The headline is simple: Let’s start thinking about Marijuana and those who have been convicted of crimes because of their possession of it differently.  Biden highlighted three steps that would be taken immediately: 1) The immediate granting of pardons for anyone convicted of a federal marijuana possession; 2) He also called on all State Governors to consider doing the same; and 3) He asked for the federal classification of Marijuana to be reviewed.

Federal Pardons
6,500 people that have been charged with federal marijuana possession, dating back to 1992 will now be pardoned of those crimes.  These pardons ONLY apply to those individuals that have solely a marijuana possession conviction, with no additional convictions such as “with intent to distribute” charges, additional violent crimes, etc.  Also, this is very specifically a Pardon and NOT an expungement.  This means that this crime remains on your permanent record, however, you will have certain civil liberties restored.

State Pardons
While the President can extend Federal Pardons, he does not have the ability to do so at the State level – where most marijuana related charges are brought.  That power lies with the respective State Governors.  Biden urged all State Governors to follow his lead.  Some have done so already, while some say that they never will.  Thankfully, New York is on the right side of this one.

Reclassifying Marijuana
Under the Federal Controlled Substances Act, Marijuana is currently a Schedule 1 substance.  This is a classification that puts it on par with heroin and LSD; and considers it to be more serious/dangerous than fentanyl and methamphetamines.  This makes it incredibly difficult, if not impossible, to properly study and research the plant and its many uses; and categorizes it as a substance that has “no currently acceptable medical use.” Ironic considering that 75% of the States have specifically legalized marijuana for medical purposes at the State level.  Considering this ridiculousness, President Biden has asked that the Attorney General initiate a multi-step review, to assess whether Marijuana is properly categorized.

Speculation is running wild about this last part, and what this could mean, so let’s talk about it.  Here’s a breakdown of all possible outcomes from this administrative review:

Option 1: Nothing happens; Marijuana remains a Schedule 1 substance.  This is the least climactic outcome of the bunch.  I believe that there is a fair amount of momentum behind some movement here, or else why even bother with this?  Highly doubtful that this is the ultimate outcome.

Options 2 & 3: Marijuana gets re-scheduled or de-scheduled.  A re-scheduling would mean that marijuana would be moved [from schedule 1] to a different schedule and would/could be considered a legitimate medical product or ingredient.  This would open the door for more ease of testing and potential clinical trials, as well as widespread use throughout our health care system.  By contrast, a de-scheduling would mean that marijuana comes off the list altogether and would then become more of a corporate [but still regulated] product – like tobacco for example.

At a minimum, I think that we see re-scheduling; and at most, we see full de-scheduling.  Either outcome would produce a massive ripple effect across the country.  Neither of these outcomes happen overnight though, so we’re going to be waiting quite a while for any significant movement.

Option 4: Marijuana becomes legalized at a Federal level.  I wouldn’t count on this, and frankly, any entrepreneurs looking to break into the cannabis business (I’m looking at you, New Yorkers) should be praying that this doesn’t happen…yet.  Sure, everyone would also like to see people in the cannabis space be able to conduct their respective businesses like other non-cannabis business owners do – enjoying the ease of traditional banking and credit, friendlier tax rules, etc.  HOWEVER, once this happens, it’s going to be next to impossible for the little guys, the mom and pops, the local entrepreneurs to break into this industry.

Once federal legalization happens, big pharma will get into the game as will big tobacco and big alcohol.  And then there will be a further consolidation of the Multi-State Operators as well, and the window of opportunity for the scrappy, local entrepreneur will be a thing of the past.  By that same token though, any little guy that can get in the game BEFORE federal legalization happens, will be well-positioned for a big payday.

We’ve been waiting a long time for legalized commerce, New York, and we’re finally knocking on the door.  Tremaine Wright, Chair of the Cannabis Control Board and friend of the Firm, started to set some real expectations a few days ago.  While she wouldn’t answer questions about a definitive date that commerce would begin in NY, she DID offer that she expects draft regs to finally be released at some point before the end of 2022, and that she was expecting the full application portal to open in Q1 of 2023.  This is great news, and is consistent with what we’ve been saying. The next few months should be the most exciting so far.  And I have to believe that every piece of positive [federal] news on the topic, like POTUS’ statement last week, pushes things forward that much more.

Stay tuned for more updates, as I do believe there will be a lot more to say very soon.