Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Joe Biden’s administration is planning to reclassify cannabis as a less harmful drug with a smaller legal penalty, in a historic shift for US drug policy, said people familiar with the matter.
The recommendation from the Department of Justice’s Drug Enforcement Agency would remove cannabis from a list of the most dangerous drugs, including heroin and LSD, and recognise its medicinal use, putting it on par with substances such as ketamine.
Reviewing the classification of marijuana had emerged as a top political priority for President Biden in recent months as he has battled to shore up the youth vote ahead of the November election pitting him against Donald Trump.
During his State of the Union address to Congress in March, Biden proclaimed that “no one should be jailed for using or possessing marijuana!”
Senior Democrats had also put pressure on the Biden administration to take the step, with 17 lawmakers writing to the DEA last week to push for the review to be sped up. The Department of Health and Human Services first recommended the agency remove cannabis’s schedule-1 classification last year, but the DEA’s determination was the next big hurdle.
Chuck Schumer, the Senate majority leader, cheered the move on Tuesday. “It is great news that DEA is finally recognising that restrictive and draconian cannabis laws need to change to catch up to what science and the majority of Americans have said loud and clear,” he said.
Although the DoJ was expected to notify the White House of its recommendation on Tuesday, the change in policy will not be imminent because it will still have to go through a public comment period before the final rule takes effect.
The Biden administration has also been pushing to offer broader student debt relief — another policy that would appeal to younger Americans, even as the president faces a backlash from some progressive voters over his support for Israel’s war in Gaza.
Under the new classification change, cannabis would remain illegal under federal law. But its new designation as a schedule-3 controlled substance would reduce the criminal penalty for possession and distribution in most states. Officials have largely deprioritised prosecuting federal cannabis offences in recent years.
The policy change would mark the most dramatic shift in US drug policy in a generation. Federal laws governing the use of cannabis have lagged far behind state laws, with cannabis now legal for recreational use in 24 states as well as Washington DC and for medicinal use in 39 jurisdictions.
If the DEA proposal is signed off by the White House’s Office of Management and Budget, which oversees the federal budget and agency programmes, the move will ease clinical research into cannabis and allow cannabis companies to access a key tax benefit. The justice department and DEA declined to comment.
The move would be a boon to the US legal cannabis industry, which generated an estimated $29.6bn in sales last year, according to cannabis data company BDSA.
The AdvisorShares Pure US Cannabis ETF jumped 21 per cent following reports of the proposal. The move was first reported by the Associated Press. Shares in Nasdaq-listed Canopy Growth and Tilray Brands soared 53 per cent and 41 per cent respectively. The companies also rallied on Toronto’s main stock index, where they are dual-listed.
But the shares of the largest Nasdaq-listed cannabis groups are still trading at substantial discounts to previous highs, as investors have soured on the sector. Cannabis remaining federally illegal means the product cannot be moved across state lines, forcing companies to spend on production facilities in each state.
Read the full article here
