The multi-million dollar question of 2024 is when the Drug Enforcement Agency reschedules cannabis from Schedule I to a Schedule III recommendation.
To review, in August 2023 the Department of Health and Human Services recommended to the Drug Enforcement Agency that marijuana be reclassified from a Schedule I drug to a Schedule III drug under the Controlled Substances Act. While some in the cannabis reform movement believe this policy initiative does not go far enough, (Let’s get it descheduled!) make no mistake that it is a monumental shift in the Federal government policy since the Nixon Administration placed cannabis on Schedule I in 1970.
A common Washington, D.C. parlor game is guessing when announcements like this happen; the province of the lobbying profession is to know when it happens. Inside the Capital Beltway, it actually feels refreshing when a Federal Agency keeps its work to itself, and the DEA has maintained its reputation as a black box. The Food and Drug Administration’s recommendation to Schedule III was notably prophesied, as someone within the FDA’s policymaking and scientific structure let slip what they were up to. However, nobody, not even the most highly-paid lobbyists, have succeeded in wrangling any inkling of information out of DEA about timing or recommendation. (And if someone tells you they know or make an absolute statement, they’re not telling the truth.) So the two questions are... what’s going to happen? And when?
Wayne Gretzky famously said what made him great was skating to where the puck was going. We are likely to see DEA rescheduling cannabis to Schedule III. Health care and pharmaceutical observers cannot find an instance where DEA went in a different direction from an FDA recommendation.
When will this happen? In an informal survey of D.C. influence peddlers, I have yet to meet anyone who can really unpack the timing of DEA’s decision-making in a logical way. I have heard rumors of a summertime announcement, perhaps before Labor Day. October is not unquestionable given the Biden Administration announced the cannabis pardons in 2022, perhaps a similar move. The bottom line is there is no clear answer, but after November 5th seems unlikely.
Upon a Schedule III designation by DEA, the Federal policy implications are profound. From Congress’s own research service, the following shifts would take place:
• “Those who manufacture, distribute, dispense, and possess medical marijuana may now be able to do so lawfully (under the Controlled Substance Act.)
• States’ medical marijuana programs may now be able to comply with the CSA, and will still be subject to CSA/DEA criminal and regulatory control, federal public health laws such as the Federal Food, Drug, and Cosmetic Act, and agricultural laws such as the Agricultural Marketing Act of 1946.
• The scope of and demand for FDA oversight for medical marijuana and related products may grow considerably. In the short term, FDA may need to generate or update a substantial amount of technical information to clarify its regulatory approach to marijuana for relevant stakeholders. Given that marijuana is a complex substance containing various pharmaceutical components and is available to consumers in numerous formats, FDA may also need to consider long-term resource allocation to ensure that marijuana products consistently meet applicable regulatory standards.
• Marijuana producers and retailers would be able to deduct the costs of selling
their product (e.g., payroll, rent, advertising) for the purposes of federal income tax filings.
• Those who use medical marijuana lawfully may now be eligible to (1) access public housing, (2) obtain immigrant and nonimmigrant visas, and (3) purchase and possess firearms. Those who use marijuana recreationally would still face restrictions in these areas.
• Researchers would face less strict regulatory controls in researching marijuana as a Schedule III controlled substance, which may in turn promote further research on marijuana.
• DEA would no longer set production quota limitations for marijuana.
• Those who use medical marijuana lawfully may contend with fewer barriers to federal employment and eligibility to serve in the military.”
If you have made it this far reading this bland update, I am afraid there is bad news to share. If DEA opts to move forward with rescheduling marijuana to Schedule III, (and we do believe this will happen) DEA would have to initiate a Federal rulemaking process.
The most powerful law you’ve never heard of is the Administrative Procedure Act of 1946, which outlines that Federal agencies must not take actions that exceed their statutory authority or violate the Constitution. The APA states that agencies must follow an open public process when they issue regulations. This is a steeply bureaucratic process that is painful to watch but necessary to follow; a Schedule III designation is very likely to go through a rulemaking, where upon it will be sued by anti-cannabis groups, namely by Smart Approach to Marijuana on “arbitrary and capricious” grounds. Again, it is possible that such litigation could get thrown out of court, but a new standard to apply on the FDA side of the rulemaking would mean a judge could direct this to a trial by jury. That means a 2-3 year process. Smart Approach to Marijuana is said to have a $10M war chest and runs a professional, by-the-book, political campaign.
At the end of the day, fellow users know that cannabis remains a dysfunctional market as long as illicit manufacturers and marketers own access to interstate commerce. Ultimately, this is a decision for the United States Congress to create a sensible, rational, functional cannabis market with a size of $30 billion.
Where does Congress stand on cannabis rescheduling? The primary obstacle is Republican Congressional leadership, who refuse to take up legislation. If a vote were to happen today, about 80% of Congressional Democrats are pro-cannabis and would vote for a functionable marketplace. Thus, the work to be done for rescheduling, or descheduling, or legalization, is all on the GOP side. Congressman Dave Joyce is the primary Republican advocate for cannabis, along with Congressman Brian Mast, Matt Gaetz, Tom McClintock, and Nancy Mace. At the end of the day, cannabis normalization depends on the Republican Party leadership deciding that the issue is a winning issue for them. Until then, we will keep fighting the good fight.
Sean Todd
Founder & President
Fox Potomac Resources
644 Massachusetts Ave NE
Suite 505
Washington DC 20002
