DEA to Reclassify Medical Cannabis to Schedule III

Earlier today, the AP confirmed through a number of close sources that the United States Drug Enforcement Administration (DEA) is planning to remove medical cannabis from the list of Schedule I drugs and reclassify it as a Schedule III drug. This landmark decision follows the advice given by the federal Health and Human Services Department (HHS) to reschedule cannabis, reflecting the plant’s medicinal benefits.

According to the AP, the DEA’s proposal, pending review by the White House Office of Management and Budget, acknowledges cannabis’ medical benefits and its lower potential for abuse compared to certain dangerous drugs.

Substances classified as Schedule I have a “high abuse potential with no accepted medical use; medications within this schedule may not be prescribed, dispensed or administered,” states the National Library of Medicine. Heroin, LSD, MDMA and cannabis currently fall under this categorization.

Among growing research and acceptance of cannabis’ medicinal benefits among healthcare practitioners, their patients and the greater public, the DEA is proposing that the substance be moved to the list of Schedule III drugs, which have less potential for abuse and are accepted for medical treatments. Other substances classified as Schedule III drugs include ketamine, testosterone and anabolic steroids. While this rescheduling of cannabis would mark a historic shift, it would not allow for adult-use cannabis on a federal level, which many in the industry believe falls short of true reform.

“Rescheduling of cannabis to Schedule III is an important first step in cannabis reform,” says Kim Rivers, CEO of Florida-based Trulieve. “By definition, rescheduling acknowledges the medical value of cannabis. Once finalized, rescheduling would immediately reduce the stigma associated with cannabis, open the door for more research, and allow legal operators to pay a normalized corporate tax rate,” Rivers said. “We believe rescheduling could ultimately lead to additional federal reform, representing the first major domino to fall and a meaningful step toward addressing the growing divide between federal and state laws. Trulieve will continue to advocate for cannabis reform and expansion of access to regulated cannabis products.”

California-based Autumn Brands has been eagerly awaiting the recent news that the US is on its way to relaxing restrictions on cannabis. “Ideally, we would prefer to see it de-scheduled,” says CFO and Partner Autumn Shelton. “However, reclassifying cannabis as a less dangerous drug means easier access for people to benefit from this natural plant’s healing, restorative, and stress-relieving effects. It also increases the ability to deeply study the plant and all of its benefits. As a cannabis business owner, this is a game changer if we are no longer plagued by 280e, which forces us to pay taxes on money we never made. We are grateful for all our fellow advocates, consumers and this administration for continuing our path toward normalcy and a future for cannabis that sheds its stigma as a criminal drug. The majority of Americans want safe access to cannabis, full legalization and the elimination of the harmful influence of the underground market.”

Advocates Say It’s Not Enough

Although rescheduling cannabis from Schedule I to Schedule III might attract public support, advocates argue that it merely scratches the surface of legalization and overlooks the damage caused by decades of prohibition. Nonetheless, such a move would grant state-legal cannabis enterprises access to federal tax deductions currently prohibited by IRS code 280E.

“The DEA’s reclassification of marijuana to Schedule III is historic, but it didn’t go far enough,” says cannabis attorney, author and advocate Rod Kight. “It’s too early to know how this rescheduling action will impact the marijuana industry, but we can assume that it will enough the federal government’s enforcement priorities over marijuana, provide much-needed relief from the negative tax implications of section 280E, and increase M&A activity. However, since it doesn’t legalize the activities of any currently licensed marijuana company (adult use or medical) but does legalize pharmaceutical marijuana, the DEA’s action will almost certainly usher in a new era in which the pharmaceutical industry gets heavily involved in the cannabis sector.”

The DEA’s proposed plan to reclassify medical cannabis comes after President Joe Biden issued two executive orders pardoning individuals convicted of certain nonviolent federal cannabis offenses and directed the Department of Health and Human Services (HHS) to assess cannabis’s potential reclassification within the federal controlled substances list. Although HHS recommended moving cannabis to a less restrictive category by late 2023, the final decision from the Department of Justice (DOJ) remains pending. Biden’s subsequent expansion of the pardon declaration in December aimed to provide relief to a broader population, estimated by Harris to be in the “tens of thousands.”

In March this year, Vice President Kamala Harris criticized the current federal classification of cannabis as “absurd” during a recent White House event, expressing her eagerness to await the Drug Enforcement Administration’s (DEA) decision on potential reclassification. 

The move to reclassify medical cannabis from Schedule I to Schedule III could provide a much-needed boost for Biden, a Democrat, especially among younger voters. A Gallup poll last autumn revealed that 70% of adults support legalization, marking the highest level ever recorded by the polling firm and a stark increase from the roughly 30% who endorsed it in 2000.