Rescheduling Cannabis in Texas

What Rescheduling Cannabis Means for Texas

After months of deliberation, the DEA has announced that it will reclassify marijuana as a Schedule III substance under the Controlled Substances Act (CSA). 

Until now, cannabis has been designated as a Schedule I substance under the Controlled Substances Act (CSA), where it sits alongside heroin, cocaine, and other high-risk drugs  with “no accepted medical use”–despite the fact that medical cannabis has been both accepted and legalized in two thirds of the country, including Texas. Now, marijuana may be reclassified as a lower-risk, Schedule III substance, alongside prescription medications and other substances with accepted medical properties. Rescheduling will “recognize the medical uses of cannabis and acknowledge that it has less potential for abuse” than other, Schedule I drugs.

But what will rescheduling mean for Texas, and how might marijuana’s Schedule III status impact the state’s medical marijuana program? Read on to learn more about everything you need to know regarding rescheduling and Texas’ medical cannabis market.

Lifting IRS 280E

Because marijuana has long been classified as a Schedule I substance, industry operators–including legal Texas dispensaries–have been beleaguered by excessive taxation under IRS 280E. IRS 280E is a tax code that applies to businesses involved in the “trafficking” of Schedule I substances, and it prohibits marijuana companies from taking standard deductions–such as the costs of doing business. Now that marijuana will be a Schedule III substance, however, marijuana dispensaries will be freed of IRS 280E taxation and the dangerously narrow profit margins it has created for legitimate industry operators.

Expanding Texas’ Medical Program

Cannabis experts such as Daryoush Zamhariri suggest that rescheduling could have a major impact on Texas’ marijuana landscape, since Texas has “trigger laws” that correspond to federal scheduling, and those laws could work out favorably for cannabis–if the Department of State Health Services (DSHS) doesn’t intercede to prevent changes. If Texas does allow these laws to correspond to the new federal scheduling of marijuana, it would pave the way for an expansion of the state’s medical marijuana program in the next legislative session. 

However, there’s still the possibility that the state could reject the rescheduling altogether, and retain its own classification of marijuana as Schedule I, despite the fact that its medical marijuana program already recognizes cannabis’ medicinal use: “It’s been almost 10 years since we passed the Compassionate Use Act, and yet Texas remains one of the most restrictive medical marijuana programs in the country,” said Zamhariri, stating that “Texas can and needs to do more for the patients” enrolled in its Compassionate Use program. 

The Texas Compassionate Use Program has already expanded several times since the state legalized medical marijuana in 2015, and rescheduling might fuel even more progress. In April 2023, the Texas House of Representatives approved a bill allowing doctors to recommend cannabis as an opioid alternative for chronic pain. And recently, program expansion allowed Texas Originals to introduce the state’s first 30mg medical gummy, due to a 2021 expansion that increased the allowable amount of THC per edible to 1% of total weight per piece.

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Expanding Research, Access, and MMJ Prescriptions

Until now, cannabis’ Schedule I status has created serious barriers to scientific research. Conducting trials on a Schedule I drug has severely limited the scope of medical research on cannabis’ effects, but now, scientists will have a far easier time getting studies approved. 

“It would give opportunities to have more research done, because currently, at  a federal level, that’s not even possible except for one university down south,” said a source for KVUE.

 And for licensed cannabis physicians such as Dr. Brimberry, the rescheduling also promises to “destigmatize the medical use of cannabis, so more people are open to it instead of using addictive opioids.”

Brimberry believes that rescheduling is particularly promising given the structure of Texas’ medical program, which already requires prescriptions for cannabis purchases–much like pharmacies require prescriptions for medications. Already, the CRS has suggested that a similar prescription infrastructure could be implemented more broadly: 

“If marijuana were moved from Schedule I to Schedule III, it could in theory be dispensed and used by prescription for medical purposes,” the report reads. “However, prescription drugs must be approved by the FDA. Although FDA has approved some drugs derived from or related to cannabis, marijuana itself is not an FDA approved drug.” 

Though FDA approval would be required, Texans would have an advantage if it occurs, since the state already has a prescription program in effect. For this reason, Brimberry says, “We’re in a unique situation where we actually have the infrastructure to support the rescheduling of this medicine,” and Texas prescribers already have the software necessary to expand cannabis prescriptions. This expansion seems crucial given Bimberry’s estimate that, although only 79,000 residents are currently registered in the state’s MMJ program, an actual 3 to 5 million would qualify for–and benefit from–medical cannabis treatment. 

Criminal Reform

These are just a few of many ways in which rescheduling could impact Texas’ medical dispensaries, consumers, and the wider state community. Though only time will tell if these changes occur, rescheduling is a major step forward for the cannabis industry at large, and hints at a bright future for states like Texas, where medical access has long been established–and will, hopefully, continue to grow. 

“This is monumental…Far too many lives have been upended because of a failed approach to marijuana, and I’m committed to righting those wrongs. You have my word on it.” 

If Texas decides to follow the federal government on rescheduling, it could result in substantial criminal reform. Since rescheduling was approved just a few weeks ago, President Biden has already pardoned thousands of people with federal marijuana convictions, and has urged state governors to do the same:

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