In a significant policy shift, the US Justice Department has recommended reclassifying marijuana as a schedule three controlled substance, aligning it with drugs like ketamine and Tylenol with codeine.
This change, announced on Tuesday, does not legalize recreational marijuana use nationally but does pave the way for lighter legal penalties and enhanced financial opportunities for the cannabis industry.
Implications for the cannabis industry
Currently categorized as a schedule one drug alongside substances like heroin and LSD, marijuana’s reclassification would alleviate some of the financial burdens on cannabis businesses.
Specifically, firms will be able to deduct normal business expenses during tax assessments, a benefit they are currently denied due to the drug’s stringent classification.
Market response to the announcement
Following the announcement, shares in cannabis companies experienced significant gains.
Canada’s Canopy Growth Corporation saw its stock prices soar by 80.02 percent, while Cronos Group’s shares increased by 15.71 percent.
US-based Cronos Group also witnessed a nearly 40 percent jump in stock value.
Regulatory steps ahead
The proposed reclassification is part of a broader initiative led by US President Joe Biden, who began a review of federal marijuana laws in October 2022.
The change is still pending approval from the White House Office of Management and Budget and must undergo a public comment period and an administrative judge’s review before it can be officially enacted.
Biden’s stance on marijuana reform
President Biden has been vocal about correcting what he sees as the failures of past marijuana policies, notably pardoning thousands of Americans convicted of possession.
“Too many lives have been upended because of our failed approach to marijuana. It’s time that we right these wrongs”.
Challenges and potential benefits
Despite the lucrative nature of the cannabis industry, estimated to be worth tens of billions of dollars, federal regulations have hindered its full economic potential.
These regulations restrict interstate commerce, limit access to banking services, and constrain funding for medical research.
The prohibition of marijuana since 1937 has contributed to racial disparities within the justice system, making this reclassification a potentially significant step toward addressing these issues.
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