The feds are finally moving to reclassify marijuana as a (slightly) less dangerous drug. Advocates say this is the first step in changing federal cannabis laws, but there may be some bugs in the soup. Rescheduling weed could ultimately allow pharmaceutical companies to take over the industry and push out state operators.
Last year the U.S. Department of Health and Human Services (HHS), at the behest of the Biden administration, recommended that cannabis be reclassified as a Schedule III drug under the Controlled Substances Act (CSA). That recommendation was sent to the Drug Enforcement Administration (DEA), which has the final say on whether drugs can be rescheduled.
Under the CSA, substances designated Schedule III have the potential to be abused but also have some medical uses. Drugs in this category include Tylenol with codeine, ketamine, anabolic steroids and testosterone. Weed is currently designated Schedule I, meaning it’s considered a dangerous and addictive drug that has no accepted medical use. Other drugs in that category include heroin, PCP and crack.
Rescheduling cannabis would certainly ease a number of restrictions currently in place, and advocates are right to point out that it would be an overall win for the reform movement.
The most notable and immediate improvement would be in the area of federally-approved research. A law that was signed by President Joe Biden in 2022 gave cannabis researchers special exemptions from federal bans on studying Schedule I drugs, but getting federal approval for weed research is still much harder than it is for drugs in Schedule III. If it were rescheduled, scientists would immediately gain easier access to the drug for research purposes.
On the business side, industry players will finally be able to deduct business expenses from their taxes—a simple luxury that is taken for granted in most other industries, and one that could significantly save companies in taxes. Under IRS tax code 280E, businesses involved in the trade of Schedule I and II substances are specifically forbidden from deducting business expenses.
Meanwhile, investors are currently burning holes in their pockets, just waiting to throw money at marijuana businesses the moment the DEA announces weed’s new status.
But some advocates say that’s where the substantive changes for weed users and businesses end. Laws and penalties around the drug aren’t dependent on its scheduling status, and rescheduling won’t close the gap between state and federal policies.
Perhaps most alarmingly, the status change could allow Big Pharma to swoop in and snatch the rug out from under the current cannabis industry by creating cannabis-derived drugs that will lead to debilitating regulatory limitations for current industry players.
Naysayers will point out that a Congressional Research Service report published last month found that rescheduling weed alone wouldn’t be enough to give Big Pharma a chance to storm the gates.
As the think tank correctly notes, drugs in Schedule III can be prescribed by doctors, but only if they’ve been approved by the Food and Drug Administration (FDA). Since marijuana as a whole hasn’t been approved, pharmaceutical companies will still be unable to start opening weed pharmacies any time soon.
But the report fails to mention the case of Epidiolex, the FDA-approved CBD drug that has been holding the CBD industry hostage in a legal gray area for the better part of a decade. Epidiolex is used to treat extremely rare forms of seizures in children. At the time, its approval by the FDA was hailed as proof of the healing powers of CBD.
The 2018 Farm Bill legalized hemp and hemp-derived CBD and a whole new industry was born. The CBD craze was just hitting its stride when FDA Commissioner Scott Gottlieb made a statement advising the public that selling CBD is illegal.
Federal law prohibits companies from selling over-the-counter drugs containing the active ingredient of an FDA-approved pharmaceutical.
Since Epidiolex had already been approved, the FDA ultimately took a hands-off approach to the CBD market and has only gone after companies that make medical claims about their products. But at first, law enforcement were called to raid CBD stores and arrest elderly people for possessing contraband. It was only after public outcry that the feds decided to go easy on businesses.
The Congressional Research Service is correct that the Rohrabacher–Farr amendment protects state-compliant medical marijuana businesses from being molested by the Department of Justice and that rescheduling weed won’t have any immediate ramifications for legally operating recreational pot businesses. It’s also correct that pharmaceutical companies won’t be able to start opening dispensaries.
What it fails to address is what will happen when rescheduling makes it easier for Big Pharma to fund research into cannabis extraction and begins developing drugs based on specific cannabinoids as was done with Epidiolex. If that happens, cannabis companies will continue with no problems unless cannabis is legalized federally, at which point, all of those companies will be selling a product that’s illegal for over-the-counter sales.
Since all signs point to the DEA rescheduling weed any day now, and there isn’t any indication that Congress will be legalizing any time in the near future, pharmaceutical companies will have plenty of time to crank out cannabis-based drugs.
Rescheduling marijuana could make it even harder to legally consume weed without a prescription or sell weed outside of a pharmacy in the future. Access to the drug could potentially become more limited than it is now.
Cannabis advocates in the future may look back on this time as the final days of a golden era. Let’s hope not.