On May 1, 2024, the United States Department of Justice (“DOJ”) recommended rescheduling marijuana from a Schedule I to a Schedule III drug. As a Schedule III drug, marijuana related businesses would be eligible to steep tax cuts because such business would no longer be subject to Section 280E of the Internal Revenue Code, which prohibits marijuana-related businesses from standard business expense write offs when calculating pre-tax profits. Additionally, it is likely that banks and credit unions will also increase capital available and become more willing to extend credit and issue loans to these businesses with marijuana as a Schedule III drug. Although, it will be ultimately up to the individual banks and credit unions to adopt internal policies and processes to become more accommodating to these businesses.
However, the DOJ’s recommendation does not automatically reschedule the drug to Schedule III. Rather, the recommendation must go through an administrative process commencing with the Drug Enforcement Agency publishing its ruling to move marijuana to Schedule III. The public, then, will have the opportunity to submit comments and/or requests and participate in a formal administrative hearing. Undoubtedly, opposition is anticipated as current and former public officials have voiced concerns about rescheduling the drug. This process could take months, but the public remains optimistic as nearly 70% percent of Americans believe marijuana use should be legal at the federal level.
As this rescheduling process navigates the federal system, the Wagoner Firm will follow each development closely and keep our clients informed. We remain available to discuss any specific questions or concerns you may have regarding the rescheduling of marijuana as a Schedule III drug or any other marijuana related issues you may have.
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