DEA Hearing on Cannabis Reclassification in the United States Postponed to 2025

The Drug Enforcement Administration (DEA) has postponed its hearing on the reclassification of cannabis from December 2, 2024, to early 2025.

The DEA hearing is expected to feature expert testimony on whether cannabis should be reclassified under the Controlled Substances Act, a step that was initially part of a two-year initiative led by the Biden administration.

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History of the DEA Reclassification Effort

DEA Efforts to reclassify cannabis began in October 2022, when President Biden ordered an expedited review of cannabis’s federal status, arguing that its current Schedule I classification was a “failed policy.”

Following this directive, health regulators issued a recommendation in August 2023 to reclassify cannabis under Schedule III, acknowledging an “accepted medical use” in the United States.

This DEA classification would move cannabis away from its alignment with substances like heroin, which are deemed to have no medical use, and could potentially open doors for the U.S. cannabis industry to access federal tax deductions and financial support.

Postponement of the DEA Hearing

DEA Chief Administrative Judge John Mulrooney postponed the hearing, originally set for early December, to allow for a more thorough background check of the 25 designated experts and participants.

This additional step has raised concerns that the Biden administration’s efforts to implement the rescheduling could face further delays. Judge Mulrooney’s order requires additional information by November 12, including each participant’s stance on the rescheduling proposal and any potential conflicts of interest with the DEA or the Department of Justice.

The DEA hearing’s participants include a diverse group representing different perspectives within the industry and law enforcement. Among them are Aaron Smith, CEO of the National Cannabis Industry Association, and Shane Pennington, an administrative law attorney representing Village Farms International.

Prominent anti-cannabis voices, such as Smart Approaches to Marijuana, are also present.

Industry Impacts of a Schedule III Reclassification

If cannabis is reclassified by the DEA under Schedule III, one of the most significant impacts would be financial. Currently, Section 280E of the Internal Revenue Code prevents cannabis businesses from taking standard tax deductions due to their Schedule I classification.

This tax burden has created considerable challenges for cannabis businesses, as they are unable to deduct typical business expenses like rent, salaries, and other operational costs, which significantly affects profitability.

David Culver, Senior Vice President of the U.S. Cannabis Council, stated, “While we’re disappointed by a potential DEA delay, we remain confident in the process.”

He added that the DEA delay could ultimately help strengthen arguments for rescheduling, particularly given bipartisan support for this policy change. However, for cannabis businesses, this delay means an extended period without the tax relief that Schedule III status would provide.

The postponement pushes the hearing beyond President Biden’s term, as the new hearing schedule may coincide with the inauguration of the next president in January 2025. Both Vice President Kamala Harris and former President Donald Trump, the Democratic and Republican candidates, respectively, have expressed support for the DEA reclassification effort.

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(Featured image by Cal OES (CC BY-NC 2.0) via Flickr)

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