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ACKRELL
CAPITAL
Cannabis Investment Report | December 2017

(4) FDA Routinely Approves CBD Drugs
The FDA will adopt procedures for the routine approval of drugs that contain extracts of certain
low-THC/high-CBD FDA-registered chemovars. The new procedures will involve development of
a low-THC cannabis drug monograph that resembles in some ways the FDA monographs for over-
the-counter drugs. The monograph will address formulation, dosing and labeling requirements. The
FDA-registered chemovars included in the monograph will be rescheduled by the DEA to Schedule II,
III, IV or V in order to relax DEA registration requirements for manufacturing; however, the chemo-
vars themselves (particularly their flowers) will not be approved for use by the FDA, and only drugs
produced from extracts in accordance with the monograph will receive routine FDA approval.

(5) FDA Routinely Approves THC Drugs
Relying on experience with the low-THC cannabis drug monograph and a growing database of FDA-
registered chemovars, the FDA will adopt procedures for the routine approval of drugs that contain
extracts of certain high-THC FDA-registered chemovars. The procedures will parallel in many ways
those used in the low-THC monograph procedure, and likely will incorporate additional safeguards
related to THC content. The FDA-registered chemovars included in the high-THC monograph will be
rescheduled by the DEA, but cannabis flower from those rescheduled chemovars will not be approved
for use by the FDA.

(6) Federal Government Legalizes Cannabis
Parts and derivatives of the cannabis plant will be removed from the CSA schedules. This could occur
incrementally, starting with CBD (which could be removed by amending the definition of marijuana
to exclude CBD) and followed later by the rest of the plant (including THC). Or all parts and deriv-
atives of the plant could be de-scheduled at the same time. There will be three general categories of
legal cannabis products: (i) FDA-approved drugs, which will continue to be developed and approved
through the NDA and other processes; (ii) “therapeutic” cannabis products, which may be limited
to CBD concentrates and infused products if CBD is de-scheduled first, but which eventually will
include smokable flower (including high-THC flower) and most forms of cannabis, and which will
be permitted to make limited health-related claims but will not be approved by the FDA as safe and
effective for treating any specified medical condition; and (iii) recreational products, which also may
be limited to CBD products initially, but which eventually will include a broad range of high-THC
flower, concentrates and infused products. The DEA will still require registration of cannabis and CBD
manufacturers if CBD is de-scheduled first, but once the entire cannabis plant is de-scheduled, a new
federal cannabis agency will be established to regulate medical and recreational cannabis in coopera-
tion with the FDA and state regulators. The new agency will adopt the DEA’s institutional framework
for controlling the manufacture of chemovars used in FDA-approved drugs and the most successful
state strategies for regulating recreational cannabis, such as potency limits, labeling requirements and
restrictions on marketing to minors.

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