DEA Reschedules Marijuana 

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After a recommendation from the US Department of Health and Human Services, and after more than 50 years, the DEA decided to reschedule marijuana from Schedule I to Schedule III under The Controlled Substances Act (CSA). Before all the good news, remember that this rescheduling will not make marijuana federally legal, and laws related to marijuana enforcement, until changed, largely remain in effect. 

Marijuana is no longer to be listed with heroin, and the rescheduling acknowledges that there is medical value and a lower potential for abuse. This is a big event in the marijuana universe.

Since the first days of state legal marijuana, the industry has been hamstrung by the enforcement of Internal Revenue Service (IRS) code section 280E. When implemented, state legal businesses will be able to take federal tax deductions previously denied to them. 

Other changes will follow. For instance, better tax treatment should mean better ability to combat the illegal market through market pressures that impact traditional market structures, such as pricing. This also means that R&D barriers are coming down, and researchers will have access to more capital, more grants, and none of the restrictions imposed on research into Schedule I narcotics. 

For now, the DEA still regulates the enforcement of marijuana activity. If and when marijuana is federally legalized, then the FDA will take over regulation, and the DEA’s enforcement role will come to an end. The federal dam has cracked, and this could signal an appetite for further reform. 

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