Potential Changes to U.S. Federal Marijuana Policy
: An overview of reported administrative actions and their possible implications for business and law.
Introduction: A Reported Shift in Administrative Policy
The legal status of marijuana in the United States is defined by a conflict between state and federal law. While many states have legalized cannabis for medical or recreational use, it remains a Schedule I controlled substance at the federal level. In 2024, multiple news outlets reported that the Biden Administration was considering executive actions to loosen these federal restrictions. This article outlines the reported proposals and their potential effects.
The Current Legal Framework: State vs. Federal
Under the U.S. Controlled Substances Act of 1970, marijuana is classified as a Schedule I drug. This classification means the federal government views it as having a high potential for abuse and no accepted medical use. However, as of 2024, 38 states have legalized medical cannabis, and 24 states have legalized adult recreational use. This creates a legal gray area where state-licensed businesses operate in violation of federal statute, though they are generally not prosecuted under current federal enforcement guidelines.
The Role of the DEA and HHS
Rescheduling a drug is a formal administrative process led by the Drug Enforcement Administration (DEA), which acts on a scientific and medical evaluation from the Department of Health and Human Services (HHS). In 2023, HHS recommended that the DEA move marijuana from Schedule I to Schedule III. Schedule III substances are recognized as having a moderate to low potential for dependence and an accepted medical use, such as ketamine or products containing codeine.
Reported Executive Actions Under Consideration
According to reports from sources like The Associated Press, the administration was considering a two-part approach. The first part involves the DEA formally proposing the rescheduling of marijuana to Schedule III, following the HHS recommendation. This step would initiate a period of public comment and rulemaking. The second part reportedly involves pardoning individuals convicted of simple marijuana possession under federal law, building on a similar, more limited action taken in 2022.
The Business and Tax Implications of Rescheduling
A move to Schedule III would have significant business consequences. The most direct impact would be on taxation. Under Internal Revenue Service code 280E, businesses trafficking in Schedule I or II substances cannot deduct standard business expenses. This results in effective tax rates of 70% or higher for state-legal cannabis companies. Rescheduling to Schedule III would remove this tax barrier, allowing companies to deduct rent, payroll, and marketing costs, potentially making them profitable for the first time.
Effects on Banking and Capital Markets
Federal prohibition has severely restricted the cannabis industry's access to banking. Most federally chartered banks refuse to serve these businesses due to regulatory and compliance risks. Rescheduling would not automatically grant full access, but it would reduce the legal risk for financial institutions. This could lead to more mainstream banking services, business loans, and credit card processing. It would also likely allow cannabis companies to list on major U.S. stock exchanges like the NASDAQ or NYSE, providing new avenues for capital.
Limitations of Rescheduling
It is important to note what rescheduling would not do. Moving marijuana to Schedule III would not legalize it federally. It would remain a controlled substance, and federal law would still prohibit general recreational use. Interstate commerce in cannabis would remain illegal. The production and sale would still be subject to extensive FDA regulation similar to other Schedule III pharmaceuticals. State-legal markets would continue to operate under their own rules, but with a reduced threat of federal intervention.
Market Reaction and Stock Volatility
News of potential rescheduling has historically caused volatility in the stocks of publicly traded cannabis companies, which primarily list on Canadian exchanges. Share prices often rise sharply on rumors of U.S. policy shifts. However, these stocks are also subject to rapid sell-offs if the process appears delayed. The market reaction reflects both the significant long-term opportunity and the uncertainty of the federal regulatory timeline.
Political and Public Opinion Context
Public support for some form of legalization is strong, with consistent majority support in national polls. The policy shift is seen by analysts as aligning federal action with this public sentiment. It also allows the administration to address racial disparities in marijuana enforcement through pardons, a key issue for some political constituencies. However, the move would likely face opposition from some lawmakers who view any easing of restrictions negatively.
The Path Forward: Rulemaking and Legal Challenges
If the DEA publishes a proposed rule to reschedule, it begins a formal process. There will be a public comment period, likely lasting several months. The DEA must then review comments and publish a final rule, which could be challenged in federal court by opponents of the change. The entire process from proposal to finalized rule could extend beyond the 2024 election cycle, introducing political uncertainty.
Impact on Medical Research
A Schedule III classification would facilitate much broader clinical research on cannabis. As a Schedule I substance, researchers face substantial bureaucratic hurdles to study it. Schedule III status would streamline approvals, potentially leading to more FDA-reviewed studies on its efficacy and safety for various conditions, and possibly paving the way for federally approved prescription medications derived from cannabis.
State-Level Regulatory Evolution
State cannabis regulators are monitoring the federal process closely. A federal move to Schedule III would not dismantle state regulatory agencies, but it would require them to review and potentially harmonize some rules with forthcoming federal standards, particularly concerning product safety, labeling, and pharmaceutical-grade manufacturing for medical products.
International Treaty Considerations
The United States is a signatory to international drug control treaties, such as the 1961 Single Convention on Narcotic Drugs. Some legal scholars argue that rescheduling cannabis to Schedule III while allowing state recreational markets could conflict with treaty obligations to limit use strictly to medical and scientific purposes. This could lead to diplomatic discussions but is not expected to block the action.
Conclusion: A Step, Not a Final Destination
The reported administrative actions represent a potential historic shift in U.S. drug policy, but not a full legalization. Rescheduling to Schedule III is a procedural step that would acknowledge a medical use and alleviate specific business burdens, most notably the punitive tax structure. It would reduce the federal-state conflict but not resolve it entirely. The process underscores the gradual and complex nature of changing federal policy, where executive action can alter the legal landscape but a permanent and comprehensive solution would require an act of Congress. For businesses and investors, it signals a move toward normalization and reduced risk, while the core dynamics of a state-led market would remain in place for the foreseeable future.
About the Creator
Saad
I’m Saad. I’m a passionate writer who loves exploring trending news topics, sharing insights, and keeping readers updated on what’s happening around the world.
“When Survival Created the First Friendship Between Man and Beast”
This story takes us back about 20,000 years from today, to a time when humans lived in small tribes. In the story, we see ancient European people who lived in tribal groups and hunted together. We are introduced to the leader of this tribe, whose name is Ergen. A few months later, winter is about to arrive, so Ergen goes out hunting with the people of his tribe to gather food for the cold season. In front of them is a very large herd of wild bison. Everyone crawls closer to the bison. Ergen, being the leader of the tribe, waits for the right moment and signals the attack, and everyone rushes toward the bison. To escape the hunters, the bison start running in the opposite direction, and one by one many of them fall into a ravine. However, one bison survives and, in anger, charges toward Ergen’s son, Noyan. Noyan has come on a hunt for the first time and does not know how to protect himself. Ergen tells his son to move out of the way, but Noyan gets scared and starts running. The wild bison quickly approaches Noyan, lifts him onto its horns, and runs toward the ravine. Seeing this, Ergen throws his spear at the bison to save his son. The spear hits the bison, but despite being injured, it does not let go of Noyan and instead throws him toward the edge of the ravine. From here, the story goes into a flashback, one week earlier, where we see the tribe preparing for the hunt. They are making different kinds of sharp weapons from stones. This was not just preparation; new people who wanted to join the hunt had to make such stone weapons. Whoever made the sharpest and most pointed weapon was selected for the hunt. In this competition, Ergen’s son Noyan also succeeds. That night, Noyan’s mother tells Ergen not to take Noyan on the hunt with him, saying that he is still a child. She says that she loves him very much and does not want to lose him. Ergen replies that winter is coming and at this time of the year everyone goes hunting. If they do not hunt, they will die of hunger during the winter, and Noyan must prove that he is his son. The next morning, all the people of the tribe leave for the hunt. Noyan’s mother feels anxious that something might happen to her son, but Ergen reassures her and says not to worry, nothing will happen to Noyan. Then they all set off on the hunt. After going some distance, they encounter another tribe that, like them, has also gone out hunting to gather food for the winter. After traveling a long distance, they reach a stone structure that was built by their ancestors. This journey is very dangerous, and many of their elders had lost their lives during it, which is why they built this stone structure in their memory. Moving forward, they spot a wild boar, which they injure with a spear. Ergen tells his son Noyan to kill it, but Noyan has never hunted before. He panics and is unable to kill the boar. Ergen then snatches the stone dagger from his hand, kills the boar, and says: “I never thought you would turn out to be so cowardly. Only the strong survive here — this is the law of the jungle.” At night, while they are eating their hunt, strange sounds are suddenly heard. Ergen tells everyone to stay alert. At that moment, a lion appears and carries away one of the boys. The next morning, they make a small grave in memory of that boy and continue their journey. Despite walking many miles, they do not find any more prey. After walking the entire day, they decide to spend the night in a cave. There, Ergen makes star-shaped tattoos on Noyan’s hand and tells him that these stars will appear in the night sky, and if he follows them, he will find his way back home. In reality, this is a map, so that if someone gets lost during the hunt, they can find their way back home.
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