A marijuana reschedule refers to the proposed re-scheduling of marijuana (cannabis) from a Schedule I controlled substance to a Schedule III controlled substance by the federal government.

This is seen by many as the first step in easing federal cannabis regulations to bring them more in line with the states that have decriminalized the substance and legalized adult recreational use of the drug—a move that has been highly anticipated for years.

What are the current federal marijuana laws?

Currently, the Drug Enforcement Agency (or the DEA, which is part of the Department of Justice or DOJ) classifies cannabis as a Schedule I drug, along with the likes of heroin, lysergic acid diethylamide (LSD), and 3,4-methylenedioxymethamphetamine (ecstasy).

Under the Controlled Substances Act, there are five controlled substance schedules in the U.S. These classifications are made based on a drug’s potential for abuse, whether the drug has accepted medical use, and its perceived safety.

Schedule I drugs are considered by the federal government to have no accepted medical use and a high potential for abuse. 

Even though the majority of states have active medical cannabis programs and many of the states have legalized adult-use cannabis, with many others decriminalizing it, a charge of possession, cultivation or distribution of the substance at the federal level can lead to harsh penalties, including prison time.

For instance, a first-offense marijuana possession charge (any amount) in federal court is currently prosecuted as a Class A misdemeanor that carries a penalty of up to one year in jail 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. 

These penalties seem greatly out-of-step with state cannabis laws, leading to gathering momentum behind a marijuana reschedule and federal recognition of the potential therapeutic and medical benefits of cannabis.

It should be noted that, despite the harsh federal penalties associated with cannabis, recent presidential administrations have not prioritized the prosecution of state-legal medical or recreational cannabis activities.

What stage are we at with a marijuana reschedule?

On May 21, 2024, the DOJ published a notice of proposed rulemaking (NPRM) to reschedule cannabis from a Schedule I controlled substance to Schedule III.

The proposal applies only to substances derived from botanical cannabis, i.e., the Cannabis sativa L. plant. It does not apply to synthetically derived THC, which will remain in Schedule I. 

Schedule III controlled substances are classified as having a moderate to low risk of dependency.

This move by the DOJ followed a comprehensive review by the US Department of Health and Human Services (HHS) on the safety of cannabis. Further to that review, it was recommended that the DEA reschedule cannabis.

Stakeholders interested in submitting comments to the DOJ had to do so by July 22, 2024. Further, before moving ahead with a reschedule, the decision-makers must consider eight different factors under the Controlled Substances Act, as follows:

• 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 notice of proposed rulemaking from the DOJ concludes that marijuana has less potential for abuse than the drugs or other substances in Schedules I or II (e.g., fentanyl, hydrocodone) and marijuana has accepted medical use in treatment—a great step forward, indeed.

What are the potential consequences of a marijuana reschedule?

Importantly, the proposed rescheduling of marijuana does not legalize the substance federally. It simply reduces the consequences of being charged with manufacturing, possessing, dispensing or distributing it. Criminal charges can still apply.

Besides the criminal penalties associated with cannabis, the reschedule could also have wide-reaching consequences for the cannabis industry and cannabis businesses around the U.S., as well as the pharmaceutical and banking industries. 

The hope is also that the move by the DOJ will open the door to further cannabis research and development at the federal level. For instance, it could make it easier to access funding and grants previously unavailable to parties interested in cannabis research and development opportunities. Pharmaceutical companies could also submit new drug applications for cannabis-based products to demonstrate their safety, efficacy, and manufacturing quality to the FDA.

If cannabis is rescheduled, cannabis businesses may find that the prohibitive tax burdens they currently face are somewhat eased. These businesses may also have more funding and loan options available to them. Similarly, the banking industry may be positively impacted by reduced regulatory and legal risks associated with providing financial services to cannabis-based businesses.

What are the next steps for the proposed cannabis reschedule?

There’s no doubt that a federal reschedule would promote drug development with cannabis. It would also adjust the legal framework in which cannabis manufacturers and distributors operate—but it hasn’t happened yet.

We need to watch this space and be patient, as the road to “finalization” of federal law changes tends to be a long one.

After the thousands of stakeholder comments are reviewed, rulemaking must be conducted on the record after the opportunity for a hearing before an administrative law judge. Reservations may still exist with some stakeholders. So, the likelihood of the entire process being completed by the end of 2024 is remote—and, with a change in the White House imminent, who knows what direction this may yet take?

If you’re unsure about how the proposed new federal regulations may impact cannabis businesses in your state or your plans to open such a business, consult with a knowledgeable cannabis lawyer…

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