Marijuana: The Implications of Moving from Schedule I to Schedule III

The federal government’s categorization of narcotics includes Schedule I through Schedule V.

The first schedule includes heroin and is supposed to consist of the worst, most harmful, most addictive controlled substances. Heroin is an example.

Marijuana has been a part of Schedule I for a long time. But now the FDA is considering moving it to Schedule III. The Biden Administration supports this change. But recreational use would remain illegal under federal law.

What are the implications?

Marijuana-related businesses will be relieved of major tax consequences if the drug is moved to Schedule III. These businesses will therefore be much more profitable. They will be eligible for many more tax deductions and credits. The floodgates of investment in these businesses will open. Forbes has an article that explains the situation in greater detail.

Of course, those pushing legal marijuana have been luring politicians with donor cash, including right here in North Carolina.

Ultimately, it is not a good thing to make “legal” marijuana more widely available.


2 thoughts on “Marijuana: The Implications of Moving from Schedule I to Schedule III

  1. Schedule I or lll makes no difference and I believe that DEA will veto this change

    Maybe the market for legal pot isn’t all that great.

    From Fortune Magazine:

    A chain of cannabis stores that was once described as the “Apple store of weed” and valued as high as $1.7 billion as a public company, is near financial collapse, according to a regulatory filing.

    The company, MedMen, said that it has only $15.6 million in cash remaining versus $137.4 million in debt.

    “The conditions described above raise substantial doubt with respect to the company’s ability to meet its obligations for at least one year,” the company said in its filing last week.

    MedMen is just the latest of the onetime cannabis darlings to face a reckoning as the industry bubble of five years ago deflates due to excessive debt, falling marijuana prices, competition from illegal sellers, and high taxes. The reality, as in any retail business, is that opening stores is expensive and taking on debt is risky—even as an increasing number of states legalize pot sales.

    MedMen, based near Los Angeles, operates 23 stores including in California, New York, and Illinois. In an effort to cut costs, it sold its stores in Florida last year, is trying to sell its New York stores, and is also attempting to renegotiate leases for the stores that remain.

    The company has already defaulted on some of its debt, the filing said, and it needs to obtain an extension or to refinance it.

    In 2018, MedMen went public on the Canadian Securities Exchange through a reverse merger amid a wave of cannabis businesses. Early on, its shares rose to over $8, but today its stock trades for just 4 cents.

    Shares in other pot-related companies have also suffered as the cannabis business lost its luster with investors. Stock of Tilray Brands, a cannabis producer that is among the industry’s largest companies, is down more than 90% from its all-time high, for example, while Canopy Growth, another major player, is down a similar amount.

    On another note, as you know I now live in Virginia,

    RICHMOND, Va. (WRIC) — Virginia won’t begin retail sales of marijuana by 2024 after the last remaining bill to set up a legal market failed.

    A Republican-controlled House of Delegates subcommittee voted 5-3 along party lines Tuesday to kill legislation from state Sen. Adam Ebbin (D-Alexandria) that would have paved the way for recreational sales to begin next year.

    1. That’s great news about Virginia, Fred. I hope it holds.

      And it would be great if the market for legal marijuana is not nearly as great as it could be.

      Readers need to know that Fred is retired from the federal government and was employed for many years with the Drug Enforcement Administration (DEA). He has real expertise with these kinds of issues.

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