What Biden’s weed move means for cannabis industry and states

A demonstrator waves a flag with marijuana leaves depicted on it during a protest calling for the legalization of marijuana, outside of the White House on April 2, 2016, in Washington. (AP Photo/Jose Luis Magana, File)

Cannabis stocks jumped this week after President Biden said he asked federal agencies to “review expeditiously” how marijuana is scheduled under federal law.

But cannabis law experts say the review could take years. And not every outcome will be well-received by marijuana businesses now operating in the 36 states with a legal pot program.

Experts say Attorney General Merrick Garland taking marijuana off the controlled substances list, or descheduling, would be the best-case scenario.

The impact of descheduling “would be profound,” John Hudak, deputy director of the Center for Effective Public Management and a senior fellow in Governance Studies at the Brookings Institution, a Washington D.C. think-tank, said in an email.

Descheduling would remove restrictions around interstate commerce, banking, tax policy and the ability of federal agencies to guide states, he said.

But it’s more likely that federal officials choose to reclassify the drug as a less dangerous substance, or reschedule it, experts say. “Under re-scheduling, almost nothing would change,” Hudak said.

The federal Controlled Substances Act sorts dangerous drugs into five categories. Marijuana is currently “Schedule I,” the highest classification, meaning the federal government considers it to have a high risk of abuse and no valid medical use. Federal law bans sales, possession and manufacture of Schedule I drugs, although it does allow for some research, according to the Congressional Research Service.

Under the administrative review process Biden has asked for, federal agencies will have to review scientific evidence for how marijuana affects the body and its potential for abuse, among other factors, according to a 2015 report co-authored by Hudak.

“It will take forever,” said Hilary Bricken, a Los Angeles-based attorney and chair of Harris Bricken’s regulated substances practice group. “There’s all this review and input, from all these federal agencies, that are lobbied by all these private interest groups.”

As marijuana research has historically been limited, thanks to the drug’s scheduling, Bricken said she’s not sure officials will have the data they need to deschedule it.

Rescheduling — the more likely scenario — would mean that, under federal law, people would only be allowed to use marijuana if they had a prescription.

“The only way to get a hold of it legally, if it’s rescheduled, would be through a physician, at a hospital and a clinic,” Bricken said.

The gatekeepers would be pharmacists, said Bob Hoban, the Denver-based leader of Clark Hill’s Cannabis Industry Group. “That’s not what the industry’s all about right now, although that would cause a substantial increase in drug development,” he said of rescheduling.

“It would formally recognize that cannabis does have medicinal benefit,” he added.

The marijuana industry would oppose any effort to move marijuana to Schedule II, on par with drugs such as Vicodin and fentanyl, said Michael Correia, director of government relations for the National Cannabis Industry Association. “I would do everything in my power to oppose Schedule II,” he said.

The industry would be more supportive if cannabis were moved to Schedule III or lower, on par with drugs such as Xanax. That would allow cannabis businesses to make federal business tax deductions, potentially with a big impact on their profits.

Federal scheduling hasn’t stopped states from legalizing cannabis. The Obama, Trump and Biden administrations have all looked the other way as voters and lawmakers in 19 states and Washington, D.C., allowed adults to use marijuana. Voters and lawmakers in an additional 17 states have let people use marijuana for medical reasons, according to the Marijuana Policy Project.

More states could legalize soon. Voters in Maryland, South Dakota, Missouri, Arkansas and North Dakota will decide whether to legalize adult pot use in November.