News Alert: DEA To Reschedule Cannabis In Fundamental Shift For The Industry
April 30, 2024As predicted in today’s SND Cannabis Edition, the Drug Enforcement Agency (DEA) has agreed to transfer cannabis from a Schedule I to a Schedule III drug, placing it in line with substances like ketamine. Now that the DEA has signed off, the White House Office of Management and Budget (OMB) must review the new rule, after which it will be subject to public comment before being implemented.
News of the rescheduling sent cannabis stocks soaring this afternoon. Leading multistate operators like Curaleaf (+25%), Trulieve (+38%), Green Thumb (+22%), Verano (+24%), Cresco (+14%), Tilray (+40), and Ascend Wellness (+17%) all spiked as investors toasted the prospect of better returns across the business moving forward.
In addition to loosening rules around researching cannabis—the study of which has up to now been tightly controlled by the DEA—the move to Schedule III will obviate the much-maligned IRS 280E rule that prevents cannabis businesses from claiming standard federal tax deductions, because that rule only applies to Schedule I and II drugs.
The latter development is a key boost for the cannabis industry, as 280E “has burdened cannabis businesses and kept the industry from reaching its full potential,” according to Dennis Curran, CEO of multistate operator Acreage Holdings. “Finally, cannabis operators will be able to compete and operate on a more level playing field with other businesses in the country.”
”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,” added David Goubert, president and CEO of Ayr Wellness.
In a statement, the Wine & Spirits Wholesalers of America, which favors regulating cannabis products like alcohol, called the move “a step in the right direction to ending the conflict between state and federal law,” but added that it “further underscores the need for Congress to take critical action and create a clear, comprehensive federal regulatory structure that protects public health and safety and empowers states to regulate cannabis products.”
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