The DEA’s hearing on cannabis rescheduling kicks off 👀

SCHEDULE III
Rescheduling hearing kicks off

Driving the news: The long-awaited Drug Enforcement Administration hearing on reclassifying cannabis from the most restrictive Schedule I to the far less restrictive Schedule III kicked off yesterday.

While there wasn’t much action — no witness testimony was heard as this was a preliminary hearing — it’s the start of perhaps the biggest drug policy shift undertaken by the federal government since the Nixon Administration.

Here’s what you need to know: The hearings will likely continue in January, and will run from Tuesday to Thursday until they’re concluded. Don’t expect this to be over quickly.

This first hearing was more to establish rules around who could and couldn’t speak, and the procedural stuff on how long each witness will have to speak and what’s allowed for cross-examination from opponents. 

Much of the testimony being heard is by parties opposed to Schedule III. Only one group in favor of the change, The National Cannabis Industry Association, is allowed to be an official witness. 

For more background on the hearing, and some of the controversy around who can say what, read our November 27 newsletter.

But, but, but: The DEA itself, while officially a proponent of the rule, doesn’t seem to be in favor of it, according to their planned witness testimony.

Anne Milgram, the agency’s administrator, declined to sign off on the original proposed rule change.

What they’re saying: “Remember, everybody, this is not a trial whether marijuana is good or bad, because I don’t know whether it’s good or it’s bad,” John Mulrooney II, the judge presiding over the hearing, said. 

“My issues are much more narrow than that, and has to do with addiction potential and several other little pigeon holes that I have.” 

And: “Here’s a spoiler alert — I am not going to be reading anybody’s book,” Mulrooney said, as many of the witnesses tried to get him to read their books. 

Why it matters: While rescheduling is far from legalization, it would go a long way into making federal cannabis policy more coherent for the reality on the ground. It’s legal for adults in nearly half of the US.

It’s not clear yet the full impacts of Schedule III on the industry. It would still be a controlled substance that you’d theoretically need a prescription to get, and the government will have to figure out how to disentangle that from retail sales. But at this point, the industry will take anything other than outright prohibition. 

It would, however, remove the 280E tax, which stipulates that companies selling Schedule I  or II substances can’t deduct regular business expenses — an ongoing burden on the industry’s profitability, and it would certainly be good for investor sentiment. 

The end result will come under the next administration. President-elect Donald Trump’s pick to lead the DEA, Chad Chronister, won’t likely be an opponent to the rule change, as we wrote in yesterday’s newsletter. 

-JB

“We were literally having breakdowns in our house, crying, wondering what are we going to do?,” Patricia Conner told The City, in a story that dives deep into the challenges that she and her husband, Roland Conner, had in getting their cannabis dispensary open as part of New York’s social equity program last year.

The Conners are the face of New York’s cannabis program, but have faced severe financial difficulty while operating their store. Read more from The City.

Federal cannabis case will get its day in court on December 5 👀

A high profile case filed on behalf of a group of cannabis companies including Verano Holdings will have another day in court on December 5. The case, which centers on the federal government’s ability to regulate intrastate cannabis commerce, was dismissed by a Massachusetts judge last summer but now heads to the First Circuit Court of Appeals in Boston. The top attorney on the case, Josh Schiller joined Cultivated Live in November to discuss the case and next steps. Watch that here. 

Pennsylvania Dems to intro decriminalization bill 🌿

Pennsylvania Reps. Rick Krajewski and Dan Frankel said on Monday they plan to co-sponsor legislation that would decriminalize cannabis in the state. They plan to focus the legislation on restorative justice for those harmed by the War on Drugs, as well as limit THC potency and add other public health-focused measures after holding multiple hearings with experts on the issue. A competing legalization bill was introduced by Rep. Aaron Kaufer in September, though has not yet passed Pennsylvania’s divided House despite Gov. Josh Shapiro’s support. Read more.

Green Wednesday sales 📈

‘Green Wednesday,’ or the day before Thanksgiving, is historically one of the best sales days for cannabis retailers — after 4/20 of course. This year, cannabis tech platform Dutchie says sales on their platform increased 91% (!) over a regular Wednesday. That’s a lot of pre-dinner cousin walks…

Massachusetts eyes social consumption sites 🤙🏻

Massachusetts cannabis regulators are looking to open social consumption lounges, where customers can consume cannabis alongside food, next year. For the first five years of the program, these licenses will only be available to social equity-linked license holders. Read more. 

Advocates call on Biden to free more drug prisoners after Hunter’s pardon 🥊

After President Joe Biden pardoned his son, Hunter, over drug-related and other crimes, advocacy groups including The Last Prisoner Project are calling on him to go further before he leaves office next year. Here’s an enlightening thread from New York University law professor Rachel Barkow on Biden’s historically low pardon rate, and how getting nonviolent cannabis offenders out of prison is an easy start. Lawmakers including Sen. Elizabeth Warren (D-MA) and Rep. Barbara Lee (D-CA) called on Biden to release more cannabis prisoners last week — his previous pardons resulted in no releases from prison.

Happy Munkey opens second store 🗽

New York cannabis brand Happy Munkey opened its second store in Downtown Brooklyn last month. The company is run by Vladimir Bautista, who was arrested more than 20 times and spent time in jail for selling cannabis — but now, finally, he gets to do it legally. Read more from The Brooklyn Eagle.

High Tide takes Cabana Club global 🌎

High Tide Inc, a Canadian cannabis retailer, is taking its membership program, Cabana Club, global. In the US, customers will be able to purchase hemp-derived CBD products, and members in Europe and the UK will be able to purchase snacks and confectionaries. Read more. 

Jay-Z’s cannabis company in a ‘death spiral’ ⏰

Jay-Z’s cannabis company, Monogram, appears to be in a ‘death spiral,’ after raising $575 million, reports SF Gate. It’s another sign of the difficult market for California cannabis companies — and the challenges with selling $50 joints. While you’re at it, read our newsletter on the coming debt bomb for cannabis firms. 

And more:

Edibles brand Gron and Curaleaf are launching Prickly Pear edibles in Arizona. 

Sen. Steve Daines (R-MT), one of the chief Republican supporters of the SAFER Banking Act, a cannabis banking bill, appears to be eyeing a move from the Senate Banking Committee to the Senate Foreign Relations Committee, reports Punchbowl News. If it happens, it’s a blow for the bill. 

Flowhub, a retail platform for cannabis dispensaries, is rolling out ‘The Great American Dispensary Tour,’ a docu-series produced by Ricki Lake. You can sign up here for updates.

Missouri cannabis microbusiness ‘mentor’ connected to licenses under state investigation | Missouri Independent

Inside Sunderland's medical cannabis boom | BBC 

Does cannabis help us love music more? Canadian researchers are on a quest to find out | The Globe and Mail