Why rescheduling could be boon to cannabis research

If marijuana is rescheduled from a Schedule 1 to a Schedule 3 substance, it won’t change the laws regulating cannabis research.

But the demand for research of the plant and cannabis for research purposes will grow, legal experts and marijuana producers say.

So far, the U.S. Drug Enforcement Administration has approved eight companies to provide researchers with marijuana products for studies and 600-plus researchers to conduct that work.

“I believe demand is going to skyrocket,” Richard Shain, CEO of Maridose, a DEA-licensed bulk manufacturer of cannabis, said in an interview with MJBizDaily.

Shain said he believes the medical community’s interest in marijuana research will grow as a result of rescheduling, and more researchers will seek approval to conduct studies with patients.

Headquartered in Boca Raton, Florida, Maridose has started leasing a pilot facility in Brunswick Landing, Maine.

The company is working on its next funding round.

Once that funding comes in, the business will be ready to move forward – something Shain hopes will happen in mid-2024.

While there is still a stigma attached to marijuana, fueled in part by its Schedule 1 status, Shain says investors are reassured by the company’s emphasis on broader biotechnology research and medicine development rather than marijuana.

Eric Berlin, a Chicago-based partner at international law firm Dentons and leader of the company’s U.S. and international cannabis teams, believes demand for research and research supplies will grow if marijuana is rescheduled.

“It’ll make researchers within universities or hospitals or even private companies better-armed to say, ‘We should be doing this, and we can be doing this,’” Berlin told MJBizDaily.

Perceived hurdles such as getting passed over for grants to engage in cannabis research will seem outdated, he said, and scientists will be able to point to other Schedule 3 substances that have been used for research, such as testosterone and anabolic steroids.

Shain said Maridose is considering sourcing its starter materials from Canadian licensed producers through an import license issued by the DEA.

Because Canada allows exports of cannabis, it’s a good option for companies looking to stay compliant with DEA regulations, he said.

But Berlin at Dentons said the DEA’s 2022 guidance concerning cannabis seeds, cuttings and tissue culture stipulates that starter materials are considered hemp, provided they contain no more than 0.3% THC, meaning they aren’t a controlled substance.

So while researchers can’t source high-THC products from state-licensed marijuana stores or cultivators – regardless of how MJ is scheduled – DEA-approved bulk manufacturers of cannabis for research can source starter materials that contain no more than 0.3% THC from state-licensed cultivators.

Similarly, DEA-licensed researchers and bulk manufacturers can produce infused edibles or other manufactured products derived from marijuana for use in patient studies, he said.

Federal lawmakers have introduced bills to allow state-licensed marijuana operators to provide clinical researchers with high-THC products, but neither the DEA nor the U.S. Food and Drug Administration are likely to budge on the issue until there’s a change in federal law.

“Marijuana, as defined by the Controlled Substances Act, remains a controlled substance, and any party that is registered to do business with them cannot be at the same time violating the Controlled Substances Act,” Berlin said.

The cannabis research community was excited when Congress passed the Medical Marijuana and Cannabidiol Research Expansion Act in December 2022 because the measure was designed, in part, to decrease the waiting period for DEA approval to conduct studies.

But the co-sponsors of the act, U.S. Reps. Earl Blumenauer and Andy Harris, alleged in a letter to the DEA and Department of Health and Human Services (HHS) that approvals for research applications aren’t happening within the 60-day window, and that implementation of the act has been “ineffective.”

The DEA and HHS also didn’t provide a report about federal barriers to research before the Dec. 2, 2023, deadline, which was another provision in the bill, they said.

Those barriers could be more significant than rescheduling, which won’t impact approval times or the pathway to FDA approval of drugs containing marijuana or synthetic THC, Berlin said.

FDA approval still will require an extensive multiphase process, but Berlin said rescheduling will encourage more companies will embark on the pathway to FDA approval if cannabis is rescheduled.

“While it doesn’t change the FDA pathways, it’ll make getting on those pathways a lot easier,” Berlin said.

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Rescheduling marijuana likely won’t impact state cannabis programs in the short term, but it definitely won’t hurt them, Berlin said.

If anything, rescheduling will indicate there won’t be any federal enforcement against state-regulated marijuana programs, encouraging investor confidence.

“There’ll be all sorts of good things that come from that, like regular tax treatment and just a greater signaling that this industry will move forward in some capacity,” Berlin said.

Maridose’s Richard Shain agreed.

The industry has struggled to affordably raise capital the past few years.

But rescheduling will help ease that pressure – and bulk cannabis manufacturers for research purposes will benefit, too, he said.

“Demand creates investment,” Shain said.

“If you have good demand, you’re going to get the funding.”

Kate Robertson can be reached at kate.robertson@mjbizdaily.com.