WASHINGTON – Whether it’s a silver bullet, a monumental disappointment, or an inch toward something resembling progress, the cannabis industry’s mixed public opinions about rescheduling remind us how much is at stake for stakeholders, especially in areas that impact far more than the balance sheet.
After months of rumors and speculation about the decision, on Thursday the Department of Justice (DOJ) proposed moving cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA). Rescheduling is expected to bring tax relief and other financial benefits to cannabis businesses and their hundreds of thousands of American workers. While many in the often financially challenging industry are celebrating the big news, others are far from satisfied with the major gaps between state and federal drug policy.
“This is a necessary step forward for our industry, and I applaud the Biden-Harris administration for leading the historic push,” said Jason Vedadi, chief executive officer at Story Cannabis Company, one of the largest privately owned multistate operators in the United States. “We can expect to see more private equity, improved taxes and deductions, and increased stock market confidence as a result of this huge step. With the recent news, I am optimistic about our industry’s future.”
Many publicly traded cannabis companies saw solid share price gains on Thursday after the DEA’s announcement.
- Ayr Wellness Inc. +13%
- Canopy Growth Corp. +14.7%
- Cresco Labs Inc. +10%
- Curaleaf +7%
- Goodness Growth Holdings Inc. +11%
- Green Thumb Industries Inc. +7.5%
- TerrAscend Corp. shares +10%
- Tilray Brands Inc. +6.3%
- Trulieve Cannabis Corp. +10.2%
- AdvisorShares Pure U.S. Cannabis ETF MSOS + 8.2%
- Amplify Alternative Harvest ETF MJ + 5%
According to NORML Deputy Director Paul Armentano, businesses undoubtedly will see benefits from rescheduling. In his organization’s view, though, merely rescheduling doesn’t engage reform on a broad level.
“This recommendation validates the experiences of tens of millions of Americans, as well as tens of thousands of physicians, who have long recognized that cannabis possesses legitimate medical utility,” he said. “But it still falls well short of the changes necessary to bring federal marijuana policy into the twenty-first century. Specifically, the proposed change fails to harmonize federal marijuana policy with the cannabis laws of most U.S. states, particularly the twenty-four states that have legalized its use and sale to adults.
“Nevertheless, as a first step forward, this policy change dramatically shifts the political debate surrounding cannabis,” Armentano continued. “Specifically, it delegitimizes many of the tropes historically exploited by opponents of marijuana policy reform. Claims that cannabis poses unique harms to health, or that it’s not useful for treating chronic pain and other ailments, have now been rejected by the very federal agencies that formerly perpetuated them. Going forward, these specious allegations should be absent from any serious conversations surrounding cannabis and how to best regulate its use.”
Armentano is not alone in criticizing the measure as insufficient. Some advocates feel the administration has focused on incremental improvements for the business sector while ignoring the human cost of prohibition.
“When it comes to marijuana rescheduling, President Biden’s words are failing to match his administration’s actions,” said Kassandra Frederique, executive director at the Drug Policy Alliance. “In a new video, he asserts that no one should be in jail for marijuana, and yet his support for the proposal to reschedule marijuana from Schedule I to Schedule III will continue the federal criminalization of marijuana. His comments reveal a fundamental misunderstanding of how marijuana rescheduling will impact our communities.
“Rescheduling marijuana to Schedule III would result in tax benefits for marijuana businesses and pharmaceutical corporations but would otherwise maintain the failed status quo,” she continued. “Under Schedule III, federal criminalization would remain in place, meaning arrests, deportations, and family separations for marijuana would continue. Federal food, housing, and education benefits would continue to be withheld from people with a marijuana record. People would remain behind bars for marijuana. And Schedule III would continue the glaring disconnect between state legal regulation programs and federal law.
“As a Black woman who grew up seeing my communities locked up for marijuana and locked out of opportunities to live full lives because of their arrests, I know better than to accept rhetoric in place of action,” she added. “Our communities have waited long enough for common-sense marijuana laws grounded in health, racial equity, and reinvestment. We cannot wait any longer.”
Here’s what other stakeholders had to say.
“My feelings on government rescheduling of cannabis? It’s a mix. There’s excitement for the opportunities it brings, relief for the societal shift it signals, and cautious optimism for its implementation. Yet, there’s also a tinge of frustration for the slow pace of reform, especially for those who’ve felt the brunt of prohibition’s impact.” —Katie Enright, founder, Lavinia
“This is a huge step in the right direction. For the first time since 1970, the government finally recognized the medical validity of the cannabis plant. Something our patients and consumers have known for a long time. With today’s announcement, we are one step closer to achieving the ultimate goal of descheduling and societal acceptance. However, our work must not stop here. The industry, patients, and consumers should continue advocating for the descheduling of cannabis. The only way to eliminate stigma and legitimize the legal cannabis industry is to fully remove cannabis from the Controlled Substances Act. For as long as cannabis is listed as a scheduled substance, there will always be an inherent conflict between federal and state law. We encourage the federal government to seek a balance between exercising federal oversight and enforcement responsibilities while preserving each state’s ability to determine the best approach to cannabis within its borders. While the pending DEA announcement is historic, we must continue advocating for policies that create certainty for the cannabis industry and consumers so they know and trust the products being consumed are safe.” —Wendy Bronfein, co-founder, chief brand officer, and director of public policy, Curio Wellness
“The move to reclassify marijuana from a Schedule I to Schedule III substance has huge growth potential for the industry. Not only could this open the door for new ecommerce and marketing channels by lifting all of the current restrictions we face, more importantly, it would enable brands and retailers to connect with a wider audience and in a more engaging way that better aligns with customer expectations.” —Caroline Fontein, director of marketing, The Artist Tree
“While the AP story a few weeks ago on the U.S. government’s intent to reschedule cannabis to Schedule III was an amazing step forward, President Biden formally acknowledging the Justice Department’s action to follow through on rescheduling and commence the rule-making process is the biggest victory in the cannabis reform movement to date. For me, it is a surreal moment and vindication for my late father and so many others. Our work is not done, but today everyone who cares about the cannabis plant should breathe a sigh of relief.” —Brady Cobb, founder and CEO, Sunburn Cannabis
“From my perspective, along with many in the community, this action represents a step forward in recognizing the therapeutic value of the plant. Yet moving it to Schedule III, in our view, doesn’t completely resolve the federal ban that remains an overarching problem.” —Alex Maniatis, chief brand officer, THC Design
“This is a monumental moment, but we still have a long way to go to rectify the injustices of the war on drugs. The recent strides in cannabis rescheduling mark a significant departure from a failed fifty-year prohibition policy. We must continue this momentum by calling on our state and federal leaders to prioritize the release of individuals incarcerated for cannabis-related offenses. This is not just about acknowledging the legitimacy of the cannabis industry, but also about rectifying the disproportionate impact of outdated policies on marginalized communities. As we pave the way towards a thriving $50 billion market, let’s ensure that justice and equity guide our path forward. It’s time to right the wrongs of the past and embrace progress wholeheartedly.” —John Mueller, founder and CEO, Greenlight
“President Biden’s rescheduling announcement holds profound implications for the entire cannabis ecosystem. Firstly, it will alleviate the regulatory burdens imposed by [Internal Revenue Code Section] 280E tax regulations, bolstering the financial stability of cannabis operators. Moreover, this pivotal action by the federal government is poised to spur additional investments into the sector, potentially enabling operators to strengthen their balance sheets and further enhance industry credit quality. These advancements are poised to ignite overall expansion throughout the cannabis industry as the trajectory toward normalization and legalization persists.” —Anthony Coniglio, CEO and president, NewLake Capital Partners
“The reclassification of cannabis holds immense promise for the industry’s financial landscape. With access to traditional lending avenues, cannabis businesses stand to benefit from lower interest rates, increased capital, and enhanced financial stability. This shift can fuel growth, innovation, and compliance efforts, driving economic development and job creation. Moreover, the global ramifications of potential rescheduling are significant. Elevating cannabis to Schedule III showcases U.S. leadership internationally, potentially influencing agreements with organizations like the United Nations and World Health Organization. This could inspire other nations to reconsider current classifications and move towards legalization. Despite these advancements, challenges persist, notably in payment network issues, maintaining the industry’s cash-intensive nature. Changes to Bank Secrecy Act regulations are unlikely in the near term, pending the passage of the SAFER Banking Act. State-level efforts to combat the illicit market remain crucial for supporting legal cannabis sector growth.” —Sundie Seefried, CEO, SHF Holdings
“The Biden Administration’s rescheduling of cannabis will likely have a transformative impact on the advertising and ecommerce landscape within the industry. This shift opens doors to new avenues for brands to reach consumers and for ecommerce platforms to expand their offerings.” —Dan Mondello, founder and CEO, Rank Really High
“This is a huge victory for everyone who has worked to normalize federal cannabis policy and begins the process of federal support for state cannabis markets. Most importantly, for the first time the federal government recognizes the overwhelming evidence of the clear medical benefits of cannabis.” —Bryan Barash, vice president, Dutchie, and co-chair of the Coalition for Cannabis Scheduling Reform
“President Biden characterized rescheduling as a means of reversing long-standing inequities. One dominating inequity cannabis businesses face is the inability to deduct regular business expenses, since they sell a Schedule I substance. This proposal will release cannabis businesses from the crippling tax burden they are currently shackled with and allow these businesses to grow and prosper.” —Brian Vicente, founder, Vicente LLP
“The cannabis industry has been anxiously awaiting news from the Office of Management and Budget regarding the rescheduling process of cannabis. This uncertainty has been partially cured today in another historic step forward for U.S. legal cannabis. It is imperative that this proposal reach final rule and be published to the Federal Register this year as far ahead of the election as possible. The large capital pools from institutional investors, strategics like [beverage alcohol], and [consumer packaged goods] remain on the sidelines waiting for the long overdue federal recognition of legal cannabis. The finish line is on the horizon, but the race has not been won yet.” —Morgan Paxhia, managing director, Poseidon Investment Management
“For years, the cannabis industry has faced undue scrutiny and legal hurdles due to its classification, which has perpetuated harmful stereotypes and disproportionately impacted marginalized communities, particularly communities of color. The removal of cannabis from Schedule I is not just a victory for the cannabis industry; it is a victory for justice, freedom, and human rights.” —Omar Delgado, vice president of retail, Ivy Hall
“Not only is this great news for cannabis advocates everywhere, but it’s a strong indicator that the cannabis industry is going to witness an employment boom unlike anything we’ve seen before. There are currently over 440,445 full-time employees in cannabis, and we can now only imagine how that number will grow given the loosening of restrictions surrounding growing, selling, and purchasing cannabis.” —Karson Humiston, CEO, Vangst
“On behalf of thousands of legal businesses operating across the country, we commend President Biden for taking this important first step toward a more rational marijuana policy. Now it’s time for Congress to enact legislation that would protect our industry, uphold public safety, and advance the will of the voters who overwhelmingly support making cannabis legal for adults. Rescheduling alone does not fix our nation’s state and federal cannabis policy conflict. Only Congress can enact the legislation needed to fully respect the states and advance the will of the vast majority of voters who support legal cannabis.” —Aaron Smith, co-founder and CEO, NCIA
“We are happy to see the federal government finally make serious efforts to reschedule cannabis. Too many companies in the industry have faced difficult interactions with the government because of the plant’s Schedule I status. This rescheduling gives the cannabis industry more of a fair shake, and we hope it will be a sign of more things to come.” —Ali Garawi, co-founder and CEO, Muha Meds
