DEA Poised to Release Draft Cannabis Rescheduling Rule
Washington, D.C. — A significant procedural step in the potential federal reclassification of cannabis appears imminent, as the U.S. Drug Enforcement Administration (DEA) is reportedly preparing to release a draft of its long-awaited rule proposing the rescheduling of cannabis under the Controlled Substances Act (CSA). According to a source familiar with the matter, the highly anticipated draft rule is expected to be published in the Federal Register sometime early next week.
This move follows a formal recommendation made in August 2024 by the Department of Health and Human Services (HHS). The HHS, acting on a directive from President Joe Biden to review the federal scheduling of cannabis, concluded its scientific and medical evaluation and recommended that cannabis be moved from Schedule I to Schedule III of the CSA. Schedule I drugs are currently defined as substances with a high potential for abuse, no currently accepted medical use, and a lack of accepted safety for use under medical supervision. Heroin, LSD, and ecstasy are examples of other Schedule I substances. Schedule III substances, in contrast, are defined as drugs with a moderate to low potential for physical dependence, a high potential for psychological dependence, and a currently accepted medical use. Examples include Tylenol with Codeine, ketamine, and anabolic steroids.
The DEA, as the agency responsible for enforcing the CSA and determining the scheduling of substances based on scientific and medical findings from HHS and its own analysis, then undertook its review process. The forthcoming draft rule represents the culmination of the DEA’s initial evaluation and formalizes its proposed action in response to the HHS recommendation.
The Regulatory Process: Federal Register and Public Comment
The publication of the draft rule in the Federal Register is a critical stage in the federal rulemaking process. This action officially announces the proposed regulatory change and typically triggers a public comment period. During this period, which usually lasts for a minimum of 30 to 60 days, interested individuals, organizations, state governments, and other stakeholders will have the opportunity to submit formal comments on the DEA’s proposal.
The DEA is required to review and consider all comments received during the public comment period. This feedback can influence the final shape of the rule. Following the comment period, the DEA will analyze the submissions and prepare a final rule, which will also be published in the Federal Register. The effective date of the rule is typically set for a period after its final publication.
While the HHS recommendation in August 2024 focused solely on the scientific and medical aspects of cannabis, the DEA’s review also considers the agency’s legal authority and the criteria for scheduling under the CSA. The draft rule is expected to detail the DEA’s findings and rationale for proposing rescheduling to Schedule III.
Implications of Schedule III Classification
A potential move to Schedule III would have significant implications, though it would not legalize cannabis federally for recreational or medical use without a prescription. Instead, it would primarily impact the scientific, medical, and potentially the commercial aspects of cannabis at the federal level.
For instance, Schedule III status would allow for the possibility of federally approved research into cannabis more easily than is currently possible under Schedule I. It could also pave the way for the development of cannabis-based pharmaceuticals that could be prescribed by doctors and dispensed through traditional pharmacies, subject to Food and Drug Administration (FDA) approval and DEA regulations for Schedule III substances.
Furthermore, a rescheduling to Schedule III could address a major financial burden for state-legal cannabis businesses: Section 280E of the Internal Revenue Code. This provision currently prevents businesses trafficking Schedule I or II substances from deducting ordinary business expenses, leading to extremely high effective tax rates for state-licensed cannabis operators. If cannabis were moved to Schedule III, businesses dealing with it could potentially become eligible for normal business deductions, though clarity on this would likely depend on specific IRS guidance.
However, state-legal cannabis markets, operating under varying state laws that permit medical and/or adult-use cannabis, would largely remain unchanged by federal rescheduling alone. Rescheduling affects the federal classification and regulatory framework, not the underlying state-level legality or regulatory structures. The juxtaposition of federal Schedule III status and diverse state-level legality would create a complex legal and regulatory landscape.
Industry and Research Perspectives
Industry analysts are closely watching the details of the proposed rule. They are particularly interested in language that might clarify how the federal government views state-legal operations, the framework for potential pharmaceutical development, and any provisions related to research. The rule’s specifics could provide significant insights into the future trajectory of federal cannabis policy and its impact on existing state-legal markets and the burgeoning field of cannabis research.
The anticipation of the draft rule’s release has already generated considerable interest across the political spectrum and within the cannabis industry, research community, and public health sectors. The impending publication marks a tangible step forward in a process that could fundamentally alter the federal government’s approach to cannabis after decades under the Schedule I classification.
While the release of the draft rule is a crucial procedural development, it is not the final step. The subsequent public comment period and the DEA’s final determination will be closely scrutinized as stakeholders await a definitive resolution on the potential federal rescheduling of cannabis.
