Federal Exception for Cannabis

Proposed Legislation

124E.27 Legal Task Force.  The department shall convene a task force of legal experts to assist in executing the department’s responsibilities under 2020 Iowa Acts, chapter 1116, section 31 (protection of federal funding).
Under state and federal controlled substances acts medical use of cannabis is inconsistent without interstate marketing approval or some other type of authorization.
Iowa Code Chapter 124E authorizes intrastate-only medical use of cannabis in Iowa under Iowa Code Chapter 124.
Federal authorization is available for other types of use, like religious use of peyote by the Native American Church, upon request under 21 U.S.C. § 822(d).
The task force shall evaluate 21 U.S.C. § 822(d) (“The Attorney General may, by regulation, waive the requirement for registration of certain manufacturers, distributors, or dispensers if he finds it consistent with the public health and safety”).
The task force shall consider:
  1. the federal exemption for the religious use of peyote by the Native American Church, 21 C.F.R. § 1307.31, to determine the proper scope of 21 U.S.C. § 822(d);
  2. the phrase “public health and safety” as that phrase is used in 21 U.S.C. § 822(d);
  3. the phrase “occupy the field” as that phase is used in 21 U.S.C. § 903;
  4. the right to judicial review of a final agency decision under 21 U.S.C. § 877; and
  5. the level of judicial deference due to a final agency decision in judicial review under Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2023), precedent.
In addition to any factors the task force deems relevant, the task force shall consider each of the following:

Authorities

Tenth Amendment: Anti-Commandeering Doctrine.
Application of State Law 21 U.S.C. § 903; Gonzales v. Oregon, 546 U.S. 248, 251 (2006) (“The CSA explicitly contemplates a role for the States in regulating controlled substances, as evidenced by its pre-emption provision.”).
U.S. Department of Justice (2009-2013): U.S. Department of Justice, Ogden Memorandum, October 19, 2009; U.S. Department of Justice, Cole Memorandum, June 29, 2011; U.S. Department of Justice, Cole Memorandum, August 29, 2013.
Appropriations: Public Law 118-42, § 531, 138 STAT. 25, 174 (March 9, 2024) Consolidated Appropriations Act, 2024 (H.R. 4366); Public Law 117-328, § 531, 136 STAT. 4459, 4561 (December 29, 2022) Consolidated Appropriations Act, 2023 (H.R. 2617); Public Law 117-103, § 531, 136 STAT. 49, 150 (March 15, 2022) Consolidated Appropriations Act, 2022 (H.R. 2471); Public Law 116-260, § 531, 134 Stat. 1182, 1283 (Dec. 27, 2020) Consolidated Appropriations Act, 2021 (H.R. 133); Public Law 116-93, § 531, 133 Stat. 2317, 2431 (Dec. 20, 2019) Consolidated Appropriations Act, 2020 (H.R. 1158); Public Law 116-6, § 537, 133 Stat. 13, 138 (Feb. 15, 2019) Consolidated Appropriations Act, 2019 (H.J. Res. 31); Public Law 115-141, § 538, 132 Stat. 347, 444 (Mar. 23, 2018) Consolidated Appropriations Act, 2018 (H.R. 1625); Public Law 115-31, § 537, 131 Stat. 135, 228 (May 5, 2017) Consolidated Appropriations Act, 2017 (H.R. 244); Public Law 114-113, § 542, 129 Stat. 2241, 2332 (Dec. 18, 2015) Consolidated Appropriations Act, 2016 (H.R. 2029); Public Law 113-235, § 538, 128 Stat. 2129, 2217 (Dec. 16, 2014) Consolidated and Further Continuing Appropriations Act, 2015 (H.R. 83).
Peyote: 21 C.F.R. § 1307.31.
Delta-9 THC: Agriculture Improvement Act of 2018, Pub. L. No. 115-334, 132 Stat. 4490 (December 20, 2018); 7 U.S.C. § 1639o(1); AK Futures LLC v. Boyd St. Distro, LLC, 35 F. 4th 682 (9th Cir. 2022).
UN Commission on Narcotic Drugs: reclassifies cannabis to recognize its therapeutic uses, World Health Organization, December 4, 2020; CND votes on recommendations for cannabis and cannabis-related substances, Commission on Narcotic Drugs, Press Release, December 2, 20020
Drug Enforcement Administration: Notice of proposed rule making, A Proposed Rule by the Drug Enforcement Administration on 05/21/2024.
Items Not Deductible: Application of Internal Revenue Code Section 280E to Marijuana Businesses;  26 U.S.C. § 280E.
Money Laundering and Exclusion from Banking: Marijuana Banking: SAFE(R) Banking Acts;  18 U.S.C. § 1956;  18 U.S.C. § 1957.
Judicial Review:  21 U.S.C. § 877.
Independent Judiciary:  Slip Opinion: Loper Bright Enterprises v. Raimondo;  Page Proof Pending Publication: Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2023).

Text of Authorities

Tenth Amendment:  The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
§ 903. Application of State law:  No provision of this subchapter shall be construed as indicating an intent on the part of the Congress to occupy the field in which that provision operates, including criminal penalties, to the exclusion of any State law on the same subject matter which would otherwise be within the authority of the State, unless there is a positive conflict between that provision of this subchapter and that State law so that the two cannot consistently stand together.  (Pub. L. 91–513, title II, §708, Oct. 27, 1970, 84 Stat. 1284.)
Cole Memo (2013):  Indeed, a robust system may affirmatively address those priorities, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors, and replacing illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for.
Public Law 118-42, § 531 (March 9, 2024):  SEC. 531.  None of the funds made available under this Act to the Department of Justice may be used, with respect to any of the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, or with respect to the District of Columbia, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, Guam, or Puerto Rico, to prevent any of them from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.
§ 1307.31 Native American Church:  The listing of peyote as a controlled substance in Schedule I does not apply to the nondrug use of peyote in bona fide religious ceremonies of the Native American Church, and members of the Native American Church so using peyote are exempt from registration. Any person who manufactures peyote for or distributes peyote to the Native American Church, however, is required to obtain registration annually and to comply with all other requirements of law.
§ 10113. Hemp production:  The term “hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
WHO:  On 2nd December 2020, the UN Commission on Narcotic Drugs (CND), the drug policy making body of the UN re-classified cannabis and cannabis resin under an international listing that recognizes its medical value.
HHS:  Pursuant to the Controlled Substances Act (CSA), 21 U.S.C. 811(b) and (c), I, the Assistant Secretary for Health, am recommending that marijuana, referring to botanical cannabis (Cannabis sativa L.) that is within the definition “marihuana” or “marihuana” in the CSA, be controlled in Schedule III of the CSA.
    Upon consideration of the eight factors determinative of control of a substance under 21 U.S.C. 811(c), the Food and Drug Administration (FDA) recommends that marijuana be placed in Schedule III of the CSA.  The National Institute on Drug Abuse has reviewed the enclosed documents (which were prepared by FDA’s Controlled Substance Staff and are the basis for FDA’s recommendation) and concurs with FDA’s recommendation.  Marijuana meets the findings for control in Schedule III set forth in 21 U.S.C. 812(b)(3).
    Based on my review of the evidence and FDA’s recommendation, it is my recommendation as the Assistant Secretary for Health that marijuana should be placed in Schedule III of the CSA.
IRS:  § 280E.  Expenditures in connection with the illegal sale of drugs.  No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.  (Added Pub. L. 97–248, title III, §351(a), Sept. 3, 1982, 96 Stat. 640.)
Banking:  § 1956(7)(C) Laundering of monetary instruments: the term “specified unlawful activity” means any act or acts constituting a continuing criminal enterprise, as that term is defined in section 408 of the Controlled Substances Act (21 U.S.C. § 848);  § 1957(f)(3) Engaging in monetary transactions in property derived from specified unlawful activity, the terms “specified unlawful activity” and “proceeds” shall have the meaning given those terms in section 1956 of this title.
Judicial Review:  § 877.  Judicial review.  All final determinations, findings, and conclusions of the Attorney General under this subchapter shall be final and conclusive decisions of the matters involved, except that any person aggrieved by a final decision of the Attorney General may obtain review of the decision in the United States Court of Appeals for the District of Columbia or for the circuit in which his principal place of business is located upon petition filed with the court and delivered to the Attorney General within thirty days after notice of the decision. Findings of fact by the Attorney General, if supported by substantial evidence, shall be conclusive.  (Pub. L. 91–513, title II, §507, Oct. 27, 1970, 84 Stat. 1273.)
Independent Judiciary:  Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.  Careful attention to the judgment of the Executive Branch may help inform that inquiry.  And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it.  But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.  Loper Bright, 603 U.S. at 412-13.