(Reuters) -The U.S. Department of Health and Human Services (HHS) has recommended easing restrictions on marijuana, a department spokesperson said on Wednesday, following a review request from the Biden Administration last year.
Nearly 40 U.S. states have legalized marijuana use in some form, but it remains completely illegal in some states and at the federal level. Reclassifying marijuana as less harmful than drugs like heroin would be a first step toward wider legalization, a move backed by a majority of Americans.
The scheduling recommendation for marijuana was provided to the Drug Enforcement Agency (DEA) on Tuesday as part of President Biden's directive to HHS, the spokesperson said.
"As part of this process, HHS conducted a scientific and medical evaluation for consideration by DEA. DEA has the final authority to schedule or reschedule a drug under the Controlled Substances Act. DEA will now initiate its review," a DEA spokesperson said.
Marijuana is currently classified as a schedule I drug under the Controlled Substances Act, meaning it has a high potential for abuse and no accepted medical use, along with drugs like heroin and LSD.
HHS is recommending reclassifying marijuana to say it has a moderate to low potential for dependence and a lower abuse potential, which would put it in a class with ketamine and testosterone.
If marijuana classification were to ease at the federal level, that could allow major stock exchanges to list businesses that are in the cannabis trade, and potentially allow foreign companies to begin selling their products in the United States.
"The administration's process is an independent process led by HHS, led by the Department of Justice and guided by evidence... we will let that process move forward," White House Press Secretary Karine Jean-Pierre said.
Cannabis is legal in Canada, which has become the home in North America for publicly traded cannabis growers and distributors, many of which would be expected to expand into the United States, if federal legalization follows there.
Shares of several cannabis firms including Canopy Growth (NASDAQ:CGC), Tilray (NASDAQ:TLRY) Brands and Cronos Group (NASDAQ:CRON) rose on the news. Firms such as Verano Holdings and Sunburn Cannabis welcomed the HHS move.
"For far too long, cannabis prohibition and its outdated status as a schedule I substance have unduly harmed countless individuals affected by the failed War on Drugs," Veranos CEO George Archos said.