The rescheduling of cannabis from a Schedule I Controlled Substance to a Schedule III Controlled Substance is unlikely to give cannabis businesses access to federal bankruptcy protection, despite providing other potential advantages such as the ability to claim tax deductions. This is according to the attorneys of Foley Hoag’s Cannabis practice.
These potential benefits would come as a result of the reclassification of cannabis, but the courthouse doors would still remain closed to federal bankruptcy protection without the participation in other regulatory territories, among them DEA registration.
Rescheduling cannabis as a Schedule III substance would, in theory, allow the industry to operate in the same way as any other legal business. It would theoretically give companies access to a host of benefits such as standard deductions for taxable income. However, despite claims that this would pave the way for cannabis businesses to gain bankruptcy protection, Foley Hoag’s attorneys argue this is not likely to be the case.
Cannabis businesses are still expected to encounter obstacles due to the continued prohibition of marijuana under federal law, even with a reschedule to a Schedule III Controlled Substance. The expectation is that standard legal routes, such as federal bankruptcy protection, will remain inaccessible, at least in the short term. Given the ongoing legal challenges, cannabis businesses are strongly advised to discuss these matters with legal experts to ensure a clear understanding of the situation.
For a more detailed analysis, visit Foley Hoag LLP – Cannabis and the Law.