The Realities of Cannabis Rescheduling & GMP

Despite the high expectations following the recent federal cannabis rescheduling announcement by the U.S. Justice Department on April 23, it’s important to remain mindful of the regulatory and legal complexities that still lie ahead. Industry veterans in the U.S. will no doubt remember the 2016 expectation that rescheduling was imminent, a hope that didn’t materialize. Now that it has become a reality and cannabis is officially a Schedule III drug, the big question everyone is asking is what this all means. While ambiguity and opinions abound, two things are certain.

Litigation Lag

First, I think everyone can agree that we will experience “Litigation Lag,” a term American Trade Association for Cannabis and Hemp President Michael Bronstein discussed in his podcast, What’s Next for Cannabis Rescheduling. Implementation will take time. Even if rescheduling happened today, Bronstein warns that before it takes effect, “I would anticipate that that litigation could take anywhere from a year and a half to two years.”

Moreover, moving cannabis to Schedule III also carries an overlooked hurdle. Technically, the FDA would require clinical trials to prove safety and efficacy. This process takes 10 to 12 years and costs an average of $1 billion to $2 billion, with no guarantee of success. Assuming cannabis gained approval, it would then require a formal physician’s prescription and dispensing through a licensed pharmacist. While the new ruling appears to carve out room for existing state-licensed operations to stay in business, the devil remains in the details of how regulators ultimately define the “medical” uses of the drug.

While the U.S. cannabis market is already well established in 40 states, Schedule III technically renders recreational dispensaries illegal. Some argue that if they remain open, they could still face 280E tax penalties and limited banking access due to their “unlawful” federal status. The hope is that a clear legislative carve-out similar to those granted to alcohol or tobacco will emerge under this new framework, but right now, nobody knows exactly how recreational cannabis products will fare.

Which brings us to the second certainty, and what may prove to be the industry’s most difficult challenge of all: meeting the FDA’s Good Manufacturing Practices (GMP). It is not overdramatic to say this single regulatory hurdle could shutter many operations before other legal questions are ever litigated.

GMP & GACP Certification

Current Good Manufacturing Practices (cGMP) regulate manufacturers of human and animal products, while growers follow current Good Agricultural Collection Practices (cGACP). Both frameworks require cleanroom facilities, safe processes, and rigorous product testing, but the demands of GMP certification are anything but simple. If a product goes in or on the human or animal body, federal law requires it to originate from a GMP-certified processing facility, and those facilities can only source raw materials from GACP-certified growers.

With rescheduling now underway, the FDA will soon face the task of notifying cannabis businesses that they must become GMP and GACP compliant. Many expect a 12-month compliance window, creating a massive hurdle for an industry that has largely operated outside these standards. The primary focus areas include hygiene, sanitation, quality control, contamination prevention, and process validation. The transition centers on what industry experts call the “5 Ps”: People, Processes, Procedures, Premises, and Products. The first step for most operators will be a detailed gap analysis to identify infrastructure and process deficiencies.

“I fear that most licensed operators in the U.S. are woefully unprepared for the consequences of not considering GMPs from the start and will be forced to shut down,” said Darwin Millard, Technical Director at Cannabis Safety and Quality (CSQ), a globally accredited cGACP and cGMP certification program for licensed cannabis and hemp producers.

The reality is that many cannabis businesses occupy low-quality industrial real estate. Installing the required air filtration systems, floor drains, and seamless surfaces often makes rebuilding cheaper than retrofitting existing facilities, yet Section 280E has already left many operators cash-poor. Beyond physical infrastructure, companies must validate equipment, implement strict SOPs, train staff, and hire specialized GMP compliance personnel.

Regulatory standards also vary depending on intended use. While GMP 21 CFR Parts 117 and 111 govern food and supplements, only the more demanding pharmaceutical-grade cGMP 21 CFR Parts 210 and 211 permit medical claims. Globally, EU-GMP remains the platinum standard, requiring proactive proof of safety and quality rather than reactive planning. As regulations currently stand, any U.S. operation seeking relief from 280E will likely need to follow federal law and achieve pharmaceutical-grade GMP compliance rather than lower food-grade standards.

While many U.S. operators remain unprepared for these changes, Canadian companies are already compliant with Canada’s Good Production Practices (GPP), and many are adopting EU-GMP standards to access Europe’s rapidly expanding export markets. Given the looming GMP timeline in the United States, beginning the certification process immediately may prove essential for survival.

Astute U.S. processors will complete a gap analysis now and prepare for GMP audits before the FDA requires it. The savviest operators will aim for EU-GMP standards from the outset.

For help building an EU-GMP-compliant extraction facility, contact SteveFuhr@SciPhySystems.com.