DEA Agrees to Reclassify Marijuana: What It Means for Cannabis Businesses

On April 30, 2024, the Drug Enforcement Administration (DEA) announced a groundbreaking decision to reschedule marijuana from Schedule I to Schedule III under the Controlled Substances Act. This move follows a recommendation from the U.S. Department of Health and Human Services. The proposal is not yet finalized, and it must first clear the White House Office of Management and undergo a public comment period.

Implications for Cannabis Businesses

If rescheduled, it would carry significant implications for state-legal cannabis businesses:

Tax and financial implications

• Cannabis would no longer be subject to Section 280E of the Internal Revenue Code, which currently limits the tax deductions available to cannabis businesses.
• Rescheduling could make it easier for cannabis businesses to access banking services, investment, and other financial resources that are currently limited due to the Schedule I classification.

Regulatory changes

• Rescheduling could lead to changes in federal regulations surrounding the production, distribution, and sale of marijuana products.
• The change in classification could facilitate more medical research into the potential therapeutic benefits of cannabis and its compounds.

What to Do Now

At this time, there is nothing for clients to do, as the rescheduling process is ongoing and no immediate changes have taken effect. However, it is crucial to stay informed and be prepared for potential future developments.

Staying Informed and Prepared

We are closely monitoring this development and its implications for our clients. We will keep you informed of any updates or changes that may impact your business operations and compliance requirements.

If you have questions or concerns about how the DEA’s rescheduling decision may affect your company, please contact your Yeo & Yeo advisor. Our team is here to provide guidance and support during this evolving regulatory landscape.

For more information, see the MICIA’s article: DEA Agrees To Reschedule Marijuana Under Federal Law In Historic Move Following Biden-Directed Health Agency’s Recommendation