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ACKRELL
CAPITAL
CHAPTER IV U.S. Legal Landscape

■ The Path to Federal Legalization
We believe that cannabis will eventually become federally legal for recreational enjoyment by adults and for use in a broad range of safe drugs and therapeutic products. A wide gulf currently separates federal policy from state legalization initiatives. Both federal and state regulators lack experience with science-based regulation that allows cannabis access, but they approach this lack of experience differently. Current federal policy is slow-turning and bureaucratic; it requires rigorous scientific evidence that cannabis is safe and effective but largely prohibits the industry from developing that evidence. State legalization initiatives are experimental: they start by legalizing the cannabis industry, then task state regulators with implementing rules and safeguards as the industry builds its scientific foundation and its markets.

We believe that federal policy will move (and may already be moving) in a new direction which allows for federally approved cannabis-derived drugs. If that happens, and if several cannabis-derived drugs are federally approved, we expect the FDA and the DEA will have developed data and protocols that facilitate more rapid approval of medical cannabis products. And if that happens, these federal agencies should be able to combine their science-based regulatory practices with the best practices of state regulators to develop a comprehensive federal approach to medical and recreational cannabis.

DEA and FDA Policy Direction
The path to federal legalization begins with understanding that current federal law, in theory, allows for the production, distribution and prescription of medical cannabis products in the United States. The DEA can register manufacturers to produce medical cannabis products in accordance with the CSA. The FDA can approve medical cannabis products for distribution in accordance with the FD&C Act. The DEA (an agency of the DOJ) and the FDA (an agency of the DHHS) together can cause medical cannabis products to be rescheduled under the CSA so that doctors legally can prescribe them. None of these regulatory actions requires a change in law. Technically, cannabis is not entirely prohibited by federal law.

But in any practical sense, cannabis is federally prohibited. For nearly 50 years, the DEA has registered only one cannabis manufacturer. The FDA has never approved a cannabis-derived drug. Because marijuana remains a Schedule I controlled substance, the lone DEA-registered cannabis manufacturer can produce cannabis only for strictly controlled research, and doctors cannot prescribe any marijuana compound or derivative as medicine. A duo of federal regulatory agencies—not federal law—prohibits lawful access to medical cannabis products; this may be changing. The DEA and the FDA appear to be exploring policies and practices that could result in the actual production, distribution and prescription of cannabis-derived drugs.

In August 2016, the DEA announced a new policy designed to increase (beyond one) the number of DEA-registered cannabis cultivators and permit-registered cultivators to grow cannabis for privately funded commercial drug development projects. The DEA has since accepted at least 25 applications for registration but has not issued any new registrations. Some observers believe the new policy initiative has stalled under the leadership of the DOJ, currently run by U.S. Attorney General Sessions. How-

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