Tag Archives: rescheduling

Below are excerpts from the conversation at the White House press conference where President Trump signed an Executive Order to move marijuana from a Schedule 1 controlled drug to Schedule III.

President Trump: Well, it was a big day, and many reasons, really, for many reasons, and I have a very distinguished group of people behind me. Mostly medical people and brilliant people, and they really know what they’re doing. And I want to thank them. They truly gave their lives in terms of the time and all of the incredible work they’ve done over the years in arriving at the position they have now, the most respected people in the country. Today, I’m pleased to announce that I will be signing an executive order to reschedule marijuana from a Schedule 1 to a Schedule III controlled substance with legitimate medical uses.

We have people begging me to do this. People who are in great pain.

For decades, this action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizure disorders, neurological problems, and more, including numerous veterans with service-related injuries, and older Americans who live with chronic medical problems that severely degrade their quality of life.

I can’t tell you; I think I’ve probably received more phone calls about this… Hopefully, this reclassification, which, by the way, polls at 82%.

It will help many of those patients live a far better life.

We’re joined today by Secretary Robert F. Kennedy, Jr, who’s doing a fantastic job, Administrator of Centers for Medicare and Medicaid Services, Dr. Mehmet Oz, the FDA Commissioner, Dr. Marty Makary, Director of the National Institutes of Health, Jay Bhattacharya, the Director of the National Institute on Drug Abuse, Dr. Nora Valkyo, as well as Dr. Ilana Braun from the Dana-Farber Cancer Institute, Duke University’s Dr. David Casarett, the National Commander of the American Legion, Dan Wiley, and my friend Howard Kessler.

“I want to emphasize that the order I am about to sign is, not the legalization or it doesn’t legalize marijuana in any way, shape, or form, and in no way sanctions its use as a recreational drug. This nothing to do with it.”

Just as prescription painkillers may have legitimate uses, they can also do irreversible damage, if you look at some of the damage that can be caused, wreck lives if they’re abused. It’s never safe to use powerful controlled substances in recreational manners.

I’ve always told my children, Don’t take drugs, no drinking, no smoking. And just stay away from drugs. They would look at me, and they would say, Dad, would you stop saying that? I would say it every time I looked at them, practically. Young Americans are especially at risk, so unless a drug is recommended by a doctor for medical reasons, just don’t do it.

“At the same time, the facts compel the federal government to recognize that marijuana can be legitimate in terms of medical applications when carefully administered in some cases.”

This may include the use as a substitute for addictive and potentially lethal opioid painkillers that cause tremendous problems. Marijuana can help in a less risky way and make people feel much better.

Forty states and multiple U.S. territories have already recognized the use of medical marijuana.

“This reclassification order will make it far easier to conduct marijuana-related medical research, allowing us to study benefits, potential dangers, and future treatments. I believe it’s going to have a tremendously positive impact.”

“We’re also asking Congress to reconsider its classification of hemp-derived CBD to ensure seniors can access CBD products they have found beneficial for pain and other reasons.”

Some people are literally dying with tremendous pain, and this can, in many cases, literally stop it, and they can have their senses about them, as opposed to painkillers, which don’t allow that, don’t allow them to die with dignity, frankly.

I promised to be the President of common sense, and that is exactly what we’re doing. This is really about common sense, and it’s that many people I respect ask me to do it.

People are having problems, big medical problems. They are having big problems with illness, with cancer in particular.

I would now like to invite Dr. Oz to say a few words, followed by Dr. Braun, Dr. Cassarette, Dan Wiley, and Dr. Valkow.

“And, we’ll sign the order as soon as they complete their statement.”

Dr. Oz: Mr. President, thank you for always bravely pushing for common sense change, as you call it. So, President Trump and Secretary Kennedy have been pushing for change, their passion, their desire to help the American people, and they have relentlessly pursued this agenda throughout this administration. This also includes a deep passion for research. Gold standard research, as Secretary Kennedy also says.

But there’s another side to the President that often isn’t reflected in media reports: his deep passion for the people in his life. And he has called me frequently about the people who are calling him, as he alluded to, saying they have problems and have found relief from some of the solutions we’re discussing today. Howard Kessler, who’s standing behind me here, who’s a mutual friend of ours, was an early caller of the President. Many others have reached out as well. And Howard’s been a passionate advocate for avoiding narcotics, especially in seniors, and particularly seniors suffering from cancer.

And that’s a population that is a very important one, and it’s a sympathetic population that’s, like, that’s desires for trying new ways, besides some of the conventional approaches that have been tested by pharmaceutical companies, but have untoward side effects at the beginning of the year.

One of the first things the President told me, he doesn’t actually tell you, he’d demand from me, that my agency, CMS, use all the tools at his disposal to find a better way to help seniors. A passion for a population that has been left behind in these discussions. I promised that we would find an answer, even though it had not been done before, and today we are delivering on that promise.

“Today, our Innovation Center at CMS is announcing a new model and additional actions to give seniors access to cannabinoids.”

These are CBDs, and they’re not addictive, which many are already using to manage pain. There’s some clinical evidence that shows that CBDs provide relief from common conditions that affect Americans, including cancer symptoms, chronic pain, and a slew of other problems that disproportionately affect seniors and our veterans. And 6 in 10 people who use the CBDs report that they improve their pain. I think all of those people are judging the President based on the number of calls supporting what we’re doing today. And sometimes these decisions are difficult, and there’s a reason this hasn’t happened before, and there’s a reason, Mr. President, that every President before you has whiffed on this issue. It’s tough. And I know there’s going to be a lot of discussion about it, that’s why we’re so passionate about making it clear that this patchwork that we’re working within now, the laws and regulations, they’re leaving patients and doctors without adequate guidance on the safeguards of how to use these products, even though they’re still being used.

“At Medicare, we cover 68 million Americans, including people under the age of 65. And they did not have a way of providing these treatments until today. With the President’s insistence, that all changes. The Innovation Center models are going to allow millions of Americans on Medicare to become eligible to receive CBD as early as April of next year, and at no charge, if their doctors recommend them.”

Thanks to the hard work of the entire CMS team, especially Abe Sutton and Gita Dio at the Innovation Center, accountable care organizations in this country working in Medicare will be able to provide these products again at no cost to patients.

“Medicare Advantage insurers, and we’ve been calling them, are also agreeing to consider CBD to be used for the 34 million Americans that they cover. If you can hear my voice and you’re over 65, you should pay attention to this executive order, because it’s going to touch your life.”

“Again, this all becomes active after the first quarter of next year. These CBD products must first meet local and state quality and safety standards. They must come from legitimate sources. They must abide by the other regulations of those states. With these boxes checked, patients can be eligible for up to $500 of hemp-derived products each year. This is the first government-led testing of quality and outcomes for patients across different conditions, and it delivers on the need for more data collection and research into hemp usage.”

“CMS is going to collect data, that’s our job, on the patients that are being given these products by their physicians, and in accordance with all the privacy and security regulations, we’re going to analyze that data, we’re going to make it publicly available to everybody to be able to analyze with us. If it shows promise, we will expand access to these products to even more conditions amongst Medicare and Medicaid beneficiaries. “

FDA Commissioner, Dr. Marty Makary: We want a lot of companies that are doing this research to approach the FDA for formal approval. That is the right way to move forward. And Jay Bhattasharia, who’s hiding in the back, he rarely hides, but Jay runs NIH, and he’s agreed to support initiatives to study the data that we’re collecting.

I thank you again, from the bottom of my heart, for taking a difficult stance. Thank you very much.” Mr. President, members of the Cabinet, thank you so much for the opportunity to be here, and for your leadership in rescheduling cannabis from Schedule 1 to Schedule 3.

“This decision will accelerate scientific research and expand what can responsibly be studied.”

I’m Dr. Ilana Braun, a cancer psychiatrist and medical cannabis researcher at the Dana-Farber Cancer Institute. Over the past decade, federal investment in research has helped transform cancer care. People are living longer than ever before. But cancer care is not only about treating the tumor, but it’s also about addressing the anxiety, the fear, the stress that can come with a diagnosis, symptoms that can interfere with treatment and make recovery much more difficult.

Many medications we use for acute anxiety carry significant risks, particularly in older adults. That’s why we’re studying specific natural compounds found in cannabis, including the non-addictive cannabidiol, to understand whether they can safely and effectively help manage anxiety during cancer treatment. Rescheduling allows us to ask these questions rigorously about dosing, about safety, and who may benefit most.

“This research reflects the best of federal investment, helping people not only live longer, but live better. Thank you, Mr. President, for supporting careful, science-based research that puts patients first. Thank you. Thank you, Doug.”

Duke University’s Dr. David Casarett: “I’ll add my vote of thanks, Mr. President. I never really thought this day would come. I met a patient about 20 years ago, a retired professor named Elizabeth, who came to my clinic. She was dying of pancreatic cancer, and she asked me then whether cannabis might help her. And I said no, because that’s what I learned in medical school. She reached into her briefcase, took out a 3-inch tall stack of articles, put them down on my desk, and said, “Really? Doctor? You should read these. You might learn something.” I read every single article; I found several more, and I learned something. I learned that there actually is some medical benefit to cannabis that I had not anticipated, never heard about in medical school.

Second, I learned that there was a lot we don’t know. And third, I learned it’s really, really, really difficult to do high-quality, randomized controlled trials of a substance that’s federally illegal.

“Rescheduling has the potential to change all of that, and to rewrite the way that we do research related to cannabis in the United States in three ways. First of all, it’ll democratize the research process so that all academic institutions can participate in research, not just elite academic medical centers. Number two, it’ll give patients and researchers access to highly refined, reliable sources of cannabis, rather than relying on one or two sources around the country. And last but not least, it’ll let us do the sorts of large-scale randomized controlled trials that we do in oncology and cardiology. Not dozens of patients, but hundreds or thousands of patients. That’s how we learn, that’s how we produce valuable knowledge that’s useful in guiding treatment decisions.”

Mr. President, I am Dan Wiley, National Commander of the American Legion, representing 1.5 million veterans. We are the largest veterans organization. We have 2.5 million members of our American Legion family. Thank you for your leadership on this issue. This issue is extremely important to the American Legion, and I want to thank you on behalf of the veterans who will benefit from the research. I also want to thank you for your VA Secretary, Secretary Collins, and his work on difficult veterans issues with us this past year. The VA has worked with us on our mission to fight the epidemic of veteran suicide.

“Veterans are disproportionately affected by conditions such as PTSD, TBI, depression, and chronic pain. And with this reclassification, it will allow research to be conducted with regard to cannabis. There is anecdotal evidence that cannabis benefits these conditions, and now we’ll have an opportunity to see if research does prove that it is effective.”

And if it is so, then it’ll open up a whole new method of treatment for our veterans with regard to this particular issue. And so, again, I just want to thank you for your leadership and, on behalf of the American Legion, for this executive order, which will help the many people who have suffered and will suffer much less now.

I’m Nora Volkow, I’m the Director of the National Institute on Drug Abuse, and for us, rescheduling accelerates the rate at which we can conduct research and discovery. And research is crucial in order for us to, for example, understand what may be, and for whom, the dangers of cannabis. Yes, cannabis can be addictive, and adolescents and children may be the most vulnerable. Still, we cannot close our eyes to research and the opportunity that we are hearing from patients, that for some of them, cannabis can solve their problem.

So, first, we need to conduct research to understand those conditions. Number two, in order to be able to learn how to use it optimally, and to understand, number three, what is the danger? And it is knowledge that will allow us to benefit optimally.

Take the benefits behind cannabis, as research shows, but on the other hand, enable us to do prevention interventions to protect those who are most vulnerable.

Secretary of Health and Human Services, Robert F. Kennedy, Jr.: Mr. President, thank you for your leadership and vision, and for finally reaching a closure on this issue. This is a scientific question that has divided our country for many years, and there are valid claims on both sides. On one side, the patients and physicians attached to cannabinoids and THC can have miraculous effects on chronic pain, on epilepsy, on PTSD, and on chemotherapy-induced nausea.

My friend Howard Kessler, without whom we wouldn’t be here today, has driven this change in the schedule because of his experience mitigating the impacts of chemotherapy; he has nothing to gain from this. He saw something that worked for him and thousands of other Americans, and he wants to make it available to them.

On the other side, there are valid claims about the negative impacts, about addiction, about psychosis, about adverse public health impacts, and impacts particularly on young people, which we haven’t been able to verify. The evidence on all of these is anecdotal and hypothetical because we have not been able to do scientific studies. There is no standardized dosing. And if you don’t have standardized dosing, any study that you do is comparing apples to pears. We don’t know the difference between botanicals and synthetics, and we’ll now be able to answer all of these questions.

The prior administration promised to act on this issue. The Biden administration promised to do this, but the proposal became mired in chaos, inertia, and disorganization. I want to thank President Trump, who promised during the 2024 election that he would come in, solve this issue, and take decisive action, and he has kept that promise today. Thank you, President Trump, for your vision; as a result, we will have answers very soon. This will finally allow us to study this issue and to answer these questions for the American people.

Howard Kessler: I just want to help people 65 and over and make a difference in their lives. And we have machines and talent that could do it, not in 8-year clinical trials, but in a year. We’re going to prove that, and it may change the way healthcare works. So thank you, Mr. President.

President Trump, as he signed the Executive Order to move marijuana from Schedule I to Schedule III, said, ” It’s an honor to do this.”

December 18, 2025

Trump Reschedules Cannabis!

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The moment many in the cannabis industry have been waiting for has finally arrived. Operators, investors, and advocates are cautiously celebrating President Trump’s executive order directing the Department of Justice to finalize the rescheduling of cannabis to Schedule III, an action many hope is a stepping stone toward full federal descheduling.

Full descheduling would free the industry by treating cannabis like alcohol or tobacco by eliminating federal scheduling, ending arrests, removing state vs. federal silos, and enabling interstate and international trade. This would allow national supply chains, economies of scale, access to banking, and provide greater appeal to institutional investors.

Industry Caution

Not everyone in the industry is celebrating. Josh Kesselman, publisher of High Times and founder of RAW® Rolling Papers, warns that rescheduling could introduce new federal risks for state-legal operators.

“I, among others in the industry, am very concerned that this rescheduling could be a false flag,” Kesselman says. He argues that moving THC to Schedule III could allow large pharmaceutical companies to dominate the market with synthetic THC products available only by prescription, while exposing dispensaries and cultivators to a new category of federal criminal liability under the Food, Drug, and Cosmetic Act (FDCA).

Kesselman cautions that businesses could face charges including selling a prescription drug without a license, dispensing without a prescription, misbranding a drug, illegal distribution, and conspiracy. “In fact,” he adds, “the penalties under Schedule III actually increase, not decrease, depending on what a federal prosecutor chooses to charge a seller or grower with.”

The Case for Patients and Veterans

Harrison Bard, CEO and co-founder of Custom Cones USA and DaySavers, sees rescheduling as a long-overdue recognition of cannabis as a legitimate therapeutic option—particularly for veterans.

“For years, veterans have faced stigma, inconsistent access, and significant out-of-pocket costs managing chronic pain, PTSD, and other service-related conditions,” Bard says. “Veterans have carried the weight for the rest of us. It’s time our policies—and our industry—carry some of it back.”

Gennaro Luce, founder and CEO of CannaLnx, echoes the sentiment but emphasizes that rescheduling alone is not enough to improve patient access.

“Moving cannabis to Schedule III is an important step,” Luce says. “But without insurance verification, compliance, and eligibility frameworks, patients will still struggle to receive coverage for medical cannabis.”

The Biggest Impact of All

Financial executives see both promise and caution in rescheduling.

Terry Mendez, CEO of Safe Harbor Financial, notes, “Reclassifying cannabis as Schedule III acknowledges its medical legitimacy and corrects decades of misguided federal policy, but rescheduling is not reform.” Compliance burdens, cash dependency, and Bank Secrecy Act obligations would remain, keeping many financial institutions cautious.

Anthony Coniglio, CEO of NewLake Capital, highlights one immediate benefit tied to rescheduling: relief from the financial constraints that have distorted cannabis operators’ balance sheets for years. “This isn’t about legalization,” he says.

Adam Stettner, CEO of FundCanna, agrees. “Eliminating 280E changes the math overnight,” he says. “It also accelerates research, encourages standardized formulations, and nudges the industry toward institutionalized compliance and reporting.”

Headset’s latest analysis shows that while the U.S. cannabis industry continues to grow in consumer demand, it is operating under increasing financial strain. Retail margins have compressed significantly—falling from 52.6% in 2021 to about 42.7% year to date in 2025—leaving operators focused on cash preservation rather than expansion. This pressure does not stop at the retail level; it ripples across brands, distributors, and service providers that depend on healthy retail purchasing and payment cycles.

At the center of this strain is Section 280E, which prevents many cannabis businesses from deducting ordinary operating expenses for federal tax purposes. Headset’s modeling of more than 2,100 stores across 24 states shows that under the current 280E treatment, the median retailer in nearly half of those states operates at a negative after-tax profit. In some markets, federal tax obligations exceed total net profit, constraining hundreds of thousands of dollars per store each year and increasing fragility throughout the supply chain.

If cannabis is rescheduled to Schedule III and 280E is removed, the impact on cash flow could be substantial. Headset estimates that the typical median retailer would recover roughly $268,000 per year in federal tax drag, with high-volume stores seeing as much as $805,000 annually. At the industry level, this translates to an estimated $1.6 billion to $2.2 billion in incremental after-tax cash flow at current sales levels.

While retailers would feel the most immediate relief, Headset notes that the broader ecosystem would benefit through more consistent inventory purchasing, improved payment timelines for brands and distributors, increased investment in marketing and product innovation, and greater operational stability. For an industry supporting roughly 425,000 full-time equivalent jobs, improved cash flow is less about rapid expansion and more about sustainability—supporting restored hours, reduced turnover, and long-term reinvestment.

The Case for Small Businesses

Small operators see rescheduling as a potential lifeline.

Levar Thomas, co-founder of CPG brand Silly Nice, says, “Access to banking and meaningful tax relief could finally level the playing field.” He emphasizes that rescheduling makes funding, scaling, and basic compliance far more achievable, and hopes it will accelerate expungements and releases for those still incarcerated.

Nonprofits and Social Justice

Betty Aldworth, co-executive director of MAPS and chair of the Marijuana Policy Project (MPP), cautions that rescheduling alone will not undo the harms of prohibition.

“Rescheduling is a symbolic victory,” Aldworth says. “But cash-only operations remain dangerous, consumers still face housing, immigration, and workplace risks, and patients lack regulatory clarity for insurance coverage.” She adds, “Cannabis policy must catch up to political reality. Anything less isn’t reform—it’s delay.”

What Does Implementation Look Like?

Cannabis Regulations Association (CANNRA) submitted a comment on the proposed federal rule rescheduling marijuana, highlighting the process that still needs to happen once President Trump flips the switch. They stated that the comment does not take a position on rescheduling, but rather focuses on the implementation of the proposed federal rescheduling in U.S. states and territories.

The comment calls for additional federal guidance in six areas to support state and territorial regulators in being able to implement the policy:

1. Guidance is needed on how federal priorities, including enforcement priorities, will change under the proposed rescheduling.

2. Guidance is needed on how federal agencies will engage with states and territories under the proposed rescheduling.

3. Guidance is needed on how state governments can interact with each other under the proposed rescheduling.

4. Guidance is needed on how research processes and protocols will change under the proposed rescheduling.

5. Guidance is needed on how to regulate cannabinoids that appear in two different places on the schedule due to the federal legalization of hemp.

6. Guidance is needed on how the proposed rescheduling will impact banking and finance directives and policies.

Global Impact

Even short of full descheduling, U.S. policy shifts are already resonating globally. JP Doran, CEO of Crucial Innovations Corp., notes, “While rescheduling stops short of legalization, it reduces research barriers, modernizes oversight, and formally acknowledges medical value.”

Because the U.S. is the world’s largest pharmaceutical market, this move may prompt regulators in the UK, EU, South Africa, and other markets to reassess outdated frameworks, harmonize quality standards, and expand patient access. “As global markets respond, rescheduling has the potential to accelerate the development and distribution of next-generation cannabis medicines,” Doran adds.

Looking Ahead

According to multiple reports, Trump also plans to establish a federal commission by summer 2026 to study full descheduling as “phase two,” signaling that additional reforms could follow the initial administrative action.

Vince C. Ning, co-CEO and co-founder of Nabis, says. “The next transformation comes when interstate commerce barriers fall, allowing a national cannabis infrastructure to scale responsibly, innovate faster, and deliver safer, more efficient access for consumers.” As Ning puts it, “This is a watershed moment. Now it’s up to operators, advocates, and policymakers to sustain momentum and shape what comes next.”

READ EXCERPTS FROM THIS HISTORIC PRESS CONFERENCE.

August 30, 2023

HHS Recommends DEA Reschedule Cannabis to Schedule III

By Cannabis Industry Journal Staff

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Massively promising news for the cannabis industry today that many are calling historic: the Department of Health and Human Services (HHS) has sent a letter to the Drug Enforcement Administration (DEA), recommending that cannabis be rescheduled from Schedule I to Schedule III. The news was originally reported by Bloomberg, but further expanded on (and without a paywall we’ll add) by Marijuana Moment with comments from the DEA, HHS and the White House.

Many cannabis stocks across the market saw significant spikes in trading prices following the news of the recommendation. Industry stakeholders and trade organizations seem to share a similar sentiment across the board: Not quite exuberance and celebration, but cautious optimism. The move doesn’t mean the federal government is legalizing cannabis, but they are showing their willingness to work with the industry.

The current Schedule I status of cannabis means the DEA and the federal government see no medical value in it and a high potential for abuse, grouping it with heroin and cocaine. Moving it to Schedule III would mean the opposite, that they recognize cannabis does have medical value and does not have a high potential for abuse, which would put cannabis in the same classification as ketamine, testosterone and Tylenol with codeine.

Importantly, the move would remove the dreaded 280E tax burden that has plagued the cannabis industry with huge tax penalties. It would also lift many barriers to study cannabis that have hindered research for decades.

Last year, President Biden asked HHS to review the scheduling of cannabis, and this recommendation letter to the DEA appears to be the culmination of their review. It is only a recommendation and nothing happens instantly. The DEA still has to decide if they choose to reschedule cannabis.

Out of all the quotes and statements flooding the cannabis media today, Rep. Earl Blumenauer (D-OR) best summarized the feelings shared by many folks in the industry: “This is a step in the right direction but it is not sufficient. I hope it is followed by more significant reforms. This is long overdue.”

June 29, 2020

South Africa Reschedules CBD and THC

By Marguerite Arnold

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The South African government has taken a leap into the future (ahead also of the expected World Health Organization (WHO) decision on cannabis this December). Namely, it has begun to regulate hemp (more in line with Europe intriguingly, than the U.S.) and attempted to remove the THC part of the equation from a domestic list of plants and drugs with no medical use.

The notice was signed by South African Minister of Health Zweli Mkhize and published a week after a domestic moratorium on CBD expired. The moratorium permitted the sale of some kinds of CBD products.

This is an intriguing new development, although it will also undoubtedly cause headaches for the burgeoning industry in the region.

On The CBD Front…

South Africa’s new hemp guidelines – namely for the amount of THC allowed in legit hemp crops that are also regulated – are that plants contain no more than 0.2% THC. This makes the guidelines absolutely in line with what is generally developing across the EU. And even more intriguingly, below federal guidelines for most U.S. domestic hemp crops (which are 0.3% at a federal level and only differ in a few state cases where the amount is lower by state law).

However, there is also a unique twist to all of this: The South African government has now created a two-pronged regulatory schemata just for CBD. The default approach to the cannabinoid is that it is in fact medication, scheduled under South African internal and global drug guidelines as a “Schedule 4” drug.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

The other designation is reserved for CBD packaged in sizes of 600mg or less (and limited by instructions to no more than 20mg a day). This kind of CBD (despite the dubious understanding of cannabinoid science) will henceforth be labelled a “supplement” and on “Schedule 0”.

However, do not be fooled: This is not “descheduling.” This actually means that all CBD has been classified as a medical substance except in packets that are under a certain size, with portion suggestions on the outside of the wrapper or package.

That is hardly scientific. However, what is more burdensome is that any CBD cultivator in South Africa must also be GMP- (or internationally medically) certified (even if bound for the supplement market). By definition, in other words, it will make the cost of production for the supplement (commercial, food and cosmetic) part of the equation as expensive as pharmaceutical production. While from a purist’s point of view, having ultra clean cannabis in any product (at the level of pharmaceutical standards) is a wonderful idea, but this gets ridiculous when it comes to reality, and will ultimately never stand.

This development is also undeniably inconvenient (at minimum) for any who had envisioned outdoor hempires, which most of the cannabis grown in South Africa is. The only people who have the money to build indoor grows, starting with GMP certified greenhouses, are, for the most part, white people, foreigners or those who own property and have access to external, international equity.

The sins of Apartheid, in other words, are being writ large on the entire cannabis industry at present in South Africa. And CBD is contained right in the middle of the mix.

On The THC Front…

There are several interesting aspects to this.

The first is that THC has been removed from the South African “Schedule 7” which is roughly equivalent to the international “Schedule I” that cannabis also resides in until the WHO re- or deschedules the same.

However, this also means that all CBD as well as THC must be produced by those with pharmaceutical-grade facilities – and this of course includes more than just indoor, temperature-controlled greenhouses. It also includes a complex supply chain that is European and Western centric, starting with the requirement to access a rather large amount of capital to construct the same.

Global Re-Alignment Or Stopgap Measure?

This new regulation, in other words, specifically leaves the vast majority of what has already been seeded, or what is most likely to be, in the hands of a few Canadian and other companies who have been moving in this direction for the last several years.

It also implies, intriguingly, that the intra-African cannabis market is low priority at present for those writing the (health) rules. And that also means that eyes are being set more on creating an export market than for treating South African citizens.

It is not an unusual move, rather tragically so far. And almost certainly one that will be challenged, and in several directions, both by events, but also by firms caught up in the mix.

Why? For starters, the South African cannabis market also effectively controls the Lesotho cannabis regulatory scheme (namely all exports from Lesotho, which has seen quite a lot of cannabis investment over the last several years). All such crops must be labelled per South African guidelines if they, literally, can hit a port to be exported.

The vast majority of those grows, even with relatively decent foreign backing, are also outside – and of course as a result ineligible for GMP certification.

Of course given the fact that the UN is likely to clarify both the status of THC and CBD by the end of the year, this current situation in South Africa is also fairly clearly intended to be a stop-gap regulatory measure to last up until at least this time.

Where it may go after that is anyone’s guess. This measure, however, is also clearly being made to protect those who have invested in GMP-grade facilities as opposed to those who have been clearly angling for reform on the CBD front, starting with the beer market. Stay tuned. Interesting developments clearly ahead.

July 11, 2019

Soapbox

Medical Cannabis in Georgia: Federal Policy Effects on State Industries

By Reggie Snyder

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Under the U.S. Drug Enforcement Administration’s (DEA) Controlled Substance Act (CSA), drugs are classified into five distinct schedules depending upon their acceptable medical use and their overall potential for abuse or dependency. The DEA currently lists cannabis as a Schedule I drug, which the CSA defines as drugs having no currently accepted medical use and a high potential for abuse. It appears, however, that the DEA may soon reconsider its current Schedule I classification of cannabis.

This article considers how the DEA’s potential reclassification of cannabis potentially could affect Georgia’s medical cannabis industry. Specifically, the article discusses: (1) how Georgia medical cannabis distributors would operate within this new regulatory framework; (2) how this change would affect registered Georgia patients who are either currently purchasing medical cannabis or are planning to do so; and (3) whether this reclassification would cause big pharmaceutical companies to enter Georgia’s medical cannabis market, and if so, how.

The DEA’s Reclassification of Cannabis Would Likely Affect the Regulatory Framework of Georgia’s Medical Cannabis Industry

On April 2, 2019, Georgia became the 34th U.S. state to legalize cannabis for medicinal use when the Georgia Legislature passed House Bill 324 (“HB 324”), which recently took effect on Monday, July 1, 2019. In Georgia, medical cannabis is defined as a “low-THC oil” that contains 5% or less of tetrahydrocannabinol (THC)—the psychoactive chemical in cannabis that causes a “high.”

If the DEA reclassifies cannabis, the regulatory framework of Georgia’s medical cannabis industry under HB 324 would likely be affected. For instance, depending on how the DEA elects to reclassify cannabis, low-THC oil products manufactured and sold in Georgia could become subject to the U.S. Food and Drug Administration’s (FDA) costly, complicated and time-consuming drug approval process. Then, any low THC oil products that the FDA approves will be subject to federally mandated quality, efficacy and potency standards for FDA-approved drugs. Also, any federal standards that stem from the DEA’s reclassification of cannabis will trump any conflicting provisions in HB 324 or any other conflicting rules, regulations or procedures established by the Georgia Access to Medical Cannabis Commission (GAMCC), the seven member state agency responsible for promulgating and implementing the state-based rules, regulations and procedures necessary to produce and distribute low-THC oil in Georgia, and the Georgia State Board of Pharmacy (Pharmacy Board). However, even if the DEA reclassifies cannabis, the following state regulatory framework established by HB 324 will remain unaffected:

The GAMCC will likely continue to oversee the state’s medical cannabis industry.
The following two different types of dispensary licenses issued under the legislation will still likely remain: retail outlets (issued by the GAMCC) and pharmacies (issued by the Pharmacy Board).
Licensed dispensaries will still likely not be located within a 1,000-foot radius of a school or church, and licensed production facilities will still not be located within a 3,000-foot radius of a school or church.
Pharmacists who dispense low-THC oil will still likely have to review each registered patient’s information on the state’s Prescription Drug Monitoring Program (PDMP) database to confirm that they have been diagnosed with one or more of the 17 approved conditions and diseases. The legislation does not require retail outlet dispensaries to review patient information on the PDMP database or employ a pharmacist to dispense the drug.
Registered patients will still likely be prohibited from vaping low-THC oil or inhaling it by any other electronic means. The legislation does not expressly prohibit the use of other, non-electronic delivery methods of low THC oil such as pills or nasal spray.
All licensed dispensaries (and all licensed production companies) will still likely be subject to an “on-demand” inspection when requested by the Georgia Bureau of Investigation (GBI), the GAMCC, the four-member Medical Cannabis Commission Oversight Committee (MCCOC), or local law enforcement. The GAMCC and the Georgia Drugs and Narcotics Agency (GDNA) will also still likely be able to conduct one, annual inspection of dispensary locations. And, upon request, licensed dispensaries will still likely be required to immediately provide a sample of their low-THC oil for laboratory testing to the GBI, GAMCC, MCCOC, GDNA or local law enforcement.
All licensed dispensaries (and all licensed production facilities) will still likely be required to utilize a GAMCC-approved seed-to-sale tracking software.
All licensed dispensaries (and all licensed production companies) will still likely be prohibited from advertising or marketing their low-THC oil products to registered patients or the public. However, they will still likely be allowed to provide information about their products directly to physicians, and upon request, physicians will still likely be allowed to furnish the names of licensed dispensaries (and licensed production companies) to registered patients or their caregivers.

The DEA’s Reclassification of Cannabis Would Likely Affect the Availability of Low THC Oil

To date, approximately 9,500 Georgians are registered with the state’s Low-THC Registry, which allows them to purchase low-THC oil from licensed dispensaries. Since the legislation’s passage, the number of registered patients has increased significantly and continues to steadily rise. If the DEA reclassifies marijuana, this patient number will likely increase at an even faster rate because the public will likely perceive reclassification as an acknowledgement by the federal government that marijuana possesses health and medicinal benefits. If that occurs, statewide demand for low THC oil could quickly outstrip the supply.

Georgia Gov. Brian Kemp
Image: Georgia National Guard, Flickr

Under HB 324, the GAMCC is tasked with ensuring that the state has a sufficient number of retail outlet dispensaries across the state to meet patient demand but is limited to issuing only six production licenses. As the number of registered patients continues to grow, the GAMCC may be forced to recommend amendments to the statute allowing it to issue additional production licenses to increase the state’s supply of low THC oil, and depending on how many additional patients are added to the state’s Low-THC Registry, the GAMCC may also have to issue additional dispensary licenses to keep up with patient demand by relaxing the geographic limitations on locating dispensaries.

Thus, the DEA’s reclassification of cannabis likely would affect the amount of low THC oil available to registered patients in Georgia.

The DEA’s Reclassification of Cannabis Would Likely Cause Large Pharmaceutical Companies to Enter Georgia’s Medical Cannabis Market

Large pharmaceutical companies typically manufacture, market, sell and ship their products on a national and international scale. Given cannabis’ current status as a Schedule I drug under the CSA, these companies have largely steered clear of the burgeoning medical marijuana industry because of the inherent risk of violating federal law. If the DEA reclassifies cannabis, that risk will be diminished greatly, and the companies therefore will likely decide to enter the market by acquiring existing medical marijuana companies with established national or state-level medical cannabis brands.

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways.Depending on how the DEA reclassifies cannabis, low-THC oil in Georgia could be subject to stringent federal standards, including the FDA’s complex and expensive drug approval process. Georgia medical cannabis companies will likely not be accustomed to complying with such federal regulations. Large pharmaceutical companies, on the other hand, are very accustomed to dealing with the federal government, including FDA drug approval. So, if the DEA reclassifies marijuana, pharmaceutical companies will likely view reclassification as a tremendous opportunity to enter the Georgia market by leveraging their experience and institutional knowledge dealing with federal law to acquire or partner with a licensed Georgia cannabis company that has an established brand of low -HC oil.

Entering Georgia’s medical cannabis market won’t be easy, however, because HB 324 prohibits licensees from transferring their licenses for five years and requires that the original licensee be a Georgia business. But, HB 324 does not prohibit them from selling their businesses, which necessarily includes any licenses the business owns. Purchasing a licensed Georgia medical cannabis company requires payment of a production license business transfer fee. The fee for the first sale of a business with a Class 1 production license is $100,000 and the fee for a Class 2 license is $12,500. The fee for the second sale is $150,000 for a Class 1 production license, and $62,500 for a Class 2 license. The fee for the third and fourth sales is $200,000 for a Class 1 production license, and $112,500 for a Class 2 license.

Conclusion

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways. Specifically, depending on how the drug is reclassified, the regulatory framework for medical cannabis companies likely will change to include both state and federal requirements, potentially including the FDA’s complex drug approval process. Also, the amount of low-THC oil available for registered patients to purchase likely will be diminished precipitating the need for the GAMCC to modify the statute to allow for issuing additional production licenses and relaxing the geographic limitations on locating dispensaries. Finally, large pharmaceutical companies likely will attempt to enter Georgia’s medical cannabis market by purchasing existing, licensed Georgia companies that have established low-THC oil brands.

February 7, 2019

WHO Makes Noise About Cannabis “Rescheduling”

By Marguerite Arnold

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At this point in the end of prohibition, not even the United Nations (UN) or the World Health Organization (WHO) are immune to the great green wave sweeping the planet. Yet, lest anyone get too optimistic about developments at the nose bleed level of international drug reform, the newest round of headlines regarding “WHO cannabis reform” is hardly cause for celebration.

The Story At The International Level So Far

In documents obtained by Cannabis Industry Journal last fall, it appeared that cannabis reform of the serious kind had caught the eye of senior leaders at the WHO. Further, it also appeared that some kind of decisive action or declaration would be forthcoming by the end of the year.

Yet as reported at the end of January, such decisions appear to be headed for a tortoise speed approvals track. Yes, it appears that CBD will probably be descheduled, and from both the hemp and cannabis perspective. That should be good news to many who are caught in a raft of international standards that are confusing and all over the place on a country-by-country level. However, this will not be much of a boon to the industry in Europe, in particular, where the discussion is less over CBD but the source of it, and how distillates are used. From this perspective, the draft WHO documents will make no difference, except perhaps to speed the acceptance of CBD, and create clearer regulations around it.

On the THC front, the WHO appears to do nothing more than move cannabis squarely into international Schedule I territory. More interesting of course, is the intent of international regulators to keep cannabis very much in uncertain status while moving “pharmacized” versions of the same into Schedule III designation.

What Does The Opinion of The WHO Really Mean?

What this means is also still unclear except that those who want to sell to regulated medical and nonmedical markets have to get their products (whatever those are) registered as medicine or a legitimate consumer product in every jurisdiction and eventually at a regional level (see Europe). That is clearly underway right now by both the big Canadian and emerging Israeli entities in the market as well as savvy European players in both verticals. That said, it is also a game that is about to create a very interesting market for those who are able to produce cheap, but high-grade oils in particular.

What Does This Mean For The Future Of Flower?

On the medical front, Germany became the third country in the world to consider reimbursing flower via national healthcare. Of the three who have tried it to date so far (and it is unclear what Poland will do at this point longer term), Israel is inching away and Holland nixed the entire cannabis covered by insurance conversation at the same time Germany took it on. Where that plays out across Europe will be interesting, especially as the cost of production and end retail cost continues to drop. And doctor education includes information about “whole plant” vs. pre-prescribed “dosing” where the patient has no control. The reality in the room in Europe right now is that this drug is being used to treat people with drug resistant conditions. Dosing dramas in other words, will be in the room here for some time to come as they have in no other jurisdiction.

Beyond dosing and control issues that have as much to do with doctors as overall reform, flower is still controversial for other reasons. One, it is currently still being imported into Europe from highly remote and expensive import destinations. That will probably change this year because of both the cultivation bid and Israel’s aggressive move into the middle of the fray as well as widely expected ex-im changes that will allow imports from countries throughout Europe. However, in the meantime, this is one of the reasons that flower is so unpopular right now at the policy and insurance level. The other is that pharmacists in Germany are allowed to treat the flower as a drug that must be processed. In this case, that means that they are adding a significant surcharge, per gram, to flower because they grind it before they give it to patients.

How long this loophole will exist is unclear. However, what is also very clear is that oils in particular, will play a larger and larger role in most medical markets. Read, in other words, “pharmaceutical products.”

For this reason, the WHO recommendations, for one, are actually responding to unfolding realities on the ground, not leading or setting them.

Setting A Longer-Term Date For Widespread Recreational Reform

This conservative stance from the WHO also means, however, that in the longer run, individual country “recreational reform” particularly in places like Europe, will be on a slower than so far expected track. There are no countries in the EU who are willing to step too far ahead of the UN in general. That includes Luxembourg, which so far has made the boldest predictions about its intentions on the recreational front of any EU member. However, what this also may signal is that the UN will follow the lead set by Luxembourg. Even so, this legitimately puts a marker in the ground that at least Europe’s recreational picture is at least five years off.

In the meantime, the WHO recommendations begin to set international precedent and potentially the beginnings of guidelines around a global trade that has already challenged the UN to change its own regulations. In turn, expect these regulations to guide and help set national policy outside a few outliers (see Canada, Uruguay and potentially New Zealand) globally.

Bottom line, in other words? The latest news from the UN is not “bad” but clearly seems to say that cannabis reform is a battle that is still years in the making. That said, from the glass is half full perspective, it appears, finally, there might be the beginning of a light at the end of the international tunnel of prohibition.

September 11, 2018

GW Pharma’s Enormous Price for Epidiolex

By Marguerite Arnold

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In a fascinating early August conference call with Seeking Alpha, British-based GW Pharmaceuticals finally revealed their retail price point for CBD-based drug, Epidiolex, as it goes into distribution in the U.S.

The drug is designed for the treatment of certain kinds of childhood epilepsy – although not all kinds. Also notable of course, is that GW Pharma’s “other” drug for treatment of resistant epilepsy failed in late stage trials in Eastern Europe earlier this year. It also knocked off 5% of the price of the company’s stock.The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

British Advocacy Over Access And Pricing

The ineffectiveness of GW Pharma’s drugs for many patients (along with the cost charged for them) was responsible for pre-empting the entire access discussion in the UK this year. The mother of an epileptic British child tried to import a personal store of cannabis oil (produced by Canadian LP Tilray) only to have it confiscated at the airport this summer. Her son ended up in the hospital shortly thereafter.

The national uproar this caused pushed forward the country’s new medical cannabis policy– indeed drug rescheduling is due to go into effect in October. Conveniently, right as Epidiolex goes on sale in the U.S. (where cannabis remains a Schedule I drug).

The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

Price Tags and Politics

What is the price of Epidiolex? $32,500 per patient, per year. If that sounds high, the company insists it is pricing the drug to be “in line” with other drugs for this segment of the market.

The majority of this cost will not be picked up by private health insurers but rather the federal governmentActually, according to industry analysis, this is about 70% more than the price of one comparable drug (Onfi), and slightly more expensive than Banzel, the two competing (non-cannabinoid based) medications now available in the U.S. for this market.

Here is the other (widely unreported) kicker. The majority of this cost will not be picked up by private health insurers but rather the federal government, which is also not negotiating with GW Pharma about that high price (unlike for example what is going on in Europe and the German bid).

Why the difference?

Two reasons. The first is that Epidiolex has obtained “orphan drug” status (a medication for a disease that affects fewer than 200,000 patients in the U.S.) The second is that the majority of the insurance that will be picking up this tab is Medicaid. The patient pool will be unable to afford this. As a result, the bulk of the money will remit not from private insurance companies but rather federal taxpayers. And, unlike in say, Germany, none of this is pre-negotiated in bulk.

Co-payments are expected to range from $5 to $200 per month per patient after insurance (read: the government) picks up the tab. This essentially means that the company plans to base participation at first at least on a sliding scale, highly subsidized by a government that has yet to reschedule cannabis from a Schedule I in the U.S.

Creating, in other words, a new monopoly position for GW Pharmaceuticals in North America.

A Hypocrisy Both Patients And The Industry Should Fight

The sordid, underhanded politicking that has created this canna monster is hardly surprising given the current political environment in both the U.S. and the U.K. right now. The people who benefit the most from this development are not patients, or even everyday shareholders, not to mention the burgeoning legitimate North American cannabis industry, but in fact highly placed politicians (like British Prime Minister Theresa May). Philip May, the PM’s husband’s firm is the majority shareholder in GW Pharma. Her former drugs minister (with a strong stand against medical cannabis) is married to the managing director of British Sugar, the company that grows GW Pharma’s cannabis stock domestically.

So far, despite a domestic outcry over this in the UK (including rescheduling), there has been no political backlash in the United States over this announcement. Why not?

Look To Europe For A More Competitive Medical Market

This kind of pricing strategy is also a complete no go in just about every other market – including medical-only markets where GW Pharma already has a footprint.

For example, German health insurers are already complaining about this kind of pricing strategy for cannabis (see the Cannabis Report from one of the country’s largest insurers TK – out earlier this year). And this in an environment where the government, in fact, does negotiate a bulk rate for most of the drugs in the market. Currently most German cannabis patients are being given dronabinol, a synthetic form of THC which costs far less.

On top of this, there are also moves afoot by the German government to begin to bring the costs of medical cannabis and medicines down, dramatically. And this too will impact the market – not only in Europe, but hopefully spark a debate in every country where prices are also too high.

The currently pending German cultivation bid for medical cannabis has already set an informal “reference” price of at most 7 euros a gram (and probably will see bid competitors come in at under half that). In other words, the government wholesale price of raw, unprocessed cannabis flower if not lightly processed cannabis oil is expected to be somewhere in the neighbourhood of 3-4 euros per gram come early next year. If not, as some expect, potentially even lower than that.

Processed Cannabis Medicine vs. Whole Plant Treatment

The debate that is really raging, beyond pricing, is whether unprocessed cannabis and cannabis oil is actually “medicine.” At the moment, the status quo in the U.S. is that it is not.

GW Pharmaceuticals, in other words, a British company importing a CBD-based derivative, is the only real “medical cannabis” company in the country, per the FDA. Everyone else, at least according to this logic, is placed in the “recreational camp.” And further, hampered still, with a lack of rescheduling, that affects everyone.

If that is not an organizing issue for the American cannabis industry, still struggling with the many issues inherent in the status quo (from insurance coverage and banking to national distribution across state lines) leading up to the midterms, nothing will be.

June 13, 2016

Soapbox

A Case To Not Reschedule Cannabis

By Tyler Dautrich

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As many probably already know, last month the DEA announced that the organization was going to reconsider its position on cannabis and would come to a decision about whether or not to reschedule cannabis on The Controlled Substance Act (CSA) by June of this year. Many would say this is long overdue, considering the DEA has cannabis listed as a Schedule I drug, the same as heroin and LSD.

Rescheduling cannabis to Schedule II would place it in the same category as Vicodin, cocaine, methamphetamine, Adderall, oxycodone, and many more. These substances are defined as drugs with a high potential for abuse, with use potentially leading to severe psychological or physical dependence. However, they are recognized as having some potential medical benefits.

If cannabis were to become a Schedule II drug, it would allow further research on the plant. This could be beneficial to the industry because further medical research would finally provide the scientific validation that cannabis does have medical benefits and that it should be accepted as a form of medicine.

Those benefits come with a steep cost.

If cannabis becomes Schedule II it means the federal government finally sees cannabis as a plant (drug) that can provide some medical value. Which, at face value, is good because that is what many advocates have been fighting for. On the other hand, the only reason that larger pharmaceutical companies have largely kept out of the industry so far is because it is a Schedule I drug and the government did not officially recognize that it had any medical value. If this were to change, there is no reason for those pharmaceutical companies to continue watching from the sidelines. There is also no industry better fit than the pharmaceutical industry to run, manufacture, control, and profit from medical cannabis. The infrastructure is already in place.

There is also not another industry that has the money and the historical relationship with the FDA like the pharmaceutical industry. If the FDA were to regulate cannabis, it would have to regulate every single product on the shelf of every single dispensary, which would require more stringent lab testing guidelines. Just because one of your brownies made it through the FDA regulation process, does not mean the cookie next to it will. Entering into this process would take companies years to complete and cost more than $1 billion per product. Think about how many products some dispensaries have. Think about the number of different strains that dispensaries carry. That requires years of testing and multiple billions of dollars, just for the strains.

Big Pharma is positioned perfectly to come in and take control of the entire process if this happens. It will be a mad rush from all pharmaceutical companies to come in and quickly obtain market share. I know that as an industry we think we are seeing a lot of money in sales and profit, but compared to the pharmaceutical industry, it is merely a drop in the bucket. These companies will easily, and willingly, out-spend every company currently in the industry to the point where we can no longer compete. All the work that advocates and business professionals have put in to get the industry to where it is today could be lost.

Schedule II status would also turn the adult-use industry into utter chaos. The only reason we are able to have an adult-use market right now without the interference of the FDA is because cannabis is federally illegal. If cannabis is moved to Schedule II it will be recognized by the government, which means the FDA will have to come in and start the approval process for every product on the shelf. How smoothly do you think that will go for the adult-use retail centers in the industry? The cost alone will force shops to close. There is also not another substance that has a Schedule II classification that we have an adult-use industry for. Could cannabis be the first? I would not want to take that chance with the government or have to go through that process as an adult-use cannabis business owner.

When discussing this matter with several colleagues, some would ask “But what about now? We are in direct violation of the federal law right now, and they are leaving us be.”

Yes, that is for the most part true, but it is true because cannabis is now a Schedule I, federally illegal drug. Meaning the government does not even recognize it. The FDA will not regulate anything that is not recognized by the federal government because they are a federal agency. If the FDA were to implement regulations and an approval process, that would mean that a federal agency is recognizing cannabis as a consumer product. Right now that goes directly against the government’s public stance on the issue. And pharmaceutical companies cannot start selling a drug that is federally illegal and has been classified by the government as having no medical value. But as soon as the government recognizes cannabis as a form of medicine, it opens the doors for these organizations to get involved because it is justifiable now.

If that were to happen all the money that has been generated in this industry, and has made several people very wealthy and successful, will slowly, but surely get stuffed into the pockets of Big Pharma, the FDA and the government.

That is a lot of individuals that stand to lose a very significant amount of money. This could be devastating for Colorado. Colorado’s entire economy is booming right now largely because of the cannabis industry. Colorado’s Real Estate market has seen tremendous growth since legal cannabis took effect with home values going up 13%, which is nothing compared to commercial properties. Cannabis is the driver behind half of Colorado’s tourism, and provided the state with $35 million to put into schools.

In my mind, rescheduling cannabis to a Schedule II substance will create more issues for the industry than it will benefits.

If the government were to take any stance on cannabis, it should completely declassify it. It should not be listed on any type of controlled substance list by the government. It is a natural plant, not a man-made substance. If the government will not declassify cannabis, I would rather them keep it as a Schedule I substance. At least this way it protects the industry and keeps it as is, belonging to the people.

Opportunities like the cannabis industry are once in a lifetime. It would be a shame to see it taken by Big Pharma, or controlled by the government.

For those that have made it this far down on this post, please understand that this is a worst-case scenario. A very drastic, but realistic outcome down one of the many paths the industry could go. But the motto in this industry since the beginning was, “prepare for the worst, and pray for the best.” I think we should follow those instructions now more than ever.

Editor’s Note: This article represents the opinion of the author, not necessarily that of Cannabis Industry Journal. We invite all readers who agree or disagree with the author’s opinion to join the conversation in the comments section below the article.