what does assignment schedule mean

What does reclassifying marijuana mean? Here’s what to know.

It's not entirely clear how a move to a Schedule III substance could impact Pennsylvania, but there could be some benefits for the medical marijuana industry.

More than five decades after it was first identified as a dangerous drug with no medical value and a high potential for abuse, the U.S. Drug Enforcement Administration has reportedly agreed to reclassify marijuana .

A proposal from the DEA, which has not yet taken effect, would move marijuana from its current status as a Schedule I drug under the Control Substances Act to Schedule III, according to the Associated Press. The proposal comes following a review of federal marijuana law that President Joe Biden called for in 2022, and follows a recent recommendation made by the U.S. Department of Health and Human Services.

The change would signify that under federal law, marijuana is considered to have less potential for abuse than other substances, as well as an accepted medical value. It could also have implications for marijuana businesses in states where the drug is medically or recreationally legal, and make researching marijuana easier.

Before the proposal goes into effect, it must be reviewed by the White House Office of Management and Budget, after which the DEA will hold a public comment period. Following public comment, the final rule would be published.

Here is what you need to know:

What does scheduling mean?

Marijuana has been a Schedule I drug since the passage of the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970, better known as the Controlled Substances Act. Under that classification, it has been placed alongside drugs such as heroin, LSD, and MDMA, which the law says have “no currently accepted medical use and a high potential for abuse,” according to the DEA .

Such drugs are criminally prohibited at the federal level, cannot be prescribed for medical use, and aren’t easily medically researchable.

The act has five categories, with the potential for abuse or dependence decreasing at each level. Schedule III drugs , for example, include substances like ketamine, anabolic steroids, and Tylenol with codeine. Those drugs can be prescribed , provided they have approval from the Federal Drug Administration, with rules about refills.

Does rescheduling legalize marijuana?

No. As a Schedule III drug, marijuana would still be regulated by the DEA. State medical and recreational marijuana programs would also remain federally illegal once the change takes effect, according to the Congressional Research Service .

That means the roughly 15,000 cannabis dispensaries in the United States would have to register with the DEA like regular pharmacies and fulfill strict reporting requirements, something that they are loath to do and that the DEA is ill-equipped to handle.

Additionally, the research service noted in a January memo, quantity-based mandatory minimum sentencing “would not change as a result of rescheduling.”

How could rescheduling impact Pennsylvania?

It’s not entirely clear. But as a state in which medical marijuana is legal, that industry could see some benefits.

With cannabis as a Schedule III drug, Pennsylvania marijuana businesses could see a reduction in their federal tax burden, which can be 70% or more, according to industry groups.

That’s because of an Internal Revenue Services rule prevents businesses that “traffick” in Schedule I or II substances from deducting regular businesses expenses from their federal taxes. If marijuana moves to Schedule III, those businesses would be able to deduct expenses on federal taxes.

Additionally, the move would make marijuana easier to study and research, as it is much more difficult to conduct authorized clinical studies on Schedule I substances.

What to marijuana proponents say?

Marijuana’s rescheduling has long been rumored , and has been met with a mixed reaction by marijuana proponents. In a statement Tuesday, Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws called rescheduling a “significant” step, but said it ultimately, it “fails to adequately address” the conflict between state and federal laws.

As a result, Armentano said, marijuana should instead be de-scheduled altogether, which would allow states to implement marijuana laws and not run afoul of federal law.

David Goubert, president and CEO of cannabis company AYR wellness, which operates in several states including Pennsylvania, said in a statement that rescheduling is “the most significant step towards federal cannabis reform in U.S. history.”

But while rescheduling “represents positive progress,” Goubert added, many companies, including AYR Wellness, advocate for full de-scheduling — an event that he said he expects to be an “eventual outcome.”

This report contains information from the Associated Press.

Biden administration plans to drastically change federal rules on marijuana

The Biden administration is poised to make a landmark change to the federal government's position on marijuana with a proposed plan that would no longer consider marijuana among the most dangerous and addictive substances . 

In what would be the biggest change in marijuana policy the federal government has taken since pot was first outlawed, the Drug Enforcement Administration will take public comments on a plan to recategorize marijuana under the Controlled Substances Act, according to a source familiar with the process. The news was first reported by The Associated Press .

The Department of Justice will send its recommendation to reclassify marijuana from a Schedule I drug to a Schedule III drug to the White House Office of Management and Budget, according to the source, who was not authorized to speak publicly. The Justice Department is expected to transmit the recommendation today, the source said.

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The plan wouldn't legalize marijuana at the federal level outright, but it would reclassify it from a Schedule I drug – believed highly dangerous, addictive and without medical use – to a Schedule III drug that can be lawfully prescribed as medication. Marijuana has been a Schedule I drug since the Controlled Substances Act was signed in 1970.

“It is significant for these federal agencies, and the DEA and FDA in particular, to acknowledge publicly for the first time what many patients and advocates have known for decades: that cannabis is a safe and effective therapeutic agent for tens of millions of Americans," said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, or NORML, which advocates for cannabis to be removed altogether from the list of controlled substances.

This bureaucratic move is only a small step toward what advocates hope will be full legalization of the drug. However, the new proposed classification does not fully address the inconsistencies between federal restrictions and the laws in a growing number of states that have authorized medical and recreational use of pot. 

Twenty-four states and Washington, D.C., have legalized the recreational use of marijuana, and 14 other states authorize it for medical use, according to the Pew Research Center .

“Rescheduling the cannabis plant to Schedule III fails to adequately address this conflict, as existing state legalization laws – both adult use and medical – will continue to be in conflict with federal regulations, thereby perpetuating the existing divide between state and federal marijuana policies," Armentano said in a statement.

The federal proposal to reschedule marijuana would have broad support among voters. A nationwide survey last fall commissioned by the Coalition for Cannabis Rescheduling Reform found nearly 60% of likely voters supported rescheduling, with 65% of younger voters 18 to 25 favoring it, the highest of any demographic group polled. Overall, the number of Americans who think marijuana should be legal reached a record high at 70%, according to a Gallup poll in the fall.

For decades, marijuana has been listed under the Controlled Substances Act as a Schedule I drug, alongside heroin, LSD and ecstasy. The act categorizes drugs based on their potential for abuse, addiction and medical use. Schedule I drugs are outlawed under federal law level and deemed to be without accepted medical use. 

In 2022, President Joe Biden directed the Department of Health and Human Services to conduct a review of how marijuana is classified; and last year HHS recommended it be rescheduled to Schedule III, alongside drugs like Tylenol with codeine and anabolic steroids. The Justice Department did its own analysis and reached the same conclusion, the source said.

The proposal will undergo a public review period; the source did not say when the proposed rule would be open to public comment.

Rep. Andy Harris, R-Md., has previously criticized federal efforts to change Marijuana's classification . Harris was a physician at the Johns Hopkins Hospital, according to his online biography .

"Removing restrictions on an addictive gateway drug like Marijuana is a dangerous mistake. Numerous studies, including a recent and reputable study published by JAMA, points to the negative impact recreational marijuana has on the body and brain," Harris said in a Tuesday social media post on X, formerly known as Twitter.

Experts previously told USA TODAY that marijuana’s placement on Schedule I was not based on credible scientific evidence of its perils, but once it was listed, researchers and advocates faced a heavy burden trying to prove it shouldn’t face such stiff restrictions. 

What exactly does rescheduling cannabis mean?

Placing marijuana in Schedule III puts it on par with drugs, such as ketamine, testosterone, anabolic steroids or Tylenol with codeine, that have “moderate to low potential for physical and psychological dependence,” according to the DEA.

Schedule III drugs can be legally prescribed by licensed health care providers and dispensed by licensed pharmacies. Rescheduling could also help resolve a massive federal tax burden that has been placed on cannabis companies – which were effectively seen as drug traffickers for tax purposes.

But rescheduling marijuana doesn’t make it legal to use recreationally, and it doesn’t change much about current state cannabis programs, said Jay Wexler, who teaches a seminar about marijuana laws at Boston University. It would still a controlled substance even with the new announcement

Wexler and other policy experts and advocates say rescheduling is not a solution, but it could be a sign the federal government is catching up with public opinion and consensus in the medical field that there are therapeutic benefits to marijuana, along with some risks.

"Rescheduling is a step forward, but it is not nearly enough. And there's no reason to keep cannabis in the Controlled Substances Act,” Wexler previously told USA TODAY.

What are the possible risks of marijuana?

Because of its classification, marijuana has been hard to study. But the move to reschedule marijuana is due in large part to its lower public health risk, federal scientists have said.

In a leaked HHS document , officials wrote to the DEA to support lowering its classification to Schedule III. Its risk for addiction was lower than other drugs and it had medical benefits, unlike Schedule I and II drugs, HHS researchers said. 

Still, scientists said, users develop moderate to low physical dependence on it, and there is some risk of psychological dependence. However, they noted, the withdrawal symptoms are “relatively mild” compared with alcohol. Marijuana is more comparable to tobacco, they said.

There are no known deaths from a marijuana overdose, according to the National Institute on Drug Abuse , or NIDA. But it does affect physical and mental health.

Marijuana can cause permanent IQ loss for people who begin using it at a young age, the institute said. Additionally, long-term use has been associated with temporary paranoia and hallucinations, and it can exacerbate symptoms with disorders such as schizophrenia, NIDA said.

Marijuana smoke has a similar health impact to tobacco smoke. NIDA found people who smoke marijuana frequently develop issues with breathing, akin to tobacco smokers. 

Smoking cannabis, the most common way to consume the drug, may have additional risks because of particulate matter a person inhales, according to a recent study in the Journal of the American Heart Association . Researchers noted cannabis smoke isn’t all that different than tobacco smoke, the only difference being the added effect of the psychoactive drug THC in marijuana rather than nicotine in tobacco.

Respiratory issues include daily cough, phlegm and a higher risk of lung infections, however, the institute said it’s unclear if marijuana causes a greater risk of lung cancer. 

Smoking marijuana also increases heart rate, which can increase the chance of heart attack, especially among older people and people with heart conditions. The Heart Association journal study linked increased cannabis use with an increased risk of heart attack and stroke. 

“Despite common use, little is known about the risks of cannabis use and, in particular, the cardiovascular disease risks,” the study’s lead author, Abra Jeffers, a data analyst at Boston’s Massachusetts General Hospital, said in a statement. “The perceptions of the harmfulness of smoking cannabis are decreasing, and people have not considered cannabis use dangerous to their health. However, previous research suggested that cannabis could be associated with cardiovascular disease.” She noted that smoking cannabis, which is the predominant way it is used, could pose other risks because it involves inhaling particulate matter.

In the study published in late February, researchers examined Centers for Disease Control and Prevention survey data of over 400,000 adults from 2016 to 2020, looking at self-reported cannabis use with cardiovascular outcomes, such as heart disease, heart attacks and strokes. 

People who used marijuana daily had a 25% higher chance of having a heart attack and a 42% higher chance of stroke than those who didn’t use it at all.

Proposal reflects potential for health benefits

The cannabis plant has been used for medicinal purposes for centuries if not millennia. It appears to help with treating pain , insomnia, anxiety, and glaucoma, among other health conditions. Still, evidence is mixed and more research into its health benefits is needed, researchers at Johns Hopkins Bloomberg School of Public Health said in August.

While the FDA hasn’t approved the cannabis plant for any medical use, federal regulators have approved several drugs containing cannabinoids, or substances such as THC or CBD found in the cannabis plant, according to the National Institutes of Health .

These include Epidiolex, a purified form of CBD ingested orally, that is FDA-approved to treat seizures associated with two severe forms of epilepsy. Marinol and Syndros both contain synthetic THC and are used to treat nausea and vomiting caused by chemotherapy. Nabilone, another synthetic similar to THC, is approved as the brand name drug Cesamet for people with HIV/AIDS who experiencing weight loss and appetite loss.

A 2017 federal report found cannabis or cannabinoids were more likely to reduce pain symptoms for patients with chronic pain. Additionally, there is some evidence that cannabis is effective in treating symptoms of multiple sclerosis, particularly addressing the stiff or rigid muscles caused by the disease. One cannabinoid drug, nabiximol, a mouth spray that has both THC and CBD, has been approved in several countries but not in the U.S. Under the brand name Sativex, it has shown pain relief for people with cancer or multiple sclerosis.

Other research has examined cannabis’ uses to treat post-traumatic stress disorder, but the NIH said the evidence is mixed.

What does the reclassification of marijuana mean? Here is all you need to know

Sources tell nbc news that the drug enforcement administration is expected to approve an opinion from the department of health and human services, allowing medical cannabis research to begin, by ryan nelson • published 1 hour ago • updated 58 mins ago.

According to sources with knowledge of the decision, the Biden administration is poised to reclassify marijuana from a Schedule I drug to a Schedule III drug, a historic step in the shifting landscape of U.S. drug policy.

As opposed to Schedule I, Schedule III drugs are considered to have medical benefits and less risk for abuse.

Sources tell NBC News that the Drug Enforcement Administration is expected to approve an opinion from the Department of Health and Human Services, allowing medical cannabis research to begin.

This comes after President Biden directed the HHS in 2022 to review marijuana’s classification.

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The proposed reclassification recognizes marijuana as less likely to lead to addiction compared to its previous classification. However, it does not legalize recreational marijuana at the federal level, leaving the drug’s legal status subject to state laws.

Bradley Cobb is founder and CEO of Sunburn Cannabis, a medical marijuana treatment center in Florida, a former lawyer and former lobbyist.

“The name Sunburn Cannabis comes from my father's unique story in cannabis from 1977 to 1983 was one of the largest smugglers of cannabis in the history of the justice department. He was indicted, went to prison in what was dubbed ‘Operation Sunburn,’” he said.

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Cobb expressed bittersweet emotions over the decision, seeing it as both a vindication of his belief that marijuana should be treated like any other substance, and as an opportunity to erase the stigma associated with marijuana.

“It will now open up a myriad of services to both patients, as well as the operators serving it banking reform, tax reform. It'll serve as a springboard for broader reform to ultimately look at build to bring a lot of these transactions into the sunshine,” said Cobb.

The move also reflects a broader shift in public opinion. Twenty years ago, only 34% of Americans believed marijuana should be legal. Today, that figure has risen to 70%, with nearly half of U.S. states legalizing marijuana for recreational use.

Melba Pearson, director of prosecution projects at Florida International University, a former state prosecutor and former ACLU deputy director, noted the reclassification has reignited conversations around restorative justice.

“Now you see more states, especially notably California, looking at these cannabis convictions and saying, you know what? It's kind of unjust for someone to be serving time presently for something that is now legal or to not be able to apply for a job because they have this conviction for cannabis on their record,” Pearson said.

However, not everyone is pleased with the administration’s decision.

One opposition group, Smart Approaches to Marijuana (SAM), criticized the cannabis industry for heavily lobbying to sell what it described as “demonstrably harmful products.”

The group also accused the Biden administration of a “thinly veiled attempt to reverse polling trends.”

Nonetheless, experts suggest the move could garner political support in an election year, particularly among young and Black voters.

In Florida, where recreational marijuana remains illegal, voters will decide its fate in November through ballot initiative Amendment 3. 

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What Rescheduling Marijuana Means For The Cannabis Industry

With the DEA set to reclassify marijuana as a less dangerous drug, weed companies will finally get a break from a punitive federal tax rate—and cannabis stocks have already rallied.

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Photo by Olivier Douliery / AFP

I n a historic move, the U.S Drug Enforcement Administration will end its ban on cannabis by reclassifying it as a less dangerous drug . According to the Associated Press , the DEA has proposed moving marijuana from its current status as a Schedule I narcotic—alongside heroin and LSD—to Schedule III, which includes drugs such as ketamine, Tylenol with codeine, anabolic steroids and opioid-use disorder medication buprenorphine. The move marks the most significant change in marijuana reform since pot was outlawed by the Controlled Substances Act in 1970.

The DEA’s recommendation has been hotly anticipated for many months. In October 2022, President Biden asked the Department of Health and Human Services and the Attorney General to review “expeditiously” how marijuana is scheduled under federal law. By August 2023, HHS completed its review, concluding that cannabis has some legitimate medical benefits and sent its recommendation to the DEA, asking the agency to re-classify marijuana as a Schedule III drug. Biden also addressed the subject in his State of the Union address in March, declaring that “no one should be jailed for using or possessing marijuana.”

The proposal is not yet final as it must first clear the White House Office of Management and Budget and undergo a public-comment period. The news that the Biden administration would reclassify marijuana immediately electrified the $28 billion cannabis industry—composed of 38 states that have some form of regulated marijuana sales, with 24 states allowing sales to people 21 and older. Some pot stocks were up 25% within hours of AP report.

“It goes without saying that this is the most significant cannabis reform in modern history and sets us on the clear path to federal legalization,” says David Culver, vice president of industry trade and lobbying organization U.S. Cannabis Council.

The most profound impact the DEA’s historic policy change would have on licensed cannabis companies would be on taxes. The move from Schedule I to Schedule III means that cannabis companies will not have to file under U.S. code 280e, the punitive tax measure reserved for drug traffickers that bans most deductions. (The effective tax rate for most cannabis companies is around 80% of gross revenue.)

“Removing the 280e burden is enough for the industry to have a turning point moment and succeed financially,” says Culver. He also believes that ending the ban on marijuana at the federal level will open things up for greater reform. “We won’t be sitting next to heroin anymore,” Culver adds, “so lawmakers will have an easier time working on additional cannabis reforms.”

Josh Schiller, an attorney and partner at Boies Schiller Flexner, says the move to Schedule III is a step in the right direction but not enough. Schiller and David Boies are suing Attorney General Merrick Garland on behalf of several cannabis companies in Massachusetts to challenge the federal prohibition of marijuana and the government’s ability to interfere with state-regulated cannabis programs. “This will not provide the relief our lawsuit seeks,” says Schiller, “but it is the clearest statement that government no longer has a policy to eradicate marijuana across the U.S.”

The immediate effect, Schiller adds, will be that cannabis companies will no longer be “treated as criminal enterprises, for tax purposes.”

The rescheduling of cannabis, however, provides no legal fix to the banking issues that have long plagued the industry, nor will it allow U.S.-based cannabis companies to be listed on the New York Stock Exchange or the NASDAQ.

The move to Schedule III still leaves plenty of unanswered questions—including whether state-licensed cannabis companies have to stop selling products until the U.S. Food & Drug Administration rules on approvals. “There is a question as to whether recreational stores can continue to exist,” Schiller says, “or whether they need to obtain some form of licensing to comply with whatever regulations are forthcoming.” Schiller and Boies advocate for no federal oversight over state-licensed cannabis companies, while Schedule III requires more federal oversight.

Andrew Freedman , the executive director of the Washington, D.C.-based nonprofit Coalition for Cannabis Policy, Education and Regulation, cautions people not to think the DEA is legalizing weed. “This has little- to no actual impact to the current criminal status of the cannabis industry, or the criminality of using it as a consumer,” says Freedman.

In other words, the current dispensary model that has rolled out across America state by state is still unlawful under federal law and will require more policy changes. “The strict prohibition of cannabis has been a story about its unbelievable deleterious impact and now we've had two federal agencies, both FDA and DEA, say that the deleterious effects were overblown, and that the potential medical effects were underestimated,” says Freedman. “It’s a big deal for cannabis, but it is really more of a signal towards the bigger policy debate than an actual policy movement.”

For long time cannabis investors such as Emily Paxhia, cofounder and managing partner of Poseidon Investment Management, the Schedule III news could not have come any sooner. “I’m doing better than yesterday, when I thought I was dead,” says Paxhia, who cofounded her pioneering San Francisco–based hedge fund in 2013. “This legitimizes the cannabis industry as a legitimate part of the U.S. economy.”

Under the blanket of federal prohibition and a lack of movement for years, the cannabis industry has been deprived of institutional capital and stock prices and company valuations have cratered. With Schedule III, Paxhia believes more investors will be willing to put money to work in the sector.

“The industry has been devoid of federal reform that has indicated any progress for years, but this is an incredibly important and positive indicator for capital to be able to start flowing back into the industry,” says Paxhia. “This is one key acknowledgement from the federal government that cannabis has a place in our society.”

In Washington, no one who has been fighting longer and harder for cannabis legalization than Congressman Earl Blumenauer, a Democrat from Oregon and founder and co-chair of the Congressional Cannabis Caucus. Blumenauer—who is retiring this year after nearly 30 years in Congress—wants to see full de-scheduling, which would put marijuana in a similar legal category as tobacco and alcohol. The 75-year-old congressman remains optimistic that the federal government will finally end its pot prohibition.

“If today’s reporting proves true, we will be one step closer to ending the failed war on drugs,” Blumenauer tells Forbes . “Marijuana was scheduled more than 50 years ago based on stigma, not science. The American people have made clear in state after state that cannabis legalization is inevitable. The Biden-Harris Administration is listening.”

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Marijuana | The US will reclassify marijuana. What does that mean?

The proposal would move marijuana from the “schedule i” group to the less tightly regulated “schedule iii”.

By Jennifer Peltz and Lindsay Whitehurst | Associated Press

WASHINGTON — The U.S. Drug Enforcement Administration is moving toward reclassifying marijuana as a less dangerous drug. The Justice Department proposal would recognize the medical uses of cannabis, but wouldn’t legalize it for recreational use.

The proposal would move marijuana from the “Schedule I” group to the less tightly regulated “Schedule III.”

So what does that mean, and what are the implications?

WHAT HAS ACTUALLY CHANGED? WHAT HAPPENS NEXT?

Still, the switch is considered “paradigm-shifting, and it’s very exciting,” Vince Sliwoski, a Portland, Oregon-based cannabis and psychedelics attorney who runs well-known legal blogs on those topics, told The Associated Press when the federal Health and Human Services Department recommended the change.

“I can’t emphasize enough how big of news it is,” he said.

It came after President Joe Biden asked both HHS and the attorney general, who oversees the DEA, last year to review how marijuana was classified. Schedule I put it on par, legally, with heroin, LSD, quaaludes and ecstasy, among others.

Biden, a Democrat, supports legalizing medical marijuana for use “where appropriate, consistent with medical and scientific evidence,” White House press secretary Karine Jean-Pierre said Thursday. “That is why it is important for this independent review to go through.”

IF MARIJUANA GETS RECLASSIFIED, WOULD IT LEGALIZE RECREATIONAL CANNABIS NATIONWIDE?

No. Schedule III drugs — which include ketamine, anabolic steroids and some acetaminophen-codeine combinations — are still controlled substances.

They’re subject to various rules that allow for some medical uses, and for federal criminal prosecution of anyone who traffics in the drugs without permission.

No changes are expected to the medical marijuana programs now licensed in 38 states or the legal recreational cannabis markets in 23 states, but it’s unlikely they would meet the federal production, record-keeping, prescribing and other requirements for Schedule III drugs.

There haven’t been many federal prosecutions for simply possessing marijuana in recent years, even under marijuana’s current Schedule I status, but the reclassification wouldn’t have an immediate impact on people already in the criminal justice system.

“Put simple, this move from Schedule I to Schedule III is not getting people out of jail,” said David Culver, senior vice president of public affairs at the U.S. Cannabis Council. But rescheduling in itself would have some impact, particularly on research and marijuana business taxes.

WHAT WOULD THIS MEAN FOR RESEARCH?

Because marijuana is on Schedule I, it’s been very difficult to conduct authorized clinical studies that involve administering the drug. That has created something of a Catch-22: calls for more research, but barriers to doing it. (Scientists sometimes rely instead on people’s own reports of their marijuana use.)

Schedule III drugs are easier to study, though the reclassification wouldn’t immediately reverse all barriers to study, Culver said.

WHAT ABOUT TAXES (AND BANKING)?

Under the federal tax code, businesses involved in “trafficking” in marijuana or any other Schedule I or II drug can’t deduct rent, payroll or various other expenses that other businesses can write off. (Yes, at least some cannabis businesses, particularly state-licensed ones, do pay taxes to the federal government, despite its prohibition on marijuana.) Industry groups say the tax rate often ends up at 70% or more.

The deduction rule doesn’t apply to Schedule III drugs, so the proposed change would cut cannabis companies’ taxes substantially.

They say it would treat them like other industries and help them compete against illegal competitors that are frustrating licensees and officials in places such as New York.

“You’re going to make these state-legal programs stronger,” says Adam Goers, an executive at medical and recreational cannabis giant Columbia Care. He co-chairs a coalition of corporate and other players that’s pushing for rescheduling.

It could also mean more cannabis promotion and advertising if those costs could be deducted, according to Beau Kilmer, co-director of the RAND Drug Policy Center.

Rescheduling wouldn’t directly affect another marijuana business problem: difficulty accessing banks, particularly for loans, because the federally regulated institutions are wary of the drug’s legal status. The industry has been looking instead to a measure called the SAFE Banking Act. It has repeatedly passed the House but stalled in the Senate.

ARE THERE CRITICS? WHAT DO THEY SAY?

Indeed, there are, including the national anti-legalization group Smart Approaches to Marijuana. President Kevin Sabet, a former Obama administration drug policy official, said the HHS recommendation “flies in the face of science, reeks of politics” and gives a regrettable nod to an industry “desperately looking for legitimacy.”

Some legalization advocates say rescheduling weed is too incremental. They want to keep the focus on removing it completely from the controlled substances list, which doesn’t include such items as alcohol or tobacco (they’re regulated, but that’s not the same).

Paul Armentano, the deputy director of the National Organization for the Reform of Marijuana Laws, said that simply reclassifying marijuana would be “perpetuating the existing divide between state and federal marijuana policies.” Minority Cannabis Business Association President Kaliko Castille said rescheduling just “re-brands prohibition,” rather than giving an all-clear to state licensees and putting a definitive close to decades of arrests that disproportionately pulled in people of color.

“Schedule III is going to leave it in this kind of amorphous, mucky middle where people are not going to understand the danger of it still being federally illegal,” he said.

Peltz reported from New York. Associated Press writer Colleen Long in Washington contributed to this report.

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US poised to ease restrictions on marijuana in historic shift, but it’ll remain controlled substance

The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, a historic shift to generations of American drug policy that could have wide ripple effects across the country.

FILE - In this Friday, March 22, 2019, file photo, a marijuana plant is visible at Compassionate Care Foundation’s medical marijuana dispensary in Egg Harbor Township, N.J. The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, a historic shift to generations of American drug policy that could have wide ripple-effects across the country. The DEA’s proposal still must be reviewed by the White House Office of Management and Budget. (AP Photo/Julio Cortez, File)

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WASHINGTON (AP) — The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, The Associated Press has learned, a historic shift to generations of American drug policy that could have wide ripple effects across the country.

The proposal, which still must be reviewed by the White House Office of Management and Budget, would recognize the medical uses of cannabis and acknowledge it has less potential for abuse than some of the nation’s most dangerous drugs. However, it would not legalize marijuana outright for recreational use.

The agency’s move, confirmed to the AP on Tuesday by five people familiar with the matter who spoke on the condition of anonymity to discuss the sensitive regulatory review, clears the last significant regulatory hurdle before the agency’s biggest policy change in more than 50 years can take effect.

Once OMB signs off, the DEA will take public comment on the plan to move marijuana from its current classification as a Schedule I drug, alongside heroin and LSD. It moves pot to Schedule III, alongside ketamine and some anabolic steroids, following a recommendation from the federal Health and Human Services Department. After the public comment period and a review by an administrative judge, the agency would eventually publish the final rule.

“Today, the Attorney General circulated a proposal to reclassify marijuana from Schedule I to Schedule III,” Justice Department director of public affairs Xochitl Hinojosa said in a statement. The DEA is a component of the Department of Justice. “Once published by the Federal Register, it will initiate a formal rulemaking process as prescribed by Congress in the Controlled Substances Act.”

Attorney General Merrick Garland’s signature throws the full weight of the Justice Department behind the move and appears to signal its importance to the Biden administration.

It comes after President Joe Biden called for a review of federal marijuana law in October 2022 and moved to pardon thousands of Americans convicted federally of simple possession of the drug. He has also called on governors and local leaders to take similar steps to erase marijuana convictions.

“Criminal records for marijuana use and possession have imposed needless barriers to employment, housing, and educational opportunities,” Biden said in December. “Too many lives have been upended because of our failed approach to marijuana. It’s time that we right these wrongs.”

The election year announcement could help Biden, a Democrat, boost flagging support, particularly among younger voters .

Biden and a growing number of lawmakers from both major political parties have been pushing for the DEA decision as marijuana has become increasingly decriminalized and accepted, particularly by younger people. A Gallup poll last fall found 70% of adults support legalization, the highest level yet recorded by the polling firm and more than double the roughly 30% who backed it in 2000.

The DEA didn’t respond to repeated requests for comment.

Schedule III drugs are still controlled substances and subject to rules and regulations, and people who traffic in them without permission could still face federal criminal prosecution.

Some critics argue the DEA shouldn’t change course on marijuana, saying rescheduling isn’t necessary and could lead to harmful side effects.

Jack Riley, a former deputy administrator of the DEA, said he had concerns about the proposed change because he thinks marijuana remains a possible “gateway drug,” one that may lead to the use of other drugs.

“But in terms of us getting clear to use our resources to combat other major drugs, that’s a positive,” Riley said, noting that fentanyl alone accounts for more than 100,000 deaths in the U.S. a year.

On the other end of the spectrum, others argue marijuana should be treated the way alcohol is.

“While this rescheduling announcement is a historic step forward, I remain strongly committed to continuing to work on legislation like the SAFER Banking Act as well as the Cannabis Administration and Opportunity Act, which federally deschedules cannabis by removing it from the Controlled Substances Act,” Senate Majority Leader Sen. Chuck Schumer of New York said in a statement. “Congress must do everything we can to end the federal prohibition on cannabis and address longstanding harms caused by the War on Drugs.”

Federal drug policy has lagged behind many states in recent years, with 38 having already legalized medical marijuana and 24 legalizing its recreational use .

That’s helped fuel fast growth in the marijuana industry, with an estimated worth of nearly $30 billion. Easing federal regulations could reduce the tax burden that can be 70% or more for businesses, according to industry groups. It could also make it easier to research marijuana, since it’s very difficult to conduct authorized clinical studies on Schedule I substances.

The immediate effect of rescheduling on the nation’s criminal justice system would likely be more muted, since federal prosecutions for simple possession have been fairly rare in recent years.

But loosening restrictions could carry a host of unintended consequences in the drug war and beyond.

Critics point out that as a Schedule III drug, marijuana would remain regulated by the DEA. That means the roughly 15,000 cannabis dispensaries in the U.S. would have to register with the DEA like regular pharmacies and fulfill strict reporting requirements, something that they are loath to do and that the DEA is ill equipped to handle.

Then there’s the United States’ international treaty obligations, chief among them the 1961 Single Convention on Narcotic Drugs, which requires the criminalization of cannabis. In 2016, during the Obama administration, the DEA cited the U.S.’ international obligations and the findings of a federal court of appeals in Washington in denying a similar request to reschedule marijuana.

Goodman reported from Miami, Mustian from New Orleans. AP writer Colleen Long contributed.

Cannabis in Tennessee: What push to reclassify marijuana to Schedule III may mean

The Drug Enforcement Agency could move to reclassify marijuana to a lesser severity in what's being reported as the " biggest change in marijuana policy" since the drug was first outlawed.

The proposal, first reported by The Associated Press , would follow a Department of Justice recommendation and lead the DEA to take public comments on a plan to recategorize marijuana, USA TODAY reports .

In this reclassification, marijuana would move from a Schedule I drug which is believed to be highly dangerous, addictive and not for medical use to a Schedule III drug that can be lawfully prescribed as medication. Marijuana has been a Schedule I drug since the Controlled Substances Act was signed in 1970 by President Richard Nixon.

Here is what we know about the reclassification.

What does rescheduling cannabis mean for Tennessee?

While this would be a landmark change, it would not change the state's current cannabis regulations. It would still be a controlled substance even with the new classification. That said, 24 states have legalized marijuana for recreational use and 14 have legalized it for medical use.

In 2022, President Joe Biden directed the Department of Health and Human Services, or the HHS, to conduct a review of how marijuana is scheduled. In the review, the HHS recommended that the drug be rescheduled to a Schedule III .

Marijuana being classified as a Schedule III drug means it would be classified alongside drugs including ketamine, testosterone, anabolic steroids and Tylenol with codeine, USA TODAY reports . These drugs have "moderate to low potential for physical and psychological dependence," according to the DEA.

The laws regarding Schedule III drugs in Tennessee vary as some drugs are legal with limitations and others are not. Therefore, it is hard to tell if the reclassification of marijuana to a lower schedule would sway Tennessee lawmakers to legalize the drug in any way.

Is marijuana legal in Tennessee?

There is no short answer to the question of whether marijuana is legal in Tennessee for a couple of reasons. Part of the confusion can stem from the various terms − cannabis, marijuana and weed − that might seem interchangeable but are not, at least not as Tennessee defines them.  Hemp  just adds to the confusion.

The defining difference between hemp and marijuana is their psychoactive component: tetrahydrocannabinol, or THC. Hemp has 0.3% or less THC, meaning hemp-derived products don’t contain enough THC to create the “high” traditionally associated with marijuana.

Tennessee has legalized the cultivation of hemp  and defined hemp as cannabis sativa containing less than 0.3% THC. Cannabis sativa containing greater than 0.3% THC, which is defined by Tennessee as marijuana, is still illegal.

While marijuana is not legal, in Tennessee you can buy products containing CBD, or cannabidiol, an active ingredient in cannabis that is derived from the hemp plant but does not cause a high and is not addictive.

Is marijuana a dangerous drug?

Marijuana has been hard to study because of its classification. However, the move to reschedule the drug is largely due to the lower public health risks, federal scientists have said. The rescheduling of marijuana to a Schedule III drug would allow for further studies to be done.

In a leaked HHS document , officials wrote to the DEA in support of rescheduling the drug. Marijuana's risk for addiction is similar to that of tobacco and has relatively mild withdrawal symptoms compared to alcohol. According to the National Institute on Drug Abuse , or NIDA, there are no known deaths from a marijuana overdose.

Despite the less intense symptoms, the drug does affect physical and mental health. According to NIDA, it can cause permanent IQ loss for people who begin using it at a young age. Long-term use has been associated with temporary paranoia and hallucinations. Marijuana can exacerbate symptoms with disorders like schizophrenia.

NIDA found that marijuana smoke has a similar health impacts to tobacco smoke. People who smoke marijuana frequently develop issues with breathing similar to those of tobacco smokers.

Respiratory issues include daily cough, phlegm and a higher risk of lung infections, however, the American Heart Association said it’s unclear if marijuana causes a greater risk of lung cancer. 

Health benefits of marijuana

The cannabis plant has been used for medicinal purposes for centuries, if not millennia. It appears to help with  treating pain , insomnia, anxiety, and glaucoma, among other health conditions. Still, evidence is mixed and more research into its health benefits is needed, researchers at  Johns Hopkins Bloomberg School of Public Health  said in August.

While cannabis is not approved for any medical use by the FDA, several drugs containing cannabinoids, or substances such as THC or CBD, have been approved according to the National Institutes of Health .

USA TODAY and Tennessee Connect reporter Liz Kellar contributed to this report

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Biden administration plans to reclassify marijuana, easing restrictions nationwide

WASHINGTON — The Biden administration will take a historic step toward easing federal restrictions on cannabis, with plans to announce an interim rule soon reclassifying the drug for the first time since the Controlled Substances Act was enacted more than 50 years ago, four sources with knowledge of the decision said.

The Drug Enforcement Administration is expected to approve an opinion by the Department of Health and Human Services that marijuana should be reclassified from the strictest Schedule I to the less stringent Schedule III. It would be the first time that the U.S. government has acknowledged its potential medical benefits and begun studying them in earnest.

Attorney General Merrick Garland submitted the rescheduling proposal to the White House Office of Management and Budget on Tuesday afternoon, a source familiar with the situation confirmed.

Any reclassification is still months from going into effect. After the proposal is published in the Federal Register, there will be a 60-day public comment period. The proposal will then be reviewed by an administrative law judge, who could decide to hold a hearing before the rule is approved.

What rescheduling means

Since 1971, marijuana has been in the same category as heroin, methamphetamines and LSD. Each substance under the Schedule I classification is defined as a drug with no accepted medical use and a high potential for abuse. Schedule III substances include Tylenol with codeine, steroids and testosterone.

By rescheduling cannabis, the drug would be studied and researched to identify concrete medical benefits, opening the door for pharmaceutical companies to get involved with the sale and distribution of medical marijuana in states where it is legal.

For the $34 billion cannabis industry, the move would also eliminate significant tax burdens for businesses in states where the drug is legal, notably getting rid of the IRS' code Section 280E, which prohibits legal cannabis companies from deducting what would otherwise be ordinary business expenses.

The Justice Department’s rescheduling decision could also help shrink the black market, which has thrived despite legalization in states like New York and California and has undercut legal markets, which are fiercely regulated and highly taxed.

Years in the making

President Joe Biden directed the Department of Health and Human Services in October 2022 to review marijuana’s classification. Federal scientists concluded that there is credible evidence that cannabis provides medical benefits and that it poses lower health risks than other controlled substances.

Biden even made history in his State of the Union address this year, for the first time referring to marijuana from the dais in the House chamber and making note of the federal review process. “No one should be jailed for using or possessing marijuana,” he said.

When Biden was vice president in the Obama administration, the White House opposed any legalization of marijuana, saying it would “pose significant health and safety risks to all Americans.”

Jim Cole, who was deputy attorney general in the Obama administration, wrote the famous Cole Memo in 2013 , paving the way for the modern marijuana market. The memo scaled back federal intervention in states that had legalized marijuana as long as they implemented “strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of marijuana.”

Cole, who is now a member of the National Cannabis Roundtable, said in an interview this week that reclassifying marijuana to Schedule III would “open up the ability to actually test it and put it in a laboratory without all of the restrictive measures” of a Schedule I drug.

Kevin Sabet, president and CEO of Smart Approaches to Marijuana and a former Obama administration adviser, said the decision to reclassify marijuana is "the result of a politicized process," arguing that it "will be devastating for America’s kids, who will be bombarded with attractive advertising and promotion of kid-friendly pot products."

"The only winner here is the marijuana industry, who will receive a new tax break and thus widen their profit margins," Sabet said. “Reclassifying marijuana as a Schedule III drug sends the message that marijuana is less addictive and dangerous now than ever before. In reality, today’s highly potent, super strength marijuana is more addictive and linked with psychosis and other mental illnesses, IQ loss and other problems.”

Researchers have raised concerns about high-potency marijuana and cannabis-induced psychiatric disorders, particularly among young men.

Some challenges ahead

Once the DEA formally makes its announcement, the marijuana industry would see an immediate benefit. But with the DEA’s proposed rule change comes a public review period that could lead to a challenge, and perhaps even a change, to the rescheduling proposal.

Once the public comment period has concluded and the Office of Management and Budget reviews the decision, Congress would also be able to overturn the rule under the Congressional Review Act, which gives it the power to weigh in on rules issued by federal agencies. Democrats control the Senate with a 51-seat majority, and for an overturn under the CRA to succeed, two-thirds of the House and the Senate would be needed to support it, meaning the marijuana rescheduling would most likely survive.

Though cannabis remains a divisive topic on Capitol Hill, there has been growing support on a bipartisan basis for marijuana reforms, largely driven by the electorate. Nearly 6 in 10 Americans say marijuana should be legal for medical and recreational purposes, according to a Pew Research poll last month. Cannabis is legal in 24 states for recreational use.

Congress is considering its own bills

Congress is considering its own measures that would make it easier for legal marijuana businesses to thrive and allow for more small and minority-owned shops to flood the marketplace.

The SAFER Banking Act , for example, which would grant legal marijuana businesses access to traditional banking and financial services, could pass both chambers by the end of the year.

Lawmakers are also considering the HOPE Act , another bipartisan bill that would provide states and local governments with resources to automatically expunge criminal records for petty, nonviolent cannabis offenses.

There is also a Democratic-only effort to remove cannabis entirely from the Controlled Substances Act, empowering states to create their own cannabis laws and prioritize restorative and economic justice for those affected by the “war on drugs.”

Senate Majority Leader Chuck Schumer, D-N.Y., praised the administration for its move, saying it amounts to "finally recognizing that restrictive and draconian cannabis laws need to change to catch up to what science and the majority of Americans have said loud and clear."

At the same time, he said he is "strongly committed" to moving forward with both the SAFER Banking Act and the Democratic bill to remove cannabis from the Controlled Substances Act entirely. “Congress must do everything we can to end the federal prohibition on cannabis and address longstanding harms caused by the War on Drugs," he said in a statement.

Sen. Cory Booker, D-N.J., also praised the administration’s move but cautioned that “we still have a long way to go.”

Booker called on Congress in a statement to "follow the lead of states around the country and legalize cannabis for adult-use and create a comprehensive taxation and regulatory scheme."

“Thousands of people remain in prisons around the country for marijuana-related crimes. Thousands of people continue to bear the devastating collateral consequences that come with a criminal record,” he said. “Legal marijuana businesses, especially those in communities hardest hit by the War on Drugs, still have to navigate a convoluted patchwork of state laws and regulatory schemes. I hope that my colleagues on both sides of the aisle, especially those who represent constituents benefitting from medical or adult-use programs, join me to pass federal legislation to fix these problems.”

But there is weariness among lawmakers who remember the last time Congress made law surrounding the drug.

The Republican-led Senate legalized hemp production in the 2018 farm bill, a decision that led to synthetic and exotic cannabinoids’ being sold over the counter, often without regulation, particularly in states where marijuana isn’t legal.

It’s a gray area that has drawn pushback from both sides of the aisle, most recently with the rise of Delta-8 , a synthetic tetrahydrocannabinol product that uses chemicals — some of them harmful — to convert hemp-derived CBD into Delta-8 THC.

Julie Tsirkin is a correspondent covering Capitol Hill.

Monica Alba is a White House correspondent for NBC News.

What does federal cannabis rescheduling mean for New Mexico?

ALBUQUERQUE, N.M.  (KRQE) – At the federal level, the rules around cannabis could soon be changing. So, what does that mean for New Mexico?

The Associated Press recently broke the news that the U.S. Drug Enforcement Agency could reclassify cannabis at the federal level. For years, marijuana has been listed as a “Schedule I” drug at the federal level, meaning there is no approved medical use for the drug. But that could change.

“The feds are now saying it’s not what they call ‘Schedule I,’ meaning they’re not treating it like heroin, for example, anymore. They’re going to treat it like a ‘Schedule III,’ which is something you would get for pain management, for example,” says Pat Davis, the president of Weeds, a New Mexico cannabis consulting firm.

“What it means, long term, is that it’s opening the door for the federal government and the FDA [Food and Drug Administration] to start doing research on legitimate medical uses for cannabis and creating cannabis-based products,” Davis adds.

Ben Lewinger, Executive Director of the New Mexico Cannabis Chamber of Commerce, had mix reaction to the news.

“It finally gives cannabis the validation that it is a substance that has a medical benefit and it’s a substance that doesn’t have a high risk of abuse which is what schedule one drugs are,” he said. “I think it doesn’t go far enough…it’s out of alignment with what most Americans want. They want acananbis to be regulated mores imilar to alcohol or tobacco.”

He also has some concerns about cannabis joining the ranks of pharmaceuticals.

“I think that there’s going to be a lot of new…fees, a lot of new costs, associated with DEA and FDA regulating cannabis from federal perspective that could counteract any potential savings from 280-E.”

New Mexico already has a medical cannabis program. And Davis says the federal rule change likely won’t affect how the state runs its program. Davis said it could create big opportunities for New Mexico cannabis businesses to get involved in the pharmaceutical market.

New Mexico’s cannabis program “was built looking ahead for when this might happen,” Davis explains. “And some of our companies in New Mexico are making some innovative products that might look very attractive to big pharma.”

The rule change would essentially remove a massive roadblock that has prevented large pharmaceutical companies from getting involved in cannabis-based drug research. So, the rule change could boost business opportunities for New Mexico growers and producers that have the know-how to expand into the medical field.

“It creates a route, suddenly, to normalize and move cannabis potentially between different states . . . and when Governor Lujan Grisham helped us set up New Mexico’s legal cannabis program here, she asked legislators to include provisions that allow us to have interstate commerce with other states if the feds ever changed the rules,” Davis says. “It means that New Mexico companies could start working with California or Texas companies in the federally regulated marketplace.”

“It opens up New Mexico’s billion-dollar cannabis industry to the rest of the nation and vice versa,” Davis says. “Long term, some New Mexicans are going to make a lot of money figuring out how to navigate a new federal system.”

The changes won’t happen overnight. Davis expects the federal government will take public input before changing rules. But after those changes do go into effect and pharmaceutical companies develop cannabis-based medicine, accessing that cannabis-based medicine might be as simple as getting a prescription drug.

Eventually, the eased classification could bring more cannabis-based drugs to the market, ones tested and approved by federal regulators. But that availability is still “years down the road,” Davis says.

And under the latest rule change, marijuana would still be illegal as a recreational drug, at least at the federal level. “In New Mexico, you can buy your cannabis and smoke it here in-state, and I don’t think that’s going to change much,” Davis says. “If you go through a [federal] checkpoint, the federal government is still going to take your cannabis if you bought it in Las Cruces and you’re taking it to Albuquerque.”

For the latest news, weather, sports, and streaming video, head to KRQE NEWS 13 - Breaking News, Albuquerque News, New Mexico News, Weather, and Videos.

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US to reclassify marijuana as a less dangerous drug: What does this mean?

The US drug enforcement administration is considering reclassifying marijuana as a less dangerous drug. The proposal aims to recognise the medical uses of cannabis, but wouldn’t legalise it for recreational use’ read more

In a historic shift to generations of American drug policy, the US drug enforcement administration (DEA) is moving toward reclassifying marijuana as a less dangerous drug.

The proposal would recognise the medical uses of cannabis, but wouldn’t legalise it for recreational use. The move acknowledges its medical applications and lower potential for abuse.

Currently, marijuana is classified as a “Schedule I” drug, alongside heroin and LSD. However, the DEA is expected to approve an opinion by the US department of health and human services that would reclassify marijuana from the strictest Schedule I to the less stringent Schedule III.

What has changed for the US?

Technically, nothing yet. The proposal must be reviewed by the White House office of management and budget and then undergo a public-comment period and review from an administrative judge, a potentially lengthy process.

Still, the switch is considered “paradigm-shifting, and it’s very exciting,” Vince Sliwoski, a Portland, Oregon-based cannabis and psychedelics attorney who runs well-known legal blogs on those topics, told The Associated Press when the federal health and human services department (HHS) recommended the change. “I can’t emphasise enough how big of news it is.”

The move came after US president Joe Biden asked both HHS and the attorney general, who oversees the DEA, last year to review how marijuana was classified. Schedule I put it on par, legally, with heroin, LSD, quaaludes and ecstasy, among others.

Biden, a Democrat, supports legalising medical marijuana for use “where appropriate, consistent with medical and scientific evidence,” White House press secretary Karine Jean-Pierre said Thursday. “That is why it is important for this independent review to go through.”

Will recreational cannabis be legalised across the US?

No. Schedule III drugs — which include ketamine, anabolic steroids and some acetaminophen-codeine combinations — are still controlled substances.

They’re subject to various rules that allow for some medical uses and for federal criminal prosecution of anyone who traffics in the drugs without permission.

No changes are expected to the medical marijuana programmes now licenced in 38 states or the legal recreational cannabis markets in 23 states but it’s unlikely they would meet the federal production, record-keeping, prescribing and other requirements for Schedule III drugs.

There haven’t been many federal prosecutions for simply possessing marijuana in recent years, even under marijuana’s current Schedule I status, but the reclassification wouldn’t have an immediate impact on people already in the criminal justice system.

“Put simple, this move from Schedule I to Schedule III is not getting people out of jail,” said David Culver, senior vice president of public affairs at the US Cannabis Council.

But rescheduling in itself would have some impact, particularly on research and marijuana business taxes.

What would this mean for research?

Because marijuana is on Schedule I, it’s been very difficult to conduct authorised clinical studies that involve administering the drug. That has created something of a Catch-22: calls for more research, but barriers to doing it. (Scientists sometimes rely instead on people’s own reports of their marijuana use.)

Schedule III drugs are easier to study, though the reclassification wouldn’t immediately reverse all barriers to study, Culver said.

What about taxes and banking?

Under the federal tax code, businesses involved in “trafficking” in marijuana or any other Schedule I or II drug can’t deduct rent, payroll or various other expenses that other businesses can write off. (Yes, at least some cannabis businesses, particularly state-licenced ones, do pay taxes to the federal government, despite its prohibition on marijuana.) Industry groups say the tax rate often ends up at 70 per cent or more.

The deduction rule doesn’t apply to Schedule III drugs, so the proposed change would cut cannabis companies’ taxes substantially.

They say it would treat them like other industries and help them compete against illegal competitors that are frustrating licensees and officials in places such as New York.

“You’re going to make these state-legal programmes stronger,” says Adam Goers, an executive at medical and recreational cannabis giant Columbia Care. He co-chairs a coalition of corporate and other players that’s pushing for rescheduling.

It could also mean more cannabis promotion and advertising if those costs could be deducted, according to Beau Kilmer, co-director of the RAND Drug Policy Centre.

Rescheduling wouldn’t directly affect another marijuana business problem: difficulty accessing banks, particularly for loans, because the federally regulated institutions are wary of the drug’s legal status. The industry has been looking instead to a measure called the SAFE Banking Act. It has repeatedly passed the House but stalled in the Senate.

What do critics have to say?

Indeed, there are, including the national anti-legalisation group Smart Approaches to Marijuana. President Kevin Sabet, a former Obama administration drug policy official, said the HHS recommendation “flies in the face of science, reeks of politics” and gives a regrettable nod to an industry “desperately looking for legitimacy.”

Some legalisation advocates say rescheduling weed is too incremental. They want to keep the focus on removing it completely from the controlled substances list, which doesn’t include such items as alcohol or tobacco (they’re regulated, but that’s not the same).

Paul Armentano, the deputy director of the National Organisation for the Reform of Marijuana Laws, said that simply reclassifying marijuana would be “perpetuating the existing divide between state and federal marijuana policies.” Minority Cannabis Business Association president Kaliko Castille said rescheduling just “re-brands prohibition,” rather than giving an all-clear to state licencees and putting a definitive close to decades of arrests that disproportionately pulled in people of colour.

“Schedule III is going to leave it in this kind of amorphous, mucky middle where people are not going to understand the danger of it still being federally illegal,” he said.

With inputs from AP

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Medicare Assignment: Everything You Need to Know

Medicare assignment.

• Providers Accepting Assignment
• Providers Who Do Not
• Billing Options
• Assignment of Benefits
• How to Choose

Frequently Asked Questions

Medicare assignment is an agreement between Medicare and medical providers (doctors, hospitals, medical equipment suppliers, etc.) in which the provider agrees to accept Medicare’s fee schedule as payment in full when Medicare patients are treated.

This article will explain how Medicare assignment works, and what you need to know in order to ensure that you won’t receive unexpected bills.

fizkes / Getty Images

There are 35 million Americans who have Original Medicare. Medicare is a federal program and most medical providers throughout the country accept assignment with Medicare. As a result, these enrollees have a lot more options for medical providers than most of the rest of the population.

They can see any provider who accepts assignment, anywhere in the country. They can be assured that they will only have to pay their expected Medicare cost-sharing (deductible and coinsurance, some or all of which may be paid by a Medigap plan , Medicaid, or supplemental coverage provided by an employer or former employer).

It’s important to note here that the rules are different for the 29 million Americans who have Medicare Advantage plans. These beneficiaries cannot simply use any medical provider who accepts Medicare assignment.

Instead, each Medicare Advantage plan has its own network of providers —much like the health insurance plans that many Americans are accustomed to obtaining from employers or purchasing in the exchange/marketplace .

A provider who accepts assignment with Medicare may or may not be in-network with some or all of the Medicare Advantage plans that offer coverage in a given area. Some Medicare Advantage plans— health maintenance organizations (HMOs) , in particular—will only cover an enrollee’s claims if they use providers who are in the plan's network.

Other Medicare Advantage plans— preferred provider organizations (PPOs) , in particular—will cover out-of-network care but the enrollee will pay more than they would have paid had they seen an in-network provider.

Original Medicare

The bottom line is that Medicare assignment only determines provider accessibility and costs for people who have Original Medicare. People with Medicare Advantage need to understand their own plan’s provider network and coverage rules.

When discussing Medicare assignment and access to providers in this article, keep in mind that it is referring to people who have Original Medicare.

How to Make Sure Your Provider Accepts Assignment

Most doctors, hospitals, and other medical providers in the United States do accept Medicare assignment.

Provider Participation Stats

According to the Centers for Medicare and Medicaid Services, 98% of providers participate in Medicare, which means they accept assignment.

You can ask the provider directly about their participation with Medicare. But Medicare also has a tool that you can use to find participating doctors, hospitals, home health care services, and other providers.

There’s a filter on that tool labeled “Medicare-approved payment.” If you turn on that filter, you will only see providers who accept Medicare assignment. Under each provider’s information, it will say “Charges the Medicare-approved amount (so you pay less out-of-pocket).”

What If Your Provider Doesn’t Accept Assignment?

If your medical provider or equipment supplier doesn’t accept assignment, it means they haven’t agreed to accept Medicare’s approved amounts as payment in full for all of the services.

These providers can still choose to accept assignment on a case-by-case basis. But because they haven’t agreed to accept Medicare assignment for all services, they are considered nonparticipating providers.

Note that "nonparticipating" does not mean that a provider has opted out of Medicare altogether. Medicare will still pay claims for services received from a nonparticipating provider (i.e., one who does not accept Medicare assignment), whereas Medicare does not cover any of the cost of services obtained from a provider who has officially opted out of Medicare.

If a Medicare beneficiary uses a provider who has opted out of Medicare, that person will pay the provider directly and Medicare will not be involved in any way.

Physicians Who Have Opted Out

Only about 1% of all non-pediatric physicians have opted out of Medicare.

For providers who have not opted out of Medicare but who also don’t accept assignment, Medicare will still pay nearly as much as it would have paid if you had used a provider who accepts assignment. Here’s how it works:

• Medicare will pay the provider 95% of the amount they would pay if the provider accepted assignment.
• The provider can charge the person receiving care more than the Medicare-approved amount, but only up to 15% more (some states limit this further). This extra amount, which the patient has to pay out-of-pocket, is known as the limiting charge . But the 15% cap does not apply to medical equipment suppliers; if they do not accept assignment with Medicare, there is no limit on how much they can charge the person receiving care. This is why it’s particularly important to make sure that the supplier accepts Medicare assignment if you need medical equipment.
• The nonparticipating provider may require the person receiving care to pay the entire bill up front and seek reimbursement from Medicare (using Form CMS 1490-S ). Alternatively, they may submit a claim to Medicare on behalf of the person receiving care (using Form CMS-1500 ).
• A nonparticipating provider can choose to accept assignment on a case-by-case basis. They can indicate this on Form CMS-1500 in box 27. The vast majority of nonparticipating providers who bill Medicare choose to accept assignment for the claim being billed.
• Nonparticipating providers do not have to bill your Medigap plan on your behalf.

Billing Options for Providers Who Accept Medicare

When a medical provider accepts assignment with Medicare, part of the agreement is that they will submit bills to Medicare on behalf of the person receiving care. So if you only see providers who accept assignment, you will never need to submit your own bills to Medicare for reimbursement.

If you have a Medigap plan that supplements your Original Medicare coverage, you should present the Medigap coverage information to the provider at the time of service. Medicare will forward the claim information to your Medigap insurer, reducing administrative work on your part.

Depending on the Medigap plan you have, the services that you receive, and the amount you’ve already spent in out-of-pocket costs, the Medigap plan may pay some or all of the out-of-pocket costs that you would otherwise have after Medicare pays its share.

(Note that if you have a type of Medigap plan called Medicare SELECT, you will have to stay within the plan’s network of providers in order to receive benefits. But this is not the case with other Medigap plans.)

After the claim is processed, you’ll be able to see details in your MyMedicare.gov account . Medicare will also send you a Medicare Summary Notice. This is Medicare’s version of an explanation of benefits (EOB) , which is sent out every three months.

If you have a Medigap plan, it should also send you an EOB or something similar, explaining the claim and whether the policy paid any part of it.

What Is Medicare Assignment of Benefits?

For Medicare beneficiaries, assignment of benefits means that the person receiving care agrees to allow a nonparticipating provider to bill Medicare directly (as opposed to having the person receiving care pay the bill up front and seek reimbursement from Medicare). Assignment of benefits is authorized by the person receiving care in Box 13 of Form CMS-1500 .

If the person receiving care refuses to assign benefits, Medicare can only reimburse the person receiving care instead of paying the nonparticipating provider directly.

Things to Consider Before Choosing a Provider

If you’re enrolled in Original Medicare, you have a wide range of options in terms of the providers you can use—far more than most other Americans. In most cases, your preferred doctor and other medical providers will accept assignment with Medicare, keeping your out-of-pocket costs lower than they would otherwise be, and reducing administrative hassle.

There may be circumstances, however, when the best option is a nonparticipating provider or even a provider who has opted out of Medicare altogether. If you choose one of these options, be sure you discuss the details with the provider before proceeding with the treatment.

You’ll want to understand how much is going to be billed and whether the provider will bill Medicare on your behalf if you agree to assign benefits (note that this is not possible if the provider has opted out of Medicare).

If you have supplemental coverage, you’ll also want to check with that plan to see whether it will still pick up some of the cost and, if so, how much you should expect to pay out of your own pocket.

A medical provider who accepts Medicare assignment is considered a participating provider. These providers have agreed to accept Medicare’s fee schedule as payment in full for services they provide to Medicare beneficiaries. Most doctors, hospitals, and other medical providers do accept Medicare assignment.

Nonparticipating providers are those who have not signed an agreement with Medicare to accept Medicare’s rates as payment in full. However, they can agree to accept assignment on a case-by-case basis, as long as they haven’t opted out of Medicare altogether. If they do not accept assignment, they can bill the patient up to 15% more than the Medicare-approved rate.

Providers who opt out of Medicare cannot bill Medicare and Medicare will not pay them or reimburse beneficiaries for their services. But there is no limit on how much they can bill for their services.

A Word From Verywell

It’s in your best interest to choose a provider who accepts Medicare assignment. This will keep your costs as low as possible, streamline the billing and claims process, and ensure that your Medigap plan picks up its share of the costs.

If you feel like you need help navigating the provider options or seeking care from a provider who doesn’t accept assignment, the Medicare State Health Insurance Assistance Program (SHIP) in your state may be able to help.

A doctor who does not accept Medicare assignment has not agreed to accept Medicare’s fee schedule as payment in full for their services. These doctors are considered nonparticipating with Medicare and can bill Medicare beneficiaries up to 15% more than the Medicare-approved amount.

They also have the option to accept assignment (i.e., accept Medicare’s rate as payment in full) on a case-by-case basis.

There are certain circumstances in which a provider is required by law to accept assignment. This includes situations in which the person receiving care has both Medicare and Medicaid. And it also applies to certain medical services, including lab tests, ambulance services, and drugs that are covered under Medicare Part B (as opposed to Part D).

In 2021, 98% of American physicians had participation agreements with Medicare, leaving only about 2% who did not accept assignment (either as a nonparticipating provider, or a provider who had opted out of Medicare altogether).

Accepting assignment is something that the medical provider does, whereas assignment of benefits is something that the patient (the Medicare beneficiary) does. To accept assignment means that the medical provider has agreed to accept Medicare’s approved fee as payment in full for services they provide.

Assignment of benefits means that the person receiving care agrees to allow a medical provider to bill Medicare directly, as opposed to having the person receiving care pay the provider and then seek reimbursement from Medicare.

Centers for Medicare and Medicaid Services. Medicare monthly enrollment .

Centers for Medicare and Medicaid Services. Annual Medicare participation announcement .

Centers for Medicare and Medicaid Services. Lower costs with assignment .

Centers for Medicare and Medicaid Services. Find providers who have opted out of Medicare .

Kaiser Family Foundation. How many physicians have opted-out of the Medicare program ?

Center for Medicare Advocacy. Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) updates .

Centers for Medicare and Medicaid Services. Check the status of a claim .

Centers for Medicare and Medicaid Services. Medicare claims processing manual. Chapter 26 - completing and processing form CMS-1500 data set .

Centers for Medicare and Medicaid Services. Ambulance fee schedule .

Centers for Medicare and Medicaid Services. Prescription drugs (outpatient) .

By Louise Norris Norris is a licensed health insurance agent, book author, and freelance writer. She graduated magna cum laude from Colorado State University.

(404) 738-5471

Ultimate Checklist for Understanding Contract Assignment Rules

• February 28, 2024
• Moton Legal Group

In contracts, understanding assignment is key. Simply put, an assignment in contract law is when one party (the assignor) transfers their rights and responsibilities under a contract to another party (the assignee). This can include anything from leasing agreements to business operations. But why is this important? It’s because it allows for flexibility in business and personal dealings, a critical component in our world.

Here’s a quick rundown: – Contract Basics: The foundational agreements between parties. – Assignment Importance: Allowing the transfer of obligations and benefits to keep up with life’s changes.

Contracts are a staple in both personal and business worlds, acting as the backbone to many transactions and agreements encountered daily. Understanding the nuances, like assignments, can empower you to navigate these waters with confidence and ease. Whether you’re a business owner in the Southeast looking to expand or an individual managing personal agreements, grasp these basics, and you’re on the right path.

Understanding Contract Assignment

Contract Assignment sounds complicated, right? But, let’s break it down into simple terms. In contracts and legal agreements, knowing about assignment can save you a lot of headaches down the road. Whether you’re a business owner, a landlord, or just someone who deals with contracts, this is for you.

Legal Definition

At its core, contract assignment is about transferring rights or obligations under a contract from one party to another. Think of it as passing a baton in a relay race. The original party (the assignor) hands off their responsibilities or benefits to someone else (the assignee). But, there’s a twist – the race keeps going with the new runner without starting over.

Contract Law

In contract law, assignment comes into play in various ways. For example, if you’re a freelancer and you’ve agreed to complete a project but suddenly find yourself overbooked, you might assign that contract to another freelancer. This way, the job gets done, and your client is happy. However, not all contracts can be freely assigned. Some require the other party’s consent, and others can’t be assigned at all, especially if they involve personal skills or confidential trust.

Property Law

When it comes to property law, assignment often surfaces in landlord-tenant relationships. Say you’re renting a shop for your business, but you decide to move. If your lease allows it, you might assign your lease to another business. This means they take over your lease, stepping into your shoes, with all the rights and obligations that come with it.

The concept might seem straightforward, but there are important legal requirements and potential pitfalls to be aware of. For instance, an assignment could be prohibited by the contract itself, or it may significantly change the original deal’s terms in a way that’s not allowed. Plus, when you’re dealing with something that requires a unique skill set, like an artist or a consultant, those services typically can’t be passed on to someone else without agreement from all parties involved.

To navigate these complexities, understanding the fundamentals of assignment in contract law and property law is crucial. It ensures that when you’re ready to pass that baton, you’re doing it in a way that’s legal, effective, and doesn’t leave you tripping up before you reach the finish line.

The goal here is to make sure everyone involved understands what’s happening and agrees to it. That way, assignments can be a useful tool to manage your contracts and property agreements, keeping things moving smoothly even when changes come up.

For more detailed exploration on this topic, consider checking the comprehensive guide on Assignment (law)). This resource dives deeper into the nuances of contract assignment, offering insights and examples that can help clarify this complex area of law.

By grasping these basics, you’re well on your way to mastering the art of contract assignment. Whether you’re dealing with leases, business deals, or any agreement in between, knowing how to effectively assign a contract can be a game-changer.

Key Differences Between Assignment and Novation

When diving into contracts, two terms that often cause confusion are assignment and novation . While both deal with transferring obligations and rights under a contract, they are fundamentally different in several key aspects. Understanding these differences is crucial for anyone involved in contract management or negotiation.

Rights Transfer

Assignment involves the transfer of benefits or rights from one party (the assignor) to another (the assignee). However, it’s important to note that only the benefits of the contract can be assigned, not the burdens. For instance, if someone has the right to receive payments under a contract, they can assign this right to someone else.

Novation , on the other hand, is more comprehensive. It involves transferring both the rights and obligations under a contract from one party to a new party. With novation, the original party is completely released from the contract, and a new contractual relationship is formed between the remaining and the new party. This is a key distinction because, in novation, all parties must agree to this new arrangement.

Obligations Transfer

Assignment doesn’t transfer the original party’s obligations under the contract. The assignor (the original party who had the rights under the contract) might still be liable if the assignee fails to fulfill the contract terms.

In contrast, novation transfers all obligations to the new party. Once a novation is complete, the new party takes over all rights and obligations, leaving the original party with no further legal liabilities or rights under the contract.

Written Agreement

While assignments can sometimes be informal or even verbal, novation almost always requires a written agreement. This is because novation affects more parties’ rights and obligations and has a more significant impact on the contractual relationship. A written agreement ensures that all parties are clear about the terms of the novation and their respective responsibilities.

In practice, the need for a written agreement in novation serves as a protection for all parties involved. It ensures that the transfer of obligations is clearly documented and legally enforceable.

For example, let’s say Alex agrees to paint Bailey’s house for $1,000. Later, Alex decides they can’t complete the job and wants Chris to take over. If Bailey agrees, they can sign a novation agreement where Chris agrees to paint the house under the same conditions. Alex is then relieved from the original contract, and Chris becomes responsible for completing the painting job.

Understanding the difference between assignment and novation is critical for anyone dealing with contracts. While both processes allow for the transfer of rights or obligations, they do so in different ways and with varying implications for all parties involved. Knowing when and how to use each can help ensure that your contractual relationships are managed effectively and legally sound.

For further in-depth information and real-life case examples on assignment in contract law, you can explore detailed resources such as Assignment (law) on Wikipedia).

Next, we’ll delve into the legal requirements for a valid assignment, touching on express prohibition, material change, future rights, and the rare skill requirement. Understanding these will further equip you to navigate the complexities of contract assignments successfully.

Legal Requirements for a Valid Assignment

When dealing with assignment in contract law , it’s crucial to understand the legal backbone that supports a valid assignment. This ensures that the assignment stands up in a court of law if disputes arise. Let’s break down the must-know legal requirements: express prohibition, material change, future rights, and rare skill requirement.

Express Prohibition

The first stop on our checklist is to look for an express prohibition against assignment in the contract. This is a clause that outright states assignments are not allowed without the other party’s consent. If such language exists and you proceed with an assignment, you could be breaching the contract. Always read the fine print or have a legal expert review the contract for you.

Material Change

Next up is the material change requirement. The law states that an assignment cannot significantly alter the duties, increase the burdens, or impair the chances of the other party receiving due performance under the contract. For instance, if the contract involves personal services tailored to the specific party, assigning it to someone else might change the expected outcome, making such an assignment invalid.

Future Rights

Another important aspect is future rights . The rule here is straightforward: you can’t assign what you don’t have. This means that a promise to assign rights you may acquire in the future is generally not enforceable at present. An effective assignment requires that the rights exist at the time of the assignment.

Rare Skill Requirement

Lastly, let’s talk about the rare skill requirement . Some contracts are so specialized that they cannot be assigned to another party without compromising the contract’s integrity. This is often the case with contracts that rely on an individual’s unique skills or trust. Think of an artist commissioned for a portrait or a lawyer hired for their specialized legal expertise. In these scenarios, assignments are not feasible as they could severely impact the contract’s intended outcome.

Understanding these legal requirements is pivotal for navigating the complexities of assignment in contract law. By ensuring compliance with these principles, you can effectively manage contract assignments, safeguarding your interests and those of the other contracting party.

For anyone looking to delve deeper into the intricacies of contract law, you can explore detailed resources such as Assignment (law) on Wikipedia).

Moving forward, we’ll explore the common types of contract assignments, from landlord-tenant agreements to business contracts and intellectual property transfers. This will give you a clearer picture of how assignments work across different legal landscapes.

Common Types of Contract Assignments

When we dive into assignment in contract law , we find it touches nearly every aspect of our business and personal lives. Let’s simplify this complex topic by looking at some of the most common types of contract assignments you might encounter.

Landlord-Tenant Agreements

Imagine you’re renting a fantastic apartment but have to move because of a new job. Instead of breaking your lease, you can assign your lease to someone else. This means the new tenant takes over your lease, including rent payments and maintenance responsibilities. However, it’s crucial that the landlord agrees to this switch. If done right, it’s a win-win for everyone involved.

Business Contracts

In the business world, contract assignments are a daily occurrence. For example, if a company agrees to provide services but then realizes it’s overbooked, it can assign the contract to another company that can fulfill the obligations. This way, the project is completed on time, and the client remains happy. It’s a common practice that ensures flexibility and efficiency in business operations.

Intellectual Property

Intellectual property (IP) assignments are fascinating and complex. If an inventor creates a new product, they can assign their patent rights to a company in exchange for a lump sum or royalties. This transfer allows the company to produce and sell the invention, while the inventor benefits financially. However, it’s critical to note that with trademarks, the goodwill associated with the mark must also be transferred to maintain its value.

Understanding these types of assignments helps clarify the vast landscape of contract law. Whether it’s a cozy apartment, a crucial business deal, or a groundbreaking invention, assignments play a pivotal role in ensuring these transitions happen smoothly.

As we navigate through the realm of contract assignments, each type has its own set of rules and best practices. The key is to ensure all parties are on the same page and that the assignment is executed properly to avoid any legal pitfalls.

Diving deeper into the subject, next, we will explore how to execute a contract assignment effectively, ensuring all legal requirements are met and the process runs as smoothly as possible.

How to Execute a Contract Assignment Effectively

Executing a contract assignment effectively is crucial to ensure that all legal requirements are met and the process runs smoothly. Here’s a straightforward guide to help you navigate this process without any hiccups.

Written Consent

First and foremost, get written consent . This might seem like a no-brainer, but it’s surprising how often this step is overlooked. If the original contract requires the consent of the other party for an assignment to be valid, make sure you have this in black and white. Not just a handshake or a verbal agreement. This ensures clarity and avoids any ambiguity or disputes down the line.

Notice of Assignment

Next up, provide a notice of assignment to all relevant parties. This is not just common courtesy; it’s often a legal requirement. It informs all parties involved about the change in the assignment of rights or obligations under the contract. Think of it as updating your address with the post office; everyone needs to know where to send the mail now.

Privity of Estate

Understanding privity of estate is key in real estate transactions and leases. It refers to the legal relationship that exists between parties under a contract. When you assign a contract, the assignee steps into your shoes, but the original terms of the contract still apply. This means the assignee needs to be aware of and comply with the original agreement’s requirements.

Secondary Liability

Lastly, let’s talk about secondary liability . Just because you’ve assigned a contract doesn’t always mean you’re off the hook. In some cases, the original party (the assignor) may still hold some liability if the assignee fails to perform under the contract. It’s essential to understand the terms of your assignment agreement and whether it includes a release from liability for the assignor.

Executing a contract assignment effectively is all about dotting the I’s and crossing the T’s . By following these steps—securing written consent, issuing a notice of assignment, understanding privity of estate, and clarifying secondary liability—you’re setting yourself up for a seamless transition.

The goal is to ensure all parties are fully informed and agreeable to the changes being made. This not only helps in maintaining good relationships but also in avoiding potential legal issues down the line.

We’ll dive into some of the frequently asked questions about contract assignment to clear any lingering doubts.

Frequently Asked Questions about Contract Assignment

When navigating contracts, questions often arise, particularly about the concepts of assignment and novation. Let’s break these down into simpler terms.

What does assignment of a contract mean?

In the realm of assignment in contract law , think of assignment as passing the baton in a relay race. It’s where one party (the assignor) transfers their rights and benefits under a contract to another party (the assignee). However, unlike a relay race, the original party might still be on the hook for obligations unless the contract says otherwise. It’s like handing off the baton but still running alongside the new runner just in case.

Is an assignment legally binding?

Absolutely, an assignment is as binding as a pinky promise in the playground – but with legal muscle behind it. Once an assignment meets the necessary legal criteria (like not significantly changing the obligor’s duties or having express consent if required), it’s set in stone. This means both the assignee and the assignor must honor this transfer of rights or face potential legal actions. It’s a serious commitment, not just a casual exchange.

What is the difference between assignment and novation?

Now, this is where it gets a bit more intricate. If assignment is passing the baton, novation is forming a new team mid-race. It involves replacing an old obligation with a new one or adding a new party to take over an old one’s duties. Crucially, novation extinguishes the old contract and requires all original and new parties to agree. It’s a clean slate – the original party walks away, and the new party steps in, no strings attached.

While both assignment and novation change the playing field of a contract, novation requires a unanimous thumbs up from everyone involved, completely freeing the original party from their obligations. On the other hand, an assignment might leave the original party watching from the sidelines, ready to jump back in if needed.

Understanding these facets of assignment in contract law is crucial, whether you’re diving into a new agreement or navigating an existing one. Knowledge is power – especially when it comes to contracts.

As we wrap up these FAQs, the legal world of contracts is vast and sometimes complex, but breaking it down into bite-sized pieces can help demystify the process and empower you in your legal undertakings.

Here’s a helpful resource for further reading on the difference between assignment and cession.

Now, let’s continue on to the conclusion to tie all these insights together.

Navigating assignment in contract law can seem like a daunting task at first glance. However, with the right information and guidance, it becomes an invaluable tool in ensuring that your rights and obligations are protected and effectively managed in any contractual relationship.

At Moton Legal Group, we understand the intricacies of contract law and are dedicated to providing you with the expertise and support you need to navigate these waters. Whether you’re dealing with a straightforward contract assignment or facing more complex legal challenges, our team is here to help. We pride ourselves on our ability to demystify legal processes and make them accessible to everyone.

The key to successfully managing any contract assignment lies in understanding your rights, the obligations involved, and the potential impacts on all parties. It’s about ensuring that the assignment is executed in a way that is legally sound and aligns with your interests.

If you’re in need of assistance with a contract review, looking to understand more about how contract assignments work, or simply seeking legal advice on your contractual rights and responsibilities, Moton Legal Group is here for you. Our team of experienced attorneys is committed to providing the clarity, insight, and support you need to navigate the complexities of contract law with confidence.

For more information on how we can assist you with your contract review and other legal needs, visit our contract review service page .

In the constantly evolving landscape of contract law, having a trusted legal partner can make all the difference. Let Moton Legal Group be your guide, ensuring that your contractual dealings are handled with the utmost care, professionalism, and expertise. Together, we can navigate the complexities of contract law and secure the best possible outcomes for your legal matters.

Thank you for joining us on this journey through the fundamentals of assignment in contract law. We hope you found this information helpful and feel more empowered to handle your contractual affairs with confidence.

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Assignment of Contract (What It Is And How It Works: Best Overview)

Looking for Assignment of Contract ?

What is the assignment of a contract in simple terms?

How does it work?

In this article, I will break down the meaning of contract assignment so you know all there is to know about it!

Keep reading as I have gathered exactly the information that you need!

Let me explain to you what assignment of contract means and why it matters!

Are you ready?

Let’s get started!

Table of Contents

What Is Assignment of Contract

The assignment of contract refers to instances where one party to a contract transfers its rights and obligations to another party.

In other words, one contracting party exits the contract and another party steps in the exiting party’s shoes.

For instance, Mary and Joe are parties to a contract.

Joe assigns his rights and obligations under the contract to Tim.

The original contract now continues between Mary and Tim where Joe has stepped out.

The party assigning the contract is called the “assignor” and the third party stepping in to the assignor’s shoes is the “assignee”.

Be sure to keep reading as I will explain to you how the assignment works and it’s important that you know more about the assignor’s liability when assigning the contract.

Assignment Under Contract Law

Under contract law , the assignment of a contract is considered to include the assignment of rights and the delegation of the party’s duties to another.

This means that the assignor’s rights are passed on to the assignee.

In addition to that, the assignor’s duties under the contract are also assigned to the assignee.

Assignment Under Property Law

In property law, the assignment of contract generally takes place between landlords and tenants.

Typically, a person (the tenant) will sign a lease with another party (the landlord) to rent an apartment or premises.

If the tenant wishes to leave the premise without breaching the terms of the contract, an assignment may be an option.

In that case, the tenant will assign its rights and duties under the lease agreement to another party (a new tenant).

How Assignment of Contract Works

To better understand the assignment of contract, let’s look more closely at how it works.

Contract Assignment Clause

One of the first things you should consider when contemplating an assignment of a contract is to find the contract assignment clause in your contract.

In most commercial contracts, the parties will include an assignment clause governing the possible assignment by the parties.

Some contracts will authorize the assignment, others will limit assignment to specific situations, while some contracts entirely prohibit assignments.

Be sure to read the contract assignment to see how your contract regulates assignments.

Consent To Assignment of Contract

In most cases, a contracting party looking to assign the contract to another party will need to get the consent of the other contracting party.

If the staying party consents to the assignment, the assignor can proceed with the assignment of the agreement to a third party (or assignee).

However, if the staying party does not consent to the assignment, then the other party must remain in the contract and observe its contractual obligations.

Assignor’s Liability

Assigning a contract does not necessarily mean that the assignor will be released of all liability under the contract.

Depending on the assignment clause language, the assignor may have the right to assign the contract but continue to remain liable under the contract.

In the event the assignor may continue to remain liable under the contract, it’s important that an assignment agreement be signed where the staying party releases and discharges the assignor of future contract liability .

Assignment Enforceability

Under the assignment law, when a contract is assigned as per the terms of the contract, the assignment will be legally enforceable.

However, assignment contracts are not enforceable if the contract prohibits the assignment, the assignment agreement is not materially consistent with the obligations under the original contract, or the assignment violates public policy or the law in some way.

In addition, a contract cannot be assigned if the assignor is not formally in a contract.

There are also instances where the contract requires that a party with special skills or unique characteristics render the services or perform the obligations, and an assignment would not work.

Keep reading as I will now give you an example of contract assignment so you can see how it works in practice.

Contract Assignment Process

The actual contract assignment process is fairly straightforward for most contracts.

Contract Assignment Steps

Here are the steps you’ll need to take to assign a contract:

• See if the contract has an assignment clause
• Make sure that the assignment clause authorizes assignments 
• If the assignment is authorized, follow the assignment logistic provided in the contract 
• If the assignment is prohibited, you may want to speak to the other contracting party to see if you could get consent to assign the contract

In some cases, all you may need to do is to give notice of assignment to provide the details of the assignment if the contract allows for an assignment this way.

In other cases, you may want to have an assignment agreement signed by the staying party, the exiting party, and the third party detailing the terms and conditions of the assignment.

Assignment Agreement Content

When a contract assignment agreement is needed, you should make sure that you include all the right information for the assignment to be valid and enforceable.

In most cases, the assignment of the contract is simple where you may find an assignment of contract form online to complete.

For simple assignment contracts, here is the content that you should expect:

• Identification of the parties (original contract parties and assignee)
• Contract assignment effective date
• Original contracting party’s consent to the assignment
• Assignee’s acceptance of the assignment 
• Assignor’s release and discharge of obligations going forward 
• Governing law 
• Signature block for the three parties 

Alternatives To Assignment Contracts

What are the alternatives to a contract assignment?

Here are the main alternatives to a contract assignment:

• Novation 

Licensing refers to situations when a party authorizes another party to use a property or asset (whether tangible or intangible).

Delegation is when someone authorizes another to act on its behalf under a contract.

Novation is when a new party takes on a contracting party’s rights and obligations where the existing party’s rights are relinquished and all liability under the original contract wiped out.

Assignment of Contract vs Delegation of Contract

What is the difference between the assignment of a contract and the delegation of a contract?

The “assignment” of contract refers to a situation where one contracting party “transfers” the contract to a third party.

Once the assignment is completed, the assignor will no longer be in a contract with the other contracting party and the assignee will take the assignor’s place.

For example, Party A and Party B are part of a service contract.

Party B assigns the contract to Party C.

Going forward, the contract will be between Party A and Party C.

On the other hand, a delegation is when a party to a contract subcontracts parts of a contract to another party.

The party delegating the contract to another remains a contracting party and will remain responsible for the contract even though the obligations were delegated to another.

For example, a general contractor may delegate the plumbing work in a project to a plumber.

Although the general contractor has delegated part of the project to a subcontractor, it remains a contracting party and will remain responsible for the overall project.

Assignment of Contract Example

Let’s look at a few examples of when a contract may be assigned to another.

Assignment of Contract In Bankruptcy

You have entered into a contract with a company providing you with phone services.

The company goes bankrupt.

In the context of the bankruptcy, another phone company buys out a portion of the bankrupt’s book of business and your contract is in the pool of assets purchased.

The bankruptcy trustee assigns your contract from the bankrupt phone company to the new phone company.

Assignment of Contract In Real Estate

In real estate, some investors engage in assignment transactions where they do not actually buy the property but enter into a purchase contract that it then assigns to another.

In essence, the real estate investor enters into a real estate purchase agreement defining the terms and conditions relating to the purchase of a property.

Following the executing of the real estate purchase agreement and prior to the “closing” of the transaction, it assigns the contract to another party in an attempt to make a profit without ever actually owning the property.

Assignment of Contract In Corporate Restructuring

In the corporate world, companies tend to restructure their operations to ensure they are legally and operationally optimized.

In the context of a corporate restructuring transaction, a company may assign a contract to another entity within its group, a subsidiary, or an affiliate.

Assignment of Agreement Takeaways 

So there you have it folks!

What Does Assignment of Contract Mean

“Assignment of contract” is a legal term used to refer to situations where a party to an existing contract transfers its contractual obligations to another party.

Following the assignment , the assignee becomes responsible to execute the contractual obligations in favor of the party staying in the original contract.

If you are looking to assign a contract, you may want to consult with a qualified contract attorney who can assess your rights and obligations.

Keep in mind that a simple assignment of a contract does not necessarily mean that the assignor is released from liability under the original contract.

Now that you know what is an assignment of contract, how it works, and what it entails, good luck with your transaction!

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If you enjoyed this article on what is an assignment contract, I recommend you look into the following terms and concepts. Enjoy!

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Understanding Writing Assignments

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How to Decipher the Paper Assignment

Many instructors write their assignment prompts differently. By following a few steps, you can better understand the requirements for the assignment. The best way, as always, is to ask the instructor about anything confusing.

• Read the prompt the entire way through once. This gives you an overall view of what is going on.
• Underline or circle the portions that you absolutely must know. This information may include due date, research (source) requirements, page length, and format (MLA, APA, CMS).
• Underline or circle important phrases. You should know your instructor at least a little by now - what phrases do they use in class? Does he repeatedly say a specific word? If these are in the prompt, you know the instructor wants you to use them in the assignment.
• Think about how you will address the prompt. The prompt contains clues on how to write the assignment. Your instructor will often describe the ideas they want discussed either in questions, in bullet points, or in the text of the prompt. Think about each of these sentences and number them so that you can write a paragraph or section of your essay on that portion if necessary.
• Rank ideas in descending order, from most important to least important. Instructors may include more questions or talking points than you can cover in your assignment, so rank them in the order you think is more important. One area of the prompt may be more interesting to you than another.
• Ask your instructor questions if you have any.

After you are finished with these steps, ask yourself the following:

• What is the purpose of this assignment? Is my purpose to provide information without forming an argument, to construct an argument based on research, or analyze a poem and discuss its imagery?
• Who is my audience? Is my instructor my only audience? Who else might read this? Will it be posted online? What are my readers' needs and expectations?
• What resources do I need to begin work? Do I need to conduct literature (hermeneutic or historical) research, or do I need to review important literature on the topic and then conduct empirical research, such as a survey or an observation? How many sources are required?
• Who - beyond my instructor - can I contact to help me if I have questions? Do you have a writing lab or student service center that offers tutorials in writing?

(Notes on prompts made in blue )

Poster or Song Analysis: Poster or Song? Poster!

Goals : To systematically consider the rhetorical choices made in either a poster or a song. She says that all the time.

Things to Consider: ah- talking points

• how the poster addresses its audience and is affected by context I'll do this first - 1.
• general layout, use of color, contours of light and shade, etc.
• use of contrast, alignment, repetition, and proximity C.A.R.P. They say that, too. I'll do this third - 3.
• the point of view the viewer is invited to take, poses of figures in the poster, etc. any text that may be present
• possible cultural ramifications or social issues that have bearing I'll cover this second - 2.
• ethical implications
• how the poster affects us emotionally, or what mood it evokes
• the poster's implicit argument and its effectiveness said that was important in class, so I'll discuss this last - 4.
• how the song addresses its audience
• lyrics: how they rhyme, repeat, what they say
• use of music, tempo, different instruments
• possible cultural ramifications or social issues that have bearing
• emotional effects
• the implicit argument and its effectiveness

These thinking points are not a step-by-step guideline on how to write your paper; instead, they are various means through which you can approach the subject. I do expect to see at least a few of them addressed, and there are other aspects that may be pertinent to your choice that have not been included in these lists. You will want to find a central idea and base your argument around that. Additionally, you must include a copy of the poster or song that you are working with. Really important!

I will be your audience. This is a formal paper, and you should use academic conventions throughout.

Length: 4 pages Format: Typed, double-spaced, 10-12 point Times New Roman, 1 inch margins I need to remember the format stuff. I messed this up last time =(

Academic Argument Essay

5-7 pages, Times New Roman 12 pt. font, 1 inch margins.

Minimum of five cited sources: 3 must be from academic journals or books

• Design Plan due: Thurs. 10/19
• Rough Draft due: Monday 10/30
• Final Draft due: Thurs. 11/9

Remember this! I missed the deadline last time

The design plan is simply a statement of purpose, as described on pages 40-41 of the book, and an outline. The outline may be formal, as we discussed in class, or a printout of an Open Mind project. It must be a minimum of 1 page typed information, plus 1 page outline.

This project is an expansion of your opinion editorial. While you should avoid repeating any of your exact phrases from Project 2, you may reuse some of the same ideas. Your topic should be similar. You must use research to support your position, and you must also demonstrate a fairly thorough knowledge of any opposing position(s). 2 things to do - my position and the opposite.

Your essay should begin with an introduction that encapsulates your topic and indicates 1 the general trajectory of your argument. You need to have a discernable thesis that appears early in your paper. Your conclusion should restate the thesis in different words, 2 and then draw some additional meaningful analysis out of the developments of your argument. Think of this as a "so what" factor. What are some implications for the future, relating to your topic? What does all this (what you have argued) mean for society, or for the section of it to which your argument pertains? A good conclusion moves outside the topic in the paper and deals with a larger issue.

You should spend at least one paragraph acknowledging and describing the opposing position in a manner that is respectful and honestly representative of the opposition’s 3 views. The counterargument does not need to occur in a certain area, but generally begins or ends your argument. Asserting and attempting to prove each aspect of your argument’s structure should comprise the majority of your paper. Ask yourself what your argument assumes and what must be proven in order to validate your claims. Then go step-by-step, paragraph-by-paragraph, addressing each facet of your position. Most important part!

Finally, pay attention to readability . Just because this is a research paper does not mean that it has to be boring. Use examples and allow your opinion to show through word choice and tone. Proofread before you turn in the paper. Your audience is generally the academic community and specifically me, as a representative of that community. Ok, They want this to be easy to read, to contain examples I find, and they want it to be grammatically correct. I can visit the tutoring center if I get stuck, or I can email the OWL Email Tutors short questions if I have any more problems.

Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

Get your assignment of agreement

by   Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...

Read more...

Updated on: November 24, 2023 · 3 min read

The assignment and assumption agreement

The basics of assignment and assumption, filling in the assignment and assumption agreement.

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

• The initial contract must provide for the possibility of assignment by one of the initial contracting parties.
• The assignor must agree to assign their rights and duties under the contract to the assignee.
• The assignee must agree to accept, or "assume," those contractual rights and duties.
• The other party to the initial contract must consent to the transfer of rights and obligations to the assignee.

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

• First, carefully read and understand the assignment and assumption provision in the initial contract. Contracts vary widely in their language on this topic, and each contract will have specific criteria that must be met in order for a valid assignment of rights to take place.
• All parties to the agreement should carefully review the document to make sure they each know what they're agreeing to, and to help ensure that all important terms and conditions have been addressed in the agreement.
• Until the agreement is signed by all the parties involved, the assignor will still be obligated for all responsibilities stated in the initial contract. If you are the assignor, you need to ensure that you continue with business as usual until the assignment and assumption agreement has been properly executed.

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

• Identification of the existing agreement, including details such as the date it was signed and the parties involved, and the parties' rights to assign under this initial agreement
• The effective date of the assignment and assumption agreement
• Identification of the party making the assignment (the assignor), and a statement of their desire to assign their rights under the initial contract
• Identification of the third party accepting the assignment (the assignee), and a statement of their acceptance of the assignment
• Identification of the other initial party to the contract, and a statement of their consent to the assignment and assumption agreement
• A section stating that the initial contract is continued; meaning, that, other than the change to the parties involved, all terms and conditions in the original contract stay the same

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

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Assignment Definition

Investing Strategy , Jargon, Legal, Terminology, Title

Table of Contents

• What Is an Assignment?
• What is an Assignment in Real Estate?
• What Does it Mean to Assign a Contract in Real Estate?
• How Does a Contract Assignment Work?
• Pros and Cons of Assigning Contracts

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

An assignment or assignment of contract is a way to profit from a real estate transaction without becoming the owner of the property.

The assignment method is a standard tool in a real estate wholesaler’s kit and lowers the barrier to entry for a real estate investor because it does not require the wholesaler to use much (or any) of their own money to profit from a deal.

Contract assignment is a common wholesaling strategy where the seller and the wholesaler (acting as a middleman in this case) sign an agreement giving the wholesaler the sole right to buy a property at a specified price, within a certain period of time.

The wholesaler then finds another buyer and assigns the contract to him or her. The wholesaler isn’t selling the property to the end buyer because the wholesaler never takes title to the property during the process. The wholesaler is simply selling the contract, which gives the end buyer the right to buy the property in accordance with the original purchase agreement.

In doing this, the wholesaler can earn an assignment fee for putting the deal together.

Some states require a real estate wholesaler to be a licensed real estate agent, and the assignment strategy can’t be used for HUD homes and REOs.

The process for assigning a contract follows some common steps. In summary, it looks like this:

• Find the right property.
• Get a purchase agreement signed.
• Find an end buyer.
• Assign the contract.
• Close the transaction and collect your assignment fee.

We describe each step in the process below.

1. Find the Right Property

This is where the heavy lifting happens—investors use many different marketing tactics to find leads and identify properties that work with their investing strategy. Typically, for wholesaling to work, a wholesaler needs a motivated seller who wants to unload the property as soon as possible. That sense of urgency works to the wholesaler’s advantage in negotiating a price that will attract buyers and cover their assignment fee.

RELATED: What is “Driving for Dollars” and How Does It Work?

2. Get a Purchase Agreement Signed

Once a motivated seller has agreed to sell their property at a discounted price, they will sign a purchase agreement with the wholesaler. The purchase agreement needs to contain specific, clear language that allows the wholesaler (for example, you) to assign their rights in the agreement to a third party.

Note that most standard purchase agreements do not include this language by default. If you plan to assign this contract, make sure this language is included. You can consult an attorney to cover the correct verbiage in a way that the seller understands it.

RELATED: Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts

This can’t be stressed enough: It’s extremely important for a wholesaler to communicate with their seller about their intent to assign the contract. Many sellers are not familiar with the assignment process, so if the role of the buyer is going to change along the way, the seller needs to be aware of this on or before they sign the original purchase agreement.

3. Find an End Buyer

This is the other half of a wholesaler’s job—marketing to find buyers. Once they find an end buyer, the wholesaler can assign the contract to the new party and work with the original seller and the end buyer to schedule a closing date.

4. Assign the Contract

Assigning the contract works through a simple assignment agreement. This agreement allows the end buyer to step into the wholesaler’s shoes as the buyer in the original contract.

In other words, this document “replaces” the wholesaler with the new end buyer.

Most assignment contracts include language for a nonrefundable deposit from the end buyer, which protects the wholesaler if the buyer backs out. While you can download assignment contract templates online, most experts recommend having an attorney review your contracts. The assignment wording has to be precise and comply with applicable local laws to protect you from issues down the road.

5. Close the Transaction and Collect the Assignment Fee

Finally, you will receive your assignment fee (or wholesale fee) when the end buyer closes the deal.

The assignment fee is often the difference between the original purchase price (the price that the seller agreed with the wholesaler) and the end buyer’s purchase price (the price the wholesaler agreed with the end buyer), but it can also be a percentage of it or even a flat amount.

According to UpCounsel, most contract assignments are done for about $5,000, although depending on the property and the market, it could be higher or lower.

IMPORTANT: the end buyer will see precisely how much the assignment fee is. This is because they must sign two documents that show the original price and the assignment fee: the closing statement and the assignment agreement, respectively, to close the transaction.

In many cases, if the assignment fee is a reasonable amount relative to the purchase price, most buyers won’t take any issue with the wholesaler taking their fee—after all, the wholesaler made the deal happen, and it’s compensation for their efforts. However, if the assignment fee is too big (such as the wholesaler taking $20,000 from an original purchase price of $10,000, while the end buyer buys it for $50,000), it may ruffle some feathers and lead to uncomfortable questions.

In these instances where the wholesaler has a substantially higher profit margin, a wholesaler can instead do a double closing . In a double closing, the wholesaler closes two separate deals (one with the seller and another with the buyer) on the same day, but the seller and buyer cannot see the numbers and overall profit margin the wholesaler makes between the two transactions. This makes a double closing a much safer way to conclude a transaction.

Assigning contracts is a way to lower the barrier to entry for many new real estate investors; because they don’t need to put up their own money to buy a property or assume any risk in financing a deal.

The wholesaler isn’t part of the title chain, which streamlines the process and avoids the hassle of closing two times. Compared to the double-close strategy, assignment contracts require less paperwork and are usually less costly (because there is only one closing occurring, rather than two separate transactions).

On the downside, the wholesaler has to sell the property as-is, because they don’t own it at any point and they cannot make repairs or renovations to make the property look more attractive to a potential buyer. Financing may be much more difficult for the end buyer because many mortgage lenders won’t work with assigned contracts. Purchase Agreements also have expiration dates, which means the wholesaler has a limited window of time to find an end buyer and get the deal done.

Being successful with assignment contracts usually comes down to excellent marketing, networking, and communication between all parties involved. It’s all about developing strategies to find the right properties and having a solid network of investors you can assign them to quickly.

It’s also critical to be aware of any applicable laws in the jurisdiction where the wholesaler is working and holding any licenses required for these kinds of real estate transactions.

Related terms

Double closing, wholesaling (real estate wholesaling), transactional funding.

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