Week in Review: Five takeaways from the DEA’s marijuana decision

By John Schroyer

Overjoyed. Infuriated. Apathetic.

That’s the marijuana industry’s response to the U.S. Drug Enforcement Administration’s decision to say “no” to cannabis rescheduling and “yes” to medical cannabis research. Here’s a closer look at the business and political implications of this week’s DEA verdict. 

 1. New industry niche

“Great news.”

That was at the top of an email from Dr. Sue Sisley, who’s been striving for years to put together a study on the medical efficacy of cannabis for patients with post-traumatic stress disorder.

In April, the DEA approved Sisley’s scientific study involving military veterans and MMJ, and she’s happy the agency now appears ready to sign off on other clinical trials.

“This new policy permits commercial growing operations to be approved with the purpose of producing a product that can be used in research and also for potential commercial sales,” Sisley wrote. “The federal monopoly on the production of marijuana for federally-regulated research, in existence since 1968, is now over.”

Sisley pointed out the DEA’s new policy doesn’t limit new applicants to universities, as initially reported on Wednesday by the New York Times. Instead, Sisley interpreted the DEA’s decision – which refers to “entities” – to mean private companies could now seek permission to grow research-grade marijuana.

That could spawn a new MMJ industry segment.

2. Business & research impact

Many in the cannabis trade disagreed on whether or not the DEA’s new position on research will ultimately produce actionable medical information that could unleash new and improved MMJ products and opportunities.

“It’s just the same runaround that we’ve been hearing for years,” said Steve DeAngelo, the founder and CEO of Harborside Health Center in Oakland, California. “I don’t see a silver lining to this cloud. I’m just profoundly disgusted with the DEA. Their promise of opening up more research is just another lie.”

DeAngelo, for instance, is dubious the DEA and the U.S. Food and Drug Administration will approve a “whole plant study,” as he argues the agencies should.

Pharmacist Joseph Friedman, the chief operating officer of Illinois dispensary PDI Medical, also was doubtful that any potential research could lead to solid benefits for the MMJ industry – because it’s still a Schedule 1 narcotic.

“It’s going to hamper the entire research effort that’s going to show that cannabis can be a very life-saving, life changing-drug,” Friedman said, adding that it will likely be years before the DEA or FDA approve any MMJ-related study.

The message to the industry on Thursday, Friedman said, was: “Stay the course.”

“We’re continuing to fight an uphill battle; but as more states come on board, it’s going to be harder for the federal government to refuse what’s clearly in front of them, and that’s that cannabis is clearly not as dangerous as cocaine and methamphetamine,” he added. Both of the latter are Schedule 2 drugs.

3. Investing impact

From an outsider’s point of view, the DEA’s move could be spun as at least slightly positive.

“We kind of knew that (rescheduling) was not going to happen, and that this was just a lot of headlines and press releases and stories,” said Avis Bulbulyan, the CEO of California-based Bulbulyan Consulting Group.

But here’s what it did do over the past couple of months: “It got a lot of investors interested,” said Bulbulyan. “It’s going to encourage a lot more money to come into the industry.”

Matt Karnes, the founder of New York-based GreenWave Advisors, analogized the DEA’s announcement to the stock market, and said it probably wouldn’t have much impact on cannabis company valuations. That means the cannabis industry remains ripe for good investments, he said.

“It’s the status quo, from a valuation standpoint,” Karnes said. “Had the DEA rescheduled, or there were some progress, perhaps it could have raised valuations in the sector. So it’s still a good entry point.”

In fact, Wall Street’s initial reaction to the DEA’s announcement was muted.

An index of publicly traded U.S. stocks developed by MarijuanaIndex.com showed the market remained unchanged Thursday from where it started the day. GW Pharmaceuticals – the largest company in the index with perhaps the most to gain from rescheduling – was up 1.1%.

4. Political impact

The political ramifications of the DEA’s decision are a mixed bag.

Conceivably, Democrat Hillary Clinton – the current front-runner to become the next president of the United States – could renege on her campaign pledge to move cannabis from Schedule 1 to Schedule 2, despite reiterating that promise on Thursday.

“I’m 90% sure she will (not reschedule),” Bulbulyan said. “I definitely think she’s going to use this as an opportunity to say, ‘The DEA has had an opportunity to look at it … and it would be premature for me as president to reschedule.'”

There’s also the chance that the momentum from the DEA’s move Thursday could spur action in Congress on further cannabis reform, either on banking or taxes or other MMJ-related issues, Karnes said.

“It’ll put the pressure on Congress” to enact further reforms, Karnes said.

The DEA’s rejection of rescheduling will no doubt give fresh ammo to opponents of marijuana legalization. The agency, for example, said cannabis “does not meet the criteria for currently accepted medical use in treatment in the United States.”

But DeAngelo predicted the DEA’s decision will inflame pro-marijuana voters across the country and likely give even more of a boost to the eight or more cannabis legalization state ballot measures. Those campaigns could wind up having a much bigger impact on the national marijuana policy debate than Thursday’s decision by the DEA.

“Every single cannabis person that I’ve talked to so far is just more energized, more fired up, and more enraged by this,” DeAngelo said. “We will take that anger, and we will turn it into campaign donations and votes.”

5. Hemp impact

A less publicized segment of the DEA’s announcement concerned industrial hemp. The agency spelled out a “statement of principles” governing the legalized growing and cultivation of of industrial hemp for research purposes.

“There are two positives from the DEA announcement,” said Eric Steenstra, executive director of the Hemp Industry Association. “One is that it confirms that private parties can conduct pilot programs under the authority of the U.S. Department of Agriculture. That had been previously disputed by the DEA.”

The other positive: Hemp grown under the 2014 Farm Bill can qualify for USDA research funding. “It makes hemp eligible for the same kinds of research funding that other crops have had available to them,” Steenstra said.

John Schroyer can be reached at [email protected]

Omar Sacirbey and Eli McVey also contributed. They can be reached at [email protected] and [email protected]

13 comments on “Week in Review: Five takeaways from the DEA’s marijuana decision
  1. john schwartz on

    This should NOT be the DEA’s call. Legalization or re-scheduling would dramatically reduce DEA funding or put the DEA out of Business.

    So they voted to maintain the status quo….the charde…the lie… Imagine that.

    Here’s the real question…
    Why is Marijuana Schedule 1 in the first place ?

    Harper’s magazine featured an interview with John Ehrlichman a former aide to president Richard Nixon who died in 1999. The Nixon Administration, “knew we couldn’t make it illegal to be either against the war or blacks but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities.  We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs ? Of course we did.”

    We don’t need 5 Take Away’s on the DEA’s invented, manufactured, old and tired, B.S….We simply need to take away, the DEA.

    Its that simple.

    Reply
    • Jaime on

      John, we DO need the DEA; like we need other govt. agencies to work on the public’s behalf. It’s just that the DEA ( and other gov. agencies ) has been allowed to progress/morph into a machine that serves interests that are largely against that of the publics’ and mostly favor special interests motivations that are usually contrary to the public’s health and well being. Further, are tax dollars are largely funding that human misery.

      I think you’re right about DEA’s function around making scheduling determinations. It’s ridiculous. They’re an enforcement arm of gov., not a scientific and legislative one ( where the decision making re: the scheduling issue belongs ). No one’s challenged that premise in any effective manner.

      Reply
    • ryan on

      our top government officials are the scummiest of self serving pigs. In pueblo county colorado the cops are fighting an already legal retail cannabis industry by lying, cheating, by use of force, like when an active pueblo police officer beat a university professor last month when he was trying to print anti-re-illegalization pamphlets.
      If there is one thing you can count on in today’s america its that the CIA backed media and the lying government will lie cheat and steal their way to a high standard of living no matter what destruction comes in their wake.
      logical decision making and justice are the last thing we should expect here, the only up side of where we stand today is that some of the blood sucking government officials see their pensions tied to our industry in states with legal mj. the only thing that actually matters in those scum bags decision making. if pharma could drop a million to a decision making politician they would screw the american people over for a trillion damage for that little personal gain, look at how our govt has all fallen in line for hillary when corruption, treason, and fraud are rampant.

      Reply
  2. John Sullivan on

    It is a good thing that DEA did not “re”schedule cannabis from schedule 1 to schedule 2. Had they done so, the political pressure to do the RIGHT THING, which is to “de”schedule would have subsided. Being ensconced at schedule 2 would not have done anything about our 280e, credit card or banking issues, but it would have given big Pharma (who holds schedule 2 licenses) a huge incentive to gobble up a few of us and put the rest of us out of business. Congress needs to “DE”schedule cannabis just like the far more dangerous tabacco and alcohol are “DE”scheduled.

    Reply
  3. moldy on

    Any schedule is a lie and the lying must end now. As an American citizen I will not stand to be lied to from an agency that uses my tax dollars… defund and disband the DEA.

    Reply
    • Jaime on

      And, in the meantime: defrock and dethrone Rosenberg; and place a non-puppet, moderate, level headed, well ( scientific background ) educated and experienced technocrat in that position. Is that asking too much??

      Reply
    • martin tull on

      moldy, I totally agree. Of course complete DE-schedule is ideal for (unlimited) research but for now at least, big pharma’s greed can’t slip in and get a foot-hold under schedule 2 licensing.

      Reply
  4. Jack Pedotto on

    I agree totally with John Sullivan. Decheduling is what is needed. Rescheduling would be a disaster. Rescheduling to schedule II would toss the regulation totally to the FDA, a federal agency. The FDA will dictate in which forms cannabis can be administered, and to whom. The FDA will look to Big Pharma to do clinical trials and produce medicines according to their own protocols. Say good bye to your flowers. Say good bye to your wax and shatter. Say good bye to your bud tender and dispensary.

    Say hello to the US bureaucratic medical system that has proven to be one of the most inefficient and ineffective in the world. If you are currently a medical marijuana patient, the time, hassle, and cost of trying to get a prescription under schedule II will prove to be prohibitive.

    Rescheduling allows the feds to totally control the cannabis industry and will dismantle everything that has been built to date. Descheduling is the only thing that can preserve and advance the tremendously valuable cannabis industry that has successfully emerged.

    Reply
  5. Lawrence Goodwin on

    The United States Congress passed the 1970 Controlled Substances Act (short name), codifying the word “marihuana” in Schedule I and thereby revitalizing one of the most blatant economic frauds ever perpetrated on the American people. Drug Enforcement Administration bureaucrats have been enforcing this fraud ever since, literally smothering hundreds of billions in legitimate cannabis commerce nationwide. Imagine how many millions of Americans could be working right now in a marketplace unfettered by the barrels of law enforcement guns pointed at our beautiful cannabis plants in still far too many states. The U.S. Congress has the power to immediately remove the all-encompassing word “marihuana” from the Controlled Substances Act (when the current session resumes), and then rename the federal regulator the Bureau of Alcohol, Cannabis, Tobacco, Firearms and Explosives—and we, the people, must begin inundating lawmakers’ offices with phone calls and old-fashioned letters demanding such action. That’s the only acceptable way to proceed, in my view. The ballot measures of 2016, win or lose, are simply not enough to defeat the DEA, which has aggressively suppressed our domestic cannabis “free market” for almost 80 years. The anti-“marihuana” war is a fraud (waged exclusively to protect the profits of huge corporations, including DuPont, Monsanto, Pfizer, Dow Chemical et al.) that has zero legal or scientific justification in our constitutional republic. Regardless of this latest DEA inaction, let us reflect upon the fact that extracts of female cannabis flowers were commonly prescribed by America’s doctors to treat their patients, with quite positive results, for nearly 100 years—before all this “marihuana” madness had descended upon our land. It has always epitomized absurdity to claim that cannabis flowers have no “accepted medical use.” It’s like saying the sun at high noon is not bright in a clear blue summer sky. Zach de La Rocha of Rage Against the Machine sang it best: “Who controls the past now/Controls the future/Who controls the present now/Controls the past/Who controls the past now/Controls the future/Who controls the present now? Now Testify! It’s right outside your door.”

    Reply
  6. Paul Sorensen on

    The ‘States’ is where this change will occur. It’s a slower process initially, but the momentum is already building. Plus, the Fed will grow jealous of the tax revenue it’s not getting. I think this slower course makes it more palatable to the masses too.

    Reply

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