Biden Announces Mass Pardon & Plans to Reschedule Cannabis – But What Does That Mean?

By: Andrew P. Cooper, Esq., LL.M. with contributions from Terran Cooper

Yesterday afternoon President Biden announced that his administration will pardon all prior federal offenders charged with  “simple marijuana possession.” Further, he announced that he would ask the Secretary of the Department of Health & Human Services (HHS) and the Attorney General to initiate the process of reviewing cannabis’s designation under federal law as a Schedule I substance (Schedule I substances are deemed the most dangerous and currently include heroin and LSD). This is the largest step the United States government has ever taken toward addressing cannabis criminalization and the resulting harm it has caused since the Controlled Substances Act was passed in 1971 by President Richard Nixon.  This announcement has two critical components, that we will address separately below.

Pardoning of Federal Offenses

The mass pardoning of those individuals with “simple marijuana possession” convictions is anticipated to benefit roughly 6,500 people who were convicted from 1992 to 2021 (Michael Shear, 2022). President Biden shared his reasoning for this decision, explaining that, “sending people to jail for possessing marijuana has upended too many lives – for conduct that is legal in many states. That’s before you address the clear racial disparities around prosecution and conviction.” While the timing of this announcement conveniently coincides with the upcoming midterm elections, suggesting political motivations for his decision to announce this plan now, the impact of Biden’s actions will nonetheless be substantial and represent the most significant federal action against cannabis convictions in history.

The most uncertain component of these pardons lies in the Biden Administration’s definition of a “simple marijuana possession.” Officials have noted that no one is currently in federal prison for solely “simple marijuana possession” offenses (Toluse Olorunnipa, 2022). This means that none of the 6,500 people anticipated to be pardoned are individuals currently incarcerated in our federal prison system. We do not yet know how these pardons might affect those with multiple possession charges, or who were imprisoned due to simple marijuana possession and other marijuana-related federal crimes, such as felony cannabis cultivation.

President Biden also called upon state governors to pardon individuals previously convicted of “simple state marijuana possession offenses,” stating that “no one should be in a local jail or state prison for that reason, either.” According to the Last Prisoner Project, local and state incarceration for cannabis crimes vastly outweighs federal incarceration. There are roughly 22,000 individuals currently incarcerated in state prisons, not including those incarcerated while awaiting sentencing or trial, those in local or county jails (likely a significant number, considering that there were 545,602 cannabis-related arrests in 2019), juvenile correctional facilities, Indian county jails, immigration detention centers, those with secondary cannabis offenses, those who have been re-incarcerated due to cannabis parole/probation violations, and those incarcerated in jurisdictions who don’t report their statistics to the national database (in 2021, nearly 40% of local law enforcement agencies failed to report their arrest numbers to the FBI).  While this federal announcement is a promising first step, if more meaningful change is to occur nationwide in how marijuana offenses are treated, it cannot be the last.

De-Scheduling

Many cannabis legalization advocates argue that de-scheduling cannabis is the best path forward. De-scheduling means removing cannabis from the schedules of the Controlled Substances Act (CSA) entirely, similar to alcohol, nicotine, and hemp. This would allow existing state-legal programs which allow for the use of cannabis (whether for medical and/or recreational purposes), to remain in effect, resolving the present conflict between the illegality of cannabis under the CSA and the legalization of cannabis in many states. Similarly, states would have discretion in their own programs (subject to potential limitations as discussed below), as federal de-scheduling would still provide each state with the option to prevent a legal cannabis market within its borders. Further, many of the tangential issues associated with the cannabis industry would essentially disappear, should cannabis be entirely de-scheduled. Such issues (currently) include the Section 280E tax burden, lack of financial access for legal cannabis businesses within a state (including the inability to be listed on major U.S. stock exchanges), limitations on federal research and programs, restrictions on federally funded housing programs for cannabis users, and barriers to access to medical cannabis treatment, among many others.

While de-scheduling cannabis would remove most of the burden and consequences of its illegality, it is important to acknowledge how it would affect the existing state-legal markets. An important potential ramification of de-scheduling cannabis would be the new interplay between the cannabis industry and the Dormant Commerce Clause (DCC), which provides Congress with the exclusive power to regulate interstate commerce. In the decades since federal cannabis criminalization, interstate cannabis commerce has been entirely illegal, leading many states to establish cannabis programs encapsulated within their states. These currently protectionist state programs could find themselves in conflict with the DCC the moment cannabis is de-scheduled. High-producing states such as California could potentially flood the national market with cannabis sold at a lower price than nearly all other state markets. Many states have also attempted to address the disproportionate impact of the federal “war on drugs” on minority communities through the implementation of social equity programs or licenses, which often require state residency, or residency within certain impacted areas. These programs, and any attempt to prohibit out-of-state cannabis, would likely be subjected to legal challenge as soon as cannabis is de-scheduled. Additionally, the 2018 Farm Bill’s legalization of hemp and hemp-derived products demonstrated the potential for widespread unregulated and untested products following de-scheduling.

De-scheduling cannabis would result in a drastic national change to both the perception and criminality of cannabis. Still, it will be important to address and plan for the potential challenges that will accompany this process, particularly as it relates to the DCC, in order to avoid state market upheaval. While proponents of cannabis legalization hope for eventual de-scheduling of cannabis altogether, rescheduling cannabis on a lower-tiered schedule of the CSA is the more likely outcome of any scheduling review in the immediate future.

Re-Scheduling

While not as impactful as de-scheduling, a number of significant changes would still be realized from the rescheduling of cannabis. Cannabis’ current designation as a Schedule I substance, as the President noted, “makes no sense.” Should it be re-listed under a different schedule of the CSA, cannabis research would be a far less tedious process, especially when combined with last year’s expansion of the number of cannabis sources for research purposes (previously limited to outdated varieties provided by the University of Mississippi). Federally funded programs would no longer be required to prohibit cannabis, with hospital systems, the Department of Veterans Affairs, and the Department of Housing and Urban Development potentially able to change their policies regarding cannabis.

Rescheduling cannabis would bring its own potential ramifications, which would depend on its change in schedule. While a Schedule II designation would allow for the above changes, designation of cannabis as part of Schedule III or below would be required in order to eliminate the burdensome Section 280E tax burden. Requiring prescriptions for cannabis, as is the case for most Schedule II substances, would undermine the existing state medical cannabis markets. Additionally, rescheduling, like de-scheduling, would not resolve the disparity between state and federal laws. Rescheduling would similarly have to address the existing state legal programs or risk market upheaval.

Next Steps

Schedule I designation in the CSA is reserved for substances which have “no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision, and a high potential for abuse”.  In reviewing whether cannabis is appropriately classified as a Schedule I substance, in accordance with Biden’s announcement, the Department of Health & Human Services will be tasked with evaluating whether this description applies to cannabis. If HHS finds that there is a potential medical benefit to cannabis, which is supported by appropriate research, they will forward their findings to the Drug Enforcement Administration (DEA). The DEA would then present its own findings and recommendations regarding how cannabis should be scheduled to the Attorney General. The Attorney General would then review the findings and decide whether to initiate a rescheduling rulemaking process. This process could take a number of years, if not expedited.

While rescheduling of cannabis as a Schedule II substance would likely be the easiest change to implement, it offers the least progress in the movement to fully decriminalize cannabis. For cannabis business owners, Section 280E disallows ordinary business deductions besides cost of goods sold, which will continue to impose an incredible burden on the cannabis industry until it is classified as Schedule III or below. No matter the change, we must properly consider the consequences of any rescheduling or de-scheduling on state markets and interstate commerce, or risk an even larger national illicit market.

For more information on Section 280E, financial access, federal agency guidance, and building a cannabis business, please see our free downloadable eBook – Building a Legal Cannabis Business and Brand: A New York Perspective.

Works Cited

Last Prisoner Project. (2022). Exactly how many people are locked up for weed? Retrieved from Last Prisoner Project: https://www.lastprisonerproject.org/cannabis-prisoner-scale

Michael Shear, Z. K.-Y. (2022, October 6). Biden Pardons Thousands Convicted of Marijuana Possession Under Federal Law. Retrieved from The New York Times: https://www.nytimes.com/2022/10/06/us/politics/biden-marijuana-pardon.html

Toluse Olorunnipa, Y. A. (2022, October 6). Biden offers mass pardon for those convicted of marijuana possession. Retrieved from The Washington Post: https://www.washingtonpost.com/politics/2022/10/06/biden-marijuana-decriminalization/

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