The prospects and perils of reclassifying cannabis as a less dangerous controlled substance

In this pivotal moment, it is increasingly evident that responsibility for resolving the ongoing uncertainties surrounding cannabis’ legal status ultimately rests with Congress.

The impending decision by the Drug Enforcement Administration (DEA) to reclassify cannabis as a less dangerous controlled substance marks a significant shift in federal drug policy. Reliable reports confirming the DEA’s intent to move cannabis from a Schedule I drug — the strictest category of controlled substances — to Schedule III all but assure this outcome. The implications are profound, bringing obvious benefits but also potential drawbacks that may be consequential enough to require congressional action. 

First, drugs currently in Schedule I are those deemed to have no “medically accepted uses” and a high potential for abuse. A move to Schedule III serves as a recognition of cannabis’ medicinal value and relatively low potential for abuse compared to substances in Schedule I, like heroin, and Schedule II, like fentanyl. This acknowledgment aligns with mounting scientific evidence supporting the therapeutic utility of cannabis for various medical conditions. Rescheduling could lead to increased access to medical cannabis for patients suffering from chronic pain, epilepsy, PTSD and other ailments, potentially improving their quality of life, particularly those living in one of the 13 states that have yet to authorize legal cannabis sales in any form. Moreover, by easing barriers to medical research, the move may lead to an increase in the number of conditions cannabis may treat, as well as improvements or innovations in its effects, safety and efficacy. 

In the immediate term, the cannabis industry would be the greatest beneficiary of the move. By placing cannabis in Schedule III, cannabis businesses would gain increased access to traditional banking services and investment capital. More importantly, perhaps, a move to Schedule III would allow licensed cannabis businesses to deduct business expenses from their tax burden, an allowance afforded to other lawful industries. The increased investment and reduced costs could increase financial stability and stimulate spending within the industry, leading to more jobs, reinvestment into local economies and increased tax revenue.

Lastly, one little-discussed positive effect of reclassifying cannabis is the future impact it may have on other controlled substances, such as psychedelics. Traditionally, federal agencies have used FDA approval as proof that a drug has “medically accepted uses.” In fact, in previous attempts to reschedule cannabis, both the FDA and the DEA determined that only FDA-approved drugs with cannabis components could be moved to a lower schedule, not the entire plant. That federal health and drug agencies now recommend moving the entire cannabis plant to Schedule III signals a significant shift that could open the door for reform regarding other Schedule I substances, such as psilocybin and MDMA. 

Despite the positive impact of moving cannabis to Schedule III, there are also possible drawbacks. For one, the move does not “legalize” cannabis at the federal level nor would it bring state-authorized cannabis industries into compliance with federal law, leaving consumers and businesses open to criminal penalties. While the move would reduce schedule-specific penalties, it would not eliminate them or adjust penalties that apply specifically to marijuana, such as quantity-based mandatory-minimum sentencing requirements. 

Similarly, while Schedule III drugs, unlike Schedule I, can be lawfully dispensed, a valid prescription is required. Traditionally, drugs in Schedule III — like anabolic steroids and ketamine — may only be legally prescribed after receiving FDA approval. How feasible this approval process might be will depend largely on how the FDA chooses to exercise its regulatory authority over cannabis products. If the FDA opts to treat cannabis like other pharmaceutical drugs, the approval process for which can take up to 15 years and cost over $1 billion, it would likely devastate state cannabis markets and drastically reduce the products available to consumers. FDA may choose to adopt an alternative pathway for cannabis product approval that would better balance requirements for efficacy and safety against consumer access, but this would likely require action by Congress. 

The prospects and perils of cannabis’s reclassification are profound. It may unlock significant benefits for patients, businesses and the broader economy. Yet, it does not address the ongoing conflict between state and federal law, continues to leave consumers and state-authorized cannabis markets vulnerable to federal prosecution, and raises a host of new complexities surrounding regulatory oversight of cannabis.

In this pivotal moment, it is increasingly evident that responsibility for resolving the ongoing uncertainties surrounding cannabis’ legal status ultimately rests with Congress. If anything, the move to reschedule cannabis demonstrates a need for and interest in comprehensive drug reform. An easy first step that could resolve many of these complexities regarding cannabis would be for Congress to simply remove it from the list of controlled substances entirely and leave its regulation to the states. 

Michelle Minton is a senior policy analyst at the Reason Foundation.