SCHEDULE III Fears, Facts & the Future

Posted by Steph Sherer on September 13, 2023

Navigating Medical Cannabis in the Federal Arena

The news of Health and Human Services’ (HHS) recommendation to move Cannabis to a Schedule III status created a flurry of media coverage and press statements from various cannabis stakeholders and elected officials about the impact of such an action. Much of the focus was on the impact this would have on the current state-level cannabis businesses and often confused what would be possible under Schedule III with what will actually happen when the scheduling process at the Department of Justice (DOJ) is complete.

For medical cannabis advocates, rescheduling means that the struggle for access to medical cannabis has moved to the federal level. A change in schedule pushes the issue before federal agencies beyond determining IF cannabis has accepted medical properties to HOW we can integrate cannabis into the healthcare infrastructure.

The federal prohibition of cannabis sent medical cannabis advocates to their states for legal protection and eventually access. Through state programs we were able to develop regulations for various stages of the supply chain, train a workforce, stimulate interest in cannabis research, and as HHS has concluded, establish “accepted medical use in the United States.”

While the unknown often conjures fear, the truth is, medical cannabis cannot evolve without a change in federal policy, and it is worth repeating, adult use cannabis is NOT the evolutionary path for medical cannabis. We also know from the aftermath of the Farm Bill, that the Food and Drug Administration (FDA) has concluded that a new regulatory system is needed for manufacturing and distribution of cannabis and cannabinoids meant for human consumption.

So, in the same way that patient advocates came together and guided voters, state legislators, and regulators down an unknown path of overseeing the manufacturing and distributing of a Schedule I substance; it is time for us to guide federal agencies and policymakers through the unknown path of bringing plant-based, multi-compound, non-pharmaceutical medicines into the national healthcare infrastructure. The good news is we have been preparing for this moment for over 20 years. . . keep reading.

Americans for Safe Access (ASA) created this blog to help clarify the cannabis scheduling process including next steps, outline some of the impacts that would follow a change in scheduling status, and to share our vision of what is now possible.

MAJOR TAKEAWAYS

Medical cannabis advocacy has just entered the federal arena.
Federal health agencies have confirmed that cannabis has accepted medical use in the United States.
Cannabis WILL change schedules.
The federal oversight of cannabis at the federal level will expand beyond the DOJ after it changes schedules.
A change in schedule will intensify the need for Congressional action to create a regulatory framework for medical cannabis and cannabinoid products.
Unregulated and unsanctioned commerce associated with schedule II & III substances is considered drug trafficking.

Now is the time to get involved!

BACKGROUND

In October 2022, President Biden called on Health and Human Services (HHS) & the Department of Justice (DOJ) to conduct a review of the scheduling of cannabis under the Controlled Substances Act (CSA).
The process of determining the schedule of substance is defined under the CSA and requires a medical and scientific review defined under the “Eight Factor Analysis” which includes a “five- element test” for determining whether the drug has a currently accepted medical use in treatment in the United States. This test is conducted by HHS and delegated to the FDA, and is followed by a final review and scheduling determination by the DOJ which is delegated to the Drug Enforcement Administration (DEA).
Over the last 50 years, HHS and DOJ have conducted five scheduling reviews of cannabis, initiated by the petition process defined in the CSA. The last review concluded in 2016 with the DEA’s issuing “Denial of Petition to Initiate Proceedings to Reschedule Marijuana.”

HHS REVIEW

On August 30, 2023, HHS confirmed news reports that their medical and scientific review, which included a recommendation that cannabis be moved to Schedule III as defined by the CSA, had been sent to the DEA.
The HHS review is not available to the public at this time. Barring a leak, an unlikely successful FOIA filing, or a demonstrative action from Congress, it will not be in the public domain until it is added to the Federal Register along with DEA’s review when the DOJ issues their determination.
In order for HHS to recommend Schedule III, their scientific review must include evidence supporting:
- Cannabis has “accepted medical use in the United States” and
- Cannabis has a “moderate to low potential for physical and psychological dependence. Schedule III drugs abuse potential is less than Schedule I and Schedule II drugs but more than Schedule IV”.

HHS asserting that cannabis has “accepted medical use in the United States” is not equivalent to FDA approval or even a recognition that cannabis IS a medicine as defined by the FDA.

WHAT’S NEXT

The DEA is now performing their own review that will include the HHS findings, their own application of the CSA’s “8 Factor Analysis”, and scheduling allowances under the United States’ obligations to international drug treaties.
There is no statutory time requirement for the DEA/DOJ response.
DOJ is not bound to HHS’s Schedule III recommendation for their final determination. However, they will unlikely recommend that cannabis remain in Schedule I because:
- DOJ is bound to HHS’ determination of accepted medical use in the U.S.
- DOJ is bound to the definitions of the schedules: “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.”
- The CSA has strong ties to United Nation (UN) drug treaties and the UN recognized cannabis’ medical use when it rescheduled cannabis in 2020.

IMPACT OF ANY CHANGE IN CANNABIS SCHEDULING

A scheduling change will likely impact social attitudes about medical cannabis in general, reducing the stigma, and increasing the acceptance of cannabis for medical professionals, employers, state and federal policy makers.
While state medical cannabis programs will continue to be protected from federal interference by the DEA and DOJ under the protections provided under the CJS amendment, as soon as cannabis is on Schedule II, III or even de-scheduled, any cannabis activity that includes anything outside of personal use is now under the jurisdiction of other federal regulations and enforcement. Enforcement activity would be up to the priorities of POTUS.
A change in scheduling, especially under Schedule III, would make conducting research on cannabis more accessible by decreasing costs to meet requirements for the handling, storage and security associated with Schedule I substances. This will expand and improve scientific cannabis research and lead to greater knowledge of its effects, safety, and potential uses.

IMPACT OF CANNABIS SCHEDULING ON STATUS QUO

Products produced in state medical cannabis programs would NOT move into federally regulated protocols without guidance from Congress and a registration process. For example, these products would NOT be available by prescription, nor would prescriptions be required for patients to participate in state medical cannabis programs. These products could not be used in efficacy-related clinical trials, etc.
Unregulated Schedule II/III substances are still federally illegal. The protection of individuals for possessing these substances is through a prescription, and luckily for patients, the federal government rarely enforces simple possession charges. However, cultivating, manufacturing, and/or distributing these substances outside the regulatory process is referred to as trafficking and still holds steep penalties.
For example, penalties for Trafficking Any Amount of Schedule III drugs:
- First Offense: Not more than 10 years. If death or serious injury, not more than 15 yrs. Fine not more than $500,000 if an individual, $2.5 million if not an individual.
- Second Offense: Not more than 20 yrs. If death or serious injury, not more than 30 yrs. Fine not more than $1 million if an individual, $5 million if not an individual.
Tax deductions for business with DEA cultivation licenses would be likely. While 280E specifically refers to Schedule I & II, it is unlikely that unregulated Schedule III substances would be allowed tax deductions for business expenses as the manufacturing and distribution of these substances is considered trafficking under federal law. All income is taxable in the U.S., (i.e. Al Capone), but business expenses are not deductible for illegal activity (i.e. racketeering, sports betting, prostitution, cock fights etc).

PATHWAY FOR CANNABIS AND CANNABINOID MEDICINES

ASA is calling on Congress to adopt a comprehensive approach to cannabis regulations that would include the creation of a new schedule for cannabis and cannabinoids (Schedule VI) and the creation of the Office of Medical Cannabis and Cannabinoids Control (OMCCC) housed in HHS. ASA has developed a legislative framework for a national medical cannabis program that builds on the knowledge from the state level experiment, includes input from patients, regulators, researchers, medical professionals, medical cannabis providers, and patient organizations, and incorporates the experience of the 65 countries with federal medical cannabis programs.

A NEW AGENCY: OMCCC

The mission of the OMCCC is to facilitate access to medical cannabis for therapeutic use and research, regulate the production of medical cannabis and cannabinoid products, facilitate private-public partnerships for product development and research, and oversee the new Schedule VI.

The OMCCC will require initial federal funding though most operational funds will come from the reorganization of current cannabis oversight funding, licensing and permit fees, and private- public research partnerships.

A NEW SCHEDULE: Schedule VI

There is a national consensus that cannabis does not belong in Schedule I of the Controlled Substances Act (“CSA”). A status shared with heroin and a classification claiming it is considered more dangerous than cocaine, methamphetamine, OxyContin, and fentanyl (all Schedule II substances). The overwhelming majority of substances listed in the Controlled Substances Act are synthetic compounds, not natural products. Cannabis (and perhaps a few other natural substances) do not organically fit into the schedules described by the CSA.

Since 1996, states have been authorizing cannabis programs that operate completely outside the purview of the CSA. By amending 21 USC 812(b)(5) of the CSA to create a new scheduling category for cannabis, Schedule VI, Congress will maintain moderate control over medical cannabis and cannabinoids for human consumption, give clear guidance to federal and state agencies, all while allowing the greatest number of patients to access cannabis as a medicine.

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SCHEDULE III Fears, Facts & the Future