Schedule III Classification Offers New Opportunities For The Pre-Roll Industry
The road to cannabis legalization has been long, and the journey isn’t over yet. Currently, 46 states have legalized or decriminalized marijuana to some degree, but it remains illegal at the federal level.
However, Americans are getting closer to the prize thanks to a proposal to reclassify marijuana from a Schedule I to a Schedule III drug. What does this mean for the pre-roll industry? They’ve already proven to be a successful addition to the industry, with pre-rolls now accounting for 15% of the market as supply increases and prices decline. Here’s what you need to know about potential benefits and how to strategize accordingly.
What Does Reclassification Mean for Marijuana?
Since the Controlled Substances Act (CSA) was enacted in 1970, cannabis has been classified as a Schedule I drug. This puts it in the same category as illicit drugs like heroin, LSD and ecstasy and defines it as a drug with high potential for abuse and “no currently accepted medical use.”
The Justice Department, recognizing the views of the Department of Health and Human Services (HHS) that marijuana does have accepted medical uses, announced in May that the attorney general submitted a proposal to reclassify marijuana as a Schedule III drug.
If approved, this proposal would place marijuana in a category alongside prescription drugs like Tylenol with codeine, testosterone and anabolic steroids.
Schedule III drugs not only have accepted medical uses but also have a lower potential for abuse than Schedule I and II drugs, along with moderate to low potential for dependence (physical and psychological).
How long will it take for rescheduling to occur? There’s no set timeline, but the Justice Department started the process by submitting the proposal and notifying the public.
From there, the public can submit commentary to the Drug Enforcement Agency (DEA), which the agency will consider before making and publishing a final ruling concerning scheduling. The 62-day window for public commentary ended July 22, 2024, but there is no timeline for review.
New Financial Landscape
The major benefit of reclassification is that cannabis will no longer be subject to Internal Revenue Service (IRS) Code Section 280E. This section of the tax code essentially states that businesses selling Schedule I or II substances cannot take deductions or …