What does rescheduling cannabis mean for New York State?

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When the U.S. Department of Health and Human Services last week recommended that cannabis be moved from the Drug Enforcement Agency’s Schedule I to Schedule III, stakeholders nationwide began wondering how it will affect them.

Marijuana is currently a Schedule I narcotic, a category reserved for substances the DEA claims have a high risk for abuse and no medical benefits. If the DEA accepts HHS’ recommendation, cannabis would remain a controlled substance, but would be in the same category as drugs available with a prescription like ketamine and anabolic steroids.

To get an idea of how this move could affect New York’s legal weed market and beyond, NY Cannabis Insider spoke with three cannabis-focused attorneys in New York about how they think reclassifying cannabis as a Schedule III substance will play out.

Lauren Rudick, cannabis-focused attorney and founder and managing principal of Rudick Law Group, a new boutique, women-led law firm

The prospective “rescheduling” of cannabis inexcusably fails to address restorative justice and further perpetuates the stigmas that allowed cannabis to be scheduled and maintained as a Schedule I substance under the CSA in the first instance.

Adding insult to injury, it may facilitate enshrining the first movers’ advantage enjoyed only by large, multi-state operators, many of which are properly scrutinized for anti-competitive operations and predatory dealmaking, at the expense of smaller, sustainable, and diversely held businesses.

In order for substances to be properly classified as Schedule I under the Controlled Substances Act, they must meet three requirements, namely that it: (i) cannot have any medical benefit; (ii) cannot be used safely, even under strict medical supervision; AND (iii) be highly susceptible to abuse.

Cannabis meets none of these requirements. Instead, we’ve learned that the classification of cannabis as a Schedule I substance (by the Nixon Administration) was rooted in racial animosity, bigotry, and a desire to suppress political speech, which was antithetical to the then-current political regime. While the government could not, without blatantly violating the US Constitution, target war protestors or people of color, they could endeavor to target their drug of choice.

The classification of cannabis as a Schedule I substance was supposed to be temporary, subject to further medical research. The very government-sanctioned research revealed that cannabis is among the most efficacious medical substances known to man. Yet cannabis remained classified as Schedule I, while the focus of research shifted to prospective harms, as opposed to medical efficacy.

Reclassifying cannabis as a Schedule III drug ignores these [embarrassing] errors and lapses in judgment, which defied medical science and triggered an unconstitutional campaign against people, mostly of color. And it will ignite layers of bureaucracy among governmental institutions, wreaking havoc on existing state cannabis programs.

A new classification as Schedule III removes some barriers to medical research (an incredible win for medical patients, many of whom rely upon medical cannabis to live or live comfortably), as well as to banking and financial reporting (likely to result in an influx in investment dollars, spurring innovation and competition).

However, there are no provisions for expungement, resentencing, addressing the collateral consequences associated with prior drug arrests, lowering barriers to entry for those who are traditionally underrepresented in cannabis business ownership, assuring a safe and productive transition to regulated markets for those participating in unregulated markets – a metric proving indispensable to the ongoing vitality of any state cannabis program – or protecting those existing operators who do not meet Schedule III FDA operational or production requirements (nearly all of them, except the biggest).

I’m thrilled for medical patients as a first step toward liberalization and relief without fear of criminal prosecution. But I’m saddened for social justice advocates and “justice-involved” individuals, whose needs will inevitably be subordinated to the thrill of newfound liquidity. For legalization advocates, the work has become more difficult, and those who seek to protect the plant, its uses, and the people who use it, must stay focused.

Katie Neer, cannabis-focused attorney, Of Counsel at Dickinson & Avella, PLLC

Cannabis is a huge part of my life, both professionally and personally. As a regulatory attorney, HHS’ recommendation to the DEA to reschedule the drug down to Schedule III from Schedule I is a big deal.

After nearly a year of evidenced-based research, HHS is unequivocally stating that the science shows cannabis to have a medicinal benefit and “moderate to low potential for physical and psychological dependence.” That’s after over half a century of racially motivated enforcement of the plant as a Schedule I drug, or one with no accepted medical use and a high potential for abuse.

I’ll continue to advocate and support full federal decriminalization and legalization, however, I’m excited to see what comes of this HHS recommendation and look forward to the DEA taking action.

Schedule III would still present challenges to state-regulated markets, but it would eliminate one of the biggest barriers to accessing capital and achieving profitability: 280E. It’s also notable that a rescheduling would accelerate and legitimize research of the plant, something New York’s much-anticipated regulations embrace with the creation of research licenses.

If this industry craves anything, it’s more research, more information, and more evidenced-based data to guide policymakers, regulators, operators, and consumers alike.

Scheril Murray Powell, cannabis-focused attorney and COO of The JUSTÜS Foundation

Scheduling reform has been an important part of my work for the past eight years.

As a member of the recently formed Council for Cannabis Scheduling Reform, we as a cross-industry work group have produced an analytics-rich white paper on approaches for the federal government to consider for relaxing the scheduling of cannabis based on its proven medical benefit and low addiction potential.

My preference was always for the complete descheduling of cannabis which would significantly improve accessibility for adults who need cannabis as medicine and also significantly reduce incidents of criminalization of our citizens often resulting in the separation of families. Although I prefer descheduling, the rescheduling to Schedule III or IV would be a huge victory.

The HHS recommendation is non-binding, and we as an industry are hoping that the DEA will adopt the recommendation as policy and not further obstruct the global movement towards progressive and citizen-friendly cannabis and drug policy. There are too many of our citizens that have yet to be returned to their families and communities due to wrongful incarceration.

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