White House Orders Schedule III Reclassification
Summarize
President Donald Trump signed an executive order directing federal agencies to reclassify marijuana. It has been 50 years since such a significant change to U.S. cannabis policy was put in place. Once finalized by the Drug Enforcement Administration, the order would move cannabis from Schedule I of the Controlled Substances Act, which is the most restrictive category reserved for substances considered to have no accepted medical use, to Schedule III. The less restrictive Schedule III includes drugs recognized for medical use and a lower potential for abuse.
The administration indicated the decision is a response to years of appeals from patients who rely on cannabis to manage severe and chronic conditions. In announcing the order, Trump said the action was driven by requests from American patients living with incurable and other severe chronic conditions, neurological disorders, including many veterans with service-related injuries, and older Americans whose long-term medical problems significantly reduce their quality of life.
Also, an element of the reclassification effort involves a pilot program offered by the Centers for Medicare and Medicaid Services. Beginning in April, certain Medicare-covered seniors would receive free, doctor-recommended CBD products. Compliance with all applicable state and local laws is still required. CBD products must still come from sources that comply with laws, such as the Federal Farm Bill. A third-party lab must independently test them to verify CBD content and screen for contaminants.
The reclassification has broad implications beyond giving patients more access to cannabis. Moving cannabis to Schedule III would mean that businesses operating legally under state laws would no longer be subject to certain federal tax restrictions. Federal tax laws have limited businesses’ ability to deduct routine business expenses that other businesses can deduct, such as payroll and rent. The reclassification of cannabis could also give businesses increased access to banking and financing services, which cannabis’s prior classification has constrained due to tax laws. This could lead to more access to capital for business expansion.
One potential issue is that some observers believe these regulatory shifts may encourage greater participation by established healthcare and pharmaceutical organizations seeking more opportunities to serve federally insured patients. However, the entry of large pharmaceutical companies into the market could drive some smaller businesses out of business.
Trump said,
“I want to emphasize that the order … doesn’t legalize marijuana in any way, shape or form, and in no way sanctions its use as a recreational drug.”
As a Schedule III controlled substance, a prescription is required.
The announcement has also drawn attention to CBD, which has grown popular in consumer products but remains minimally regulated by the FDA. Experts note that reclassification could facilitate more comprehensive research into both cannabis and CBD, potentially leading to clearer guidance on their medical uses and safety.
More explicit guidance at the federal level is needed because the mishmash of federal and state laws has created enormous confusion for the cannabis industry, especially for industrial hemp industry members producing and selling CBD products. Also, the FDA’s lack of guidance is likely holding back the CBD industry’s growth and innovative product development.
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