Currently, medical marijuana is legally sanctioned in 38 states of the United States, while 24 of these states have also legalized its use for recreational purposes. Despite this, marijuana remains classified as an illegal controlled substance under federal law, a position that stands contradictory to its estimated $30 billion merit in the domestic cannabis industry.
The U.S. Drug Enforcement Administration is expected to shift the status of marijuana from a Schedule I drug to a less dangerous Schedule III drug. Schedule I drugs have a high potential for abuse and zero recognized medical use, according to the federal government’s classification. This group includes substances as potent as heroin and LSD. By contrast, Schedule III drugs such as certain anabolic steroids and ketamine have established medical uses and lower risk of addiction.
The reclassification of marijuana to Schedule III is forecasted to assist several struggling legal firms in the cannabis business. Investments from venture capital into marijuana companies have seen a significant decline in recent years. In 2019, total investments stood at the $3 billion mark. By the end of 2020, this dropped to $2.7 billion. However, 2021 saw a more drastic fall with total investments at only $550 million.
Being reclassified as a Schedule III drug will offer several new advantages to cannabis providers, including eligibility to deduct business expenses from their federal taxes and the elimination of many restrictions placed on cannabis research. However, the reclassification also leaves several obstacles unaddressed, such as the prohibition on legal interstate trade of cannabis and the ban on business with cannabis companies for federally chartered financial institutions.
Even though the reclassification will have to go through several procedural steps before becoming law, the proposal is a significant move toward the easing of restrictions around the cannabis industry. Sugarcoating aside, the placement of marijuana in Schedule III will not solve all of the legal issues facing the industry. However, it will pose a giant stride towards eliminating multiple hindrances to doing business, making it arguably the most vital federal action concerning marijuana in recent times.