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Joe Biden’s administration plans to reclassify cannabis as a less harmful drug with a lighter legal penalty, marking a historic shift in U.S. drug policy, people familiar with the matter said.
The recommendation from the Justice Department’s Drug Enforcement Agency would remove cannabis from a list of the most dangerous drugs, including heroin and LSD, and recognize its medical use, equating it with substances such as ketamine.
Reviewing marijuana classifications had become a top policy priority for the president in recent months as he struggled to boost youth voting ahead of November’s election against Donald Trump.
During his State of the Union address to Congress in March, Biden proclaimed that “no one should be in prison for using or possessing marijuana!”
Senior Democrats had also put pressure on the Biden administration to take the step, with 17 lawmakers writing to the DEA last week to push for the review to be expedited. The Department of Health and Human Services first recommended the agency remove the Schedule 1 classification of cannabis last year, but the DEA’s determination was the next big hurdle.
Senate Majority Leader Chuck Schumer welcomed the move on Tuesday. “It’s great news that the DEA is finally recognizing that restrictive and draconian cannabis laws need to change to keep pace with what the science and the majority of Americans have said loud and clear,” he said.
Although the Justice Department was expected to inform the White House of its recommendation on Tuesday, the policy change will not be imminent as it still needs to go through a public comment period before the final rule takes effect.
The Biden administration is also pushing to offer broader student debt relief — another policy that would appeal to younger Americans, even as the president faces backlash from some progressive voters over his support for Israel’s war in Gaza.
The classification change would keep cannabis illegal under federal law. But its new designation as a Schedule 3 controlled substance would reduce the criminal penalty for possession and distribution in most states. In recent years, authorities have largely deprioritized federal prosecutions of cannabis crimes.
The policy change would be the most dramatic shift in U.S. drug policy in a generation. Federal laws regulating cannabis use lag far behind state laws. Cannabis is now legal in 24 states plus Washington, DC for recreational use and in 39 jurisdictions for medical use.
If the DEA proposal is approved by the White House Office of Management and Budget, which oversees the federal budget and agency programs, the move will facilitate clinical research on cannabis and give cannabis companies access to a crucial tax advantage. The Justice Department and DEA declined to comment.
The move would be a boon for the U.S. legal cannabis industry, which generated an estimated $29.6 billion in sales last year, according to cannabis data firm BDSA.
The AdvisorShares Pure US Cannabis ETF rose 21 percent following reports of the proposal. The move was first reported by the Associated Press. Shares of Nasdaq-listed Canopy Growth and Tilray Brands rose 53 percent and 41 percent, respectively. The companies also rallied on Toronto’s main stock index, where they are second-listed.
But shares of the largest Nasdaq-listed cannabis companies are still trading at significant discounts from previous highs as investors have disapproved of the sector. Cannabis remains illegal at the federal level, meaning the product cannot be transported across state lines, forcing companies to spend money on production facilities in each state.