$5.7 Billion in Tax Revenue in the Last 18 Months and Anti-Pot Groups Worry the Weed Biz Would Get Too Big with Rescheduling?

October 27, 2023 · Cannabis.net

Eleven former high-ranking officials, including six ex-DEA heads and five former White House drug czars, have opposed the U.S. Department of Health and Human Services’ recommendation to reschedule marijuana. They sent a letter to the current Attorney General and DEA Administrator, expressing concern over this proposal.

Rescheduling Debate

The letter suggests that rescheduling marijuana to Schedule III could “supersize” the industry through tax relief and market normalization. It also argues that rescheduling would reduce penalties for marijuana trafficking, potentially hindering cartel prosecution. Legal experts, however, challenge this claim, highlighting that penalties for drug trafficking are not directly linked to the drug’s scheduling under the Controlled Substances Act.

Remember, states have collected over $5.7 billion in tax revenue in the past 18 months just from marijuana sales.  One, the industry already is supersized. Two, who is complaining if the number jumps to $12.8 billion or $14.3 billion after rescheduling? Will towns and cities complain with all the new tax revenue coming in to build schools, fix roads, and help with treatment centers?

Whaaaaaaa?

Penalties for cannabis trafficking differ based on the amount involved. For instance, trafficking up to 50 kilograms mandates a minimum five-year prison sentence and a maximum $250,000 fine for a first offense, while trafficking 1,000 kilograms carries a ten-year minimum sentence. However, these penalties are specific to marijuana.

Therefore, the assumption that rescheduling marijuana would automatically reduce these penalties is questionable and largely reliant on potential future statutory changes by Congress. Unlike other substances, changing the schedule for marijuana does not directly alter the associated criminal penalties. Legal experts emphasize this point, asserting that the former federal drug agency heads’ claim in their letter is inaccurate.

Kevin Sabet, who leads the prohibitionist organization Smart Approaches to Marijuana (SAM), has consistently argued against the notion that criminal penalties for federal drug offenses are directly tied to the drug’s scheduling status. He even criticized a member of Congress for allegedly misunderstanding this disconnection between scheduling and penalties. Nevertheless, some scholars contend that rescheduling marijuana could reduce penalties under the Controlled Substances Act (CSA).

Furthermore, it’s worth noting that judges and prosecutors typically possess discretion and might opt for lesser penalties in the event of federal rescheduling, even if not legally mandated. Despite seeking clarification from the DEA, Marijuana Moment received no response and was referred to the Justice Department for inquiries about criminal penalties and prosecutions, which remained unaddressed.

The former DEA heads and White House drug czars argue in their letter that rescheduling marijuana to Schedule III would have an effect of expanding the cannabis industry in the United States. This change would provide them with the opportunity to circumvent IRS Section 280E, granting businesses the ability to write off their expenditures.

As a result, marijuana companies could deduct expenses related to youth-oriented advertising and the sale of cannabis products aimed at children, potentially fueling a substantial surge in the industry’s commercialization prospects.

Around a year ago, President Joe Biden initiated a comprehensive examination of marijuana scheduling, with HHS conducting an exhaustive 11-month scientific evaluation. This evaluation ultimately recommended reclassifying cannabis to Schedule III within the framework of the Controlled Substances Act. The decision now rests with the DEA, as the health agency’s scientific findings carry binding weight, though the law enforcement agency retains the authority to disregard this recommendation.

The Research Gap

Ex-DEA administrators and ONDCP directors have communicated in their letter that the DEA ought to dismiss the scientific findings of HHS and oppose the reclassification of marijuana to Schedule III. They expressed severe reservations, arguing that there hasn’t been any recent evidence in the past seven years warranting a shift in marijuana’s classification.

They highlighted that Schedule I drugs lack accepted medical use, and the FDA has not endorsed raw marijuana due to a lack of double-blind, published studies demonstrating its safety and efficacy. However, these studies face significant obstacles due to marijuana’s Schedule I status, a concern shared by other prominent health officials, including NIDA Director Nora Volkow.

The letter from former DEA administrators and ONDCP directors delves into several common prohibitionist arguments, touching on concerns like increased THC potency, potential misuse, and the limitations of legalization in curbing the illicit market. They point out that reclassifying marijuana to Schedule III would benefit cannabis companies by allowing them to deduct business expenses, leading to higher profits, more advertising, and greater commercialization.

IRS Code 280E restricts tax deductions for businesses marketing Schedule I or II controlled substances, subjecting the industry to a higher effective tax rate. They argue that since a 2016 review, which found no accepted medical value and high abuse potential, there has been no new evidence to warrant reclassification.

Numerous studies conducted since 2016 have linked cannabis to various positive health effects. Additionally, more states have legalized it for medical use, addressing a wide range of conditions. Notably, the officials pointed to research suggesting that marijuana is more addictive than some other Schedule I substances, such as LSD, GHB, ecstasy, and khat.

However, they didn’t propose rescheduling these substances, despite MDMA (ecstasy) being designated as a breakthrough therapy by the FDA, potentially gaining federal approval as a medication next year. The letter underscores the argument against rescheduling marijuana, emphasizing the need for large-scale clinical trials to outweigh its risks for patients it aims to treat, based on a NIDA factsheet.

The letter fails to acknowledge the criticism of drug criminalization and Schedule I designations from the long-standing head of the same agency, Dr. Nora Volkow. In 2021, she noted a lack of evidence for occasional marijuana use harming adults. She highlighted the complications of criminalizing drug use, research barriers, and the structurally racist impact of the drug war.

In contrast, the former drug officials argue in their letter that if specific marijuana compounds prove medically valuable, few would oppose FDA-approved marijuana-derived medications.

They point to the federal approval of synthetic THC medication dronabinol as an example.

They also challenge the notion that rescheduling would significantly enhance research, citing the expensive and largely private nature of drug development as a potential barrier to the creation of more marijuana-based medications.

Research Funding

The former DEA and ONDCP leaders, with a history of service under presidents from both major political parties, penned a letter calling on the National Institutes of Health (NIH). They have asked NIH to finance research examining both the potential medical benefits of marijuana and the dangers linked to highly potent cannabis products.

They underscored marijuana’s addictive qualities and the absence of recognized medical applications, raising apprehensions about how rescheduling might affect law enforcement efforts and prosecutions related to drug trafficking.

As advocates and lawmakers marked the first anniversary of President Biden’s mass marijuana pardon and scheduling directive, they called for more comprehensive reform and federal legalization. Additionally, two GOP senators introduced legislation to prevent cannabis rescheduling without congressional approval.

In contrast, a coalition of 14 Republican congressional lawmakers urged the DEA to maintain marijuana’s most restrictive CSA classification and reject the federal health agency’s rescheduling recommendation.

Conclusion

The letter from former DEA and ONDCP heads illustrates the ongoing debate surrounding marijuana rescheduling. While they express concerns about the potential risks of rescheduling, advocates, and lawmakers are pushing for comprehensive reform, highlighting the need for more research and the changing landscape of cannabis acceptance in society. This dynamic and evolving conversation underscores the complex nature of marijuana policy in the United States. (Full Story)

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