Marijuana rescheduling moves businesses into ‘uncharted territory’

Marijuana business owners hoping to benefit from the Biden administration’s move to reschedule marijuana use may be disappointed, experts say.

The administration announced Thursday that it plans to move forward with a rule that would reschedule marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA).

Under U.S. tax law, companies that handle Schedule I or Schedule II substances are not allowed to take deductions or add credits to their annual federal taxes. This situation could change if marijuana becomes a Schedule III drug.

Marijuana industry officials agree that being able to deduct costs from taxes is helpful, and Washington, D.C.-based cannabis dispensary Green Theory calls the decision “a step in the right direction.”

But experts like Robert Mikos, the LaRoche Family Law Professor at Vanderbilt University, don’t expect marijuana entrepreneurs to benefit.

“There will be some impact. I think there are actually two reasons why the impact is not as big as many people expect,” Mikos said.

“One is that this drug will continue to be regulated under the Controlled Substances Act. And it will be very difficult for companies that are currently in this industry to meet these regulations. “It will be,” he added.

Another problem Mikos sees is that marijuana is dually regulated under the Food, Drug, and Cosmetic Act. The law prohibits the sale of all unapproved drugs, such as marijuana, even if they are reclassified to a more lenient classification.

“It will not be approved by the government.” [Food and Drug Administration] And that recognition is still a long way off. So everything these companies are doing now, all the sales they’re making, will continue to be illegal. Therefore, I think they will continue to have difficulty accessing banking services. ”

Paul Armentano, deputy director of the National Marijuana Law Reform Organization, criticized the move to change the schedule as not going far enough. But he said the question of how businesses would benefit is unclear because rezoning marijuana would take the country into “uncharted territory.”

“The reality is none of us know, and these policies and regulations will probably continue to evolve after the fact,” Armentano said.

“There has never been a situation where a substance was changed from one CSA schedule to another before it was approved through the traditional FDA market approval process.”

A patchwork of state laws legalizing marijuana has resulted in A strong and growing industry, cannabis businesses face obstacles that other businesses don’t. Armentano cited a lack of access to credit and the exclusion of cannabis entrepreneurs from bankruptcy protection as “troubling” issues that still need to be addressed.

“This is clearly a necessary protection, especially when you’re talking about an industry as volatile as this one. Small business loans are not available at this time,” he said. “I think the overarching theme is that the marijuana industry, which currently employs more than 425,000 full-time workers, wants to be treated like any other legal industry in this country. ”

With a reduced tax burden, cannabis businesses may be able to reduce operating costs and pass those savings on to their customers, which could lead to increased traffic.

“We are pleased with the possibility of eliminating the 280E tax burden. Eliminating this tax burden will create a more equitable environment in which small cannabis businesses can reinvest not only in their operations but also in the communities around them. “This tax has fiscal limitations,” Green Theory said in a statement to The Hill.

“We believe that more needs to be done in this area to continue to create fair opportunities for those adversely affected by tough drug laws, and we look forward to continued government action. I look forward to your efforts.”

Mikos and Armentano said any action beyond changing the White House’s schedule would have to come from Congress.

“This is all Congress’ fault,” Mikos said. “If anyone wants to blame anyone for the bizarre federal marijuana policy that we have today, that’s almost entirely the responsibility of Congress.”

Senate Majority Leader Chuck Schumer (New York) Re-introduced law This month, we will completely remove marijuana from the CSA.

“Reclassifying cannabis is a necessary and long-awaited step, but it is not the end of the story. We hope Congress wakes up and passes the cannabis reform that most Americans have been asking for for years. It’s past time for Congress to catch up with public opinion and catch up with the science,” Schumer said.