Will the DEA reschedule cannabis?

Will the DEA reschedule cannabis?

  • On April 6, 2016

On Monday April 4, 2016 the DEA responded to lawmakers with a memo outlining their responses to questions that had been presented to them during calendar year 2015.  The major issue that is being addressed is will the DEA reclassify cannabis away from schedule 1 on the Controlled Substances Act. The news has been well covered over the last several days by reporters who have been following this issue for several years. This is something that many in the cannabis industry have been requesting for many years, but is it something that they really want?

Much of the reason that dispensaries as we know them today exist is because cannabis is a schedule 1 drug. As schedule 1, there is no place where the drug can legally be dispensed as per Federal Law. For the past three administrations, starting with Bill Clinton, the Feds have made the determination to allow medical cannabis dispensaries to open in states that have passed legislation allowing for them, despite that this is in direct opposition to Federal Law. Over the past 20 years there has been no shortage of anecdotal evidence that cannabis has efficacious qualities and recently we have seen a great deal of empirical evidence come out to further support its medical benefits. This has caused members of the public and their representative politicians to demand that cannabis is rescheduled away from schedule 1 to a lower schedule that allows for scientific research and clinical trials.

But what is the effect if this effort is successful? Arguably it is that the entire dispensary industry as we know it is immediately disrupted. If cannabis is a schedule 2 or 3 drug, that means that it must be prescribed by a physician and dispensed by a pharmacist. The DEA has made this clear for years saying:

Pharmacists must receive written and manually signed prescriptions for Schedule II substances. They may receive oral or faxed prescriptions for Schedules III-V substances provided they confirm the legitimacy of the prescription and the practitioner. Prescriptions for Schedule II substances may not be refilled. Prescriptions for Schedules III-V controlled substances may be refilled five times, but no prescription may be filled or refilled more than six months after the date on which the prescription was issued. Only those people who are registered with DEA as importers and who are in compliance with DEA requirements may have controlled substances shipped into the customs territory or jurisdiction of the U.S. from a foreign country.

DEA cannabis                     DEA                         attorney-chuck-rosenberg-fbi-new-dea-chief-800x480

With this in mind, a rescheduling to schedule 2 or lower may provide a boon to the pharmaceutical and bio tech industries who have been itching to study cannabinoids in the hope of isolating compounds that show true medicinal promise. This means that investment capital will likely come pouring into these more traditional industries as soon as the announcement is made, further exacerbating the problems traditional cannabis businesses may have once rescheduling happens.

In many ways, the preferred solution would be to declassify cannabis away from the Controlled Substances Act altogether. While this will not prevent outside industries from getting involved in the space, it could create a national marketplace where cannabis could move across state lines. If that happens the industry will see massive amounts of internal M&A activity in order to prepare for potential acquisitions from outside the industry.

Of course this is all conjecture until we see what the DEA does this Summer, but it is certainly worth thinking about in the near term as no matter what, reclassification or declassification will have a profound impact on the cannabis industry as we know it.