Marijuana Rescheduling Would Create Over 50,000 New Jobs, Industry Group Tells DEA On Last Day Of Public Comment Period

If the Drug Enforcement Administration (DEA) ultimately decides not to move forward with marijuana rescheduling, many small and minority-owned cannabis business will have to close shop, “resulting in major economic losses and unemployment,” according to a new industry report. But enacting the reform, in contrast, would grow the sector, adding more than 50,000 jobs by 2030.

The Minority Cannabis Business Association (MCBA) included the data from the report that was conducted by Whitney Economics in a public comment submitted to DEA ahead of Monday’s deadline for stakeholders to weigh in on cannabis rescheduling, offering a detailed economic analysis as the agency had specifically requested in its call for expert input.

The MCBA survey of 206 marijuana licensees across 32 states revealed some troubling trends in the cannabis industry, with just 27 percent of respondents reporting that their operations are profitable, compared to 41 percent that are breaking even and 36 percent that are losing money.

More than 80 percent of the businesses cited finances and tax issues as major economic problems. And MCBA said those issues could be largely resolved in DEA does move marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA) as the Justice Department has proposed because it would mean that the sector could finally take federal tax deductions they’re currently barred from under an Internal Revenue Service (IRS) code known as 280E.

The “economic data indicates this Proposed Rule would positively impact all 42,125 state-issued marijuana licenses, and in particular small and minority-owned businesses,” it says. “The excess tax payments imposed as a result of IRC § 280E currently prevent marijuana businesses from deducting ordinary business expenses, resulting in higher taxable income and federal tax expense.”

Rescheduling “would lead to substantial tax savings and increased profitability for marijuana businesses, including small and minority-owned businesses,” while also allowing regulated businesses “to more easily compete with the unregulated, untaxed market.”

“Without tax reform that comes with rescheduling, many small and minority marijuana licensees will go out of business, resulting in major economic losses and unemployment,” it said.

MCBA emphasized that while descheduling marijuana entirely would “provide the fullest economic and criminal justice benefits to Americans affected by the War on Drugs,” the modest rescheduling move would still have “innumerable benefits for small and minority-owned cannabis businesses.”

With the 280E restriction in place, the marijuana industry has paid an estimated $2.2 billion in tax overpayments compared to other sectors of the economy, it said.

Moving cannabis to Schedule III and the resulting relief would significantly increase employment opportunities, adding 55,500 jobs by 2030, the report says. That, in turn, would mean an up to $2.7 billion in additional wages and $5.6 billion in new economic activity by that time.

The public comment is directly responsive to what the Justice Department requested in the Federal Register when the proposed rule was published in May. The agency said it wanted input on the “unique economic impacts” of its marijuana rescheduling proposal given that state-level legalization has created a “multibillion dollar industry” that stands to benefit from possible federal tax relief under the reform.

In another public comment on the proposed rule, a group representing state-level cannabis regulators recently called on the Biden administration and DEA Administrator Anne Milgram to provide a clear explanation of how rescheduling marijuana would affect federal enforcement priorities and the U.S. government’s interaction with jurisdictions that regulate cannabis products.

Meanwhile, Sen. Bill Cassidy (R-LA) is condemning the Biden administration over what he describes as repeated refusals from federal agencies to brief Congress on its plans and justification for rescheduling marijuana, which he argues fuels speculation that the proposed policy change is politically motivated.

Similarly, 25 GOP congressional lawmakers sent a public comment letter last week opposing the Biden administration’s planned rescheduling of marijuana, specifically alleging the government’s recommendation was based on politics rather than science.

At the Republican National Committee convention this week, multiple GOP lawmakers spoke with Marijuana Moment about their own views on how cannabis policy issues such as rescheduling could be impacted if former President Donald Trump wins the November election. They generally deferred to the nominee, but there were mixed opinions about what they would like to see happen.

Rep. Andy Harris (R-MD), for his part, said at the event that “I don’t care” whether rolling back the Biden administration’s marijuana rescheduling move under a potential Trump presidency would hurt the Republican party, because he feels more strongly that the modest reform would endanger public health.

Also, bipartisan congressional lawmakers are now seeking to remove a controversial section of a spending bill that would block the Justice Department from rescheduling marijuana—one of several cannabis- and psychedelics-related amendments to appropriations legislation that have been filed in recent days.

GOP senators have separately tried to block the administration from rescheduling cannabis as part of a standalone bill filed last September, but that proposal has not received a hearing or vote.

Read MCBA’s comment on the marijuana rescheduling proposal below: 

GOP Congressman Says ‘I Don’t Care’ If Rolling Back Marijuana Rescheduling Would Hurt Republican Party

Photo courtesy of Mike Latimer.