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For decades, the federal government has classified cannabis as a Schedule I substance, deeming it to have a “high potential for abuse” and “no currently accepted medical use in treatment” in the United States. But now, half a century after the Controlled Substances Act placed marijuana alongside heroin and LSD in terms of its perceived dangers, pot’s days as one of the nation’s most incongruously restricted substances may be nearing an end.

Last week, The Associated Press reported the Biden administration was on the cusp of reclassifying cannabis from a Schedule I to Schedule III narcotic — a move that would overturn years of drug policy precedent, and dramatically change the way the government engages with a substance used at one point or another by approximately half the country, according to a recent Gallup poll. The process is not a simple one, with any eventual reclassification occurring only after a series of various administrative hurdles, public comment period, and final judicial review. Still, the reclassification of cannabis would mark a new era in America’s often contradictory relationship with a substance already legalized in one form or another in more than half the states. Crucially, reclassification isn’t full federal legalization. So what would the administration’s more permissive pot posture actually do? 

Scientific study and medical moves

Perhaps the biggest change reclassification would bring is expanding the ability for the government to conduct further research into the health benefits of cannabis. As a Schedule I substance, scientific studies of cannabis have faced “something of a Catch-22: calls for more research, but barriers to doing it,” with researchers sometimes relying on “people’s own reports of their marijuana use” rather than clinical testing, the AP said. Revising its federal classification would “ease some restrictions on studying the drug,” such as the onerous process of applying and registering with the DEA, although “researchers caution barriers would still remain” The Washington Post said. 

Reclassification also means the government acknowledges cannabis, like all other Schedule III substances, has an “accepted medical use and may lawfully be dispensed by prescription,” the Congressional Research Service said. However, any such prescriptions must be approved by the Food and Drug Administration. Though the agency has green-lit medications “derived from or related to cannabis, marijuana itself is not an FDA-approved drug.” States with medical marijuana programs in place already have “some federal protections in place via appropriations legislation that restricts the Justice Department from interfering in those programs” which will remain unchanged by reclassification, CNN said. 

The business of bud

Beyond expanding and easing access to federal research opportunities, reclassifying cannabis will have a major impact on the booming — but still legally murky — marijuana industry as a whole. Once in effect, the new rules will “ease access to banking services and free licensed cannabis companies from IRS rule 280e, which denies most standard business deductions to companies selling Schedule I substances,” High Times said. Under Schedule I rules, cannabis marketers operating in states that have legalized marijuana faced “punishing IRS levies” which in turn created “perverse incentives for black market operators to remain in the shadows,” Rolling Stone said. 

But many experts say rescheduling won’t ease banking challenges for the cannabis industry, which has dealt almost exclusively in cash for lack of banking options. No matter its Schedule placement, “cannabis would still be illegal under federal law, and that is a line many banks in this country will not cross,” said American Bankers Association spokesperson Blair Bernstein. Some industry insiders disagree: “Rescheduling cannabis should pave the way for much-needed safe banking solutions” which creates a “secure environment for financial transactions, granting access to essential services like checking accounts and loans,” Bob Groesbeck, co-CEO of the Las Vegas-based Planet 13 dispensary told High Times. 

Legalize it? Not quite

Ultimately, many pre-existing tensions between states with legal cannabis and the federal government will likely remain unchanged. While reclassification means that some “applicable penalties for some offenses would be reduced,” violations of the Controlled Substances Act which “apply to activities involving marijuana specifically, such as the quantity based mandatory minimum sentences […] would not change as a result of rescheduling,” Congressional Research Service said.