Prepared statements from industry members started flowing into our inboxes immediately after the news broke that the Drug Enforcement Agency (DEA) will soon begin rescheduling cannabis from Schedule 1 to Schedule 3, a process that will take many months, if not longer, to complete. Of course, no one was surprised by the announcement, which was portended last August when HHS recommended the historic change. Only the timing was up in the air, but today that too was apparently put to rest in an unofficial announcement (i.e. a leak) that was “confirmed to the AP on Tuesday by five people familiar with the matter who spoke on the condition of anonymity to discuss the sensitive regulatory review.”
The following statements will be supplemented by any additional comments that we receive:
The profound impact of rescheduling cannabis from Schedule I to Schedule III would signify a crucial shift in the perception of cannabis, recognizing its medical potential and solidifying its legitimacy in the financial realm. From a banking and lending perspective, we believe that the reclassification of cannabis will broaden lending opportunities for cannabis businesses, leading to access to lower interest rates, increased access to capital and improved financial stability across the industry. This newfound access to traditional financing channels has the potential to stimulate growth, innovation, and compliance efforts within the industry, ultimately fostering economic development and job creation. Furthermore, the global implications of potential rescheduling cannot be overlooked. Elevating cannabis to Schedule III demonstrates the United States’ leadership on an international scale and has the potential to positively influence agreements and international treaties with organizations like the United Nations and World Health Organization. This shift could hold significant weight, especially for other countries seeking to challenge current classifications and legalize cannabis sales. – Sundie Seefried, CEO, Safe Harbor Financial
The US Cannabis Council strongly supports the move by the DEA to reclassify cannabis at a lower level under the Controlled Substances Act. President Biden and his Administration should be commended for recognizing that cannabis was wrongly classified as a Schedule I controlled substance and pursuing an administrative review to reclassify it.
The proposed DEA rule implements the recommendations of the Department of Health and Human Services, which were based on an extensive scientific review by the Food and Drug Administration. Once finalized, the reclassification of cannabis to Schedule III will mark the most significant federal cannabis reform in modern history and place the nation on a clear path toward our ultimate goal of federal legalization.
Reclassifying cannabis at Schedule III will transform the nation’s cannabis industry by ending the onerous 280E tax penalty. Under federal law, regulated cannabis operators are prevented from deducting standard business expenses–including rent and payroll–from their taxes. This results in an effective tax rate north of 70% for many operators.
Under the status quo, it is challenging to merely break even as a regulated cannabis business. Moving to Schedule III will boost cannabis businesses of all sizes – particularly independent and social equity operators – and make the regulated market much more competitive with the larger illicit market. The net effect will be that more Americans will legally purchase cannabis from licensed retailers that enforce age restrictions and sell safe, high-quality products.
More broadly, the DEA’s proposed rule would provide a range of benefits by recognizing the therapeutic value and low abuse risk of cannabis while signaling to the criminal justice system that cannabis should be a lower priority. Most importantly, it will mark a formal end to the more than 50 years that cannabis has been improperly classified as Schedule I–alongside heroin–and placed at the center of our nation’s destructive drug war.
Moving to Schedule III represents a tectonic shift in our nation’s drug laws. The US Cannabis Council is committed to ending federal cannabis prohibition, and we believe that reclassification is a necessary and critical step toward that goal. In the coming days, we will submit comments to the DEA in support of the proposed rule. – Edward Conklin, Executive Director, US Cannabis Council
Today’s decision by the DEA to reschedule cannabis to Schedule III is one of the most monumental developments that cannabis has seen in years and is a crucial step in undoing the harms caused by the failed and discriminatory War on Drugs. We are thankful to President Biden and his Administration for helping to push this process forward. This ruling reflects evolving attitudes towards the plant, recognizing its well-documented therapeutic value and medicinal applications. It’s very clear that the country is ready for this step, given that 92% of Americans are now in support of legalization in some form. As the cannabis industry undergoes regulatory transformations, Curaleaf remains committed to collaborating with regulatory authorities, industry members, and the broader community to ensure the responsible and sustainable growth of the cannabis sector. The future for the cannabis industry is real and we look forward to seeing what 2024 has in store. – Matt Darin, CEO, Curaleaf
AYR Wellness applauds the historic proposal by the Drug Enforcement Administration’s to reclassify cannabis from Schedule I to Schedule III, in alignment with the science-backed recommendation made earlier this year by the Department of Health and Human Services.
This represents the most significant step towards federal cannabis reform in U.S. history and will provide much needed relief to operators of all shapes and sizes, allowing us fair tax treatment by eliminating 280E, in addition to allowing for additional research into the medical efficacy of cannabis. AYR Wellness, along with many of its peers, continues to advocate for the full de-scheduling of cannabis, and feel today’s news represents positive progress towards that eventual outcome.
We will closely monitor the next steps on the proposed rule as we move closer to implementation.
Thank you to President Biden and his Administration for following through on their commitment to modernize the federal government’s approach to cannabis regulation. – David Goubert, President/CEO, AYR Wellness
Acreage strongly applauds the DEA’s decision to reclassify cannabis as a Schedule III substance under the Controlled Substances Act. For far too long, restrictive policies have stifled the scientific examination of the plant’s many healing capabilities. With this massive hurdle removed, more research can be done to learn about the medical efficacy of cannabis and the positive impact that it can have on the health and wellness of millions of people across the country. With this monumental move also comes the elimination of 280E, which has burdened cannabis businesses and kept the industry from reaching its full potential. Finally, cannabis operators will be able to compete and operate on a more level playing field with other businesses in the country. – Dennis Curran, CEO/Chairman, Acreage Holdings
The DEA’s decision to reschedule cannabis from Schedule I to Schedule III is a commendable step toward fostering a more progressive and inclusive cannabis industry. This move not only reflects a commitment to evidence-based policymaking but also signals a recognition of the industry’s economic potential and its positive impact on job creation. By loosening regulatory constraints, the government will be empowering businesses, encouraging innovation, and contributing to the overall growth and maturation of the cannabis sector. – Ed Schmults, CEO, StateHouse Holdings
Today’s DEA decision to move cannabis to Schedule III marks a significant advancement in U.S. cannabis reform—a change supported by 88% of Americans according to Pew Research. The reclassification invites pharmaceutical companies into the mix, driving research and development, and necessitating FDA approval for cannabis-derived products which will require a prescription to comply with Schedule III. The advent of federal regulation is set to substantially enhance both product quality and consumer safety, potentially redefining the medical marijuana industry, which has until now been monitored only by local health departments that lack the subject matter expertise and broad reach of the FDA.
The FDA’s regulatory acumen will play a crucial role in fulfilling the need for standardization and stringent consumer safety standards that has long been overlooked. From its inception, Prodigy has only designed and manufactured cannabis and hemp extraction equipment that not only complies with but exceeds pharmaceutical and cGMP standards, thereby seamlessly aligning the FDA’s stringent regulations with our dedication to consumer safety. – Marc Beginin – Founder/CEO, Prodigy Processing Solutions
Today marks a historic step forward from the Federal government on cannabis reform. The DEA’s agreement with the HHS to reschedule cannabis from Schedule I to Schedule III is a pivotal move that opens various opportunities to cannabis operators like Ascend. This favorable industry development could improve customer and patient access, enhance access to funding, provide broader research avenues, and more. As we navigate this transformative landscape, Ascend eagerly anticipates exploring further potentials, including potentially up-listing to major exchanges. We look forward to seeing how this plays out in the coming weeks. – John Hartmann, CEO, Ascend Wellness
This is a major nail in the coffin on a failed 50-year prohibition policy. Good riddance, let it rest in peace. We’re finally headed in the right direction after all these years, but we still have a long way to go. This is a major milestone for a marginalized industry that’s been fighting for recognition. We’re more than ready to be recognized as a legitimate industry on its way to becoming a $50 billion market. It’s about time we embraced progress and leave outdated practices behind. – John Mueller, Founder/CEO, Greenlight
This rescheduling carries significant implications for the entire cannabis landscape. Firstly, it will alleviate the burdens imposed by 280E tax regulations, bolstering the credit quality of cannabis operators, including those within NewLake’s portfolio. We project that our tenants stand to collectively save over $400 million annually in taxes, leading to increased cash flows for their businesses. Moreover, this pivotal move by the federal government is poised to stimulate additional investment in the sector, potentially enabling operators to strengthen their balance sheets, thus enhancing the industry’s credit quality, including our tenant base. – Anthony Coniglio, CEO, NewLake Capital Partners
Embracing this momentous shift in marijuana classification isn’t just about changing policies; it’s about a new era of understanding and opportunity. At Carma HoldCo, we’ve always championed the transformative power of cannabis, not just as a product but as a catalyst for positive change. This reclassification will not be just a regulatory adjustment; it’s a validation of what we’ve known all along: cannabis isn’t a threat; it’s a solution. It’s time to rewrite the narrative, break down barriers, and usher in a future where cannabis is celebrated for its potential to heal, inspire, and empower. And as we stand on the cusp of this historic moment, let’s remember: we’re just getting started. – Adam Wilks, CEO, Carma HoldCo
The U.S. DEA’s decision to accept health regulators’ recommendation to reschedule cannabis from Schedule I to Schedule III is a critical step in transforming cannabis into the mainstream industry that it already is for most Americans. Section 280E of the IRS tax code has been one of the greatest burdens on operators across the supply chain, and with this decision, cannabis business owners will be able to file taxes like any other business, saving billions of dollars for the industry as a whole.
Rescheduling will also be a boon to the country’s medical market, but the adult-use markets of 24 states and D.C. still face great limitations that hinder the legal industry from reaching its full potential. We’re hopeful that this progressive and landmark decision will set an example and pave the way for improved measures like SAFE Banking, increased access to logistic providers and to capital, and ultimately, to federal legalization. – Nicolas Guarino, CEO, Naturae
Should the DEA move forward with plans to reclassify cannabis in the U.S. from Schedule I to Schedule III under the Controlled Substances Act, such actions would be historic not just for American cannabis patients, but for those around the globe as well. The rescheduling of cannabis in the U.S. can broaden access to cannabis for medical purposes and may lawfully be dispensed by prescription.
Germany reclassified cannabis as of April 1 and can now serve as a guide for the forecasted expansion of the U.S. medical cannabis industry under this change. In Germany, following reclassification, we saw a significant uptick in medical cannabis patient applications and demand for telemedical appointments with physicians to prescribe the treatment. Bloomwell Group’s telemedical platform, Algea Care, has already seen 10,000 new patients registered within the first few days of the law going into effect. That number doubled to 20,000 by the second week of reclassification in Germany.
We can expect to see the same rise in demand that we’ve seen in Germany in the U.S. under reclassification. While cannabis treatments will take time to be approved by the FDA, the medical cannabis community needs to prepare for the rise in demand and expand patient services. This means building up the seed-to-sale value chain and expanding patient access through telemedicine platforms. It is also crucial for more research to be funded and accepted throughout the medical and scientific communities to unlock the plant’s full potential as a treatment. – Niklas Kouparanis, CEO, Frankfurt-based Bloomwell Group