The nation’s top health agency is recommending easing restrictions on marijuana in what could portend a landmark shift in federal policy on cannabis.

The Department of Health and Human Services has recommended to the Drug Enforcement Administration that marijuana be reclassified as a lower-risk, Schedule III controlled substance, according to a person familiar with the recommendation who spoke on the condition of anonymity because they were not authorized to speak on the issue. Marijuana is currently a Schedule I controlled substance, deemed alongside heroin and LSD as having the potential for abuse and with little or no accepted medical use.

DEA, which said it has the final authority to classify a drug under federal law, confirmed it has received a recommendation from HHS and said it will now initiate its review, a process that could take months. If DEA follows the health agency’s recommendation, marijuana would be placed in the same category as anabolic steroids and ketamine, which can obtained with a prescription.

Such a decision would not outright legalize marijuana at the federal level, a policy that has long conflicted with those of states that have legalized marijuana for medical and recreational use. But it could nevertheless alter the landscape of cannabis in this country, boosting the regulated marijuana industry in states where it is legal and even facilitating more scientific research into the effects of the drug.

“We believe that rescheduling to Schedule III will mark the most significant federal cannabis reform in modern history,” said Edward Conklin of the U.S. Cannabis Council, a nonprofit that advocates for the regulated cannabis industry. “President Biden is effectively declaring an end to Nixon’s failed war on cannabis and placing the nation on a trajectory to end prohibition.”

Marijuana legalization has increasingly garnered bipartisan support. Twenty-three states and D.C. have legalized recreational marijuana, and medicinal use is lawful in 38 states. According to federal survey data, an estimated 36.4 million people age 12 or over used marijuana during the past month. The number of Americans diagnosed with cannabis use disorder has also risen, federal data shows.

The HHS recommendation is consistent with efforts by President Biden – who is running for reelection in 2024 – to reshape the nation’s marijuana policies.

Last October, Biden offered pardons to anyone convicted of a federal crime for simply possessing the drug, and he directed his administration to expedite a review of whether marijuana should continue to be listed as a Schedule I substance.

The recommendation to recategorize marijuana was made in a letter sent by HHS to the DEA this week, although officials at both agencies declined to release the letter, or to confirm the nature of the recommendation. Bloomberg News first reported on the Schedule III recommendation.

Advocates for full legalization say the HHS recommendation doesn’t go far enough, and that people could still face criminal charges related to possession of, or dealing in, controlled substances.

“Just as it is intellectually dishonest to categorize cannabis in the same placement as heroin, it is equally disingenuous to treat cannabis in the same manner as anabolic steroids,” said Paul Armentano, deputy director of the pro-legalization organization NORML, in a statement. The organization advocates for marijuana to be treated similar to tobacco and alcohol, which are not controlled substances.

He added: “It will be very interesting to see how DEA responds to this recommendation, given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law.”

Other experts believe DEA will follow HHS’s lead. Howard Sklamberg, a former Food and Drug Administration official, said the HHS position is “a big deal” in the government’s long and complicated relationship with marijuana, and he predicts that DEA would accept the health agency’s recommendation. That’s because DEA must defer to HHS on the scientific and medical aspects of the issue, which is a large part of the determination about scheduling, he said.

In addition, downgraded scheduling for marijuana would send an important message from the federal government that marijuana is less of a risk to public health than the government has said in the past. “That could make it easier in some states to legalize and decriminalize” marijuana, Sklamberg said.

Members of Congress who support legalization or decriminalization of marijuana applauded the administration move. If DEA accepts HHS’s recommendation, “it will be a historic step for a nation whose cannabis policies have been out of touch with reality,” Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a statement.

But ultimately, Wyden said, cannabis should be de-scheduled – removed from the list of controlled substances – with strong federal regulations put in place to protect public health and safety.

“Progress cannot stop here,” Wyden said. “The administration and my colleagues in Congress must do more to bring America’s cannabis policy into the 21st century, catch up with the states, and help undo the decades of harm caused by the failed War on Drugs.”

Cannabis businesses in Wyden’s home state, as in others where recreational marijuana is legal, stand to benefit if de-scheduling is adopted. State-regulated marijuana industries boomed during the pandemic but are flailing now because of the high costs of doing business, competition and a glut of supply.

Under federal tax code, companies cannot deduct many ordinary business expenses if they deal in Schedule I or II controlled substances. That prohibition would no longer apply if marijuana becomes a Schedule III substance, finally allowing many cannabis companies to turn a profit, said Griffen Thorne, a cannabis industry attorney based in Los Angeles.

“This would be a lifeline for an industry that has really been suffering,” Thorne said.

Cannabis company stocks rose Wednesday afternoon after news of the HHS recommendation became public.

The change in marijuana’s status could also improve efforts to understand the health benefits – or harms – of marijuana, a body of research that has long been complicated by the drug’s federal status.

Researchers have to go through “quite a few hoops” to study marijuana, said Igor Grant, director of the Center for Medicinal Cannabis Research at the University of California at San Diego. That includes getting research approved by DEA – and getting marijuana samples for studies directly from the federal government, he said.

“In California, should I choose to get marijuana for myself, I can just go to one of the dispensaries,” Grant said. “However, as a scientist and physician, I can’t go buy it and supply it to a participant.”

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