Napa & Sonoma cannabis leaders weigh in on proposal to change how drug is classified.  “Historic” — that’s the word that came up over and over again among North Bay, state and national cannabis leaders in describing a proposal to reclassify marijuana as a less dangerous drug. The proposal by the U.S. Drug Enforcement Administration (DEA) would move marijuana from the Schedule I category, with drugs like heroin, and into the Schedule III category, alongside ketamine and some anabolic steroids.  The proposed change comes on the heels of a recommendation from U.S. Health and Human Services and a call by President Joe Biden for a review of federal drug policy.  Brandon Levine, CEO of Sonoma County-based Mercy Wellness, sent a letter last month to the White House asking for a change.  A letter signed by the president was returned to Levine, taking issue with people languishing in jail over marijuana possession. The president also noted the inequity among minorities filling prisons with these types of drug offenses.The letter dated April 17 continued with a pledge for the federal government “to initiate the process of reviewing how marijuana is scheduled under federal law.” The classification “makes no sense,” the president added in the letter. “This is big news for cannabis. This is a moment we have all been waiting for,” Levine said. “It will take time, but there’s light at the end of the tunnel. Twenty to 30 years of hopes and dreams are finally coming true.” It’s especially a new day and age for Lynnette Shaw, who founded Marin Alliance CBC, believed to be the state’s first medical marijuana dispensary in Fairfax. Shaw says she still wrestles with local government as she seeks legitimacy. “It’s happening in my lifetime,” Shaw said, as if in genuine disbelief. “I’m living to see this. You know, I’m going to celebrate this. It’s been my life’s work. It took us so long to get to this point.” Like many, Shaw contends the proposed change doesn’t go far enough.

Supporters say pros far outweigh cons
Supporters of the move say if marijuana is reclassified, it could become more widely available to those who use it for medical reasons. Secondly, cannabis businesses would be able to avoid tax penalties under IRS rules that disallow the cannabis industry from claiming business expenses. Thirdly, it could open the door to nullifying or reducing other laws that restrict cannabis businesses from selling across state lines. Medical marijuana programs are licensed in 38 states, according to the Associated Press. Legal recreational pot is permitted in 23 states, but it is against the law to sell into a state where it is illegal. The DEA proposal, if approved, could also change banking rules for what is currently a cash-based business. “This is phenomenal news that is long overdue,” said Tiffany Devitt, governmental affairs chief at CannaCraft, a Santa Rosa distributor. She points to a domino effect on future policy. “If this does nothing but solve banking problems and our ‘280E’ (tax) problems, those two things will be huge,” she said. Deductions for expenses associated with activities defined by federal law as “drug trafficking” are prohibited under a 1982-enacted tax code established to penalize criminal drug dealers. Despite Tuesday’s news first announced by the Associated Press, the American Bankers Association released a statement indicating the reclassification “has no bearing on the legal issues around banking,” ABA President and CEO Rob Nichols said. “Cannabis would still be largely illegal under federal law.” “This is about as far as the DEA will go without Congress,” said National Cannabis Industry Association CEO Aaron Smith, who once lived in Sonoma County.

Opportunity knocks.
Sam Rodriguez, policy director for a growers’ advocacy group, Good Farmers, Great Neighbors, views the change as an invitation. “We can finally rescind local government ordinances meant for regulating cannabis as a Schedule I drug,” he said. “The governor can also ask his ag state agency to petition (U.S. Department of Agriculture) for the cannabis plant while in the ground to be considered a crop.” By state law, cannabis is currently classified as an agricultural commodity. Amy O’Gorman Jenkins, a lobbyist for the California Cannabis Industry Association, positions the change as an economics issue. “The big thing here is it gives us the opportunity to unlock significant economic potential,” she said. California’s top cannabis officials were also “heartened” by the news. “This move will acknowledge what California has known for almost 30 years — cannabis has medical value. It will enable new scientific research into the value and potential risks of the plant,” California Department of Cannabis Control Director Nicole Elliott said. “It will also help level the financial playing field for businesses that have long been burdened by inequitable federal tax laws.” The assessment was echoed by the CEO of the parent company of Napa’s Perfect Union cannabis retailer. “Access to affordable capital may become less elusive, encouraging further growth within the industry … (it) marks a historic milestone, reflecting substantial research and state-based policies that support age-appropriate and medically appropriate access to cannabis,” Tom Sheridan said. The proposed change would need to go through the White House Office of Management and Budget. If it signs off, the DEA would then take public comment and make a final recommendation. “This is a massive milestone and a big step in the right direction,” said Solful CEO Eli Melrod, who has also taken issue with the IRS tax law outlawing write-offs for his Sebastopol-based retail operation. “I would say this is the biggest shift in federal cannabis policy,” Melrod said. “And we gotta celebrate our wins. It’s a defining moment.”

Susan Wood covers law, cannabis, production, transportation, agriculture as well as banking and finance. She can be reached at 530-545-8662 or susan.wood@busjrnl.com
LINK: https://www.pressdemocrat.com/article/business/cannabis-dea-marijuana/