Key Takeaways:
- The federal designation for marijuana is changing, with President Trump directing the Department of Justice to reschedule it from a Schedule I to a Schedule III substance.
- This change may make banking more accessible for cannabis businesses, but it won’t suddenly make all banking institutions accept them as customers.
- The reclassification could lead to changes in tax deductions for cannabis companies, allowing them to invest more revenue back into their business and workforce.
- The shopping experience for medical and recreational users won’t change immediately, but it may in the future with the potential for cannabis prescriptions.
- Rescheduling may shift employers towards a more relaxed approach to employees consuming marijuana, but it won’t immediately change their drug policies.
Introduction to the Rescheduling of Marijuana
The federal designation for marijuana is on the verge of changing, with President Trump signing an executive order directing the Department of Justice to reschedule it from a Schedule I to a Schedule III substance. This change puts marijuana in the same category as substances like ketamine, anabolic steroids, testosterone medications, and Tylenol with codeine. Although this change is significant, it’s essential to understand the implications and what it means for various stakeholders, including cannabis businesses, medical marijuana users, and employers.
The President’s Power to Reschedule Marijuana
Technically, President Trump’s executive order doesn’t automatically reschedule marijuana. Instead, it tells the Department of Justice to hurry along its process to move cannabis from being classified as a Schedule I substance to Schedule III. However, the president does have the power to make this order, and it’s likely to happen via the executive function, bypassing Congress. According to Brian Vicente, a Denver attorney specializing in cannabis and psychedelics, this move is legally defensible, and the next steps will likely include a public comment period before the DOJ makes the official change.
Impact on Banking for Cannabis Businesses
The reclassification of marijuana may make banking more accessible for cannabis businesses, but it won’t suddenly make all banking institutions accept them as customers. Vicente notes that the federal government has already put out memos saying banks can bank cannabis, but many have been hesitant due to the federal legality and the Controlled Substances Act. With the Schedule III status, banks may become more comfortable with the idea, and some may start to make this risk calculus themselves. However, as Colleen Scanlon, co-owner of the Happy Camper Cannabis Company, points out, banking has already been somewhat integrated into the industry, with credit unions and other options available.
Tax Implications for Cannabis Companies
A significant change for cannabis companies in Colorado could be the way they do their taxes. With the Schedule III status, the IRS will allow them to make ordinary business deductions, like marketing and payroll, which will have a dramatic effect. This means companies will have more revenue to invest back into their business and workforce. Vicente notes that this change will have a positive impact on the industry, allowing companies to grow and expand their operations.
Impact on Medical Marijuana Users
The shopping experience for medical marijuana users won’t change immediately, but it may in the future. The government has stated that if users are following state laws, they’re not interested in prosecuting them. However, this change introduces the potential for cannabis prescriptions at some future point, if companies pursue that route. Schedule III drugs are easier to study via federal clinical trials, and we could see botanical cannabis medicine sold at Walgreens, but it’s likely years away.
Traveling with Medical Marijuana
Unfortunately, marijuana is still an illegal substance in the federal government’s eyes, so flying with it or crossing state lines with it remains illegal. This means that medical marijuana users will still need to be cautious when traveling, and it’s essential to understand the laws and regulations in each state.
Employment and Marijuana Use
There won’t be any immediate changes to employers’ drug policies, private or public. They are still allowed to test workers for THC and sanction or fire them if they test positive. However, Vicente believes that rescheduling could shift employers towards taking a more relaxed approach to their employees consuming marijuana. This change in enforcement and progressive view by the federal government may lead employers to reevaluate their policies and consider allowing employees to use marijuana.
Impact on States without Recreational Cannabis
There’s no immediate impact on states that haven’t legalized recreational or medicinal marijuana usage — if it’s illegal there now, it will stay illegal, unless lawmakers decide to act. However, this change may pave the way for future reforms and could have a positive impact on states that are considering legalization.
Research and Epilepsy
Rescheduling will make research easier for many potential medical uses of marijuana, including epilepsy. The order specifically announces an intention to improve access to cannabidiol (CBD) products, which are being looked into as an effective treatment for epilepsy. This pilot program could represent a major policy development with immediate, positive implications.
Expungement of Cannabis-Related Offenses
The short answer is no, expungement of cannabis-related offenses won’t happen automatically. Even in Colorado, it didn’t happen automatically with legalization, and it’s taken action by the governor and lawmakers to wipe state convictions for marijuana off people’s records. Vicente notes that it remains to be seen how this decision will affect how individual states treat marijuana in their own laws and how it will impact individuals with criminal records.