The DEA’s marijuana reclassification may ease the cannabis industry’s strain

Grass gets greener… In a seismic shift for US cannabis policy, the Biden admin this week began the process of loosening restrictions on marijuana. Under the proposal, pot would become a Schedule III drug (on par with anabolic steroids). It’s been classified as a Schedule I drug (on par with heroin) since 1970. Although the move wouldn’t amount to decriminalization, cannabis-related stocks and ETFs soared on the news as investors bet it could reignite the beleaguered $35B industry.

• Write-off: Moving to Schedule III will pull canna-businesses out of a section of tax code that bars them from writing off things like rent and salaries, a potentially massive tax cut.

• Smoke test: Reclassifying cannabis would make it easier for researchers to further study its health effects and pharma applications.

• Nug #s: Medical or recreational weed use is now legal in 38 states and Washington, DC. But the cannabis industry is still waiting for federal decriminalization.

Weed needed a hit… Despite pot’s slow ’n’ steady legalization spread, the industry’s fallen on dank times. The state-by-state legal hodgepodge has made it hard for Canadian pot biggies like Tilray and Canopy Growth to plant roots in the US (and for American canna-companies it’s been a buzzkill to even get listed on US exchanges). A day before the reclassification news, MedMen, previously a pot unicorn (valued at $3B in 2018), filed for bankruptcy. Last year, Mastercard cracked down on the use of its debit cards as payment for weed products. Venture cannabis investment was just $550M last year, down 80% from 2021.