There is a lot of “buzz” in the cannabis community about the DEA’s proposed rule to reschedule cannabis to a Schedule III drug.

Before we start doing cartwheels, we need to understand more about the proposal from the DEA/ DOJ and what a federal reschedule of the drug could mean for cannabis business owners, cannabis users, and other stakeholders.

The federal government is not about to “legalize” cannabis. So, let’s take a closer look at what the proposed reschedule could mean…

Current federal laws on cannabis

The Drug Enforcement Agency (DEA) is part of the Department of Justice (DOJ) and is responsible for enforcing federal drug laws across the U.S.

Where cannabis is concerned, these laws have created considerable confusion in recent times. State cannabis laws increasingly decriminalize and legalize medical and recreational cannabis, while the federal laws remain unchanged, classifying cannabis alongside heroin, LSD, and ecstasy as drugs with no accepted medical use and a high potential for abuse. 

These drugs are known as Schedule I drugs according to the five schedules set out under the Controlled Substances Act. Classifications are made based on a drug’s potential for abuse, whether the drug has accepted medical use, and its perceived safety.

To many states, the notion that cannabis has “no accepted medical use” seems particularly out-of-step with the medical research and anecdotal evidence going back thousands of years!

Yet, as we speak, cannabis is still classified as one of the most dangerous controlled substances in the country. Possessing, cultivating or distributing the substance can lead to harsh penalties, including prison time:

• A first-offense marijuana possession charge (any amount) is currently prosecuted as a Class A misdemeanor in a federal court—with a penalty of up to one year of incarceration and a fine of up to $1,000. 
• Selling any amount of cannabis under 5 kg is a felony that carries a penalty of up to five years’ incarceration and a fine of up to $250,000. 

When set alongside the cannabis laws in many of the states, these types of penalties seem outdated and draconian. Indeed, recent presidential administrations have decided not to prioritize the federal prosecution of state-legal cannabis activities.

Despite cannabis remaining listed as a Schedule I substance for so long, the increasing recognition of the therapeutic and medical benefits of cannabis cannot be ignored. The proposed cannabis rule change by the DEA is likely a reaction to this.

What does the proposed DEA rule change say?

The proposed DEA rule change will reschedule cannabis from a Schedule I controlled substance to Schedule III.

The DEA/DOJ published a notice of proposed rulemaking (NPRM) on May 21, 2024, following a comprehensive review and recommendation by the US Department of Health and Human Services (HHS) to reschedule cannabis based on its perceived safety.

The NPRM concludes that cannabis has less potential for abuse than other substances in Schedules I or II (which include fentanyl and hydrocodone) and has accepted medical use.

Importantly, the proposed rule change applies only to substances derived from botanical cannabis, i.e., the Cannabis sativa L. plant—not synthetically derived THC, which will remain in Schedule I. 

So, instead of cannabis being regarded as a substance with no accepted medical use and a high potential for abuse, it will be re-classified as having a moderate to low potential for physical and psychological dependence.

What are the likely consequences of a cannabis reschedule?

Unfortunately, despite all the “buzz”, the federal government is not about to simply “legalize” cannabis—and the process to reschedule it could take some time.

Many commentators believe that it could potentially pave the way for the eventual legalization of cannabis at the federal level. In the shorter term, it is likely to:

• Ease the tax burden for cannabis businesses, which are penalized by current federal cannabis laws.
• Open doors to funding from banks and other organizations that could not accept cannabis businesses. 
• Reduce the regulatory and legal risks for banks providing financial services to cannabis-based businesses.
• Reduce the consequences of being charged with manufacturing, possessing, dispensing or distributing it—though criminal charges will still apply if federal laws are contravened.
• Open the door to further cannabis research and development, with easier access to federal funding and grants previously off-limits to parties interested in cannabis research and development opportunities. 
• Aid pharmaceutical companies in developing new drugs for cannabis-based products for approval with the Food and Drug Administration (FDA).

What happens next with the proposed DEA cannabis rule change?

Stakeholders were invited to submit comments to the DOJ by July 22, 2024. These thousands of comments will first be reviewed. Then, any rulemaking must be conducted on the record after the opportunity for a hearing before an administrative law judge.

We should not expect the DEA rule change to proceed at any great pace, especially with an imminent change in the White House.

Before a reschedule of cannabis can be approved, the decision-makers must consider the following eight factors according to the Controlled Substances Act:

• The drug’s actual or relative potential for abuse
• Scientific evidence of its pharmacological effect, if known
• The state of current scientific knowledge regarding the drug or other substance
• Its history and current pattern of abuse
• The scope, duration, and significance of abuse
• What, if any, risk there is to the public health
• Its psychic or physiological dependence liability
• Whether the substance is an immediate precursor of a substance already controlled

The proposed federal reschedule would be a big step forward for the cannabis industry, adjusting the legal framework in which cannabis businesses operate—but it hasn’t happened yet.

We may need to be patient before the “finalization” of federal law changes can be confirmed.

For informed legal advice for cannabis businesses anywhere in the U.S., call 866-329-0729 for a consultation at Cannabis Law Solutions.