Cannabis is on the cusp of one of the biggest changes in recent federal drug policy. In late August, a senior official from the Department of Health and Human Services (HHS) formally advocated for marijuana reclassification as a Schedule III substance. The recommendation was sent in a letter to the Drug Enforcement Administration (DEA), which is now overseeing a thorough review of the drug’s status.
This decision promises a major shift in how cannabis is regulated and viewed. Let’s explore why rescheduling will reduce stigma, increase research, and encourage innovation.
Rescheduling and Reducing Stigma
Currently, cannabis is in the most restrictive drug schedule. Under the Controlled Substances Act, cannabis is a Schedule I drug and therefore considered a substance with a significant risk of abuse and no medical applications. Notably, other substances in this category include heroin and LSD.
In contrast, Schedule III substances are characterized by a “moderate to low potential for physical and psychological dependence.” The latter is much more in line with the risk profile, social attitudes, and latest research regarding cannabis.
Cannabis is far less stigmatized today and this should be reflected in legislation. For example, about 70% of adults are in favor of cannabis legalization, a record high. This is in stark contrast to 34% in 2003. Of course, rescheduling would also bring other benefits, like lesser sentences to individuals with federal indictments for possessing or using cannabis.
Rescheduling and Increasing Research
Further, rescheduling will facilitate even broader access and in-depth study of the plant by scientists and technology experts. Fewer restrictions offer greater academic and scientific access as a result.
This is something we’ve already witnessed since the start of the last decade. Since 2010, for example, there has been a more than 600% increase in cannabis clinical trials. Almost half, 46%, of these trials sought to treat pain with cannabinoids. Meanwhile, other commonly featured conditions under the microscope included epilepsy, cancer and associated conditions, seizures, and autism spectrum disorder.
In recent years, a significant surge in clinical trials has explored the potential therapeutic benefits for a range of mental health disorders, including anxiety and depression. It’s hard to see this trend slowing once cannabis enjoys even more relaxed rules and regulations. In turn, the change will positively influence societal attitudes and medicinal exploration.
Rescheduling and Encouraging Innovation
Perhaps most exciting for those of us in the business of cannabis is this final impact. If rescheduled, banking and financial services will be far more accessible for the cannabis industry. This is because the current status of cannabis poses substantial obstacles to accessing conventional services. Even in legal states, for example, things as simple as opening a checking account are impossible with a standard bank. The proposed reclassification could pave the way for cannabis-related businesses to access institutional capital and various financial services, fueling growth.
In general, rescheduling will simply treat cannabis businesses more equitably. Currently, 23 states permit adults to possess cannabis legally, while 38 states have implemented medical marijuana programs. However, due to the federal illegality of cannabis, related businesses are subject to a federal tax code that denies them standard tax deductions for expenses, such as employee salaries and benefits. This tax code restriction doesn’t apply to Schedule III substances.
Therefore, if rescheduling goes ahead, cannabis businesses nationwide would see a substantial reduction in their federal tax burden. This would provide a substantial boost to an industry that has been grappling with financial challenges. Again, this would boost growth and empower businesses to be more innovative.
Rescheduling and the “Data and Science”
Of course, this is a recommendation at this stage, but there is reason to hope rescheduling is on the horizon. HHS notes that it is following the “data and science” in its letter and the ball is now in the DEA’s court. While this agency has been historically positioned against cannabis, the winds of change are blowing strong.
Rescheduling has the backing of The White House, which kicked off this administrative process last year by asking HHS to review how marijuana is scheduled under federal law, and the strong majority support of Americans. Let’s look forward to discussions and decisions in good faith and enjoy the vast benefits — economic, societal, scientific — of cannabis rescheduling.
