Business

The feds have embraced medical marijuana. Now what?

The U.S. Department of Justice’s recent decision to downgrade the drug classification for medical cannabis will help medical marijuana businesses. Companies will be able to claim some federal tax benefits. New research can start up at state universities.

But the broader divide between federal and state marijuana policy remains largely intact, leaving states to navigate a fragmented and still-evolving cannabis landscape with few clear answers about what comes next.

The unprecedented change in April reclassifying medical marijuana from Schedule I to Schedule III means the federal government is acknowledging an accepted healthcare use for cannabis. Recreational marijuana, however, remains a Schedule I drug under federal policy, even though 24 states and the District of Columbia allow recreational cannabis in various forms, from dried flower to vaping oils to processed gummy candies.

The U.S. Drug Enforcement Administration is set to hold its first hearing at the end of June on the possible de-scheduling of marijuana broadly, which would include recreational or adult-use cannabis.

Until then, some experts say little is expected to change for the more than half of states with medical or recreational marijuana programs.

“This change is sort of catching up to what states are already doing,” said Katharine Neill Harris, a drug policy fellow at Rice University’s Baker Institute for Public Policy. “In some ways the federal government is following the states on this issue.”

States have spent years building regulatory frameworks for medical and recreational marijuana programs — including licensing systems, tax structures, testing requirements and retail oversight.

Following the DEA’s announcement in April that it would reschedule medical cannabis, some state commissions acknowledged the decision but stressed that their laws have not changed and that they are awaiting further federal guidance.

In Nevada, for example, state cannabis officials released a statement noting that the rescheduling change allows medical cannabis licensees to register with the DEA, while also emphasizing that Nevada law still classifies non-medical marijuana as a Schedule I substance.

In mid-May, the California Department of Cannabis Control proposed emergency regulations that would allow businesses holding licenses for both medical and recreational marijuana to obtain separate licenses. The change could position cannabis businesses to take advantage of potential benefits tied to the rescheduling of medical marijuana.