The federal government’s decision to reduce funding for research is jeopardizing 565 cannabis-related studies. In addition, a freeze on new grants from the National Institutes of Health (NIH) is slowing down future studies at a critical time, raising concerns about cannabis policy changes and potential consequences for the industry.
Earlier this month, the NIH announced that there would be a significant cut in research grants allocated for indirect costs, such as facility and administrative expenses, capping it at 15%. Universities responded by filing lawsuits to block the cuts, leading to a temporary halt in their implementation while legal challenges unfold.
Researchers are now left in uncertainty, continuing their work despite the looming threat of funding termination, which could have long-term effects on the $32 billion cannabis industry.
Without solid scientific studies, the legal cannabis sector faces difficulties countering claims about the negative effects of marijuana, including lawsuits concerning high-potency cannabis products. Additionally, without substantial research backing, industry advocates may struggle to persuade legislators who remain skeptical or opposed to marijuana reform, including changes to its federal classification.
While federal grants are not the sole financial resource for marijuana studies, institutions like UCLA receive funding from state marijuana tax revenue. However, in most cases, NIH grants remain essential as they support larger, more impactful research projects.
The federal government has also halted the review process for new studies, leaving many projects stuck indefinitely.
This disruption contradicts previous indications that the administration would take a supportive stance on cannabis and goes against a call made by the National Academies of Sciences, Engineering, and Medicine in September. The organization urged the government to lift existing research restrictions to better understand marijuana legalization’s public health implications.
Although cannabis research accounts for only a fraction of the $47 billion the federal government spends annually on biomedical studies, it has seen significant growth. In 2012, when recreational cannabis was legalized for the first time in Washington and Colorado, researchers published approximately 1,200 cannabis-related studies. By 2021, that number had surged to over 4,200, with an increasing focus on marijuana’s potential benefits rather than just its risks.
The uncertainty surrounding funding could also impact the ongoing cannabis rescheduling process. The DEA has paused rescheduling hearings, with the decision now resting solely in the agency’s hands. If Trump’s choice for DEA director, Terrance Cole, a known marijuana critic, is confirmed as DEA chief, the chances of rescheduling could diminish.
Marijuana businesses like Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) inside and outside the U.S. are likely to take a keen interest in the way Trump’s administration supports or hinders marijuana policy reform at the federal level.
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