As of early May, more than three years after New York legalized recreational marijuana, just 119 licensed dispensaries were serving that market in the entire state. Unauthorized pot shops outnumbered legal outlets by 20 to 1, according to The New York Times, with more than 2,000 operating in New York City alone. The state had less than one licensed pot store per 100,000 residents—in contrast with about six in Massachusetts, 10 in Maine, 11 in Co
As of early May, more than three years after New York legalized recreational marijuana, just 119 licensed dispensaries were serving that market in the entire state. Unauthorized pot shops outnumbered legal outlets by 20 to 1, according to The New York Times, with more than 2,000 operating in New York City alone. The state had less than one licensed pot store per 100,000 residents—in contrast with about six in Massachusetts, 10 in Maine, 11 in Colorado, 19 in Oregon, and 48 in New Mexico.
Legislators and regulators could have avoided this "disaster," as New York Gov. Kathy Hochul recently called it, had they learned from the mistakes of other states that have struggled to displace the black market. Yet New York politicians somehow did not anticipate what would happen after people could legally use marijuana but could not obtain it from legal sources.
Legislators did not allow home cultivation, and they initially did not allow medical dispensaries to serve recreational consumers. New York created a complicated, costly, and sluggish licensing process that prioritized "equity" and "diversity" above efficiency. The state imposed burdensome fees, taxes, and regulations that made it difficult for legal dispensaries to compete with the unlicensed stores that sprang up to fill the supply gap.
New York did not let medical dispensaries enter the market until last December. Even then, it charged companies $20 million for the privilege of operating up to three outlets.
New businesses faced fees up to $300,000, and regulators gave priority to retail applicants who were deemed disadvantaged, including people with marijuana conviction records and their relatives. Those preferences provoked lawsuits that further delayed the licensing process, and they blocked applicants who might have been better equipped to run a successful business.
Despite these problems, Hochul remains proud of New York's "social equity" program. But she has ordered a bureaucratic overhaul to speed up retail license approvals and has voiced support for cutting the state's heavy marijuana taxes, which currently include a three-tiered wholesale tax based on THC content as well as a 13 percent retail tax.
Legislators should keep in mind that licensed shops are competing with a black market where the tax rate is zero. New York also should reexamine the onerous regulations that make legal weed more expensive and less accessible.
Although Hochul has promised to "shut down illicit operators," any such crackdown is apt to inflict the sort of harm that legalization was supposed to ameliorate, punishing entrepreneurs for filling the yawning gap left by the state's misguided policies and administrative incompetence. Nor is enforcement likely to succeed, given the abysmal track record of the war on weed—a crusade that legislators supposedly ended three years ago.
"We have pardoned tens of thousands of people with federal convictions for simple marijuana possession," Vice President Kamala Harris bragged on Thursday. It was not the first time she had offered that estimate, which she also cited during an appearance in South Carolina last February and at a "roundtable conversation about marijuana reform" the following month. Where did Harris get that number? From thin air, it seems. "While Harris said 'tens o
"We have pardoned tens of thousands of people with federal convictions for simple marijuana possession," Vice President Kamala Harris bragged on Thursday. It was not the first time she had offered that estimate, which she also cited during an appearance in South Carolina last February and at a "roundtable conversation about marijuana reform" the following month.
Where did Harris get that number? From thin air, it seems. "While Harris said 'tens of thousands' have been pardoned under President Joe Biden's October 2022 and December 2023 clemency proclamations," Marijuana Momentnoted in February, "the Justice Department estimates that roughly 13,000 people have been granted relief under the executive action." And only a tiny percentage of those people have bothered (or managed) to obtain evidence of their pardons: This week the Justice Department reported that "the Office of the Pardon Attorney has issued 205 certificates of pardon" to people covered by Biden's proclamations.
In October 2022, President Joe Biden announced pardons for people who had possessed marijuana in violation of 21 USC 844 or Section 48–904.01(d)(1) of the D.C. Code. That proclamation applied to "all current United States citizens and lawful permanent residents" who had "committed the offense of simple possession of marijuana" on or before October 6.
According to a count by the U.S. Sentencing Commission (USSC), about 7,500 citizens and 1,200 "resident/legal alien offenders" (only some of whom would be eligible for pardons) were convicted of marijuana possession under 21 USC 844 from FY 1992 through FY 2021. Those numbers include some people who also were convicted of other offenses.
That count did not include D.C. Code violations. "We estimate that over 6,500 people with prior federal convictions for simple possession of marijuana and thousands of such convictions under D.C. law could benefit from this relief," a White House official said during a press background call on the day Biden announced the pardons.
In December 2023, Biden expanded the pardons to include people who had violated either of two additional laws covering attempted possession (21 USC 846 and Section 48-904.09 of the D.C. Code) or federal regulations prohibiting marijuana possession in specific locations such as "Federal properties or installations." That proclamation also extended the cutoff for violations by another year or so. At the time, Harris said the additional pardons would help "thousands of people."
So how did Harris arrive at "tens of thousands"? Even if you include people who committed these offenses prior to FY 1992, there would have to be about 10,000 of them who are still alive to justify Harris' estimate.
The USSC found fewer than 9,000 such cases over three decades, and Biden's expansion may have added a few thousand more. So going back a couple more decades would not do the trick, even if you assume that the annual numbers are about the same over time, which we know is not true: The USSC count included years when the number of federal sentences for simple marijuana possession rose and fell precipitously. Overall, the annual number of marijuana arrests (the vast majority under state law) was much lower in the 1960s and '70s than it was in the period covered by the USSC analysis. And if you go back that far, you are including many people busted for possession who are no longer with us.*
Harris' exaggeration reflects the Biden administration's general tendency to fib about the extent of its "marijuana reform" while trying to motivate younger voters whose turnout could be crucial to the president's reelection. In his State of the Union address on March 8, for example, Biden falsely claimed that he was "expunging thousands of convictions."
Biden's marijuana pardons do not entail expungement because it is not possible under current federal law. As the Justice Department notes, a pardon "does not signify innocence or expunge the conviction." So it is also not true that Biden's clemency "lifts barriers to housing, employment, and educational opportunities for thousands of people with prior convictions under federal and D.C. law for simple marijuana possession," as inaptly named "fact sheets" from the White House claimed in February 2023, September 2023, and April 2024. Likewise for Biden's recent claim that he is "lift[ing] barriers to housing, employment, small business loans, and so much more for tens of thousands of Americans," which combines two kinds of hyperbole.
During his 2020 campaign, Biden promised to "decriminalize the use of cannabis." But his pardons did not accomplish that either. Without new legislation, simple possession will remain a federal offense punishable by a minimum $1,000 fine and up to a year in jail. Biden and Harris have muddied that point by saying his pardons are based on the premise that "no one should be jailed for simply using" marijuana, as Biden said in March, or that "no one should go to jail for smoking weed," as Harris put it on Thursday.
Those formulations also imply that low-level marijuana arrests commonly result in incarceration, which is not true. The USSC reported that "no offenders" covered by Biden's October 2022 proclamation were in federal Bureau of Prisons custody as of the previous January. And since those pardons excluded people who had been convicted of growing or distributing marijuana, they did not free a single federal prisoner.
Biden also has misrepresented the significance of moving marijuana from Schedule I to Schedule III of the Controlled Substances Act, which he describes as a "monumental" accomplishment. That change, which the Drug Enforcement Administration formally proposed this week, would facilitate medical research and allow state-licensed marijuana suppliers to deduct standard business expenses when they file their federal tax returns—a big financial benefit to the cannabis industry. But it otherwise would leave federal pot prohibition essentially unchanged, which is how Biden wants it.
For a longtime drug warrior who supposedly has seen the error of his ways but nevertheless opposes marijuana legalization, appealing to voters who overwhelmingly favor it is a tough sell. As Harris' pardon prevarication illustrates, that pitch requires obscuring the truth in ways small and large.
*Addendum: "I share your concerns about hyperbole around the number of pardons (and all the other marijuana reform hype)," Douglas Berman, a sentencing expert at the Ohio State University's Moritz College of Law, says in an email. He nevertheless suggests that "motivated math" could get Harris to a bit more than 20,000 simple possession convictions. That calculation would hinge on including D.C. arrests from the mid-1970s on and assuming about 15 percent resulted in convictions, which Berman says is "reasonable for a mid-sized city." But "this VP-friendly accounting," he notes, "is entirely back of the envelope," which he sees as "a big problem in this space." And Harris said she was talking about "federal convictions for simple marijuana possession," which implies convictions under 21 USC 844, 21 USC 846, and location-specific federal regulations.
[This post has been updated with additional observations about the impact of Biden's pardons.]
President Joe Biden describes the Drug Enforcement Administration's proposal to reclassify marijuana under federal law as "monumental." How so? "It's an important move toward reversing longstanding inequities," Biden claims in a video posted on Thursday. "Today's announcement builds on the work we've already done to pardon a record number of federal offenses for simple possession of marijuana, and it adds to the action we've taken to lift barrier
President Joe Biden describes the Drug Enforcement Administration's proposal to reclassify marijuana under federal law as "monumental." How so? "It's an important move toward reversing longstanding inequities," Biden claims in a video posted on Thursday. "Today's announcement builds on the work we've already done to pardon a record number of federal offenses for simple possession of marijuana, and it adds to the action we've taken to lift barriers to housing, employment, small business loans, and so much more for tens of thousands of Americans."
Even allowing for 60 days of public comment and review of a final rule by Congress and the Office of Management and Budget, marijuana's rescheduling could be finalized before the presidential election. And even if it does not take effect before then, Biden is hoping the move will help motivate younger voters whose turnout could be crucial to his re-election. But he also had better hope those voters are not paying much attention to the practical consequences of rescheduling marijuana, which are much more modest than his rhetoric implies.
"Look, folks," Biden says in the video, "no one should be in jail merely for using or possessing marijuana. Period. Far too many lives have been upended because of [our] failed approach to marijuana, and I'm committed to righting those wrongs." Yet rescheduling marijuana will not decriminalize marijuana use, even for medical purposes. It will not legalize state-licensed marijuana businesses or resolve the growing conflict between federal prohibition and state laws that authorize those businesses. It will not stop the war on weed or do much to ameliorate the injustice it inflicts.
In accordance with a recommendation that the Department of Health and Human Services (HHS) made last August, the DEA plans to move marijuana from Schedule I of the Controlled Substances Act, a list of completely prohibited drugs, to Schedule III, which includes prescription medications such as ketamine, Tylenol with codeine, and anabolic steroids. Schedule I supposedly is reserved for drugs with a high abuse potential and no accepted medical applications that cannot be used safely even under a doctor's supervision.
When Biden directed HHS to review marijuana's legal status in October 2022, he noted that "we classify marijuana at the same level as heroin" and treat it as "more serious than fentanyl," which "makes no sense." On Thursday, he likewise noted that "marijuana has a higher-level classification than fentanyl and methamphetamine—the two drugs driving America's overdose epidemic."
Biden is right that marijuana's current classification makes no sense, as critics have been pointing out for half a century and as HHS belatedly acknowledged in explaining the rationale for rescheduling. HHS found "credible scientific support" for marijuana's use in the treatment of pain, nausea and vomiting, and "anorexia related to a medical condition." It also noted that "the risks to the public health posed by marijuana are low compared to other drugs of abuse," such as heroin (Schedule I), cocaine (Schedule II), benzodiazepines like Valium and Xanax (Schedule IV), and alcohol (unscheduled).
Although "abuse of marijuana produces clear evidence of harmful consequences, including substance use disorder," HHS said, they are "less common and less harmful" than the negative consequences associated with other drugs. It concluded that "the vast majority of individuals who use marijuana are doing so in a manner that does not lead to dangerous outcomes to themselves or others."
According to the DEA's proposed rule, Attorney General Merrick Garland, who holds the ultimate authority to reschedule drugs under the CSA, "concurs with HHS's conclusion" that marijuana has currently accepted medical uses. Garland also "concurs with" the assessment that "marijuana has a potential for abuse less than the drugs or other substances in schedules I and II." And he agrees that "the abuse of marijuana may lead to moderate or low physical dependence, depending on frequency and degree of marijuana exposure."
Those conclusions are "monumental" in the sense that HHS, the DEA, and the Justice Department are finally acknowledging what most Americans already knew. Abandoning the pretense that marijuana meets the criteria for Schedule I represents progress in that sense, although it comes after decades of legal wrangling in which HHS and the DEA took the opposite position, at a time when 38 states have legalized medical use of marijuana, two dozen have taken the further step of legalizing recreational use, and an overwhelming majority of Americans oppose pot prohibition.
In practical terms, the two main benefits of moving marijuana to Schedule III are fewer regulatory barriers to medical research and a financial boon to state-licensed cannabis suppliers, who will no longer be barred from deducting standard business expenses when they file their federal tax returns. But when Biden calls it "an important move toward reversing longstanding inequities" and links it to "righting [the] wrongs" suffered by cannabis consumers, he is promising more than rescheduling can possibly deliver.
Although Biden promised to "decriminalize the use of cannabis" during his 2020 campaign, rescheduling does not do that. Nor do the pardons he touts. Despite those two moves, low-level marijuana possession will remain a federal offense punishable by a minimum $1,000 fine and up to a year in jail. Only Congress can change that. Biden has invested little, if any, effort in urging it to do so, and he opposes outright federal legalization based on "gateway drug" concerns that pot prohibitionists have been voicing since the 1950s.
Neither rescheduling nor pardons will remove the unfair "barriers" that Biden decries. Although Biden claims he is "expunging thousands of convictions," that is not true, since pardons do not entail expungement. Nor do pardons eliminate the various legal disabilities associated with marijuana convictions, cannabis consumption, or participation in the cannabis industry, which include loss of Second Amendment rights (a policy that Biden defends) and ineligibility for admission, legal residence, and citizenship under immigration law.
As his pardons reflect, Biden's concern about unjust incarceration is curiously limited. Because those pardons did not apply to people convicted of growing or selling marijuana, they did not free a single federal prisoner. Neither will rescheduling.
With marijuana in Schedule III, state-licensed marijuana businesses will remain criminal enterprises under federal law, albeit subject to less draconian penalties. "If marijuana is transferred into schedule III," the DEA notes, "the manufacture, distribution, dispensing, and possession of marijuana would remain subject to the applicable criminal prohibitions of the CSA."
For that reason, rescheduling is unlikely to reassure financial institutions that are leery of serving marijuana businesses because it could expose them to devastating criminal, civil, and regulatory penalties. "Because marijuana would remain a controlled substance under the CSA," the law firm Debevoise & Plimpton notes, "its rescheduling would not immediately impact the potential legal risks to financial institutions (and other parties) considering whether to provide services to marijuana businesses."
If marijuana is listed along with prescription drugs, doesn't that at least mean that it can legally be used as a medicine? No, because doctors can prescribe only specific products that have been approved by the Food and Drug Administration (FDA). Unless and until new cannabis-based medicines pass muster with the FDA, they will not be legal for doctors to prescribe or patients to use.
These points are easily overlooked in the hoopla surrounding the rescheduling announcement. But the limitations of Biden's "monumental" policy shift are clear from the reactions of activists and the cannabis industry.
"This recommendation validates the experiences of tens of millions of Americans, as well as tens of thousands of physicians, who have long recognized that cannabis possesses legitimate medical utility," said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, which first urged the DEA to reschedule marijuana back in 1972. "But it still falls well short of the changes necessary to bring federal marijuana policy into the 21st century. Specifically, the proposed change fails to harmonize federal marijuana policy with the cannabis laws of most U.S. states, particularly the 24 states that have legalized its use and sale to adults."
The review from the American Civil Liberties Union (ACLU) was similarly mixed. "President Biden's decision to reschedule marijuana is the most significant step any American president has taken to address the harms of the war on marijuana," Cynthia W. Roseberry, director of policy and government affairs at the ACLU's Justice Division, said in an emailed statement. "While it is an incredibly encouraging step in the right direction, the rescheduling does not end criminal penalties for marijuana or help the people currently serving sentences for marijuana offenses."
John Mueller, CEO of the Greenlight dispensary chain, likewise noted what rescheduling will not do. "This is a monumental moment," he said in an emailed press release, "but we still have a long way to go to rectify the injustices of the War on Drugs. The recent strides in cannabis rescheduling mark a significant departure from a failed 50-year prohibition policy. We must continue this momentum by calling on our state and federal leaders to prioritize the release of individuals incarcerated for cannabis-related offenses. This is not just about acknowledging the legitimacy of the cannabis industry, but also about rectifying the disproportionate impact of outdated policies on marginalized communities.…It's time to right the wrongs of the past and embrace progress wholeheartedly."
Aaron Smith, CEO of the National Cannabis Industry Association, had a similar take. "On behalf of thousands of legal businesses operating across the country, we commend President Biden for taking this important first step toward a more rational marijuana policy," he said. "Now it's time for Congress to enact legislation that would protect our industry, uphold public safety, and advance the will of the voters who overwhelmingly support making cannabis legal for adults. Rescheduling alone does not fix our nation's state and federal cannabis policy conflict. Only Congress can enact the legislation needed to fully respect the states and advance the will of the vast majority of voters who support legal cannabis."
The Justice Department formally, finally, proposed to stop lying about marijuana today after decades of insisting the drug is comparable to heroin and ecstasy—and more dangerous than cocaine and methamphetamine. The Drug Enforcement Administration (DEA), in a proposed rule sent to the Federal Register, moved to change marijuana's status from a Schedule I drug under the Controlled Substances Act—considered by the government to be highly abuse-pron
The Justice Department formally, finally, proposed to stop lying about marijuana today after decades of insisting the drug is comparable to heroin and ecstasy—and more dangerous than cocaine and methamphetamine.
The Drug Enforcement Administration (DEA), in a proposed rule sent to the Federal Register, moved to change marijuana's status from a Schedule I drug under the Controlled Substances Act—considered by the government to be highly abuse-prone drugs with no medical value—to a Schedule III drug. Recreational marijuana possession and use would remain illegal under federal law, and any new cannabis-based medications would still require approval from the Food and Drug Administration.
President Joe Biden directed the Justice Department and the Department of Health and Human Services (HHS) in 2022 to review marijuana's status as a Schedule I drug. In 2023, HHS recommended that marijuana be moved to Schedule III, which includes drugs with a medium risk of abuse and accepted medical use.
On the campaign trail in 2020, Biden promised to "decriminalize the use of cannabis," but despite lamenting the injustices of marijuana convictions and the barriers they create, and despite the continuing collapse of public support for marijuana prohibition, Biden still opposes full-scale legalization. Instead, his administration has focused on mass pardons and other measures that largely leave those injustices in place.
As Reason's Jacob Sullum wrote earlier this month, after news of the impending proposal first broke, rescheduling marijuana may allow for more medical research and be a good election-year talking point for Biden, but it won't end the continuing federal prohibition of cannabis:
Rescheduling marijuana will not resolve the conflict between the CSA and the laws of the 38 states that recognize cannabis as a medicine, 24 of which also allow recreational use. State-licensed marijuana businesses will remain criminal enterprises under federal law, exposing them to the risk of prosecution and forfeiture. While an annually renewed spending rider protects medical marijuana suppliers from those risks, prosecutorial discretion is the only thing that protects businesses serving the recreational market.
Even if they have state licenses, marijuana suppliers will be in the same legal position as anyone who sells a Schedule III drug without federal permission. Unauthorized distribution is punishable by up to 10 years in prison for a first offense and up to 20 years for subsequent offenses. That is less severe than the current federal penalties for growing or distributing marijuana, which include five-year, 10-year, and 20-year mandatory minimum sentences, depending on the number of plants or amount of marijuana. But distributing cannabis, with or without state permission, will remain a felony.
But even getting the DEA to acknowledge that marijuana is not a drug on par with LSD and heroin is a victory of sorts.
In 2012, Barack Obama's head of the DEA, Michele Leonhart, refused to say whether drugs like crack cocaine and heroin were worse than marijuana, only offering the weak response that "all illegal drugs are bad."
Chuck Rosenberg, who followed Leonhart as head of the DEA, also equivocated when asked the same question in 2015: "If you want me to say that marijuana's not dangerous, I'm not going to say that because I think it is," Rosenberg said on a conference call with reporters. "Do I think it's as dangerous as heroin? Probably not. I'm not an expert."
Rosenberg clarified his statements a week later, saying, "Heroin is clearly more dangerous than marijuana."
Still, the federal government decided to keep embarrassing itself for nearly another decade before moving to drop marijuana from Schedule I.
The DEA's rescheduling proposal will now go through a public comment period.
The Justice Department yesterday confirmed that the Drug Enforcement Administration (DEA) plans to move marijuana from Schedule I of the Controlled Substances Act (CSA), a list of completely prohibited drugs, to Schedule III, which includes prescription medications such as ketamine, Tylenol with codeine, and anabolic steroids. The Associated Press notes that the change, which is based on an August 2023 recommendation by the Department of Health
The Justice Department yesterday confirmed that the Drug Enforcement Administration (DEA) plans to move marijuana from Schedule I of the Controlled Substances Act (CSA), a list of completely prohibited drugs, to Schedule III, which includes prescription medications such as ketamine, Tylenol with codeine, and anabolic steroids. The Associated Press notes that the change, which is based on an August 2023 recommendation by the Department of Health and Human Services (HHS) that resulted from a review President Joe Biden ordered in October 2022, "would not legalize marijuana outright for recreational use."
That is by no means the only thing rescheduling marijuana will not do. Biden wants credit for "marijuana reform," which he hopes will help motivate young voters whose turnout could be crucial to his reelection. The announcement of the DEA's decision seems designed to maximize its electoral impact. But voters should not be fooled: Although moving marijuana to Schedule III will facilitate medical research and provide a financial boost to the cannabis industry, it will leave federal pot prohibition essentially untouched.
Rescheduling marijuana will not resolve the conflict between the CSA and the laws of the 38 states that recognize cannabis as a medicine, 24 of which also allow recreational use. State-licensed marijuana businesses will remain criminal enterprises under federal law, exposing them to the risk of prosecution and forfeiture. While an annually renewed spending rider protects medical marijuana suppliers from those risks, prosecutorial discretion is the only thing that protects businesses serving the recreational market.
Even if they have state licenses, marijuana suppliers will be in the same legal position as anyone who sells a Schedule III drug without federal permission. Unauthorized distribution is punishable by up to 10 years in prison for a first offense and up to 20 years for subsequent offenses. That is less severe than the current federal penalties for growing or distributing marijuana, which include five-year, 10-year, and 20-year mandatory minimum sentences, depending on the number of plants or amount of marijuana. But distributing cannabis, with or without state permission, will remain a felony.
That reality suggests that banks will remain leery of providing financial services to state-licensed marijuana suppliers, which entails a risk of potentially devastating criminal, civil, and regulatory penalties. The dearth of financial services has forced many cannabis suppliers to rely heavily on cash, which is cumbersome and exposes them to a heightened risk of robbery. It also makes investment in business expansion difficult.
Although federal arrests for simple marijuana possession are rare, cannabis consumers likewise will still be committing crimes, even if they live in states that have legalized marijuana. Under 21 USC 844, possessing a controlled substance without a prescription is a misdemeanor punishable by a minimum $1,000 fine and up to a year in jail. Moving marijuana to Schedule III will not change that law, which only Congress can do. Nor did President Joe Biden's mass pardons for people convicted of simple marijuana possession under that statute, which apply only retrospectively, "decriminalize the use of cannabis," as he promised to do during his 2020 campaign.
Biden has repeatedly decried the barriers to education, employment, and housing that marijuana convictions create. But contrary to what he claims, his pardons do not entail expungement of criminal records and therefore do not eliminate those barriers. Nor did the pardons address the various legal disabilities associated with marijuana convictions, cannabis consumption, or participation in the cannabis industry, which include loss of Second Amendment rights (a policy that Biden defends) and ineligibility for admission, legal residence, and citizenship under immigration law. Rescheduling marijuana likewise will not remove those barriers and disabilities.
Moving marijuana to Schedule III will not even make it legally available as a medicine, which would require regulatory approval of specific products. Doctors can legally prescribe Marinol (a.k.a. dronabinol), a synthetic version of THC listed in Schedule III, and Epidiolex, a cannabis-derived CBD solution listed in Schedule V. But they will not be able to prescribe marijuana even after it is moved to Schedule III unless the Food and Drug Administration approves additional cannabis-based medications.
The medical "recommendations" that authorize patients to use marijuana for symptom relief under state law are not prescriptions, and they do not make such use compliant with the CSA. So rescheduling marijuana not only will not legalize recreational use; it will not legalize medical use either.
What will rescheduling do? It should make medical research easier by eliminating the regulatory requirements that are specific to Schedule I, and it will provide an important benefit to state-licensed marijuana suppliers by allowing them to deduct standard business expenses when they pay federal income taxes.
Under Section 280E of the Internal Revenue Code, which is aimed at sticking it to drug dealers, taxpayers may not claim a "deduction or credit" for "any amount paid or incurred during the taxable year in carrying on any trade or business" that involves "trafficking" in Schedule I or Schedule II drugs. As that provision has been interpreted by tax courts, marijuana businesses can still deduct the "cost of goods sold," which counterintuitively means they can deduct the expenses associated with obtaining and maintaining an inventory of cannabis products. But they cannot deduct any other business expenses, including rent, utilities, salaries and benefits, office supplies, security, cleaning services, insurance, and legal fees.
That rule results in a crushing financial burden, forcing marijuana retailers to pay an effective tax rate as high as 70 percent or more. But because Section 280E applies only to businesses that sell drugs in Schedule I or Schedule II, moving marijuana to Schedule III will eliminate that disadvantage.
"I cannot emphasize enough that removal of § 280E would change the industry forever," cannabis lawyer Vince Sliwoski writes. "Having worked with cannabis businesses for 13 years, I view taxation as the largest affront to marijuana businesses—more than banking access, intellectual property protection problems, lack of bankruptcy, you name it. This would be HUGE." In addition to making it much easier to turn a profit, Sliwoski says, the tax change would help attract investors and give marijuana businesses "more leverage" in negotiating those deals.
Aside from those practical changes, rescheduling represents a historic federal about-face on the benefits and hazards of marijuana. Schedule I is supposedly reserved for drugs with a high abuse potential and no accepted medical use that cannot be used safely even under a doctor's supervision. Explaining its rationale for recommending marijuana's reclassification, HHS acknowledged that the drug does not meet those criteria—a point that critics had been making for half a century.
HHS cited "credible scientific support" for marijuana's use in the treatment of pain, nausea and vomiting, and "anorexia related to a medical condition." Regarding abuse potential and safety, it noted that marijuana compares favorably to "other drugs of abuse," such as heroin (Schedule I), cocaine (Schedule II), benzodiazepines like Valium and Xanax (Schedule IV), and alcohol (unscheduled). "The vast majority of individuals who use marijuana," HHS said, "are doing so in a manner that does not lead to dangerous outcomes to themselves or others."
In agreeing to follow the HHS recommendation, the DEA likewise is implicitly admitting that the federal government has been lying about marijuana for decades. But that long-overdue reversal falls far short of addressing today's central cannabis issue: the conflict between federal prohibition and state tolerance, which extends to recreational use in jurisdictions that account for most of the U.S. population. Repealing the federal ban—a step that Americans overwhelmingly support—would resolve that conflict. And while Biden cannot do that on his own, he has stubbornly resisted the idea, even as he emphasizes the irrationality and injustice of the war on weed.
The federal government is finally expected to change the way it regulates marijuana, such that the drug would no longer be completely forbidden. The change is welcome, but it does not go far enough. "The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug," the Associated Press reported on Tuesday. The proposal "would recognize the medical uses of cannabis and acknowledge it has less potential for abuse
The federal government is finally expected to change the way it regulates marijuana, such that the drug would no longer be completely forbidden. The change is welcome, but it does not go far enough.
"The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug," the Associated Press reported on Tuesday. The proposal "would recognize the medical uses of cannabis and acknowledge it has less potential for abuse than some of the nation's most dangerous drugs. However, it would not legalize marijuana outright for recreational use."
The policy would signal a welcome shift from decades of prohibitionist drug policy. Since 1970, the federal government has regulated marijuana under Schedule I of the Controlled Substances Act, intended for drugs with "a high potential for abuse" and "no currently accepted medical use in treatment." Other Schedule I substances include heroin and peyote.
That description has always been ridiculous when applied to marijuana, but especially in recent years, as more than two-thirds of U.S. states, plus three territories and the District of Columbia, now allow marijuana for medical use—not to mention that 24 states, two territories, and D.C. further allow recreational use.
The proposed reclassification stems from President Joe Biden's October 2022 announcement calling on Attorney General Merrick Garland and Secretary Xavier Becerra of the Department of Health and Human Services (HHS) to "initiate the administrative process to review expeditiously how marijuana is scheduled under federal law."
In August 2023, HHS delivered its recommendation: Marijuana should be reclassified from Schedule I to Schedule III. According to the DEA, Schedule III drugs have "a moderate to low potential for physical and psychological dependence" and can be prescribed by a doctor. Examples include ketamine, Tylenol with codeine, and anabolic steroids. Marijuana would not be completely legalized, though: Schedule III substances are still subject to regulation on their sale and use.
Even now, if the DEA decides to reschedule marijuana, nothing will change right away: The proposal "still must be reviewed by the White House Office of Management and Budget," the A.P. notes, after which "the DEA will take public comment on the plan…. After the public comment period,…the agency would publish the final rule."
Marijuana prohibition is an antiquated notion, and its end is long overdue. Nearly 90 percent of Americans now think marijuana should be legal in some capacity, according to a Gallup poll conducted earlier this year, with 57 percent favoring full legalization and another 32 percent preferring that it be legal only for medical use.
Even the government's excuses for keeping cannabis illegal have never stood up to scrutiny. When HHS decided to recommend reclassification last year, it effectively reversed itself and contradicted its own long-held position on the topic; the DEA has previously declined to reschedule marijuana five times. As Reason's Jacob Sullum wrote in January, "The [HHS] reversal shows that marijuana's classification has always been a political question rather than a legal or scientific matter."
"It is significant for these federal agencies, and the DEA and [Food and Drug Administration] in particular, to acknowledge publicly for the first time what many patients and advocates have known for decades: that cannabis is a safe and effective therapeutic agent for tens of millions of Americans," said Deputy Director Paul Armentano of the National Organization for the Reform of Marijuana Laws (NORML) in an emailed statement. But that's not far enough, Armentano argues: "Just as it is intellectually dishonest and impractical to categorize cannabis in the same placement as heroin, it is equally disingenuous and unfeasible to treat cannabis in the same manner as anabolic steroids and ketamine."
Rescheduling marijuana so that people can use it without fear of being put in prison is a welcome first step. But the best solution would be for Congress to simply decriminalize it altogether.
The DEA's scare tactics likening Adderall prescriptions to the opioid epidemic betrays its addiction to manufacturing drug panics to protect its authority amid the drug war's failures.
The Drug Enforcement Administration has found a new bogeyman to justify its failed prohibitionist crusade — prescription medication for people with ADHD. — Read the rest
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The DEA's scare tactics likening Adderall prescriptions to the opioid epidemic betrays its addiction to manufacturing drug panics to protect its authority amid the drug war's failures.
The Drug Enforcement Administration has found a new bogeyman to justify its failed prohibitionist crusade — prescription medication for people with ADHD. — Read the rest
President Joe Biden's perfunctory reference to marijuana reform during last night's State of the Union address further undermined his campaign's already iffy attempt to motivate young voters, who overwhelmingly oppose pot prohibition. Biden claimed he was "expunging thousands of convictions for the mere possession" of marijuana, which is not true, and declared that "no one should be jailed for simply using" marijuana—a proposition that was on the
President Joe Biden's perfunctory reference to marijuana reform during last night's State of the Union address further undermined his campaign's already iffy attempt to motivate young voters, who overwhelmingly oppose pot prohibition. Biden claimed he was "expunging thousands of convictions for the mere possession" of marijuana, which is not true, and declared that "no one should be jailed for simply using" marijuana—a proposition that was on the cutting edge of drug policy half a century ago.
Contrary to what Biden said, his pardons for people convicted of simple possession under federal law do not entail expungement of criminal records because there is no way to accomplish that without new legislation. The distinction matters because Biden has emphasized that "criminal records for marijuana possession" create "needless barriers to employment, housing, and educational opportunities." His pardons do not remove those barriers. The certificates that pardon recipients can obtain might carry weight with landlords or employers, but there is no guarantee of that.
In other words, Biden has not delivered on his campaign promise to "automatically expunge all prior cannabis use convictions." Yet Biden claimed otherwise last night, conflating pardons with expungements that would mean people convicted of simple possession no longer "have it on their record."
What about the idea that people should not be arrested simply for using marijuana? During his 2020 campaign, Biden promised to "decriminalize the use of cannabis." His pardons do not accomplish that goal either. Federal law still treats simple marijuana possession as a misdemeanor punishable by a minimum $1,000 fine and up to a year in jail. In any event, all but a tiny percentage of simple possession cases are prosecuted under state law.
"Biden made two promises on marijuana reform on the 2020 campaign trail—to decriminalize marijuana use and expunge records—and he has failed to deliver either," notes Cat Packer, director of drug markets and legal regulation at the Drug Policy Alliance. "Biden's pardons haven't released anyone from prison or expunged anyone's records."
We might credit Biden for at least having his heart in the right place if he had ventured to say that marijuana use should not be treated as a crime back in the 1970s, when that idea first gained traction. In 1972, the same year that Biden was elected to his first term in the U.S. Senate, the National Commission on Marihuana and Drug Abuse recommended decriminalization of marijuana possession for personal use. It also recommended that "casual distribution of small amounts of marihuana for no remuneration, or insignificant remuneration, no longer be an offense."
Those recommendations were especially striking in light of the commission's composition. Most of its members had been appointed by President Richard Nixon, a law-and-order Republican, and it was chaired by Raymond Shafer, a Republican who had just completed a term as Pennsylvania's governor.
That decade, nearly a dozen states, beginning with Oregon in 1973, took the commission's advice, typically changing low-level possession from a criminal offense to a civil violation punishable by a modest fine. President Jimmy Carter endorsed decriminalization in 1977, when he told Congress that "penalties against possession of a drug should not be more damaging to an individual than the use of the drug itself."
That wave of reform was followed by an anti-drug backlash in which Carter's successor, Ronald Reagan, figured prominently. So did Biden. "We have to hold every drug user accountable," he declared in a 1989 speech that faulted Republicans for not being tough enough on the issue, because "if there were no drug users, there would be no appetite for drugs, and there would be no market for them."
Biden now presents himself as a recovering drug warrior who has seen the error of his ways. During his 2020 campaign, he conceded that the scientifically baseless penal distinction between crack and cocaine powder, which resulted in glaring racial disparities, was "a big mistake." He switched from pushing mandatory minimums to advocating their elimination. And he said the federal government should "leave decisions regarding legalization for recreational use up to the states."
That last promise cannot be fulfilled as long as federal prohibition remains in place. Until marijuana is descheduled, state-licensed marijuana businesses will remain criminal enterprises under federal law, which makes it hard for them to obtain financial services and exposes them to the risk of prosecution and civil forfeiture. For businesses that serve the recreational market, prosecutorial discretion is the only protection against that risk.
Reclassifying marijuana as a Schedule III drug, another move that Biden touted last night, would leave federal prohibition essentially untouched. It would not decriminalize the cannabis industry or remove the various legal disabilities triggered by participation in that industry or by cannabis consumption, such as the loss of Second Amendment rights and ineligibility for admission, legal residence, and citizenship under immigration law. Rescheduling would not even make marijuana legally available as a prescription medicine, which would require approval of specific products by the Food and Drug Administration.
Until marijuana is "removed from the Controlled Substances Act entirely," Packer notes, "federal criminalization will continue to ruin countless lives, create barriers to jobs, housing, food, and education and disproportionately harm Black and Brown communities. If Biden is truly committed to ending the failures of federal marijuana criminalization he should: expand pardons and commutations beyond simple possession cases; end marijuana-based deportations of noncitizens; direct his administration to revise policies related to marijuana, including access to housing and food assistance programs; and call on the DEA and Congress to federally decriminalize marijuana by descheduling it."
Biden has stubbornly resisted federal legalization, saying he is worried that marijuana might be a "gateway" to other, more dangerous drugs—an argument that pot prohibitionists have been deploying since at least the early 1950s. That position flies in the face of public opinion. According to the latest Gallup poll, 70 percent of Americans, including 87 percent of Democrats, favor legalization.
Support for repealing pot prohibition is especially strong among younger voters, whose behavior in November could be crucial to Biden's reelection. It is therefore not surprising that his campaign is trying to boost turnout among those voters by bragging that Biden "changed federal marijuana policy" (which so far is not accurate) because "nobody should have to go to jail just for smoking weed," which almost never happens under current law and won't happen less often as a result of Biden's pardons or rescheduling.
Even if Biden had the power to unilaterally decriminalize low-level marijuana possession, that step would not address today's central cannabis issue, which is the conflict between federal law and the laws of the 38 states that have legalized marijuana for medical use, including two dozen, accounting for most of the U.S. population, that also allow recreational use. Instead of addressing that issue, which is what an overwhelming majority of his supporters would like him to do, Biden is acting as if it is still 1972.
A large majority of Americans—70 percent, according to the latest Gallup poll—support marijuana legalization, and that sentiment is especially strong among younger voters. Gallup found that 79 percent of 18-to-34-year-olds thought marijuana should be legal, compared to 64 percent of adults 55 or older. Similarly, a Pew Research Center survey found that support for legalization was inversely correlated with age. It therefore makes sense that Presi
A large majority of Americans—70 percent, according to the latest Gallup poll—support marijuana legalization, and that sentiment is especially strong among younger voters. Gallup found that 79 percent of 18-to-34-year-olds thought marijuana should be legal, compared to 64 percent of adults 55 or older. Similarly, a Pew Research Center survey found that support for legalization was inversely correlated with age. It therefore makes sense that President Joe Biden, who has generated little enthusiasm among Americans of any age group, would try to motivate young voters by touting his support for "marijuana reform."
The problem for Biden, a longtime drug warrior who is now presenting himself as a reformer, is that his position on marijuana falls far short of repealing federal prohibition, which is what most Americans say they want. His outreach attempts have clumsily obfuscated that point, as illustrated by a video that Vice President Kamala Harris posted on X (formerly Twitter) earlier this month.
"In 2020," Harris writes in her introduction, "young voters turned out in record numbers to make a difference. Let's do it again in 2024." The video highlights "the largest investment in climate action in history," cancellation of "$132 billion in student debt," "the first major gun safety legislation in nearly 30 years," and $7 billion in subsidies for historically black colleges and universities. Then Harris says this: "We changed federal marijuana policy, because nobody should have to go to jail just for smoking weed." That gloss is misleading in several ways.
Biden has not actually "changed federal marijuana policy." His two big moves in this area were a mass pardon for people convicted of simple possession under federal law and a directive that may soon result in moving marijuana from Schedule I of the Controlled Substances Act, a category supposedly reserved for drugs with a high abuse potential and no recognized medical use that cannot be used safely even under a doctor's supervision, to Schedule III, which includes prescription drugs such as ketamine, Tylenol with codeine, and anabolic steroids.
Although Harris, echoing Biden, says "nobody should have to go to jail just for smoking weed," that rarely happens. Biden's pardons, which excluded people convicted of growing or distributing marijuana, did not free a single prisoner, and they applied to a tiny fraction of possession cases, which are typically prosecuted under state law.
When he announced the pardons in October 2022, Biden noted that "criminal records for marijuana possession" create "needless barriers to employment, housing, and educational opportunities." But his pardons do not remove those barriers. They do not entail expungement of marijuana records, which is currently not possible under federal law. The certificates that pardon recipients can obtain might carry weight with landlords or employers, but there is no guarantee of that.
Biden's pardons also did not change federal law, which still treats simple marijuana possession as a misdemeanor punishable by a minimum $1,000 fine and up to a year in jail. So people can still be arrested for marijuana possession under federal law, even if they are unlikely to serve time for that offense (which would be true with or without Biden's pardons). The pardons that Biden announced on October 6, 2022, applied only to offenses committed "on or before the date of this proclamation." When he expanded those pardons on December 22, 2023, that became the new cutoff.
Marijuana use still can disqualify people from federal housing and food assistance. Under immigration law, marijuana convictions are still a bar to admission, legal residence, and citizenship. And cannabis consumers, even if they live in states that have legalized marijuana, are still prohibited from possessing firearms under 18 USC 922(g)(3), which applies to any "unlawful user" of a "controlled substance."
The Biden administration has stubbornly defended that last policy against Second Amendment challenges in federal court, where government lawyers have likened cannabis consumers to dangerous criminals and "lunatics." Worse, Biden signed the Bipartisan Safer Communities Act of 2022, which increased the maximum prison sentence for marijuana users who own guns from 10 years to 15 years and created a new potential charge against them, which likewise can be punished by up to 15 years behind bars. This is the very same law that Harris touts as "the first major gun safety legislation in nearly 30 years."
Biden, in short, has neither "decriminalize[d] the use of marijuana" nor "automatically expunge[d] all marijuana use convictions," as Harris promised on the campaign trail. Both of those steps would require congressional action that Biden has done little to promote.
What about rescheduling? A recent poll commissioned by the Coalition for Cannabis Scheduling Reform, Marijuana Momentreports, found that "voters' impression of the president jumped a net 11 points" after they were informed about "the implications of the rescheduling review that the president initiated." That included "an 11-point favorability swing among young voters 18-25," who "will be critical to his reelection bid."
But let's not get too excited. Since rescheduling has not happened yet, it is not true that Biden "changed federal marijuana policy" in this area either. And assuming that the Drug Enforcement Administration moves marijuana to Schedule III, as the Department of Health and Human Services recommended last August in response to Biden's directive, the practical impact would be limited. Rescheduling would facilitate medical research, and it would allow state-licensed marijuana suppliers to deduct business expenses when they file their federal tax returns, which is currently prohibited under Section 280E of the Internal Revenue Code.
Even after rescheduling, however, marijuana businesses would remain criminal enterprises under federal law, which makes it hard for them to obtain financial services and exposes them to the risk of prosecution and asset forfeiture. For businesses that serve recreational consumers, prosecutorial discretion is the only protection against that risk. Cannabis consumers would still have no legally recognized right to own guns, and people who work in the cannabis industry would still face other disabilities under federal law, including life-disrupting consequences for immigrants. Rescheduling would not even make marijuana legally available as a prescription medicine, which would require approval of specific products by the Food and Drug Administration.
In response to overwhelming public support for marijuana legalization, in other words, Biden has made modest moves that leave federal prohibition essentially untouched. While he does not have the authority to unilaterally deschedule marijuana, he cannot even bring himself to support legislation that would do that. Why not?
During the 2020 campaign, Biden echoed seven decades of anti-pot propaganda, saying he was worried that marijuana might be a "gateway" to other, more dangerous drugs. "The truth of the matter is, there's not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug," he said. "It's a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it….It is not irrational to do more scientific investigation to determine, which we have not done significantly enough, whether or not there are any things that relate to whether it's a gateway drug or not."
After Biden took office, his press secretary confirmed that his thinking had not changed. "He spoke about this on the campaign," she said. "He believes in decriminalizing the use of marijuana, but his position has not changed."
Biden's rationale for opposing legalization is the same line of argument that Harry J. Anslinger, who headed the Federal Bureau of Narcotics from 1930 to 1962, began pushing in the early 1950s after retreating from his oft-reiterated claim that marijuana causes murderous madness. "Over 50 percent of those young [heroin] addicts started on marijuana smoking," he told a congressional committee in 1951. "They started there and graduated to heroin; they took the needle when the thrill of marijuana was gone."
Anslinger reiterated that point four years later, when he testified in favor of stricter penalties for marijuana offenses. "While we are discussing marijuana," a senator said, "the real danger there is that the use of marijuana leads many people eventually to the use of heroin." Anslinger agreed: "That is the great problem and our great concern about the use of marijuana, that eventually if used over a long period, it does lead to heroin addiction."
Since then, a great deal of research has examined this issue, which is complicated by confounding variables that make the distinction between correlation and causation elusive. Biden nevertheless thinks "more scientific investigation" will reach a definitive conclusion. If he won't support legalization until we know for sure whether marijuana is a "gateway drug," he will never support legalization.
The supposedly reformed drug warrior's intransigence on this issue poses an obvious challenge for Harris, a belated legalization supporter who is trying to persuade voters who take the same view that Biden is simpatico. Marijuana Momentreports that Harris' staff recently has been reaching out to marijuana pardon recipients, "seeking assurance that the Justice Department certification process is going smoothly and engaging in broader discussions about cannabis policy reform."
According to Chris Goldstein, a marijuana activist who was pardoned for a 2014 possession conviction, the vice president's people get it. Goldstein was "surprised by how up to speed and nice everybody was," he told Marijuana Moment. "Her staff really did know the difference between rescheduling [and] descheduling, and they were interested to talk about it."
No doubt Biden also understands the difference. The problem is that he supports the former but not the latter, which he rejects for Anslinger-esque reasons. Cheery campaign videos cannot disguise that reality.
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