Former FDA Regulator Predicts Cannabis Rescheduling This Year

A longtime attorney at the U.S. Food and Drug Administration who helped found the agency’s Marijuana Working Group in 2014, Howard Sklamberg is now involved in federal cannabis policy on behalf of multistate operator Columbia Care (Cboe/NEO: CCHW) (CSE: CCHW) (OTC: CCHWF).

Sklamberg recently spoke with Green Market Report about the ongoing federal review of cannabis as a Schedule 1 drug – which he believes will result in the Biden administration rescheduling the plant and its derivatives this year or early in 2024.

“Certainly this calendar year,” Sklamberg said, emphasizing he has no “insider” knowledge of any internal timelines set by either the Department of Health and Human Services or the Department of Justice, both of which will play crucial roles in the process.

“The latest will be the first quarter of next year, because you want to get the things settled before you get into the political season,” Sklamberg predicted. “I don’t think they would want this to be one of the things that are floating around a year from now.”

In this exclusive interview, Sklamberg shared that he believes the vast majority of business consequences that are likely to come from such a move will be all positive, contrary to many widespread industry fears of a Big Pharma takeover if marijuana remains on the list of controlled substances.

“I simply do not understand that argument. I’ve heard it, time after time. It does not make sense to me,” Sklamberg said. “Why would why would the industry be more in the hands of Big Pharma when it’s Schedule 2 or 3 than when it’s Schedule 1? I mean, you know, to state the question is to answer it. If FDA wanted the industry to be in the arms of Big Pharma, it would have the power to do that now. And it’s not.”

Rather, Sklamberg said, he doesn’t think anyone doing business legally under state laws has anything to worry about from rescheduling rather than de-scheduling. He also asserted the former should be viewed as a political stepping stone to the latter.

As long as cannabis is moved at least to Schedule 3, section 280E of the tax code would no longer apply to the industry, and marijuana businesses could claim standard business tax deductions. That would provide a needed boost to profitability for many operators.

The hands-off approach that the federal government has taken since 2014 – when Colorado and Washington state became the first to launch recreational marijuana markets under the Obama administration – has remained in place through current day, Sklamberg noted. That’s not by chance.

“FDA has the authority today, if it wanted to, to take enforcement action against a lot, a lot of products in this space. DEA has that authority today. They choose not to for a whole bunch of reasons that have to do with resources and their priorities, as well as a policy decision,” Sklamberg pointed out.

That means there’s no real reason to fear a new federal crackdown or a return to the days of DEA raids on medical marijuana dispensaries, a trend that ran for years during the George W. Bush administration, Sklamberg intimated.

It’s also not necessarily reason to think that the Biden administration will give marijuana activists everything they want, in the form of total de-scheduling, or removing cannabis from the list of controlled substances. That was the ask from the coalition paper that Sklamberg helped with this year.

But that’s not really politically feasible, the former FDA insider said.

“I certainly understand that is a strong preference, to get (cannabis) de-scheduled,” Sklamberg said. “But there are, historically, not many areas of health policy that undergo very substantial change in one step. That’s just not the way the world works, both in terms of Congress’s capacity to pass legislation, and the (FDA’s) capacity to change things within their existing statutory framework. Because they have to follow the law.”

For the FDA, following the law means following the science, Sklamberg said, which will almost certainly lead to a rescheduling of some sort, he predicted. The simple fact that President Joe Biden ordered the review in the first place indicates a solid chance that legalization of some sort is upcoming in the near future, he said.

“I would be very surprised if it were not rescheduled,” Sklamberg said. “There clearly is a policy preference for this to be (at the) very least rescheduled. I think there are strong arguments for rescheduling. I’d be really surprised if after this effort, we ended up with the status quo. I think that de-scheduling is a much bigger lift, just given the framework.”

There’s actually a very good practical reason for rescheduling cannabis as well: political prioritization for limited FDA resources.

“If you enter enforcement … it’s kind of like sending advisors into Vietnam in the early 1960s. You are then entering into an area and you then own a problem. And once you do that, you have to be able to explain why it is you’re doing things the way you’re doing in a way that’s not arbitrary,” Sklamberg said.

That means anyone at FDA who would want to start a new war on the cannabis sector would have to be willing and able to justify it. And at least for now, Sklamberg said, it doesn’t appear that there’s anyone in the federal bureaucracy who wants to stick their neck out for such a cause.

“If you want to actually have an impact in enforcement and not to do something that’s arbitrary and purely symbolic, well, then you’d have to put a lot of resources into it,” Sklamberg said. “And the resources would come out of things like food safety inspections, counterfeit drugs. Do you want to be the agency official who is cutting back on inspections of produce that could make people sick, that have pathogens in them? You want to be the person who diverted resources from inspecting produce and inspecting seafood, and dealing with counterfeit drugs and all those high priority areas for FDA, and putting them into an effort that is largely symbolic?”

“Not many people would answer that, ‘That’s something we want to do,'” he argued.

To cannabis industry insiders who worry that rescheduling would be pseudo-legalization that would ignore criminal justice concerns and other issues, Sklamberg expressed confidence and said emphatically there will be a place in the future U.S. marijuana market for all the businesses that are operational today.

“Not only will the sky not fall, the clouds will not even darken,” he said, emphasizing that he finds such fears “mystifying.”

“Ultimately rescheduling would be a step in the direction that the industry wants,” Sklamberg said. “An important step. … I don’t think FDA’s enforcement will change very much, because it’s not doing very much now. And the same is true of DEA. I think the federal government’s posture will continue to be that companies that are compliant with state programs, both medical and recreational, are not going to be subjected to federal enforcement. That’s been true for years. And I think that will continue to be true.”