U.S. DEA Set to Announce Marijuana as Schedule III Drug

Marijuana products would still be federally restricted.

May 01, 2024

According to numerous press reports, the U.S. Drug Enforcement Administration (DEA) is set to announce plans to reschedule marijuana from a Schedule I drug to a Schedule III drug. The DEA is said to be taking this step nearly eight months after the U.S. Department of Health and Human Services recommended the move.

Such a decision would constitute a recognition by federal authorities that marijuana is not as dangerous a drug as other drugs such as heroin, LSD and MDMA—which are classified as Schedule I, meaning they do not have any accepted medical use and are at high risk for abuse. It would move marijuana to a classification of drugs such as Tylenol with codeine, ketamine and anabolic steroids.

The Biden Administration has been pursuing this action since August 2023. The move, however, would not completely legalize marijuana. The two primary impacts of a move to Schedule III would be:

  • It would allow for a much broader range of research into the potential benefits or consequences of marijuana use.
  • It would clear up a tax issue for marijuana businesses in states that have legalized marijuana under state law.

The tax code has prevented businesses from taking normal business tax deductions related to their business because they are considered to be “trafficking” a Schedule I or II drug.

Marijuana products would still be severely federally restricted. Schedule III drugs require a prescription for people to purchase them. The move would not clear up the barriers that cannabis sellers have in accessing the federal banking system. Marijuana products would still need to go through an existing U.S. Food & Drug Administration (FDA) drug approval process before being considered a legal therapy and becoming available via prescription. That process typically takes years.

The move should have no impact on state level marijuana regulations. States that have legalized adult-use of marijuana will still be considered to be in contravention of federal law because the products have not been approved by FDA or obtained via a formal medical prescription. The change could cause further confusion in the cannabis markets, especially if the FDA eventually approves cannabis products as a legal therapy.

It would not help convenience retailers gain access to this market. In fact, it raises more barriers to entry by restricting any eventual federally approved sales to pharmacies.

Once the DEA makes its formal announcement, it will be subject to the normal notice and comment rulemaking process that any other federal regulation undertakes. That means that there will be opportunities for the public to share their thoughts on the pending change with the DEA. Anti-marijuana legalization groups have already announced their strong opposition to the move and announced that that they are reviewing legal options to oppose it should the DEA formally finalize such a proposal in the coming months.