The Biden Administration announced yesterday the U.S. Drug Enforcement Administration (USDEA) will move to reclassify cannabis from Schedule I to Schedule III, categorizing it as a less dangerous drug.
The Maine Office of Cannabis Policy (OCP) anticipates no changes to the state’s medical and adult use cannabis programs as a result of this rescheduling. The USDEA and the Food and Drug Administration (FDA) regard state-regulated, non-hemp cannabis programs as inconsistent with federal law as a Schedule I substance, and those same programs would remain inconsistent with federal law as a Schedule III substance. However, across the past three presidential administrations, the Justice Department has taken a non-enforcement approach against state-regulated medical and adult use cannabis programs, and OCP fully expects there to be no change to that posture.
It is important to be clear that rescheduling of cannabis does not equate to federal legalization. Nor does the move change federal criminal penalties related to cannabis. Interstate commerce will still be prohibited, as Congress has not approved such activities. Cannabis remains a controlled substance.
The Administration’s move, while still required to go through standard regulatory processes before being made final, will likely provide significant tax relief to the cannabis industry. Because Section 280E of the Internal Revenue Code restricts producers of Schedule I and II substances from being eligible for almost all federal business tax deductions and credits, a move to Schedule III paves the way for federal tax relief. State tax relief for those same expenses is already accessible for Maine’s medical and adult use cannabis businesses.
The biggest federal policy change—beyond potential tax benefits—would center on medical and scientific research. Schedule III substances face much lower bureaucratic hurdles for scientists to conduct research. The reclassification of non-hemp cannabis will lower those burdens, decrease research costs, and, hopefully, spur additional research.
About the Office of Cannabis Policy (OCP)
The Mills Administration created the Office of Cannabis Policy (OCP) within the Department of Administration and Financial Services (DAFS) in February 2019. The Office is responsible for the oversight of all aspects of legalized cannabis in Maine, including the Medical Use of Cannabis Program and the Adult Use Cannabis Program.