YOUR GUIDE TO THE LEGAL PRESENT AND FUTURE OF THE CANNABIS INDUSTRY
Cannabis: In Focus
As the Biden administration actively reviews the classification of cannabis under the Controlled Substances Act (CSA), a diverse group of cannabis companies and organizations is partnering with scientific and legal authorities, including Perkins Coie LLP, to launch the Coalition for Cannabis Scheduling Reform (CCSR).
The current classification of cannabis as a Schedule I drug puts it in the same category as heroin and cocaine (and more strictly controlled than even fentanyl). This is despite widely accepted medical use, a low potential for abuse, and per the DEA, no overdose deaths attributable to cannabis. As a result of its classification, cannabis continues to be harshly criminalized, Americans continue to be incarcerated for possession and use of cannabis, and state-licensed cannabis businesses operate under extreme regulatory burdens.
Last October, President Biden took the historic step of directing his administration to “expeditiously” review the status of cannabis under the CSA. Rescheduling cannabis to Schedule III, IV, or V would mark historic progress toward ending federal prohibition and present a wide range of advantages over the status quo. Descheduling would demonstrate cannabis’ low potential for abuse and represent a dramatic step toward achieving President Biden’s criminal justice and racial equity goals.
CCSR aims to engage with stakeholders to provide critical information and analysis concerning the urgent need for cannabis scheduling reform by, among other things, releasing a forthcoming comprehensive report on the classification of cannabis. Senior Counsel Andrew Kline, co-chair of the firm’s Cannabis Law industry group, is one of the white paper’s authors, with support from Associate Tommy Tobin and Paralegal Hanna Barker Mullin.
Read the official press release or visit SchedulingReform.org to learn more.
Cannabis: In Focus
Cannabis: In Focus
Cannabis: In Focus
Rep. Earl Blumenauer (D-OR) introduced the Small Business Tax Equity Act (H.R. 2643) on April 17, 2023, a bill that will allow cannabis businesses to obtain tax write-offs for ordinary business expenses.
Currently, cannabis businesses are not able to deduct business expenses under a provision of the tax code known as Section 280E, which prohibits such deductions for Schedule I or Schedule II controlled substances. The bill would amend Section 280E to allow ordinary business expenses to be deducted when the company’s business consists of sales of cannabis conducted in compliance with state law.
The proposed bill has bipartisan cosponsors including Reps. David Joyce (R-OH), Brian Mast (R-FL), Nancy Mace (R-SC), Barbara Lee (D-CA), and Danny Davis (D-IL). The bill has been referred to the House Committee on Ways and Means for further consideration.
Of course, the congressman’s bill would be moot if the President Biden’s administrative rescheduling process moves cannabis to Schedule III, IV, or V. Rescheduling to Schedule III, IV, or V would solve the 280E tax issue without the need for an additional legislative fix. Congressman Blumenauer has asked for more transparency around the president’s process.
Cannabis: In Focus
As a consequence of cannabis’ federal illegality, cannabis companies are generally locked out of the nation’s federal bankruptcy courts. Perkins Coie’s Cannabis industry group’s Tommy Tobin recently sat down with Billy Organek, a program fellow at the Harvard Law School Bankruptcy Project, to discuss the effects of current bankruptcy laws on cannabis companies in the United States.
Cannabis companies can run out of money, but they are generally unable to declare bankruptcy. While company leaders and investors still have options, these opportunities remain largely untested. Harvard’s Organek discussed several options, including:
As with so many aspects of cannabis law, there are countervailing pressures and untested solutions to novel problems. Of course, having smart, appropriate contracting on the front end is vital when working with cannabis companies, including provisions that will help mitigate risk in the absence of federal bankruptcy protections.
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Cannabis: In Focus
Cannabis: In Focus
