15 August 2016

The firm writes…….

In a major disappointment to the national cannabis industry, the Drug Enforcement Administration again refused to reschedule marijuana despite the legality of the plant for medicinal purposes in 25 states plus Washington, D.C., Puerto Rico and Guam and legalization in four states. Although the federal government will begin to allow some additional research on the cannabis plant through an expanded application process, individuals that have previously grown or researched the plant under State medical programs will most likely be denied.

The DEA issued three statements on Thursday regarding cannabis in response to a request from Governors Gina Raimondo of Rhode Island and Jay Inslee of New Mexico. In the first statement, DEA Acting Administrator Chuck Rosenberg denied the Governors’ petition to reclassify marijuana as a Schedule I substance confirming the federal government’s fifty year old policy that marijuana has a “high potential for abuse” and “no currently accepted medical use.” This announcement was a major disappointment to medical marijuana advocates and companies throughout the U.S. who believed the federal government might acknowledge some medical value in the plant and reschedule it from its current classification as a Schedule I narcotic (the same classification as heroin and LSD).

In the second policy statement, the DEA indicated it would expand the marijuana research program it currently runs in conjunction with the National Institute on Drug Abuse. This limited program has relied on a single grower in Mississippi to produce marijuana for this research which is conducted by the federal government. Under the new policy, the DEA will allow researchers to apply to grow marijuana not only for the federal research project but also for commercial product development in the drug industry. The number of these licenses will be limited and applicants that have engaged in “illegal activity” regardless of whether such activity was permissible under State law will have that factor “weighed heavily against granting the registration.”

In the last statement titled a “Statement of Principles,” representatives with the Department of Agriculture, DEA, and Department of Health and Human Services clarified the government’s interpretation of the Agricultural Act of 2014 which legalized the growing of industrial hemp in the 28 states that have legalized hemp production or research in some fashion. Among other statements, the agencies emphasized that these programs may conduct research for  “marketing research” purposes by educational institutions or State agriculture departments but not for the purpose of general commercial activity. The agencies reiterated that hemp plants and seeds may not be transported across State lines except by persons registered with the DEA to do so.

“These statements do not change the current status quo of the billion dollar cannabis industry currently operating throughout the U.S.,” said Lance Rogers with Greenspoon Marder in California, “it merely reminds us that federal agencies do not support the growth of this industry nationally. Real innovation and industry growth will continue to come from the state and local governments that support these efforts.”