The DEA decides to postpone the marijuana deadline

In a historic move, the Drug Enforcement Administration announced it plans to reclassify cannabis. Monumental change in the marijuana industry.

After waiting three years for President Biden to make good on his promise to take action on cannabis legalization, the Drug Enforcement Agency (DEA) announced its plan to reclassify cannabis. This follows recommendations from Health and Human Services (HHS) and the Food and Drug Agency (FDA). They will send their recommendation to the White House Office of Management and Budget to consider the budget implications. The shifts recognized the medical benefits of cannabis and could pave the way for treating post-traumatic stress disorder in veterans, according to the president and Senator Patty Murray (D-WA).

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“The transition to Schedule III is the biggest thing that could happen to the U.S. cannabis industry. It eliminates the 280E tax burden, increases medical research and opens the investor base. Today is truly a turning point for this emerging industry,” said Jesse Redmond, managing director of Water Tower Research.

“This historic move by the Biden Administration to reclassify cannabis from Schedule I to Schedule III reflects changes in the scientific and medical understanding of cannabis. It reflects movements in other countries around the world. Domestically, this lays the foundation for federal tax benefits for the cannabis industry by treating cannabis businesses like other businesses for deductions and credits. This also reduces the costs and hurdles in researching the plant and its products. Although skeptics argue that, as we know, this would mean the beginning of the end for the cannabis industry, these doomsday scenarios fail to answer a fundamental question: Why would the Biden administration want to crack down on a substance it deems “less dangerous?” It refused to take action against the substance, even though it was a List I substance. Little, if any, will change at the state regulatory level, but that should not detract from the historic nature of this decision. Cannabis has been a Schedule I substance for 54 years, and despite multiple opportunities to reclassify it over the past few decades, today is the first time the U.S. government is willing to say otherwise,” said John Hudak, Director of the Maine Office of cannabis.

Hudak is well respected in the industry and has been a thought leader for the growing industry. This move will reclassify cannabis from the No. 1 dangerous drug with no medical use to Category III like ketamine, Tylenol with codeine and anabolic steroids. The timing is still uncertain, but there is hope that it will have an impact in 2024. The industry struggled with Schedule III despite tremendous consumer growth. This will also open the door for mainstream companies to enter the market.

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“While this is great news for the cannabis industry, it is still too early to pop the champagne,” said Lonnie Rosenwald, partner at Zuber Lawler, LLP. “We don’t yet know when a debt restructuring will occur or, perhaps more importantly, when the tax changes will come into effect. For companies and entrepreneurs considering entering the industry, debt restructuring alone should provide an incentive to start a business. However, existing cannabis companies will have to wait and see whether they can deduct business expenses from their 2024 or 2025 income. We expect answers to these questions in the coming weeks,” said Lonnie Rosenwald, an attorney at Zuber Lawler, a national law firm covering the cannabis industry.

This is a historic shift for the federal government and is consistent with the American Medical Association, most medical professionals, Canada and the public.