"This is monumental," President Biden says in a video posted on X. Yesterday, the Justice Department announced that the Attorney General has submitted to the Federal Register a notice of proposed rulemaking, initiating a formal rulemaking process to consider moving cannabis from a schedule I to schedule III drug under the Controlled Substances Act (CSA).
"Today, my Administration took a major step to reclassify marijuana from a Schedule I drug to a Schedule III drug," President Biden said. "It's an important move toward reversing longstanding inequities. Today's announcement builds on the work we've already done to pardon a record number of federal offenses for simple possession of marijuana. And it adds to the action we've taken to lift barriers to housing, employment, small business loans, and so much more for tens of thousands of Americans. No one should be in jail merely for using or possessing marijuana. Far too many lives have been upended because of failed approach to marijuana. And I'm committed to righting those wrongs. You have my word on it."
Click here to read the notice of proposed rulemaking submitted by the Department.
"Still a long way to go"
"We agree, President Biden – this is a monumental moment, but we still have a long way to go to rectify the injustices of the War on Drugs," reacts John Mueller, Founder and CEO of Greenlight. "The recent strides in cannabis rescheduling mark a significant departure from a failed 50-year prohibition policy. We must continue this momentum by calling on our state and federal leaders to prioritize the release of individuals incarcerated for cannabis-related offenses. This is not just about acknowledging the legitimacy of the cannabis industry, but also about rectifying the disproportionate impact of outdated policies on marginalized communities. As we pave the way towards a thriving $50 billion market, let's ensure that justice and equity guide our path forward. It's time to right the wrongs of the past and embrace progress wholeheartedly."
"Profound implications"
President Biden's rescheduling announcement holds profound implications for the entire cannabis ecosystem, says Anthony Coniglio, CEO and President of NewLake Capital. "Firstly, it will alleviate the regulatory burdens imposed by 280E tax regulations, bolstering the financial stability of cannabis operators. We anticipate that our tenants could collectively benefit from over $400 million in annual tax savings, translating to increased cash flows for their operations. Moreover, this pivotal action by the federal government is poised to spur additional investments into the sector, potentially enabling operators to strengthen their balance sheets and further enhance industry credit quality, including our tenant base. These advancements are poised to ignite overall expansion throughout the cannabis industry as the trajectory towards normalization and legalization persists."
Unlocking new opportunities
"The Biden Administration's rescheduling of cannabis marks a pivotal moment for the global cannabis industry," agrees Michael Wang, Co-Chief Executive Officer of Ispire Technologies. "We anticipate this change could unlock new opportunities for improved banking services, innovation, and market expansion. With clearer regulations and growing acceptance, we foresee a landscape conducive to broader accessibility and adoption of our vaping solutions. Furthermore, this shift could signify a broader societal acceptance of cannabis, potentially reducing stigma and accelerating mainstream adoption."
Global ramifications
"The reclassification of cannabis holds immense promise for the industry's financial landscape," adds Sundie Seefried, CEO of SHF Holdings. "With access to traditional lending avenues, cannabis businesses stand to benefit from lower interest rates, increased capital, and enhanced financial stability. This shift can fuel growth, innovation, and compliance efforts, driving economic development and job creation." Moreover, Sundie says that the global ramifications of potential rescheduling are significant. "Elevating cannabis to Schedule III showcases U.S. leadership internationally, potentially influencing agreements with organizations like the United Nations and World Health Organization. This could inspire other nations to reconsider current classifications and move towards legalization. Despite these advancements, challenges persist, notably in payment network issues, maintaining the industry's cash-intensive nature. Changes to Bank Secrecy Act regulations are unlikely in the near term, pending the passage of the SAFER Banking Act. State-level efforts to combat the illicit market remain crucial for supporting legal cannabis sector growth."
Advertising
According to Dan Mondello, CEO and Founder of Rank Really High, the Biden Administration's rescheduling of cannabis will likely have a transformative impact on the advertising and e-commerce landscape within the industry. "This shift opens doors to new avenues for brands to reach consumers and for e-commerce platforms to expand their offerings. We're poised to embrace these changes, leveraging innovative strategies to navigate evolving regulations and unlock new opportunities for growth in the digital sphere."
"Our work does not end here"
"With the submission of the proposed rule today, the formal administrative process to remove cannabis from the strictest of classifications – where it never belonged – we are moving closer to seeing the most monumental cannabis reform in half a century come to fruition," says Saphira Galoob, Executive Director of the National Cannabis Roundtable. "Just as today's news is another step forward in the ongoing administrative process that began with the October 2022 directive by President Biden, rescheduling is also a step towards larger federal cannabis reforms. This is an acknowledgment by the multiple federal agencies of what the 38 states with medical programs, 30,000 medical practitioners recommending cannabis, and six million medical cannabis patients have long known: cannabis has medical value. But our work does not end here. While we continue to commend President Biden, the DOJ, and HHS for following the science and not ignoring the need for federal cannabis policies to shift after decades of state leadership, Congress must also take action to further this progress. It starts with addressing the harms of the failed War on Drugs, supporting the work that has been done in the states, and providing regulated cannabis businesses with the same resources and opportunities to succeed as all other industries and it culminates with the end of federal prohibition."
"NCR looks forward to a thoughtful public comment period and then seeing the rescheduling rule being swiftly implemented to open the doors for further research and remove the heavy tax burden placed on cannabis operators due to 280E as we push even harder for further cannabis policy reforms by other federal agencies and Congress – where the most impactful changes ultimately can be made," she adds.