How Rescheduling Cannabis and Trump’s Election Impacts Cannabis in California
The cannabis industry in California has always operated in an area of legal uncertainty. Although California was the first state to legalize medical marijuana, cannabis has always remained federally illegal as a Schedule 1 drug under the Controlled Substances Act. This has led to a situation where for over more than two decades, canna-businesses operating in California have been operating under the cloud of federal illegality. This impacts the ability of canna-businesses to operate freely, due to banking restrictions, the uncertainty of regulations, and the risk of federal enforcement.
The DEA is currently in the process of rescheduling cannabis to Schedule 3 from Schedule 1 under the Controlled Substances Act. The DEA will hold a hearing on December 2, 2024 on the attorney general’s proposal to loosen restrictions on marijuana. The hearing comes after the period for public comment on the Biden administration’s proposal to reclassify marijuana came to a close, soliciting over 40,000 comments from an array of stakeholders.
The rescheduling of cannabis would impact the regulatory landscape in California, but not as drastically as some would think. Foreseeable changes include:
- Easing banking and financial limitations for cannabis businesses
- Allowing more research to be conducted relating to medical uses
- Standardized regulatory framework, aligning state and federal laws, which may encourage investment and innovation within the cannabis industry
The last Trump administration had a generally hands-off approach towards cannabis regulation, particularly in states that had legalized it. Initially, Attorney General Jeff Sessions took a hardline stance against cannabis, expressed a desire to enforce federal cannabis laws more strictly, and rescinded the Cole Memo, which had provided guidance to states on legal cannabis. Sessions’ tenure was short, however, and as the administration progressed, there was a more lenient approach, particularly concerning states that had legalized cannabis. The Trump administration did not introduce significant federal legislation to change cannabis regulations, leaving much of the regulatory landscape to the states.
The likely outcome with a new Trump administration is that states would still retain the authority to regulate cannabis as they see fit, meaning California could continue to enforce its own regulations while benefiting from the reduced federal constraints. This means that cannabis operators would still need to undergo the same procedures that are in place now. Namely, 1) obtaining local approvals from your local jurisdiction, and 2) obtaining state approvals.
The cannabis industry in California will continue to grow, and with it, will disputes arising out of cannabis businesses. These include everything from fights with localities regarding permitting/entitlement issues, to business disputes among partners in the cannabis space, to clashes among neighboring property owners regarding land use and real property issues. When such disputes arise, our team is here to help you navigate and assess how they may affect your business. For more questions or for more information, please contact us.