Early this month, the Drug Enforcement Administration announced that it would make a decision on whether to reclassify marijuana. Under the Controlled Substance Act, the federal government considers marijuana a Schedule I narcotic, meaning that it has high potential for abuse and no medical benefits, a position at odds with the 24 states that have legalized medical marijuana and the millions of casual users currently enjoying the occasional smoke. There’s little dispute that the current classification of marijuana is absurd — other Schedule I drugs include heroin, LSD and MDMA; both cocaine and methamphetamine are considered less onerous Schedule II drugs. But there is much debate about what rescheduling might mean for the nascent legal pot industry.
Everyone agrees, that rescheduling marijuana would make it easier for scientists to research the plant. It would also vindicate the widely held belief that marijuana has important medicinal properties. And for the businesses generating over $5 billion worth of revenue on marijuana products each year, rescheduling would mean a major step towards finally legitimizing the industry.
But there is also cause for some concerns. The DEA has rejected petitions to reschedule marijuana three times. In each instance, the agency took years to make the decision. That kind of uncertainty is toxic for young businesses. In addition, rescheduling marijuana could unleash new federal oversight that would make life even more difficult for companies that already operate at the whim of the White House. The Obama administration has allowed the industry to operate in states where pot is legal, but the next administration could take a different approach.
Hilary Bricken, a cannabis business lawyer with the Seattle firm Harris Moure, says she’s not optimistic that the DEA will reschedule. “It’s so speculative as to what the DEA will do and what will happen,” she says. But she does worry that rescheduling could cause a crackdown on state legal businesses, or set the stage for greater federal involvement in marijuana regulation.
If the federal government determines that medical marijuana must be subjected to FDA approval, companies would have to enter a process that can take years to complete and cost more than $1 billion per product. Few, if any, cannabis companies in the U.S. have the resources for that, which might open the door for Big Pharma to muscle in and take over the business. “They could put every medical provider in the country out of business in a matter of months,” says Dean Heizer, chief legal strategist at LivWell, one of Colorado’s largest marijuana companies.