The Associated Press is reporting that the Drug Enforcement Administration (“DEA”), following the federal Health and Human Services Department’s (“HHS”) recommendation, agrees with the HHS’s opinion, and is expected to propose to move marijuana from Schedule I to Schedule III under the Controlled Substances Act.
The proposal, which will need to be reviewed by the White House Office of Management and Budget (“OMB”), would recognize the medical uses of marijuana, and acknowledges that it has less potential for abuse than other Schedule I substances. Once the OMB approves the decision, the DEA will review public comments and finalize the proposal. After the public comment period and a review by an administrative judge, the DEA would publish the final rule.
Rescheduling marijuana to Schedule III could herald significant changes for state-legal marijuana businesses, including allowing for the ability for these businesses to take federal tax deductions that they have historically been barred from taking under Internal Revenue Service Section 280E. The proposal would also reduce barriers for scientists who wish to study marijuana to identify medical benefits.
The proposed change does not, however, legalize marijuana for recreational use, remove existing criminal penalties for certain marijuana-related activities, or legalize state-legal marijuana businesses activities at the federal level. Moreover, the reclassification to Schedule III will not solve the marijuana industry’s banking problems, as rescheduling to Schedule III will not enable access to federal banking, credit transactions, or changes in federal bank lending practices.
For further insight into how rescheduling marijuana may impact your business, or inquiries about the marijuana industry in general, you can contact Dave DiGiacomo from our team.