By Jim Portner, Former DEA Diversion Group Supervisor, Titan Group Senior Investigator, SageComply “Doctor of DEA”
The push to move cannabis to Schedule III under the Controlled Substances Act is being celebrated as long-overdue reform. It is not. From a regulatory and enforcement standpoint, rescheduling cannabis does not loosen federal control—it completes it.
Those of us who spent our careers in diversion control understand exactly what Schedule III means. It is not a gray area. It is not flexible. It is the point at which the federal government assumes full regulatory authority over every aspect of a substance’s manufacture, distribution, prescribing, dispensing, and possession.
Jack Teitelman, CEO of Titan Group and Founder and Chief Compliance Officer of SageComply, has been warning about this outcome for years. As he has said repeatedly, “This was never about freeing cannabis. It was an end-around to bring the runaway state markets and the unregulated hemp industry under total federal control.” He adds, “The alcohol industry must be laughing themselves to sleep—this benefits them enormously.”
Under Schedule I, cannabis is prohibited, but paradoxically unregulated at the federal commercial level. There is no recognized medical use, no FDA approval, and therefore no comprehensive federal framework governing day-to-day operations. That legal vacuum is precisely what allowed state cannabis markets to exist at all.
Schedule III changes that overnight.
Once cannabis is classified as Schedule III, it becomes fully subject to DEA, DOJ, and FDA authority. The DEA has already been clear: cannabis will be treated like every other Schedule III substance. There are no cannabis carve-outs.
Every business that manufactures, distributes, stores, or handles cannabis must obtain DEA registration. Any owner, officer, or key employee with a felony conviction—especially a drug-related felony—will be disqualified. Individuals who physically handle cannabis must also meet federal suitability standards.
As Teitelman has bluntly stated, “A massive portion of the people who built this industry would be instantly disqualified. Social equity ownership does not survive DEA background standards.”
Schedule III substances are prescription-only. That means no possession without a valid prescription issued by a licensed prescriber. Not a medical card. Not a recommendation. A prescription.
Federal law strictly limits those prescriptions: one initial fill and up to five refills over six months. After 180 days, a new prescription is required. Possession outside those parameters is felony possession of a controlled substance.
And prescription-only substances must be FDA-approved.
There are no FDA-approved cannabis products being sold in dispensaries today. Claims like “for sleep,” “for pain,” or “for anxiety” are illegal unless and until the FDA approves each product through its formal drug approval process—a process that typically takes eight to ten years per product.
When administration officials say rescheduling will “encourage research” and “establish dosing guidelines,” what they are describing is the FDA drug pipeline.
As Teitelman put it, “That’s not reform. That’s pharmaceutical-level control.”
There is also no such thing as “recreational” cannabis under Schedule III. Controlled substances are controlled substances. Cocaine is Schedule II. Ketamine is Schedule III. Neither has a recreational market. Both are dispensed only through licensed pharmacies or administered in tightly regulated clinical settings.
Cannabis would be no different.
Dispensaries are not pharmacies. They are not regulated like pharmacies, staffed like pharmacies, or licensed like pharmacies. Recreational dispensaries would be forced out of existence unless they could somehow meet pharmacy licensure requirements—an outcome most operators are unprepared for.
State governments should also be paying attention. Prescription medications are generally non-taxable. Cannabis tax revenues—billions of dollars annually—would disappear. Cocaine and ketamine generate no state tax windfalls. Cannabis would follow the same path.
Finally, Schedule III means full Prescription Drug Monitoring Program reporting. Every cannabis prescription would be logged. Patient anonymity provisions in state cannabis laws would be invalidated. Pharmacists would be required to deny or destroy prescriptions that fall outside federal limits.
As Teitelman has warned, “This isn’t legalization. It’s normalization into the most heavily monitored pharmaceutical framework in the country.”
From a regulatory perspective, the conclusion is unavoidable: Schedule III is not the beginning of cannabis freedom. It is the end of the state cannabis experiment.
And once federal control is complete, there is no going back.
Call to Action
Any company operating in—or adjacent to—the cannabis, hemp, or controlled-substance supply chain should be preparing now for the level of scrutiny that comes with federal oversight. Ensuring your operations, personnel, recordkeeping, security, and distribution practices can withstand a DEA inspection is no longer optional—it is existential.
Organizations seeking DEA compliance assessments, inspection-readiness training, supply-chain audits, or diversion control consulting can contact Titan Group, a nationally recognized leader in DEA compliance and enforcement-focused consulting.
For ongoing compliance management, monitoring, documentation, and enterprise-wide controlled-substance compliance support across all regulatory areas, organizations can contact SageComply at tara@sagecomply.com.
Preparation—not hope—will determine who survives what comes next.