Biden Pardons Cannabis Offenses

President Biden granted a pardon on Thursday to all individuals convicted of simple cannabis possession under federal law, urging governors to do the same for state level offenses. The move brings cannabis policy to the forefront just weeks before the midterm elections and is the most extensive action taken to date on U.S. drug policy by any White House administration since Nixon enacted the Controlled Substance Act.

Biden issued a statement that “sending people to prison for possessing marijuana has upended too many lives and incarcerated people for conduct that many states no longer prohibit.” Additionally, polling consistently shows that approximately two-thirds of Americans support the legalization of cannabis, with 37 states and the District of Columbia having now legalized cannabis use for medicinal purposes and 19 states having legalized non-medical use by adults.

Importantly, Biden also called on the Secretary of Health and Human Services and the Attorney General to review how cannabis is scheduled under federal law, where cannabis is currently classified as a Schedule I substance alongside heroin and LSD.

While it remains to be seen whether the federal government will reschedule or de-schedule cannabis altogether, such action could have a profound impact on the industry, particularly with regard to Section 280E of the Internal Revenue Code, which currently prohibits cannabis-related businesses from taking tax deductions or credits because those businesses involve trafficking in a Schedule I substance.

Honigman will continue to monitor cannabis-related developments at the federal level, but as government policy continues to evolve rapidly, businesses should be mindful of potential amendments and re-evaluate their structures and long-term strategies to best prepare for, and position themselves to capitalize on, those changes.

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