Executive Summary
In October 2022, President Joe Biden unveiled plans to reevaluate the federal classification of cannabis, aiming to address its restrictive treatment under federal law and the growing conflict between federal and state cannabis law. This move prompted evaluations by the Drug Enforcement Administration (DEA) and the U.S. Department of Health and Human Services (HHS) to potentially alter cannabis’s Schedule I status under the Controlled Substances Act (CSA).
Established in 1970, the CSA categorizes drugs into five schedules based on their potential for abuse, medical uses, and other criteria. Since the CSA’s enactment, cannabis has held a Schedule I designation, the most restrictive of the five categories, hindering medical research and creating conflicts between state and federal laws. In August 2023 the HHS completed its review and recommended that the DEA reclassify cannabis to Schedule III, a departure from previous opinions issued on the matter, marking a significant shift in federal policy.
This study explores the potential implications of moving cannabis to Schedule III, examining its impact on consumers, businesses, and local markets. Investigating the historical context surrounding cannabis’s Schedule I status, the mechanics of the rescheduling process, and the current HHS recommendation, the study also considers possible repercussions for other federally-controlled substances in light of changing perspectives on cannabis.
Should the DEA adopt the HHS recommendation, the cannabis industry and research community stand to gain immediate benefits, including potential relief for medical cannabis patients, reduced barriers to research, and a reduction in federal penalties for cannabis-related crimes. Specifically, the study addresses the financial relief this change might provide to state-authorized cannabis businesses through issues related to taxation and banking.
Alongside the potential benefits, this study also explores possible drawbacks of moving cannabis to Schedule III, such as the failure to fully address criminal penalties against cannabis users in compliance with state law. Moreover, the study considers the possibility that reclassification may stimulate regulatory interest in the medical cannabis market, possibly subjecting cannabis to greater oversight from the Food and Drug Administration (FDA).
Analyzing potential outcomes, the study delves into the intricate regulatory challenges associated with rescheduling, including the FDA’s role, potential pathways for approving state-licensed cannabis-derived medications, and the impact these different approaches may have on existing cannabis markets.
The study concludes that, while the optimal solution would be to remove cannabis from the list of controlled substances entirely, moving it to Schedule III presents both immediate and long-term advantages over its current Schedule I designation. However, challenges would persist were cannabis to remain federally controlled, perpetuating conflicts between state and federal law, and leaving consumers and markets vulnerable to regulatory uncertainty. In particular, an aggressive interpretation of the FDA’s regulatory scope following a shift to Schedule III could impose costs and barriers for existing state-licensed cannabis markets far in excess of the status quo. As federal authorities take this pivotal step, collaborative efforts among policymakers, researchers, and advocates are crucial to ensuring decisions align with evolving scientific understanding, social implications, and the needs of all stakeholders.
Full Brief: The Implications of Federal Cannabis Rescheduling