Last week marked a historic moment for the cannabis industry. The US Drug Enforcement Agency (DEA) announced it would move forward to reclassify cannabis to Schedule III. This marks a significant step forward in acknowledging its medical benefits and lower potential for abuse. A  review by the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) highlights the positive impact of cannabis in medical treatments, urging further research. This change not only acknowledges marijuana's medicinal value but also boosts its acceptance within the medical community. 

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Unlike Schedule I, which categorizes substances as having no medical value and highly addictive, Schedule III allows for FDA-approved drugs to be prescribed by doctors and dispensed by authorized entities. However, this doesn't mean your local dispensary will suddenly be fully compliant with federal law, nor does it mean you'll find cannabis products at your corner pharmacy. Sales of cannabis within state programs, not approved by the FDA and distributed by non-DEA registrants, remain federally illegal, as they did under Schedule I. This also means cannabis grown under state programs can't be sold across state lines. So, even with Schedule III, cannabis products are only federally legal if they're approved by the FDA, which is currently limited to just three cannabis-based drugs.

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Over the past few administrations, the federal government has been hands-off when it comes to enforcing federal laws against most cannabis businesses operating within state-sanctioned programs. This leniency started back in 2009 with guidance from the US Department of Justice (DOJ) and continued even after it was rescinded during the Trump administration. While it's uncertain what enforcement will look like, the reclassification might prompt the FDA to crack down on false drug claims, similar to its actions with hemp products. Additionally, congressional legislation has prevented the Justice Department from using funds to interfere with state medical cannabis programs. However, this doesn't cover adult-use programs, highlighting the need for broader regulation.

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The shift to Schedule III will happen once the DEA publishes its ruling, allowing for public comments and formal administrative hearings. The process involves administrative law judges overseeing hearings similar to court trials, where evidence must be relevant to the DEA's scheduling recommendations. After this, the DEA will review all input and issue a final rule, with a 30-day period before it takes effect, during which parties can file lawsuits.

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While Schedule III offers some relief, particularly regarding tax burdens imposed by Section 280E, it doesn't solve the federal legality issues, which would take descheduling cannabis completely. However, it does pave the way for incremental reforms. It could spur congressional action toward broader legalization efforts, aligning with President Biden's commitment to address the injustices of the war on drugs. As perceptions around cannabis evolve, Schedule III plays a key role in reshaping cultural attitudes and supporting the economic viability of cannabis businesses, laying the groundwork for comprehensive legislative reforms aimed at de-scheduling, legalization, and regulation.

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