Rescheduling – Smoke Master https://smoke.vmondeika.com The ultimate smoking source Sun, 20 Sep 2026 12:16:19 +0000 en-US hourly 1 https://wordpress.org/?v=7.1.1 https://smoke.vmondeika.com/wp-content/uploads/2026/01/cropped-SMG_logo_favicon-32x32.png Rescheduling – Smoke Master https://smoke.vmondeika.com 32 32 Alabama Officials Withdraw Objection To Rescheduling Marijuana Under State Law In Line With Trump’s Federal Move https://smoke.vmondeika.com/alabama-officials-withdraw-objection-to-rescheduling-marijuana-under-state-law-in-line-with-trumps-federal-move/ Sun, 20 Sep 2026 12:16:19 +0000 https://smoke.vmondeika.com/alabama-officials-withdraw-objection-to-rescheduling-marijuana-under-state-law-in-line-with-trumps-federal-move/

“The program’s already live, even though it’s still Schedule I in Alabama.”

By Anna Barrett, Alabama Reflector

Alabama’s public health officials on Thursday withdrew their objection to the federal rescheduling of marijuana, a move officials characterized as procedural, following a July public hearing.

The governing body of the Alabama Department of Public Health (ADPH) in May voted to delay the rescheduling so that officials could have more time to determine how to implement it, but noted that they “fully intended” to reschedule the drug.

State Health Officer Dr. Scott Harris said Thursday morning that he did not see any issues with the change, and the public comments did not reflect the impact of rescheduling but rather marijuana itself.

“I would say there are a lot of really passionate people that had a lot of really strong feelings about it, and I don’t want to minimize that or oversimplify that,” Harris said. “The comments were people who really support medical marijuana or who really don’t support medical marijuana. The comments weren’t really about what we were trying to get at, which [was] ‘what are the consequences of rescheduling.’”

Conservative activists at the public hearing said the rescheduling would “harm children” and “worsen Alabama’s mental health crisis.” The only proponent of rescheduling at the public hearing said not doing so would instill distrust between patients and doctors.

Harris said ADPH’s legal team resolved all of the department’s concerns, like the impact to pharmacies and those seeking the medication.

In April, the U.S. Department of Justice (DOJ) moved marijuana from Schedule I—the Drug Enforcement Administration’s list of drugs with the greatest potential for abuse and least legitimate use—to Schedule III, with drugs considered to have a moderate to low potential for physical and psychological dependence, according to the U.S. Drug Enforcement Administration.

The order followed an executive order signed by President Donald Trump in December instructing the DOJ to move towards rescheduling.

Former President Joe Biden instructed DOJ to reschedule the drug in 2024, but hearings on the move were canceled in early 2025.

The federal order applies to state-licensed medical marijuana products in the states that allow medicinal use of the drug. The move means those businesses can deduct business expenses from their federal taxes and researchers have access to state-legal products. As a Schedule I drug, only cannabis grown in a federally approved facility could be studied, severely limiting the supply available to researchers.

Alabama’s medical cannabis program was created by the Legislature in 2021. Three dispensaries are open in the state, with seven more to open within the next few months. At the program’s full capacity, there will be nearly 40 dispensaries.

Harris said the rescheduling would not impact the state’s medical cannabis program.

“The program’s already live, even though it’s still Schedule I in Alabama. The reason is, the statute was written essentially to decriminalize it for people who are authorized to have it,” he said.

The committee unanimously withdrew its objection.

This story was first published by Alabama Reflector.

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Trump Releases More Federal Marijuana Prisoners As DEA Considers Rescheduling Cannabis https://smoke.vmondeika.com/trump-releases-more-federal-marijuana-prisoners-as-dea-considers-rescheduling-cannabis/ Fri, 04 Sep 2026 20:55:34 +0000 https://smoke.vmondeika.com/trump-releases-more-federal-marijuana-prisoners-as-dea-considers-rescheduling-cannabis/

President Donald Trump has granted clemency to two people who are serving time for federal marijuana convictions as his administration advances the process of rescheduling cannabis.

The president on Thursday commuted the sentences of Jerry Haymon IV and Kevin Harden, effectively ending their sentences and putting them on the path to being free.

Haymon was given a 10-year mandatory minimum sentence in federal prison for his participation in a marijuana distribution conspiracy, and has been living in home confinement for the past year.

Until now, he has had about a year left to go and has experienced difficulty getting approval for jobs. For example, the private company overseeing his home confinement blocked his ability to handle social media for a cannabis company and to do research at a policy organization that touched on the issue of marijuana even though neither job would have involved him touching the plant.

“Today is an amazing day that I will never forget,” Haymon told Marijuana Moment on Friday after receiving the news of his commutation, saying it feels like he has been “reborn again.”

“I got my life back,” he said. “There are no words that can fully express what this act of clemency means to me and the people I love. I am deeply grateful to everyone who advocated for me, supported me and helped give me this second chance.”

Thirty-six members of Congress sent a letter to then-President Joe Biden in support of Haymon’s request for clemency.

“Jerry was a two-way football star in high school who went on to play defensive back in college, where he was majoring in economics (and even made the Dean’s List one semester),” the lawmakers wrote. “Prior to his arrest in 2017, Jerry was looking to try out for professional football. At sentencing, the trial judge regretfully noted that his hands were tied by federal mandatory minimum prison terms for marijuana.”

While Biden issued mass pardons to people who committed federal marijuana possession offenses, he did not heed calls to free people serving time in federal prison for involvement in selling cannabis.

Harden, the other person that Trump granted clemency to on Thursday, has been serving a 30-year sentence after being convicted of conspiracy to distribute marijuana.

His co-defendant in the cannabis case, James Romans, was granted clemency by Trump in 2021 on the final day of his first term in office.

While incarcerated, Harden has experienced several severe medical issues, including multiple open-heart surgeries, a seizure disorder and blood-clotting.

The clemency applications from Haymon and Harden were both accompanied by a letter that boxer Mike Tyson wrote to Trump in which he praised the president for making moves to federally reschedule marijuana.

“There are Americans still sitting in federal prison for the very conduct your order addresses, waiting to see if your historic words will extend to them,” he wrote. “With two-thirds of Americans in support of marijuana legalization, not more punishment, the politics align with common sense policy. Yet individuals remain behind bars under outdated federal laws for conduct that today would not result in prison in much of the country.”

“Granting clemency to non-violent marijuana offenders would reunite families, restore lost opportunity, and write the final chapter of the federal war on marijuana—a chapter that only you have the power to close,” Tyson said. “It would be a legacy moment: bold, decisive, and right. I respectfully urge you to act.”

The two cannabis commutations are part of a broader package of clemency grants the the president issued this week.

Trump’s move to free a handful of cannabis prisoners comes as his administration of moving forward with the process of federally rescheduling marijuana.

Attorney General Todd Blanche in April issued an order that immediately reclassified state-licensed medical cannabis, as well as marijuana products approved by the Food and Drug Administration (FDA) from Schedule I of the Controlled Substances Act (CSA) to Schedule III.

Under a separate order he signed, the DEA hearing was held to consider more comprehensively moving marijuana to Schedule III. An agency judge is currently considering a recommendation on the issue, and then the DEA administrator will issue a final determination.

During the hearing, DEA officials charged with defending the cannabis rescheduling proposal highlighted testimony on marijuana’s medical benefits and its relative safety compared to other substances such as alcohol and opioids.

That included appearances from a Food and Drug Administration (FDA) scientist and a medical doctor from New Hampshire who detailed how medical marijuana provides relief to pain patients and can serve as an alternative to opioids.

Weldon Angelos, founder of the criminal justice non-profit The Weldon Project who received a cannabis-related presidential pardon during Trump’s first term, said that “today is an extraordinary day for two deserving men and their families.”

“These grants of clemency are about mercy, redemption, second chances and recognizing the humanity in people who have already paid an enormous price for their mistakes,” he said.

“President Trump has granted clemency to two individuals serving prison time for cannabis, Jerry Haymon and Kevin Harden. Jerry, a former college football standout, has worked incredibly hard to demonstrate that a person’s worst moment should never define the rest of their life. Kevin has endured serious and debilitating medical conditions that have made his continued incarceration both extraordinarily difficult and increasingly dangerous.”

“I am deeply grateful to President Trump and Alice Johnson for continuing to give deserving people a pathway home,” Angelos said, referring to Trump’s White House pardon czar who herself received clemency from Trump in 2018.

“For Jerry and Kevin, and especially for the families who have waited and prayed for this day, this is life-changing,” he said. “We are also encouraged by the administration’s continued commitment to clemency and expect to see more deserving individuals receive relief in the future. This is exactly why we do this work.”

Haymon said he is “eternally grateful to President Donald J. Trump and Alice Johnson for granting me a full commutation for my marijuana offense and giving me the opportunity to move forward with my life without this conviction hanging over me.”

“I also want to thank Weldon Angelos and the entire Mission Green and Weldon Project team for believing in me, fighting for me, and never giving up on my case,” he said. “They stood beside me and my family throughout this process and worked tirelessly to make this moment possible.”

Erik Luna, who represented Haymon on behalf of the Mission Green Initiative and serves as director of research and legal policy at the Weldon Project, said his client “received a ten-year federal sentence for conduct that is now legal in both states where the offense occurred.”

“Jerry served years in prison for a first-time, nonviolent marijuana offense, while today multi-billion-dollar cannabis companies operate openly under state law—often with armed security—engaging in the very conduct for which Jerry was convicted and sentenced,” he said. “That is the definition of injustice.”

Earlier this year, Trump pardoned a former NFL star who was convicted of trafficking 175 pounds of marijuana.

At the start of his second term, the president fulfilled a campaign promise by commuting the life sentence of Ross Ulbricht, a man who was convicted of running a dark web illicit drug market.

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Federal Rescheduling Sets The Stage For Marijuana Business Acquisitions As Pharma And Ag Firms Eye Industry (Op-Ed) https://smoke.vmondeika.com/federal-rescheduling-sets-the-stage-for-marijuana-business-acquisitions-as-pharma-and-ag-firms-eye-industry-op-ed/ Sat, 29 Aug 2026 06:38:42 +0000 https://smoke.vmondeika.com/federal-rescheduling-sets-the-stage-for-marijuana-business-acquisitions-as-pharma-and-ag-firms-eye-industry-op-ed/

“The practical question isn’t whether this is something to celebrate, it’s whether your business is positioned to be a consolidator, an attractive acquisition target or something different.”

By Christopher B. Lynch, Dickinson Wright PLLC

There are a lot of rumors and misinformation out there about what the April 23 federal marijuana rescheduling order means. Some will tell you a story about legalization finally arriving. Others will tell you that not much is changing. But if you look closely, there’s another interesting story emerging: one of careful planning, swift action and targeted consolidation.

Since Acting Attorney General Todd Blanche moved Food and Drug Administration (FDA)-approved and state-licensed medical marijuana products from Schedule I to Schedule III of the Controlled Substances Act, the businesses that I think are best positioned to take advantage of rescheduling aren’t popping champagne—they’re positioning themselves to take advantage of new first-mover opportunities.

That, more than any headline about “federal legalization,” is the real story of rescheduling’s first year: not a national market opening overnight, but a faster, harder sorting of who survives in the one we already have.

NewLake Capital Partners CEO Anthony Coniglio put it well: “Each year brings predictions of a major M&A wave in cannabis. And so far, each year has mostly delivered tuck-in deals rather than transformative consolidation.”

We’re seeing deals that are smaller, more frequent and often faster with less diligence. Two months after Blanche’s order, the Department of Justice opened an expedited administrative hearing to consider rescheduling marijuana in full, including adult-use. That hearing has now concluded, and a recommendation could come at any time.

But for license holders and investors making decisions today, the more immediate question isn’t when the Drug Enforcement Administration (DEA) and DOJ finish the bigger rulemaking. It’s whether their business is built to be an acquirer, an acquisition target or neither, in a race that’s already started.

What the order actually does

The April order reclassified medical marijuana that is FDA-approved or state-licensed, moving it out of Schedule I—reserved for drugs deemed to have no accepted medical use —and into Schedule III, the category for substances with accepted medical use and an abuse potential lower than Schedule I or II drugs. Blanche limited the order to medical products, citing U.S. international drug treaty obligations as the reason adult-use marijuana stayed on Schedule I.

Licensed operators got a 60-day window to opt into a priority DEA registration pathway.

Many took advantage of that pathway, and we’re seeing some of the results: in June, Trulieve restructured to separate its 206 DEA-registered medical dispensaries from its adult-use business and became the first U.S. cannabis company to list on the New York Stock Exchange proof that registration can be a path to markets and resources this industry has been shut out of for a decade.

Tax relief under Section 280E—which prevents deductions for operations that sell Schedule I and II drugs—is the clearest near-term benefit of registration, but there are arguments for federal trademark protection and other prospective benefits.

Where the broader rescheduling case stands today

The bigger question of full rescheduling was the subject of DOJ’s separate administrative hearing, which ran from June 29 through July 15. Final briefs were filed August 19, and Chief Administrative Law Judge Derek C. Julius is now finalizing the record ahead of a recommendation.

That recommendation won’t be law; it goes to DEA Administrator Terrance Cole, who, together with Blanche, will decide whether to issue a final rule. There’s no statutory deadline to rely on, so there could be an update next week or next year—and that’s assuming none of the legal challenges cause further delay.

What began as a single petition challenging the rescheduling move by Smart Approaches to Marijuana has become three consolidated lawsuits in the D.C. Circuit, plus a coalition of doctors, activists and the attorneys general of Indiana and Nebraska (Louisiana has since withdrawn).

And if you need proof that of the value of the opportunities that rescheduling can bring, just look to the claims by MMJ International Holdings, which argues it now faces competitors reaching Schedule III for free after it spent years (and significant capital) pursuing FDA approval the traditional way to get a market advantage.

The plaintiffs in the consolidated lawsuits have asked the court to stay the order while the case proceeds. The DOJ opposed that, and plaintiffs filed their reply on July 17. Two operators, MedPharm Iowa and Tri-Mountain Pure, have since moved to intervene in defense of the order.

A ruling granting a stay could freeze DEA registrations and potentially suspend benefits that operators are banking on.

Why “rescheduled” doesn’t necessarily mean “legalized”

If you operate under a state medical marijuana license, hold dual medical and adult-use authorizations or are evaluating an investment in this industry, treat this moment as the start of a compliance project, not the arrival of a legalized market—we still have many more questions than answers.

State law compounds this, since no two states built their systems alike. The right strategy in Maryland may be wrong in Michigan or Washington, and the ground could shift again fast if the D.C. Circuit grants a stay, or if the ALJ’s recommendation or the eventual final rule reshapes the framework.

Some states could tie state licensure to DEA registration—Oklahoma already has, telling license holders to get DEA registration or risk losing their state permits next year.

Layer on top of all that new DEA regulation of license holders, which could mean on-demand facility access and inspection authority, DEA security requirements, mandatory disclosure of employees’ Social Security numbers and potential exposure for co-located medical and adult-use businesses.

This industry could look very different twelve months from now.

Striving for pole position

Rescheduling alone isn’t going to turn leaden cannabis equities into gold overnight, and I don’t think institutional capital is going to dive into the market immediately—that still requires congressional legislation such as the SAFER Banking Act and operators with the earnings and balance sheets to earn institutional trust.

But in the meantime, rescheduling is drawing interest from pharmaceutical, agricultural and consumer products companies that stayed on the sidelines while marijuana sat on Schedule I and well-positioned operators are already using this window to plan restructurings, seek new partners, acquire distressed assets and target new markets.

This is a genuinely significant moment in the fifty-year history of federal cannabis policy, and one that I think will reward careful, jurisdiction-specific planning and analysis.

The practical question isn’t whether this is something to celebrate, it’s whether your business is positioned to be a consolidator, an attractive acquisition target or something different, and the race for pole position is already underway.

As the smoke clears on rescheduling, start preparing now to take advantage of the opportunity.

Christopher B. Lynch is a Member in Dickinson Wright PLLC’s Seattle office, where he practices in the firm’s Mergers and Acquisitions and Cannabis Law groups.

Photo by Kyle Jaeger.

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How Cannabis Companies Can Take Advantage Of The Research And Development Tax Credit Under Federal Rescheduling (Op-Ed) https://smoke.vmondeika.com/how-cannabis-companies-can-take-advantage-of-the-research-and-development-tax-credit-under-federal-rescheduling-op-ed/ Thu, 27 Aug 2026 06:25:53 +0000 https://smoke.vmondeika.com/how-cannabis-companies-can-take-advantage-of-the-research-and-development-tax-credit-under-federal-rescheduling-op-ed/

“Cannabis companies should consider various pitfalls to ensure not only legal compliance, but to maximize potential benefits.”

By Meeren Amin, William Bogot and Douglas W. Charnas, Fox Rothschild LLP

With rescheduling of medicinal marijuana and potential relief coming for recreational use, cannabis companies should be aware of tax benefits available to the industry.

One such incentive for companies not subject to Internal Revenue Code (IRC) § 280E—which blocks tax benefits to entities that sell Schedule I and II substances—is the IRC § 41 R&D (research and development) tax credit. The R&D tax credit provides a dollar-for-dollar reduction of tax owed for qualifying companies. It is not industry specific and can be claimed by a qualifying company in any sector, including cannabis.

The R&D tax credit was enacted in 1981 to incentivize U.S. companies to increase R&D activity. For years the credit was extended temporarily by Congress at the end of each calendar year. However, in 2015, Congress made it permanent. And then in 2025, lawmakers breathed even more life into the credit by eliminating the requirement that R&D expenditures be amortized over a five-year period.

Now, with IRC § 280E on the chopping block as cannabis moves toward Schedule III status, certain companies in the industry can claim the credit that others have taken advantage of for years. Having said that, careful planning is required when considering the R&D tax credit.

Cannabis companies should consider various pitfalls to ensure not only legal compliance, but to maximize potential benefits.

Pitfall #1: Thinking you don’t qualify for the credit because you don’t do research in a laboratory.

The R&D tax credit is not industry specific. Instead, to qualify for the credit, a company must meet each part of a four-part test:

  1. A company needs to develop a new or improved product, process, software, technique, formula or invention. Practically, this means that many cannabis companies can qualify by developing a new or improved product.
  2. The research needs to eliminate uncertainty about a product’s capability, method or appropriate design. Often, research will qualify by means of having uncertainty as to a product’s ultimate design.
  3. The research must involve a process of experimentation. This does not need to be in a laboratory, but instead simply requires evaluating alternatives through system trial and error.
  4. The research must be technological in nature, in that it requires the use of principles of hard science.

This formulaic approach to determining qualification for the credit allows companies in many industries—from pharmaceutical companies to architectural firms—to claim the R&D tax credit. Cannabis companies involved in breeding, cultivation, growing, extraction and product development could potentially qualify for the credit if they meet the four-part test and do not fall under any applicable exclusions.

Pitfall #2: Not maintaining proper records of research activities and expenditures.

The Internal Revenue Service (IRS) commonly attacks R&D credit claims for a lack of substantiation. Taxpayers have the burden to prove they are entitled to the credit, so they must adequately substantiate their claims.

Cannabis companies that qualify can claim the tax credit on qualified wages or supply costs. However, companies must have evidence of wages and supply costs to claim the R&D tax credit.

Evidence of supply costs includes receipts of goods and logs showing how supplies are used in the research process. Since supplies that are later sold to customers would not qualify for the credit, cannabis companies need to track how research supplies are used.

Evidence of wages usually requires detailed activity logs. Most small and mid-sized operators do not require employees to keep a log of activities, but to be able to withstand IRS scrutiny, companies should require employees involved in research to track their time using a consistent methodology.

Maintaining detailed records or R&D activities is difficult for rapidly growing businesses. While granular level records may not be necessary, it is important for cannabis companies to consult with their tax advisors on the level of detail needed and how to implement tracking systems.

Pitfall #3: Relying on unscrupulous or shady promoters of R&D tax credits.

The R&D tax credit is complicated and can be overwhelming. There are a number of reliable firms that can determine qualification, draft a study and calculate the credit. Unfortunately, there are a large number of firms that do not perform the necessary due diligence and are not credible. These firms sometimes charge large contingency fees and make guarantees about eligibility. Their calculations are often greatly overstated for the purpose of generating high fees. These firms may seem credible but can be overly aggressive in their approach.

With the emergence of the cannabis companies as potential new credit claimants, these companies will likely be aggressive in their pitch. However, poor work on the front end can lead to adverse determinations by the IRS.

Cannabis companies need to properly vet the firms they hire to conduct R&D studies and then have those studies reviewed by a third party. Credit experts can analyze the work done by firms to help strengthen the front-end studies. Companies that are not careful face the risk of losing the credit, while also owing promoters huge fees.

Pitfall #4: Not separating non-IRC § 280E and IRC § 280E activities.

As of now, only state-licensed medical marijuana is not subject to IRC § 280E and thus eligible for the R&D tax credit. That means research related to recreational use marijuana is not eligible for the R&D tax credit.

This makes it difficult for most eligible companies who are involved in both medicinal and recreational uses, as they need to separate their research activities relating to the two. This may be almost impossible for vertically integrated companies. But other companies can use entity structuring to help allocate costs and ensure segregation of qualifying and non-qualifying research activities.

The R&D tax credit is a very powerful incentive that certain cannabis companies can now claim. However, it is a major area of focus for the IRS due to the complexity of the credit and the aggressive positions pushed by certain promoters. While this may cause concern to companies seeking to claim the credit, careful due diligence and reliance on advisors can help businesses ensure that their credit claims are well supported.

Meeren Amin is a partner in the Taxation & Wealth Planning Department at Fox Rothschild. William Bogot is co-chair of the Cannabis Law Practice at Fox Rothschild. Douglas W. Charnas is counsel in the Taxation & Wealth Planning Department at Fox Rothschild.

Photo courtesy of National Institute of Standards and Technology.

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Feds Aren’t Answering States’ Questions On Marijuana Rescheduling Process, South Dakota Official Says https://smoke.vmondeika.com/feds-arent-answering-states-questions-on-marijuana-rescheduling-process-south-dakota-official-says/ Sat, 22 Aug 2026 15:19:27 +0000 https://smoke.vmondeika.com/feds-arent-answering-states-questions-on-marijuana-rescheduling-process-south-dakota-official-says/

“At the state level, we probably have more questions than answers.”

By Makenzie Huber, South Dakota Searchlight

A federal change in medical marijuana’s legal classification should help South Dakota’s medical cannabis industry claim business tax deductions and gain access to banking, officials told state lawmakers Monday, but questions remain about the broader impact.

Whitney Brunner, administrator of the state’s medical cannabis program, told the legislative Medical Marijuana Oversight Committee during a meeting at the Capitol in Pierre that the federal government has shared little information about the change with the state—other than to request data.

“At the state level, we probably have more questions than answers,” Brunner said.

In April, the federal government moved medical marijuana from Schedule I to Schedule III under federal drug law. Schedule I drugs are considered to have no accepted medical use and a high potential for abuse. Schedule III drugs are recognized as having accepted medical uses and a lower potential for abuse.

Recreational marijuana remains a Schedule I drug under federal policy, even though 24 states and the District of Columbia allow recreational cannabis in various forms. South Dakota does not allow recreational marijuana use.

Medical marijuana has been legal in South Dakota since 2021, after voters approved it through a citizen-led ballot measure in 2020. Since then, South Dakota has built a regulatory framework—including licensing systems, testing requirements and oversight.

Brunner did not say whether South Dakota businesses will be required to register with the Drug Enforcement Administration to participate in the state program or what new compliance requirements they might face.

Kittrick Jeffries, chairman of the Cannabis Industry Association of South Dakota and owner of Puffy’s Dispensary in Rapid City, said some businesses are taking the initiative.

“A lot of our establishments within our association are currently going through the DEA inspection process to become licensed under the DEA,” Jeffries said.

Cannabis businesses have long been blocked from taking certain federal tax deductions because marijuana was classified as a Schedule I substance—meaning they couldn’t deduct ordinary business expenses the way other businesses can. Banks have also largely avoided working with cannabis businesses because marijuana remains broadly illegal under federal law, exposing financial institutions to regulatory penalties even in states where it’s legal.

The reclassification will allow medical cannabis businesses to claim deductions, said Nicole Ezeh, a presenter with the National Conference of State Legislatures. It should also ease banking access for the industry.

The federal changes come as South Dakota’s program is in transition. Brunner told lawmakers the department overhauled its medical cannabis inspection program over the last year, after inspectors were missing violations and citing establishments inconsistently.

“We realized last year, and it wasn’t a difficult realization to make, that we had a lot of work to do on inspections and our processes,” Brunner said.

The department created new procedures and training, reorganized its supervisor structure and added a formal process for businesses to challenge citations, Brunner said.

Rob Krogstad, who operates Bad River Cannabis in Fort Pierre, told lawmakers his business was fined $3,000 for two “clerical errors” that were corrected before inspectors left the building.

“There will be human error,” Krogstad said, adding that the fine forced the business to delay other operational expenses. He suggested a three-strikes approach for minor clerical errors, with immediate fines reserved for more serious violations.

A rules package moving through administrative review would “make this a little easier on establishments,” Brunner said. The package would simplify language around inventory tracking training and reduce how long businesses must store security camera footage—changes Brunner said would be less expensive and less “cumbersome.”

The rules package would also restructure the fines system, making first-offense minor violations result in a corrective action plan rather than an immediate fine.

This story was first published by South Dakota Searchlight.

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Too Many People On Probation And Parole Still Can’t Use Medical Marijuana, Even Under Federal Rescheduling And State Legalization (Op-Ed) https://smoke.vmondeika.com/too-many-people-on-probation-and-parole-still-cant-use-medical-marijuana-even-under-federal-rescheduling-and-state-legalization-op-ed/ Fri, 21 Aug 2026 14:40:10 +0000 https://smoke.vmondeika.com/too-many-people-on-probation-and-parole-still-cant-use-medical-marijuana-even-under-federal-rescheduling-and-state-legalization-op-ed/

“Because marijuana use remains illegal under federal law, standard supervision conditions may prohibit consumption.”

By Sephria Reynolds-Tanner, Reason Foundation

Medical marijuana is legal in 47 states, the District of Columbia and three U.S. territories. Yet for millions of Americans on probation or parole suffering from qualifying conditions like chronic pain, post-traumatic stress disorder and anxiety, that legalization is worth very little in practice. In many states, people on probation and parole are forbidden to use medical marijuana, even when legally recommended by a physician.

It’s an oversight that state lawmakers need to address.

Nearly four million adults in the United States are on probation or parole, almost double the number of people held in jails and prisons combined. Because marijuana use remains illegal under federal law, standard supervision conditions may prohibit consumption. A positive drug test can trigger a violation of probation or parole and result in jail or prison time.

In 2023, states collectively spent an estimated $3 billion re-incarcerating people for “technical violations,” such as missing a check-in appointment or failing a drug test. The exact share attributable to marijuana-related test failures is unknown because agencies do not collect substance-specific violation data. But, because marijuana is the most commonly used controlled substance and remains detectable in urine for up to 30 days, that share is likely substantial.

This problem for patients is rooted in marijuana’s Schedule I designation under the federal Controlled Substances Act, which deems it to have “no currently accepted medical use.”

But even the federal government is changing its position. Last year, President Donald Trump ordered the attorney general to expedite rescheduling marijuana to Schedule III. In April, then-Acting Attorney General Todd Blanche issued a final order moving Food and Drug Administration-approved and state-licensed medical marijuana to Schedule III, while setting an expedited hearing on broader rescheduling that ran through July 15, with a formal recommendation still pending.

Federal rescheduling at least removes the primary legal justification agencies and courts have used to strip those under community supervision of legal access to medical marijuana. Yet, federal rescheduling will not fix the problem for people under state supervision who need medical marijuana. Most states independently schedule marijuana in their own drug laws, and supervision conditions that prohibit marijuana specifically need to be revised.

Courts in Arizona, Pennsylvania and Michigan have already struck down state bans on people under supervision using medical cannabis, with judges ruling that the immunity granted by state medical marijuana legalization does not simply disappear because someone is placed on probation.

Legislatures in Connecticut, New York, Minnesota, Missouri and Colorado have also taken steps to harmonize their supervision systems with medical marijuana legalization, enacting laws to allow those under supervision to participate in medical marijuana programs.

Corrections agencies in Washington, Florida and Minnesota have implemented administrative policies to do the same, creating a system to verify registration with medical marijuana programs and maintain oversight without categorical prohibition.

But for those under supervised release in many other states, re-incarceration is still a risk if they use doctor-recommended cannabis.

Probation and parole officers do not prohibit people under supervision from taking prescribed controlled substances like Adderall, Xanax or OxyContin. Standard probation conditions include carve-outs that permit the use of prescribed drugs, managing risks through documentation, monitoring and clinical intervention when problems arise.

States should extend the same framework to medical marijuana: Verify the recommendation, document it in the case files and treat it like any other prescribed medication rather than an automatic violation that can lead to reincarceration.

The states that have legalized medical marijuana have already made the policy decision that patients with qualifying conditions deserve access to physician-recommended treatment without criminal penalty. Supervision systems in those same states should reflect the intent of medical marijuana laws and protect patients.

Sephria Reynolds-Tanner is a criminal justice and drug policy analyst at Reason Foundation and a former probation and community corrections officer in Washington state. She is the author of Medical Cannabis Access Under Probation and Parole: Removing Barriers to Doctor-Recommended Treatment.

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Marijuana Rescheduling: DEA’s Final Brief Asks Judge for Schedule III https://smoke.vmondeika.com/marijuana-rescheduling-deas-final-brief-asks-judge-for-schedule-iii/ Fri, 21 Aug 2026 01:14:41 +0000 https://smoke.vmondeika.com/marijuana-rescheduling-deas-final-brief-asks-judge-for-schedule-iii/

The government spent most of its final brief making the legal case for Schedule III. Then, in the closing pages, it took the opposition’s witnesses apart, and quoted some of those same witnesses to prove cannabis is medicine. One scientist walked away almost untouched. She works at the DEA.

The federal government’s closing argument for moving marijuana to Schedule III is in, and its lawyers did not hedge. “Marijuana can no longer remain in Schedule I,” the DEA’s attorneys wrote in a post-hearing brief filed August 17 with Chief Administrative Law Judge Derek C. Julius, asking the judge to “expeditiously recommend” the transfer.

It is the government’s last word before Julius drafts the recommendation that will frame DEA Administrator Terrance “Terry” Cole‘s final decision. And it lands where this proceeding was always going to land: not on whether cannabis has medicinal value, but on which legal test gets to answer that question, and on whose testimony the judge should be allowed to believe.

High Times has covered this hearing since before it opened: the participant roster stacked entirely with opponents, the DOJ’s argument that those opponents’ real injuries are commercial, and the stretch of days in which the opposition’s own witnesses kept helping the government. The closing brief turns that pattern into legal strategy.

Six briefs arrived by the August 17 deadline, as first reported by Marijuana Moment: the government’s, a joint filing from Smart Approaches to Marijuana and the states of Idaho, Indiana and Nebraska, separate briefs from the Tennessee Bureau of Investigation and the National Drug and Alcohol Screening Association, a joint brief from DUID Victim Voices and pain physician Dr. Kenneth Finn, and a pro se statement from pharmacist Dr. Phillip Drum. Julius capped each at 50 pages. The government used all 50. On Thursday morning, the judge issued the order correcting the hearing transcript, putting the full record in public hands by August 26.

Getting cannabis out of Schedule I is the easy half, and the brief treats it that way. Schedule I requires that a substance have no accepted medical use. The 2023 Health and Human Services evaluation found three: chronic pain, anorexia related to a medical condition, and nausea and vomiting from chemotherapy. One is enough. A 2024 Office of Legal Counsel opinion holds that the DEA owes those scientific findings “significant deference” and cannot redo them from scratch. Then the brief adds the arithmetic: more than 30,000 practitioners authorized to recommend cannabis to more than six million patients across 43 U.S. jurisdictions, which the government says also undercuts any claim that cannabis cannot be used safely under medical supervision.

Getting it in Schedule III specifically takes dozens more pages on abuse potential and dependence, most of it built on the HHS comparison of cannabis against heroin, fentanyl, cocaine and prescription opioids, plus government witness Dr. Corey Burchman‘s testimony that opioid withdrawal is “horrific” while cannabis withdrawal rarely sends anyone to a hospital.

A reminder of what’s actually on the table, because coverage of this saga keeps blurring it: April’s order already aimed to move FDA-approved cannabis products and state-licensed medical marijuana to Schedule III. This proceeding decides whether the rest of the plant follows. The government wants all of it moved, while keeping cannabis federally controlled either way.

The Closing Pages

Julius ruled before the hearing that all expert designations would be decided afterward, in writing. The government took him up on it. Starting on page 43, the last eight pages of the brief work through the opposition’s witnesses one at a time, sorting what it calls the “so-called expert witnesses” into different grounds for disqualification.

High Times Vault

Some testified outside their expertise, the brief argues. Yale psychiatrist Dr. Deepak D’Souza was offered by the states as an expert in five areas and then asked about pain management, which the brief notes sits outside the boundaries D’Souza drew around his own expertise on the stand.

Some answered the wrong question entirely, per the government: workplace drug-testing witnesses describing hypothetical future hurdles, a state investigator who spoke about “deregulation” and “legalization” in a proceeding that would do neither, and Humboldt County Sheriff William Honsal, whom the states never properly noticed as an expert and who, the brief says, admitted he has “no meaningful connection to Nebraska, Idaho or Indiana,” the three states that called him.

The sharpest allegation gets its own section. According to the filing, Ed Wood of DUID Victim Voices and Finn both ignored the tribunal’s sequestration instructions and admitted to reading transcripts of earlier testimony before taking the stand. Their testimony, the government argues, “has been irreparably tainted and cannot be cured other than providing it little to no weight.” The brief cites transcript pages for both admissions. Those are the government’s characterizations of a record the public still cannot read—though that changes next week.

Dr. Drum, testifying on his own behalf, painted a different picture. He told the tribunal there is no scientific indication or medical use for plant-based marijuana, and the brief notes his opinion on cachexia and cancer pain rests on personal experience with two patients. It also notes what he said next: that Schedule II “would be potentially more appropriate level for marijuana,” because of how fast it absorbs. Schedule II is stricter than Schedule III. It is still not Schedule I. A designated party who came to oppose rescheduling told the judge, under oath, that cannabis belongs somewhere other than where it is.

The filing allows itself one moment of grace. Of Laura Stack, who testified about losing her son, the government writes that it “acknowledges the personal impact of Ms. Stack’s testimony and commends her testimony.” Then it goes back to work.

Because the same brief that asks Julius to discount these witnesses also quotes them making the government’s case. “Testimony from both Government and Opposed Parties alike support the Government’s position,” it argues, and the receipts follow. Harvard’s Dr. Bertha Madras, SAM’s marquee expert, “testified that there is scientific evidence of marijuana’s efficacy for neuropathic pain patients, although she believes that the science is weak,” per the brief, and her own demonstrative exhibit noted benefits for wasting syndrome, appetite and pain in cancer patients and severe nausea. D’Souza described a study in which a standardized cannabis extract beat placebo for pain.

Finn gets perhaps the most lawyerly treatment in the document. A footnote sets up the fallback in advance: the government believes his testimony should get no weight because of the sequestration problem, but “should the Tribunal choose to give any consideration” to it, the brief highlights the parts where he admits he recommended marijuana to his own pain patients and believes there is likely a therapeutic benefit. Throw him out. If you won’t throw him out, he’s ours.

“The evidence proffered by the Opposed Parties boils down simply to the fact that Schedule III marijuana poses employment and enforcement difficulties, the same as any other controlled substance in Schedules II – V.”

The Witness They Didn’t Touch

Dr. Luli Akinfiresoye is a pharmacologist in the DEA’s Drug and Chemical Evaluation Section and an author of the agency’s own scientific review. SAM called her, and she delivered. The SAM and states brief cites her 25 times, using her testimony to argue that cannabis fails the five-part medical-use test the DEA applied for decades, including her line that there was no clear data supporting cannabis for chronic pain.

Cannabis Business Times, which first reported the brief’s credibility strategy, described her as the lone witness the government didn’t pick apart. The document is a shade stranger than that. Akinfiresoye appears in the government’s 50 pages exactly once, cited in support of the government’s own finding that marijuana has no consistent, reproducible chemical profile. The eight pages devoted to picking apart everyone else never name her.

High Times Strains

Her actual conclusion does get answered, but on a different level. The government’s response is that the OLC found the five-part test “impermissibly narrow” and the newer two-part inquiry legally sufficient, so a witness applying the old test is applying a standard that no longer controls. That is not a rebuttal of her science. It is a request for a ruling about which science counts.

Which is the tell: against the sheriff, the pharmacist, the drugged-driving advocate and the Harvard addiction expert, the government litigates credibility and relevance. Against its own scientist, it shifts ground and argues that the question she answered is beside the point.

One more small detail, from the order Julius signed Thursday morning. On the tenth hearing day, when her surname came up, the official transcript rendered it “Akinfire-Soye.” The tribunal corrected it this week.

The Opposition’s Case

The other briefs are worth reading too, starting with the signature block. The SAM and states filing is signed by Patrick Philbin, former deputy White House counsel to Donald Trump, of Torridon Law, the firm founded by former Attorney General William Barr. It opens by noting the government has considered rescheduling marijuana “no fewer than nine times, most recently in 2016” and refused every time, then argues abuse and mental-health harms have worsened since. Its bluntest line comes a section header calling the two-part standard a test “That Was Made Up for This Proceeding.” Its conclusion: the government “has not carried its burden,” and marijuana should stay in Schedule I.

Tennessee’s investigators barely engage with the science. Their brief leads with a procedural knife: the attorney general long ago delegated scheduling authority to the DEA administrator, yet the attorney general issued the rescheduling proposal himself. “That alone is enough to hold the NPRM deficient and keep marijuana in Schedule I,” TBI writes.

NDASA’s brief traces the history of federal drug testing, from Reagan’s 1986 executive order through the 1987 Conrail crash, and builds toward one warning: because the federal testing framework defines illegal drugs by reference to Schedules I and II, moving marijuana to Schedule III could pull the legal floor out from under the Department of Transportation’s testing program, which its witness called the largest in the world. The DUID Victim Voices and Finn brief closes on the human register, invoking a “memorial roll of young people” and accusing the agency of institutional inaction. And Drum, filing alone, opens by declaring marijuana “not a medicine” and numbering the industry’s claims as fraudulent statements one and two.

What Happens Now

The record is nearly closed. On Thursday morning, Julius issued a 13-page order correcting the hearing transcript across all eleven days, and set August 26 as the deadline for the fully corrected version to go up on DEA’s website, with the fixes marked in red. Six parties filed proposed corrections; NDASA did not. Most of the list is housekeeping: misspelled names, misattributed speakers, dozens of lines on day four assigned to the wrong government attorney. Some of it is not. On day one, “there’s adulterants” becomes “there’s no adulterants.” On day eight, “illegal” becomes “legal.” On day ten, “increase” becomes “decrease.” The court reporter also spent a stretch of day one transcribing “Touhy,” the rule governing testimony by federal employees, as “DUID.”

After that, federal regulations direct Julius to prepare his recommended decision “as soon as practicable,” with no deadline attached. Parties then get 20 days after service to file exceptions, and the record is certified to Cole no earlier than 25 days after service. Cole faces no clock either. And the D.C. Circuit is still sitting on a motion to stay April’s order, a ruling that could scramble all of this in a week.

One footnote in the government’s brief points at the real fight: Julius separately asked the parties to brief the binding effect of the OLC opinion, the document that blessed the two-part test and shelved the five-part one. The judge flagged the exact question this case turns on. If the two-part test governs, the government’s arithmetic wins. If the five-part test survives, the strongest evidence against rescheduling came from a DEA pharmacologist.

The government spent its last eight pages taking witnesses apart. Its own scientist got one citation and a change of subject. She works down the hall.

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MMJ Fights to Undo Marijuana Rescheduling After Years Battling the DEA https://smoke.vmondeika.com/mmj-fights-to-undo-marijuana-rescheduling-after-years-battling-the-dea/ Mon, 17 Aug 2026 17:28:56 +0000 https://smoke.vmondeika.com/mmj-fights-to-undo-marijuana-rescheduling-after-years-battling-the-dea/

A drug company spent nearly eight years fighting the DEA to make cannabis medicine the hard way. Now that everyone else is getting an easier path, it’s in court trying to undo the whole thing, a move that could send cannabis back to Schedule I for the entire industry.

MMJ International Holdings spent nearly eight years and millions of dollars fighting the DEA for the right to grow cannabis. It sued the agency. Its CEO called the delays “obstruction in uniform.” Now that the federal government has created a new, easier path for state-licensed cannabis businesses, MMJ is in court challenging the rescheduling.

For nearly a decade, it was the kind of company cannabis reformers could point to as a victim of the DEA. It did everything the federal government said to do. It filed drug applications with the FDA, won an Orphan Drug Designation, stood up a DEA-licensed lab, and asked the agency for permission to grow cannabis for clinical trials. Then it waited. And waited. Its application has been pending since December 2018.

The company was furious about it, loudly and for years. Its CEO, Duane Boise, did not mince words about the agency’s conduct. Now that same company is in federal court trying to reverse the rescheduling of marijuana, the first major federal marijuana reform in half a century. If it wins, cannabis could revert to Schedule I, the punishing 280E tax bill could return, and every state operator that just applied for federal relief could be left holding a voided application.

The company that spent the better part of a decade trying to get through the front door is now asking a court to decide whether everyone else should have to use it, too.

The Hard Road

To be fair to MMJ, and the story does not work unless you are, its grievance is real. The company, through its subsidiaries MMJ BioPharma Cultivation and MMJ BioPharma Labs, has chased FDA approval for cannabinoid medicines aimed at Huntington’s disease and multiple sclerosis since 2015. It holds FDA Investigational New Drug (IND) applications and FDA Orphan Drug Designation, and its lab carries a DEA Schedule I analytical registration. This is the expensive, slow, by-the-book pharmaceutical route the federal government has long told cannabis companies was the only legitimate one.

And the DEA stonewalled it. MMJ BioPharma Cultivation applied in December 2018 to become a federally authorized bulk manufacturer of cannabis for those trials. The DEA opened its pre-registration investigation in 2021 and inspected the facility that October. Then nothing. As Cannabis Business Times reported, MMJ sued the agency in 2024 over the delays, accusing it of obstructing legitimate research and running what the company called a “kangaroo court.” MMJ even challenged the constitutionality of the DEA’s in-house judges, and the Justice Department later conceded that the removal protections shielding those judges violate the separation of powers, though that concession did not resolve MMJ’s own stalled application.

High Times Vault

On that record, MMJ had a point. A company that did everything right sat in limbo for years while the agency that demanded the rigor refused to act on it.

The Turn

Then the ground shifted. In April 2026, the Trump administration rescheduled state-licensed medical cannabis to Schedule III and opened an expedited DEA registration path for state operators. While MMJ kept pursuing FDA-approved cannabinoid medicines, state-licensed cannabis businesses were suddenly getting federal relief through a faster route, no INDs required.

So, MMJ joined the other side. It is now one of the petitioners in the consolidated challenge to the rescheduling order before the U.S. Court of Appeals for the D.C. Circuit. As Business of Cannabis reported, MMJ filed alongside an addiction recovery clinic, a victims’ group and two doctors, naming President Trump, the Justice Department, the DEA, Acting Attorney General Todd Blanche and DEA Administrator Terrance Cole as defendants. The petitioners are not asking for a tweak. They want the court to stay the order and vacate it entirely.

Read what that means in plain terms. A stay freezes the reform. Vacatur erases it. Cannabis would revert to Schedule I, the 280E tax penalty that costs operators an effective rate far above ordinary businesses would come roaring back, and the DEA applications state companies are racing to file would rest on a legal foundation the court had just voided. A win for MMJ could become a major setback for the state-licensed industry.

The Argument, And the Witnesses

MMJ frames this as principle, not spite. Asked directly whether a company that fought to enter the federal system is now trying to block reform for everyone else, Boise rejected the premise. “That question assumes rescheduling is about helping an industry. It isn’t,” he told High Times. “We don’t oppose legitimate medicine, we oppose lowering the scientific standard for what gets called medicine.” The broader industry, he argued, “has spent years bastardizing the word ‘medicine’” by marketing state products as medical without the reproducible formulations, stability testing and clinical trials the FDA pathway demands. “MMJ chose the harder path because patients deserve medicines backed by science, not marketing.”

That distinction sits at the heart of the dispute, and so does the word itself. MMJ uses “medicine” in its pharmaceutical sense, in reference to products that have completed the FDA approval process. Much of the state-licensed cannabis industry, by contrast, has never argued that dispensary flower is equivalent to an FDA-approved pharmaceutical. It argues the two serve different purposes under different regulatory systems. So, the fight is less about whether pharmaceutical standards matter than whether state medical cannabis should have to become a pharmaceutical product before federal law can acknowledge it at all.

High Times Strains

The company’s core claim is a regulatory double standard: it argues the government cannot extend Schedule III benefits to state operators who skipped the FDA pathway while companies that spent years and millions following it remain stuck in limbo. Its filings raise constitutional, statutory and treaty objections, including the argument that the rescheduling order creates a “hybrid schedule” Congress never authorized. On the consequences, a stay that would freeze the relief the whole industry is counting on, Boise was unmoved. If the court finds the order unlawful, he said, “any consequences for tax treatment, registrations, or existing business models would be the legal result of correcting an invalid agency action, not the objective of MMJ’s lawsuit. Our case is about restoring the rule of law, not restoring Schedule I for its own sake.”

To carry the message, MMJ has put forward people with federal pedigrees. In a June 17 announcement, it pointed to Jorge Jimenez, a retired DEA supervisory diversion investigator who once served as a section chief at DEA headquarters overseeing registrations, and Dr. Elio Mariani, a pharmaceutical scientist with decades in drug development. Their pitch is that opposition to rescheduling is not all ideology, that some of it comes from people who built the federal drug approval system. Also cited in the broader opposition is Dr. Bertha Madras, the Harvard Medical School professor and longtime cannabis skeptic who served on President Trump’s 2017 opioid commission, a figure with her own decades-long record on drug policy, not a witness MMJ brought forward.

The Ladder Problem

Here is the tension the company cannot fully escape. For years, MMJ argued that the DEA was the villain, that it ignored science, defied the rule of law and kept medicine from sick patients. Now it is asking a federal court whether anyone else should be allowed to enter through a different door. MMJ says it is a matter of scientific standards and equal treatment. Critics see a company trying to keep everyone else out of a system it spent years trying to enter.

You can read MMJ’s move two ways, and the company would insist on the first. One, it is a consistent demand that the government hold everyone to the same scientific standard, even if that means slowing the whole thing down. Two, it is a company that did the hard work, got beaten by the bureaucracy, and now wants to make sure nobody else gets the prize it was denied. The filings are about standards. The effect, if they succeed, is to pull the ladder up behind it.

Boise rejects the second reading outright. “This isn’t about denying anyone relief. It’s about ensuring that everyone who wants to market products as medicine plays by the same scientific rules,” he said. “Equal treatment doesn’t mean lowering the standard, it means applying the same standard to everyone.”

He also pushed back on the idea that simply granting MMJ its long-stalled DEA license would make the lawsuit go away. The application, filed in 2018, is still pending, and resolving it “would certainly address one part of the harm MMJ has experienced,” he said, but “even if MMJ received its DEA registration tomorrow, the legal questions before the Court would remain.”

That distinction matters. By MMJ’s own account, simply receiving its long-delayed registration would not end the dispute. The company is not only asking to enter the federal system itself. It is asking the court to throw out the easier path the rest of the industry just started using.

The stakes are not abstract, and they are close. The petitioners asked the D.C. Circuit to freeze the rescheduling order while the case plays out. That fight runs parallel to a separate DEA hearing on rescheduling that begins June 29, and there is no fixed deadline for either to resolve. If the court grants a stay, the relief the industry has been counting on, the tax break, the registration path, the first real federal thaw in half a century, stalls while the lawyers argue. There is an irony in that. The company that spent years condemning the DEA for making it wait is now asking a court to make everyone else wait, too.

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California Cannabis Contracts After Rescheduling: Why Your Contracts Need a Second Look https://smoke.vmondeika.com/california-cannabis-contracts-after-rescheduling-why-your-contracts-need-a-second-look/ Sun, 16 Aug 2026 04:40:13 +0000 https://smoke.vmondeika.com/california-cannabis-contracts-after-rescheduling-why-your-contracts-need-a-second-look/

Rescheduling did not just change tax treatment and licensing options for cannabis operators. It also changed the assumptions baked into thousands of existing cannabis contracts. Supply agreements, licensing arrangements, and investment documents drafted before April 2026 were built around a world where cannabis was federally illegal in every respect. That world no longer exists for qualifying medical activity, and many of those older contracts were never written to handle the change.

This creates a quiet, but serious, risk. A contract that looked airtight eighteen months ago may now contain gaps, outdated assumptions, or ambiguous triggers that leave one party exposed. Before signing a new deal or relying on an old one, California operators should take a hard look at how rescheduling, DEA registration, and DCC license restructuring interact with their existing contracts.

Why legacy California cannabis contracts are suddenly at risk

Most cannabis agreements were negotiated under the premises that cannabis is a Schedule I substance. Representations, warranties, and compliance covenants were built around that reality, focused almost entirely on state-law compliance because federal legality was never on the table.

Rescheduling changes that baseline for qualifying medical activity, and DEA registration and DCC license restructuring add new categories of regulatory status that many contracts never anticipated. A supply agreement that only asks a counterparty to comply with “all applicable state cannabis laws” may be silent on whether that counterparty is DEA-registered, whether its license structure supports a medical channel, or whether its own upstream suppliers meet that same standard. The result is a contract that technically still applies, but no longer captures full risk exposure.

Supply agreements: where the biggest exposure is hiding

Supply agreements deserve close look, because they sit at the center of the medical versus adult-use distinction discussed in earlier posts on this blog; HERE and HERE.

Representations tied to old premises.

Many supply contracts include reps and warranties drafted narrowly around state-law compliance, without addressing DEA registration status at all. If a counterparty becomes DEA-registered, or fails to, the existing language may not say anything meaningful about that fact, leaving a gap exactly where the parties need protection.

Sourcing and counterparty registration.

If an operator’s restructuring and Schedule III compliance depends on sourcing from suppliers with a distinct medical license structure or DEA registration, existing supply contracts should require and verify that status, not just assume it. Without a specific covenant and audit right, an operator has no reliable way to confirm that its supply chain actually supports the medical positioning it is relying on for tax or regulatory purposes.

Change-in-law and force majeure clauses.

Many agreements include change-in-law provisions that were drafted with vague, future hypotheticals in mind. Rescheduling is no longer hypothetical. Operators should review whether these clauses were written broadly enough to address rescheduling, new DEA rules, or DCC license restructuring, and whether triggering them now would produce the outcome the parties desire, such as renegotiation, termination, or price adjustment.

Licensing agreements: aligning contracts with DCC license restructuring

DCC’s rules allowing license designation changes and A/M splits outside the renewal cycle creates new possibilities for operators, but they also create blind spots in existing licensing agreements, brand licensing deals, and management agreements.

Operators should ask a few direct questions about every active licensing contract:

  • Does the agreement assume a specific license type, such as adult-use only or a combined A/M structure, that may now change?
  • Does the agreement say who bears the cost, delay, or risk if one party decides to pursue a license conversion?

If the answers are unclear or silent, that silence is not neutral. It usually means the party with less leverage will absorb the cost of any future conversion dispute. Proactive amendments, even short ones, are far cheaper than resolving that ambiguity in litigation later.

Investment and M&A agreements: new risks and new opportunities

Deal documents deserve particular attention because they tend to rely heavily on defined terms and broad references to “applicable law.”

Representations about regulatory status.

Purchase agreements, subscription agreements, and credit agreements often include representations about compliance with applicable law that were treated as boilerplate in a Schedule I world. Post-rescheduling, that phrase carries more weight. Diligence checklists should now expressly cover DEA registration status, supply-chain registration, and how a target company is positioning itself for I.R.C. 280E purposes.

Valuation and earnout provisions.

If 280E relief materially changes a company’s effective tax rate for medical activity, historical financials used to calculate earnouts or purchase price adjustments may need a second look. Deals negotiated before rescheduling could produce disputes if one side argues the numbers should be recalculated to reflect the new tax reality, while the other side insists the original figures control.

Indemnification and escrow considerations.

Existing indemnification baskets and survival periods were built to cover a narrower set of known risks. New deals should include specific indemnities addressing DEA registration compliance, license conversion missteps, and supply-chain misrepresentations, rather than relying on generic compliance language to catch issues it was never designed to catch.

Common pitfalls to avoid with California cannabis contracts

Operators often make three mistakes when updating cannabis contracts. First, they rely on outdated template language without addressing what has actually changed since rescheduling. Second, they update contracts in isolation, without coordinating with parallel efforts around license restructuring or DEA registration, which creates inconsistencies between what the paperwork says and what the business is actually doing. Third, they assume counterparties will voluntarily disclose changes in their own registration or compliance status, when in reality that disclosure needs to be a contractual obligation, not a courtesy.

Action checklist

  • Add or strengthen DEA registration and supply-chain compliance covenants in supply agreements.
  • Review licensing agreements for silence on license conversion or A/M split scenarios, and amend where necessary.
  • Update M&A and investment diligence checklists and deal documents to reflect new tax and regulatory realities.
  • Treat contract review as part of the same strategy as DEA registration, license conversion, and 280E planning, not a separate project handled after the fact.

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For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

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FAA Considers New Marijuana Standards For Pilots And Air Traffic Controllers Under Trump’s Rescheduling Move https://smoke.vmondeika.com/faa-considers-new-marijuana-standards-for-pilots-and-air-traffic-controllers-under-trumps-rescheduling-move/ Fri, 31 Jul 2026 23:51:44 +0000 https://smoke.vmondeika.com/faa-considers-new-marijuana-standards-for-pilots-and-air-traffic-controllers-under-trumps-rescheduling-move/

The Federal Aviation Administration (FAA) is moving to develop new marijuana-related standards for pilots and air traffic controllers in light of the “operational risk” created by the Trump administration’s move to reschedule cannabis—which has furthered the “normalization” of the drug.

FAA’s Office of Aerospace Medicine is partnering with the National Academies of Sciences, Engineering, and Medicine (NASEM) to convene a series of meetings focused on the impact of marijuana consumption on air travel professionals, an effort aimed at informing approaches the agency might take to “evaluate, update, or refine their current policies for cannabis use, particularly for determining when individuals are fit for duty.”

Topics to be discussed during the four planned meetings set to take place this year and next year—which will not be open to the public—include drug testing, cognitive functioning monitoring and the length of impairment following cannabis use. Invited participants will include experts on impairment evidence, pharmacokinetics and detectability, operational risk translation and policy framing.

There is an “urgent need to establish clear, scientifically defensible, and operationally actionable fitness-for-duty standards for pilots and air traffic control specialists (ATCS) in the context of evolving federal cannabis policy,” NASEM said in a overview of the effort, which FAA is supporting with just over $200,000.

Under an order issued by U.S. Acting Attorney General Todd Blanche in April, marijuana products regulated by a state medical cannabis license immediately moved from Schedule I of the Controlled Substances Act (CSA) to Schedule III, as did any marijuana products that are approved by the Food and Drug Administration (FDA). An administrative hearing is considering broader marijuana rescheduling, including of recreational products.

While Department of Transportation (DOT) drug testing and FAA medical certification standards remain unchanged for now, the notice of the upcoming meetings says that the “dual-status regulatory environment” under the scheduling reform has created a policy “misalignment” that poses “significant operational risk”—including by “increasing the likelihood and normalization of cannabis use,”  “complicating disclosure and compliance” and “leaving the FAA without validated criteria to determine when individuals are no longer impaired.”

“The central policy question is: Following cannabis use, what elapsed time ensures both (1) absence of operational impairment and (2) compliance with DOT drug testing requirements?” NASEM’s Transportation Research Board said in the posting which was noted earlier by Cannabis Wire.

“Due to the urgency of near-term policy decisions and the inability to conduct new primary research in the required timeframe, the FAA requires structured, policy-relevant interpretation of existing scientific evidence,” the notice said, specifying that the meetings will take place over a span of about 12 months, which will enable FAA to develop and implement new cannabis policies within 12–18 months.

NASEM previously did work on state marijuana legalization law’ impact on airports on behalf of FAA, publishing a briefing on the issue and holding an event.

Meanwhile, the Transportation Security Administration (TSA) recently clarified that its “policy on medical marijuana has not changed”—despite numerous news organizations running exaggerated headlines about a supposed change in the federal government’s policy on bringing marijuana into airports and on airplanes.

DOT, which houses FAA, clarified in May that truck drivers, airline pilots and other federally regulated safety-sensitive workers still cannot use medical marijuana without being punished despite the federal rescheduling move.

Last month, a coalition of transportation and safety organizations sent a letter to federal officials saying they have “serious safety concerns” surrounding the Trump administration’s move to federally reschedule marijuana— asking them to take steps to ensure that safety-sensitive workers will continue to be tested for cannabis.

Earlier this month, the House Appropriations Committee adopted a provision directing federal officials to continue requiring government employees and safety-sensitive workers such as truck drivers and airline pilots to be drug tested for marijuana, “regardless of any future changes to the legal status or scheduling.”

The followed a press conference organized by prohibitionist groups and a drug testing industry association where two Republican lawmakers joined their call for a “carve-out” to marijuana rescheduling by affirming that safety-sensitive transportation workers could still be penalized for testing positive for THC.

The lawmakers and prohibitionist activists argued that moving marijuana to Schedule III would mean a 1986 executive order on the federal workforce that President Ronald Reagan signed defining illegal drugs as Schedule I and II drugs under the Controlled Substances Act (CSA) would be effectively nullified when it comes to cannabis use by truck drivers, airline pilots and other workers regulated by DOT.

Last October, Transportation Secretary Sean Duffy suggested President Donald Trump was “getting pressure” to reschedule cannabis—arguing that marijuana is “really addictive” and saying that policy reform around the issue sends a “dangerous” message.

“At a time when culture is pushing and celebrating the use of marijuana, we’re not talking about the risk,” Duffy said.

Image element courtesy of Steve Fitzgerald.

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