What reclassifying Marijuana in US could do for New York's Cannabis market
The industry needs to move toward a better normalization, but it's a step in the right direction.
The U.S. Drug Enforcement Administration is moving forward in the process of reclassifying marijuana in the country from a Schedule I controlled substance to a less restrictive Schedule III category - marking a significant milestone in America's drug policy and the war on drugs.
This change in designation would no longer classify marijuana in the category defined as drugs or substances with no currently accepted medical use and a high potential for abuse.
Aleece Burgio of Colligan Law tells WBEN that reclassification is a step in the right direction in aiding New York's recreational cannabis market, specifically in taxation.
"At the moment, cannabis businesses have to file what's called this 280E provision in the IRS code, which doesn't allow you to write off anything other than cost of goods sold. For a cannabis business, a cannabis retailer, 40% of your business can be taxed."
Tax breaks for cannabis retailers in turn, could potentially, or at least theoretically, decrease the price in cannabis, which could potentially curb the illegal market.
"With some more tax relief comes a decrease in price. I also think that now the idea is to make cannabis a commodity similar to alcohol and so the more we do that, the more enforcement that we see, we hopefully start busting up these illicit shops a lot more and making it so that it's just a regular course of business without this impact of having the store next door to you selling marijuana for 40% the cost of what you have to sell it for."
Even though marijuana is still illegal on the federal level, some recreational marijuana dispensaries hope that this reclassification will be enough to change the minds of the big banks, as finding a bank to do business with has been a significant challenge for licensed recreational cannabis dispensaries.
"The hope is that with this recent announcement, that local banks are going to find it more comfortable to look at the possibility of banking with cannabis-related businesses. That's our hope, I believe it's something that will happen, it's just a matter of when," Joel Giambra tells WBEN on Friday, former Erie County Executive and co-owner of Honey, a recently-opened state-licensed recreational cannabis dispensary operating in Kenmore.
"Banking should open up significantly," adds Burgio.
Burgio notes that one thing regarding reclassification of marijuana in the country that is unclear at this point is interstate commerce. Eventually, cannabis growers are going to offer their product to legal consumers outside of their states.
"If interstate commerce is permitted, a California grower would be able to sell their weed in New York State. Now, this is unclear, obviously, through this reclassification. These are things that I do think are going to open up the market a little bit, and we're going to have a lot of conversations surrounding that idea, which could impact New York growers. Everything is going to have an effect."
What are the next steps in reclassification?
According to the Associated Press, the proposal must still be reviewed by the White House Office of Management and Budget, and then undergo a public-comment period and review from an administrative judge, which Burgio notes could take some time.
