High Stakes: What Marijuana Rescheduling Means for the Cannabis Industry

In a groundbreaking shift, the US Drug Enforcement Administration (DEA) is set to reschedule marijuana at the federal level. This development has the potential to remove marijuana from the most restrictive category of drugs, paving the way for positive change all across the cannabis industry. While the cannabis industry will undoubtedly be affected, the question is – how exactly?

In this article, we’ll explore how marijuana rescheduling will affect different aspects of the industry. From tax breaks to research opportunities, keep reading to get the inside scoop on what’s to come for the cannabis industry. 

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What Does Marijuana Rescheduling Mean?

In a nutshell, marijuana rescheduling means that its classification under the Controlled Substances Act (CSA) will be downgraded to reflect its lower risk. Currently, marijuana is listed as a Schedule I drug, classified alongside other drugs with a high potential for abuse, such as heroin, LSD, and MDMA. Schedule I drugs are not accepted for medical use whatsoever, meaning they cannot be prescribed, dispensed, or administered. Rescheduling marijuana would reclassify it as a Schedule III drug, which recognizes its potential medical benefits with a moderate to low potential for dependence. 

While this is certainly an exciting time for the cannabis industry, the full rescheduling process may take some time. Once the DEA accepts the recommendation for marijuana rescheduling, there are still a few steps to go before the decision is final, which includes:

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1. White House Office of Management and Budget (OMB) review
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2. Notice of Proposed Rulemaking will be published in the Federal Register
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3. Public comment period of 60 to 90 days
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4. Administrative law judge review and hearing
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5. DEA review and publication in the Federal Register

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At the time of this writing, there has been no set timeline for when this process will be completed. However, it’s still good news for the cannabis industry as it’s a step in the right direction. 

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Does Marijuana Rescheduling Mean That It Will Be Legalized Federally?

No, marijuana rescheduling does not mean that it will be legalized federally for either medical or recreational use. Although rescheduling would loosen restrictions on marijuana and recognize its medical benefits, it will still be a controlled substance that’s subject to strict federal rules and regulations. 

Schedule III drugs can be sold with a prescription if they’re FDA-approved, but state-authorized cannabis companies don’t sell FDA-approved marijuana products. This means that state-authorized sales for either medical or recreational use would still remain illegal under federal law, despite no longer being classified alongside the most dangerous drugs. 

Even though we won’t see any changes related to federal legalization from rescheduling, activists are expecting it to pave the way for future descheduling, which would eventually allow cannabis to be regulated the same way as alcohol or tobacco. 

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Will Cannabis Companies Be Allowed to Ship Marijuana Across State Lines?

No, cannabis companies will not be allowed to ship marijuana across state lines. Since marijuana will still be classified as a controlled substance, FDA approval would be required for interstate commerce. 

According to the National Cannabis Industry Association, it’s unlikely that the cannabis industry will be going through the FDA approval process. The FDA tends to approve isolated molecules, which means we may start to see the approval of isolated cannabis components like THC, CBD, or cannabinoids. However, the marijuana plant as a whole wouldn’t be approved because of the large variation between products. 

Further down the line, we can expect to see interstate commerce open up once marijuana is descheduled completely. 

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Will Cannabis Companies Be Able to Sell Directly From Their Websites?

No, cannabis companies will not be able to sell directly from their websites by shipping products across state lines since it’s still an illegal transaction at the federal level. State-authorized cannabis retailers can still sell products on their website for pickup or local delivery as these transactions will remain legal at the state level. 

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Will Rescheduling Affect Criminal Penalties? 

No, cannabis rescheduling won’t have a direct impact on criminal penalties. This means that those who are currently incarcerated for marijuana will not be released, and past convictions won’t be expunged. While it might lead to reduced penalties for future offenses, marijuana will still be federally illegal, meaning that consequences would remain. This is just another reason why activists are calling for much broader reform in hopes of eventually decriminalizing marijuana. 

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Marijuana Rescheduling vs. Marijuana Descheduling: What’s the Difference?

With marijuana rescheduling, the plant is moved into a new drug class – from Schedule I to Schedule III. Even though this move recognizes the lower risk marijuana poses to the general public, Schedule III drugs are still categorized as controlled substances. At the federal level, marijuana will still be illegal, meaning that the strict rules and regulations surrounding its distribution will remain. 

On the other hand, marijuana descheduling would take the plant off the controlled substances list entirely. This change would put cannabis in the same category as alcohol and tobacco, which are subject to certain rules, but aren’t controlled substances. Ultimately, activists in the cannabis industry aim to make descheduling a reality one day. Marijuana descheduling would be a monumental change in American history since it would decriminalize marijuana and freely allow interstate commerce without FDA approval. 
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How Does Rescheduling Impact Taxes and Banking for Cannabis Companies?

Running a state-authorized cannabis business can be tough when you have to jump through hoops with taxes and banking. Let’s explore how cannabis rescheduling could potentially affect company financials. 

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Section 280E Implications

‍Section 280E of the US Internal Revenue Code prohibits businesses from deducting any business expenses associated with the “trafficking” of any Schedule I or II substance. This makes it extremely difficult for cannabis businesses to expand and invest in their own growth due to having a higher tax burden. 

Luckily, marijuana rescheduling means that Section 280E will no longer apply to the cannabis industry, giving many companies a lifeline. Cannabis businesses will be able to deduct necessary business expenses to reduce their tax burden, essentially letting them operate as normal businesses. With this change, we expect to see further growth and investment in the cannabis industry. 

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SAFE Banking Act

Unfortunately, when it comes to banking, rescheduling doesn’t change anything. What could change this, though, is the SAFE Banking Act, which would protect banks from penalties for servicing cannabis businesses. The SAFE Banking Act is something that needs to pass Congress separately, regardless of whether marijuana is rescheduled or not, since it doesn’t change the fact that state-based cannabis businesses are still in violation of federal law. The SAFE Banking Act will likely be the next change that we see within the cannabis industry, but the challenge will be getting Congress to act on it. 

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How Does Rescheduling Affect Marijuana Research?

Once marijuana is rescheduled as a Schedule III drug, research will become much easier to conduct. As a Schedule I drug, it’s difficult to research the benefits due to regulations and restrictions, so most of the current research on cannabis is from outside of the US. After rescheduling, more research can be done on the plant to hopefully get certain components of it FDA-approved, and we’ll start to see it being produced by pharmaceutical companies as a medicine. While we won’t be seeing products like pre-rolls or flower being sold at a pharmacy, we can expect to see more isolated products that can potentially treat certain conditions like epilepsy. 
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Will Cannabis Companies Be Legally Allowed to Post on Social Media?

At this time, there’s no direct answer on whether cannabis companies will be legally allowed to post on social media. Ultimately, this decision rests in the hands of each individual social media platform. However, it’s unlikely we’ll see any change since the reality is that these businesses will still be selling a Schedule III drug that’s not approved by the FDA. Over time, we may start to see these platforms make their rules less restrictive, but it won’t be solely because of this one policy change. 

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What Can I Do to Help as a Cannabis Business Owner?

Whether you’re a cannabis business owner or enthusiast, you can help by supporting the National Cannabis Industry Association (NCIA). The NCIA has been working hard to ensure the cannabis industry has a seat in the White House during these policy reforms. They have been on the ground in Washington, DC, meeting with members of Congress and their staff so they can advocate for issues like marijuana rescheduling and the SAFE Banking Act. 

If you’re interested in getting involved with the NCIA and learning more about paving the way in cannabis policy, check out their website here. 

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Final Thoughts on Marijuana Rescheduling

All in all, marijuana rescheduling marks a significant turning point for the cannabis industry. While it still doesn’t make it legal, it opens up the door for groundbreaking research, eliminates Section 280E, and acts as the first step to future descheduling. In a new, highly regulated industry, this change will also help cannabis become more publicly accepted and less taboo. As cannabis reform continues to gain momentum, we can all hope to see more positive change to follow. 

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