US President Joe Biden has set out plans to reclassify marijuana as a less addictive drug under federal law, consequently carrying fewer penalties for possession or sale.
Marijuana has a so-called schedule one status in the Drug Enforcement Administration's (DEA) Controlled Substances Act, placing it on the same level as heroin and methamphetamine.
The substance was listed as schedule one during the Nixon administration in 1970 but the US government is now looking to give the drug schedule three status.
Under US law, possession, trafficking or sale of a schedule-one drug can face up to 15 years imprisonment. While regulations vary by state, a schedule-three drug offence can still land a prison term of five years. Ketamine is among the substances listed as schedule three.
The classification system's lowest level, schedule five, includes drugs that contain limited quantities of certain narcotics, such as cough drugs with codeine.
The US Attorney General is set to initiate a required 60-day public rulemaking process in order to move marijuana to schedule three. The DEA will now gather information and public comment as it makes a determination about where marijuana should be placed. In the meantime, marijuana remains schedule one.
The US National Cannabis Industry Association (NCIA) welcomed the proposal to reschedule marijuana but noted it is just a “first step” towards a “rational marijuana policy”.
“Rescheduling alone does not fix our nation’s state and federal cannabis policy conflict. Only Congress can enact the legislation needed to fully respect the states and advance the will of the vast majority of voters who support legal cannabis,” NCIA CEO Aaron Smith said.
“Reclassifying marijuana from schedule one to schedule three in the Controlled Substances Act would provide tax parity for the cannabis industry by ensuring legal businesses would no longer be subject to an arcane provision of the US tax code Section 280E that prohibits deductions associated with 'drug trafficking'.”
Marijuana has been legalised for adult use in 24 US states. Seventeen states have approved its use for medical purposes.
In the US, there are a number of CBD and THC beverage companies working within the legalised states. However, few of the major brand owners have fully committed to the category and some have pulled back from previous investments.
Molson Coors announced in November 2022 it was to exit both the ready-to-drink and CBD beverage categories, citing that it saw “no near-term pathway to federal legislation”.
In 2017, Constellation Brands invested in Canadian marijuana venture Canopy Growth, at one stage owning 38.6% of the company. However, in 2022, Constellation moved to reduce its exposure to marijuana and converted its common stock holding in Canopy Growth into exchangeable shares in the Canadian firm.
Last year, distribution behemoth Southern Glazer’s Wine and Spirits ended its US distribution deal with Canada-based CENTR Brands Corp. for its CBD beverage products.
In a statement, CENTR said the partnership ended due to the “determination” of the major US and international distributor to exit the CBD category in the US “in its entirety”.
