Cannabis company owners in Illinois welcomed the news Tuesday that the federal government is expected to reclassify marijuana as a drug with medicinal value and lower potential for abuse.
The Associated Press reported that the Drug Enforcement Administration will move to reclassify marijuana from Schedule I to Schedule III. Rather than continuing to classify cannabis with much stronger drugs such as heroin and LSD, the move would put pot in the same class with certain prescription drugs such as codeine, ketamine, steroids, and testosterone.
The change will not be immediately noticeable to most consumers in Illinois, where medical and recreational use already are legal under state law. But it may have a huge impact on weed businesses, allowing them greater ability to take tax deductions for business expenses and making it easier to get loans.
“I’m hopeful it will open the door for financial institutions to provide capital, specifically to smaller players,” said Reese Xavier, CEO and managing partner of HT23 Growers, a Black-owned craft cannabis company trying to get money to start production in Chicago Heights.
With increased competition and cheaper access to capital, customers might see better pricing, he added.
Others warned of harmful fallout from the move.
Kevin Sabet, president and CEO of the not-for-profit Smart Approaches to Marijuana, said public health officials, law enforcement and substance abuse treatment experts opposed the change.
He challenged the decision, saying that the raw plant has never passed safety and efficacy protocols, and that it would encourage further addiction, and could lead to further cases of psychosis, depression and IQ loss.
“A drug isn’t medicine because it’s popular,” he said.
The change should allow greater research into the effects of cannabis, and could help the industry pass the SAFER Banking Act, which would allow greater access to banking services and reduce reliance on cash.
Currently, federally-licensed banks generally are reluctant to work with a federally illegal business.
Charlie Bachtell, CEO of industry giant Cresco Labs, based in Chicago, said the change marks an important shift in attitudes toward the plant that could help pass the banking legislation.
“Patients and consumer should embrace finally getting recognition from the federal government that cannabis has medicinal value,” he said.
Verano, another cannabis company based in Chicago doing business in multiple states, issued a statement that it expected to see $80 million in savings from being able to deduct business expenses. It anticipated additional payment methods for customers, more vendors participating in the industry and U.S. stock exchanges warming to the idea of listing cannabis companies.
Verano founder and CEO George Archos said the decision should help amend the effects of the war on drugs that has negatively affected society, especially people of color.
“We’re excited for this potential monumental step forward in support of cannabis legalization, and look forward to seeing further progress at the federal level,” Archos said.
Scott Redman, founder of the Illinois Independent Craft Growers Association, welcomed the change, but said it could lead to unintended consequences, such as greater federal regulation. Pharmaceuticals under Schedule III generally are held to strict manufacturing standards.
“It’s a step into the right direction, but it opens a whole Pandora’s box,” he said. “This could very well be one of those be careful what you ask for situations.”
