Marijuana is currently classified as a Schedule I drug under the Controlled Substances Act (“CSA”), defined as a substance having “no currently accepted medical use” and “a high potential for abuse.” Other Schedule I substances include LSD and heroin. In late August 2023, the Department of Health and Human Services (“HHS”) recommended rescheduling marijuana under the CSA from Schedule I to Schedule III, signaling the potential for drastic change in federal regulations and the marijuana industry as a whole.


On January 12, 2024, HHS made public previously unreleased documents that identify the basis for the U.S. Food and Drug Administration’s (“FDA”) determination that credible evidence shows that marijuana has legitimate medical uses and fits the criteria for rescheduling under the CSA. The documentation reveals the outcome of extensive testing by FDA researchers, demonstrating marijuana’s legitimate medical applications and its comparatively lower risk of physical dependency, especially when contrasted with other Schedule I substances. The DEA, on December 19, 2023, announced it was considering HHS’s recommendation, indicating a possible forthcoming change in marijuana’s legal classification. Although the DEA holds ultimate authority over drug scheduling, HHS’s recommendations on scientific and medical issues are deemed binding under the CSA.


The FDA’s comprehensive analysis determined that marijuana poses a lesser abuse risk than substances listed in Schedule I or II and is recognized for its medical utility in the U.S., including for managing nausea and appetite loss associated with chemotherapy and for pain relief. The FDA further observed that, while regular, heavy users of marijuana are subject to experiencing withdrawal, the issue is not prevalent among occasional users of the drug, and that withdrawal symptoms amongst chronic users are generally milder than those from substances like alcohol, which can lead to severe symptoms such as agitation, paranoia, seizures, and even death.


The FDA also noted that marijuana presents lower public health risks compared to other addictive substances, such as heroin, oxycodone, and cocaine, citing studies on emergency department visits, hospitalizations, unintentional exposures, and notably, overdose deaths. While the focus of its research was primarily on the effects of delta-9 THC, the FDA acknowledged the psychoactive properties of delta-8 THC as well, though the legal status of delta-8 THC may be complicated by the lack of comprehensive study.


The DEA is likely to approve reclassification of marijuana as a Schedule III substance. This advancement marks a significant step toward federal legalization. A reclassification to Schedule III would alleviate tax and banking challenges faced by the marijuana industry, including tax burdens imposed by Section 280E of the Internal Revenue Code. However, reclassification would also likely result in stricter FDA regulation over the industry – something the industry has not seen before – necessitating new rules and guidance that could take years to develop, maintaining a period of uncertainty for the industry in the meantime.

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