Week in Review: DEA decision, raid response in MI & cannabis club vote in DC

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By John Schroyer and Omar Sacirbey

The U.S. Drug Enforcement Administration says it will decide soon whether to reschedule marijuana, Michigan attorneys develop a defense strategy for raided dispensaries, and Washington DC city leaders vote to ban cannabis social clubs.

Here’s a closer look at several notable developments in the marijuana industry over the past week.

Rescheduling tease

The DEA raised a lot of hopes on Monday when the agency revealed that it is weighing whether to reclassify marijuana on the list of controlled substances.

But those in the know aren’t holding their breath.

“If history tells us anything, I think it’s unlikely that DEA will recommend a rescheduling,” Bob Capecchi, director of federal policies for the Marijuana Policy Project, wrote in an email to Marijuana Business Daily. “However, I’ve been surprised before.”

Jacob Sullum, a senior editor at Reason magazine who’s written extensively about rescheduling, penned an article earlier this week outlining why no one should expect the DEA to change marijuana’s status without being forced to do so.

Sullum argued that the DEA is unlikely to reschedule marijuana in part because it’s rejected three petitions in the past that asked the agency to recategorize cannabis.

Furthermore, changing marijuana’s classification would require a major departmental reinterpretation of the Controlled Substances Act, and the Obama administration has left rescheduling up to Congress, Sullum wrote.

Still, there’s a chance.

If the DEA does decide to take a radical step, the effects will differ depending on which schedule cannabis lands in.

For example, if it’s moved to Schedule III, then the costly 280E provision of the federal tax code would no longer apply to legal cannabis businesses, resulting in potential savings of hundreds of thousands a year for a mid-sized company.

If cannabis is moved to Schedule II, then 280E would remain the same thorn in the industry’s side that it’s always been, but it could still open the door for medical research and protections for both companies and patients.

He said, she said

A few Michigan attorneys may have created a get-out-of-jail-free card for dispensaries that are raided by law enforcement and charged with crimes, but only if those companies do their due diligence in advance.

The strategy came to light in a news story this week about a married couple whose attorney was able to convince a judge to toss criminal charges brought against them as medical marijuana dispensary owners.

The key was demonstrating that the pair had gotten permission from local officials to open the dispensary. The judge in the case ruled that couple had a reasonable basis to believe they were not breaking the law because they were operating with the blessing of the city.

Case dismissed.

It’s not the first time that strategy, which is called “entrapment by estoppel,” has worked in Michigan.

There have been several others, all dismissed in 2016, said Michigan criminal defense attorney Paul Tylenda. He counted five cases that he knows of in which the estoppel argument has prevailed, and he’s working on a sixth.

“Entrapment by estoppel is, I come home, there’s a pile of dirt in the back yard. Mom says I can play on it. I’m playing on the dirt, Dad comes home and gives me a whipping for playing on the dirt. The issue of me playing on the dirt isn’t between me and dad. It’s between mom and dad,” Tylenda explained.

There’s a chance that the Michigan cases could be used as precedent in other states where dispensaries may have been raided, Tylenda said, particularly in California. The key is to obtain proof of permission from a local official or agency, whether it’s the mayor or city council or local health department.

That evidence, Tylenda said, can counteract a prosecutor’s argument that a dispensary owner was knowingly breaking the law.

“The premise is pretty universal, but the particulars may be different” from state to state, Tylenda said.

Downer in DC

Hopes for cannabis clubs in Washington DC took a major hit this week when city council officials voted 7-6 to permanently ban them.

But there’s still a slight possibility that the decision could change, because the council must vote twice on a measure before sending it for approval to the mayor.

At the earliest, the next vote could happen April 19, according to Kate Bell, a MPP legislative policy analyst who follows the issue.

She believes a councilor changing his or her mind can’t be ruled out, partly because the vote was so close.

There have also been surprises on this issue before.

In fact, the vote in favor of permanently banning MJ clubs came as a shock to Bell because the council had passed a measure in February to create a task force to study the issue and present recommendations in September.

The council even chose two of its members to head the task force – one in favor of allowing cannabis clubs and the other against it.

The bill authorizing the task force would have become law on April 29, the date until when Congress, which has some authority over the city, would have to block the task force bill.

“I was surprised because the bill that created the task force passed unanimously just two months ago, it was a compromise,” Bell said. “We’re obviously hoping somebody will change their mind so the task force can at least do its job… This is a very popular issue with the voters.”

She noted that a survey by the Washington City Paper found that 61% of residents support permitting cannabis clubs.

John Schroyer can be reached at johns@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com