to the state’s attorney on Wednesday, Hatfield countered that the company did test the product in compliance with the law.

Delta also agreed to pay for retesting of any Delta product, Hatfield wrote in the letter, as well as to destroy all the product in its facility in order to reach a settlement with the state.

“Should the parties not reach an agreement, Delta intends to challenge the Department’s authority to regulate hemp-derived products,” Hatfield’s letter states.

The courts will not entertain a legal challenge against the state until Delta Extraction’s appeal process is completed, a judge has already ruled.

Missouri would then be among several states where companies are challenging the state cannabis regulators’ authority to regulate hemp. Unlike marijuana, hemp has very little psychoactive properties naturally—which is why it was taken off the federal controlled substance list in the 2018 farm bill.

But since then, businesses have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant.

On September 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THC-A, are protected under the 2018 farm bill.

“Should Delta succeed in that challenge,” Hatfield wrote, “the industry would be free to engage in bringing in industrial hemp products from out of state for use in marijuana products.”

This story was first published by Missouri Independent.

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