Business law

Bloomberg report: Department of Health and Human Services recommends moving marijuana to Schedule III –


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Bloomberg News Reports that the Department of Health and Human Services has recommended to the U.S. Drug Enforcement Administration, to which authority is delegated under the Controlled Substances Act by the Attorney General, to reschedule cannabis to Schedule III of the Controlled Substances Act. The recommendation appears to be based on a scientific and clinical review by the Food and Drug Administration that President Biden ordered last year. If true, the FDA’s new findings would reverse the agency’s decision in 2016 that cannabis should remain a Schedule I controlled substance when the rescheduling petition was denied. Schedule I controlled substances have a high potential for abuse with no accepted medical use in the United States and a lack of accepted safety for use under medical supervision. As we all know, this is an inappropriate classification for cannabis.

If the Bloomberg report is correct, the HHS recommendation would be binding on the DEA on “scientific and medical issues,” but the authority to reschedule rests with the DEA. To reschedule cannabis to Schedule II, the DEA would have to go through a formal rulemaking procedure under the Federal Administrative Procedure Act, a lengthy process that requires, among other things, notice of proposed rulemaking and acceptance of public comment. Any final ruling will be subject to challenge in court. As part of the process of accepting the Department of Health and Human Services recommendation, the DEA must also consider the government’s obligation to comply with the United Nations Single Convention on Drugs, which would not allow any signatory to schedule cannabis below Schedule II. Moreover, moving to the third schedule does the trick noCannabis is decriminalized at the federal level, and state-certified cannabis operators are not decriminalized or regulated.

However, the potential for cannabis to be reclassified under the Controlled Substances Act is enormous. Among other things, the rescheduling would remove state-legal cannabis companies from the crippling effect of Section 280 of the Internal Revenue Code, allowing them to deduct business expenses like any other business. The rescheduling may lead to revitalization of the capital markets and may prompt the NASDAQ and the New York Stock Exchange to reassess their position prohibiting the listing of influential American companies. It’s also likely that we’ll see an update to Attorney General Garland’s “Cole memorandum” in the coming weeks or months that could provide more specific guidance on the legality of the cannabis industry at the state level and banking and capital markets. The implications for FDA-supervised drug development are many. If the news is true, this could be the first – finally – step towards the normalization of cannabis.

The content of this article is intended to provide a general guide to the subject. It is advised to take the advice of specialists in such circumstances.

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