White House Moves to Reschedule Cannabis in ‘Monumental’ Decision, Biden Says

President Joe Biden confirmed May 16 that the White House is moving forward on the next step to reschedule cannabis, from a Schedule I to a Schedule III drug, under the Controlled Substances Act (CSA).

This announcement comes two weeks after the Department of Justice (DOJ) confirmed with Cannabis Business Times that Attorney General Merrick Garland circulated a proposal from the Drug Enforcement Administration (DEA) for the plant’s reclassification to Schedule III.

That proposal initiated a review process by the White House Office of Management and Budget.

Now, more than a year and a half after Biden directed the Health and Human Services Department (HHS) in October 2022 to conduct an administrative process to review how cannabis is scheduled, the federal government is officially moving forward on reforming cannabis under the CSA.

“This is monumental. Today, my administration took a major step to reclassify marijuana from a Schedule I drug to a Schedule III drug,” Biden said in a video message released on social media. “It’s an important move toward reversing longstanding inequities. Today’s announcement builds on the work we’ve already done to pardon a record number of federal offenses for simple possession of marijuana. And it adds to the action we’ve taken to lift barriers to housing, employment, small business loans, and so much more for tens of thousands of Americans.”

Coinciding with Biden’s announcement, the DOJ officially announced May 16 that it submitted proposed regulations to reschedule cannabis.

“Look folks, no one should be in jail merely for using or possessing marijuana. Period,” Biden said. “Far too many lives have been upended because of [our] failed approach to marijuana. And I’m committed to righting those wrongs. You have my word on it.

Too many lives have been upended because of our failed approach to marijuana.

So today, the @TheJusticeDept is taking the next step to reclassify marijuana from a Schedule I to a Schedule III drug under federal law.

Here's what that means: pic.twitter.com/TMztSyyFYm

— President Biden (@POTUS) May 16, 2024

While Biden has repeated this stance that no one should be in jail for using or possessing cannabis during his push for reform in recent months, reclassifying cannabis to Schedule III would not end criminalization, according to those who have advocated for an all-or-nothing approach that calls for completely descheduling the plant.

RELATED: 'Deschedule or Do Nothing:' Drug Policy Alliance Says Rescheduling Cannabis Would Not End Criminalization

But reclassifying cannabis to Schedule III does have myriad implications for the cannabis industry, from simple normalization to tax savings via the elimination of Internal Revenue Code Section 280E, which would allow cannabis companies to deduct ordinary business expenses.

For some of the biggest players with multistate cannabis operations, this means tens of millions of dollars a year in savings.

“Reclassifying cannabis is an important and pragmatic step on the path to full legalization,” Adam Goers, senior vice president of corporate affairs for The Cannabist Co., said in a prepared statement provided to CBT.

Also serving as the co-chair for the Coalition for Cannabis Scheduling Reform, Goers worked closely with the Biden administration through the nearly 20-month-long rescheduling process so far.

“This move will not only eliminate the draconian taxation of cannabis businesses under 280E, but it will open research opportunities, protect public health and safety, and further signal that cannabis is being normalized under federal law,” he said.

Biden’s May 16 announcement that the DOJ is moving forward on the reclassification process comes after HHS officials conducted a scientific review, determining that cannabis has “currently accepted medical use” and recommending to the DEA in August 2023 that cannabis should be reclassified as a Schedule III drug.

This means—with the DOJ moving forward on this proposal—that the federal government recognizes that cannabis’s relative abuse potential and its physical and psychological dependence liability are not as high as compared to other drugs currently listed on Schedule I (heroin, LSD, ecstasy, etc.) and Schedule II (cocaine, fentanyl, etc.).

Cannabis has been listed as a Schedule I drug ever since the CSA was signed into law by President Richard Nixon more than 50 years ago.

“Right now, marijuana has a higher-level classification than fentanyl and methamphetamine—the two drugs driving America's overdose epidemic,” Biden wrote on social media May 16. “That just doesn't add up.”

The next step now is for the DOJ to issue a notice of proposed rulemaking to reclassify cannabis in the Federal Register. This will be followed by a 60-day public comment period prior to the department potentially finalizing the rule. This also allows the opportunity for cannabis rescheduling opponents to challenge the rule and trigger an administrative law hearing.

“We fully expect that there are going to be challenges, not necessarily a legal challenge (although that’s certainly possible), but an administrative law judge hearing request on the rule,” Jonathan Havens, Baltimore office managing partner and Cannabis Law practice co-chair at Saul Ewing, previously told CBT.

Specifically, cannabis prohibitionist group Smart Approaches to Marijuana (SAM) already announced that it’s raising money to fund a potential legal challenge.

While the timeline for cannabis to be officially listed as a Schedule III drug remains fluid amid the possible legal roadblocks, that’s not stopping industry stakeholders from applauding the “crucial step” toward implementation in prepared statements provided to CBT following Biden’s announcement on May 16.

“AYR applauds today’s announcement regarding continued progress on the historic decision to reclassify cannabis from Schedule I to Schedule III,” Ayr Wellness President and CEO David Goubert said. “This milestone represents another crucial step towards implementation.” 

Bryan Murray, the executive vice president of government relations at Acreage Holdings, said the rescheduling decision is supported by extensive research that demonstrates the federal government’s recognition of cannabis’s medical benefits.

“Without 280E, we’ll see industry growth, job creation, and greater investment in research and development,” he said. “Additionally, this decision supports efforts to address past injustices, particularly the disproportionate impact of cannabis prohibition on Black, Brown and economically disadvantaged communities.”

Verano founder and CEO George Archos also applauded the progress.

“Today’s news from President Biden and the White House approving rescheduling cannabis is another significant acknowledgement from the highest levels of the federal government of the countless economic, social and societal benefits cannabis provides millions of Americans every day,” Archos said. “We are grateful that our leaders are finally recognizing the positive power of this incredible plant and listening to the overwhelming majority of Americans who support legalization, and [we] look forward to further progress towards what we hope will be the most monumental year for cannabis reform in the history of our nation.”

The move by the U.S. government to reschedule cannabis comes at a time when a record-high 70% of Americans support legalizing cannabis, according to Gallup pollsters.