Opinion: Results of Rescheduling Marijuana May Not Be What You Expect

Marijuana may finally have a new home under federal law. After a review requested by President Joe Biden, the Department of Health and Human Services recommended moving the legal status of marijuana to Schedule III. The Drug Enforcement Administration is now reviewing HHS’s recommendation, and the Food and Drug Administration just released research supporting the proposal.

Rescheduling may sound easy, but the results would not be what most people expect.

First, a look at where we are: Marijuana is a Schedule I narcotic under the Controlled Substances Act. That means, in the eyes of the federal government, it is highly addictive and has no medicinal value, and it is therefore completely illegal. Schedule III narcotics are what doctors typically prescribe. Moving marijuana to Schedule III has been thought of for years as “federal legalization,” but that is only partly true.

Federal marijuana legalization could come in two basic forms: rescheduling and de-scheduling. Rescheduling, or medical marijuana legalization, would change it from a Schedule I narcotic, completely illegal, to Schedule III, making it available through a prescription. De-scheduling, or federal recreational marijuana legalization, would remove marijuana from the Controlled Substances Act and regulate it separately, like alcohol.

Only rescheduling is on the table now, but it would come with some awkwardness. First, it likely would not be available in the forms current marijuana consumers are used to — no smokable joints or pot brownies, maybe no edibles or vapes or anything attractive to minors, just traditional medicinal forms, such as pills, oils or topical ointments. It would therefore miss the overwhelming majority of today’s marijuana consumer market.

Second, it would not happen overnight. Normal FDA approval for medicine takes years of clinical testing. The COVID vaccines were approved at lightning speed and are not barometers for traditional approval timetables.

Third, in a rescheduling-only scenario, state and local jurisdictions would lose the tax revenues to which they have become addicted, as medicine is generally not taxable. The potential budget implications could create political opposition from states, depending on how it would be implemented.

Finally, big pharmaceutical companies might take over a significant portion of the medical market, devastating the existing industry. Now spread across the country, medical marijuana manufacturing could concentrate only in existing pharmaceutical states.

If the DEA agrees with HHS’s rescheduling recommendation, federal policymakers would then have to make major decisions. First, would medical marijuana be limited to only those with true medical needs, or would a broader customer base have access? Would the federal government allow smoking as a medical delivery mechanism through our highly regulated prescription system? Would prescription marijuana be available in the forms currently demanded by the recreational market, or only through traditional medicinal delivery mechanisms? It is likely that policymakers will take a somewhat restrictive approach to the ‘how’ of rescheduling, and therefore legalized medical marijuana would have a much smaller impact than many proponents anticipate.

Because of this, the federal government would almost certainly allow state recreational marijuana structures to continue to exist parallel to the federally legalized medical marijuana.

Therefore, it is likely that rescheduling would result in a hybrid system with medical marijuana available through physician-issued prescriptions to those truly in need, plus a state-legal recreational structure. While they may not be able to consume in all the ways they would like, patients could potentially have their prescription marijuana covered by insurance and would pay no sales tax on those purchases. The federal government could play a key role in creating uniform systems for testing, potency, portion size, tracking, packaging, labeling, consumer protection and enforcement, and each state would continue to have the autonomy to decide whether it will allow recreational marijuana, and if so, how to regulate it. Importantly, decriminalizing marijuana by removing it from Schedule I would eliminate a tax burden from recreational marijuana business and give a boost to the industry.

Rescheduling marijuana would be a significant step, but it would not be as impactful as many people believe.

Tom Downey is a regulatory attorney at Ireland Stapleton Pryor & Pascoe, former Assistant Colorado Attorney General and former Director of Excise and Licenses for Denver. The opinions expressed here are the author’s own, and do not necessarily reflect those of his firm. Reach him at [email protected].

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