Six months ago President Biden announced plans to reclassify cannabis as a Schedule III drug.

On Monday, the U.S. Drug Enforcement Administration kicked off the process with a procedural hearing as part of the formal rule-making process and prepares for a trial.

The DEA’s Chief Administrative Law Judge, John J. Mulrooney, said the trial portion of the rule-making process will likely begin mid-January. An official date has not been set.

At the trial, parties for and against the rescheduling will call expert witnesses and have the opportunity to cross-examine witnesses.

Most of the witnesses will testify on the medicinal uses of cannabis and the risk for addiction.

Why it matters: Under the Controlled Substances Act, cannabis is currently a Schedule I drug.

Rescheduling it to Schedule III would be a historic shift.

  • Cannabis is currently classified at the same level as heroin and LSD. Schedule III drugs

are considered to have a moderate to low risk of physical dependency. They include

drugs such as testosterone and anabolic steroids.

  • Cannabis companies currently face a higher tax burden than others. A Schedule III

classification would allow cannabis businesses to claim federal tax deductions. Allowing

  • Regulatory barriers currently restrict cannabis research. A reclassification would remove

some barriers.

  • Federal penalties for the manufacture, distribution, or sale of cannabis could change.

As a Schedule I drug the penalty is five to 40 years imprisonment for the first offense. For a Schedule III drug, the maximum is five years imprisonment.

Background: Recreational cannabis is legal in 24 states and in Washington D.C. 37 states, and Washington D.C., have comprehensive medicinal cannabis programs, seven states allow CBD oil for medicinal use. Six states have not legalized cannabis for either use.

  • According to Pew Research Center, 89% of Americans believe cannabis should be legal

in some form. 32% say it should be legal for medicinal use only. 57% say it should be

legal for medicinal and recreational use.

  • A Schedule III classification would have no effect on cannabis businesses' ability to work

with federally insured banks.

  • When the proposal to reclassify cannabis was announced, American Bankers Association president, Rob Nichols, released a statement calling for the SAFER Banking Act which would allow banks to work with cannabis businesses.