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U.S. HHS Proposes to Reclassify Cannabis. No Change in Law Until DEA Acts

Last week, the Department of Health and Human Services (HHS) sent a letter to the federal Drug Enforcement Administration (DEA) recommending that the DEA begin a process to reclassify cannabis from a Schedule I controlled substance to a Schedule III controlled substance. Schedule III drugs aren't deemed particularly harmful and are often available without a prescription. We haven't seen the letter, but it's been widely reported in the press. This is in response to the Biden administration's request to examine the classification of cannabis.

For broadcasters, the importance of this proposal is that the distribution of Schedule III drugs isn't illegal under the Controlled Substances Act. This means that federal law would no longer potentially penalize stations for broadcasting advertisements for legal, medical, or recreational cannabis. Of course, there's always the possibility of liability for advertising a Schedule III drug. However, this type of enforcement would be similar to typical false and deceptive advertising limitations placed by the FTC or the FDA.

We don't currently know how the DEA will react to the proposal to reclassify cannabis. It's unclear whether the DEA or other federal agencies would enact cannabis advertising rules in conjunction with reclassifying cannabis from a Schedule I to a Schedule III drug. Any new rules could affect our ability to advertise.

Reclassification to a Schedule III drug addresses the potential impact of federal criminal law on your license. There's a separate level of concern in regard to the FCC’s public interest analysis. Even if cannabis is reclassified, will the FCC prevent cannabis advertising under the “public interest” standard? To date, no specific FCC rules are preventing or governing cannabis advertising. (The risk of losing your license because of existing federal criminal law and the FCC’s subsequent reaction to a criminal conviction acts as a sufficient deterrent.)

If cannabis is reclassified as a Schedule III drug, we believe the FCC would have to first establish a specific policy that prohibits such advertising. Unless such a policy is adopted, the FCC would be hard-pressed to issue a fine or revoke a license. Unless there's some unforeseen future political pressure, we doubt the FCC would get into the business of creating advertising policies for specific legal products since it hasn't done so in the past. Any future rules are likely to come from the DEA, FTC, or FDA.

Remember, federal laws aren't the only consideration. Under rules adopted by the NY Office of Cannabis Management, a cannabis business can only advertise during programs where 90% of the audience is over twenty-one years old. There's also an extensive labeling requirement. These rules are directed at the cannabis advertiser instead of the station. We're working to revise these regulations because they significantly restrict the market.

To summarize, running a cannabis advertisement today still might violate federal law. Before cannabis can be reclassified from a Schedule I to a Schedule III drug, the DEA must complete a rulemaking. This could take a year or so to complete. A positive is that we don't have to pass legislation to effectuate this change. So, HHS’s recommendation is a positive step forward.

For a discussion about the politics of the issue, see the article reported in Politico here.

For more information about the potential impact on broadcasters, see the article in Inside Radio here.



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