Washington DC - President Joe Biden's administration formally proposed on Thursday reclassifying marijuana as a less dangerous drug, a historic shift that would bring federal policy more in line with public opinion.

"No one should be in jail merely for using or possessing marijuana. Period," Biden said in a video statement.

"Far too many lives have been upended because of a failed approach to marijuana and I'm committed to righting those wrongs."

Marijuana has been classified since 1970 as a so-called Schedule I drug under the Controlled Substances Act (CSA) – the same level as with heroin, ecstasy, and LSD. That classification means it is deemed to have no accepted medical use and a high potential for abuse.

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But it would be downgraded to a Schedule III drug under the proposal, putting it alongside drugs like ketamine and painkillers containing codeine, considered to have a moderate to low likelihood of dependence.

That wouldn't make it legal, but it could lead to fewer arrests at the federal level.

The proposal to reclassify cannabis was unveiled by the Biden administration at the end of April, and the Justice Department officially launched the process on Thursday.

Marijuana will remain a controlled substance until the process – which includes a public comment period and a potential hearing before a judge – is complete.

In 2022, Biden became the first president to initiate a federal review of marijuana policy.

The issue is seen as a potential vote winner for Biden as he faces Republican Donald Trump in a tough election rematch this November, especially among younger people that the Democratic incumbent is struggling to court.

A Pew Research Center survey found 88% of Americans believe marijuana should be legal for medical or recreational use. Just 11% said it should not be legal at all.

Cannabis was first outlawed at the federal level in 1937, a decision critics say was made largely on the basis of racist ideas, as the drug was perceived as being intimately tied to jazz music, the Black community, and Mexican immigrants.

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The 1970s brought the "War on Drugs," which likewise disproportionately hit minorities – before the medical marijuana movement took root in the 1990s. In 2012, states began to make recreational cannabis legal for adults.

Cannabis is today a multibillion-dollar business in the US, with more than half of all states having legalized recreational and medicinal cannabis use, including California and New York.

But figures show that racial minorities, in particular Black Americans, are overrepresented in marijuana-related arrests.

Biden himself sponsored a 1994 crime bill which escalated the war on drugs and the mass incarceration of Black and brown people.

"This decision is monumental," the NAACP civil rights organization said on X, formerly Twitter, of the new development.

"Far too many Black Americans have fallen victim to a system designed for their demise."

Since the drug remains a controlled substance at the national level, everyone involved is still technically breaking the law of the land.

The classification makes it difficult for businesses in the marijuana industry to access banking services, stops federal funding for medical marijuana research, and prevents interstate commerce as well as federal regulation on best practices and protocols for marijuana.

A reclassification would also allow companies to deduct their operating expenses from their taxes, which is currently prohibited.

Thursday's decision "will unlock important research on the medical efficacy of cannabis and bring about real change for legal operators," Curaleaf CEO Matt Darin said in a statement to AFP.

On Wall Street, industry shares rose, with Curaleaf gaining 1.07% and Verano Holdings .69%.