All Articles Marijuana rescheduling: What it could mean for stakeholders

Marijuana rescheduling: What it could mean for stakeholders

States may not be affected immediately if federal agencies change marijuana from a Schedule I drug to a Schedule III drug.

5 min read


States largely would see no immediate impact if federal agencies agree to change marijuana from a Schedule I drug to a Schedule III drug, experts said at a Food and Drug Law Institute webinar. 

Forty states and Washington, D.C., have enacted legislation allowing for some form of a medical cannabis program, with 24 of those states and D.C. authorizing adult use, although not all programs are running, said attorney Jonathan Havens, a partner at Saul Ewing, citing MJBizDaily data.

Meanwhile, other states are debating whether to establish such programs, but even with authorization at the state level, marijuana remains illegal federally. 

Rescheduling is a massive undertaking for federal regulators and states would likely maintain control over inspections and enforcement of their own regulations “so long as they will become lined up with federal regulations,” says Deborah Miran, a former regulator in Maryland. For now, states are likely to maintain their current regulations, added Lila McKinley, legal programs director at the Connecticut Department of Consumer Protection, noting that “we don’t see a huge shift in the way that this is going to be regulated.” The adult-use market in Connecticut, for example, would maintain the status quo.

“For states, we have a lot invested in our programs, and there are some things I think that rescheduling won’t address and will need to be addressed more holistically, such as the social justice reform portion, social equity programs that states have in place, all of those things … that doesn’t come out of this rescheduling,” McKinley said.

Behind the scenes

Schedule I drugs are defined under the Controlled Substances Act as those that have no currently accepted medical use and have a high potential for abuse. Schedule III drugs, on the other hand, are defined as having a moderate to low potential for dependence and abuse.

The Drug Enforcement Administration has for decades said that moving drugs out of Schedule I first requires demonstrating medical use, and it has equated medical use with FDA approval so randomized, controlled trials would be needed to show a drug is safe and effective, said Robert Mikos of Vanderbilt University School of Law. But because there are no trials that can meet that requirement, the FDA created a currently accepted medical use test that looks at practical experience, such as physician recommendations and state authorizations before HHS proposed to reschedule marijuana. 

That test, in theory, could be extended to other Schedule I drugs, such as psilocybin. However, Mikos added, that there are no strong randomized, controlled trials that could demonstrate a benefit, so for now, marijuana is the only drug that can satisfy the FDA’s test. Unlike marijuana, only a few states have authorized psilocybin, so there is not enough data to recommend rescheduling. 

Why Schedule III?

Matters of safety and risk based on medical purpose and potential for abuse are why Schedule III was chosen over other schedules, as regulators don’t see marijuana as being as harmful as Schedule II drugs such as fentanyl, said Srikumaran Melethil, professor emeritus at the University of Missouri-Kansas City. While there is risk, there is not as high of a risk of abuse. 

Veterans could benefit, but producers and sellers might not

Veterans could immediately benefit from changing marijuana to a Schedule III drug. The Department of Veterans Affairs doesn’t want physicians to recommend the drug, even in states where it’s authorized because of its scheduling status, which has led veterans to seek prescriptions from physicians outside the VA system, Mikos said. If rescheduling is approved, the VA could allow physicians to recommend it. 

However, the impact of the decision could be limited for the some 10,000 companies licensed by states to cultivate, process or sell cannabis products because “they’re going to have a tough time meeting all the new regulations that apply to them under Schedule III,” Mikos said. “Moving it from Schedule I to Schedule III doesn’t deregulate cannabis production and sale; [it] just subjects it to less onerous regulations.”

It will still be illegal to sell marijuana under the Food, Drug and Cosmetic Act because it does not have approval from the FDA, and the FDA has been adamant that it is not approving the drug. “These companies are going to have some benefits from rescheduling like eliminating that onerous tax provision … but otherwise they’re still going to be engaging in federal crimes,” Mikos added. 

If the drug is rescheduled, banking, intellectual property and real estate concerns would remain since they would need to be addressed at the federal level, panelists noted. 

What’s ahead

It may be a long road to approval by federal agencies if previous rulemaking is any indication, and there likely will be at least one public hearing on this issue. Questions remain on how states would respond to rescheduling, including whether they would object to it, panelists said. 

While HHS, and by extension the FDA, see benefits to rescheduling the drug and may be convinced by state data about marijuana use, it could be an uphill battle to convince the DEA, according to Miran. The DEA has asked for feedback specifically on the potential for human abuse, but if the agency doesn’t receive enough comments, it could come to its own conclusions, placing rescheduling in doubt, Havers noted.  

Additionally, approval could lead to challenges in states that have authorized adult or medical use, as regulations are often based on the political climate, McKinley said, and states hope that the Department of Justice offers guidance on enforcement. 

“I think this is going to be a long fight,” Melethil said.