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A recently published Congressional Research Service (CRS) report has highlighted the potential shortcomings of the U.S. Department of Health and Human Services’ (HHS) marijuana rescheduling recommendation. Last year, the HHS published a series of documents recommending that the U. S. Drug Enforcement Administration (DEA) reschedule marijuana to Schedule III of the Controlled Substances Act. HHS officials justified the recommendation on the grounds that cannabis currently has “accepted medical uses” and thus did not meet the conditions required of Schedule I drugs.
Rescheduling cannabis from Schedule I to Schedule III would finally make it legal for doctors to prescribe marijuana at the federal level and would be a major step forward for the country’s medical marijuana industry. However, Congressional researchers argue that the rescheduling recommendation has many shortcomings. The recent report outlined the legal consequences of rescheduling marijuana.
It noted that the country’s state marijuana markets would still be illegal at the federal level and certain cannabis activity-related criminal penalties would remain in place even if cannabis is rescheduled. According to the CRS, approving the rescheduling without any additional legal changes would not make the state legal recreational and medical marijuana industries compliant with the federal Controlled Substances Act.
The report said that while moving cannabis to Schedule III would make it legal for doctors to prescribe it, the U.S. Food and Drug Administration (FDA) would first have to approve cannabis medicines before federal law allows physicians to prescribe cannabis.
Additionally, the manufacturers and distributors of any cannabis products that receive FDA approval would have to register with the DEA and meet regulatory requirements for drugs in Schedule III of the Controlled Substances Act before they can begin handling their respective products. Medical marijuana users would also need to acquire prescriptions from licensed medical providers that will most likely be subject to different federal requirements. The report adds that the rescheduling will only change certain criminal penalties while some marijuana-related penalties would remain unchanged.
On a positive note, the report noted that the rescheduling would finally allow cannabis businesses to deduct their business expenses when they file their federal taxes, something they have been unable to do since the industry’s inception due to federal prohibition. The CRS report also said that regardless of how the rescheduling issue plays out, the Justice Department wouldn’t be able to interfere with state medical cannabis programs, thanks to an appropriations rider renewed annually by Congress since 2012.
As long as the rider remains in place, the report explains, players in America’s state-legal medical cannabis industry will be protected from federal prosecution as long as they comply with state cannabis law.
Despite these shortcomings revealed in the CRS report, cannabis industry actors and ancillary companies such as Innovative Industrial Properties Inc. (NYSE: IIPR) are likely to see the rescheduling of marijuana to Schedule III as a step in the right direction. Other reforms can follow this significant step in due course.
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