Easing federal marijuana rules: There’s still a long way to go

Weeks after the U.S. Drug Enforcement Administration proposed loosening a federal prohibition on marijuana, the next phases of policy fights over the drug’s status are starting to take shape.

Public comments, which the DEA is accepting on the proposal until mid-July, will likely include an analysis of the economic impact of more lenient federal rules.

Administrative law hearings, a venue for opponents to challenge executive branch decisions, will likely follow, with marijuana’s potential for abuse a possible issue.

Congress, meanwhile, could act on multiple related issues, including banking access for state-legal marijuana businesses and proposals to help communities harmed by the decades of federal prohibition.

U.S. Rep. Earl Blumenauer, a Democrat from Oregon and longtime advocate for legalizing marijuana who’s retiring at the end of the year, is encouraging his colleagues to build on the administration’s action by taking up bills on those related issues.

The politics of the issue should favor action, even in the face of an upcoming campaign season that typically slows legislative action, Blumenauer said in a May 17 interview, noting the popularity of a more permissive approach to the drug.

“Congress may not do a lot between now and November, but they should,” the 14-term House member said. “Because it’s an election year, there’s no downside to being more aggressive.”

Economic impact

In a proposed rule published in the Federal Register last month, the DEA specifically asked commenters to weigh in on the economic impacts of moving the drug from Schedule I to the less-restrictive Schedule III list under the federal Controlled Substances Act.

That will likely mean the agency will consider the impact of allowing state-legal marijuana businesses to deduct business expenses from their federal taxes, Mason Tvert, a partner at Denver-based cannabis policy and public affairs firm Strategies 64, said in an interview. Under current law, no deductions are allowed.

That issue is seen by advocates, including Blumenauer and fellow Oregon Democrat Ron Wyden, who chairs the tax-writing U.S. Senate Finance Committee, as paramount for the industry.

Thousands of state-legal businesses struggle to earn a profit or operate at a loss under the current system, Blumenauer said.

Potential for abuse

The DEA typically looks at three factors when assessing how strictly to regulate a drug: its medicinal value, potential for abuse relative to other drugs and ability to cause physical addiction.

A 2023 analysis by the U.S. Department of Health and Human Services that looked at data from states where medicinal marijuana is legal showed that “there exists some credible scientific support for the medical use of marijuana.”

That finding could lead DEA to look at other factors, Tvert said.

“The battleground that we’ll see will be around how we define potential for abuse,” he said.

Agencies split?

But the DEA proposed rule revealed a divided view among government agencies about the drug’s potential harms, Paul Armentano, the deputy director for the longtime leading advocacy group National Organization for the Reform of Marijuana Laws, told States Newsroom.

The text of the proposed rule shows “a lack of consensus” among HHS, the Attorney General’s Office and the Drug Enforcement Administration, he said.

“There are several points in the DEA’s proposed rule where they express a desire to see additional evidence specific to concerns that the agency has about the potential effects of cannabis, particularly as they pertain to abuse potential and potential harms,” Armentano said.

“The HHS addresses those issues, but the DEA essentially says, ‘We’d like to see more information on it.’”

Kevin Sabat, the president and CEO of the anti-legalization group Smart Approaches to Marijuana, agreed that the DEA did not appear to agree with the HHS conclusion that medical uses exist.

The proposed rule “just brings up all these issues with the HHS’s determination and it basically invites comment on all those issues,” he said.

Administrative law hearing

Sabat’s group will also be petitioning for a DEA administrative hearing, he said. An administrative law judge could rule that the proposal should not go through or that it should be amended to remain stricter than the initial proposal described.

“We’re going to highlight the fact that, first of all, this does not have approved or accepted medical use,” he said.

Tvert said the accepted medical value question is likely not to be a major factor in an administrative law hearing. Several medical organizations and states that allow medicinal use have already endorsed its medicinal value, he said.

Instead, the focus will turn to the drug’s potential for abuse, he said.

“What will be critical is looking at cannabis relative to other substances that are currently II or III or not on the schedule, and determining whether cannabis should be on Schedule I when alcohol is not even on the schedules and ketamine is Schedule III.”

As of June 6, nearly 12,000 people had commented on the proposal in the 18 days since its publication.

While opinion polls show that most Americans favor liberalizing cannabis laws — a Pew Research Center survey in March found 57% of U.S. adults favor full legalization while only 11% say it should be entirely illegal — the public comments so far represent a full spectrum of views on the topic.

“This rule is a horrible idea, this should remain in Schedule I,” one comment read. “Marijuana is a gateway drug and ruins lives.”

“There are no negative side effects to its use,” another commenter, who favored “fully” legalizing the substance, wrote. “Its not harmful. The only harm is what the government has done to me and America. Shame on the people that continue to oppose this. Seriously shame on anyone that would stand in the way of this change.”

Congressional action?

Blumenauer authored a memo last month on “the path forward” for reform as the rescheduling process plays out.

He listed four bills for Congress to consider this year.

One, sponsored by House Democrats, would remove cannabis from the Controlled Substance Act schedule entirely and expunge prior offenses.

A bipartisan bill would make changes to the banking laws to allow state-legal businesses greater access to loans and other financial services.

Another, cosponsored with Florida Republican Brian Mast, would allow Veterans Administration health providers to discuss state-legal medicinal marijuana with veteran patients.

Blumenauer has also co-written language for appropriations bills that would prevent the Department of Justice from prosecuting marijuana businesses that are legal under state or tribal law.

“All of these things are overwhelmingly popular, they’re important, we have legislative vehicles and supporters,” he said.

Still, there may be disagreements about what to pursue next.

Recent years have seen disagreements among Democratic supporters of legalization over whether to prioritize banking or criminal justice reforms.

A banking overhaul has much greater bipartisan support, and advocates on all sides of the issue agree it’s the most likely to see congressional action.

But some who support changes to banking laws in principle object to focusing on improving the business environment without first addressing the harms they say prohibition has caused to largely non-white and disadvantaged communities.

As recently as 2021, Senate Majority Leader Chuck Schumer described banking reform legislation as too narrow. Sen. Cory Booker, a New Jersey Democrat, called it a “common-sense policy” but said that he favored a more comprehensive approach.

“I’ve gone around with Cory on that,” Blumenauer said. “More than anybody in Congress, I’m in favor of the major reforms, and we’ve been fighting for racial justice and equity … but (racial justice and banking reforms) are not mutually exclusive.”

In September, Booker agreed to co-sponsor the banking reform bill after winning a promise from Schumer that a separate bill to help expunge criminal records would also receive a vote. Neither measure has actually received a floor vote.

In a statement following the administration’s announcement on rescheduling, Booker praised the move, but called for further action from Congress.

That includes passing a bill he’s sponsored that would decriminalize the drug at the federal level, expunge the records of people convicted of federal marijuana crimes and direct federal funding to communities “most harmed by the failed War on Drugs,” according to a summary from Booker’s office.

“We still have a long way to go,” Booker said in the statement on rescheduling. “Thousands of people remain in prisons around the country for marijuana-related crimes. They continue to bear the devastating consequences that come with a criminal history.”

Blumenauer said Congress should act on the proposals that have widespread support from voters.

“This not low-hanging fruit, this is having them pick it up off the ground,” he said. “There is no other controversial issue that has as much bipartisan support that’s awaiting action.”