The great rescheduling

DEA’s shift on cannabis has big implications for business, criminal justice and science

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Alexis at the Cannabis Depot. Credit: David Harwi Photography

After more than 50 years of classification as a dangerous, highly addictive drug with no medical value, the U.S. federal government is changing its stance on cannabis. 

On April 30, Attorney General Merrick Garland circulated an official proposal to reclassify marijuana from a Schedule I substance to Schedule III under the Controlled Substances Act. The Drug Enforcement Agency (DEA) agreed to the recommendation.

Next, the White House Office of Management and Budget (OMB) will review the rule. If accepted, it goes to public comment before being adopted as law. 

When asked about the status of the Department of Justice’s proposed rule to reschedule cannabis, White House Press Secretary Karine Jean-Pierre said, “This is a commitment and a promise that [President Biden] made when he decided to run back in 2019.”

Technically, Biden campaigned in 2019 on the promise to legalize or decriminalize cannabis, not to reschedule it. But this is historic progress. 

In accepting the Department of Health and Human Services’ recommendation to reschedule cannabis, the DEA and federal government are, for the first time, officially recognizing the medical value of this plant. 

Schedule I substances — like cannabis, LSD, mescaline, heroin, ecstasy, bath salts, magic mushrooms, GHB and others — are classified as dangerous, having no known medical use and a high potential for abuse. They not only carry the heaviest criminal penalties but are severely restricted and controlled when it comes to scientific and pharmaceutical research. 

Schedule III drugs, by contrast, are described by the DEA as having a “moderate to low potential for physical and psychological dependence.” They have known medical uses and are not considered dangerous, unlike Schedule I and II drugs. Codeine, ketamine, anabolic steroids and testosterone are in this tier of controlled substances. Legally possessing them requires a prescription.

Rescheduling will make it possible for universities and private labs to dig into serious research on cannabis, its health effects and potential uses as a medicine. It will also open the doors for the pharmaceutical industry to start its own research and start making chemical analogs of THC, CBD, CBN or other cannabinoids that could be patented and sold over the counter — but it won’t happen overnight.

“It’s going to be really confusing for a long time,” Ziva Cooper, director of the University of California, Los Angeles Center for Cannabis and Cannabinoids, told PBS News Hour. “When the dust has settled, I don’t know how many years from now, research will be easier.”

According to a May 1 Congressional Research Service report, rescheduling could also affect criminal sentences for anyone incarcerated for a cannabis crime that hinged on its classification as a Schedule I substance. Any quantity-based mandatory minimums would likely remain unchanged. 

One of the biggest upsides may be for cannabis businesses themselves. A Schedule III trade or business falls outside of the purview of Section 280E of the Internal Revenue Code. That tax code section currently prevents cannabis businesses from making any federal tax deductions. Removing that restriction would finally allow cannabis companies to file taxes, giving them access to expense write-offs and other benefits that traditional businesses enjoy. 

At the May 1 press conference, Jean-Pierre said she could not confirm if the OMB had received the proposed rule change yet, but assured those watching that “the process continues.” 

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