Cannabis Round-Up: Rescheduling Stalls in the US, Banking Reform Hits Another Setback

US cannabis rescheduling in limbo as new year begins

After a series of delays and procedural challenges, the US Drug Enforcement Administration’s (DEA) push to reschedule cannabis from a Schedule I substance to a Schedule III substance continued in December.

The process has been marked by a series of twists and turns as both proponents and opponents finalize witness lists ahead of a hearing that is now scheduled to begin on January 21.

In November, Chief Administrative Law Judge John Mulrooney II addressed several key issues, including the DEA's witness list and a motion to remove the agency from its role as a proponent in the rescheduling process.

On December 2, a preliminary hearing was held to address procedural matters for rescheduling; no witness testimony was heard on that day. Afterward, on December 4, Mulrooney laid out the next steps in the cannabis rescheduling process, with testimony now set to be held between January 21 and March 6.

Supporters of the proposed rule, including the DEA as a designated proponent, will be the first to present their arguments, with opponents to follow. The parties will each be assigned a day to deliver their presentations.

Mulrooney also criticized the DEA for failing to submit required documents ahead of the preliminary hearing, and for failing to provide a complete list of the evidence it plans to present at the January hearing.

On December 5, lawyers representing Doctors for Drug Policy Reform (D4DPR) submitted a petition to a federal court, contesting the DEA's refusal to allow it to participate in the proceedings. D4DPR requested that Mulrooney suspend the hearings while the US District Court for the District of Columbia Circuit conducts a review.

Soon after, the US Department of Justice asked a federal court to dismiss the lawsuit, arguing that it would be against public interest to delay proceedings any longer.

Adding to the complications, federal health officials denied the DEA's request to have representatives from the Department of Health and Human Services testify at the 2025 hearing, prompting the agency to request that Mulrooney subpoena representatives of the department, a request that he ultimately granted.

As the new year begins, the fate of cannabis rescheduling hangs in the balance, with legal challenges, procedural disputes and interagency tensions adding to the uncertainty surrounding this pivotal moment in US drug policy.

Cannabis banking reform stalls again in the US

After over a year of uncertainty, sources for Marijuana Moment reported that Senate Minority Leader Mitch McConnell (R-KY) and House Speaker Mike Johnson (R-LA) blocked Majority Leader Chuck Schumer’s (D-NY) attempt to attach the SAFER Banking Act to a government funding bill in one of the last sessions of the year.

The move effectively sends the issue back to square one for a new Congress to deal with in 2025.

Although the lack of banking reform is discouraging to those in the cannabis industry, the Government Accountability Office (GAO) is now gathering information directly from marijuana businesses through focus groups to better understand the challenges these businesses face in accessing banking services under federal prohibition.

Interested parties can sign up to participate in the focus group here.

According to Marijuana Moment, the GAO will convene virtual focus groups in January or February 2025, perhaps in response to a request from a group of Democrats led by Senator Reverend Warnock (D-GA).

In December 2023, the group asked Comptroller General Gene Dodaro to allow the GAO to study how financial institutions can address negative effects economic effects of the War on Drugs.

Investor takeaway

December saw significant developments in US cannabis policy, but little forward momentum.

Rescheduling efforts continue to be mired in legal and procedural complexities, with the DEA facing criticism and challenges from various stakeholders. Meanwhile, the failure to pass the SAFE Banking Act once again leaves the cannabis industry without access to traditional banking services.