The Office of National Drug Policy (ONDCP) director Dr. Rahul Gupta, often referred to as President Joe Biden’s appointed “drug czar,” spoke about the ongoing discussion of rescheduling cannabis.

In a recent interview with Star Tribune on May 24, which was originally featured in the news outlet’s free email newsletter, the first question inquired about Gupta’s “main takeaway” in regard to federal rescheduling. “We’ve had a policy for over half a century where so many lives have been upended because of our failed approach to marijuana,” Gupta responded. “We’ve had so many people arrested, prosecuted and incarcerated. We know white, Black and brown people use marijuana at similar rates, but Black and brown incarceration rates are higher.”

He cited Biden’s October 2022 announcement to pursue pardoning cannabis offenses and instructing the Department of Justice (DOJ) and Department (of Health and Human Services (HHS) to review the current schedule category that cannabis is positioned in. Now that request has been acted upon through the HHS in August 2023, with more recent moves suggesting progress within the Drug Enforcement Administration as well, Gupta commented on the importance of what happens next. “This is going to be really important to remove barriers to critical research and perhaps drug development, and it could also lead to more research into the benefits of medical marijuana,” he said. “Clearly this decision is going to have a historic and long-lasting impact.”

When asked if Gupta could offer clarity in how federal law enforcement will alter their prioritization of cannabis, he referred to other substances that are included in the Schedule III classification and thus have much lower priority, such as Tylenol with codeine and testosterone. “It will have an impact on racial disparity, incarceration and prosecutions,” he said. “And whether in Massachusetts or West Virginia or Texas, Americans should be able to get treatment for their condition.”

It’s important to note the differences between rescheduling cannabis and federally legalizing cannabis. Rescheduling cannabis doesn’t include approval from the U.S. Food and Drug Administration (FDA), which means that it can still lead to cannabis-related prosecution. Furthermore, the status of cannabis as a federally illegal substance means that incarcerations and prosecutions will continue if or when cannabis is rescheduled to a Schedule III substance.

In another interview between WGCU and Gupta published on May 20, he suggested that Schedule I substances have no approved medical use, but anything categorized between Schedule II-V “can be prescribed when appropriate by a licensed provider who has a DEA registration…” However, the FDA hasn’t approved cannabis as a medicine overall, just a few exceptions with drugs derived from cannabis.

The Star Tribune subject shifted to the topic of banking, but preferred to refer the question to others involved more closely in that discussion. “We do know the drugs that are Schedule III are in legitimate interstate commerce within the federal system. I’ll leave it to others to talk about the commercial process,” he said. “The focus for the president has been making sure Americans are able to get the help they need no matter where they live, and on the other side making sure we’re not [harming] people.”

One of the final questions in the interview asked that if a new president is elected later this year, how this entire process of rescheduling could be paused, canceled, or reversed. “The president has given the opportunity to Congress to take action; he did because he could wait no longer,” Gupta said. “The independent reviews of these agencies followed established processes and procedures in getting to this result. That process is driven through science. I can’t provide any hypothetical answers to what may happen. This is a change that is driven by policy, by science, by data, regardless of the political process.”

He concluded the interview by restating how the president is following through with his promise to help the people avoid being incarcerated. “The president has been very consistent: No one should be in jail for using or possessing marijuana,” Gupta said. “These steps to move marijuana from Schedule I to Schedule III is a policy that is consistent with science in the 21st century.”

Former ONDCP director Gil Kerlikowske, who served under former President Barack Obama between 2009-2014, recently spoke on the podcast Sagely Speaking with Mary Bono on May 13. Kerlikowske’s response to Biden’s approach to rescheduling cannabis was more negative. “It’s not medicine. This is all Big Cannabis,” Kerlikowske said. “This isn’t people my age that are just old hippies that want to open up a pot shop somewhere. This is a huge business like Big Tobacco. Absolutely.”

He explained that the HHS decided not to reschedule cannabis due to no evidence of health three years ago, but now has changed its tune, with the DOJ expected to follow suit. Later on in the discussion, Kerlikowske compared the rise of cannabis to the rise of Big Tobacco.

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The federal government is finalizing the reclassification of cannabis. The U.S. Department of Justice published a proposed rule in the U.S. Federal Register to reclassify cannabis from Schedule I of the federal Controlled Substances Act (CSA) and move it to Schedule III.

For over 50 years, cannabis has been classified as a Schedule I controlled substance, a classification reserved for drugs with “no medical value.” Many critics from the cannabis industry have criticized the reclassification, saying that only decriminalization is enough and that moving cannabis to Schedule III only puts it in a slightly less restrictive category.

Then on Oct. 6, 2022, President Biden asked the Attorney General and the Secretary of Health and Human Services (HHS) to launch a review of how cannabis is classified. After receiving HHS’s recommendations last August, the Attorney General first sought legal advice from the Justice Department’s Office of Legal Counsel (OLC). Then, based on the HHS’ medical and scientific determinations, and OLC’s legal advice, the Attorney General exercised his authority under the law to initiate the rulemaking process to reclassify cannabis.

The proposed rule was first announced by the DOJ Office of Public Affairs on May 16, and follows a series of recommendations and approvals.

“The Department of Justice proposes to transfer marijuana from schedule I of the Controlled Substances Act (CSA) to schedule III of the CSA, consistent with the view of the Department of Health and Human Services (HHS) that marijuana has a currently accepted medical use as well as HHS’s views about marijuana’s abuse potential and level of physical or psychological dependence,” the proposal for the federal register reads. “The CSA requires that such actions be made through formal rulemaking on the record after opportunity for a hearing.”

“If the transfer to schedule III is finalized, the regulatory controls applicable to schedule III controlled substances would apply, as appropriate, along with existing marijuana-specific requirements and any additional controls that might be implemented, including those that might be implemented to meet U.S. treaty obligations,” the proposal reads. “If marijuana is transferred into schedule III, the manufacture, distribution, dispensing, and possession of marijuana would remain subject to the applicable criminal prohibitions of the CSA. Any drugs containing a substance within the CSA’s definition of “marijuana” would also remain subject to the applicable prohibitions in the Federal Food, Drug, and Cosmetic Act (FDCA). DOJ is soliciting comments on this proposal.”

The National Organization for the Reform of Marijuana Laws (NORML) offered cautious enthusiasm for change, finally at the federal level.

“NORML is in a unique position to mobilize interested parties to provide their perspectives throughout the public comment period and we will be encouraging advocates and experts to do so in the coming weeks,” said NORML’s Deputy Director Paul Armentano. “In particular, it is important that the voices of both physicians and patients are heard and considered, as the Justice Department weighed the real-world experiences of doctors and their patients in medical cannabis states when making their recommendation to reclassify.”

“Additionally, NORML will be submitting our own comprehensive comments substantiating the evidentiary record that cannabis possesses accepted medical utility and comparatively low dependence liability,” Armentano continued. “We will also be addressing a number of the issues raised by political opponents with respect to cannabis’ impact on public health, making it clear that these concerns do not warrant the continued classification of cannabis as a Schedule I substance. While NORML ultimately favors descheduling rather than rescheduling, we understand that reclassification is associated with both symbolic and tangible benefits to the cannabis community, both in the short-term and the long-term.”

Public Comment Period on Reclassification Move

Now that the rule proposal has been published on the Federal Register, the public comment period will kick off and run for about 60 days.​​

The rescheduling of a controlled substance must undergo a formal rulemaking procedure that requires a notice to the public, informing them of an opportunity to comment and an administrative hearing. Then the DEA will gather and consider information and views submitted by the public, in order to make a determination. During that process, and until a final rule is published, marijuana remains a schedule I controlled substance.

Comments must be submitted electronically or postmarked on or before July 22, 2024. Interested persons may file a request for a hearing or waiver of an opportunity for a hearing or to participate in a hearing pursuant to 21 CFR 1308.44 and in accordance with 21 CFR 1316.47 or 1316.49, as applicable, which must be received or postmarked on or before June 20, 2024.

The DOJ encourages that all comments be submitted through the Federal eRulemaking Portal, which provides the ability to type short comments directly into the comment field on the web page or to attach a file for lengthier comments. Individuals can go to the regulations website and follow the online instructions at that site for submitting comments.

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Cannabis stocks spiked immediately after President Joe Biden announced the reclassification of cannabis from a Schedule I to a Schedule III drug, endorsing the Justice Department’s recommendation. 

Biden posted a video on X at 1 p.m. May 16, declaring that the U.S. Department of Justice would indeed reclassify cannabis, and within hours, cannabis-related stocks began rising amid the growing excitement.

“Today’s step is another historic step moving forward,” Poseidon Investment Management co-founder Emily Paxhia told Yahoo! Finance on an episode of Market Domination. “I think anything around cannabis reform has been very difficult for the past 10 years plus, obviously, and so anything that’s working through an ordinary process and following the steps as it should is very confirmatory.” 

Familiar names of bigger players in the industry are popping up. “We’ve seen increasing volumes in the top names in the industry,” Paxhia added.

Multi-state operators (MSOs) would benefit the most from the Schedule III classification, like Canopy Growth, Curaleaf Holdings, Green Thumb Industries, and Trulieve Cannabis, with operations in about three dozen states that allow cannabis sales. Shares of Canopy Growth, an enormous Canadian cannabis producer that trades on the New York Stock Exchange, rose 15%, to $11.95, after the tweet, Barron’s reports.

The reclassification of cannabis doesn’t fix the gap between federal and state law, and it sparked some negative feedback of a potential pharmaceutical takeover.

“On behalf of thousands of legal businesses operating across the country, we commend President Biden for taking this important first step toward a more rational marijuana policy,” said Aaron Smith, who heads the National Cannabis Industry Association. “Now it’s time for Congress to enact legislation that would protect our industry.”

Forbes reports that shares of Canopy Growth Corp. ended up closing at roughly $11, an increase of over 11% on the day to a one-month high. Canadian cannabis producer Aurora Cannabis’ stock rose nearly 7%, closing Thursday at nearly $8 per share. Cannabis product manufacturer Green Thumb Industries’ stock rose nearly 3%, climbing to a high of just over $13.

Shares of Trulieve Cannabis Corp rose as well to nearly 6% to just under $13 per share, while Tilray Brands’ shares increased by roughly 2.5% to just over $2 per share. Shares of Cronos Group also jumped over 4% on Thursday, closing at over $3 per share.

It’s important to keep in perspective the overall picture. Despite the recent gains seen by cannabis MSOs, several cannabis-related stocks are far below their 5-year highs. Curaleaf is down nearly 66% from its February 2021 high, while Tilray is down nearly 97% from its high from the same month, Reuters reports.

A 60-day commitment period will take place for a space for public input.

The Justice Department will take comments on the proposal after it appears in the Federal Register. A final rule would have to be issued before the reclassification would take effect. The process can be lengthy,  and it must undergo a public comment period before it can be implemented, which can take up to a year.

Tax Implications of a Schedule III Classification

Part of the excitement surrounding the reclassification move could be centered on the probate changes in tax policy that is near. Legal advisors are expecting the limitations of tax code Section 280E will change significantly now that cannabis is moving to Schedule III of the Controlled Substances Act

Duane Morris LLP & Affiliates, for instance, provided an explainer that indicates Section 280E provides that:

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”

Once cannabis is rescheduled as a Schedule III substance, Section 280E will not apply to that company’s tax return and additionally, the company would no longer be banned from deducting expenses on tax returns like any other type of legal business.

Kilpatrick Townsend & Stockton LLP provided a Truth vs. Fiction article that explains  reclassification, in reality, it will probably take over a year for major changes to roll out. But one of the biggest lies or rumors, they explained, is that Schedule III will wipe out existing state cannabis markets. No one knows that at this point, and state cannabis markets have always operated in the gray market.

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Another year being weird is in the books, and what an eventful one it’s been! From THCa to Schedule III, our community is jumping through as many loopholes as ever, and with just as many doomsayers out there waiting to yuck our yum. It can be both exhausting and exhilarating at the same damn time.

As usual though, while the doom & gloom may be great for headlines & clicks, the hearts of the diehards beat on. Our demise is continuously overstated – we’re a resilient kind. We continue to find a way.

Over the past year we’ve covered some major ground in our little experiment over here – from fighting bullshit legislation, to sounding the alarm about spray terps, rebranding the term stoner to praising mylar bags – it’s hard to think of any hot button issues we DIDN’T bitch about. We campaigned for small batch, and macrodosing, while asking important questions like ‘can weed bring us closer to god?’ and ‘who raised you fucking people?’. I called many of us addicts, while Matt called those who don’t smoke cops. (Only teasing, he didn’t say that.) But to say we’ve got range, and depth, at this point I’d say that’s a pretty massive understatement. We’re fuckin’ meta, baby. (The adjective, not the company.) It’s crazy to see the legs this lil’ section has developed, and the voices that are now asking to be a part of it – we’re truly just getting started…

But if you remember last year’s recap, I had promised to evolve this section with some new features & assets that I thought would be coming online and well… they didn’t. Instead, some other things happened, and we’ve had to take a different direction, so let’s start there.

What’s going on with High Times?

Now if you’ve been following the news lately you might’ve seen some stories out there starting to count us out, or preying on our demise. I’ve had a lot of articles shared with me over the past few weeks that contained questionable information about the company and our situation, so I figured this was a good medium to set the record straight. I know every person that dislikes the brand or me personally has shared these articles, and celebrated that we’re likely all out of jobs. Well friends, I hate to break it to you, but the truth, as always, is likely going to be much less satisfying than the idea you’ve made up in your head. You’ve got some valid questions and while I don’t have all the answers right now, I’d like to give a little update for all of you wondering what’s up.

Right now, High Times is in the process of a rebirth. While I can’t speak to or for any other area of the High Times enterprise, I can speak to what’s going on in this particular house. As you all know, our media business is an important cornerstone of this industry. Now in its 50th year of operation, the magazine’s voice has been a rallying cry for our culture longer than most of us have been alive, and it’s one many people, including myself, would like to see given the proper love and care it deserves in order for it to continue to bear fruit for the community for many years to come. Because of that, and many other things that actually have very little to do with us, High Times is currently in the process of changing ownership.

What does this mean?

Similar to the acquisition that happened in 2017, sometime in the next few weeks, or months, High Times will be acquired, and thus have a new owner. We are in a process right now where court appointed representatives are studying what we do & packaging up our business to offer it to potentially interested parties who may want to develop or operate it going forward. This is company-wide, and every asset and business area we have is being analyzed. 

Now, our media business has operated independently from the other business areas forever, but it is possible, and honestly likely, that this side of High Times will be separated from some of the other assets our former leadership amassed over the past few years. I know that this may seem like a loss for the brand, but in reality optimizing our lean business model in order to ensure we can grow and prosper for years to come is essential for every business, and it’s the media side’s biggest priority. This is likely a necessary decision for the future of all of our current business areas. Speaking for my team, we all love what we do, and are honored to do it – we simply can not imagine letting this voice fall off into the ether, and we’re doing everything in our power to protect it. While it’s not 100% in our control, I’m feeling pretty good about the future right now, for the first time in a while.

While sure, any change of this magnitude is scary, and uncertain, the truth is that High Times is an incredibly resilient brand. It WANTS to breathe, and grow – it just needs the room to do so. Had you told me 10 years ago High Times would be publishing longer than VICE I probably wouldn’t have believed you, but with all I’ve seen over the past 7 years here it no longer surprises me. I have watched countless people try to hold us down or count us out in my time here, and none have been successful. The brand continually carries on in spite of whatever gets in its way. High Times really is just like the plant we all love so much, it’s a weed – it’ll bloom through whatever cracks of light it gets. And we’re here to prod those little cracks to let some more light in.

Now, while I can’t promise that whoever the new owner is will want to keep me or any of this around, I can tell you my priority is ensuring this team continues on. That the work continues on. What I can promise you, dear reader, is that I will keep doing whatever in my power is best for this business, this brand, this community, and the information that you deserve, no matter what the future brings, or what may happen to my role at this company. I have fought many an executive who thought we could just Chat GPT this work out, and I am not afraid to continue that argument as long as they’ll have me, but we don’t get to control everything… Whatever the case, we’ll find a way forward.

Silver Linings

So with that brief explainer, let’s loop back around to my initial point. 

Because of all that’s been going on the past few months, the growth that I expected to see at the end of last year obviously hasn’t happened – respectfully, our priorities have to shift with the business – but rest assured, we haven’t given up! In fact, in true High Times fashion, we turned those lemons to lemonade, and worked out some new, more cost-effective, ways to get these ideas over the finish line. We even worked out a few kinks to spruce the projects up a bit. While we’re still underwater dealing with this sale, and addressing the very real concerns many of you have raised to us, I am confident that the new model we’ve hypothesized will allow us to create a bunch of that content we’ve been waiting to make for you – no matter who is manning the ship at that point. I don’t want to let too much out of the bag yet, but yes, we have heard all your requests for video content and podcasts, and we’re not too far from the day we’ll get to introduce them to you.

I know you’ve got more questions – and that the road ahead seems long, and tired, but the truth is we’re far closer to many of our goals than we’ve ever been, and we’re all fighting harder than ever. With all the momentum we’ve built over our collective history in this fight, let’s not forget to remember how far we’ve come. We’re doing the things our ancestors thought impossible; it would be silly to give up now. 

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President Joe Biden announced that the U.S. Department of Justice will officially reschedule cannabis, moving it from Schedule I, reserved for dangerous drugs with no medical value, to Schedule III. The news follows the historic announcement on April 30, that the U.S. Drug Enforcement Administration (DEA), will move to reclassify cannabis under Schedule III, the Associated Press reported.

Biden, along with Vice President Kamala Harris, both recorded videos of the announcement and posted them on social media.

“This is monumental,” Biden said in a video that was posted on X. “Today my administration took a major step to reclassify marijuana from a Schedule I to a Schedule III drug. It’s an important move towards 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.”

Biden continued, “No one should be in jail just for using or possessing marijuana.”

“Today’s announcement builds on the work we’ve already done to pardon a record number of federal offenses for simple possession of marijuana. I’m committed to writing those historic wrongs,” he said. “You have my word.

“Currently marijuana is classified on the same level as heroin and more dangerous than fentanyl,” Harris said in another video. “We are finally changing that. But I want to thank all of the advocates and everyone out there for helping to make this possible and we are on the road to getting it done.” 

“This recommendation validates the experiences of tens of millions of Americans, as well as tens of thousands of physicians, who have long recognized that cannabis possesses legitimate medical utility,” NORML Deputy Director Paul Armentano said. “But it still falls well short of the changes necessary to bring federal marijuana policy into the 21st century. Specifically, the proposed change fails to harmonize federal marijuana policy with the cannabis laws of most U.S. states, particularly the 24 states that have legalized its use and sale to adults.”

“Nevertheless, as a first step forward, this policy change dramatically shifts the political debate surrounding cannabis,” Armentano added. “Specifically, it delegitimizes many of the tropes historically exploited by opponents of marijuana policy reform. Claims that cannabis poses unique harms to health, or that it’s not useful for treating chronic pain and other ailments, have now been rejected by the very federal agencies that formerly perpetuated them. Going forward, these specious allegations should be absent from any serious conversations surrounding cannabis and how to best regulate its use.”

A 60-day comment period will soon begin to allow input on the pros and cons of Schedule III.

Questions and Shortcomings of Schedule III

Industry leaders pointed out that reclassifying cannabis under Schedule III won’t absolve the discord between federal law and dozens of medical adult-use cannabis laws at the state level. For some, the reclassification announcement leads to more questions.

“While there’s still work to be done, I’m optimistic about what this means in terms of a domino that needed to fall in order for the wave to come that we’ve all been waiting for and working towards for so long,” said Caleb Counts, CEO & Co-Founder, Connected Cannabis. “Rescheduling is a step in the right direction without question, and while it isn’t at the stage of descheduling, it’s still impactful for so many people and that doesn’t go unnoticed. Loosening taxes and regulations where customers benefit is always a win in my book.”

“While a great step for the industry, the truth is, most of our operational challenges remain,” said Roger Volodarsky, Founder and CEO, Puffco. “A lot of people think that moving cannabis from Schedule I to Schedule III will drive additional research in the space, but the reality is that it’s more complicated than that. In late 2022, the Medical Marijuana Expansion Research Act was passed, which essentially says that regardless of the scheduling of cannabis, the DEA still holds the final ruling of who’s allowed to research the plant, and where those research materials are coming from. So while a move to Schedule III is a huge step forward in terms of protecting our freedoms in this industry, we are still at the mercy of policy-makers. Ultimately, the goal is a complete descheduling of the plant and until that happens our fight is not over.”

“For me, it raises more questions than solving any problems that we have,” said Christopher Louie, Co-Founder & CEO of Made in Xiaolin, a legacy cannabis operator in Colorado and soo in New York. “What does this mean from here? Great, marijuana now has medical benefits in the eyes of the government. Does this mean that in order to obtain it you need a prescription and in order to distribute or manufacture it I would need a medical license? It seems this could help out pharmaceutical companies and big businesses affiliated in the medical field, but I’m not sure how this benefits companies like ours.”

Others commended the small step towards legalization that signals a shift in the way cannabis is viewed in the eyes of the federal government.

“We commend the POTUS’s efforts to reschedule cannabis to Schedule III. While the fight isn’t over to legalize cannabis nationally, this is a much-needed wind in our sails that we haven’t felt in over 50 years at the federal level,” said Vince Ning, co-founder and CEO of Nabis, a leading wholesale marketplace. “As far as public commentary goes, we will certainly be providing our thoughts on how to improve this change to push for the full legalization of this controlled substance, and how to provide safe access of quality tested cannabis products to the patients in need through existing regulatory frameworks that currently exist today.”

“President Biden characterized rescheduling as a means of reversing longstanding inequities,” said Brian Vicente, founder of Vicente LLP. “One dominating inequity cannabis businesses face is the inability to deduct regular business expenses, since they sell a Schedule 1 substance.  We work with hundreds of licensed cannabis businesses, and the ability to deduct ordinary operating costs under the Schedule 3 proposal would be a game-changer for them. This proposal will release cannabis businesses from the crippling tax burden they are currently shackled with and allow these businesses to grow and prosper.”

“On behalf of thousands of legal businesses operating across the country, we commend President Biden for taking this important first step toward a more rational marijuana policy. Now it’s time for Congress to enact legislation that would protect our industry, uphold public safety, and advance the will of the voters who overwhelmingly support making cannabis legal for adults,” said Aaron Smith, NCIA CEO & co-founder. “Rescheduling alone does not fix our nation’s state and federal cannabis policy conflict. Only Congress can enact the legislation needed to fully respect the states and advance the will of the vast majority of voters who support legal cannabis.”

There will then be a 60-day public comment period before the rule is potentially finalized.

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Last week, the Drug Enforcement Administration (DEA) shared that marijuana would be rescheduled from a Schedule I, meaning that the plant was classified as a substance with no accepted medical value, such as heroin, to a Schedule III, controlled substances that allow for some medical use, such as ketamine. While cannabis advocates, stoners, and anyone with the ability to reason welcomed this news (although it fell short of actually declassifying or legalizing it), just a day following the DEA announcement, a prominent group opposed to cannabis legalization already sent out an email to its supporters soliciting funds to combat the policy change.

“SAM will oppose this change at every level, including, if necessary, pursuing legal action,” the group Smart Approaches to Marijuana shared in the email sent out on Wednesday, which asked, of course, for money. 

The email came with a link to what SAM crowned a “Rescheduling Legal Defense Fund,” which seeks either one-time (or you can make that recurring, of course), monthly donations ranging from $250 to $5,000. Think of all the weed you could buy with that money! Loaded anti-cannabis haters also have the option to donate much, much more. 

If you’ve heard of SAM before, it’s because they are very vocal about what they perceive as the dangers of marijuana. The landing page on their website shares that they’re apparently trying to prevent the “next Big Tobacco,” which is just plain silly. As High Times reported, a recent study actually found that tobacco consumption has decreased in states with recreational cannabis legalization. SAM’s “About” section claims to be bipartisan and then links out to The Drudge Report. 

“Our new Rescheduling Legal Defense Fund will be used to support our challenges of marijuana laws and regulations, specifically marijuana’s Schedule III recommendation,” reads the donation page.

“Let’s be clear: this does not mean marijuana is legalized—it will remain federally illegal,” the email reads (yes, unfortunately, they are right about this). “But, if implemented, moving marijuana to Schedule III would give Big Marijuana billions in tax write-offs as well as continue the normalization of high-potency THC drugs. SAM will oppose this change at every level, including, if necessary, pursuing legal action.”

They are absolutely right about the tax write-off; it’s one of the biggest wins regarding the descheduling announcement. As business is set up now, it’s incredibly hard for cannabis companies to turn a profit. The National Cannabis Industry Association (NCIA) anticipates that reclassifying cannabis to Schedule III will alleviate some of the harsh effects of tax code 280E on thousands of state-legal cannabis enterprises. The Legal Intelligencer notes that this change would eliminate the current restrictions on tax deductions that 280E imposes. 

As for the high THC concern, consuming too much THC can be very uncomfortable, and there are high THC products available for those with high tolerances, but this argument is so tiring. Of course, there’s the obvious comparison to liquor, which leads to blackouts and even death in a way that a big edible just doesn’t. But perhaps more importantly, it’s just so easy to use THC responsibly. One of the benefits of legalization is that products can be clearly labeled so one can purchase the acceptable dose for their tolerance and body weight. There may be 100mg gummies available now, but there are also 2.5mg usually on the same shelf. We know from the failed war on drugs that prohibition doesn’t make things better; in fact, we now know that adult-use cannabis laws and sales were not associated with an overall increase in teen substance abuse. Rather, the researchers found modest drops in alcohol and e-cigarette use occurred. One must use cannabis responsibly, especially when it comes to edibles, but we have to leave that up to individuals and assume that grown-ups can take care of themselves. 

SAM’s president, Kevin Sabet, accused the Biden administration of “starting with the decision and working backward to find the supporting materials,” but, in reality, the original decision to classify cannabis as a Schedule I was, as noted by Rep. Earl Blumenauer said in an emailed statement obtained by High Times in our reporting on the descheduling decision, based on stigma rather than science. And, based on the knee-jerk reaction of SAM, a day after the descheduling announcement, we can assume that the modest move to move marijuana to Schedule III will not end this toxic stigma and that the War on Drugs is far from over. 

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Cannabis advocates, executives and investors are celebrating the Drug Enforcement Administration’s reported decision this week to reclassify marijuana under federal drug laws, a development that spurred rejoicing from coast to coast and a spike in cannabis stock prices. The celebrations were tempered, however, by the reality that the decision falls short of the full marijuana legalization that determined activists have been seeking for decades.

On Tuesday, the Associated Press reported that the DEA had decided to follow a recommendation from the U.S. Department of Health and Human Services to reschedule cannabis under the Controlled Substances Act (CSA), citing five unnamed sources familiar with the matter. Under the recommendation, marijuana will be changed from Schedule I of the CSA, the most strict classification intended for drugs with no medical value and a high potential for abuse, to Schedule III, a group including the drugs Tylenol with codeine and testosterone.

The groundbreaking decision to reschedule cannabis will facilitate research into the medicinal benefits of the plant that could lead to new treatments for an unknown number of physical and mental health conditions. As a Schedule I drug, cannabis research was subjected to the strictest regulatory conditions under federal law, hampering studies that could result in meaningful medical advances.

Rescheduling cannabis under federal drug laws will also have significant impacts on the regulated cannabis industry. Perhaps most significantly, the change will ease access to banking services and free licensed cannabis companies from IRS rule 280e, which denies most standard business deductions to companies selling Schedule I substances. 

Pot Advocates Hail DEA Decision

After the DEA decision to reschedule cannabis was reported by the Associated Press on Tuesday, the move was hailed by policymakers, cannabis activists and entrepreneurs as an historic milestone in U.S. drug policy reform. In Colorado, one of the first two states to legalize recreational marijuana in 2012, Democratic Governor Jared Polis hailed the historic moment.

“I am thrilled by the Biden Administration’s 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,” Polis said in a statement. “This action is good for Colorado businesses and our economy, it will improve public safety, and will support a more just and equitable system for all.”

Chuck Smith, president of the board of directors for Colorado Leads, an alliance of cannabis business leaders created to educate the public and policymakers about the importance of a safe and regulated cannabis industry, said that “reclassification under Schedule III will address the 280e tax issue that has unfairly forced state-legal cannabis businesses to pay a far higher effective tax rate than other legal businesses. Allowing marijuana businesses to start deducting ordinary business expenses will allow Colorado companies to retain more revenue, employ more workers, and further invest in their surrounding communities.”

Ali Garawi, the co-founder and CEO of California independent cannabis operator Muha Meds, said the rescheduling of cannabis will allow funds that are now going to taxes to instead be invested in the growth of the company.

“Like many in cannabis, we have had to really think outside the box in terms of financing. At Muha Meds, we’re entirely self-funded, which has forced us to be incredibly calculated with growth. No longer bound to 280e Tax Regulations leftover from the war on drugs, we will be able to utilize funding that we didn’t have the right to before,” Garawi writes in an email to High Times. “We are looking forward to tremendous growth opportunities and some ease of restrictions in terms of just running a business.”

Bob Groesbeck, co-CEO of Planet 13, a multistate operator that owns what is billed as the world’s largest dispensary in Las Vegas, said that the DEA decision will also result in easier access to traditional banking services for cannabis companies. Advocates of regulated cannabis in Congress have offered legislation to allow banks to serve marijuana businesses over the last 10 years, but so far the Senate has failed to approve the bill.

“Rescheduling cannabis should pave the way for much-needed safe banking solutions. Safe banking in the cannabis industry provides a secure environment for financial transactions, granting access to essential services like checking accounts and loans,” Groesbeck noted. “It ensures transparency, reduces costs associated with cash handling, and offers consumers safe and convenient payment options. Overall, safe banking is crucial for industry growth, regulatory compliance, and enhancing consumer experiences.”

Activists Call for More Siginificant Reform

Although the rescheduling of cannabis was hailed by much of the cannabis community, the DEA decision does not achieve the full legalization of cannabis that has been fought for over decades, leading activists to call for more significant reform. Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws (NORML), said that marijuana should not be regulated by the CSA at all, noting that commonly used but potentially dangerous drugs such as alcohol and tobacco are readily available to adults.

“The goal of any federal cannabis policy reform ought to be to address the existing, untenable divide between federal marijuana policy and the cannabis laws of the majority of US states,” Armentano said in a statement from the group. “Rescheduling the cannabis plant to Schedule III fails to adequately address this conflict, as existing state legalization laws — both adult use and medical — will continue to be in conflict with federal regulations, thereby perpetuating the existing divide between state and federal marijuana policies.”

Sarah Gersten, the executive director of Last Prisoner Project, a nonprofit working to secure the release of all individuals incarcerated for cannabis offenses, said that the group will continue advocating for more wide-reaching reform.

“Last Prisoner Project believes that complete descheduling and full legalization of cannabis is a necessary step towards correcting past injustices and creating a fair and equitable criminal legal system,” Gersten said in a statement from the group. “We will continue to work tirelessly to ensure that individuals burdened with past cannabis convictions have their records expunged and that all cannabis prisoners are released, regardless of the federal scheduling decision. Despite not achieving full legalization, we must use this historic moment to push the fight for cannabis justice forward, and we intend to do so by leveraging this reclassification for broader criminal legal reforms as outlined here.”

Weed Stocks Rally

Despite falling short of marijuana legalization, the DEA rescheduling decision sent share prices of cannabis stocks to significant gains in Tuesday trading. Multistate operator Trulieve spiked nearly 30% Tuesday afternoon, CNBC reported, while Curaleaf jumped 19% to a 52-week high. 

MarketWatch reported that Toronto-based TerrAscend was up more than 25%, while Green Thumb Industries Inc. rose by more than 22% and Cresco Labs Inc. climbed nearly 14%.

Emily Paxhia, co-founder of cannabis investments firm Poseidon Investment Management, said she expects a “surge in liquidity as sidelined capital enters the market, drawn by the potential for legal businesses to thrive” as regulated cannabis companies face off against the entrenched unlicensed cannabis market.

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The U.S. Drug Enforcement Administration (DEA), under the Biden administration, will move to reclassify cannabis under Schedule III, meaning its medical benefits will be recognized by the federal government, the Associated Press first reported today. By all accounts, it’s a historic move by the DEA and the federal government as the plant was wrongly classified as a substance with no accepted medical value, for decades.

The DEA’s move to reclassify cannabis must first be reviewed by the White House Office of Management and Budget (OMB), and for the first time in 50 years would recognize the medical uses of cannabis. The move to Schedule III was recently recommended by the U.S. Department of Health and Human Services (HHS). By definition, Schedule I substances are criminally prohibited under federal law because they possess a “high potential” for abuse and have no currently accepted medical use. 

Leadership from The National Organization for the Reform of Marijuana Laws (NORML) broke down the pros and cons of Schedule III and why this move is so historic.

“While the DEA’s decision fails to go far enough, it represents the first time the agency has ever abandoned its ‘Flat Earth’ position toward cannabis and acknowledged that the substance possesses legitimate therapeutic utility and that it doesn’t belong in the same federal classification as heroin,” NORML Deputy Director Paul Armentano tells High Times. 

It won’t erase the discord between federal and state law fully, however. Armentano continues, “Unfortunately, this move—if and when finalized—continues to perpetuate the growing divide between federal marijuana laws and the marijuana laws of most states. It also fails to align with public opinion, as most Americans would like to see cannabis treated more like alcohol than like anabolic steroids.”

Fifty Years Under Schedule I

For the Scientific American, David Downs reported in 2016 that disgraced former Attorney General John Mitchell of the Nixon administration placed cannabis in this category as part of the classification or “scheduling” of all drugs under the 1970 Controlled Substances Act.

U.S. leaders also provided comments on the DEA announcement.

“If today’s reporting proves true, we will be one step closer to ending the failed war on drugs,” Rep. Earl Blumenauer said in an emailed statement obtained by High Times. “Marijuana was scheduled more than 50 years ago based on stigma, not science. The American people have made clear in state after state that cannabis legalization is inevitable. The Biden-Harris Administration is listening.” 

According to the National Cannabis Industry Association (NCIA), moving cannabis to Schedule III is expected to lift the unfair burden of 280E on thousands of state-legal cannabis businesses. The Legal Intelligencer reported that Schedule III would remove the prohibitions against tax deductions under tax code 280E.

“Moving marijuana out of its absurd classification as a Schedule I drug is long overdue and we applaud the administration for finally acknowledging the therapeutic value that has been widely accepted by the medical community and millions of medical cannabis patients for decades,” said CEO, Aaron Smith. “While this is undoubtedly a very positive first step, rescheduling will not end federal marijuana prohibition and doesn’t harmonize federal law with the laws allowing some form of legal cannabis in the vast majority of the states. In order for this move to be meaningful on the ground, we need clear enforcement guidelines issued to the DEA and FDA that would ensure the tens of thousands of state-licensed businesses responsibly serving cannabis to adults are not subject to sanctions or criminal prosecution under federal laws.”

“Further, it’s imperative that Congress build upon this development by passing comprehensive legislation to remove cannabis from the Controlled Substances Act and forge a new regulatory framework for whole plant cannabis products.” added Smith.

“The goal of any federal cannabis policy reform ought to be to address the existing, untenable divide between federal marijuana policy and the cannabis laws of the majority of US states,” he said. “Rescheduling the cannabis plant to Schedule III fails to adequately address this conflict, as existing state legalization laws—both adult use and medical—will continue to be in conflict with federal regulations, thereby perpetuating the existing divide between state and federal marijuana policies.”

Cannabis Industry Reacts

The US Cannabis Council (USCC) aims to be the voice of America’s regulated cannabis industry. “The US Cannabis Council strongly supports the move by the DEA to reclassify cannabis at a lower level under the Controlled Substances Act,” USCC Executive Director Edward Conklin said in a statement. “President Biden and his Administration should be commended for recognizing that cannabis was wrongly classified as a Schedule I controlled substance and pursuing an administrative review to reclassify it.

“The proposed DEA rule implements the recommendations of the Department of Health and Human Services, which were based on an extensive scientific review by the Food and Drug Administration. Once finalized, the reclassification of cannabis to Schedule III will mark the most significant federal cannabis reform in modern history and place the nation on a clear path toward our ultimate goal of federal legalization…”

High Times also received a high volume of comments from cannabis business leadership.

“Today’s decision by the DEA to reschedule cannabis to Schedule III is one of the most monumental developments that cannabis has seen in years and is a crucial step in undoing the harms caused by the failed and discriminatory War on Drugs,” said Matt Darin, CEO of Curaleaf. “We are thankful to President Biden and his Administration for helping to push this process forward. This ruling reflects evolving attitudes towards the plant, recognizing its well-documented therapeutic value and medicinal applications. It’s very clear that the country is ready for this step, given that 92% of Americans are now in support of legalization in some form. As the cannabis industry undergoes regulatory transformations, Curaleaf remains committed to collaborating with regulatory authorities, industry members, and the broader community to ensure the responsible and sustainable growth of the cannabis sector. The future for the cannabis industry is real and we look forward to seeing what 2024 has in store.”

“AYR Wellness applauds the historic proposal by the Drug Enforcement Administration’s to reclassify cannabis from Schedule I to Schedule III, in alignment with the science-backed recommendation made earlier this year by the Department of Health and Human Services,” David Goubert, President & CEO of AYR Wellness.

It’s now up to the OMB at the White House to give final approval of the DEA’s move to reschedule cannabis.

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If the Department of Health & Human Services’ (HHS) recommendation to reschedule cannabis on the federal Controlled Substances Act becomes a reality, it could make an impact on President Joe Biden’s favorability ahead of the upcoming 2024 presidential election.

A new survey, conducted by Lake Research Partners, revealed a number of key findings surrounding registered voters and attitudes surrounding cannabis, namely that Biden could boost his favorability by 11% among younger voters should cannabis move from Schedule I to Schedule III.

To gather the data, researchers engaged 900 likely voters through phone calls and text-to-online outreach. The survey includes oversamples of younger voters and voters in presidential battleground states (100 voters aged 18-25 and 200 voters in battleground states, Arizona, Georgia, Michigan, North Carolina, Nevada, Pennsylvania and Wisconsin).

A Look at Voter Opinions on Cannabis Rescheduling

The survey looked more generally at the support behind rescheduling cannabis, with 58% of participants showing support and 19% opposed. Researchers said that support also crossed most demographic lines, and no more than one-third of voters in any major subgroup was opposed to rescheduling. Young voters, those aged 18-25, showed the strongest levels of support for rescheduling at 65%, with nearly half indicating they felt strongly about the issue. Support was strong across age demographics, with seniors showing support by a double-digit margin.

Democrats and independents also showed strong support (74% to 7% and 55% to 15%, respectively), while Republicans were more divided (41% to 31%) despite showing more support overall. The survey also found that younger Republicans and Republican women were disproportionately more supportive.

Two-thirds (66%) of voters also said that Biden should accept the recommendation, with young voters 18-25 showing overwhelming support (84% with 77% indicating they felt strongly about their answer). 

Researchers also found that attacking rescheduling didn’t sway voters, despite the fact that “no punches were pulled” in articulating the opposing viewpoints. These include the rescheduling proposal being a “half measure,” comparing cannabis regulation unfavorably to regulating alcohol, the argument that it will provide “massive profits to pharmaceutical companies” while resulting in “hundreds of thousands of Americans behind bars for marijuana-related offenses).

After reviewing opposing arguments for rescheduling cannabis, 58% voters continued to support rescheduling while 18% opposed. Support among young voters remained strong, with 66% behind rescheduling including 50% with strong support.

A Potential Boost for Biden?

“By the end of the poll, impressions of Biden improve by a net double-digits — an 11-point swing overall, including a double-digit (+11-point) swing among younger voters,” the survey notes. 

“In conclusion, rescheduling cannabis is not only the right move from a policy perspective, it is also politically helpful,” the survey concludes. “Nowhere is this more true than for younger voters—one of the most cross-pressured groups of voters, and also the most sanguine about rescheduling.”

Concrete talks of rescheduling cannabis first began in Oct. 2022, when Biden made a statement asking the secretary of HHS and the attorney general to review the scheduling of cannabis under federal law. In Aug. 2023, the HHS submitted its recommendation to the DEA to reschedule cannabis from Schedule I to Schedule III. 

The U.S. Food and Drug Administration (FDA) also recently said they support reclassifying cannabis as a Schedule III substance, which would make medical cannabis and the research supporting it federally legal but still heavily regulated.

The DEA has final authority to schedule, reschedule or deschedule a drug under the DEA and is currently conducting its review. However, there is currently no specific timeframe on when the DEA will make its decision.

Researchers also note that the findings of the survey align with a recent Gallup poll, which found that support for legal cannabis hit a record high of 70% among all adults in the U.S. Namely, they highlight that the poll found the highest levels of support in the youngest age cohort, with 78% of the 18-34 age group supporting legalization.

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An official at the Department of Health and Human Services recommended to the Drug Enforcement Agency (DEA) that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the Controlled Substances Act in a leaked letter.

HHS Assistant Secretary for Health Rachel Levine sent a letter dated Aug. 29 to DEA Anne Milgram, recommending that cannabis be reclassified. The HHS confirmed on Tuesday that a representative sent its findings to the DEA. “Following the data and science, HHS has expeditiously responded to President Biden’s directive to HHS Secretary [Xavier Becerra] and provided its scheduling recommendation for marijuana to the DEA on August 29, 2023,” an HHS spokesperson said.

The move was called “historic,” sent cannabis stocks soaring, but was also called insufficient in ending cannabis prohibition as it would remain a controlled substance, albeit with fewer restrictions.

Last October, President Joe Biden requested that the HHS secretary and attorney general conduct a review of the classification of cannabis under federal law. Cannabis currently falls under Schedule I, meaning the DEA considers it a drug “with no currently accepted medical use and a high potential for abuse.”

The DEA defines a Schedule III substance as “drugs with a moderate to low potential for physical and psychological dependence.” The DEA says that the potential for abuse of Schedule III drugs is less than Schedule I and Schedule II drugs—but more habit-forming than Schedule IV (Xanax, Valium) and Schedule V drugs (Robitussin AC). Examples of Schedule III drugs include pills and drugs with less than 90 mg of codeine per dosage unit (Tylenol 3), ketamine, anabolic steroids, and testosterone.

It’s important to note that under Schedule III, cannabis would still be federally prohibited although it would open doors for researchers. Some leaders in Congress applauded the move, while others said it’s not enough.

What Happens Now?

NORML reports that the HHS recommendation now heads to DEA, to conduct its own scientific review. The DEA adopted its own five-factor test to determine if cannabis should be rescheduled, and it’s different from the HHS’ criteria. But the DEA determined that cannabis failed to meet its five criteria four times. 

“It will be very interesting to see how DEA responds to this recommendation, given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law,” NORML Deputy Director Paul Armentano said. “Further, for decades, the agency has utilized its own five-factor criteria for assessing cannabis’ placement in the CSA—criteria that as recently as 2016, the agency claimed that cannabis failed to meet. Since the agency has final say over any rescheduling decision, it is safe to say that this process still remains far from over.”

Senate Majority Leader Chuck Schumer (D-NY) said in a statement that HHS had recommended that cannabis be moved from a Schedule I to a Schedule III controlled substance. “HHS has done the right thing,” Schumer said. “DEA should now follow through on this important step to greatly reduce the harm caused by draconian marijuana laws.”

Is Schedule III Enough?

“This is a step in the right direction but it is not sufficient, Congressman Earl Blumenauer (D-OR), founder and co-chair of the Congressional Cannabis Caucus said in a statement. “I hope it is followed by more significant reforms. This is long overdue.”

Cannabis coalitions applauded the move as historic, while it would not fully decriminalize cannabis at the federal level.

“The Biden Administration just took a major step toward ending our nation’s failed war on cannabis,” stated Adam Goers, co-chair of the Coalition for Cannabis Scheduling Reform. “For decades, cannabis has been a Schedule I controlled substance, on par with heroin and above fentanyl and meth. This was completely baseless, and we now know that the FDA and Department of Health and Human Services agree.

“The federal government is now on track to recognize cannabis as medicine, regulated alongside Schedule III drugs such as Tylenol with codeine which have demonstrated medical uses and low risk of abuse. Our ultimate goal is full legalization of cannabis, and we believe that rescheduling is a key step on the way there.

Cannabis Stocks Soar

The news impacted cannabis trading. ETF.com reports that the AdvisorShares Pure US Cannabis ETF soared 21%. Other cannabis-related funds, including FMG Alternative Harvest ETF and Global X Cannabis ETF were up 10.79% and 7.44% respectively. Eight cannabis-related ETFs are traded on U.S. markets, with total assets under management of $630.76M. 

Publicly traded cannabis companies also saw spikes based on the news. Canopy Growth rose 13%, Tilray Brands soared by nearly 9%, and Aurora Cannabis rose by 6%.

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