What would the DEA rescheduling of Cannabis actually do?

Denver, CO-In April, the Drug Enforcement Administration announced that it would be soon making a decision on the reclassification of marijuana, before the end of the first half of 2016. A move that many Cannabis activists are skeptical of as the DEA has been petitioned three times before to reschedule the drug, and refused each time.

Cannabis is currently considered a Schedule I drug, which means it currently has” no accepted medical use, and a high potential for abuse” under the Controlled Substances Act. Ohio Governor John Kasich just signed Ohio’s new medical marijuana program into law which makes Ohio the 25th state to institute some kind of medical marijuana program, and puts the DEA at odds with half the states from the medical standpoint.

The Controlled Substances Act is separated into five different schedules based on the DEA’s view of what they consider the most dangerous. Cannabis is listed in the same schedule as Heroin, LSD, Ecstasy, and Peyote, a point that has been highly contested by advocates, patients, and doctors nationwide for years.

The United States in recent years been gripped by an Opioid crisis, due to a crackdown on “pill-mills” and the over-prescribing of painkillers. When those addicted to pills can no longer get those pills they turn to a cheaper, more readily available option: Heroin. Since 2010, heroin overdose deaths in the United States have more than tripled.

The irony of the DEA and government placing Cannabis in Schedule I wouldn’t be quite as painful if many of the Opioids currently causing health problems and addictions are listed as Schedule II, meaning they have high potential for abuse with use potentially leading to severe psychological or physical dependence. Even though these Schedule II drugs are just as dangerous as Heroin (Schedule I), Cannabis is listed right along side them, and is even more restricted than opioids when there has never been a documented overdose from Cannabis. Ever.

In February, Senator Elizabeth Warren wrote a letter to CDC director, Thomas Frieden, asking the agency to look at how Medical Marijuana could play a role in combatting the opioid crisis. As a result of that letter, and another letter from Warren and seven other Senators asking the DEA to consider the scheduling of Cannabis and it’s uses medically. The DEA has said the agency “understands the widespread interest in the prompt resolution of these petitions and hopes to release its determination in the first half of 2016.”

Though touted as a step in the right direction, what does the rescheduling Cannabis really mean for half of the country’s Medical Marijuana states? Many in the Cannabis industry believe that the drug needs to be de-scheduled altogether, and that moving to Schedule II could ruin the current markets that currently exist.

What downsides could exists from Marijuana moving from Schedule I to Schedule II? At Schedule II Marijuana could now be opened up to medical research, a great win for the plant, but with new research and possible mandates by the Food and Drug Administration for product approval, new regulations could hobble or even destroy existing industries.

The FDA review and approval of products many times take years to complete and up to $1B per product. Take a look at how many products dispensaries carry, and you quickly see how costs could skyrocket. Regulatory costs of that magnitude price out many, if not all, current players in state medical marijuana markets. This leads many to believe that it greases the skids for Big Pharma and Big AG to take over current Marijuana markets using their massive balance sheets.

What are the benefits that exist in Cannabis moving to Schedule II? As said before, with rescheduling, research into the plant would be allowed to uncover its medical benefits, and would lower federal penalties for using it as well. It would also allow doctors to prescribe it as opposed to just “suggesting” or making a recommendation for its use without worrying about being prosecuted.

One of the most expensive pieces of overhead for Cannabis businesses is that due to a tax provision called 280E, companies that deal with Schedule I and II drugs are not allowed to write off any of their expenses. The section states:

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”

Only if the DEA rescheduled to Schedule III, then would they allow allow these business owners to write off their expenses like any other business. Knowing the DEA’s stances they have taken towards marijuana businesses in the past, helping them lower their tax burden is likely something they do not care about doing, since Marijuana being illegal means more money for their bloated budgets.

The DEA needs to deschedule Cannabis altogether so that legal marijuana businesses don’t have to try to dance on the line of legality from ever changing regulatory landscapes that the government decides to send down. What is really needed is action from Congress and whoever the next President is to legalize Cannabis altogether, which looks unlikely at this point in time.

12 states will likely have Cannabis on the ballot in November. California, Maine, and Nevada are all near guarantees for voting on recreational legalization in the election later this year. More states are beginning to see success of our home state of Colorado, and in Washington and Oregon, that the sky isn’t falling, and a lot of tax money is coming in.

As more states legalize recreationally, and the attitudes towards Marijuana continue to evolve and change, Cannabis will need to be legalized outright and for it to be treated as a legitimate medical option for citizens of our country. Prohibition has its roots based in racism and fear mongering, and ultimately has ruined the lives of millions of Americans since the War on Drugs began.

Jordan Bentle is the Digital Marketing Chief for Chiefton Supply Co. and General Cannabis Corporation in Denver, Colorado.

Chiefton Supply Co. creates Cannabis inspired art apparel, as well as provides design, and branding services to Cannabis businesses. For more information and set up a consultation contact. Jacob@chieftonsupply.com