
Daniel T. McKillop
Partner
201-896-7115 dmckillop@sh-law.comFirm Insights
Author: Daniel T. McKillop
Date: September 18, 2023
Partner
201-896-7115 dmckillop@sh-law.comThe U.S. Department of Health and Human Services (HHS) has recommended that the Drug Enforcement Administration (DEA) move cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA). This recommendation from the country’s top health agency will have significant implications for the cannabis industry, but it is only one step towards legalization.
Last year, President Joe Biden had asked Health and Human Services Secretary Xavier Becerra and Attorney General Merrick Garland to evaluate how cannabis is classified under federal law. According to a letter leaked to Bloomberg, HHS has determined that cannabis no longer deserves its Class I status under the CSA.
The Class I designation is reserved for substances with no accepted medical use and have a “high potential of abuse.” In light of new “data and science,” HHS is recommending that the DEA reclassify cannabis as Class III, a designation given to drugs with a “moderate to low potential for physical and psychological dependence.” Common examples of Class III drugs include ketamine, anabolic steroids, and Tylenol with codeine.
As HHS officials have emphasized, the agency’s recommendation is just the first step in the rescheduling process. As explained by an HHS spokesperson:
While HHS’s scientific and medical evaluation is binding on DEA, the scheduling recommendation is not. DEA has the final authority to schedule a drug under the CSA (or transfer a controlled substance between schedules or remove such a drug from scheduling altogether) after considering the relevant statutory and regulatory criteria and HHS’ scientific and medical evaluation. DEA goes through a rulemaking process to schedule, reschedule or deschedule the drug, which includes a period for public comment before DEA finalizes the scheduling action with a final rulemaking.
While the exact impact of rescheduling is currently being debated, a few things are certain:
While rescheduling cannabis would be a monumental change, there is a lot that remains unaddressed. Most importantly, it is clearly not the same as legalization, and it would not make adult-use cannabis businesses legal under federal law. For full legalization, cannabis needs to be removed from the CSA entirely.
Nonetheless, a win is a win. Removing the tax challenges posed by Section 280E and improving access to cannabis medical research are important changes that will benefit the industry tremendously. Rescheduling may also provide the momentum to push through other key reforms, such as the SAFE Banking Act.
Going forward, we encourage cannabis businesses to stay on top of legal developments, as the DEA will now review the recommendation and conduct its own rulemaking process.
If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
This article is a part of a series pertaining to cannabis legalization in New York, New Jersey and the United States at large. Prior articles in this series are below:
Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.
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