How Will Moving Cannabis to Schedule III Impact the Industry
The Biden Administration has made a historic decision to reschedule marijuana right before election season. But what does that mean exactly? Here’s a quick breakdown of how moving cannabis to Schedule III will impact the industry.
Understanding the DEA’s Rescheduling of Cannabis
The recent announcement by the U.S. Drug Enforcement Administration (DEA) has signaled a shift in the federal approach to cannabis regulation. For half a century, cannabis has been classified as a Schedule I drug under the Controlled Substances Act. A category reserved for substances with no accepted medical use and a high potential for abuse. The DEA’s agreement to recommend rescheduling cannabis to Schedule III is a monumental step. One that finally acknowledges the therapeutic potential of the plant and reduces the stigma attached to its use.
This change in scheduling is a recognition of the growing body of research and changing public opinion regarding cannabis. Schedule III classification will place cannabis alongside drugs that are considered to have a moderate to low potential for physical and psychological dependence. This pivotal move is expected to open doors for more research and a better understanding of cannabis’ benefits and risks.
The Legal Implications of Moving Cannabis to Schedule III
Transitioning cannabis to a Schedule III substance has significant legal implications. Firstly, it alters the legal framework for federal penalties related to cannabis possession, distribution, and production. Potentially leading to lesser penalties compared to Schedule I substances. While federal legalization for recreational use will not be directly affected, the new classification could influence state laws and enforcement priorities.
Moreover, the rescheduling could facilitate the prescription and dispensing of cannabis for medical purposes under federal law. This could ease restrictions on pharmacies and doctors. Potentially allowing them to handle and prescribe cannabis without facing the severe legal risks associated with Schedule I substances.
Effects on Cannabis Research and Medical Use
The reclassification of cannabis is expected to have a profound effect on research and medical use. Currently, the Schedule I status of cannabis places stringent restrictions on research. Making it difficult for scientists to study its effects and potential medical applications. With rescheduling, researchers will likely find it easier to obtain cannabis for clinical trials. Thereby expanding our understanding of its therapeutic effects and safety.
This could lead to the development of new cannabinoid-based medications and treatments for a variety of conditions. Patients may also see an increase in available medical cannabis products and a reduction in the bureaucracy involved in obtaining them. Which would improve access to treatments that many find beneficial.
Changes in Taxation and Business Operations for Cannabis Companies
The rescheduling of cannabis is poised to impact taxation and business operations for companies in the industry. Currently, businesses dealing with Schedule I substances face significant tax burdens and have limited access to banking services. For years, Section 280E of the Internal Revenue Code has forbidden businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances. Moving to Schedule III would allow cannabis companies to claim tax deductions and credits, improving their financial viability.
Additionally, access to banking and financial services would likely improve, leading to increased investment and growth opportunities for cannabis businesses.
Next Steps: When will the new Rule Take Effect?
Now that the new rule has been officially posted to the federal registry it has kicked off a public comment period of 60 days. Advocates, and prohibitionists will have until July 22 to voice their opinions and concerns before the rule is potentially finalized.
Once the public comment period has commenced the The Department of Justice will analyze the comments and make revisions to the rule if needed. Then a final revised rule could be issued as soon as September or October of 2024, at which point Schedule 3 would become law.
The move to Schedule III does not eliminate all challenges faced by the cannabis industry, but it does offer a more optimistic future. The reclassification could lead to broader acceptance and integration of cannabis into mainstream healthcare and business sectors.
Although the rescheduling of cannabis presents numerous opportunities, the industry may also face new regulatory challenges as it transitions to a Schedule III substance. Compliance with both federal and state laws will become more complex as the industry adjusts to these changes. Companies will need to comply with FDA regulations for drug development and marketing, which could impose additional costs and require strategic adjustments.
Hopefully this helps you have a better understanding of How moving cannabis to Schedule III will impact the industry. With rescheduling changes on the horizon, there is no better time than now to level up your cannabis knowledge and make sure you’re prepared for what lies ahead. Enroll in our Dispensary Agent Certification course today and get up to speed on the industry in just 10 hours or less!