Will the rescheduling happen in time to help the marijuana industry?

Biden keeps promising/pushing for rescheduling – will it be in time to help the industry this year?

The public has taken an about-face on marijuana use. With the exception of a few senior members of Congress (including Mitch McConnell), the majority of Americans and Canadians believe that cannabis should be legal. The American Medical Association, founded in 1847 and long the platinum standard for medical decisions in the United States, has stated that marijuana has medical benefits. But senior members of the current administration, and most likely Biden himself, are still reluctant to take steps to help patients, people and the industry. There is concern that the rescheduling will come in time to help the marijuana industry in 2024.

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In October 2022, the government decided to address scheduling to deliver an election campaign promised to younger voters. Both Health and Human Services (HHS) and the Food and Drug Administration (FDA) conducted the research and recommended that the Drug Enforcement Agency (DEA) reclassify it from a dangerous drug to one with health benefits. While the DEA has never contradicted its decision, it has not commented on it regarding cannabis. And time flew by, there were rumors that it would be at the end of 2023, then on April 20th. and now perhaps would be announced at the end of the summer.

And as customers continue to spend money on legal weed, the industry's foundation is crumbling with zero tax benefits, burdensome decisions and a business stigma. The vice president mentioned moving forward, and the president tried to take credit in his State of the Union address, but nothing happened.

A key advantage is that debt restructuring would enable industry-standard trade tax depreciation. Currently, companies that come into contact with the facility cannot claim tax deductions, but benefit from additional business expenses. Debt restructuring gives an industry with more than 50% small businesses a chance. A decision must be made by the beginning of October in order to attract young voters to the election. But will it be too late to help this year? And how many small businesses will be affected or forced to close?

It is clear in political circles that while this is not the policy Biden and his team wanted, it is a necessary measure to attract increasingly distant younger voters. The DC rumor mill says a decision will be made in the fall as to whether a decision is “necessary” or whether they have regained enough ground with young voters.

Lonnie Rosenwald of Zuber Lawler shared, “Whether the timing of the rescheduling makes a difference depends on the effective date. For example, if the effective date is January 1, 2025, businesses would be able to deduct their ordinary and necessary business expenses on their 2025 federal income tax returns.”

“A debt restructuring could take place retroactively. In this case, companies would have to file amended returns claiming deductions for prior years quickly enough to avoid running out of the statute of limitations. If the debt restructuring ultimately takes effect in 2024, it should apply retroactively to January 1, 2024, regardless of the specific date of entry into force of the debt restructuring. Businesses that overpaid their taxes in 2024 through quarterly payments before the debt restructuring took effect would be able to claim deductions for ordinary business expenses for the entire year and receive refunds for their overpayments in 2025.”

The general opinion in the industry is that the rescheduling decision must take six months to come into effect before the elections. However, there is an option to skip the preliminary procedure and go straight to a final decision. Theoretically, this could not happen until September.

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