In this collaborative analysis, Vicente LLP and the preeminent FDA law firm Kleinfeld, Kaplan & Becker LLP examine how the potential reclassification of cannabis into Schedule III could impact its distribution and dispensing. The authors also explore what Schedule III status would (and would not) change, how the DEA’s closed system of distribution and FDA oversight continue to shape the market, and why meaningful reform will require more than reclassification to create a coherent, medically sound federal framework for cannabis.

Cannabis has occupied a uniquely conflicted position in U.S. law since the inception of the Controlled Substances Act (CSA) in 1970. It is classified federally as a Schedule I substance with no accepted medical use and a high potential for abuse, even as most states have legalized it for medical purposes and federal agencies increasingly acknowledge its therapeutic potential.

In 2023, the Federal Department of Health and Human Services (HHS) recommended that the Drug Enforcement Agency (DEA) reschedule cannabis to Schedule III, signaling one of the most consequential shifts in U.S. federal drug policy, but it does not, on its own, resolve the legal and regulatory tensions that define today’s cannabis landscape.

As this article explores, rescheduling may ease research restrictions and alter how cannabis is treated under the CSA, yet cannabis would remain an unapproved drug under FDA law, leaving state-licensed dispensaries, pharmacists, and patients without a clear federal pathway to lawful prescribing or dispensing.

Cannabis as an Unapproved Drug Under FDA Law

While the U.S. Food and Drug Administration (FDA) has approved certain cannabis-derived or cannabinoid-based medications, such as Epidiolex for seizures, it has never approved cannabis in its whole-plant form for medical use, thereby rendering it an unapproved new drug.

Despite this federal stance, states have steadily forged their own paths. Beginning with California’s landmark Compassionate Use Act of 1996, nearly every state has since enacted some form of medical cannabis program; more than 20 states now permit adult-use sales, and almost all states permit some form of cannabis through hemp regulation. In fact, the U.S. Department of Health and Human Services considered data from 38 states, the District of Columbia, and four territories when it determined that a CAMU for cannabis existed.

While maintaining its jurisdiction over all cannabidiol (CBD) and tetrahydrocannabinol (THC) products, the FDA has taken a hands-off approach to these state regulatory frameworks for over a decade, exercising enforcement discretion based on long-standing federal enforcement priorities rather than direct interference, thereby rendering it an unapproved new drug.

Federal lawmakers have also signaled tolerance for state experimentation; since 2014, every federal appropriations bill has included the Rohrabacher-Blumenauer Amendment (called the Rohrabacher-Farr Amendment in its early years). This budget rider prohibits the U.S. Department of Justice from using federal funds to interfere with state-legal medical cannabis programs, providing stability for patients, providers, and regulators operating in good faith.

While cannabis itself remains a Schedule I substance under federal law, several cannabis-related or cannabis-derived drugs have received FDA approval through the standard drug review process. Three such drugs are CBD, dronabinol, and nabilone:

• Epidiolex (mentioned above), a purified CBD oral solution, was the first cannabis-derived drug to receive FDA approval in 2018 and is approved for the treatment of seizures related to Lennox-Gastaut syndrome, Dravet syndrome, and tuberous sclerosis complex.
• Dronabinol (marketed under names such as Marinol and Syndros) is a synthetic form of delta-9 THC approved for chemotherapy-induced nausea and appetite loss in AIDS patients.
• Nabilone (Brand name, Cesamet) is another synthetic cannabinoid approved to control severe nausea and vomiting associated with chemotherapy treatment.

These products are an important reminder that cannabis products can enter the U.S. pharmaceutical system, but only through the rigorous pathways applicable to all prescription drugs. They are developed under strict laboratory controls, tested in large-scale clinical trials, and reviewed through the FDA’s Investigational New Drug and New Drug[SH9]  Application processes. [KKB10]

As a result, they are prescribed and dispensed like any other medication through pharmacies, not sold in state-licensed cannabis dispensaries. This difference is particularly notable for patients familiar with prescription products: FDA-approved drugs contain consistent, well-characterized formulations, whereas dispensary products vary widely in potency, formulation, and labeling standards.

What Rescheduling Means for Cannabis Research Infrastructure

While a Schedule III classification could prove a critical step forward for cannabis researchers, potentially making access to research cannabis less burdensome, the drug approval process is still notoriously lengthy and expensive, often taking a decade or more from initial research to market entry. And, absent reforms to FDA drug approval processes or a separate pathway for cannabis-based drugs, we may never see an FDA-approved product that is simply “cannabis” in its natural form. The plant’s chemical complexity, variability across cultivars, and difficulty meeting the uniformity and dosing requirements of FDA standards make whole-plant cannabis an unlikely candidate for approval.

The challenges for cannabis researchers were clearly demonstrated by the lengthy process that researcher Dr. Sue Sisley faced in advancing her FDA trials assessing smoked cannabis for THC in veterans. Instead, future approvals will likely focus on purified compounds, synthetic analogs, or novel cannabis formulations; however, it will be crucial to monitor the results of Dr. Sisley’s trials as potential evidence to the contrary.

Schedule III Drug Controls: What Reclassification Would Mean

If cannabis is rescheduled to Schedule III, it will occupy the broader regulatory framework that governs other Schedule III substances under the CSA. At its core, the Drug Enforcement Administration (DEA) maintains a “closed system of distribution” for controlled substances. This system is designed to tightly regulate the flow of these substances, from manufacture to prescribing and dispensing, to minimize diversion into unlawful channels.

In practice, this means that every participant in the supply chain must be registered with the DEA unless very narrow exemptions apply to them. Manufacturers, distributors, importers, exporters, physicians, pharmacies, and hospitals must obtain and maintain DEA registrations specific to their respective roles and responsibilities.

Registration is not a mere formality. Registrants are required to keep detailed records of every transaction involving a controlled substance, submit periodic reports, and make those records available for inspection by the DEA. These requirements ensure that controlled substances are transferred only between authorized parties and are accounted for at every step of the process.

The “closed system” approach is a defining feature of federal drug control policy. It reflects a recognition that substances with abuse potential must remain legally available for legitimate medical purposes, but only under a system that prevents them from being diverted or misused. For Schedule III drugs like ketamine or anabolic steroids, this means strict recordkeeping, security measures, and oversight of prescribing. If cannabis moves into Schedule III, it would be expected—at least in theory—to enter this same highly monitored distribution chain.

With the federal government considering the rescheduling of cannabis, following HHS’s August 2023 recommendation, we examine the potential impacts on medical practice with our attorneys, Will Woodlee and Helen Ryan, from our strategic FDA counsel, Kleinfeld, Kaplan & Becker LLP. These questions inform the FDA and DEA landscape for cannabis in its potential new status as a Schedule III unapproved new drug and highlight needed reforms for a sensible federal regulatory framework for medical cannabis.

Q&A on Regulatory Implications for Dispensaries, Pharmacists, and Patients

Q1. Would rescheduling cannabis to Schedule III create a federally legal path, under the FDA’s laws and regulations, for state medical dispensaries to sell cannabis products?

Even after cannabis is rescheduled from Schedule I to Schedule III, state-licensed medical and adult-use dispensaries will continue to remain in violation of federal law (both the CSA and the Federal Food, Drug and Cosmetic Act (FDCA).

That said, federal enforcement priorities are not expected to shift in a way that undermines or interferes with state cannabis programs. Could there be any exception at the intrastate level that allows dispensaries to operate outside FDA oversight?

KKB’s perspective: From the FDA’s perspective, rescheduling does not remove the fundamental barrier: cannabis products will still satisfy the FDCA’s definition of a “drug” (i.e., articles intended to treat, cure, prevent disease, or affect the structure or any function of the body). That means cannabis remains an unapproved drug absent full FDA approval.

FDA’s statutory enforcement authority generally extends to products in interstate commerce, so purely intrastate operations might appear to fall outside its reach. Indeed, the notion of an “intrastate exception” may partly explain why the FDA has historically been quiet about dispensaries operating under state law.

However, in practice, when there is an appetite for enforcement, the FDA has often found an “interstate commerce hook” for activities that otherwise appeared to be fully intrastate. Common examples include:

• Packaging, precursors, or ingredients sourced from out-of-state or overseas
• Supply-chain inputs crossing state lines
• Transportation or logistical links with interstate channels

Thus, even if a dispensary’s operations seem entirely local, the FDA can often anchor its interstate jurisdiction to peripheral interstate ties. Rescheduling alone is unlikely to change that dynamic.

Q2. Would rescheduling allow dispensaries to achieve compliance through DEA registration? Given that cannabis would no longer be in Schedule I, could dispensaries now attempt to register with the DEA as “dispensers” of controlled substances under the CSA?

KKB’s perspective: The DEA’s “dispenser” registration category is conceptually intended for medical practitioners (e.g., physicians, dentists, pharmacists). In theory, dispensaries might try to seek registration, but a few practical and legal obstacles loom:

1. Statutory design: The CSA anticipates that dispensers are those in medical (including pharmacy) practice, not retail operators or non-medical personnel.
2. Burden vs. benefit: DEA registration would impose significant compliance obligations (recordkeeping, security, inspections, audits). Yet dispensaries have historically operated—even with cannabis under Schedule I—without such burdens. The upside for entering the formal DEA system is modest relative to the downside.
3. Enforcement incentives: Even if registration were permitted, regulators might view voluntary registration skeptically or subject it to heightened scrutiny.

In short: Yes, registration is theoretically possible, but it is likely unattractive and operationally difficult for dispensaries to pursue meaningfully.

Q3: Could pharmacists have dispensing authorities for unapproved drugs in Schedule III?

The DEA regulation at 21 C.F.R. § 1306.26 allows a pharmacist to dispense a controlled substance in Schedule II–V (that the FDA has not classified as a “prescription drug”) without a prescription. Could that carve-out permit pharmacists to dispense cannabis directly to patients?

KKB’s perspective: § 1306.26 is a narrow exception and must be read carefully.

• Dispensing is to be performed only by a licensed pharmacist (as defined in 21 C.F.R. § 1300.01), not by non-pharmacist employees, even under supervision.
• That no law (federal, state, or local) requires that the substance be dispensed by prescription or order. If state medical cannabis regimes require physician involvement or prescriptions, that requirement may disqualify the exception.

The definition of “pharmacist” under § 1300.01 is broad. It includes licensed pharmacists and “any other person … authorized by a State to dispense” under supervision (e.g., interns).

Someone might argue that state-authorized dispensary personnel fall under the category of “other person,” especially in intrastate scenarios. But the explicit statutory language of § 1306.26 prohibits dispensing by non-pharmacist employees, even under supervision, effectively foreclosing that broader reading.

So, the carve-out is limited to actual pharmacists practicing within their licensed scope. It does not extend to dispensary staff under state cannabis regimes.

Q4: Could pharmacists legally acquire cannabis from DEA-registered suppliers?

Shifting focus to the supply side: What rules govern how and where pharmacists might obtain non-FDA-approved cannabis products (if cannabis joins Schedule III)?

KKB’s perspective: Several supply pathways merit discussion.

1. From state-licensed cultivators: Under the CSA’s closed system of distribution, the key factor is DEA registration of the supplier, not state licensing. State licensure alone is inadequate. The CSA does not distinguish between interstate and intrastate supply chains — by law, “intrastate” manufacture and distribution cannot be differentiated in terms of controls. (See 21 U.S.C. § 801(5).)
2. From international imports: The same requirement of DEA registration applies. Even if cannabis is lawfully imported under foreign regimes or treaties, it must enter via a DEA-registered import pathway.
3. Current practice: At present, the only cannabis-derived products dispensed in pharmacies are FDA-approved drug formulations (e.g., Epidiolex, dronabinol, nabilone). No marketplace currently supports unapproved cannabis formulations via pharmacy distribution.

Thus, non-FDA-approved cannabis products may technically flow through DEA-registered supply chains, but it is impossible to determine if a supply chain is compliant under the CSA by evaluating only basic elements of state-legal sales or import-level compliance.

Q5: Are there protections for patients in Schedule III under the CSA’s possession provisions?

The CSA’s general possession provision (21 U.S.C. § 844) allows lawful possession when a controlled substance is “obtained directly, or pursuant to a valid prescription or order, from a practitioner.”

KKB’s perspective: Yes, § 844’s language suggests that not all lawful possession depends on a prescription (i.e., substances may be lawfully possessed if “obtained directly” from a practitioner). This is akin to when you directly receive a drug while in a doctor’s office or at a hospital – you never received a written prescription for the medication, but you are nonetheless lawfully able to possess it.

That said, this flexibility is not a complete shield. It must coexist with:

• The FDA constraints on unapproved drugs (cannabis still being one)
• State pharmacy or other healthcare licensing statutes
• Other federal or state obligations around dispensing or practitioner conduct

Thus, while § 844 provides theoretical headroom for personal possession of scheduled substances obtained through permissible means, it doesn’t resolve the deeper conflicts with the FDA and state law frameworks.

Q6: Would rescheduling unlock a practical pathway for pharmacists to dispense cannabis?

KKB’s perspective: Theoretically, yes, rescheduling could open the door to CSA-compliant dispensing: if cannabis products come through DEA-registered suppliers, pharmacists might legally engage in direct dispensing without running afoul of the CSA. That is a meaningful change from Schedule I status, under which there is no remote possibility of “legal dispensing,” given that the CSA does not recognize any CAMU for Schedule I substances.

However, substantial risks remain:

• FDA liability: Cannabis remains an unapproved drug under the FDCA. Pharmacists dispensing it could face FDA enforcement, such as product seizure, warning letters, or other administrative actions.
• State licensing and regulation: Many state pharmacy boards and health agencies may restrict or prohibit the dispensing of unapproved drugs.
• Practical enforcement dynamics: Although the FDA’s reach into intrastate systems may often be limited in practice, the threat cannot be ignored. The jurisdictional boundaries are often tested in enforcement actions.

In short, the CSA barrier may recede under rescheduling, but the FDA and state regulatory bricks still stand. The outcome will depend heavily on how regulators, state pharmacy boards, and courts in each jurisdiction respond.

Conclusion: A Path Forward for Sensible Cannabis Regulation

Rescheduling cannabis to Schedule III would mark one of the most significant federal shifts in modern drug policy. Yet as this analysis shows, reclassification alone will not create a workable system for prescribing or dispensing cannabis in the United States. The CSA, FDCA, and state regulatory frameworks must evolve together to ensure safe, transparent, and medically sound access.

Establishing a viable federal pathway for botanical cannabis, while maintaining public health protections, will require coordination among the DEA, FDA, Congress, and state regulators. Until such reforms occur, cannabis will continue to exist in a regulatory paradox: broadly recognized and available for its therapeutic potential yet constrained by systems not designed to accommodate such complex substances.

About the Authors

This analysis was prepared by Vicente LLP and Kleinfeld, Kaplan & Becker LLP (KKB Law), combining decades of experience across cannabis regulation, FDA and DEA compliance, and federal drug policy.

From Washington, D.C., Will Woodlee and Helen Ryan of KKB Law advise companies navigating FDA and DEA frameworks for cannabinoid-based products, pharmaceuticals, and other regulated substances.

In Colorado, Vicente partner Shawn Hauser and associate Daniel Molina counsel businesses, healthcare professionals, and policymakers on state and federal cannabis regulation and the evolving implications of Schedule III reclassification.

Andrew Livingston, director of economics and market analytics at Vicente LLP, contributed data-driven insight on market structure and the practical economic effects of federal rescheduling.

In collaboration, they bring a national perspective to one of the most consequential policy shifts in modern drug law.

For questions about how Schedule III rescheduling may affect your business, research program, or medical practice, Vicente LLP’s regulatory team is available to help.