By Ari Hoffnung, Bridge West Consulting
The possibility that the Drug Enforcement Administration may follow the U.S. Department of Health and Human Services (HHS) recommendations to reclassify marijuana as a Schedule III-controlled substance is very exciting. This would be a radical change from the Nixon era, which has been in effect for over 50 years.
This reclassification was long overdue from a scientific perspective. The scientific consensus regarding the relative harm of cannabis is not aligned with the current classification.
Fiscal ramifications are also compelling. The cannabis industry would be freed from the punitive taxes imposed by Internal Revenue Service Code Section 280E. This section currently only applies to Schedule I and Schedule II substances.
Taxing cannabis businesses the same as other businesses will help to boost the entire legal marijuana industry from large publicly traded multi-state operators down to local dispensaries.
Consumers would be the biggest winners among all stakeholders. Reclassification of cannabis products would make them more competitive in price, reducing the gap between the regulated and unregulated market.
This would have a positive effect on the state and local tax collections. Tax revenue has declined significantly in many states, including those with mature cannabis markets such as California. This is due in part to the proliferation illicit dispensaries that are now as commonplace as Starbucks and Dunkin’ Donuts in New York City.
The move of cannabis from Schedule II to Schedule III may be the beginning of an end for these illegal operations. It’s important to note that their main advantage is not their superior product or services, but their ability of evading high taxes. Although calls for more investment in enforcement is understandable, a fair taxation system will certainly provide a more sustainable and effective solution.
The reclassification could also have long-term advantages that go beyond the immediate benefits to consumers and fiscally. Moving cannabis to Schedule III, for example, could open the door to more federally-funded research on its medical benefits. The Schedule I status of marijuana severely limits research in the United States. We are unable to fully understand its benefits and risks.
Reclassifying cannabis to Schedule III would be a positive move for consumers, businesses and the common good. We can improve the business climate for cannabis by aligning its legal status with scientific consensus and fiscal policy. This could be an important moment in the history of drug policy. It is a chance for federal regulators, to correct some historical injustices and create a more equal future.
Ari Hoffnung is the partner of Bridge West Consulting. Bridge West Consulting is an affiliate of Bridge West. Bridge West was the first accounting firm in the world that focused solely on cannabis. He was previously chief operating officer at Vireo Health, and New York City’s Deputy Comptroller.
Lawmakers and Advocates React Mixed to Top Health Agency’s Recommendation To Reschedule Federal Marijuana
Photo by Philip Steffan.
The article Moving Cannabis to Schedule III Would be A Game-Changing Victory For Common Sense (OpEd) first appeared on Marijuana Moment.
