Intro

In the coming months, the Drug Enforcement Administration

will decide whether or not to reschedule cannabis under the
Controlled Substances Act. In 2016 the Utah Legislature
unanimously passed and Governor Gary Herbert
subsequently signedi Senate Concurrent Resolution 11
encouraging Congress to reclassify cannabis as a Schedule 2
drug and encourages researchers to study the benefits of
medical cannabis.

We are writing today to encourage the Editorial Board of the
Deseret News to support efforts to reschedule cannabis.
Rescheduling cannabis would alleviate the severe
restrictions on research, relieve many financial barriers for
the cannabis industry, and improve patient access to medical
cannabis.

What is the Controlled Substances Act?

The Controlled Substances Act (CSA) - Title II of the
Comprehensive Drug Abuse Prevention and Control Act of
1970 is the most comprehensive federal drug policy under
which the manufacture, importation, possession, use and
distribution of certain narcotics, stimulants, depressants,
hallucinogens, anabolic steroids and other chemicals is
regulated. President Richard Nixon signed the CSA into law
on October 27, 1970. The addition, deletion or change of
schedule of a medicine or substance may be requested by the
U.S. Drug Enforcement Agency (DEA), the Department of
Health and Human Services, the U.S. Food and Drug
Administration (FDA), or from any other party via petition to
the DEA.

The DEA implements the CSA and may prosecute violators of
these laws at both the domestic and international level.
Outlined within the CSA is a complex scheduling regiment.
Within the regiment five schedules (I-V) that are used to
classify drugs and other substances based upon their abuse
potential, medical applications, and safety. Individuals who
order, handle, store, and distribute controlled substances
must be registered with the DEA to perform these activities.
As a result pharmacies, physician offices, and other medicalrelated industries are heavily regulated under the CSA. They
must maintain accurate inventories, records and security of
the controlled substances.

The complexity and inflexibility of the scheduling system created by the CSA has, in the
case of cannabis and other drugs, impeded and frustrated efforts to conduct research into
the therapeutic benefits of those drugs. Many research institutions cite the complexity of
federal law related to cannabis as a chief concern with regards to conducting research.
Below are summations of the reasoning behind the current placement of scheduled
substances.

Schedule 1 (e.g. heroin, cannabis, etc.)
The drug has a high potential for abuse. The drug has no currently accepted medical use in
treatment in the United States. There is a lack of accepted safety for use of the drug under
medical supervision.

Highest potential for abuse

No currently accepted medical uses

Lack of accepted safety for medical use

Schedule 2 (e.g. cocaine, methamphetamine, etc.)
The drug has a high potential for abuse. The drug has a currently accepted medical use in
treatment in the United States or a currently accepted medical use with severe restrictions.
Abuse of the drug may lead to severe psychological or physical dependence.

High potential for abuse

Current but limited accepted medical uses

Potential for sever dependence

Schedule 3 (e.g. Vicodin, Suboxone, etc.)
The drug has a potential for abuse less than the drugs in schedules 1 and 2. The drug has a
currently accepted medical use in treatment in the United States. Abuse of the drug may
lead to moderate or low physical dependence or high psychological dependence.

Moderate potential for abuse

Currently accepted medical uses

Potential for moderate or low dependence

Schedule 4 (e.g. Xanax, Klonopin, Valium, etc.)
The drug has a low potential for abuse relative to the drugs in schedule 3 The drug has a
currently accepted medical use in treatment in the United States. Abuse of the drug may
lead to limited physical dependence or psychological dependence relative to the drugs in
schedule 3.

Low potential for abuse

Current widespread accepted medical uses

Potential for limited dependence

Schedule 5 (e.g. Robitussin AC, Phenergan, ezogabine, etc.)
The drug has a low potential for abuse relative to the drugs in schedule 4. The drug has a
currently accepted medical use in treatment in the United States. Abuse of the drug may
lead to limited physical dependence or psychological dependence relative to the drugs in
schedule 4.

Lowest potential for abuse relative to other controlled substances


Current widespread accepted medical uses

Limited potential for dependence

Would rescheduling completely solve the research issues related to medical
cannabis?

No. Unique and cumbersome restrictions exist for cannabis research that does not exist for
other controlled substances. These restrictions are not contained in the Currently; cannabis
is the only Schedule I drug that DEA prohibits from being produced by private laboratories
for scientific research. Although DEA has licensed multiple, privately funded manufacturers
of all other Schedule I drugs (such as heroin and LSD), it permits only one facility at the
University of Mississippi to produce cannabis for federally approved research. This facility,
under contract with the National Institute on Drug Abuse (NIDA), is entirely responsible for
the supply of cannabis available medical researchers seeking to conduct FDA-approved
studies of its medical properties.

NIDA has refused to provide cannabis for three FDA- approved studies, including a study
approved in 2012 to examine medical cannabis for veterans with post-traumatic stress
disorderii (PTSD). NIDAs response to medical cannabis research has frustrated efforts to
understand cannabis and seems to stand in opposition to NIDAs very mission, which is to
advance science on the causes and consequences of drug use and addiction and to apply
that knowledge to improve individual and public health.

The single most important change that rescheduling cannabis to a Schedule 3 or lower drug
would provide would be solving the so-called 280(e) tax issue that legal dispensaries
face. Reforming 280(e) would allow dispensaries to deduct business expenses from their
taxes like any other business. The current tax burden makes creates incredible difficulties
for medical dispensaries to operate with stability. It is also frequently used by the Internal
Revenue Service to undermine state medical cannabis programs.

As we have documented in other research documentsiii, a significant body of evidence has
emerged supporting the therapeutic and medical benefits of cannabis in treating a variety
of medical conditions. One simple truth remains, had cannabis been accurately scheduled
during the initial implementation of CSA, most of the questions regarding the benefits of
medical cannabis would have been resolved long before now.

How would rescheduling occur?
Rescheduling can occur either by Congressional action (legislation) or through DEA's
administrative rulemaking process. The DEA announcediv in April of 2016 that it would
decide whether to reschedule cannabis by the end of the Summer 2016. However, given
that previous attempts to reschedule cannabis have failed, Congressional action would
provide the most comprehensive and concrete change.

Have other drugs been rescheduled recently?
Yes. In August of 2014, the DEA published the final rulev in the Federal Register to
reschedule hydrocodone combination products to Schedule II of the CSA. The DEAs
rationale for the move is to combat prescription drug abuse and overdoses. The proposed

rule is the result of the recommendation of a FDA Public Advisory Committee meeting held
in 2013. The committee voted 19 to 10 in favor rescheduling hydrocodone combination
products from a Schedule III to a Schedule II controlled substance.

In making the announcement, DEA cited its duty to protect the health and safety of the
public as a motivating factor. In the rule, DEA laid out an eight-factor analysis of the
substances potential for abuse. Because of the rescheduling, restrictions on prescribing
and dispensing practices for hydrocodone combination products will be significantly
increased.

More on Section 280E
Section 280E of the Internal Revenue Code forbids businesses from deducting otherwise
ordinary business expenses from gross income associated with the trafficking of Schedule
I or II substances, as defined by the Controlled Substances Act. The IRS has subsequently
applied Section 280E to state-recognized medical cannabis businesses, since cannabis is
still a Schedule I substance.

Section 280E originated from a 1981 court case in which a convicted cocaine trafficker
asserted his right under federal tax law to deduct ordinary business expenses. In 1982,
Congress created 280E to prevent other drug dealers from following suit. It states that no
deductions should be allowed on any amount in carrying on any trade or business if such
trade or business consists of trafficking in controlled substances. Most commonly Section
280E is applied to state-sanctioned medical cannabis businesses more often than it is to
others forms of illegal drug distribution that the provision was intended to eliminate.












i http://le.utah.gov/~2016/bills/static/SCR011.html
ii http://www.wired.com/2011/10/marijuana-ptsd-study
iii http://www.dpputah.org/medicalcannabis
iv http://fortune.com/2016/04/06/dea-decision-marijuana-reschedule
v https://www.ascp.com/articles/proposal-reschedule-hydrocodone-combinationproducts