DEA To Reschedule Cannabis In Fundamental Shift For The Industry

In case you missed yesterday’s news alert, 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 yesterday. 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.” Here’s the full story.—Daniel Marsteller

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