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The governors of six U.S. states—Colorado, Illinois, New York, New Jersey, Maryland and Louisiana—sent a letter to President Joe Biden (D) on Tuesday urging the administration to reschedule marijuana to Schedule III of the Controlled Substances Act by the end of this year. The move, they say, will provide economic and tax benefits for cannabis businesses, protect public health and more closely align government policy with public opinion.
“Rescheduling cannabis aligns with a safe, regulated product that Americans can trust,” says the governors’ letter, which points to a poll that found 88 percent of Americans support legalization for medical or recreational use. “As governors, we might disagree about whether recreational cannabis legalization or even cannabis use is a net positive, but we agree that the cannabis industry is here to stay, the states have created strong regulations, and supporting the state-regulated marketplace is essential for the safety of the American people.”
The governors noted that the recent Department of Health and Human Services (HHS) recommendation to reschedule marijuana “comes on the heels of 38 states creating their own state markets” and regulatory systems.
“In some cases, these state regimes have thrived for more than a decade,” the letter says, calling the rescheduling recommendation “a signal that FDA and the Department of Health and Human Services have faith in state regulators and the regulations that they have promulgated to keep citizens safe.”
Many of the benefits of rescheduling, the governors told the president, are economic. “Rescheduling to Schedule III will alleviate restrictions of Section 280E of the Internal Revenue Code,” they noted, “allowing cannabis-related businesses to take ordinary business deductions—just like every other American business. Economists estimate that this will save $1.8 billion per year by shifting cannabis companies to a standard federal corporate rate of 21% versus the up to 80% effective tax rate they face now.”
The office of Colorado Gov. Jared Polis (D), who led the group letter, said in a separate press release that rescheduling “will not only alleviate the financial and safety concerns for businesses but allow a thriving industry to play a full role in the American business environment.”
Demand for marijuana in the United States isn’t going away anytime soon, the governors told Biden, arguing that regulated products are far safer than those sold on illicit markets.
“There is, and will continue to be, a significant consumer demand for cannabis. That fact will not change regardless of the policy choices we make,” the letter says. “It seems obvious and sensible to us to make cannabis as safe as it can be for adult consumers while simultaneously protecting our children. The state-regulated marketplace does just that.”
“If the state-legal marketplace doesn’t survive,” the governors added, “then we will see unsafe products on every street corner.”
It’s been just over three months since news leaked that the Department of Health and Human Services (HHS) sent a recommendation to the Drug Enforcement Administration (DEA) that marijuana be rescheduled as a Schedule III drug.
In Colorado, Polis applauded the development at the time, but he said there needed to be further action on related issues, such as banking and Food and Drug Administration (FDA) enforcement guidance.
One of the first state officials to react to the HHS rescheduling recommendation, Polis told Biden in a letter in September that while he expects DEA will “expeditiously” complete its review and move marijuana to Schedule III, the policy change must be coupled with further administrative and congressional action to promote health, safety and economic growth.
The government has since released HHS’s rescheduling letter to DEA—in response to a public records request—in highly redacted form. The redacted portions include virtually the entire substance of the message, such as the scheduling recommendation itself, as well as the scientific review portion that was attached to the letter.
The document, sent to DEA Administrator Anne Milgram, says that the HHS recommendation was based on “the eight factors determinative of control of a substance under 21 U.S.C. 81 1 (c).”
While the Congressional Research Service (CRS) recently concluded that it was “likely” that DEA would follow the HHS recommendation based on past precedent, DEA reserves the right to disregard the health agency’s advice because it has final jurisdiction over the CSA.
Meanwhile, six former DEA heads and five former White House drug czars sent a letter to the attorney general and current DEA administrator voicing opposition to the top federal health agency’s recommendation to reschedule marijuana. They also made a questionable claim about the relationship between drug schedules and criminal penalties in a way that could exaggerate the potential impact of the incremental reform.
Signatories include DEA and Office of National Drug Control Policy heads under multiple administrations led by presidents of both major parties.
In October, Advocates and lawmakers who support cannabis reform marked the one-year anniversary of Biden’s mass marijuana pardon and scheduling directive this month by calling on him to do more—including by expanding the scope of relief that his pardon had and by expressly supporting federal legalization.
Two GOP senators, including the lead Republican sponsor of a marijuana banking bill that cleared a key committee last month, recently filed new legislation to prevent federal agencies from rescheduling cannabis without tacit approval from Congress.
A coalition of 14 Republican congressional lawmakers, meanwhile, is urging DEA to “reject” the top federal health agency’s recommendation to reschedule marijuana and instead keep it in the most restrictive category under the CSA.
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