Federal Government To Reschedule Cannabis

Bloomberg News has obtained a letter from a Department of Health and Human Services (HHS) official recommending the US Drug Enforcement Administration (DEA) reclassify cannabis from a Schedule I to a Schedule III controlled substance under federal law. Yes, at least, the federal government to reschedule cannabis.

Finally Biden is delivering on a commitment he made during his campaign and early in his tenure, the administration has finally forward at a time when the conversation about marijuana has become mainstream.

Rescheduled to schedule III would be monumental for state-legal cannabis businesses.  Although rescheduling would not federally legalize the state-legal programs, it would eliminate the 280E tax burden that currently applies to such businesses. It could also expand research on—and access to—cannabis-based medicines.

This comes at a time with the cannabis industry is struggling from emerging from the black market and converting to a mainstream industry.  New York and California have significantly hampered the industry with the inept oversight including a boom for over 1,500 unlicensed dispensaries in NYC alone.

Marijuana use is at an all time high and younger people are drifting away from alcohol and moving to weed. Recently, three northeast states announced record sales. Massachusetts reached a record $157+ million last month. This was their third month with hefty growth. Maine retailers sold $20.8 million in cannabis in July, and tiny Rhode Island did $9.5 million. Consumer demand grows while oversight is lacking.

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Dated August 29th, the memo requests the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.

The HHS recommendation now goes to DEA, which will conduct its own scientific review. In the past, the DEA has employed its own five-factor test (which differs from HHS’ criteria) to determine whether or not cannabis ought to be rescheduled. The HHS recommendation now goes to DEA, which will conduct its own scientific review. In the past the agency has determined that cannabis failed to meet any of its five criteria. With 40 states having approved medical marijuana and most major medical universities doing some time of research involving cannabis it would be hard.

In general, Schedule III controlled substances, like anabolic steroids and weight loss supplements are FDA-approved drugs that are uniformly regulated by the federal government and are only legally available by prescription. This would mean medical marijuana would have stricter guidelines, which would make it easier for physicians to understand how it can used on a consistent base with correct dosages. The medical community would more comfortable with the FDA treating it similar to prescription drugs, aspirin, and other over the counter medications.

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Ultimately, an administrative law judge would consider the entire record and issue a decision, which is really a recommendation that the DEA Administrator considers for its Final Order, which can be challenged in court. There is a chance, however, that the DEA would issue the rule without the notice and comment period, relying on its authority to reschedule directly to comply with the Single Convention. Accordingly, rescheduling could take months or could be final within weeks.

Today was an early move in possible federal legalization.