On May 21, 2024, The Drug Enforcement Administration (DEA) issued a notice of proposed rulemaking in the Federal Register (FR) to reschedule marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA). This announcement comes nearly a year after the US Department of Health and Human Services (HHS) August 29, 2023 letter to the DEA recommending that marijuana be rescheduled. It also follows an April 11, 2024 opinion letter from the DOJ Office of Legal Counsel that the United States' international treaty obligations do not prevent rescheduling marijuana. The proposed rule represents the most significant policy shift for marijuana since the passage of the CSA in 1970, which categorized marijuana as a Schedule I controlled substance.

The DEA’s proposed rule is the first of many steps in the rescheduling process. The FR notice triggered the 60-day period for public comment on the proposal. Thus, interested persons may submit comments on the proposal on or before July 22, 2024. Further, because this is a formal rulemaking, interested persons may file a request for a hearing. Although not required, the DEA Administrator may grant an in-person hearing and select an Administrative Law Judge (ALJ) to preside. After a review of the record, the ALJ then provides their recommendation to DOJ, which makes the ultimate rescheduling determination. It will likely be months, or possibly longer, before a final determination is issued. During that time, marijuana will remain a Schedule I controlled substance.

Once rescheduled to Schedule III, products containing marijuana would continue to be subject to other legal and regulatory requirements. Most significantly, such products would be subject to oversight by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act and any drug product containing marijuana would require FDA approval before marketing or an investigational new drug (IND) application for investigational use.

Implications of Rescheduling

Currently, marijuana is classified under Schedule I of the CSA, a category reserved for substances with a high potential for abuse and no accepted medical use in the United States. The list of Schedule I controlled substances includes drugs such as heroin and ecstasy. Conversely, Schedule III substances are viewed as having a lower potential for abuse and accepted medical use in the United States. Schedule III controlled substances include drugs such as acetaminophen with codeine.

A Schedule I classification imposes significant barriers to research. Rescheduling marijuana to Schedule III would expand research opportunities, allowing researchers in the United States to better understand the cannabis plant and potentially discover new therapeutic uses. However, rescheduling marijuana to Schedule III would not automatically allow consumers to purchase marijuana products over the counter, including at pharmacies, convenience stores, gas stations, or grocery stores. A prescription would likely be required, depending on how the product is classified by FDA.

Rescheduling action could result in favorable tax and banking reform for the cannabis industry. It may also result in renewed investment activity in the cannabis industry following a recent downturn and the bankruptcy filing of one of the larger legal cannabis companies. However, rescheduling marijuana to Schedule III would not legalize state-level recreational marijuana programs, as Schedule III substances may not be sold or used recreationally under federal law. The proposed rule specifically states that rescheduling marijuana would not change the “regulatory controls applicable to Schedule III controlled substances.” Cannabis/marijuana companies that currently operate pursuant to state regulations on the sale and marketing of marijuana products would continue to operate outside the current federal regulatory regime. The CSA’s restrictions on the manufacture, distribution, dispensing, and possession of controlled substances would remain in place.

Importantly, even with the rescheduling, it may be some time before a new marijuana or cannabis-derived product, such as cannabidiols, becomes available for medical treatment use. Specifically, per the proposed rule, “marijuana would remain subject to applicable provisions of the [Federal Food, Drug, and Cosmetic Act (FDCA)]. For example, under the FDCA, a drug containing a substance within the CSA’s definition of ‘marijuana’ would need FDA approval to be lawfully ‘introduce[d] or deliver[ed] for introduction into interstate commerce,’ unless an IND is in effect for that drug.”

If a marijuana product were advertised or otherwise represented as being able to treat any disease or related condition, it would be a new drug and subject to FDA premarket approval requirements. For food and dietary supplement products that contain marijuana derivatives, while it is FDA’s current position that the introduction of such products into interstate commerce is a prohibited act, following the rescheduling action we may see FDA also take its own regulatory action with respect to marijuana and marijuana-derivative products. For instance, the Agency could seek the creation of a new regulatory category, emphasizing a harm-reduction regulatory pathway, as it has done for tobacco products, which would allow the sale and marketing of marijuana products with strong disclaimers and warnings about the potential harmful effects of these products. Such an action, however, would take an act of Congress, which, under the current political climate, would likely not happen in the near future.

How Rescheduling Works: Eight-Factor Analysis

The CSA grants the Attorney General, through the DEA, rulemaking authority to add, remove, or change the schedule of a controlled substance. The CSA sets forth specific findings that are required for substances to be scheduled as either Schedule I, II, III, IV, or V. For Schedule III, the following findings are required per 21 U.S.C. § 812(b)(3):

(A) The drug or other substance has a potential for abuse less than the drugs or other substances in schedules I and II.

(B) The drug or other substance has a currently accepted medical use in treatment in the United States.

(C) Abuse of the drug or other substance may lead to moderate or low physical dependance or high psychological dependance.

The process for rescheduling a substance can be initiated by the DEA, HHS, or through a petition by an interested party. To reschedule a controlled substance, HHS must evaluate it through FDA and prepare a recommendation to the Attorney General based on scientific and medical considerations and the potential public health impact. When considering the rescheduling of a controlled substance, the DEA conducts an eight-factor analysis to evaluate the substance's abuse potential, medical use, and safety. The DEA considers HHS’s recommendation as part of its overall eight-factor analysis and must accord significant deference to HHS's scientific and medical determinations. The eight factors analyzed are:

1. Actual or Relative Potential for Abuse: Epidemiological studies, case reports, and data from law enforcement and medical sources are used to assess the substance’s abuse patterns, including the number of users, frequency of use, and the degree of dependence.
2. Scientific Evidence of the Pharmacological Effects and General Pharmacology: Preclinical and clinical studies, scientific literature, and expert reviews are considered to understand the substance’s pharmacodynamics and pharmacokinetics.
3. The State of Current Scientific Knowledge Regarding the Controlled Substance: The existing scientific understanding of the substance, including its chemical structure, stability, pharmacological properties, and toxicology.
4. Its History and Current Pattern of Abuse: The historical context and contemporary patterns of the substance's use and abuse, including geographic and demographic trends.
5. The Scope, Duration, and Significance of Abuse: The extent and seriousness of abuse, considering the number of individuals affected, the duration of abuse, and the impact on public health and safety.
6. Risks to Public Health, If Any: The potential public health risks associated with the substance, including adverse health effects, overdose incidents, and the burden on healthcare systems.
7. Psychic or Physiological Dependence Liability: The substance's potential to cause psychological or physical dependence, considering withdrawal symptoms, tolerance, and addictive behaviors.
8. Whether the Substance is an Immediate Precursor of a Substance Already Controlled: The substance’s use as a primary chemical in the manufacture of a controlled substance.

The DEA comprehensively considers these eight factors to determine whether rescheduling a controlled substance is warranted.

Key Takeaways

Rescheduling marijuana from a Schedule I to a Schedule III controlled substance would allow more research opportunities on the medicinal uses of marijuana. It would also potentially create a legal marketing avenue for new categories of marijuana products as FDA issues regulation and guidance governing these products and potentially approves new drug products containing marijuana. That said, rescheduling marijuana would not legalize state-level marijuana recreational programs and the exact impact of the rescheduling at the patient level may not be seen for some time.

As the proposed rule undergoes the notice and comment rulemaking process, it is likely to draw a substantial number of comments and requests for hearings from interested parties. Historically, the rescheduling process has been drawn out, but President Biden has voiced that his Administration is intent on prioritizing review of DEA’s proposed rulemaking, particularly in an election year that could see a change of administration.

The public comment period will remain open for 60 days following the date of publication in the Federal Register. Comments may be submitted to Docket No. DEA-1362