Jason W. Klimek, co-leader of the firm’s Cannabis Industry Team, spoke to the Hartford Business Journal about the current Drug Enforcement Administration hearing to consider rescheduling marijuana from Schedule I to Schedule III under federal law. The article explored what the hearing, which runs through July 15, means for the cannabis industry.

Adult-use cannabis is now classified the same as heroin and LSD, considered a Schedule I drug the federal government considers to have no accepted medical use and a high potential for abuse.

The rescheduling hearing comes only two months after federal regulators reclassified medical marijuana as a Schedule III controlled substance. It also follows first in the industry: a cannabis company, Florida-based multistate operator Trulieve Cannabis Corp., listed its shares on the New York Stock Exchange.

Trulieve achieved its listing by splitting its business in two — one part medical, the other adult-use, Jason said, adding that is a complex and expensive transaction likely not viable for smaller players in the industry.

Jason said the reclassification of medical marijuana, while welcomed by many, raised a lot of questions. The DEA established a new registration system for medical marijuana businesses, providing cannabis companies the opportunity to register and perhaps gain legal protections and improved access to financing. But it also puts a company under federal oversight and regulations to disclose operational information.

The decision to register may be especially difficult for medical cannabis companies that also serve the adult-use market, which is still illegal under federal law.

“If the DEA is reviewing a medical licensee who also holds an adult-use license, what do they do in that circumstance?” Klimek said. “They’re evaluating you for medical, but by the way, over here is your Schedule I drug manufacturing. Does the DEA just ignore that?”

Klimek expects more questions and concerns if adult-use cannabis is rescheduled, making it difficult to advise clients one way or the other. For example, what will it mean for smaller cannabis companies if rescheduling leads to legal transport between states, which is currently illegal?

“It doesn’t take a lot of imagination to think that maybe these big medical cannabis companies would start shipping in cannabis for the medical side from low-cost states,” Harris Beach Murtha’s Klimek said. “And so, that really starts to potentially change what the market looks like.”

Read the full article to see all that Jason and others said about the rescheduling hearing and its effect on the cannabis market.