“This is the Judgment Day that we all predicted while sharing a conspiratorial joint in the dark days of prohibition. It’s surreal to see our fears manifesting in real time.”
By Deb Tharp, NuggMD
Politico recently published an extensive Q&A with Howard Sklamberg, a former top Food and Drug Administration (FDA) official who currently works at the law firm Arnold and Porter. Many advocates for legalization and restorative justice have concerns about the rescheduling of cannabis to a Schedule III substance—fears that Sklamberg believes are “alarmist and misguided.”
As a longtime advocate, I have to say that I don’t share that view. Honestly, I can’t believe Sklamberg said some of the things that he said—and I think the fears that we have are well-informed, reasoned and practical, if for no other reason than the worrying lack of transparency coming from regulatory agencies since rescheduling was recommended last year. We advocates are not always right, but our track record on drug policy is better than that of the policymakers and regulators who campaigned for, created and continued the so-called war on drugs.
Regulators, elected officials and their surrogates could benefit from hearing and taking seriously the other side: the concerns that advocates have about cannabis rescheduling. I’ve done my best to capture some of them below.
Sklamberg:
“I find it to be a very strange and not understandable myth that enforcement would increase as cannabis is rescheduled from Schedule I to Schedule III.”
“If you’re going to launch an enforcement initiative against cannabis, why would you start off with saying, ‘Oh, by the way, it’s less of a risk than we thought’? You would use your power under Schedule I and go after it.”
No-knock raids aren’t our only concern under Schedule III, although it’s still a top concern, since rescheduling doesn’t remove criminal penalties. Activists are just as concerned about the impending regulatory quagmire. Cannabis businesses are already failing by a substantial margin due to excessive state regulations. Big Pharma drug patent lawsuits and increased FDA involvement will drive out the few surviving businesses—businesses built by the fearless activists who paved the way for legalization. It’s inevitable, and whether that result is intentional or not is irrelevant. The end result will be the same.
“I don’t think that drug companies would go through years of development and patenting without attempting to completely corner their share of the market.”
A move to Schedule III directs FDA to regulate cannabis like a pharmaceutical drug. Why else would they keep it in the Controlled Substances Act? That’s like saying, “I have this axe here, but I’m only going to use it to peel your apples, not chop down your tree.”
State-legal cannabis operators are under dire threat in the absence of congressional action to protect the current marketplace. The Rohrabacher–Blumenauer amendment prohibits the Justice Department from spending funds to interfere with the implementation of state medical cannabis laws, but it has to be renewed every year. Legislation that makes it permanent, and applicable to state-legal recreational markets as well, is needed immediately—and it’s worth mentioning that the first session of the 118th Congress was the least productive in modern U.S. history. There is no reason to believe legislative action is forthcoming along with rescheduling.
Sklamberg:
“They [state-legal cannabis programs] are subject to FDA regulations now. The thing is, FDA chooses not to enforce them. Why would FDA all of a sudden want to enforce those when it hadn’t in the past under Schedule I?”
An anti-enforcement agenda isn’t FDA’s “choice.” The agency doesn’t have the clarity or the public support to interfere with the state-legal markets. Consider FDA’s stance on psychoactive hemp products. It recently asked Congress to grant clarity for regulating these products. To me, that’s a pretty big tell.
Sklamberg:
“FDA does not have resources for cannabis.”
This is a bit like saying the raccoon you saw yesterday in your garden hasn’t come back around and ruined it yet because he’s down the block, going through some garbage. It may be true, but it’s not very reassuring. Are activists happy that FDA purportedly doesn’t have resources for cannabis? Yes, sure. But we don’t think this represents any guarantee or guidance on the agency’s posture if cannabis were rescheduled.
The fact is that FDA will be given broad power and resources to regulate and enforce against unapproved commercial cannabinoids. If this wasn’t the current plan, then they would be descheduling instead of rescheduling, and FDA-controlled, Big Pharma-driven cannabis is the wrong approach. Why should anyone trust this vital herb to the same actors who ruthlessly created the opioid crisis and then campaigned against cannabis legalization to prevent competition from a safer alternative? (This isn’t an unwarranted medical claim. It is absolutely indisputable that cannabis use is safer than opiate use.)
Furthermore, if cannabis becomes a Schedule III drug under FDA’s purview instead of an agricultural crop, as it should be, then the agency will be required to enforce the privileges it grants. There are currently dozens of cannabis-based pharmaceuticals that have applied for orphan drug status. Simply type “canna” in the “product name” search box for FDA’s Orphan Drug Designations and Approvals database to see for yourself.
State-legal markets won’t be allowed to simply continue as they are with dozens of newly patented products clamoring for their market share. I don’t think that drug companies would go through years of development and patenting without attempting to completely corner their share of the market. That’s not how the pharmaceutical industry works. It’s not really how any industry works.
Sklamberg:
“If there were a new administration, and they wanted to take enforcement, it’d be more likely to come from the DEA. But they would face a similar problem: If you’re going to take merely symbolic enforcement action, you’re going to open yourself up to the criticism of favoritism and it being arbitrary, which is something agencies cannot do.”
We’re all adults here, so I’ll just be real: Every administration and state government since Nixon has been engaging in symbolic enforcement against cannabis. About half of adults have tried the substance, and this hasn’t served as a deterrent to this impossible war against it. Why should we think that they would embrace their limitations now after nearly half a century of futile aggression against the American people?
Both DEA and FDA enforcement are financially incentivized. State agencies are financially incentivized for enforcement too. This is why we still see hundreds of thousands of marijuana arrests per year despite our attempts to get regulators and law enforcement to see reason.
The arrests drive profits. Asset forfeiture, punitive fines, even prison terms result in financial benefits for enforcers, and marijuana users make for an easy target. Sklamberg’s question is what is their incentive to enforce. My question is, what is their incentive to stop?
Again, even if their symbolic and arbitrary enforcement isn’t intentionally harmful to society as a whole, the end result is the same. The data on race and cannabis enforcement alone speaks for itself. In many states, the racial divide in enforcement has increased over the past decade, even as total arrests decrease. Fear of criticism hasn’t stopped these misguided agencies yet, and I don’t see Schedule III changing that.
Sklamberg:
“If you’re talking about conducting clinical trials and filing new drug applications for specific cannabis drugs, that is a lengthy and expensive process. Practically speaking, there would still be this medical cannabis industry. The approved drug would try to convince agencies to take action against some of the medical cannabis companies.”
This reads to me like an acknowledgment of our worst fears. It admits to two things: a potential FDA enforcement agenda and the validation of activists’ concerns that drug companies would just sue cannabis operators into oblivion under Schedule III.
There is not a single reason to get a patent if there is no intention to monopolize the value of the intellectual property it protects. Drug companies are not known for just doing the consumer a solid. And they are already pursuing cannabis patents.
Consider Epidiolex, which was granted orphan drug designation and immediately rolled out of the gate with a $30,000-a-year price tag. All for a CBD compound that might not even work as well as the concentrates activists were already making in the state-legal and safety-tested market—concentrates they are providing for a minuscule fraction of that cost. And the lawsuits over GW’s overpriced pill have only just started flying.
We don’t have to speculate as to what will happen with approved THC drugs under Schedule III. We can see it unfolding before our eyes with CBD.
Patent-related litigation from the pharmaceutical industry would be absolutely devastating for cannabis operators who can already barely afford overwhelming legal and regulatory costs. The Section 280E savings under Schedule III won’t help them at all if they are forced to spend all of those tax savings on litigation and regulatory defense.
Politico:
“But would moving marijuana to Schedule III make research easier?
Sklamberg:
“Depends on who you ask. There’s a bit of a debate on that. It can make it somewhat easier, but the fact is clinical trials are still expensive, even if you’re dealing with unscheduled [substances].
“For it to make business sense, you’d have to have a company willing to invest, get the resources to do it. Spend the time doing this. And thinking, ‘Once we get this approved, we’re going to be able to have a monopoly enforced.’ I don’t see that as likely.”
Advocates see this as highly likely since we’re already witnessing it, and assuming Schedule III happens, we’ll be able to see who’s right and who isn’t in a handful of years.
Under Schedule III, we’ll see a floodgate of cannabis-related patent activity, and the existing industry will drown in the impending tsunami of litigation. Furthermore, activists aren’t willing to accept Sklamberg’s reassurances that DEA may lose interest in criminal enforcement in trade for just letting this scenario play out in the name of progress.
This is the Judgment Day that we all predicted while sharing a conspiratorial joint in the dark days of prohibition. It’s surreal to see our fears manifesting in real time.
The Outlook Under Schedule III
Basic transparency from FDA would go a long way towards alleviating many of these concerns that activists have, and I fully acknowledge that that is no longer within Sklamberg’s job description. I always enjoy his interviews and appreciate that he sees this issue through an entirely different lens. But cannabis advocates have been subjected to these empty reassurances before. I heard a similar tone and was called an alarmist during the campaign for Proposition 64, which legalized cannabis in California. And where are we now? The very people who built California’s industry have been choked out en masse by a badly written law. So perhaps I’m jaded.
All of that said, here is my basic outlook for cannabis under Schedule III, absent decisive action from Congress to protect state-legal markets:
- Massive amounts of patent litigation, which will eventually bankrupt the surviving operators
- An organized weaponization of the justice system by Big Pharma as it clamors for market share in a $100 billion industry
- Widespread confusion about which cannabis-related products and services are legal and which aren’t at the consumer level
- FDA enforcement campaigns against operators based on a variety of theories
- Continued criminal enforcement and more lives ruined (there were over a quarter million cannabis arrests last year, 92 percent of them for possession alone)
- An even greater explosion in black market activity
- A gigantic blank space on the congressional docket where cannabis legislation should be
Cannabis advocates are here, ready to have a thoughtful dialogue with regulators about why descheduling cannabis and regulating it under USDA or existing, already safe and tested state markets is the only reasonable option. New cannabis regulations should balance the individual liberties of people with the public health and safety mandate of regulatory bodies. We just can’t have that conversation with ourselves.
Deb Tharp is head of legal and policy research at NuggMD, the largest telehealth company for cannabis.
Congressman Tells DEA To Reschedule Marijuana ‘As Swiftly As Possible’
Photo courtesy of Philip Steffan.
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