The recent decision by the U.S. Supreme Court to limit the power of federal regulatory agencies has introduced new uncertainty regarding the future of cannabis rescheduling. However, administrative law and policy experts believe that the ambiguity is not expected to hinder the Biden administration’s reclassification process.
In a 6-to-3 decision last Friday, the court ruled that courts are no longer obligated to follow federal agencies’ interpretations of statutes when Congress leaves those interpretations unclear. This ruling effectively ends the Chevron doctrine, named after a 1984 judgment. Historically, courts would defer to regulators as the subject matter experts.
There is speculation about the implication of the Chevron ruling on state-licensed cannabis markets, with questions arising about the future ability of federal agencies to provide nonbinding guidance, such as a new Cole memo. Further, doubts have surfaced regarding the U.S. Drug Enforcement Administration’s (DEA) authority over intoxicating hemp products such as delta-8 THCA and THC.
Paradoxically, the dependence of courts on the Chevron doctrine has hampered earlier attempts to reschedule cannabis. This reliance enabled the DEA to utilize its own criteria in determining that cannabis did not have a recognized medical use.
However, in the ongoing rescheduling process initiated by President Joseph Biden in 2022, the U.S. Department of Health and Human Services (HHS) determined in August 2023 that marijuana does have a recognized medical use based on a new two-part standard. Acting on this advice and an opinion from the U.S. Department of Justice’s (DOJ) Office of Legal Counsel, Merrick Garland, the U.S. attorney general, proposed a rule in May to reschedule cannabis in Schedule III of the CSA.
Chief Justice Roberts noted in his 35-page opinion that federal law requires courts to use their own discretion to decide legal disputes rather than relying on administrative bodies to make decisions.
Other concerns regarding the DOJ’s analysis, which suggests that U.S. responsibilities under international treaties prevent rescheduling, are also covered in the ruling decision. There will likely be legal challenges referencing the ruling in regard to the rescheduling process.
It’s unlikely that ongoing legal actions, including one contesting the legality of the federal marijuana ban, will be immediately impacted by the ruling.
According to former Massachusetts state regulator and attorney Shaleen Title, predictions that the verdict could be used to challenge state marijuana legislation regarding licensing or social justice requirements are, at best, speculative. Meanwhile, others suggested that states might adapt their deference policies in response to the Supreme Court’s ruling, potentially weakening deference and empowering state courts to set standards for marijuana businesses.
The regulatory landscape for marijuana in the United States is still very much in flux, and leading actors such as SNDL Inc. (NASDAQ: SNDL) have plenty to digest, ranging from court decisions that set precedents to state and federal regulations, as they work to operate within established legal boundaries while going about their legitimate business activities.
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