On May 21st, the federal Drug Enforcement Administration (DEA) provided a notice of proposed rulemaking that would transfer cannabis from Schedule I to Schedule III of the Controlled Substances Act. Schedule I drugs (such as heroin) have no accepted medical use and have a high potential for abuse, while Schedule III drugs (such as codeine and anabolic steroids) have moderate to low potential for dependence. Since 1996 when California became the first state to legalize the medicinal use, possession, and cultivation of cannabis, 37 other states have followed suit and a total of 23 states have legalized adult-use of cannabis since 2012.
This rulemaking comes of the heels of a request from President Biden in October 2022 to the Attorney General and Secretary of Health and Human Services to initiate a process to review how marijuana is scheduled under federal law. Notably, this rulemaking does not extend to synthetically derived THC, nor does it affect the status of hemp, which is excluded from the definition of cannabis. While cannabis business activities would remain illegal under federal law, they would no longer be barred from certain tax deductions for allowable business expenses. Further, rescheduling cannabis would have no detrimental effect on state regulatory structures, nor would it have any effect on cannabis businesses’ ability to access financial services or banking.
The federal rulemaking docket can be accessed here. For more information, contact RCRC Policy Advocates Sarah Dukett or Leigh Kammerich.