The Biden administration’s push to reclassify marijuana under federal law would not by itself open the door for pharmaceutical companies to seize control of the $34 billion legal U.S. cannabis industry.
But moving marijuana from Schedule 1 to Schedule 3 – as has been widely reported – would promise tax relief to legal marijuana businesses, a report released Tuesday by the Congressional Research Service confirms.
Beyond that, for the U.S. cannabis industry’s status quo to drastically change, Congress would need to take further action or the U.S. Department of Justice would have to launch a legal but unprecedented and impractical assault on state-legal marijuana markets.
The new report by Congress’ public-policy think tank analyzes “the legal consequences of the possible move of marijuana” to Schedule 3.
President Joe Biden’s October 2022 executive order directing Cabinet-level agencies to reevaluate marijuana’s status under federal law led to the landmark August 2023 recommendation from health regulators that marijuana be moved to Schedule 3 of the Controlled Substances Act.
Schedule 3 drugs have proven medical applications and some potential for abuse, according to that rescheduling recommendation.
Rescheduling is now in the hands of the U.S. Drug Enforcement Administration, which is expected to issue a proposed change to federal law sometime this year.
The potential rescheduling of marijuana has also led to widespread speculation about possible consequences, including fears of a takeover of the cannabis sector by Big Pharma.
“With respect to medical marijuana, a key difference between placement in Schedule I and Schedule III is that substances in Schedule III have an accepted medical use and may lawfully be dispensed by prescription, while Substances in Schedule I cannot,” according to the Congressional Research Service (CRS) report.
“However, prescription drugs must be approved by the Food and Drug Administration (FDA).
“Although FDA has approved some drugs derived from or related to cannabis, marijuana itself is not an FDA-approved drug.”
The main direct effect of rescheduling is relief from Section 280E of the federal tax code, the CRS confirmed.
However, the CRS report noted, moving marijuana from Schedule 1 to Schedule 3, “without other legal changes, would not bring the state-legal medical or recreational marijuana industry into compliance with federal controlled substances law.
“Other collateral legal consequences would continue to attach to unauthorized marijuana-related activities.”