Cannabis Divided: Parsing the impacts

On a federal level in the United States, Cannabis sativa L. occupies two classifications: hemp and marijuana. Hemp is a federally legal substance currently feeding the adult-use market, where consumers 21 years of age may purchase over the counter products below 5mg of hemp THC in formats such as beverages and edibles. “[These products] produce an intoxicating effect,” says Bob Hoban, Clark Hill cannabis attorney, “all day long and twice on Sundays.” 

The same plant containing more than 0.3% THC by weight – the stigmatized maddening marijuana – has recently been rescheduled from Schedule I to Schedule III in the Controlled Substances Act beneath the Biden administration, reserved for regulated substances that possess some medicinal value. On a case-by-case basis, some 24-38 states have legalized marijuana for recreational and/or medical purposes via clinics and dispensaries. These products cannot cross borders as they are federally non-compliant. 

Therefore hemp (aka “red state weed,” says Hoban) comprises the federal adult-use market for low dose, over the counter intoxicating products, while marijuana is now recognized for its medicinal value. 

A polarizing topic for some, the use of hemp and marijuana by the American people is hot-button issue at the forefront of the presidential election taking place Nov. 5, 2024, between the new leader of the Democratic party, Kamala Harris, and the Republican nominee, former president Donald Trump. Publicly, the candidates’ respective stance on cannabis has oscillated, though it now appears that Harris advocates for legalization. 

What is the likelihood of federally descheduled marijuana in the U.S., on either side of the political aisle, and is federal legalization even a good idea? Denver-based attorney Bob Hoban, with 25 years of experience, and Vancouver’s Rob Laurie, founder of Ad Lucem Law Corporation, joined Grow Opportunity last month to share their views on the U.S. federal election and what it could mean for both Canada and United States on matters  of hemp, marijuana and the global cannabis marketplace.

Historic prohibition & recent rescheduling 

Regardless of whether Americans view the rescheduling as “an election day ploy,” considering the proximity to the Democratic National Convention and the final results on Schedule III moving forward, this fall the verdict will finalize on the advancement of marijuana on a Schedule III substance. “In other words,” says Hoban, “just a couple of weeks before Election Day, if you care about marijuana, ‘look what we, the Democrats, did for you. We relaxed the restrictions around marijuana.’” 

Why did cannabis even end up with opium in the first place, poses Laurie, citing the Asian Exclusion Act and the backdrop of racism: “Cannabis was used as well with hash and opium to go after and prevent the Asian immigration in the last century.” A jump to the 1970s shows the “Nixon administration and the demonization of cannabis being effectively the poster child of counterculture drugs, along with psychedelics,” he says, “the injustices of which we’re still grappling with today.”

As previously mentioned, despite that Harris may now be coming around to cannabis, “of course she’s had a history of flip flopping on the issue,” recalls Laurie, going back to her days as Attorney General for the state of California.

The U.S. stance on cannabis and marijuana ultimately impacts the global market on an international level and is indeed a step in the right direction. Trump did not greenlight the use of marijuana during his presidency, but he did create a “$23 billion hemp industry in the United States when he signed our Farm Bill into act,” says Hoban; “he’s no stranger to business around cannabis.” 

Laurie and Hoban consider the economic allure of a regulated cannabis market, questioning whether the more right leaning party might be the ones to take the bold step creating a framework around cannabis that generates revenue and draws tax dollars. 

On the flip side, it’s worth noting that the Democrats, and Joe Biden specifically, implemented the “three strikes rule.” This policy drastically altered the demographics of federal prisons in the U.S., shifting the majority from Caucasians to minority communities.

“So Democrats are no friends of cannabis; don’t make any mistake here,” says Hoban. “However, they have a social justice approach to it, largely, whereas the Republicans have spoken about it more in favour of a business approach.”

So it’s anyone’s guess what happens next, but Hoban does not expect to see federally compliant cannabis businesses. “I think you’re going to see this continued patchwork with federal policy that stays Schedule III.”

The hemp vs. marijuana civil war 

Hemp has gained traction in red states, largely free from the stigma attached to marijuana. However, the compounding effects of cannabinoids in products like beverages or gummies can still produce an intoxicating effect, even if they’re milder than the higher-dosed items found in dispensaries in states where marijuana is legal. “I would be interested to see how Schedule III effectively eliminates the notion of adult-use cannabis or recreational cannabis,” says Hoban. 

He continues, considering that flower in its natural state in accordance with Schedule III will need to be produced for a medical purpose within a medical supply chain. So how do you do adult-use? The over the counter void as it currently stands is being filled by low dose hemp products, inciting a battle between the hemp and marijuana sectors. “You’d have to figure out how a product that could potentially be consumed by inhalation fits within a medical framework,” he says.  

Whereas descheduling is concerned, that “was never really a real possibility from a government agency,” says Hoban, “that’s a political move.” However, it also begs the question: is federal legalization in the United States a good thing? 

“I’m not so sure it is,” he says.

“Federal legalization could make this purely a pharmaceutical play, purely a go-to-your-doctor-and-get-a-pill play, that continues to foster the illicit market because if I want my cannabis flower, I’ll be damned if the law is going to tell me I have to go to a doctor and get a pill for the same effect.”

Furthermore, the specifics of a Schedule III license remain uncertain, particularly regarding whether the DEA will even issue those licenses. Then once a cultivator or manufacturer obtains registration under Schedule III, they will be limited to selling only to other Schedule III license holders, and the international equivalent, in order to engage in commerce. 

Seeking reconciliation 

Both Laurie and Hoban agree that eventually the systems do merge, and there does need to be an opportunity to reconcile on an international level: meaning hemp and marijuana are called cannabis, regulated by its use. 

“If I’m going to put anything in my body, even if it’s for protein or omega 3s versus cannabinoid content, then there’s largely going to have to be some sort of synergy between the two sectors,” says Hoban. “It should all be cannabis regulated pursuant to its uses… But you just never know. Political leadership comes in weird shapes and sizes and economics and consumer behavior usually drives that discussion.” 

Already low dose THC hemp beverages are being sold at professional sporting events, big concert venues, and over 5,000 liquor stores across the U.S. sell low-dose Delta 9 hemp derived beverages. 

“It would not surprise me at all, no matter who wins our presidency,” says Hoban, “if they see this clamor towards Schedule III and they see the cons, they really then start to look at the consumer numbers.” 

Election Day predictions 

Independent, libertarian-minded Hoban suspects the American voters will divide into three groups: one-third reliably votes Democrat, one-third reliably votes Republican and the swing voters, swayed by key issues, often determine election outcomes influenced by hot-button topics like abortion rights and racial divides. He sees economic issues dominating the discussion, with many blaming the Biden administration for the rising cost of living, predicting that voters will “vote with their wallets,” leading to a 51/49 Republican victory. 

On a similar note, Laurie sees voters in both the United States and Canada getting fed up with leaders unable to handle rising costs effectively, predicting that this frustration will likely lead to a narrow win for Trump. 

“I think both camps can capitalize on exactly what Bob identified, the fact that the cost of living now, it seems almost like our respective leaders are incompetent or impotent with respect to their abilities to deal with the rising cost,” he says. 

Laurie points out the role cannabis could play in elections, noting some interesting overlaps with the religious and Indigenous issues, but is ultimately being eclipsed by other pressing problems and perhaps feelings of alienation by the progressive left. He says that cannabis may not even be a factor in the way people vote, because “any of the demographics in the middle that haven’t made up their mind will vote either with their wallet, their faith, or the fact that they want to see a return to white picket fence, apple pie and baseball America.” 

“Unfortunately, hemp versus marijuana has become such a politicized issue,” says Hoban, “but the industry is cannibalizing itself as well.”   Rather than the marijuana sector partnering with anti-hemp prohibitionists, both sectors need to be aligned, and they need to be patient. 

“Because I honestly think that any industry that still has these barriers and these boundaries is going to struggle and flounder,” says Laurie. “Especially when the Canadian cannabis industry can only move as far and as fast as the elephant south of the border, and their international and drug policies,” he concludes. “And I do expect huge things from the legal U.S. industry.”