Details Remain Unclear as Marijuana Rescheduling Gets Proposed in an Election Year

In the months leading up to a presidential election, when there is a chance that the White House may change occupants after November, administrations often push their agendas through federal actions, such as regulations and guidance, coming out of the federal departments.

So, while this election year we are not expecting Congress to get much done in terms of actual legislation, we can expect the Biden Administration to ramp up its efforts at pushing things through at the regulatory level. 

A good example of this is the proposed rule published late last week that would, in essence, make marijuana legal for medicinal use across the country. The rule, coming out of the Drug Enforcement Administration (DEA) under the Department of Justice (DOJ), proposes that marijuana be changed to a Schedule III substance under the Controlled Substances Act.

Marijuana is currently categorized as a Schedule I substance, defined as a substance for which there is a high potential for abuse, no current medical use, and a lack of accepted safety for use, even under medical supervision. 

Last week’s DEA proposed rule follows a determination from the Department of Health and Human Services (HHS) last summer that marijuana in fact does have accepted medical uses, and is less dangerous than other Schedule I drugs, which include heroin and LSD.

This move by the Administration probably triggers more questions than answers, at least with respect to its regulatory challenges. Nearly 40 states have already passed laws that legalize medical use of marijuana, though there is little in the way of state rules on prescriptions, recordkeeping, and other administrative and safety guardrails.

Although the rule would reclassify marijuana, it would still be a controlled substance, which means that federal prosecution is still a risk to anyone who traffics in the drugs or “prescribes” the drugs without the appropriate approvals and processes.

Perhaps just as important as what this proposed rule would do is what the rule would definitely not do. For instance, the proposed rule would not federally legalize marijuana to be grown and sold for recreational use. A total of 24 states allow the sale of recreational cannabis.

As an example of this, the newly proposed rule, if finalized, would not get anyone out of jail who were put there solely for growing or selling marijuana.

Relatedly, the rule would not give the cannabis industry access to credit-card and payment systems.

It is also very unclear what this means for the U.S. drug and healthcare industry at large, as you can well imagine. Could gummies bought at the neighborhood cannabis store now be covered by insurers and bought with your HSAs or FSA?

We are basically at the beginning of what may be a long rulemaking process before the rescheduling actually takes place. However, how long that will take is another question. As you may know, some regulatory changes that have popular support can move quickly from proposed rule to final rule within a year. Other rules can take years. However, we can expect that the Biden Administration will move on this rule quickly.

This may be just the latest in a number of actions that will be taken up this election year by the Biden Administration.

We’ll keep our eyes on it.