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The Drug Enforcement Administration (DEA) and National Institute On Drug Abuse (NIDA) say they are in favor of a White House proposal to streamline the process of researching Schedule I drugs like marijuana and certain psychedelics.
The agencies testified at a House Energy and Commerce subcommittee hearing on Thursday, expressing support for the Office of National Drug Control Policy (ONDCP) research plan. While the focus of the meeting was mostly on a controversial move to strictly classify fentanyl-related substances, the Biden administration proposal’s research components would also help address concerns within the scientific community about the difficulty of studying other Schedule I drugs.
DEA said in written testimony that “expanding access to Schedule I research is a critical part of DEA’s mission to protect public safety and health.”
“It is critical that the scientific and medical community study Schedule I substances, as some may turn out to have therapeutic value,” DEA Principal Deputy Administrator Louis Milione said. “DEA supports the administration’s legislative proposal’s expansion of access to Schedule I research. DEA looks forward to continuing to work with the research community and our interagency partners to facilitate Schedule I research.”
In general, what the administration is proposing is to align the research requirements for Schedule I drugs with those of less-restricted Schedule II drugs. Scientists and lawmakers have consistently pointed out that the existing rules for studying Schedule I controlled substances are excessively burdensome, limiting vital research.
Rather than having each scientist involved in a Schedule I drug study obtain DEA registration, ONDCP wants to make it so multiple researchers at a given institution would be allowed to participate under a single registration. The administration also proposed a policy change where a research institute with studies taking place over multiple locations would only require one overall registration instead of needing to have a specific one for each site.
Another change would allow certain researchers to move ahead with conducting their studies after submitting a notification to the Department of Justice instead of waiting for officials to affirmatively sign off on their proposals. ONDCP’s plan would also waive the requirement for additional inspections at research sites in some circumstances and allow researchers to manufacture small amounts of drugs without obtaining separate registrations. The latter component would not allow cultivation of marijuana, however.
“Even experienced researchers have reported that obtaining a new Schedule I registration, adding new substances to an existing registration, or getting approval for research protocol changes is time consuming,” NIDA Director Nora Volkow said in her testimony. “Unlike for Schedule II through V substances, new and amended Schedule I applications are referred by the DEA to the HHS for a review of the protocol and a determination of the qualifications and competency of the investigator.”
“Researchers have reported that sometimes these challenges impact Schedule I research and deter or prevent scientists from pursuing this critical work,” she said.
In an interview last week, Vokow said that even she—the top federal official overseeing drug research—is personally reluctant to conduct studies on Schedule I substances like marijuana because of the “cumbersome” rules that scientists face when investigating them.
When ONDCP first announced its proposed Schedule I policy changes in September, some experts tempered expectations about the practical effects of aligning Schedule I and Schedule II applications. The difference is largely a matter of extra paperwork for the more restrictive category, they contend.
Regardless, several lawmakers who attended Thursday’s subcommittee hearing expressed enthusiasm about the prospects of these policy changes.
“I’m particularly interested in eroding existing barriers of federal law that limit researchers at academic medical centers from studying Schedule I substances,” Rep. Doris Matsui (D-CA) said. “So I’m grateful that our research agencies are working to find effective solutions.”
Rep. Tony Cárdenas (D-CA) also weighed in, saying that “we all agree that the current scheduling classification system has made it very difficult for scientists to research the effects of scheduled compounds, which may have medicinal properties.”
“For example, we know that compounds in marijuana have legitimate and beneficial medical uses, despite it being Schedule I,” he said. “So I’m encouraged to see that efforts are being made to allow researchers to study the effects of various compounds. In this proposal.”
ONDCP’s intent to streamline research into Schedule I drugs has been notable and seems to be part of a theme that developed within the administration.
For example, DEA has repeatedly proposed significant increases in the production of marijuana, psilocybin and other psychedelics for research purposes, with the intent of aiding in the development of new federally approved therapeutic medications.
NIDA’s Volkow told Marijuana Moment in a recent interview that she was encouraged by DEA’s prior proposed increase in drug production quota. She also said that studies demonstrating the therapeutic benefits of psychedelics could be leading more people to experiment with substances like psilocybin.
But while the production developments are promising, advocates are still frustrated that these plants and fungi remain in the strictest drug category in the first place, especially considering the existing research that shows their medical value for certain conditions.
There has been at least one recent development in the fight to modernize marijuana research. President Joe Biden signed a massive infrastructure bill last month that includes provisions aimed at allowing researchers to study the actual cannabis that consumers are purchasing from state-legal dispensaries instead of having to use only government-grown cannabis.
But that’s just one of numerous research barriers that scientists have identified. A report that NIDA recently submitted to Congress stressed that the Schedule I status of controlled substances like marijuana is preventing or discouraging research into their potential risks and benefits.
A federal appeals court recently dismissed a petition to require the DEA to reevaluate cannabis’s scheduling under the Controlled Substances Act. However, one judge did say in a concurring opinion that the agency may soon be forced to consider a policy change anyway based on a misinterpretation of the therapeutic value of marijuana.
Meanwhile, DEA has given hemp businesses that sell delta-8 THC products a boost, with representatives making comments recently signaling that, at the federal level at least, it’s not a controlled substance at this time.
Separately, the Washington State attorney general’s office and lawyers representing cancer patients recently urged a federal appeals panel to push for a DEA policy change to allow people in end-of-life care to access psilocybin under state and federal right-to-try laws.
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Photo courtesy of Brian Shamblen.
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Kyle Jaeger is Marijuana Moment’s Sacramento-based senior editor. His work has also appeared in High Times, VICE and attn.
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Anti-Marijuana Indiana Governor Backs Proposal To Set Up Legalization Rules If Federal Prohibition Ends
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IRS Official Gives Marijuana Businesses Advice On Tax Compliance
South Dakota Voters Disapprove Of Governor’s Handling Of Marijuana Legalization, Poll Finds
Cannabis banking left out of NDAA (Newsletter: December 8, 2021)
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The governor of Indiana isn’t personally in support of marijuana legalization, but he says he’s on board with having lawmakers pass a bill to set up the regulatory infrastructure for a legal cannabis market. That said, he’d only be open to enacting the reform after federal prohibition ends.
Gov. Eric Holcomb (R) was asked about cannabis policy during an end-of-the-year interview with Indy Politics that was released on Tuesday. Specifically, he was asked whether he’d “object to Indiana lawmakers at least starting the process” of setting up a licensing structure for legal cannabis businesses so the state can “flip the switch” when federal law changes.
“I don’t mind that at all,” the governor replied.
Listen to Holcomb’s marijuana comments, around 9:00 into the audio below:
It would be a unique legislative process that no other legal marijuana state has pursued, with lawmakers hashing out rules on issues like licensing and taxes without a clear timeline for implementation that hinges on a possible future action by Congress.
The GOP governor’s support for the proposal was welcomed by the Indiana Democratic party, which recently mounted a push for marijuana legalization and called on state lawmakers to enact the reform.
Rep. Sue Errington (D) said she is working on a bill along the lines of what the governor says he’s open to. She recently hosted a town hall event to hear from constituents on the issue.
That’s my bill! https://t.co/yOpF3N3m9j
— Sue Errington (@SueinMuncie) December 8, 2021
If the GOP-controlled legislature fails to pass a legalization bill during the 2022 session, the party organization said Democrats are prepared to campaign on the issue, leveraging the popularity of ending prohibition among Indiana voters.
But while Holcomb endorsed the idea of setting the state up to legalize, he’s made it abundantly clear that it’s not his top priority and he will give deference to the federal government, refusing to enact reform until a federal policy change comes.
“We’re talking about something that is illegal, and it’s just at the core of me—I’ve said this, I’ve taken a couple blows—it’s to uphold and defend the laws of the state and nation,” the governor said. “I don’t get to pick and choose. Even if I agreed with it, I couldn’t get myself to just look the other way as a lot of states have. But just because a lot of other states have doesn’t mean it’s the right thing.”
In the meantime, Holcomb said he does want to see more research into cannabis.
“I would encourage research, proper research, to be conducted,” he said. “We’ve got Indiana University and Purdue University that agree to participate in—an ag school, a medical school—to do the proper research as they would with any other controlled substance and get the [Food and Drug Administration] involved in and get real data.”
The governor similarly talked about his interest in exploring the medical benefits of marijuana during a separate interview with WANE-TV this week.
A 2018 poll that found that about 80 percent of Indianans favor legalizing cannabis for either medical or recreational purposes, and 78 percent agreed that simple possession should be decriminalized.
Adding pressure to enact reform in Indiana is the fact that neighboring Illinois and Michigan have each legalized marijuana for adult use and Ohio has a medical cannabis program. Illinois retailers have already sold more than $1 billion worth of legal adult-use cannabis so far in 2021.
IRS Official Gives Marijuana Businesses Advice On Tax Compliance
Photo courtesy of WeedPornDaily.
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“I’m not here saying that SAFE Banking will magically alleviate access to capital problems, but it will help more than the status quo.”
By Kaliko Castille, Minority Cannabis Business Association
SAFE Banking or Nothing?
That is the question.
Over the last few weeks, there was a lot of talk from people who don’t own plant-touching cannabis businesses about how the Secure and Fair Enforcement (SAFE) Banking Act won’t help minority operators.
Here is the rub: our current legislative choice in the 117th Congress is enacting the SAFE Banking Act or passing nothing.
Comprehensive reform could be three years or more away—at best.
The decision to pull SAFE Banking from the National Defense Authorization Act (NDAA) is further proof that even incremental change is hard on Capitol Hill.
The Marijuana Opportunity Resentencing and Expungement Act (MORE) Act, which would end federal cannabis prohibition, and the SAFE Banking Act both received hearings in their respective committees of jurisdiction and a vote on the House floor in the last Congress—but only SAFE Banking has passed the House this Congress where it remains stalled in the Senate, oddly due to resistance from the party of our champions.
The MORE Act was the first comprehensive legislation that would end federal prohibition and expunge cannabis convictions to gain momentum. The bill has again passed the Judiciary Committee this year but so far has not received a commitment to be brought for a floor vote in this Congress.
Whether challenges with the bill itself, including concerns about the efficacy of the expungement, small business and regulatory provisions, or the entry of the new bright shiny thing, the Cannabis Administration and Opportunity Act (CAO) Act, the MORE Act is unlikely to get a vote in the Senate any time soon—even with 100+ cosponsors in the House at present.
I’m not here saying that #SAFEBanking will magically alleviate access to capital problems, but it will help more than the status quo.
However, it’s completely disingenuous for well intentioned people/orgs to act as if comprehensive reform will def pass this Congress or next.
— Kaliko 🌱 (@WizKaliko) December 7, 2021
The CAO Act, the discussion draft put forth by Senators Schumer, Booker and Wyden, was based in large part on the equity provisions of the MORE Act with additional focus on the regulatory framework. While the CAO Act draft provided an opportunity to strengthen and improve the equity provisions of the MORE Act, there is still no timeline on the formal introduction of the bill.
Once introduced, the CAO Act will face the same filibuster hurdle that is currently impeding progress on issues with more bipartisan support than equitable cannabis reform.
Unless Democrats defy electoral history they will lose one or both chambers of Congress in 2022, leaving the GOP in control and unlikely to move any cannabis focused legislation forward. Equitable cannabis reform will be a nonstarter.
Maybe the States Reform Act (SRA), recently introduced by Rep. Nancy Mace (R-SC), will move with Republicans in control, but the chances Democrats will give the issue over to the GOP for a win is slim to none.
If the Republicans take back the House and/or the Senate in the 2022 midterms, we’ll be well into the 2024 presidential election cycle without passing either an incremental bill (SAFE Banking) or a comprehensive bill (MORE, CAO, or SRA). Given the uncertain outcome of the 2024 election, the wait could be even longer.
Waiting would mean leaving 300,000+ cannabis industry employees at risk of losing their personal bank and retirement accounts, unable to apply for housing loans, or pay their bills in a normal manner.
Waiting means that the already too few Black and Brown entrepreneurs trying to operate in the industry will continue to be denied basic business services.
Leaving them with increased compliance costs, making it harder to pay their employees and contractors as well as creating an outsized public safety risk as they are forced to keep hundreds of thousands of dollars in cash on site—or even on their person, as they go to pay their tax bills.
Waiting means that prospective social equity applicants who are already having to start from a disadvantage are left to fend for themselves without access to basic banking services. Even when they get investment/access to capital, where can they safely store it and effectively deploy it?
Is the banking system structurally racist? Absolutely. Will SAFE Banking give safe harbor to large financial institutions? 1,000 percent. Will loans be given out disproportionately to white cannabis operators? Likely. Do all of these things make it mutually exclusive for Black and Brown operators to benefit from SAFE Banking and get loans and/or bank accounts?
Absolutely not.
It’s possible for all of these things to be true.
Even one more Black or Brown entrepreneur getting access to a bank account is an improvement over the status quo. Accomplishing legislative change isn’t a purity test. It’s about keeping a bigger picture in mind while accepting small wins along the way.
Does SAFE Banking get people who deserve to be out of prison back in the community? No. Does SAFE Banking automatically expunge records for cannabis convictions? I wish.
What does it do?
It helps protect current minority biz operators who are forced to operate in all cash environments and unable to insure their businesses.
Just last week, a dozen Oakland dispensaries were robbed for $5 million dollars worth of cash and product (donate to Supernova Women’s relief fund here). Think SAFE Banking is only about big banks and the “MSO Gang”? Tell that to Tucky Blunt, who says he felt safer selling cannabis on the streets of Oakland than being a sitting duck running a legal, all-cash business.
Also, leave no doubt that I care zero about #MSOGang stock prices. #SAFEBanking is simply a no brainer for anyone who has been operating in this industry without a bank account.
— Kaliko 🌱 (@WizKaliko) December 7, 2021
Sometimes I feel like the cannabis movement needs a refresher on the legislative process. The choice isn’t SAFE Banking vs MORE Act—it’s passing something now or passing nothing.
SAFE passed the House five times and is the only piece of industry legislation that is ready for a Senate vote today. This is how the legislative process works.
I’m not here saying that SAFE Banking will magically alleviate access to capital problems, but it will help more than the status quo.
Now that SAFE is no longer in the NDAA, the Minority Cannabis Business Association (MCBA) will continue pushing an amendment that would include protections for Community Financial Depository Institutions (CFDIs) as well as Minority Depository Institutions (MDIs), which have a history of loaning to Black and Brown communities.
Leave no doubt that MCBA’s advocacy doesn’t begin or end with SAFE Banking, but its passage is critical to the survival of the few Black and Brown operators who are actually currently operating.
How do we expect social equity programs (many of which are struggling) to work without basic access to business services like checking accounts?
It’s simply disingenuous for well-intentioned people and organizations to act as if comprehensive reform will definitely pass this Congress or next. The political reality just doesn’t line up with those idealistic hopes for legislative victory.
SAFE Banking is a no brainer for anyone who has been operating in this industry at any point these last ten years without a bank account.
Access to banking is about equity.
End of story.
Kaliko Castille is the president of the Minority Cannabis Business Association and co-founder of ThndrStrm Strategies, a digital strategy firm. Disclosure: He also supports Marijuana Moment’s work via a monthly pledge on Patreon.
IRS Official Gives Marijuana Businesses Advice On Tax Compliance
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The Internal Revenue Service (IRS) can’t do anything on its own to resolve the unique financial challenges that marijuana businesses face as a result of federal prohibition—but the agency wants to make clear that it’s here to support cannabis firms with tax compliance nonetheless.
De Lon Harris, commissioner of examination at the IRS Small Business/Self Employed (SB/SE) Division, spoke about tax-related issues in state-legal marijuana markets in a webinar published on Wednesday by PBC Conference. He said that while cannabis remains federally illegal, businesses that deal in the controlled substance must still file federal taxes, and IRS is here to help.
“It’s really our mission at the IRS—not just with marijuana and cannabis industries, but with all taxpayers—to promote voluntary compliance,” Harris said. “When most people think of the IRS, they think of examinations or audits and they think that’s the only way that we interact or try to promote voluntary compliance with taxpayers, but we do our fair share of outreach and education as well.”
To be sure, Harris also provided tips for marijuana businesses on tax compliance in a blog post published in September. And IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
“Regarding the cannabis marijuana industry, we developed a strategy that we hope will increase voluntary compliance and identify and address non-compliance when it’s there,” Harris said at the PBC event. “Our focus is to positively impact filing and paying and reporting compliance on the part of all cannabis businesses to keep audits to a minimum.”
Part of the IRS strategy involves training revenue officers and examiners “so that they can come to conduct an examination that is a quality one” and also “providing our examiners with the job aids to facilitate quality examinations.”
“We also collaborate with external stakeholders like we’re doing today,” he said. “We hope that the more we are partners with those in the private industry, the better chance there is for compliance for the businesses that they represent.”
A marijuana business might not be federally legal, but “nevertheless, it’s a business in every sense of the word” as far as IRS is concerned.
Harris also explained that while cannabis companies can’t make conventional tax deductions or receive credits because of the tax statute known as 280E, that “doesn’t prohibit the participant in the marijuana industry to reduce their gross receipts by properly calculating the cost of goods sold.”
This kind of information is also available on the IRS website, the official said, though he noted for now people need to search “marijuana,” rather than “cannabis,” to find what they need. That’s changing, Harris said, “because I really feel like a lot of the folks that are in the industry prefer to use the word ‘cannabis’ instead of ‘marijuana.’”
“So we’re making that change, but for now you would type in ‘marijuana industry’ and it would pull up the page that we give you information about—not only general information that would help you understand and meet tax responsibilities required by the cannabis industry but the page which includes links to pages of more specific information.”
Another top IRS official who’s since left the agency also participated in a PBC Conference webinar last year. He offered similar recommendations to cannabis businesses, while also recognizing that the legalization movement will potentially succeed in ending prohibition in “all states.”
There’s growing recognition within the financial sector and among regulators that the federal-state marijuana policy conflict is untenable.
The secretary of the U.S. Treasury Department said last week that freeing up banks to work with state-legal marijuana businesses would “of course” make the IRS job of collecting taxes easier.
Steven Mnuchin, the Treasury secretary under the Trump administration, repeatedly addressed the issue, saying the current policy conflict creates “significant problems” for IRS and financial regulators. It “creates significant risk in the communities for collecting this amount of cash. It’s problematic,” he said last year.
At a separate PBC Conference event in September, former National Credit Union Administration Chairman Rodney Hood criticized Congress for failing to advance marijuana reform and talked about the need for federal financial regulators to take a “principles-based approach to cannabis banking” and “deliver a preliminary regulatory framework that we can share with other regulators and members of Congress who share our concern about addressing these problems.”
Meanwhile, lawmakers, advocates and stakeholders have also been pushing for legislation to protect banks that work with state-legal cannabis businesses in an attempt to give the industry access to traditional financial institutions. Supporters say it’s a public safety matter, as marijuana companies continue to operate on a largely cash-only basis that makes them targets of crime.
The House has passed the Secure and Fair Enforcement (SAFE) Banking Act in some form five times now, though advocates were disappointed on Tuesday when a must-pass defense bill was introduced that excluded the cannabis banking protections following bicameral negotiations.
Congressional Lawmakers Want ‘Urgent’ Update From Biden On Marijuana Pardons As Holidays Approach
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