The federal government wants your input on whether marijuana should be reclassified under global drug treaties to which the U.S. is a party.
Specifically, the U.S. Food and Drug Administration (FDA) is asking for public comments about the “abuse potential, actual abuse, medical usefulness, trafficking, and impact of scheduling changes on availability for medical use” of cannabis and several other substances now under international review.
Under current U.S. federal law as well as global drug policy agreements, marijuana is classified in the most restrictive category of Schedule I. At home, that means it is considered illegal and not available for prescription, while research on its potential benefits is heavily restricted. Cannabis’s international status means that nations who are signatories of drug control treaties are not supposed to legalize it, though that hasn’t stopped Canada and Uruguay from doing so.
Public comments on marijuana’s effects and legal status “will be considered in preparing a response from the United States to the World Health Organization (WHO) regarding the abuse liability and diversion of these drugs,” Leslie Kux, FDA’s associate commissioner for policy, wrote in a Federal Register filing published on Wednesday. “WHO will use this information to consider whether to recommend that certain international restrictions be placed on these drugs.”
WHO’s Expert Committee on Drug Dependence (ECDD) is meeting in Geneva next month to consider the classification of marijuana and other substances, and is now seeking to “gather information on the legitimate use, harmful use, status of national control and potential impact of international control,” the United Nations body said in a notice excerpted in the FDA filing.
Earlier this year, ECDD determined that cannabidiol (CBD), a component of marijuana shown to have medical benefits without intoxicating properties like other cannabinoids such as THC, should not be scheduled under international drug control conventions.
“CBD has been found to be generally well tolerated with a good safety profile,” the UN body found in its critical review. “There is no evidence that CBD as a substance is liable to similar abuse and similar ill-effects as substances…such as cannabis or THC, respectively. The Committee recommended that preparations considered to be pure CBD should not be scheduled.”
The body also agreed to undergo an in-depth critical review of the marijuana plant and its resins and extracts, as well as THC itself. That new review is what triggered the FDA’s request for public comment on Wednesday.
The Trump administration sought public comments from interested parties in advance of an earlier UN pre-review on marijuana as well.
“Any comments received will be considered by [the U.S. Department of Health and Human Services] when it prepares a scientific and medical evaluation for drug substances that is responsive to the WHO Questionnaire for these drug substances,” the new FDA notice says. “HHS will forward such evaluation of these drug substances to WHO, for WHO’s consideration in deciding whether to recommend international control/decontrol of any of these drug substances.”
Legalization advocates are hopeful that a hard look at the data on marijuana’s effects will inevitably lead to a pro-reform conclusion.
“A careful review of the relevant science does not now, nor has it ever, supported a hard-line approach to cannabis scheduling. Cannabis’s abuse potential relative to other substances, including legal substances like alcohol, tobacco and prescription medications, does not warrant its continued criminalization under either U.S. or international law,” Paul Armentano, deputy director of NORML, said in an email. “By any rational assessment, cannabis prohibition is a disproportionate public policy response to behavior that is, at worst, a public health concern. But it should not be a criminal justice matter and international laws should no longer classify it as such.”
Mason Tvert, a spokesman for the Marijuana Policy Project, agreed.
“The time has come for marijuana to be removed from the federal drug schedules. There is no longer any doubt that it has significant medical value, and the science is clear that it is less harmful than many legal medical products,” he said. “While marijuana is not harmless — few, if any, products are — it poses less harm than alcohol to consumers and to society. The U.S. led the world into the quagmire of cannabis prohibition, so it should lead the world out of it by descheduling cannabis and implementing a more evidence-based policy.”
That said, the feds aren’t planning to make any cannabis recommendations to the UN panel ahead of its review meetings next month.
“Instead, HHS will defer such consideration until WHO has made official recommendations to the Commission on Narcotic Drugs, which are expected to be made in mid-2018,” the Federal Register notice says. “Any HHS position regarding international control of these drug substances will be preceded by another Federal Register notice soliciting public comments.”
In addition to marijuana and its components, the WHO committee is also reviewing several synthetic cannabinoids, fentanyls and other substances.
FDA has hinted that international rescheduling of marijuana and its components could influence changes to its legal status here at home.
This month, FDA publicly released a letter it sent to the Drug Enforcement Administration (DEA) earlier this year suggesting that CBD should be completely removed from federal control.
Cannabidiol has a “negligible potential for abuse” and has a “currently accepted medical use in treatment,” the agency found.
But, because of international drug treaty obligations, FDA conceded that the substance needs to be scheduled, concluding that it should be placed under the least-restrictive category of Schedule V.
“If treaty obligations do not require control of CBD, or if the international controls on CBD change in the future, this recommendation will need to be promptly revisited,” FDA wrote in its analysis to DEA.
That document, dated in May, preceded the WHO’s determination that CBD should not be globally scheduled, and was part of the federal government’s approval and rescheduling last month of CBD-based drug Epidiolex, which is used for severe epilepsy disorders. It is not clear why the U.S. government subsequently decided to place FDA-approved CBD medications in the federal Schedule V, with an appeal to global treaties that the UN now says shouldn’t schedule the substance.
For now, FDA is accepting public comments on marijuana and the other substances currently under UN review via the web until October 31. Interested parties can also submit written comments via mail.
Ultimately, WHO will make a scheduling recommendation for marijuana to UN Secretary-General António Guterres, who oversaw the enactment of drug decriminalization as Portugal’s prime minister, a policy he has touted in his current capacity.
Marijuana Banking Bill Would Save Federal Money, Congressional Budget Office Says
The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.
The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.
Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”
Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.
That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.
“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.
Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.
“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.
“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”
There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.
The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.
Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”
The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.
The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”
The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.
1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.
2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”
3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”
Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.
“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.
Other advocates agreed that the CBO estimate should help efforts to advance the bill.
“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”
The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.
Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.
Want 4 million more reasons why members of Congress should support the #SAFEBankingAct, which would allow cannabis businesses to access the banking system in the 33 states where it’s legal? @USCBO says the legislation will save taxpayers $4M over 10 years.
— American Bankers Association (@ABABankers) May 24, 2019
The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.
This story was updated to include comment from Perlmutter and Correia.
Federal Small Business Administration Pressed On Supporting Marijuana Industry
Sen. Jacky Rosen (D-NV) pressed a federal official responsible for advocating for small businesses on Wednesday about whether existing laws and regulations are preventing the growth of state-legal marijuana markets.
The line of questioning comes as members of Congress are preparing legislation aimed at removing barriers to small business assistance for cannabis industry participants.
The senator said at a hearing of the Senate Small Business and Entrepreneurship Committee that her state’s legal industry is attracting small businesses and entrepreneurs who are selling millions of dollars of product each month. She asked Major Clark, acting chief counsel of the office of advocacy at the Small Business Administration (SBA), about the unique barriers these companies face under federal prohibition.
“Senator, that’s a difficult question,” Clark replied. “We have not actually studied the issue of marijuana in that regard, and we have not because the federal government has not yet legalized it.”
“We do, in conversations with a lot of businesses, get inquires as to what they can do and how they can do it. But to actually do an analysis of it, we have not yet done that,” he said. “I’m sure that as soon as the federal government decides to legalize this substance, we will begin to study its impact and the ability to use it in a more economical context within the state.”
Watch the conversation about small business assistance for cannabis operators at 35:50 in the video below:
Rosen followed up to get Clark’s opinion about whether marijuana companies would benefit from some of the guidelines and resources the SBA offers to small businesses in other industries.
“These types of businesses can benefit from some of these types of things, but again, because this issue is an issue that has not reached the surface of being legalized, we have actually stayed away from trying to advise these businesses on these particular aspects,” he said.
Nevada’s cannabis industry cannot thrive without access to financial services. At yesterday’s @SmallBizCmte hearing, I asked what steps @SBAgov is taking to break down regulatory barriers for our nation’s legal marijuana businesses to ensure they can continue to grow. pic.twitter.com/lyfXGwpoRf
— Senator Jacky Rosen (@SenJackyRosen) May 24, 2019
Sen. James Lankford (R-OK), chair of the committee, weighed in on the issue after the Rosen’s time expired, saying that he recognizes the difficulty that federal agencies face when it comes to regulating a controlled substance.
“It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical cannabis law that Oklahoma voters approved in 2018. “And the federal government and the [Food and Drug Administration] continues to study it and say there’s no medicinal gain from this product.”
“It’s a Schedule I drug. I get it,” he said. “The science, and whether it is SBA or whoever it is continues to be able to deal with that.”
While lawmakers push to get marijuana businesses access to federally authorized financial services, industry advocates say that SBA-specific reform legislation may be on the horizon.
The day after Rosen questioned the SBA official about cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was being drafted to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”
Watch the SBA reform discussion at about 32:15 in the video below:
“The House Small Business Committee is looking into the issue and is interested in holding a hearing and drafting legislation this summer that addresses these issues,” a cannabis policy lobbyist who didn’t wish to be named in order to discuss plans that are in development, told Marijuana Moment separately.
Photo courtesy of Brian Shamblen.
GOP Congressman Exposes Flaws In VA Marijuana Research Projects
Rep. Matt Gaetz (R-FL) emphasized the importance conducting clinical trials on medical marijuana at the U.S. Department of Veterans Affairs (VA) on Tuesday, a topic on which he has often focused.
He also criticized the catch-22 of VA cannabis research, arguing that while the department is able to conduct clinical trials on marijuana, it doesn’t effectively publicize those studies, leaving veterans who might be interested in participating in the dark.
The congressman started by asking whether Mike Colston, director of mental health policy and oversight at the Department of Defense, felt that giving veterans access to medical cannabis could reduce suicides.
Colston said “there’s far more research to be done” and that there’s “insufficient evidence for or against that position.”
Gaetz cited research showing reductions in opioid use in states that have loosened cannabis laws, and he questioned whether “the current offramp for opioid addiction,” which typically involves prescribing long-term opioids that are less potent and less prone to abuse, “is a more effective offramp than medical cannabis.”
“I just think those are the three evidence-based therapies right now that meet the medical bar,” Colston said, referring to bupenehprine, methadone and naltrexone. “Obviously more research can change that.”
That prompted Gaetz to expand on VA policy as it pertains to medical cannabis. He asked for confirmation that the department’s doctors cannot currently recommend marijuana to veterans in states where it’s legal.
They can’t do that because “there’s a federal law against it right now,” Keita Franklin, national director of suicide prevention at the VA, claimed. (This has been a point of contention for legalization advocates, who argue that only the VA’s own internal administrative policies, and not an overarching federal law, blocks such recommendations.)
But VA officials can conduct clinical trials on marijuana, Franklin said.
“We have two ongoing research studies going on right now in this space,” she said. “I think we are open to research, yes.”
The congressman wanted to know if the VA publishes information about these studies and where to find it. The VA official wasn’t sure—and that was exactly Gaetz’s point.
“I don’t think anyone is clear, which is the source of my frustration because I think that there are a lot of these clinical trials that are seeking veterans,” he said. “The VA, due to a lack of clarity, won’t publicize that information or make it available, and then we’re unable to do the research that Captain Colston says is necessary to advance additional options for veterans trying to get off opioids and to stop them from killing themselves.”
Lawmakers have introduced legislation this session that would allow VA doctors to issue medical cannabis recommendations and require the department to conduct clinical trials on the plant’s potential therapeutic benefits for veterans, among other cannabis and veterans-related bills.
But if the VA is mandated to research the plant, Gaetz wants the department to better publicize the studies so that would-be participants actually know about them.
Photo courtesy of YouTube.