In October 2022, President Biden asked “the Secretary of Health and Human Services (HHS) and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” On August 29, 2023, the HHS made its recommendation to the U.S. Drug Enforcement Agency (DEA) to reschedule cannabis to Schedule III, a category assigned to drugs having low to moderate potential for abuse and/or addiction, and less dangerous than Schedule I or II. It is now up to the DEA, which has final authority on scheduling or rescheduling drugs under the Controlled Substances Act.
If the DEA reschedules cannabis, it will still be an illegal substance, but a little “less illegal.” Cannabis will remain subject to the regulations of the Food and Drug Administration and there will still be a difference between legal status at the state and federal levels for those states that legalize cannabis for adult recreational use.
The impact of rescheduling on banking and financial services is unknown. Perhaps most significantly, businesses in the cannabis industry will pay less taxes because rescheduling to Schedule III eliminates the tax burdens of Internal Revenue Code Section 280E.
An August 30 Politico article called the move “potentially the biggest change in federal drug policy in decades.”
Until the DEA completes its review, there will be a lot of speculation. Let’s just hope good things come to those who wait.
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