John Schroyer
The news on Thursday that President Joe Biden had launched a formal review of cannabis’ status as a Schedule 1 controlled narcotic sent a shiver of joy down the industry’s collective spine, in part because of what it could mean on the financial front.
“We’re just touching the surface on this. It’s only going to get bigger, how truly historic this was,” said Michael Correia, a lobbyist for the National Cannabis Industry Association.
Longer term, if the Biden administration moves cannabis lower on the list of controlled substances or yanks it off altogether, that will almost certainly resolve major financial hurdles such as the 280E provision of the federal tax code, which prohibits standard business deductions.
It likely would also:
- Expand banking access.
- Bring in more investment money.
- Allow companies to go public on major stock exchanges.
But that’s only if the industry gets its heart’s desire, which is to be removed from the list of controlled substances altogether, instead of being lowered to Schedule 2 or 3, Correia and others warned.
Correia predicted that the immediate business benefit is that the news gives political momentum to the SAFE Banking Act in the Senate, which he said Sen. Cory Booker indicated to NCIA recently could be passed in the lame duck session following the midterm elections next month.
“One thing is clear: We still need Congress to pass the SAFE Banking Act,” U.S. Cannabis Council CEO Khadijah Tribble wrote in an email to Green Market Report. “Simply moving cannabis down the schedule won’t address the banking problem that is vexing our industry.”
Reschedule vs. deschedule
If the Biden administration chooses a more conservative path, such as bumping cannabis down a notch to Schedule 2, not much would change other than giving major pharmaceutical companies a direct way into the cannabis business.
However, there would be a “complete overnight revolution” for the industry if cannabis were moved to Schedule 3, because that would eliminate the burden of 280E and allow business deductions, said Randal Meyer, executive director of the Global Alliance for Cannabis Commerce.
“From a capital markets perspective, that’s an insanely attractive prospect,” he said. “Just the fact that the president and executive agencies are so strongly willing to move on this … those are strong indicators to the capital markets.”
But, Meyer added, that’s not what his organization – or the vast majority of trade groups or the industry – really wants.
“We’ve got six words: Rescheduling is recriminalizing. Descheduling is decriminalizing,” Meyer said.
