The federal government is finalizing the reclassification of cannabis. The U.S. Department of Justice published a proposed rule in the U.S. Federal Register to reclassify cannabis from Schedule I of the federal Controlled Substances Act (CSA) and move it to Schedule III.

For over 50 years, cannabis has been classified as a Schedule I controlled substance, a classification reserved for drugs with “no medical value.” Many critics from the cannabis industry have criticized the reclassification, saying that only decriminalization is enough and that moving cannabis to Schedule III only puts it in a slightly less restrictive category.

Then on Oct. 6, 2022, President Biden asked the Attorney General and the Secretary of Health and Human Services (HHS) to launch a review of how cannabis is classified. After receiving HHS’s recommendations last August, the Attorney General first sought legal advice from the Justice Department’s Office of Legal Counsel (OLC). Then, based on the HHS’ medical and scientific determinations, and OLC’s legal advice, the Attorney General exercised his authority under the law to initiate the rulemaking process to reclassify cannabis.

The proposed rule was first announced by the DOJ Office of Public Affairs on May 16, and follows a series of recommendations and approvals.

“The Department of Justice proposes to transfer marijuana from schedule I of the Controlled Substances Act (CSA) to schedule III of the CSA, consistent with the view of the Department of Health and Human Services (HHS) that marijuana has a currently accepted medical use as well as HHS’s views about marijuana’s abuse potential and level of physical or psychological dependence,” the proposal for the federal register reads. “The CSA requires that such actions be made through formal rulemaking on the record after opportunity for a hearing.”

“If the transfer to schedule III is finalized, the regulatory controls applicable to schedule III controlled substances would apply, as appropriate, along with existing marijuana-specific requirements and any additional controls that might be implemented, including those that might be implemented to meet U.S. treaty obligations,” the proposal reads. “If marijuana is transferred into schedule III, the manufacture, distribution, dispensing, and possession of marijuana would remain subject to the applicable criminal prohibitions of the CSA. Any drugs containing a substance within the CSA’s definition of “marijuana” would also remain subject to the applicable prohibitions in the Federal Food, Drug, and Cosmetic Act (FDCA). DOJ is soliciting comments on this proposal.”

The National Organization for the Reform of Marijuana Laws (NORML) offered cautious enthusiasm for change, finally at the federal level.

“NORML is in a unique position to mobilize interested parties to provide their perspectives throughout the public comment period and we will be encouraging advocates and experts to do so in the coming weeks,” said NORML’s Deputy Director Paul Armentano. “In particular, it is important that the voices of both physicians and patients are heard and considered, as the Justice Department weighed the real-world experiences of doctors and their patients in medical cannabis states when making their recommendation to reclassify.”

“Additionally, NORML will be submitting our own comprehensive comments substantiating the evidentiary record that cannabis possesses accepted medical utility and comparatively low dependence liability,” Armentano continued. “We will also be addressing a number of the issues raised by political opponents with respect to cannabis’ impact on public health, making it clear that these concerns do not warrant the continued classification of cannabis as a Schedule I substance. While NORML ultimately favors descheduling rather than rescheduling, we understand that reclassification is associated with both symbolic and tangible benefits to the cannabis community, both in the short-term and the long-term.”

Public Comment Period on Reclassification Move

Now that the rule proposal has been published on the Federal Register, the public comment period will kick off and run for about 60 days.​​

The rescheduling of a controlled substance must undergo a formal rulemaking procedure that requires a notice to the public, informing them of an opportunity to comment and an administrative hearing. Then the DEA will gather and consider information and views submitted by the public, in order to make a determination. During that process, and until a final rule is published, marijuana remains a schedule I controlled substance.

Comments must be submitted electronically or postmarked on or before July 22, 2024. Interested persons may file a request for a hearing or waiver of an opportunity for a hearing or to participate in a hearing pursuant to 21 CFR 1308.44 and in accordance with 21 CFR 1316.47 or 1316.49, as applicable, which must be received or postmarked on or before June 20, 2024.

The DOJ encourages that all comments be submitted through the Federal eRulemaking Portal, which provides the ability to type short comments directly into the comment field on the web page or to attach a file for lengthier comments. Individuals can go to the regulations website and follow the online instructions at that site for submitting comments.

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President Joe Biden announced that the U.S. Department of Justice will officially reschedule cannabis, moving it from Schedule I, reserved for dangerous drugs with no medical value, to Schedule III. The news follows the historic announcement on April 30, that the U.S. Drug Enforcement Administration (DEA), will move to reclassify cannabis under Schedule III, the Associated Press reported.

Biden, along with Vice President Kamala Harris, both recorded videos of the announcement and posted them on social media.

“This is monumental,” Biden said in a video that was posted on X. “Today my administration took a major step to reclassify marijuana from a Schedule I to a Schedule III drug. It’s an important move towards reversing longstanding inequities.”  

“Today’s announcement builds on the work we’ve already done to pardon a record number of federal offenses for simple possession of marijuana. And it adds to the action we’ve taken to lift barriers to housing, employment, small business loans, and so much more for tens of thousands of Americans.”

Biden continued, “No one should be in jail just for using or possessing marijuana.”

“Today’s announcement builds on the work we’ve already done to pardon a record number of federal offenses for simple possession of marijuana. I’m committed to writing those historic wrongs,” he said. “You have my word.

“Currently marijuana is classified on the same level as heroin and more dangerous than fentanyl,” Harris said in another video. “We are finally changing that. But I want to thank all of the advocates and everyone out there for helping to make this possible and we are on the road to getting it done.” 

“This recommendation validates the experiences of tens of millions of Americans, as well as tens of thousands of physicians, who have long recognized that cannabis possesses legitimate medical utility,” NORML Deputy Director Paul Armentano said. “But it still falls well short of the changes necessary to bring federal marijuana policy into the 21st century. Specifically, the proposed change fails to harmonize federal marijuana policy with the cannabis laws of most U.S. states, particularly the 24 states that have legalized its use and sale to adults.”

“Nevertheless, as a first step forward, this policy change dramatically shifts the political debate surrounding cannabis,” Armentano added. “Specifically, it delegitimizes many of the tropes historically exploited by opponents of marijuana policy reform. Claims that cannabis poses unique harms to health, or that it’s not useful for treating chronic pain and other ailments, have now been rejected by the very federal agencies that formerly perpetuated them. Going forward, these specious allegations should be absent from any serious conversations surrounding cannabis and how to best regulate its use.”

A 60-day comment period will soon begin to allow input on the pros and cons of Schedule III.

Questions and Shortcomings of Schedule III

Industry leaders pointed out that reclassifying cannabis under Schedule III won’t absolve the discord between federal law and dozens of medical adult-use cannabis laws at the state level. For some, the reclassification announcement leads to more questions.

“While there’s still work to be done, I’m optimistic about what this means in terms of a domino that needed to fall in order for the wave to come that we’ve all been waiting for and working towards for so long,” said Caleb Counts, CEO & Co-Founder, Connected Cannabis. “Rescheduling is a step in the right direction without question, and while it isn’t at the stage of descheduling, it’s still impactful for so many people and that doesn’t go unnoticed. Loosening taxes and regulations where customers benefit is always a win in my book.”

“While a great step for the industry, the truth is, most of our operational challenges remain,” said Roger Volodarsky, Founder and CEO, Puffco. “A lot of people think that moving cannabis from Schedule I to Schedule III will drive additional research in the space, but the reality is that it’s more complicated than that. In late 2022, the Medical Marijuana Expansion Research Act was passed, which essentially says that regardless of the scheduling of cannabis, the DEA still holds the final ruling of who’s allowed to research the plant, and where those research materials are coming from. So while a move to Schedule III is a huge step forward in terms of protecting our freedoms in this industry, we are still at the mercy of policy-makers. Ultimately, the goal is a complete descheduling of the plant and until that happens our fight is not over.”

“For me, it raises more questions than solving any problems that we have,” said Christopher Louie, Co-Founder & CEO of Made in Xiaolin, a legacy cannabis operator in Colorado and soo in New York. “What does this mean from here? Great, marijuana now has medical benefits in the eyes of the government. Does this mean that in order to obtain it you need a prescription and in order to distribute or manufacture it I would need a medical license? It seems this could help out pharmaceutical companies and big businesses affiliated in the medical field, but I’m not sure how this benefits companies like ours.”

Others commended the small step towards legalization that signals a shift in the way cannabis is viewed in the eyes of the federal government.

“We commend the POTUS’s efforts to reschedule cannabis to Schedule III. While the fight isn’t over to legalize cannabis nationally, this is a much-needed wind in our sails that we haven’t felt in over 50 years at the federal level,” said Vince Ning, co-founder and CEO of Nabis, a leading wholesale marketplace. “As far as public commentary goes, we will certainly be providing our thoughts on how to improve this change to push for the full legalization of this controlled substance, and how to provide safe access of quality tested cannabis products to the patients in need through existing regulatory frameworks that currently exist today.”

“President Biden characterized rescheduling as a means of reversing longstanding inequities,” said Brian Vicente, founder of Vicente LLP. “One dominating inequity cannabis businesses face is the inability to deduct regular business expenses, since they sell a Schedule 1 substance.  We work with hundreds of licensed cannabis businesses, and the ability to deduct ordinary operating costs under the Schedule 3 proposal would be a game-changer for them. This proposal will release cannabis businesses from the crippling tax burden they are currently shackled with and allow these businesses to grow and prosper.”

“On behalf of thousands of legal businesses operating across the country, we commend President Biden for taking this important first step toward a more rational marijuana policy. Now it’s time for Congress to enact legislation that would protect our industry, uphold public safety, and advance the will of the voters who overwhelmingly support making cannabis legal for adults,” said Aaron Smith, NCIA CEO & co-founder. “Rescheduling alone does not fix our nation’s state and federal cannabis policy conflict. Only Congress can enact the legislation needed to fully respect the states and advance the will of the vast majority of voters who support legal cannabis.”

There will then be a 60-day public comment period before the rule is potentially finalized.

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The U.S. Drug Enforcement Administration (DEA), under the Biden administration, will move to reclassify cannabis under Schedule III, meaning its medical benefits will be recognized by the federal government, the Associated Press first reported today. By all accounts, it’s a historic move by the DEA and the federal government as the plant was wrongly classified as a substance with no accepted medical value, for decades.

The DEA’s move to reclassify cannabis must first be reviewed by the White House Office of Management and Budget (OMB), and for the first time in 50 years would recognize the medical uses of cannabis. The move to Schedule III was recently recommended by the U.S. Department of Health and Human Services (HHS). By definition, Schedule I substances are criminally prohibited under federal law because they possess a “high potential” for abuse and have no currently accepted medical use. 

Leadership from The National Organization for the Reform of Marijuana Laws (NORML) broke down the pros and cons of Schedule III and why this move is so historic.

“While the DEA’s decision fails to go far enough, it represents the first time the agency has ever abandoned its ‘Flat Earth’ position toward cannabis and acknowledged that the substance possesses legitimate therapeutic utility and that it doesn’t belong in the same federal classification as heroin,” NORML Deputy Director Paul Armentano tells High Times. 

It won’t erase the discord between federal and state law fully, however. Armentano continues, “Unfortunately, this move—if and when finalized—continues to perpetuate the growing divide between federal marijuana laws and the marijuana laws of most states. It also fails to align with public opinion, as most Americans would like to see cannabis treated more like alcohol than like anabolic steroids.”

Fifty Years Under Schedule I

For the Scientific American, David Downs reported in 2016 that disgraced former Attorney General John Mitchell of the Nixon administration placed cannabis in this category as part of the classification or “scheduling” of all drugs under the 1970 Controlled Substances Act.

U.S. leaders also provided comments on the DEA announcement.

“If today’s reporting proves true, we will be one step closer to ending the failed war on drugs,” Rep. Earl Blumenauer said in an emailed statement obtained by High Times. “Marijuana was scheduled more than 50 years ago based on stigma, not science. The American people have made clear in state after state that cannabis legalization is inevitable. The Biden-Harris Administration is listening.” 

According to the National Cannabis Industry Association (NCIA), moving cannabis to Schedule III is expected to lift the unfair burden of 280E on thousands of state-legal cannabis businesses. The Legal Intelligencer reported that Schedule III would remove the prohibitions against tax deductions under tax code 280E.

“Moving marijuana out of its absurd classification as a Schedule I drug is long overdue and we applaud the administration for finally acknowledging the therapeutic value that has been widely accepted by the medical community and millions of medical cannabis patients for decades,” said CEO, Aaron Smith. “While this is undoubtedly a very positive first step, rescheduling will not end federal marijuana prohibition and doesn’t harmonize federal law with the laws allowing some form of legal cannabis in the vast majority of the states. In order for this move to be meaningful on the ground, we need clear enforcement guidelines issued to the DEA and FDA that would ensure the tens of thousands of state-licensed businesses responsibly serving cannabis to adults are not subject to sanctions or criminal prosecution under federal laws.”

“Further, it’s imperative that Congress build upon this development by passing comprehensive legislation to remove cannabis from the Controlled Substances Act and forge a new regulatory framework for whole plant cannabis products.” added Smith.

“The goal of any federal cannabis policy reform ought to be to address the existing, untenable divide between federal marijuana policy and the cannabis laws of the majority of US states,” he said. “Rescheduling the cannabis plant to Schedule III fails to adequately address this conflict, as existing state legalization laws—both adult use and medical—will continue to be in conflict with federal regulations, thereby perpetuating the existing divide between state and federal marijuana policies.”

Cannabis Industry Reacts

The US Cannabis Council (USCC) aims to be the voice of America’s regulated cannabis industry. “The US Cannabis Council strongly supports the move by the DEA to reclassify cannabis at a lower level under the Controlled Substances Act,” USCC Executive Director Edward Conklin said in a statement. “President Biden and his Administration should be commended for recognizing that cannabis was wrongly classified as a Schedule I controlled substance and pursuing an administrative review to reclassify it.

“The proposed DEA rule implements the recommendations of the Department of Health and Human Services, which were based on an extensive scientific review by the Food and Drug Administration. Once finalized, the reclassification of cannabis to Schedule III will mark the most significant federal cannabis reform in modern history and place the nation on a clear path toward our ultimate goal of federal legalization…”

High Times also received a high volume of comments from cannabis business leadership.

“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,” said Matt Darin, CEO of Curaleaf. “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. As the cannabis industry undergoes regulatory transformations, Curaleaf remains committed to collaborating with regulatory authorities, industry members, and the broader community to ensure the responsible and sustainable growth of the cannabis sector. The future for the cannabis industry is real and we look forward to seeing what 2024 has in store.”

“AYR Wellness applauds the historic proposal by the Drug Enforcement Administration’s to reclassify cannabis from Schedule I to Schedule III, in alignment with the science-backed recommendation made earlier this year by the Department of Health and Human Services,” David Goubert, President & CEO of AYR Wellness.

It’s now up to the OMB at the White House to give final approval of the DEA’s move to reschedule cannabis.

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President Joe Biden issued his State of the Union address on Thursday, March 7, and among many topics, he said he’ll direct his Cabinet to consider reclassifying cannabis at the federal level. It’s the first time that a president of the United States addressed cannabis reform as part of his State of the Union address.

“Keep building public trust, as I’ve been doing by taking executive action on police reform, and calling for it to be the law of the land, directing my Cabinet to review the federal classification of marijuana, and expunging thousands of convictions  for mere possession, because no one should be jailed for using or possessing marijuana!” Biden said.

Biden also posted on X that “no one should be jailed for using or possessing marijuana,” which prompted responses from people who pushed for real expungements—not the mostly meaningless wave of pardons to people with minor cannabis convictions issued by Biden in 2022.

Biden issued two executive orders in October 2022, pardoning some people with nonviolent federal cannabis records, and he asked the Department of Health and Human Services to evaluate if cannabis should be rescheduled under the Controlled Substances Act.

The US Cannabis Council (USCC) launched in 2021 with a goal to build better access to an equitable and values-driven industry. The USCC has been working hard to advance federal cannabis legalization and promote restorative justice to the people harmed the most by the War on Drugs.

“The US Cannabis Council applauds President Biden for highlighting cannabis reform as an issue of national concern during his State of the Union address,” David Culver, SVP of Public Affairs at the USCC said in a statement obtained by High Times. “The President has issued historic pardons for nonviolent cannabis offenses and initiated a groundbreaking review of the status of cannabis under federal law. Tonight’s remarks before a national audience signal the President’s ongoing commitment to advancing cannabis reform. We are encouraged by what we heard this evening and optimistic that the Biden Administration will move cannabis down to Schedule III this year.” 

“President Biden made history tonight by addressing cannabis reform during the State of the Union,” said Adam Goers, co-chair, Coalition for Cannabis Scheduling Reform. The President is committed to modernizing the federal government’s approach to cannabis, and he reinforced that commitment tonight in front of the American people. Moving cannabis down to Schedule III would represent an historic shift in our nation’s drug laws. We thank the President for his remarks and urge his Administration to push ahead with rescheduling.” 

Cannabis Pardons and President Biden

Thousands of people received one of Biden’s pardons for federal cannabis possession convictions under two announcements issued in 2022 and in February. The Justice Department issued certificates to eligible people who applied for the pardons, but the certificates actually read “the pardon means that you’re forgiven, but you still have a criminal record.”

Former prisoner Weldon Angelos corrected Biden’s comment, adding that possession generally never leads to jail time alone. “Nobody goes to jail for use or simple possession,” Angelos posted on X. “But those imprisoned federally for marijuana felonies shouldn’t be forced to serve out the remainder of their decades long sentences either so please commute their sentences as you promised when you were running for president. 

Before Thursday’s State of the Union address, The Sentencing Project urged President Biden to remember his 2020 campaign promises to oppose mandatory minimum sentences and significantly reduce the prison population.

“America surpassed the grim milestone of 50 years of mass incarceration, with the prison population growing nearly 500% since 1973,” said Kara Gotsch, executive director for The Sentencing Project. “Today, almost 2 million individuals, and disproportionately Black Americans, are incarcerated in our nation’s prisons and jails. The U.S. incarcerates more of its citizens—for longer periods of time—than any other major democratic country in the world.” 

“President Biden promised four years ago to reduce federal incarceration levels by 50% and to oppose mandatory minimum sentences. We urge the president to keep those promises, and to scale up solutions that actually make communities safer, such as good schools, affordable childcare, broadly accessible mental health services, more effective and widely available substance use treatment programs, and more support for vulnerable children and youth. 

“Americans deserve safety, security, and community-based solutions that will build up our communities and actually stop the cycle of crime. We can get there if we put evidence-based solutions over politics, thriving communities over extreme sentences, and rehabilitation over punishment.”

In addition, Sen. Kirsten Gillibrand told High Times last that rescheduling cannabis under schedule III would do little by simply moving it to a less restrictive category. A recent survey found broad support across demographics and suggested Biden could see an 11% favorability boost if it occurs.

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In a historic move Friday, officials from the U.S. Food and Drug Administration (FDA) said in documents that they support reclassifying cannabis as a Schedule III substance. This would make medical cannabis and the research supporting it legal at the federal level but still heavily regulated like hormone replacement therapy or ketamine.

The 252-page document recommended to the U.S. Drug Enforcement Administration (DEA) that cannabis should be reclassified from a Schedule I to Schedule III substance under the Controlled Substances Act (CSA). The documents start with a letter to DEA Administrator Anne Milgram, which reads that “marijuana meets the findings for control in Schedule III.”

The FDA’s Eight Factor Analysis (which are always the same) found cannabis “has a currently accepted medical use in treatment in the United States” and “is not an immediate precursor of another controlled substance.”

Under section 21 U.S.C. 811(b) of the CSA, the eight factors that are determinative of control of the drug are the following: 

1. Its actual or relative potential for abuse. 
2. Scientific evidence of its pharmacological effect, if known. 
3. The state of current scientific knowledge regarding the drug or other substance. 
4. Its history and current pattern of abuse. 
5. The scope, duration, and significance of abuse. 
6. What, if any, risk there is to public health. 
7. Its psychic or physiological dependence liability. 
8. Whether the substance is an immediate precursor of a substance already controlled.

Clearly cannabis has been deemed to have medical value, and the documents note that  43 U.S. jurisdictions are authorized to recommend the medical use of cannabis.

It marks the first time that the FDA has recommended that the Drug Enforcement Administration (DEA) place cannabis in Schedule III of the Controlled Substances Act (CSA). Medical and adult-use cannabis laws across America are generally based on laws at the state and local levels, and they’ve always existed in discord with federal law.

Keep in mind that Schedule III drugs are still heavily regulated and need prescriptions: Tylenol 3’s, ketamine, anabolic steroids, or testosterone. Schedule III substances are defined as drugs with a “moderate to low potential for physical and psychological dependence,” with less abuse potential than Schedule I and Schedule II drugs, but more than Schedule IV. Under Schedule III, Internal Revenue Code 280E (IRC 280E) would no longer apply to cannabis businesses, so you’d see things like tax deductions. Rescheduling to Schedule III, however, will not legalize state-level cannabis programs.

Cannabis Industry Reacts

Several organizations and cannabis companies sent statements to High Times. The National Cannabis Roundtable (NCR) applauded the historic acknowledgement that a federal agency has recommended cannabis be reclassified. The NCR announced that they have been instrumental in advocating for and informing the heads of the HHS in a memo, and the DEA in an open letter, as to the scientific facts and medical value of cannabis meriting its reclassification to at least Schedule III.

They acknowledged, however, the limitations of the authority of HHS and DOJ when it comes to the CSA and urged the DEA to follow the scientific findings of HHS and the FDA in this process. 

“A move to Schedule III would mean 280E no longer applies to regulated cannabis companies,” Saphira Galoob, Executive Director of the National Cannabis Roundtable, told High Times in an email. “Not only does this reduce the extreme tax burden currently faced by the industry, but it allows them to take advantage of critical tax credits on things like payroll and other routine businesses costs regularly used by other legal entities. Cannabis companies continue to face issues with access to capital and banking services, resulting in cash intense operations. The ability to reinvest more of their revenues in their operations, instead of a majority of all revenue going to taxes, will be extremely impactful for the regulated cannabis industry—particularly small and minority operators.”

Other active players in the industry reacted as well, acknowledging both the pros and cons of Schedule III.

“Health officials’ recommendation for the Drug Enforcement Administration (DEA) to reclassify cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA) is a pivotal moment for our industry,” Wurk CEO Deborah Saneman told High Times. “The relentless efforts of the cannabis sector to destigmatize the plant have played a crucial role in challenging the long-standing unjust classification of cannabis. Despite facing various challenges, the cannabis industry has demonstrated resilience, adapting swiftly while upholding exceptional standards. As a leading player in the industry, Wurk remains committed to sustaining our position as the most dependable payroll, HR, and time-keeping platform in the market.” 

“The recommendation to reclassify cannabis to a Schedule III substance is progress towards undoing generations of cannabis prohibition and a significant step in recognizing the plant’s medicinal and societal benefits,” Socrates Rosenfeld, co-founder and CEO of Jane Technologies, told High Times. “While this reclassification is not a ‘perfect’ solution, we will continue our mission until there is legal access around the world—and everyone in prison for cannabis is free. Still, this moment in history should be celebrated, and the end of cannabis prohibition has never felt closer to becoming a reality.” 

“As the son of a convicted cannabis smuggler,  reading the full report from HHS (akin to a confession) that finally said the hard part out loud regarding the cannabis plants medicinal and societal value left me feeling both vindicated and excited for the future of cannabis reform,” Brady Cobb, a Washington, D.C. lobbyist and CEO of Sunburn Cannabis told High Times. “This is a groundbreaking step forward in the 70 plus year fight to end the ill fated war on the cannabis plant, and I eagerly await the DEA’s ruling to hopefully reschedule cannabis to schedule III. If that happens, this budding market will finally have a chance to operate in the sunshine with access to banking, U.S. financial services,  much needed tax reform and this move would serve as a springboard to much needed criminal justice reforms as well.”

How it Happened

Last October 6, 2022, President Biden directed federal agencies to expeditiously consider reclassifying cannabis from the most restrictive category on the CSA schedule. Several organizations and businesses provided feedback on the FDA’s recent move.

The move was partly spurred by attorney Matthew C. Zorn, who sued the federal officials after using a Freedom of Information Act (FOIA) request to obtain the rescheduling memo. He’s done it before: In 2019, Dr. Sue Sisley of the Scottsdale Research Institute sued the DEA for blocking medical cannabis research. Two Texas-based attorneys, Shane Pennington and Zorn, took the case pro bono. NORML wrote that the DEA is essentially monopolizing cannabis research. Since cannabis is still illegal at the federal level, the National Institute of Drug Abuse (NIDA), the FDA, and the DEA have only allowed one man—Dr. Mahmoud ElSohly at the University of Mississippi—to grow cannabis for clinical studies. 

On Aug. 29, 2023, the U.S. Department of Health and Human Services (HHS) recommended to the DEA that cannabis be reclassified from a Schedule I drug to a Schedule III.

Schedule III would change everything, especially in terms of opening up the doors to cannabis research. Zorn first published the documents on his On Drugs blog on Friday. Before Friday, a highly redacted clip of the documents released to Zorn were released a month ago with a single page of it last October.

The industry grappled with the pros and cons Schedule III would bring as pressure mounts on the DEA to act on the recommendations from the HHS and FDA.

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An official at the Department of Health and Human Services recommended to the Drug Enforcement Agency (DEA) that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the Controlled Substances Act in a leaked letter.

HHS Assistant Secretary for Health Rachel Levine sent a letter dated Aug. 29 to DEA Anne Milgram, recommending that cannabis be reclassified. The HHS confirmed on Tuesday that a representative sent its findings to the DEA. “Following the data and science, HHS has expeditiously responded to President Biden’s directive to HHS Secretary [Xavier Becerra] and provided its scheduling recommendation for marijuana to the DEA on August 29, 2023,” an HHS spokesperson said.

The move was called “historic,” sent cannabis stocks soaring, but was also called insufficient in ending cannabis prohibition as it would remain a controlled substance, albeit with fewer restrictions.

Last October, President Joe Biden requested that the HHS secretary and attorney general conduct a review of the classification of cannabis under federal law. Cannabis currently falls under Schedule I, meaning the DEA considers it a drug “with no currently accepted medical use and a high potential for abuse.”

The DEA defines a Schedule III substance as “drugs with a moderate to low potential for physical and psychological dependence.” The DEA says that the potential for abuse of Schedule III drugs is less than Schedule I and Schedule II drugs—but more habit-forming than Schedule IV (Xanax, Valium) and Schedule V drugs (Robitussin AC). Examples of Schedule III drugs include pills and drugs with less than 90 mg of codeine per dosage unit (Tylenol 3), ketamine, anabolic steroids, and testosterone.

It’s important to note that under Schedule III, cannabis would still be federally prohibited although it would open doors for researchers. Some leaders in Congress applauded the move, while others said it’s not enough.

What Happens Now?

NORML reports that the HHS recommendation now heads to DEA, to conduct its own scientific review. The DEA adopted its own five-factor test to determine if cannabis should be rescheduled, and it’s different from the HHS’ criteria. But the DEA determined that cannabis failed to meet its five criteria four times. 

“It will be very interesting to see how DEA responds to this recommendation, given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law,” NORML Deputy Director Paul Armentano said. “Further, for decades, the agency has utilized its own five-factor criteria for assessing cannabis’ placement in the CSA—criteria that as recently as 2016, the agency claimed that cannabis failed to meet. Since the agency has final say over any rescheduling decision, it is safe to say that this process still remains far from over.”

Senate Majority Leader Chuck Schumer (D-NY) said in a statement that HHS had recommended that cannabis be moved from a Schedule I to a Schedule III controlled substance. “HHS has done the right thing,” Schumer said. “DEA should now follow through on this important step to greatly reduce the harm caused by draconian marijuana laws.”

Is Schedule III Enough?

“This is a step in the right direction but it is not sufficient, Congressman Earl Blumenauer (D-OR), founder and co-chair of the Congressional Cannabis Caucus said in a statement. “I hope it is followed by more significant reforms. This is long overdue.”

Cannabis coalitions applauded the move as historic, while it would not fully decriminalize cannabis at the federal level.

“The Biden Administration just took a major step toward ending our nation’s failed war on cannabis,” stated Adam Goers, co-chair of the Coalition for Cannabis Scheduling Reform. “For decades, cannabis has been a Schedule I controlled substance, on par with heroin and above fentanyl and meth. This was completely baseless, and we now know that the FDA and Department of Health and Human Services agree.

“The federal government is now on track to recognize cannabis as medicine, regulated alongside Schedule III drugs such as Tylenol with codeine which have demonstrated medical uses and low risk of abuse. Our ultimate goal is full legalization of cannabis, and we believe that rescheduling is a key step on the way there.

Cannabis Stocks Soar

The news impacted cannabis trading. ETF.com reports that the AdvisorShares Pure US Cannabis ETF soared 21%. Other cannabis-related funds, including FMG Alternative Harvest ETF and Global X Cannabis ETF were up 10.79% and 7.44% respectively. Eight cannabis-related ETFs are traded on U.S. markets, with total assets under management of $630.76M. 

Publicly traded cannabis companies also saw spikes based on the news. Canopy Growth rose 13%, Tilray Brands soared by nearly 9%, and Aurora Cannabis rose by 6%.

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