Prince Lobel:  Client Alert: DEA to Reclassify Cannabis

Today the Associated Press broke the news of the DEA’s long-awaited decision to move forward with the plan to reclassify cannabis from Schedule I to Schedule III. The change has been decades in the making, and comes as a consequence of President Biden’s October 2022 directive to his administration to review the classification of cannabis. While the specific rule still needs to be written and adopted, this decision is historic nonetheless. Earlier in the year, a report in The Wall Street Journal indicated that a rift existed between the White House and the DEA on the issue. That, combined with implications relating to international treaties, were reasons enough to make the decision far from a done deal.

The move will have an almost immediate positive impact on the industry, a fact that is confirmed by stock prices in the industry springing ten percent and higher on the day of the announcement. One such impact is that cannabis businesses will no longer be subject to IRS Tax Rule 280E, which prevents businesses that receive income from Schedule I and II substances from deducting regular expenses like nearly all other businesses, resulting in a tax consequence multiples over what non-cannabis businesses must pay. Some cannabis businesses, like Trulieve and TerrAscend, have decided to stop paying these taxes, potentially saving over 150 million dollars toward their business. With cannabis at Schedule III, this level of speculation will no longer be necessary. There should be other positive consequences of federal rescheduling, such as bankruptcy protection and access to the U.S. Patent and Trademark Office, to name a couple.

Without being able to fully digest the end product, these comments are still speculative, but Prince Lobel will continue to monitor this space. Back in 2014, Prince Lobel was the first law firm of its type to assist clients in entering the legal cannabis market in Massachusetts, and has since been a leader in the industry with offices in both Massachusetts and New York.

 

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Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild