What does reclassifying marijuana mean? Here’s what to know.

More than five decades after it was first identified as a dangerous drug with no medical value and a high potential for abuse, the U.S. Drug Enforcement Administration has reportedly agreed to reclassify marijuana.

A proposal from the DEA, which has not yet taken effect, would move marijuana from its current status as a Schedule I drug under the Control Substances Act to Schedule III, according to the Associated Press. The proposal comes following a review of federal marijuana law that President Joe Biden called for in 2022, and follows a recent recommendation made by the U.S. Department of Health and Human Services.

The change would signify that under federal law, marijuana is considered to have less potential for abuse than other substances, as well as an accepted medical value. It could also have implications for marijuana businesses in states where the drug is medically or recreationally legal, and make researching marijuana easier.

Before the proposal goes into effect, it must be reviewed by the White House Office of Management and Budget, after which the DEA will hold a public comment period. Following public comment, the final rule would be published.

Here is what you need to know:

Marijuana has been a Schedule I drug since the passage of the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970, better known as the Controlled Substances Act. Under that classification, it has been placed alongside drugs such as heroin, LSD, and MDMA, which the law says have “no currently accepted medical use and a high potential for abuse,” according to the DEA.

Such drugs are criminally prohibited at the federal level, cannot be prescribed for medical use, and aren’t easily medically researchable.

The act has five categories, with the potential for abuse or dependence decreasing at each level. Schedule III drugs, for example, include substances like ketamine, anabolic steroids, and Tylenol with codeine. Those drugs can be prescribed, provided they have approval from the Federal Drug Administration, with rules about refills.

No. As a Schedule III drug, marijuana would still be regulated by the DEA. State medical and recreational marijuana programs would also remain federally illegal once the change takes effect, according to the Congressional Research Service.

That means the roughly 15,000 cannabis dispensaries in the United States would have to register with the DEA like regular pharmacies and fulfill strict reporting requirements, something that they are loath to do and that the DEA is ill-equipped to handle.

Additionally, the research service noted in a January memo, quantity-based mandatory minimum sentencing “would not change as a result of rescheduling.”

It’s not entirely clear. But as a state in which medical marijuana is legal, that industry could see some benefits.

With cannabis as a Schedule III drug, Pennsylvania marijuana businesses could see a reduction in their federal tax burden, which can be 70% or more, according to industry groups.

That’s because of an Internal Revenue Services rule prevents businesses that “traffick” in Schedule I or II substances from deducting regular businesses expenses from their federal taxes. If marijuana moves to Schedule III, those businesses would be able to deduct expenses on federal taxes.

Additionally, the move would make marijuana easier to study and research, as it is much more difficult to conduct authorized clinical studies on Schedule I substances.

Marijuana’s rescheduling has long been rumored, and has been met with a mixed reaction by marijuana proponents. In a statement Tuesday, Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws called rescheduling a “significant” step, but said it ultimately, it “fails to adequately address” the conflict between state and federal laws.

As a result, Armentano said, marijuana should instead be de-scheduled altogether, which would allow states to implement marijuana laws and not run afoul of federal law.

David Goubert, president and CEO of cannabis company AYR wellness, which operates in several states including Pennsylvania, said in a statement that rescheduling is “the most significant step towards federal cannabis reform in U.S. history.”

But while rescheduling “represents positive progress,” Goubert added, many companies, including AYR Wellness, advocate for full de-scheduling — an event that he said he expects to be an “eventual outcome.”

This report contains information from the Associated Press.