Major news in drug reform policy as the U.S. government will move marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA).

According to reporting by the Associated Press, Attorney General Merrick Garland is set to recommend significant changes to federal marijuana policy, a move that will lessen restrictions on cannabis, particularly for medicinal purposes. (1)

Currently a Schedule I drug (the highest and most restricted category), marijuana is classified with substances like heroin and cocaine, recognized for their high potential for abuse and lack of accepted medical use. The proposed shift would reclassify marijuana to Schedule III, aligning it with prescription medications such as ketamine, anabolic steroids, and testosterone, indicating a drug with accepted medical uses and a lower potential for abuse.

Cannabis Rescheduling: What Does It Mean?

This reclassification by the DEA would recognize the medical uses of cannabis, but wouldn’t legalize it for recreational use. This policy change does not equate to federal legalization but instead expands access to marijuana for medical use.

These drugs remain controlled substances under federal law, subject to regulations regarding medical use and federal prosecution for unauthorized trafficking. The reclassification would not alter existing medical marijuana programs in 38 states or the legal recreational markets in 23 states. While federal prosecutions for simple possession have been rare, this change will not immediately affect individuals already facing charges. (2)

Does This Affect Cannabis Research?

Moving marijuana to Schedule III would ease some of the constraints on conducting research. Currently, the Schedule I classification creates significant barriers, limiting studies to relying on self-reported data from users. Though reclassification will not eliminate all obstacles to research immediately, it will facilitate more authorized clinical studies. The exact details of how and where marijuana can be studied, such as whether it can be sourced from state-licensed dispensaries, still remain unclear.

Banking and Taxes

Currently, businesses dealing with marijuana, classified under Schedule I or II, cannot deduct typical business expenses due to federal tax code restrictions, leading to extremely high tax rates. Reclassifying marijuana as a Schedule III substance would allow cannabis companies to make these deductions, significantly reducing their tax burdens and enabling them to compete more effectively against illegal operators. This change would also potentially increase promotional activities as advertising costs could be deducted.

However, the reclassification does not directly address the difficulties cannabis businesses face in accessing banking services, such as loans, due to the drug’s legal status. The SAFE Banking Act is a bill currently under proposal to help ease banking restrictions. (2)

This historic move will reclassify cannabis after 50 years of the strictest government prohibition. Rescheduling will increase access for medicinal use and allow researchers to more easily study cannabis for a variety of conditions. It will also ease restrictions on businesses, which is likely to have positive economic impacts.

With psychedelics like MDMA in the final steps of FDA approval, this news is another sign of the government’s slow but steady change of mind regarding plant medicines and other psychoactive substances.

The cannabis rescheduling proposal must now be reviewed by the White House Office of Management and Budget, and then undergo a public-comment period and review from an administrative judge. Stay tuned for more updates.

  1. The Associated Press (2024). US poised to ease restrictions on marijuana in historic shift, but it’ll remain controlled substance.
  2. The Associated Press (2024). What marijuana reclassification means for the United States.