In a recent decision, Carachuri-Rosendo v. Holder, No. 09-60, 560 U.S. ___, 2010 U.S. LEXIS 4764 (2010), the United State Supreme Court decided that a second simple possession conviction was not an aggravated felony under INA § 101(a)(43)(B). At issue in the case was whether a second or subsequent state conviction would automatically be deemed as an aggravated felony by virtue of hypothetical qualification as federal felony recidivist possession. The court indicated that it was proper to look at what was charged, as opposed to what might have been charged. As a result, a second simple possession conviction generally will not be deemed an aggravated felony, precluding application for cancellation of removal or other forms of relief, unless there is a clear showing of recidivism within the state prosecution.
The case resolved a split in the circuits which developed following the Supreme Court's 2006 ruling in Lopez v. Gonzales, 549 U.S. 47 (2006). In that case, the court held that simple possession convictions which are state felonies, but would not be punishable as felonies under federal law, are not aggravated felonies as defined by INA § 101(a)(43)(B).
You can find the full opinion here.