By Alethia Kasben
Managing Editor
Posted: August 8, 2024 11:27 AM

The potential for the federal government to reschedule marijuana presents a host of opportunities for improvements in state industries across the country, but it will do little good if there isn't a clear, whole-of-government approach to implementation and enforcement, the Cannabis Regulatory Agency said last month.

In May, President Joe Biden announced his administration planned to move marijuana from a Schedule I substance to a Schedule III substance, a less restrictive category. Cannabis being classified as a Schedule I substance has long been criticized by advocates, particularly as states have allowed the use of the drug both medically and recreationally.

If the drug is reclassified, it will potentially allow the federal government to standardize some regulations and allow for marijuana businesses to access things like traditional banking and bankruptcy protections.

However, several federal agencies would have hands in a federally recognized cannabis market and would need to agree on the approach if the drug is rescheduled, otherwise it could do more harm than good, the Cannabis Regulatory Agency said in comments filed in July.

"The licensees, caregivers, patients, and advocates here in the state of Michigan have invested a tremendous amount of time and energy in developing the best cannabis industry in the country," CRA Executive Director Brian Hanna said in a statement. "As we stand at an important crossroads with the possibility of a federal rescheduling of marijuana, the CRA wanted to make it very clear in our public comment that rescheduling will do little good if the federal government fails to provide clear and robust whole-of-government guidance on the implications of the rescheduling. I stand ready to testify at the federal level, as needed, to share the progress we have made in building a robust regulatory program that has made Michigan the national model for stimulating business growth while preserving safe consumer access to cannabis."

In its comments, the CRA said rescheduling the drug could better serve both consumers and businesses by standardizing things like the packaging of products and allowing for "proper" taxation of businesses and products.

"Without clear guidance from the federal government, the tax system would remain convoluted and businesses would continue to face obstacles in claiming deductions and credits that are standard for other industries," the comments said. "By aligning federal and state laws through rescheduling and clear communication, the federal government can ensure transparency in financial reporting and maximize revenue generation from the burgeoning marijuana industry, benefiting both businesses and the broader economy. If marijuana is rescheduled, the U.S. Department of the Treasury should issue clear guidance about the implications of the rescheduling on commercial medical and adult-use marijuana businesses with respect to banking services and taxation."

The federal government should also clearly communicate what requirements it would have for medical marijuana if it were a Schedule III drug, the CRA said. Currently, medications that are in the same class have restrictions on the number of prescriptions allowed during a set time period and require increased paperwork. Other drugs in the same class also don't have adult-use programs like marijuana does, the agency noted.

"A whole-of-government approach will be critical to successfully communicating with state

regulators, marijuana businesses, patients, and consumers the expectations for how

rescheduling will impact the market," the CRA said. "The decisions made on this point will have far-reaching implications for the many other sectors that are impacted by marijuana's current status as a schedule I drug."

Given the widespread implications of rescheduling, the federal government should seek out advice from state regulators when determining how a rescheduling should be implemented if it moves forward.

"For more than half a century, efforts to change how the federal government views marijuana and treats those who grow and consume it fell on deaf ears," the CRA comments said. "In the absence of federal action, states took it upon themselves to gain knowledge and expertise and to build robust regulatory programs that ensure consumers have access to safe products. The federal government now has a once in a generation opportunity to make a meaningful, paradigm altering change in how marijuana is viewed in this country. The CRA urges the DEA to act wisely and responsibly to ensure this opportunity is not lost."