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DEA May Reclassify Marijuana, But Cannabis Ads Will Still Be Off-Limits To Radio.

Radio sales reps may see opportunity with the scores of cannabis dispensaries that have popped up in states where recreational marijuana has been legalized, but changes reportedly close at hand will do little for advertising revenues, say broadcast attorneys.

The Justice Department is reportedly onboard with a pending move by the Drug Enforcement Administration to reclassify marijuana as a lower-level drug. But the change, first reported by the Associated Press, would not mean decriminalization. That would make taking ads from the more than 15,0000 dispensaries now in business just as problematic for stations as it has been since Colorado and Washington became the first states to legalize cannabis for recreational use in 2012.

The proposal would keep marijuana as a drug regulated by the DEA, albeit as a Schedule III drug similar to ketamine, anabolic steroids, testosterone, and low-dose codeine medications. Broadcast attorney Greg Skall says that would lower the consequences for illegal sales and likely disincentivize any prosecution for use. But he points out that because the Food and Drug Administration has not certified cannabis, radio stations should maintain a hands-off approach to the category.

“Until the FDA approves it, the safest policy is to not accept the advertising,” Skall says. “Consider how existing advertising is placed for Schedule III drugs, with all the FDA warnings broadcast as a part of the message.” He points out that there is already some legal murkiness that further justifies a wait-and-see position.

Skall says questions are being raised about whether by moving marijuana to Schedule III, doctors or state-authorized dispensaries could distribute it consistent with state law without FDA approval, provided the process does not involve interstate commerce. “The other significant impact would be to allow dispensaries to deduct legitimate business expenses under the Internal Revenue Code and allow banks to do business with them,” he says. In the long term that could help broadcasters if the day comes that they’re cleared to take cannabis ads, since a client that has a bank account is a lot easier to do business with when it comes to paying their bills.

NORML, the National Organization for the Reform of Marijuana Laws, says while it would be significant for federal agencies like the DEA and FDA to change their long-held position opposing marijuana use, reclassifying pot as a Schedule III drug would do little to address the growing conflict between federal and state law. “The goal of any federal cannabis policy reform ought to be to address the existing, untenable divide between federal marijuana policy and the cannabis laws of the majority of U.S. states,” NORML Deputy Director Paul Armentano said.

No Change Coming Soon

Movement on marijuana comes more than a year after President Biden in Oct. 2022 ordered federal agencies to review how cannabis is classified under federal law. The current federal classification of marijuana as a Schedule I controlled substance has stations holding back out of fear they could face challenges to their licenses or fines at the Federal Communications Commission. The FCC has also not given any guidance for broadcasters in states where recreational pot has been legalized, apparently leaving how to address the issue to the DOJ.

The closest anyone in the federal government has gotten to addressing cannabis ads is the President himself, and the message was one that pointed toward treating cannabis the same as alcohol ads. “Even as federal and state regulation of marijuana changes, important limitations on trafficking, marketing, and under-age sales should stay in place,” Biden said in his executive order.

Armentano thinks federal agencies may ultimately request that Congress create new regulatory pathways for cannabis products, particularly for those marketed for adult use.

There have been some efforts in Congress to specifically give radio and television stations the ability to take cannabis ads. Two years ago, Sen. Ben Ray Luján (D-NM) introduced the SAFE Advertising Act (S.4622), which would prohibit the FCC from rejecting a license renewal, license transfer, or require an early renewal application if a station opts to air cannabis ads from a legitimate seller. But the bill failed to gain traction, and Luján did not reintroduce it in the current session of Congress.

Two-dozen states have so far legalized recreational marijuana sales, and 38 allow medical marijuana use. Public opinion is also rapidly changing. A Gallup poll released in November showed seven in ten adults support legalization. That included a majority of conservatives.

The DEA’s rescheduling decision, once formalized, will not take immediate effect. The agency must first accept public comments, during which administrative hearings can be requested to further debate the issue. The move also faces a possible legal challenge.

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