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The cannabis industry is struggling. High taxes, market saturation and competition from outside sources have created a challenging business environment. Unfortunately, when a marijuana business fails, bankruptcy protection is off the table. As a result, the business is left with two options: to liquidate without court supervision, or state-court receivership.

We have spent a lot of time around cannabis receiverships recently. Our cannabis business and debtor/creditor lawyers have represented failing businesses, creditors, receivers, and a number of parties attempting to buy assets out of receivership sales.

Receivership is an equitable remedy, which means courts and receivers have significant leeway in the receivership process. Some states have receivership statutes, while others do not. Sometimes, clients are surprised to learn these facts, or to learn that many experienced debtor/creditor lawyers have never been in or around a receivership.

Please join cannabis insolvency lawyers Ethan Minkin (Arizona), Matthew Goldberg (Oregon, Washington, New York), and moderator Vince Sliwoski (Oregon) for a fascinating Q&A session on cannabis receiverships. Ethan and Matt have over 50 years of debtor/creditor lawyering experience between them, and Vince is a business lawyer who has counseled many clients through financial restructuring and business dissolution.

The conversation should be lively and educational, and the panel will take questions during the presentation– as well as any submitted in advance. So please send those along when you register!

We look forward to seeing you on September 24, at 12pm PST.

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NOTE: We have decided to also stream this Q&A live on LinkedIn and our Facebook pages.

Until then, for more on cannabis and receiverships, check out the following:

Despite some critics of marijuana reform challenging the review process that led federal health officials to recommend rescheduling cannabis, the Drug Enforcement Administration (DEA) is now recognizing the validity of the new two-part test used to determine a substance’s accepted medical use.

This acknowledgement was included as a footnote in a notification on Tuesday about a decision to categorize two synthetic opioid medicines under Schedule I of the Controlled Substances Act (CSA), which had nothing to do with the original decision.

A Schedule I substance is one that has no contemporary recognized medical use (CAMU), according to federal law. In the past, the government has used a five-part test to determine if a chemical satisfies this requirement by looking at its chemistry, health statistics, and other pertinent details. However, earlier this year, the Department of Health and Human Services (HHS) introduced a simplified two-step analysis when reviewing the proposed rescheduling of marijuana, ultimately concluding that cannabis should be placed in Schedule III.

The New Two-Part Test for Determining Medical Use

The newly adopted two-part test introduced by the Department of Health and Human Services (HHS) focuses on two fundamental questions when determining whether a substance has an accepted medical use. First, it asks whether licensed healthcare providers currently use the substance in medical treatment within jurisdictions where such use is legally authorized. Second, it examines whether there is credible scientific evidence supporting the drug’s efficacy for at least one recognized medical condition.

This streamlined approach stands in stark contrast to the previous five-part test, which required a more complex and detailed evaluation of a substance’s chemistry, safety data, clinical efficacy, expert consensus, and the availability of published scientific studies. The older model was seen as more restrictive, often limiting substances from being considered for rescheduling despite emerging evidence of their therapeutic benefits.

The novel examination stands out for its ability to lower administrative obstacles and provide a simpler means by which drugs such as cannabis can be reassessed in light of current scientific research and practical medicinal uses. In spite of the lack of FDA clearance, the two-part exam recognizes the increasing acceptability of some medications in clinical practice by emphasizing their practical medical usage in legally permitted circumstances.

In a footnote to its latest scheduling notice, the Drug Enforcement Administration (DEA) admitted that the Department of Justice’s Office of Legal Counsel (OLC) deemed the standard five-part criteria “impermissibly narrow.” The OLC also stated that the simplified two-part examination is adequate to assess if a medicine has a genuine medical purpose, emphasizing that FDA clearance should not be the main factor in rescheduling decisions. During the rescheduling process, the DEA must now defer to the HHS’s scientific and medical determinations, representing a substantial shift in how federal agencies approach restricted drug regulation.

This novel technique may have far-reaching repercussions beyond marijuana. With increasing interest in the medicinal potential of psychedelics such as psilocybin and MDMA, the streamlined test may also facilitate the categorization of these compounds. If healthcare practitioners can establish medicinal usage in certain areas and back it up with reputable scientific research, these drugs may benefit from the less stringent regulation procedure that now applies to cannabis.

Resistance and Criticism of the Two-Part Analysis

The implementation of the two-part study has aroused strong protest from marijuana rescheduling opponents, who claim that the new criterion is unreasonable and politically driven. Some opponents argue that the simplified test was designed to enable a predetermined conclusion supporting cannabis reform rather than being based on strong scientific considerations.

One prominent prohibitionist group, Smart Approaches to Marijuana (SAM), has labeled the two-part analysis a “novel test” that was “recently invented by HHS and embraced” as a means to move marijuana into Schedule III. SAM and similar groups argue that the simplified framework lacks the rigor of the former five-part test, accusing policymakers of shaping the new approach to fit a political agenda.

Some legal experts believe that challenging the validity of the two-part test could become a central argument in any legal contest against the rescheduling of marijuana. Opponents may attempt to undermine the process by claiming that the test is an arbitrary departure from established regulatory practices, designed solely to ease the path for marijuana reform.

Despite this criticism, the DEA’s recent scheduling notice for two synthetic opioid drugs—N-pyrrolidino metonitazene and N-pyrrolidino protonitazene—suggests that the agency views the two-part analysis as legitimate. The acknowledgment of the new test in unrelated drug scheduling decisions could signal that the DEA is fully committed to using this simplified framework moving forward, which may complicate efforts to challenge it.

Implications for Future Drug Scheduling Decisions

Beyond only moving the legalization of marijuana, the DEA’s support of the new two-part exam may have a big impact on how future drug tests for other substances—like psychedelics—will be conducted. The streamlined test may offer a more accommodating framework for evaluating the medicinal use of substances like psilocybin, MDMA, and LSD in contexts where they are permitted by law, as interest in their therapeutic potential develops.

The DEA is expected to use the same two-part approach if these compounds are subject to review; the focus will be on the substances’ present medicinal use and the availability of reliable scientific backing. This change might lead to the reclassification of psychedelics, particularly because ongoing clinical research indicate that they can effectively treat diseases including anxiety, PTSD, and depression.

The widespread adoption of this reduced technique suggests a possible change in federal drug policy away from the normally strict five-part examination. The two-part test may allow for a more science-driven and practical assessment of developing medicines, increasing access to alternative treatments.

While the rescheduling of marijuana is still being reviewed, the DEA plans to have an administrative hearing in December 2024 to gather further feedback before making a final rule. The process might last until early 2025, allowing the next presidential administration to decide the future of drug policy, including how the two-part test is applied to additional substances.

Bottom Line

The DEA’s endorsement of a simplified two-part test to determine the medical use of substances, which was recently applied to marijuana rescheduling, represents a significant shift in federal drug policy. This new framework focuses on current medical use and credible scientific evidence, bypassing the more stringent five-part test previously used. While critics argue that the new test is politically motivated, it could open the door to reclassifying other substances like psychedelics, offering a more practical and science-driven approach to drug scheduling decisions.

NO MEDICINAL BENEFITS? READ ON…

NOBEL PRIZE WINNER SAYS CANNABIS HAS MEDICINAL BENEFITS

Schedule III Rescheduling might have just died

As many of you know, I’ve never been a fan of rescheduling cannabis to Schedule III. It’s a half-measure that doesn’t address the core issues of prohibition, and ironically, it’s one of the few things I find myself agreeing with prohibitionists on. Who would have thought?

But here we are in 2024, and it seems the Supreme Court has just thrown a massive wrench into the whole rescheduling process. And you know what? I can’t say I’m too broken up about it. The move to Schedule III always felt more like a political stunt to me – a way for the Democrats to claim a win without actually solving the problem. It’s the kind of move that looks good on paper but does little to address the real issues facing cannabis users and the industry.

Today, we’re diving into a recent SCOTUS ruling that’s sending shockwaves through the regulatory world. It’s all about something called the Chevron doctrine – a legal principle that’s been around since the ’80s and has played a huge role in how government agencies interpret and enforce laws. The Court’s decision to overturn this doctrine has some serious implications for cannabis regulation, and specifically, for the proposed move to Schedule III.

Now, I know what some of you might be thinking: “Great! Less regulation is always better for cannabis, right?” Well, not so fast. As much as I’m not a fan of excessive regulation, this ruling might actually create more chaos and uncertainty for the cannabis industry in the short term. And let’s be real – uncertainty is the last thing this industry needs right now.

So, buckle up, folks. We’re about to take a deep dive into the world of administrative law, regulatory authority, and what it all means for the future of cannabis in America. It’s not the sexiest topic, I know, but trust me – this ruling could have a massive impact on the industry we all care about. Let’s get into it!

So, what’s this Chevron business all about? Let’s break it down.

The Chevron doctrine, named after a 1984 Supreme Court case, has been a cornerstone of administrative law for nearly four decades. In essence, it told courts to defer to federal agencies’ interpretations of ambiguous laws, as long as those interpretations were reasonable. The idea was that agencies, with their specialized expertise, were better equipped to fill in the gaps left by Congress.

But last week, the Supreme Court’s conservative majority decided to toss this longstanding principle out the window. In their ruling, they essentially said, “Nah, we don’t trust these agencies anymore. Courts should be the ones interpreting the law, not bureaucrats.”

Now, you might be wondering, “What does this have to do with weed?” Well, buckle up, because it has everything to do with it.

See, the whole process of rescheduling cannabis to Schedule III was based on the idea that the DEA and FDA had the authority to interpret and apply the Controlled Substances Act. With Chevron gone, that authority is now on shaky ground. It’s like the refs changed the rules in the middle of the game, and now everyone’s scrambling to figure out what’s legal and what’s not.

For the cannabis industry, this means the path to Schedule III just got a whole lot rockier. Before, if someone challenged the rescheduling, courts would have likely deferred to the DEA’s decision. Now? It’s open season. Any judge can look at the Controlled Substances Act and decide for themselves whether the DEA has the power to reschedule cannabis at all.

And let’s be real – the chances of Schedule III happening anytime soon just went from slim to practically non-existent. It’s like trying to hit a moving target while blindfolded and standing on one foot. Good luck with that.

But here’s where it gets really nasty. You know those anti-cannabis groups like Smart Approaches to Marijuana (SAM)? They must be dancing in the streets right now. This ruling hands them a shiny new weapon to use in the courts. They can challenge every single move towards legalization or rescheduling, arguing that agencies are overstepping their bounds.

Imagine this: Every time a state tries to implement new cannabis regulations, or the feds make any move towards loosening restrictions, SAM and their buddies can run to the courts. They’ll argue that these actions go beyond what Congress explicitly authorized. And with Chevron gone, they’ve got a much better shot at winning these cases or at least tying things up in the legal system for years.

It’s like giving prohibitionists a legal sledgehammer. They can use it to smash any progress we’ve made, all while claiming they’re just upholding the “true meaning” of the law.

So, while the death of Chevron might sound like some dry legal mumbo-jumbo, it’s actually a game-changer for cannabis policy. And not in a good way. We’re in for a bumpy ride, folks.

Alright, I know I’ve been painting a pretty grim picture here, but hear me out – there might actually be a silver lining to this whole mess. And it’s a big one.

Let’s be real for a second: Schedule III was never the promised land we were hoping for. Sure, it sounded nice on paper, but in reality? It was just handing cannabis over to Big Pharma on a silver platter. It wouldn’t have legalized weed for the average Joe – it would have just made it easier for pharmaceutical companies to profit off it while the rest of us still faced legal risks.

So here’s the twist: with Schedule III now stuck in legal limbo thanks to the Chevron ruling, and with groups like SAM chomping at the bit to challenge every little move, we might actually have a shot at something better. I’m talking about full legalization or complete removal from the Controlled Substances Act. Yeah, you heard that right.

Now, I’m not saying it’ll happen overnight. We’re probably looking at years of legal battles and political maneuvering. But here’s the thing: the regulatory nightmare created by ditching the Chevron doctrine could take even longer to sort out. So in a weird way, this chaos might force Congress to finally step up and do something decisive.

Let’s not forget, Congress is the reason we’re in this mess in the first place. They enacted the CSA over 50 years ago based on a bunch of faulty narratives and racist fearmongering. And we’ve been paying the price ever since. But now? They might not have a choice but to fix their mistake.

The truth is, to really solve this problem, Congress needs to legalize cannabis at the federal level. That’s where the real battle is going to happen, folks. And if you ask me, it’s high time for cannabis companies to band together and start lobbying hard for this. We’re talking about forming a united front, pooling resources, and making our voices heard in the halls of power.

Because let’s face it – the current state of affairs, including this whole Schedule III business, doesn’t serve the best interests of the people. It’s a half-measure at best, and at worst, it’s a way to keep control in the hands of big corporations and government agencies.

So yeah, it might seem counterintuitive, but this Supreme Court decision could actually be the first domino to fall in the path towards real, meaningful legalization. Not this phony Schedule III Big Pharma dream, but actual freedom for cannabis users and small businesses.

It’s going to be a long, hard fight. But for the first time in a while, I’m feeling optimistic in a manner of speaking. This could be our chance to push for what we really want, not just settle for what the government is willing to give us. So let’s roll up our sleeves and get to work. The real battle for cannabis freedom is just beginning.

Alright, folks, let’s cut to the chase. It’s time to get off our collective asses and do something about this mess. The days of sitting back and hoping for change are over. We need to start making some noise.

First things first: start talking to your representatives. I mean really talking to them, not just firing off a quick email. Educate them, and while you’re at it, educate your friends, family, and anyone who’ll listen. It’s time to undo these dangerous prohibition policies that have been screwing us over for decades.

And let’s think bigger. The Controlled Substances Act isn’t just flawed when it comes to cannabis – it’s a hot mess across the board. It’s not based on science, it’s not helping public health, and it’s only benefiting a select few. I say it’s time we renegotiate the whole damn thing.

Now, I know what you’re thinking. “But it’s an election year!” You’re right, and realistically, nothing major is going to happen on the federal level until after the dust settles. But that doesn’t mean we can’t start laying the groundwork.

Come 2025, it’s time to become full-fledged activists. I want you calling your representatives so much their ears start bleeding. Make it impossible for them to ignore us. Let them know in no uncertain terms that we want cannabis completely legal, not this half-assed rescheduling nonsense.

And don’t let up. The support for legalization is growing every day. Make sure they know that. Make sure they understand that this isn’t just about getting high – it’s about personal freedom, medical access, criminal justice reform, and economic opportunity.

As for me? Well, you know I’m not going anywhere. I’ll keep doing what I do best – exposing the government’s shitfuckery and educating people on how we can fight back. I’ll keep shining a light on the hypocrisy, the lies, and the special interests that are keeping cannabis illegal.

But I can’t do it alone. This is a fight we all need to be in. So get informed, get angry, and most importantly, get active. The path to legalization isn’t going to be easy, but nothing worth fighting for ever is.

Remember, change doesn’t come from the top down – it comes from the bottom up. And right now, we’re the bottom pushing up against decades of bullshit. So let’s push hard, let’s push together, and let’s not stop until we get the legalization we deserve.

The sticky bottom line? The future of cannabis is in our hands. Let’s not fuck it up.

SOURCE: Marijuana Moment

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