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by Mariam Sunny and Suzanne McGee
The US administration is expected to reclassify marijuana as a less dangerous drug on Wednesday, Axios reported, citing a knowledgeable official.
Last December, President Donald Trump signed an order directing the easing of federal regulations on marijuana to reclassify it from Schedule I to Schedule III.
According to senior administration officials, Trump’s order instructed the attorney general to promptly proceed with the reclassification of marijuana, a process that could lead to the plant being listed as a less dangerous drug, alongside common painkillers, ketamine, and testosterone.
This reclassification, possibly the most significant policy shift in marijuana regulation since 1970, would likely reshape the cannabis industry by reducing tax burdens, easing financing for businesses, and accelerating clinical research.
Cannabis-related companies such as Canopy Growth, Organigram Global, Sundial, Aurora Cannabis, Trulieve Cannabis, and Tilray Brands are poised to benefit from this development.
Here is what such a measure could mean for businesses.
WHAT IS RECLASSIFICATION?
Under the US Controlled Substances Act, marijuana is currently listed as Schedule I, like heroin, indicating high abuse potential and no recognized medical use at present.
Last year, the Biden administration asked the Department of Health and Human Services to review marijuana’s classification, and the agency recommended moving it to Schedule III, a category of substances with a low or moderate risk of physical or psychological dependence, like steroids.
The Drug Enforcement Administration will review the recommendation and decide on the reclassification.
WHAT ARE THE FINANCIAL IMPLICATIONS?
One of the main advantages of reclassification would be that cannabis sector businesses would no longer be subject to Section 280E of the US federal tax code.
This provision prevents companies selling regulated substances from Schedules I and II from claiming tax credits and deductions for their professional expenses.
WHAT ABOUT THE INDUSTRY?
A classification in Schedule III could unlock access to banks for cannabis producers, attract institutional investors, reduce taxes, and stimulate mergers and acquisitions.
Securing financing remains one of the biggest challenges for cannabis producers, as federal restrictions prevent most banks and institutional investors from entering the sector, forcing producers to rely on expensive loans or alternative lenders.
Congress has also been debating new measures for some time. The Secure and Fair Enforcement Regulation Banking Act (SAFER), introduced in 2023, would ensure that all businesses, including state-sanctioned cannabis companies, have access to deposit accounts, insurance, and other financial services.
WHAT IS THE NEXT STEP?
According to experts, key questions such as potential market size, number of players, scientific validation, regulatory impact, and sustainability of profits will determine the long-term outlook for the cannabis sector.
