{"id":10153,"date":"2024-05-01T01:05:08","date_gmt":"2024-05-01T01:05:08","guid":{"rendered":"https:\/\/www.denverpost.com\/?p=6038087"},"modified":"2024-05-01T01:05:08","modified_gmt":"2024-05-01T01:05:08","slug":"a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis\/","title":{"rendered":"\u201cA big deal\u201d: What the feds\u2019 move to reclassify marijuana means for Colorado cannabis"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"media_block\"><\/div>\n<p>Cannabis advocates in Colorado cheered <a href=\"https:\/\/www.denverpost.com\/2024\/04\/30\/us-poised-to-ease-restrictions-on-marijuana-in-historic-shift-but-itll-remain-controlled-substance\/\">the Biden Administration\u2019s reported move<\/a> to reclassify marijuana and said the decision likely would reduce businesses\u2019 tax burden significantly.<\/p>\n<p>Industry leaders cautioned that such a move \u2014 if finalized \u2014 would not resolve some major challenges facing the industry, such as limited access to banking. But they pointed to the symbolic importance of preparations by the U.S. Drug Enforcement Administration to downgrade the substance\u2019s drug classification.<\/p>\n<figure id=\"attachment_6030590\" class=\"wp-caption alignright size-article_inline_half\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis.jpg\" alt=\"A man pours cannabis into rolling papers as he prepares to roll a joint the Mile High 420 Festival in Civic Center Park in Denver, April 20, 2024. (Photo by Kevin Mohatt\/Special to The Denver Post)\" width=\"2400\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis.jpg\" data-attachment-id=\"6030590\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2024\/04\/TDP-Z-420-FESTIVAL_6M0A7158.jpg?fit=310%2C9999px&amp;ssl=1 310w\" \/><figcaption class=\"wp-caption-text\">A man pours cannabis into rolling papers as he prepares to roll a joint the Mile High 420 Festival in Civic Center Park in Denver, April 20, 2024. (Photo by Kevin Mohatt\/Special to The Denver Post)<\/figcaption><\/figure>\n<p>\u201cThis will be the biggest change in drug policy at the federal level in at least 50 years, if not ever,\u201d said Truman Bradley, executive director of the Marijuana Industry Group, a Colorado-based trade association. \u201cThe DEA has had the option to reschedule marijuana before this and elected to keep it at Schedule I, so a reversal is a big deal.\u201d<\/p>\n<p>The Associated Press reported Tuesday that the agency planned <a href=\"https:\/\/www.denverpost.com\/2024\/04\/30\/us-drug-control-agency-will-move-to-reclassify-marijuana-in-a-historic-shift-ap-sources-say\/\">to move marijuana\u2019s drug classification from Schedule I to the less restrictive Schedule III<\/a> in a \u201chistoric shift of American drug policy that could have wide ripple effects across the country.\u201d The change, if finalized, would not legalize it nationally but would loosen certain restrictions.<\/p>\n<p>Since the passage of the Controlled Substances Act in 1970, cannabis <a href=\"https:\/\/www.dea.gov\/drug-information\/drug-scheduling\">has been listed on Schedule I<\/a> alongside LSD, heroin and other drugs deemed to have no accepted medical use and a high potential for abuse.<\/p>\n<p>The DEA considers drugs in Schedule III to have \u201cmoderate to low potential for physical and psychological dependence.\u201d Substances in that category include ketamine, anabolic steroids and some products containing codeine.<\/p>\n<p>Since August, when the DEA <a href=\"https:\/\/www.denverpost.com\/2023\/08\/30\/cannabis-marijuana-drug-enforcement-classification\/\">indicated it would consider rescheduling marijuana<\/a>, a cadence of state and federal officials, including Colorado <a href=\"https:\/\/kdvr.com\/news\/local\/polis-to-biden-reschedule-marijuana-before-2024\/\">Gov. Jared Polis<\/a> and <a href=\"https:\/\/www.denverpost.com\/2024\/01\/12\/attorneys-general-colorado-dea-cannabis-reschedule\/\">Attorney General Phil Weiser<\/a>, supported doing so.<\/p>\n<p>The effects of such a move would undoubtedly reach Colorado, where <a href=\"https:\/\/www.denverpost.com\/2023\/12\/31\/colorado-marijuana-10-years-history-legalization-industry-struggles\/\">cannabis has been legal for recreational use for more than a decade<\/a> and for medical purposes since 2000.<\/p>\n<p>According to local experts and proprietors, the biggest impact will be financial.<\/p>\n<p>Federal tax code, in section 280E, dictates that companies working with Schedule I or Schedule II substances are <a href=\"https:\/\/thecannabisindustry.org\/uploads\/2015-280E-White-Paper.pdf\" target=\"_blank\" rel=\"noopener\">prohibited from deducting many standard business expenses<\/a> from taxable gross income. That means state-legal cannabis growers, dispensaries and manufacturers \u201cend up paying an extremely high effective tax rate \u2014 far beyond what any other business might pay,\u201d said Andrew Freedman, executive director of the <a href=\"https:\/\/www.cpear.org\/press-releases\/2024\/04\/30\/cpear-applauds-the-u-s-drug-enforcement-admin-historic-recommended-rescheduling-of-cannabis\/\" target=\"_blank\" rel=\"noopener\">Coalition for Cannabis Policy, Education and Regulation (CPEAR)<\/a>, which advocates for drug reform on the federal level. He formerly was a state marijuana regulator in Colorado.<\/p>\n<p>Moving marijuana to Schedule III would relieve local businesses of that tax burden and enable them to write off expenses such as electricity, payroll and insurance. For Wanda James, co-founder and CEO of <a href=\"https:\/\/simplypure.com\/\" target=\"_blank\" rel=\"noopener\">Simple Pure Dispensary<\/a> in Denver, that could mean a savings of as much as a 15% to 20%.<\/p>\n<p>\u201cIt\u2019s a hugely significant number,\u201d she said. \u201cIt depends on your business and what you do with your business, but it could mean hiring more people. It could mean dedicating more money to marketing. It could mean upgrading your facilities or benefits to your employees.\u201d<\/p>\n<p>Connor Oman, CEO of <a href=\"https:\/\/www.experiencesuntheory.com\/\" target=\"_blank\" rel=\"noopener\">Sun Theory Holding Co.<\/a>, wrote in an email that he was hopeful the rescheduling would produce tax savings of up to 40%, a figure that fluctuates based on how each of the company\u2019s businesses is structured. Sun Theory owns 13 dispensaries in Colorado, including <a href=\"https:\/\/www.globenewswire.com\/news-release\/2024\/04\/08\/2859440\/0\/en\/Sun-Theory-Expands-Retail-Presence-through-Acquisition-of-Five-Denver-area-Terrapin-Care-Station-Locations.html\" target=\"_blank\" rel=\"noopener\">all locations of Terrapin Care Station Dispensary, which it recently acquired<\/a>.<\/p>\n<p>In a statement issued by the governor\u2019s office, Polis said he was \u201cthrilled by the Biden Administration\u2019s decision to begin the process of finally rescheduling cannabis, following the lead of Colorado and 37 other states that have already legalized it for medical or adult use, correcting decades of outdated federal policy.\u201d He cited the likely reduction of the industry\u2019s tax burden and said it \u201cwill improve public safety, and will support a more just and equitable system for all.\u201d<\/p>\n<p>James considers the rescheduling a marker of progress, but she noted that it wouldn\u2019t fix another monetary issue in the industry: banking.<\/p>\n<figure id=\"attachment_5907295\" class=\"wp-caption aligncenter size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis-1.jpg\" alt=\"Simply Pure dispensary owner Wanda James goes through some of the products behind the counter at her shop in Denver on Thursday, Dec. 28, 2023. (Photo by Andy Cross\/The Denver Post)\" width=\"6815\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis-1.jpg\" data-attachment-id=\"5907295\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2024\/05\/a-big-deal-what-the-feds-move-to-reclassify-marijuana-means-for-colorado-cannabis-1.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/12\/TDP-L-SIMPLY-WANDA-JAMES_DSC1610.jpg?fit=780%2C9999px&amp;ssl=1 780w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/12\/TDP-L-SIMPLY-WANDA-JAMES_DSC1610.jpg?fit=810%2C9999px&amp;ssl=1 810w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/12\/TDP-L-SIMPLY-WANDA-JAMES_DSC1610.jpg?fit=1280%2C9999px&amp;ssl=1 1280w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/12\/TDP-L-SIMPLY-WANDA-JAMES_DSC1610.jpg?fit=1860%2C9999px&amp;ssl=1 1860w\" \/><figcaption class=\"wp-caption-text\">Simply Pure dispensary owner Wanda James goes through some of the products behind the counter at her shop in Denver on Thursday, Dec. 28, 2023. (Photo by Andy Cross\/The Denver Post)<\/figcaption><\/figure>\n<p>Large banks are hesitant to work with cannabis businesses because they don\u2019t want to take on the risk of dealing with a substance that is still illegal on the federal level for fear that they would violate anti-money laundering laws. Their reluctance makes it difficult for entrepreneurs in the space to access loans, lines of credit or <a href=\"https:\/\/www.denverpost.com\/2024\/01\/30\/online-payment-processing-marijuana-dispensaries-colorado-credit-card\/\">traditional merchant processing<\/a>.<\/p>\n<p>Marijuana would remain a controlled substance, even if it is reclassified \u2014 so the incentive for banks to get involved in the industry wouldn\u2019t necessarily change.<\/p>\n<p>Bradley, however, remains bullish that a rescheduling would inspire more investors and financial institutions to bolster the industry, which <a href=\"https:\/\/www.denverpost.com\/2023\/12\/31\/colorado-marijuana-10-years-history-legalization-industry-struggles\/\">has recently fallen on hard times<\/a>, seeing declines in sales. In 2023, Colorado consumers spent just over $1.5 billion on cannabis products, the lowest total since 2017, according to the Marijuana Enforcement Division.<\/p>\n<p>\u201cInvestors have been sitting on the sidelines because of the federal classification. With that change, it, by definition, reduces the risk of investment in the industry,\u201d Bradley said. \u201cWith rescheduling, that removes any chance that the federal government is going to try to shut down legal cannabis. That\u2019s not a thing anymore.\u201d<\/p>\n<aside class=\"related right\"> <\/aside>\n<p>Still, uncertainty remains around when changes will take effect and how far-reaching they will be.<\/p>\n<p>Sam Kamin, a law professor at the University of Denver who was involved in the rollout of Colorado\u2019s recreational market, says a rescheduling won\u2019t align state and federal laws any more than they are now.<\/p>\n<p>In the medical marijuana sector, he said, the government could now force those businesses to adhere to federal regulations for development and distribution of Schedule III drugs. Those often are more rigid than states\u2019 rules to procure cannabis for medical conditions.<\/p>\n<p>\u201cYou can\u2019t buy anabolic steroids without a prescription. If you do so, you\u2019re committing a federal crime,\u201d Kamin said. \u201cYou can imagine an administration saying, \u2018You wanted a lawful path to marijuana. We\u2019ve given you a path, that is the only path.\u2019 That would be really disruptive.<\/p>\n<p>\u201cI don\u2019t think this administration is likely to do that at this time, but at some point that tension is going to need to be figured out.\u201d<\/p>\n<p><em><a href=\"https:\/\/www.denverpost.com\/newsletters\">Want to get the latest marijuana news from around the country? Sign up for The Cannabist, our weekly newsletter, now.<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"media_block\"><\/div>\n<p>Cannabis advocates in Colorado cheered the Biden Administration&#8217;s reported move to reclassify marijuana and said the decision likely would reduce businesses&#8217; tax burden significantly &#8212; even if it wouldn&#8217;t resolve other challenges. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1150,6913,5062,52,6811,376,7143,233,1345,1547,7075,1964,6892,306,7642,854,10621,7938,77,5577,6815,5667,6858,6899,56,9,7231,8189,5019,441,5236,6845,10476,1,3,7072,6923,61,1736],"tags":[3720,6914,5063,2632,6816,2954,7144,2811,3915,4115,7077,4532,6893,2884,7645,3427,10622,7939,2655,5580,6820,5673,6860,6900,2636,7232,8190,5022,3015,5238,6846,10483,7073,6924],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/10153"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=10153"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/10153\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=10153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=10153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=10153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}