US Cannabis Rescheduling: What does the DEA Announcement Mean?

by Oliver Callaghan

The US is finally looking into rescheduling cannabis.

12 years since the first US state legalised recreational cannabis, the Drug Enforcement Agency (DEA) finally announced their intention to reschedule cannabis earlier this month after lengthy speculation. What will this change look like and how will this impact the future of the cannabis market in the US?

What’s happening with cannabis rescheduling?

After many years of anticipation, the DEA finally vocalised their intention to reschedule cannabis from a Schedule 1 to Schedule 3 substance earlier this month. As mentioned in our previous article on this topic, this decision when officialised will fundamentally shift the federal view of cannabis in a number of ways. This will result in eased taxation against the cannabis sector,  the laws on cannabis prosecution, and recognise cannabis’ medicinal potential for research purposes. A move of this kind will also mark the start of the approval process required by the Federal Drug Administration’s (FDA) before cannabis can be distributed as a prescription medication.

What is the difference between Schedule 1 and 3?

The drug classification system was implemented to distinguish the index of harm, risk of abuse, and medicinal potential of a wide range of substances. Schedule 3 substances like anabolic steroids or ketamine do not face the same tax penalties as cannabis, and can be funded for research with significantly less intervention. Currently, this means that cannabis is ranked alongside opiates such as fentanyl and heroin, ecstasy, and hallucinogens like LSD and DMT. 

“The abuse rate is a determinant factor in the scheduling of the drug; for example, Schedule I drugs have a high potential for abuse and the potential to create severe psychological and/or physical dependence” – DEA’s definition of a Schedule 1 substance

Not sounding like the cannabis you know? The classification of cannabis as a Schedule 1 substance is a discrepancy that many have expressed for years, as it simply does not reflect the lethality, societal harm, or risk for addiction that many of the substances on the same mark possess. The perspective relating to its medicinal value is also outdated, as legislation relating to medicinal cannabis is present in some form in 71 countries and 38 states in the US as of writing this article. 

What will change with cannabis rescheduling?

  • Medical research: Cannabis as a Schedule 3 substance would mean that medical research on cannabis could be funded and reviewed by the FDA, a move that would fundamentally change the outlook of cannabis as a medicine. Although many states currently permit the medicinal use of cannabis, a stamp of approval by the FDA would permanently transform the trajectory of cannabis research and development. 
  • Economic potential: A flood of funding by pharmaceutical companies would likely align with the soaring of the market value of cannabis. A green light by officials removes much of the red tape related to cannabis commercialisation, and a tax break will only amplify the bullish outlook for many investors and business owners. While many of the big cannabis companies have reported substantial net losses this quarter, the opportunity to be listed on the Nasdaq exchange alongside Canadian cannabis companies could mark the start of a momentum shift in the making for the cannabis sector.
  • Legal easement: Although federal institutions like the DEA have consistently turned a blind eye to the enforcement of cannabis as a Schedule 1 substance, this decision codifies this attitude into law. This will formalise the lessening of those prosecuted on charges related to cannabis going forward, and could result in further criminal justice reform for those currently incarcerated regardless of the involvement of congress in this rescheduling process. Although the Biden Administration previously pardoned thousands of Americans for cannabis related charges in 2022, this change means that this issue will no longer require presidential intervention going forward.

Good things take time

Although this development is undoubtedly good news for the cannabis industry in the US, the process related to decisions like this are often drawn out and can take years to finalise. The level of involvement by congress on this issue will likely dictate how fast this cannabis rescheduling is resolved, and the upcoming election in the US cannot be understated on the influence of this change. 

There are still a number of steps which will need to be completed before cannabis is eligible for the same standards as other Schedule 3 substances. For example, once this announcement is made official cannabis will need to be approved by the FDA and manufacturers will also have to comply with the DEAs regulations regarding Schedule 3 substances (something which is not required under the current legal framework of medicinal cannabis). 

While there are still a number of questions and challenges ahead which will affect how this decision will play out, this announcement marks a significant step forward for the landscape of the cannabis industry in the US. While federal cannabis legalisation remains a speck on the horizon, this news bodes well for those in favour of criminal justice reform and cannabis advocacy. This could also inform the decisions of policymakers in the European space, alongside the recent cannabis legalisation enacted by Germany. You can read more about this here.

Stay posted for more updates on this story as it progresses.

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