Could 2023 be the year that cannabis is removed from Schedule I of the Controlled Substances Act? A major action by the Biden administration hints that it’s a likely possibility. But is this for the best?

Department Of Health And Human Services Recommends Cannabis Move To Schedule III

On Tuesday, August 29th, the United States Department of Health and Human Services (HHS) formally recommended to the Department of Justice (DOJ) that cannabis be moved lower on the list of federally controlled substances, from Schedule I to Schedule III. Since 1970, cannabis has been listed as Schedule I, meaning that the federal government views it as a drug with “no currently accepted medical use,” on the same level as substances like heroin. Schedule III drugs are considered less dangerous than substances on Schedules I and II, and may be obtained by medical patients with prescriptions. Ketamine and Tylenol with codeine are among items listed on Schedule III.

HHS Assistant Secretary for Health Rachel Levine wrote the agency’s recommendation in a letter to Drug Enforcement Administration (DEA) chief Anne Milgram. In the letter, Levine cited the Food and Drug Administration’s (FDA) examination of eight different factors during an assessment of where cannabis might be placed, and that the analysis determined Schedule III as more appropriate than Schedule I. She further noted that the National Institute on Drug Abuse concurred with the FDA’s recommendation.

Biden's Directive To Department Of Health And Human Services Results In Call For Drug Enforcement Administration To Consider Rescheduling Cannabis

Green Market Report announced the news on Wednesday, August 30th, with additional information from an email sent to the publication by an HHS spokesperson (although the representative declined to share the actual letter to the DEA). According to the email, “Following the data and science, HHS has expeditiously responded to President Biden’s directive to HHS Secretary Becerra and provided its scheduling recommendation for marijuana to the DEA on August 29, 2023. This administrative process was completed in less than 11 months, reflecting this department’s collaboration and leadership to ensure that a comprehensive scientific evaluation be completed and shared expeditiously.”

As Green Market Report’s John Schroyer writes, “The ball is now in the DEA’s court, since the top narcotics enforcement agency in the nation must now conduct its own internal review and then make a recommendation to Attorney General Merrick Garland, who will be the final decisionmaker [sic] on whether marijuana gets rescheduled, de-scheduled or left on Schedule I.”

What Led The Biden Administration To Consider Rescheduling Cannabis?

Industry experts and political insiders have been predicting all year that the Biden administration would move toward rescheduling cannabis. When the President declared a pardon in October 2022 for several thousand people convicted of federal cannabis charges, his statement also included a directive to the HHS for an extensive review of whether the plant could be rescheduled or descheduled.

In June, several cannabis organizations came together to form the Coalition for Cannabis Scheduling Reform (CCSR). This group included some of the industry’s biggest brands and national advocates, such as Acreage Holdings, American Trade Association for Cannabis & Hemp (ATACH), Columbia Care, Cresco Labs, Curaleaf, Dutchie, Green Thumb Industries, Marijuana Policy Project, National Cannabis Roundtable, Scotts Miracle-Gro, U.S. Cannabis Council, Weldon Project, and Vicente LLP. The coalition was unified around the idea that rescheduling to Schedule III would nullify the impact of U.S. Tax Code 280E, which bars businesses connected to federally illegal substances from writing off many standard tax deductions. Address the 280E problem, the industry experts said, and cannabis businesses would be saved from financial devastation, granting the Fed a substantial amount of tax revenue in the process.

And indeed, the U.S. Cannabis Council praised the HHS’s decision to recommend Schedule III, commenting in a statement: “Rescheduling will have a broad range of benefits, including signaling to the criminal justice system that cannabis is a lower priority and providing a crucial economic lifeline to the cannabis industry by lifting the 280E tax burden. State licensed cannabis businesses of all shapes and sizes will benefit from this historic reform. We urge the DEA to proceed with rescheduling cannabis with all reasonable speed.”

What Happens If Cannabis Moves To Schedule III? Why We Shouldn't Celebrate Federal Legalization Yet

But nothing is that simple. Let’s look at the further implications of Schedule III, and the HHS’s recommendation.

Schedule III Will Not Free Any Cannabis Prisoners

To begin, the agency’s letter to the DEA is non-binding, meaning that the decision will rest with the Department of Justice as to where cannabis finally falls on or off the Controlled Substances Act. Even if the plant is moved to Schedule III, this will not result in any changes in how our country’s criminal system punishes cannabis consumers. This means that not one person of the thousands currently incarcerated for cannabis-related charges would be released or have their sentences affected in any way.

Cannabis Would Only Be Available Via Medical Prescription

Schedule III would arguably create easier access for medical patients to treat themselves with cannabis. But by law, substances on this schedule, like ketamine and anabolic steroids, are only accessible to medical patients with prescriptions. Even in states that have full adult-use legal programs, many physicians and healthcare providers are reluctant to issue prescriptions for cannabis due to the remaining stigmas. Do we really think that doctors in states like Alabama or North Dakota would suddenly flip their switches to go all in writing cannabis prescriptions because the wording in cannabis policy is technically just a little different? Not to mention that the cost of the treatments for medical patients would remain as prohibitively expensive as any prescription medicines have ever been.

DEA And FDA Approvals Could Wipe Out Entire Cannabis Product Categories

Moving cannabis to Schedule III would also establish new standards for product categories that would have to be approved by the DEA and FDA. Remember how everyone thought that the FDA’s approval of the CBD treatment Epidiolex in 2018 would usher in a new wave of cannabinoid medications for the masses? Turns out that after two years of testing to meet conditions, the drug has never been able to come to market because its Big Pharma creators are tied up in lawsuits.

Imagine every cannabis brand now available in legal markets striving to comply with the deluge of regulations that the DEA and FDA would impose. We would see an enormous amount of products disappear, or at the very least be relegated back into the illicit market, because under those strict guidelines, cannabinoid items would only be available through pharmacies with prescriptions. Consumers would be unable to buy edibles, beverages, vape carts, or flower over the counter; nearly every small-business retailer would experience severe financial trouble if not outright collapse.

Schedule III's Removal Of 280E Tax Challenges Would Only Benefit Corporate Cannabis

So this brings us to the 280E question. If Schedule III removes the tax code obstacle, whom does that really benefit? Not the small businesses, who have been suffering the most under 280E. Instead, it’s the multi-state operators (MSOs), the corporate giants, and the Big Pharma-backed companies that win from this outcome. Following that timeline, we can say goodbye to efforts throughout the cannabis community to bring social equity to any true manifestation in the legal market. In a solely corporate-controlled landscape, do we expect that diverse businesses would be allowed to flourish, or that smaller brands would be able to create any foundation for generational wealth or community reinvestment? We haven’t seen it before in other industries, and for all the lip service, it likely wouldn’t change in cannabis either.

Moving To Schedule III Could Erase The Entire Adult-Use Market

For that matter, the imposition of Schedule III could render the entire structure of adult-use markets illegal in the states where they currently operate. Unless state legislators can communicate effectively with federal officials to convince them that some special exceptions can be made to protect the adult-use markets that are themselves still developing - and when was the last time that we saw swift, impactful changes between levels of government? - we might predict that embracing Schedule III would mean the loss of regulated recreational cannabis as we know it.

Legalizing Cannabis In The United States Violates International Law

Finally, the U.S. legal system as a whole is fundamentally governed by international treaties. This means that if our government moved cannabis to Schedule III, we would be in violation of treaty agreements with numerous countries. The 1961 Single Convention on Narcotic Drugs, which obligates all parties to limit the production and sale of highly addictive drugs (and where cannabis is still classified as one), compels the United States to comply or else break international law. It’s baked into our Constitution that international treaties are to be honored above that of our federal and state laws. Unless we amend the Constitution at the same time we move cannabis to Schedule III, our nation could find itself in a very awkward position regarding international trade.

Is Moving Cannabis To Schedule III Worth The Potential Cost?

Now, until the United Nations and World Health Organization members can all agree that adult-use cannabis should be legalized globally, that last point isn’t going away. But for the matter of Schedule III, consider this: Is the path to some vague semblance of federal legalization worth the harm and destruction of everything the cannabis industry has worked toward these many years? Do we want to sacrifice an innovative and inclusive adult-use market on the off-chance that medical patients may have a slightly easier time getting a prescription, and then have that prescription filled by the only remaining dispensary in their city, which is controlled by a corporate entity whose founders know nothing about the cannabis plant except that it’s a tool for making money?

This is not the future most cannabis advocates envision for legalization. It shouldn’t be celebrated, and those dedicating themselves to this sector should not allow themselves to settle for “legalization at any cost.” In this writer’s opinion, those costs are too high.

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Featured image: (C) GRAS GRUN