What Does Reclassification of Cannabis Mean for Ohioans?

On April 30th, the US Justice Department announced the DEA will reclassify cannabis to move it from Schedule I to Schedule III, and just a day later, a new bill to legalize the plant hit the Senate floor. The moves spell big changes for the cannabis industry in Ohio and across the US, with advocates and industry leaders giving mixed reactions to the news. Here’s what’s at stake:

Reclassification Does Not Mean Legalization

The most important piece of news to take from the reclassification is that it doesn’t make cannabis legal federally. Despite the 2018 Farm Bill passage which legalized hemp and THC products under .3 percent, marijuana that contains THC in excess of that would still be considered a controlled substance on schedule III, subject to all related federal rules and restrictions. Furthermore, THC-containing cannabis might only be allowed via prescription under this new framework, walking back decades of progress toward adult-use consumption. 

On the other hand, pharma’s involvement could lead to more integrative healthcare, particularly when it comes to prescribing cannabis alongside pharmaceuticals. Drug treatment centers may now begin to consider cannabis as a treatment alongside or instead of treatments like Suboxone or Methadone. Furthermore, health insurers may now begin to cover cannabis prescriptions. 

What this would mean for the 24 states that already have legalized for all adults is unclear. In many ways, these states (along with Washington D.C.) have opened Pandora’s Box by creating dispensaries. It offers a novel way of purchasing medicine without dosage or administration restrictions outside the purview of the state’s drug reporting systems and pharmacies.

History of Cannabis on Schedule I

The classification of cannabis has long been a contentious issue. Since 1970, marijuana has been categorized as a Schedule I controlled substance under the federal Controlled Substances Act, placing it in the same legal category as heroin. 

Schedule I drugs are considered to have  “no currently accepted medical use and a high potential for abuse.” This classification negatively impacts research, medical use, and legalization efforts. Psilocybin, LSD and MDMA also appear on Schedule I, despite a growing collective knowledge of their potential medical uses. 

Schedule III classification means the substance is thought to have a “moderate to low potential for physical and psychological dependence.” Drugs on Schedule III include ketamine and anabolic steroids.

The Impact on Ohio

In Ohio, HB 523 established the Ohio Medical Marijuana Control Program in 2016 and voters passed Issue 2 in November 2023 to grant access to all adults. Reclassification would impact Ohioans in several significant ways:

1. Improved Access to Research: Reclassifying cannabis will make it easier for Ohio’s research community to study the plant’s potential medical benefits and risks. This should pave the way for a more comprehensive understanding of cannabis and its therapeutic applications, allowing medical professionals to make more informed recommendations. This would impact universities as well. Cannabis studies programs have been established in recent years at the Ohio State University, University of Cincinnati, Hocking College, The University of Toledo, and Miami University. Those universities and others may now be eligible for research funding and new opportunities in this area.
2. Banking and Financial Services: Cannabis businesses in Ohio currently face difficulties in accessing banking and financial services due to federal regulations. Operators tell us they pay high interest rates and only can work with select banks, furthering the business’s barriers to financial sustainability. Reclassification will open up traditional banking services to our state cannabis company operators, reducing the reliance on cash transactions and improving financial solvency. This could lead to lower prices on products at the dispensary. 
3. Regulatory Framework: As Ohio continues to build the regulatory framework concerning the adult use program, they will also now need to adjust to align with any federal changes. This could involve revisiting licensing requirements, taxation, and other aspects of the current program to ensure compliance with federal guidelines.

Potential Drawbacks

While the reclassification of THC brings about numerous opportunities, it also poses a scourge of challenges:

1. Marijuana is still a controlled substance, subject to federal rules and restrictions. Only declassification entirely would change this. 
2. Rescheduling does not decriminalize marijuana. Equity measures, such as expungement of convictions and support for minority-owned businesses, need to be considered as a part of the reclassification efforts. Advocates echo that efforts must be made to address the social and economic disparities created by the War on Drugs. 
3. Reclassification necessitates the need to develop comprehensive federal regulations for cannabis. These regulations need to cover aspects such as quality control, labeling, and product safety. It’s not known what testing regulations will come about from reclassification.
4. Firearms Still A Sticky Issue: The Gun Control Act of 1968 “prevents” the sale of ammunition and firearms to the unlawful users of “any controlled substance”. While no list exists to cross-check to prevent a gun owner from buying cannabis at a dispensary or a cannabis user from registering for a handgun, it still remains federally illegal to do so. Reclassifying cannabis to Schedule III does not change that.
5. Still Can’t Have it On You: Legal implications of being caught possessing a controlled substance can be far reaching, including denial from loans, public housing, and child custody. Cannabis may still be illegal to carry, or carry over certain amounts, depending on where you live. It could mean no more home-grow, since it will require different licensing. 
6. Big Pharma Control: Reclassification could allow pharmaceutical companies to overtake the cannabis industry and reformulate, synthesize and market their own marijuana formulations, says one lawmaker. Some believe it’s unlikely cannabis producers and dispensaries will meet the production, record-keeping, prescribing and other requirements for Schedule III drugs, forcing them out.

Reclassifying Cannabis: The National Perspective

Beyond Ohio, the reclassification of cannabis at the federal level has far-reaching consequences for the entire United States. Here are some ways it will impact us all:

1. A Patchwork of Laws: As more states move towards cannabis legalization, the federal government’s stance has increasingly been incongruent with state laws. Reclassification will help bridge this gap and create a more consistent regulatory environment across the country.
2. Taxation and Revenue: Legal cannabis markets have proven to be a significant source of tax revenue for states. Reclassification will lead to increased tax revenue at both the state and federal levels.
3. Banking: The way cannabis companies have to do business in cash has long been a barrier and fuel to the black market. Being able to use traditional banking services will ease the flow of commerce and potentially bring the prices of cannabis down for consumers.
4. Tax Write-Offs: Moving to Schedule III cuts the federal taxes that cannabis companies have to pay. Under the federal tax code, businesses involved in “trafficking” in marijuana or any other Schedule I or II drug can’t deduct rent, payroll or various other expenses that normal businesses can usually write off. 
5. Interstate Commerce: The reclassification of cannabis will open doors to interstate commerce, allowing cannabis products to be transported and sold across state lines, potentially increasing market competition and driving innovation.
6. International Implications: This federal policy change could have implications for international drug treaties and agreements. The United States’ stance on cannabis has influenced drug policy globally, and this shift could trigger discussions on an international scale.

New Move to Federally Legalize

Taking marijuana off all schedules has been discussed as a more favorable outcome and is supported by President Biden. Reclassification does not legalize marijuana for recreational use on the federal level. States and municipalities will still be able to legislate where, if and how THC can be grown and sold and at what rate it would be taxed. 

Just a day after the announcement to declassify, Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) and a coalition of other Democratic senators officially reintroduced a bill to federally legalize marijuana. 

“It’s past time for the federal government to catch up to the attitudes of the American people when it comes to cannabis,” Schumer said in a press release on Wednesday. “That’s why we’re reintroducing the Cannabis Administration and Opportunity Act, legislation that would finally end the federal prohibition on cannabis while prioritizing safety, research, workers’ rights and restorative justice.”

The reclassification does not take effect right away. The Department of Justice will send its recommendation to the White House Office of Management and Budget, and then undergo a public-comment period and review from an administrative judge, a potentially lengthy process. 

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