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Reclassifying Cannabis as a Schedule III Substance – Will the DEA Approve? –


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On August 29, 2023, less than a year after President Biden directed federal officials, including the US Department of Health and Human Services (“HHS”) and the US Attorney General, to conduct a review of the classification of cannabis under federal law,1 HHS has submitted a letter to the US Drug Enforcement Agency (“DEA”) recommending a change to the classification of cannabis under the federal Controlled Substances Act (“CSA”).

According to sources citing confirmation from HHS and the DEA, the HHS letter indicated that it had completed its analysis of the risks and benefits of cannabis use and recommended that the DEA ease its restrictions on the drug. Specifically, the Department of Health and Human Services is recommending that the Drug Enforcement Administration reclassify cannabis from a Schedule I drug, the most restrictive level under the CSA designated for drugs that have no acceptable medical use and high potential for abuse, to a Schedule III drug. It is the level reserved for addictive drugs. Moderate to low likelihood of physical and psychological dependence.

Although cannabis is illegal under US federal law, according to the National Conference of State Legislatures, 23 states, the District of Columbia, and two US territories have legalized cannabis for adult recreational use, and 38 states, the District of Columbia, and three US territories have legalized it. For medical use. Despite the above, the industry has been in a downward spiral due, among other factors, to overproduction, taxation, competition from the illicit market, and a lack of capital as investors exit the sector.

While the recommendation to reclassify cannabis as a Schedule III substance under the CSA is a positive sign that federal cannabis policy may be moving in the right direction, rescheduling cannabis will not legalize state programs at the federal level. However, rescheduling cannabis as a Schedule III drug would provide certain benefits, such as opening up more avenues for research on cannabis, allowing cannabis companies to secure banking services more freely, and allowing cannabis companies to obtain certain tax credits and rebates under the Internal Revenue. Code, without which cannabis companies are subject to a much higher tax burden. However, the final decision on the classification of cannabis rests with the DEA, and there is no timeline by which the agency has to make its decision. The last time federal agencies were mandated to consider Schedule I status for cannabis, they decided, in 2016, that Schedule I status was still appropriate.

While this is just the beginning of a potential cannabis reform, this is a huge day for cannabis companies and enthusiasts alike as evidenced by the share prices of cannabis companies such as Canopy Growth (Nasdaq: CGC; TSX: WEED), Tilray Brands (NASDAQ: TLRY, TSE: TLRY), Cronos Group (NASDAQ: CRON, TSE: CRON), Curaleaf (OTCQX: CURLF, CSE: CURA), Green Thumb (OTCQX: GTBIF, CSE: GTII), Verano (OTCQX: VRNOF); CSE: VRNO), Cresco (OTCQX: CRLBF) TerrAscend (OTCQX: TSNDF; TSX: TSND), and Trulieve Cannabis (OTCQX: TCNNF; CSE: TRUL), among others, are on the rise. It is also possible that if cannabis were reclassified at the federal level, national exchanges such as the New York Stock Exchange and Nasdaq might allow cannabis to be listed on such exchanges, and foreign cannabis companies might be able to sell their products in the United States. US This is just the beginning and we look forward to monitoring and continuing to provide you with the latest information on the DEA’s review of the Department of Health and Human Services recommendation.


1. The previous article regarding this Executive Order here.

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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