US: HHS recommends DEA to move cannabis to schedule III

The U.S. Department of Health and Human Services (HHS) has transmitted its recommendation to the U.S. Department of Justice (DOJ) and the Drug Enforcement Administration (DEA) that cannabis be moved from Schedule I to Schedule III under the Controlled Substances Act. Rescheduling cannabis to Schedule III would eliminate the 280E tax burden that currently applies to cannabis businesses.

Schedule I drugs are defined as "drugs with no currently accepted medical use and a high potential for abuse," which includes heroin and LSD. Schedule III drugs are considered to have a "moderate to low potential for physical and psychological dependence" and can be obtained legally with a prescription. The HHS' recommendation to reschedule cannabis is part of the ongoing scheduling review process being undertaken by the federal government following the directive of President Biden made on October 6, 2022.

"A historic recommendation"
Saphira Galoob, Executive Director of the National Cannabis Roundtable, comments: "For half a century, cannabis has been inappropriately classified with no real scientific basis to the detriment of patients and those persecuted under the misguided drug war. With the conclusion of the scientific review by HHS, this historic recommendation to lessen federal restrictions on cannabis and affirming that cannabis has medical value is a major win for patients and should help undo decades of misguided drug policy. At the end of this process, if cannabis ultimately is moved to Schedule III or lower, it will also alleviate the overwhelming tax burden currently facing legal cannabis businesses, which, along with the lack of access to capital, is strangling the regulated industry to the benefit of the illicit market."

"This recommendation by HHS is just the first part of the scheduling review process started under the direction of President Biden last fall, so it remains just as urgent and critical for congressional action on SAFE Banking and other cannabis policy reforms on the federal level. We look forward to the DEA and DOJ determination on this recommendation and hope that those agencies will consider additional aspects of criminal justice reform in their decision, which lay outside the jurisdiction of the FDA and HHS," Saphira adds.

Stocks rise
According to Bloomberg, cannabis stocks surged after the announcement was made on Wednesday. "The MJ PurePlay 100 Index, which tracks cannabis stocks, jumped 13%, the most since October, on the news. Goodness Growth Holdings and Columbia Care Inc. were among the biggest gainers in the index, up 26% and 39%, respectively. Tilray Brands Inc. ended the day 11% higher, while Canopy Growth Corp. rose 13%. Verano Holdings Corp. gained 17% and Cresco Labs Inc. advanced 22%."

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