Pros and cons of moving marijuana from Schedule 1 on the list of controlled substances

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Image depicting rescheduling of marijuana

The absurdity of federal marijuana policy in the United States is perhaps best symbolized by the placement of cannabis on Schedule 1 of the Controlled Substances Act, according to industry observers.

Schedule 1 is reserved for drugs considered highly addictive and having no medicinal value. By comparison, cocaine is listed on Schedule 2, implying the U.S. Drug Enforcement Administration considers the drug less dangerous and less likely to be abused than marijuana.

Cannabis advocates have objected to the designation since the Controlled Substances Act was first published in 1971.

Shifting directions

Rescheduling marijuana from Schedule 1 to something lower was, until recently, viewed as the most likely path to legalization. But that was before the recent wave of support for marijuana reform in Congress, where pro-legalization sentiment has never been greater.

It was also before the federal government’s attempt at hemp regulation, primarily through the 2018 Farm Bill, which many stakeholders say has resulted in confusion over how CBD and other cannabinoids can be used. This has fueled the assertion held by some industry observers that federal involvement in marijuana regulation is bound to make matters worse.

“I think we can get a hint of how well this might go from the 2018 Farm Bill,” said Heather Hatcher, a North Carolina-based regulatory scientist with the law firm Womble Bond Dickinson, where she advises attorneys on regulatory matters related to the DEA and U.S. Food and Drug Administration. “It’s a bit of a hot mess.”

(See “Liquid Gold” in the February 2022 issue of MJBizMagazine to learn how the 2018 U.S. Farm Bill created a legal loophole for delta-8 THC and other unregulated, intoxicating cannabinoids.)

What would change

Now, with reform efforts squarely focused on Congress, rescheduling is on the back burner. That’s just fine with most cannabis industry executives and advocates, who view Congress as the preferred path to legalization and who see several potential pitfalls with rescheduling.

“Our position is that cannabis should be descheduled. It should not be treated as a controlled substance,” said Steve Hawkins, executive director of the U.S. Cannabis Council in Washington DC. “With the current political atmosphere, we believe strongly that there are opportunities in this Congress for substantial cannabis reform and that any talk of rescheduling would be taking away from the mission and not matching where the political winds are at this time.”

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Nonetheless, some cannabis executives believe that rescheduling is more likely to happen than congressional legalization, and they see it unleashing a wave of new opportunities for pharmaceutical companies and state-licensed marijuana businesses.

“Schedule 2 would drive hospital systems and the VA (Department of Veterans Affairs Medical Centers) to make it available. We truly believe it would be a new paradigm,” said Dr. Steven Groff, founder and chair of Dallastown, Pennsylvania-based Groff North America, one of a handful of entities in the United States with a DEA license for growing marijuana that can be sold to businesses, universities and other organizations conducting federally approved research involving cannabis. “How the state medical folks do in this paradigm is still a question, but I think that there are grand opportunities for them to do very well.”

Rescheduling would open a lot of these opportunities, and it can be done in a way that wouldn’t undermine the existing state markets, Groff added.

A question of timing

One key reason Groff believes rescheduling will happen before Congress legalizes a marijuana market is the U.S. vote at the United Nations in 2020 to drop medical cannabis from a category of the world’s most dangerous drugs. By supporting the change to the international scheduling regimen, the U.S. made it possible to reschedule cannabis domestically without violating international drug treaties.

“We think that the Schedule 2 step is most likely in the United States, because the U.S. was behind it internationally and supported a Schedule 2 equivalent in the International Narcotics Control Board,” Groff said.

“The U.S., by supporting rescheduling at the U.N. level, says it believes that there is medical use of cannabis. And we think the follow-through will be marijuana becoming Schedule 2 in the U.S.,” he said, adding that rescheduling would be a multiyear endeavor.

Another impetus behind the DEA and FDA’s desire to reschedule marijuana, Groff said, is Congress’ failure—in his view—to effectively regulate hemp. As a result, the rules governing how CBD and other cannabinoids can be used are confusing, giving rise to problems such as the unregulated manufacturing and retailing of delta-8 THC.

“The federal government (has) a real desire to take these powerful chemicals—both CBD and THC—and make sure that they’re handled properly for public safety,” Groff said. “The federal government, I think, in general recognizes that this current situation with CBD is really a bit of a Wild West show. … And I don’t think they’re particularly excited about repeating that same Wild West show with THC-containing compounds.

“That said, I think there’s a real desire to get this material out into the medical community as quickly as possible but in more of a controlled way than just completely descheduling it.”

Rescheduling upshots

While considered a long shot, marijuana rescheduling would have several potential impacts, such as access to more capital investment.

The most positive and evident effect would be felt in cannabis-related research. Rescheduling marijuana would make it easier for businesses to receive federal approval to conduct research involving the plant and its derivatives.

“We believe that rescheduling will make research easier. There’s less restrictions, somewhat less rigor in receiving approval to do research” with Schedule 2 drugs, Groff explained.

Albert Gutierrez, CEO of MedPharm, a Colorado company with a DEA license allowing it to conduct cannabis research, noted that rescheduling would mean more companies applying for Schedule 2 licenses so they could conduct studies on proprietary formulations.

Such studies could likely be carried out only by well-heeled companies with the deep pockets to pay for the research.

“With this new paradigm, we believe that MSOs can take their favorite formulations and then start moving those formulations in a federally legal way through the FDA approval process,” Groff said of multistate operators.

Rescheduling would also allow physicians to discuss cannabis with their patients and offer it as a treatment “rather than the situation now, where most physicians are fearful of even mentioning it because they could risk their own personal DEA registration,” said Groff, a physician who is certified in Pennsylvania to recommend medical marijuana to patients.

Rescheduling downsides

Rescheduling skeptics acknowledge research benefits but point out that rescheduling also has many potential drawbacks.

For one thing, moving cannabis to Schedule 2 would not eliminate Section 280E of the federal tax code. That would happen only if the plant was moved to Schedule 3 or lower.

Meanwhile, Adam Goers, vice president at multistate operator Columbia Care, said rescheduling would not solve the “huge dichotomy between state and federal law.”

“Just because the federal government decides to reschedule through the executive department’s administrative action, it’s not going to change the way that New York or Georgia or Florida are going to do their programs,” Goers said. “To be successful, any rescheduling effort would have to recognize the work that states have done to move this forward.”

What would ignoring the states look like? Mandating marijuana prescriptions for patients rather than giving recommendations that enable them to buy the drug, as is currently the case in states with legal medical cannabis markets.

“We need to make sure that how rescheduling happens isn’t a boon for the illicit market, like we’ve seen through the ambiguity of the Farm Bill and what that means for delta-8 products,” Goers said. “The answer isn’t to make everything go through double-blind drug trials and put it under an FDA rubric.”