Rescheduling hearing postponed for at least 3 months ❌

RESCHEDULING
Judge postpones reschedule hearing for at least 3 months

POSTPONED: The Drug Enforcement Administration hearings on whether to reclassify cannabis from the most restrictive Schedule I of the federal Controlled Substances Act to the far less restrictive Schedule III have been postponed for at least three months, a judge decided on Monday.

The hearings were set to kick off on January 21. Despite President Joe Biden initially suggesting the rule change, the final decision will come under President Donald Trump. 

What happened: The delay stems from a longstanding tit-for-tat over who’s allowed to say what during the hearings. 

DEA Judge John Mulrooney also rejected some key claims from an earlier filing that the DEA had improper contact with anti-cannabis reform groups including Smart Approaches to Marijuana ahead of the hearing, Marijuana Moment reports. But while Mulrooney said he couldn’t specifically remove the DEA as a “proponent,” of the rule change, he criticized, viciously, the agency’s conduct so far — especially the allegations of improper contact as well as the agency submitting a CD of public comments as evidence when it was explicitly told not too.

Mulrooney granted a request from a pro-rescheduling witness for an appeal and as a result canceled the January 21 start date to delay the hearings at least three months. 

What he’s saying: “[t]he specter of officials at the highest level of Agency management selectively assisting and granting access to individuals and groups standing in opposition to the [Notice of Proposed Rulemaking, or NPRM] it purportedly supports as the proponent, carries no small measure of discomfiture,” Mulrooney said. 

“If true, viewed in the best light, these allegations demonstrate a puzzling and grotesque lack of understanding and poor judgment from high-level officials at a major federal agency with a wealth of prior experience with the [Administrative Procedures Act].”

Zoom in: The DEA may not be in favor of rescheduling, despite technically being a proponent of the rule and in charge of the process.

The agency’s planned testimony reveals that it plans to discuss the harms of cannabis use and its addictive potential, rather than more positive medical research.

And separately, in a response to a filing last week from cannabis firm Village Farms International and advocacy group Hemp for Victory, the DEA declined to endorse rescheduling cannabis.

That’s why some pro-cannabis groups want the DEA removed from its own hearing, and will take the delay. 

Why it matters: If cannabis is moved to Schedule III, it would be the first major federal policy win for the ailing industry and would likely catalyze a wave of investment. 

But the hits just keep coming for the industry, which looked to the rescheduling hearings as a ray of sunshine in what’s been a dreary few years.

Though the current Democratic Administration campaigned on cannabis reform, Biden and Vice President Kamala Harris will leave office with little to show for those campaign promises. The administration did issue a number of cannabis and drug-related pardons, but was unable to move rescheduling across the finish line or push for any other industry-focused reform in Congress, like the SAFER Banking Act, a banking bill.

Anne Milgram, the current DEA head, will also be replaced on January 20 and it’s unclear who Trump’s pick to lead the agency will be, and what that person’s position on cannabis reform is. The next head of the agency will have a crucial role in shepherding the complex rule change through — or stymieing it. 

And more: Pam Bondi’s confirmation hearings for Attorney General start Wednesday at 9:30 AM Eastern. We’ll be watching to see if the kerfuffle over the rescheduling hearings comes up. 

-JB

“I expect there will be an immediate influx of private capital to marijuana businesses if marijuana is rescheduled. Momentum will (at least appear to) be on the side of marijuana businesses. A number of funds that have formal or informal policies governing investment in marijuana businesses will immediately investigate the opportunities. And investors will be even more motivated because it appears that 280E would no longer provide a substantial tax headwind for growth of those businesses.”

Whitt Steineker of Bradley Arant Boult Cummings LLP in his Budding Trends newsletter.

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