News: Cannabis Rescheduling Shift
Breaking News
DEA Will Move to Reclassify Cannabis to Schedule III
On April 30th, The Associated Press reported that the U.S. Drug Enforcement Administration (DEA) is moving to reclassify cannabis, formally recognizing its medical uses and lower potential for abuse compared to more dangerous drugs. The shift was confirmed by five people close to the process who spoke anonymously to the AP. Pending review by the White House, this move would transition cannabis from Schedule I to Schedule III, maintaining regulation of its use while acknowledging its medicinal value. Schedule III classification places cannabis in the same category as Tylenol with Codeine and steroids.
This decision follows President Biden’s call for a review of federal marijuana laws and efforts to pardon individuals convicted of simple possession. It is supported by a growing majority of Americans; a Gallup poll last fall found that 70% of U.S. adults support cannabis legalization.
Moreover, the transition to Schedule III is expected to significantly enhance cash flows for cannabis companies, as Section 280E of the IRC would no longer apply, allowing companies to deduct more than just COGS from their taxes. Many industry experts view this shift as the most significant regulatory change since state legalization, anticipating several positive outcomes for the industry, including increased institutional ownership. At the time of writing, most major and mid-sized MSOs were experiencing increases of 15-30%+ with 3-7 times normal volume.
If you are interested in learning more about the cannabis industry and how rescheduling is going to affect the industry, please do not hesitate to reach out to anyone on the KEY team:
Tiby Erdely – Tiby@keyinvestmentpartners.com
Pete Karabas – Pete@keyinvestmentpartners.com
Jordan Youkilis – Jordan@keyinvestmentpartners.com
Blaine Rhoden – Blaine@keyinvestmentpartners.com
Clayton Skulski – Clayton@keyinvestmentpartners.com
DISCLAIMERS: This site is not intended to provide any investment, financial, legal, regulatory, accounting, tax or similar advice, and nothing on this site should be construed as a recommendation by Key Investment Partners LLC, its affiliates, or any third party, to acquire or dispose of any investment or security, or to engage in any investment strategy or transaction. An investment in any strategy involves a high degree of risk and there is always the possibility of loss, including the loss of principal. Nothing in this site may be considered as an offer or solicitation to purchase or sell securities or other services.
