Cannabis In 2024: HHS Rescheduling Recommendation And SAFER Banking

• Published date: 05 March 2024
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Cannabis & Hemp, Food and Drugs Law
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Ms Caroline Kessler, Craig B. Bleifer, Reggie Babin and Taylor Daly

Key Points

• The scientific review supporting HHS's recommendation to DEA that cannabis be reclassified from a Schedule I to a Schedule III drug was published on January 12, 2024.
• Classifying cannabis as a Schedule III substance would have significant implications for state-legal cannabis businesses including eliminating certain tax burdens for state-legal businesses and easing research restrictions. DEA continues to review the recommendation and potentially initiate a rulemaking process that includes a public comment period before any scheduling action is finalized.
• The Senate continues to labor over the SAFER Banking Act (2860). Enactment of the Act would ensure that state-legal cannabis businesses have access to banking services.

Overview

On August 29, 2023, the U.S. Department of Health and Human Services (HHS) issued a recommendationto the U.S. Drug Enforcement Administration (DEA) that cannabis be reclassified from Schedule I to Schedule III under the Controlled Substances Act (CSA).¹ In January, a review detailing the scientific findings underpinning this recommendation was provided to a Texas lawyer, Matthew Zorn, who had sued HHS for its release. While HHS Secretary Xavier Becerra previously confirmed that his agency had made a recommendation in light of President Biden's October 2022 Executive Order, neither the text of the recommendation nor any accompanying documentation had been made public.

Senate leadership has expressed continued interest in taking up the SAFER Banking Act. Passage of the bill remains in question, however, given outstanding concerns over changes made to several provisions.

HHS Rescheduling Recommendation

Agency/Congressional Authority

Both Congress and the executive branch, through its agencies, have the ability to reclassify drugs with respect to scheduling. With regard to the agencies, the CSA authorizes DEA (by delegation from the Attorney General) to "transfer between [] schedules" any drug that meets the criteria for inclusion in the "schedule in which such drug is to be placed," or to "remove any drug...from the schedules" if it "does not meet the requirements for inclusion in any schedule."²

Before rescheduling a drug, DEA is required to request from the HHS Secretary a binding "scientific and medical evaluation" along with a recommendation for appropriate scheduling.³ The Secretary has delegated the authority to conduct these evaluations to the U.S. Food and Drug Administration (FDA). FDA and DEA have also entered into memorandums of understanding (MOUs) that dictate procedures for the sharing of information and collaboration...