The federal government finally seems ready to acknowledge the potential advantages of medicinal CBD and marijuana-derived medication. The Food and Drug Administration (FDA) and Drug Enforcement Agency (DEA) approval of Epidiolex, a CBD medication, and the steady progress of the Medical Cannabis Research Act in the legislature seem to indicate that the tide is turning. Accordingly, increased opportunities for the development and research of federally compliant marijuana-based medications are on the horizon, and companies must stand ready if they want in on the action.

On June 25, 2018, the FDA approved for the first time a drug containing a purified substance derived from marijuana known as a cannabidiol (CBD). Epidiolex is a prescription medication for treating two rare and severe forms of childhood epilepsy. Nearly three months after the FDA’s approval of Epidiolex, the DEA reclassified approved cannabidiol drugs from Schedule I to Schedule V. This marks the first time the DEA reclassified a cannabis-derived product, which typically are classified as Schedule I controlled substances under the Controlled Substance Act (CSA). The new Schedule V classification means that Epidiolex is classified as a drug with a low potential for abuse. Schedule I is reserved for drugs viewed as dangerous, addictive and without any medical benefit.

CBD remains a Schedule I substance. The DEA reclassified only those drugs containing CBD that the FDA previously approved. In order to gain DEA approval, the CBD drug must 1) be FDA approved, 2) be derived from cannabis, and 3) contain less than .1 percent THC. Currently, Epidiolex is the only drug that meets those criteria. Although other CBD medications are sold in states that have legalized them for medical use through their regulated cannabis markets, Epidiolex will be the only CBD containing medication available through traditional pharmaceutical channels.

It is clear that the federal government is loosening its grip on cannabis regulation; however, challenges remain for cannabis companies entering the federally regulated prescription drug market. Research and clinical studies on drugs containing cannabis remains severely limited due to cannabis’s Schedule I classification, which requires difficult to procure research licenses from the DEA. This has resulted in a catch-22 because Congress cannot alter federal regulations without additional research into the effects of cannabis, but additional research cannot be conducted without changing the federal regulations.

Relief, however, may be on the way with the proposed Medical Cannabis Research Act of 2018 (MCRA) (H.R. 5634). The MCRA, recently approved by the House Judiciary Committee with a vote soon to be taken on the House floor, would help encourage and facilitate federally approved clinical trials regarding the medicinal effects of cannabis. As it currently stands, only the University of Mississippi holds a federal permit to grow research-grade cannabis for clinical testing. Hence, the supply of federally legal cannabis that can be used for clinical testing remains severely limited. The MCRA would serve to bypass the U.S. Department of Justice and give Congress the power to issue additional cannabis cultivation licenses for medical research. Specifically, MCRA would increase the number of facilities permitted for cultivation from one to three, as well as require the licensing of three additional facilities each year. Facilities authorized for cultivation under MCRA would be required to:

  • Limit the transfer and sale of cannabis to researchers registered to conduct research (which would include preclinical research and clinical investigations) of Schedule I controlled substances.
  • Implement a process for storing and handling Schedule I controlled substances that includes inventory control and security monitoring.
  • Transfer or sell any cannabis manufactured pursuant to the proposed law only with the prior, written consent of the AG.
  • Complete the application and review the process for the bulk manufacture of Schedule I controlled substances.
  • Formulate and implement a process for storing and handling Schedule I controlled substances that includes inventory control and security monitoring.
  • Be able to provide at least 10 unique plant cultivars to ensure plant diversity and scale.
  • Hold a license to manufacture cannabis in each state in which they conduct operations.
  • Complete criminal background checks for all personnel involved in their operations, confirming that they have no employees who hold convictions for felonies or drug-related misdemeanors.
    • Receive a letter of reference from state health and law enforcement authorities in whose jurisdictions they operate, affirming their good standing.
  • Have the ability to test for and isolate at least 12 cannabinoids for the purposes of producing specific products for specific studies by compounding pharmacists or others, with labeling and chemical consistency.

Despite the backlog of nearly 40 cannabis bills being negotiated in Washington, D.C., MCRA has progressed further through the legislative process than most (which rarely make it out of committee). The DEA rescheduling of CBD-based drugs and the progression of MCRA are rather narrow developments, but significant nonetheless. More than ever before, the federal government appears willing to explore the impact and efficacy of cannabis medications, and the opportunity for private involvement in the cannabis drug market appears to be steadily increasing. Companies or facilities looking to apply for a federal cultivation permit should closely monitor the progress of MCRA and ensure that they are fully compliant with their state’s regulations prior to submitting their permit applications. Additionally, companies seeking to conduct clinical studies of cannabis-derived drugs may soon find increased access to federally approved cannabis plants and materials.