DEA’s Plan to Reclassify Marijuana Heralded by Cannabis Company CEOs
The Drug Enforcement Administration (DEA) in the United States is taking steps to reclassify marijuana, considering it a less dangerous drug than previously classified, according to new reports. This move has been long-awaited by cannabis company executives who perceive it as a historic and positive development for the industry. The proposed reclassification aims to shift marijuana from a Schedule III narcotic, a category that includes cocaine, fentanyl, and heroin, to a Schedule I narcotic, joining the ranks of substances like ketamine, codeine, and steroids.
This proposal is still in the early stages and will require a lengthy process before it becomes finalized. It’s important to note that this reclassification does not legalize the use of marijuana in the United States. However, the cannabis industry has long been working towards federal recognition and reclassification, and this news is seen as a significant step forward for their cause.
Curaleaf CEO Matt Darin described it as “a different process than cannabis banking reform and other legislative actions” but believes that this reclassification showcases the widespread support for cannabis and its perceived medicinal benefits. He further states that this move will help in the normalization of cannabis and signals to legislators in Washington, D.C. that the federal government recognizes the medicinal benefits and supports the regulation of cannabis similar to other industries.
Trulieve CEO Kim Rivers emphasizes that this decision by the DEA shows progress on the issue following President Joe Biden and the Food and Drug Administration’s request for a review of cannabis scheduling. Rivers highlights the recent FDA findings that indicate marijuana’s safety profile, in many respects, is superior to that of alcohol, which has been documented. This reclassification is considered a critical first step towards potential regulatory and policy changes for the cannabis industry.
Impact on Industry Opportunities and Taxes
A growing number of states in the US have already legalized marijuana, with recreational use being legal in 24 states and medical use legal in 38 states. The reclassification of marijuana as a Schedule III narcotic could potentially present more research and development opportunities for businesses in the industry.
If marijuana is reclassified, cannabis companies expect to be freed from Section 280E of the IRS tax code, which currently limits their ability to take deductions and increases their effective tax rate. This change could enable them to redirect finances towards research and development, making the industry more attractive to institutional investors and pharmaceutical companies. It is estimated that Curaleaf could save over $150 million in excess tax contributions to the government, a financial boost that could translate into significant growth and expansion.
Reclassification could also work towards normalizing banking practices in the marijuana industry, potentially granting access to loans and reducing the reliance on cash-only operations. This development is particularly important for small and minority-owned businesses as it would help support their growth and sustainability.
Furthermore, the anticipated rescheduling of marijuana may lead to increased mergers and acquisitions within the industry. Curaleaf’s CEO, Matt Darin, mentioned that the company remains opportunistic in pursuing expansion opportunities and believes that rescheduling will open up new markets.
For the latest stock market news, analysis, and events:
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
