DEA Agrees To Reclassify Marijuana On Federal Law Under CSA

The Associated Press reported on Tuesday that the U.S. Drug Enforcement Administration has agreed to reclassify marijuana under a federal law, capping the Biden administration’s efforts to reform the nation’s cannabis regulatory policy. Under the change, the DEA will reschedule marijuana under the federal Controlled Substances Act (CSA) to Schedule III instead of its current Schedule I status, a classification reserved for drugs with no medical value and a high potential for abuse, according to the AP report.

“This is a positive step forward for federal cannabis policy, however it is a rather modest step given the strong support among American voters for comprehensive cannabis reform,” Matthew Schweich, executive director of the cannabis policy reform group Marijuana Policy Project, said in a statement after news of the DEA’s decision broke on Tuesday. “It is important to acknowledge that this rescheduling would not affect the criminalization of medical cannabis patients and cannabis consumers under state laws – so we must continue the work of enacting sensible and fair cannabis legalization and medical cannabis laws through state legislatures and ballot initiatives.”

AP reports that the DEA’s decision to reschedule cannabis was confirmed “by five people familiar with the matter who spoke on the condition of anonymity to discuss the sensitive regulatory review.” The decision has not been formally announced and is subject to approval by the White House Office of Management and Budget.

In August 2023, the U.S. Department of Health and Human Services formally recommended that cannabis be rescheduled under the CSA. The recommendation was based on a review of the science behind the medicinal use of cannabis that supported the change to Schedule III, a less strict classification that includes drugs such as Tylenol with codeine and testosterone.

“I’m underwhelmed by the progress made during President Biden’s administration, I think it was fair to expect more,” added Schweich. “It was absurd to consider cannabis to be more dangerous than heroin, as is the case today. It will remain absurd to consider cannabis to be more dangerous than alcohol, Xanax, and Valium, which will still be the case after this rescheduling takes effect.”

Biden Administration Scores Cannabis Policy Reform Victory

The decision to change the status of marijuana under federal law comes after months of cannabis policy reform from the executive branch. In 2022, President Joseph Biden issued an executive order pardoning thousands of low-lever marijuana convictions and directed his administration to review the federal prohibition of cannabis.

In January, a federal review of cannabis research by HHS determined that marijuana is eligible for less strict classification under federal drug laws, according to agency documents. In the review, researchers with the U.S. Food and Drug Administration (FDA) determined that credible evidence shows that marijuana has legitimate medical uses and fits the criteria for rescheduling under the Controlled Substances Act.

“FDAs acknowledgment of the medical efficacy of cannabis and relatively low potential for abuse is of the most significant shifts in drug policy in this century,” Shawn Hauser, a partner at the cannabis law firm Vicente LLP, said in an emailed statement. “That the federal government considered the widespread medical use in state medical marijuana programs underscores the impact of state reforms that have helped millions of patients. This is a very positive step towards the end of prohibition and for public health , and signals that the Biden administration is poised to complete its expeditious review to reclassify cannabis.”

The DEA’s decision is receiving a warm welcome from the regulated cannabis industry. Recreational marijuana is now legal in 24 states and 38 have legalized cannabis for medical use. Matt Darin, CEO of multistate cannabis operator Curaleaf, praised the federal drug law enforcement agency for changing its stance on marijuana.

“Today’s decision by the DEA to reschedule cannabis to Schedule III is one of the most monumental developments that cannabis has seen in years and is a crucial step in undoing the harms caused by the failed and discriminatory War on Drugs,” Darin said in a statement from the company. “We are thankful to President Biden and his Administration for helping to push this process forward. This ruling reflects evolving attitudes towards the plant, recognizing its well-documented therapeutic value and medicinal applications. It’s very clear that the country is ready for this step, given that 92% of Americans are now in support of legalization in some form.”

George Archos, founder and CEO of Verano Holdings, said that “the DEA’s rumored decision to reschedule cannabis to Schedule III clearly affirms what our Verano team has always known: cannabis is an incredible plant that provides numerous health and wellness benefits to millions of Americans, contributes billions of dollars to local economies, and supports over 400,000 careers across a growing number of states. With more than 70% of Americans in support of legalization on a bipartisan basis, cannabis is more accepted and popular than ever, and as detailed in the Department of Health and Human Services’ recommendation letter, holds scientifically proven medicinal value.”

George Sadler, the CEO and co-founder of San Diego-based Gelato Cannabis, notes that the DEA decision will have an impact on the profitability of regulated marijuana companies, explaining that “taxes will go down considerably across the board, and we’ll be treated as any other company.” With cannabis reclassified under Schedule III, an IRS rule that denies standard business tax deductions to companies involved in sales of Schedule I substances will no longer apply.

“The cost of doing business cannot be deducted and it’s crazy,” Sadler writes in an email.