Feds may reclassify Cannabis as Schedule III
Federal regulators are considering reclassifying cannabis from a Schedule I drug to a Schedule III, which could make doing business in medicinal and recreational sales in states where it's legal much easier.
Cannabis is now classified as a Schedule I drug by the U.S. Drug Enforcement Agency, alongside heroin and LSD. Schedule I drugs are considered to be drugs with no accepted medical use and a high potential for abuse.
The news is drawing praise from retailers and producers across the state.
“To compare cannabis and heroin does an enormous disservice to the huge medicinal benefit of this plant and the products that come from it for patients and recreational customers," said Ben Zachs, chief operating officer of Fine Fettle, which has several dispensaries in Connecticut and surrounding states.
Connecticut legalized recreational cannabis sales in January, and medicinal cannabis has been legal here in the state since 2012. About 40 states have made cannabis legal to some extent, although it remains illegal under federal law.
Bloomberg News first reported a letter from U.S. Assistant Secretary for Health Rachel Levine to DEA administrator Anne Milgram, asking for marijuana to be reclassified as a Schedule III drug which, under the Controlled Substances Act, have little potential for abuse and some medical value.
The DEA released the following statement following a request for comment:
“We can confirm DEA received a letter from the Department of Health and Human Services providing its findings and recommendation on marijuana scheduling, pursuant to President Biden’s request for a review. As part of this process, HHS conducted a scientific and medical evaluation for consideration by DEA. DEA has the final authority to schedule or reschedule a drug under the Controlled Substances Act. DEA will now initiate its review.”
Verano Holdings, Connecticut’s largest cannabis producer and one of the largest cannabis companies in the nation, saw its shares jump 6 percent after news of the possible reclassification broke.
“We at Verano are incredibly excited to hear the news that the Department of Health and Human Services is calling for the rescheduling of cannabis to Schedule III,” said Verano Holdings Founder and CEO George Archos. “For far too long, cannabis prohibition and its outdated status as a Schedule I substance have unduly harmed countless individuals affected by the failed 'War on Drugs'.”
Zachs said if cannabis is indeed rescheduled, it could allow cannabis businesses to deduct business expenses from their taxes, which is currently forbidden by section 280E of the Internal Revenue Code. That prohibition applies only to Schedule I and II drugs.
Should cannabis become a Schedule III drug, “It allows legitimacy and, hopefully, a decoupling from 280E, which can have an enormous impact on our industry’s businesses, which already play with our hands tied behind our backs,” Zachs said. “The impact on the public companies today shows that. It’s still a fiercely hard and competitive business, but any tailwinds really matter.”
