(The Center Square) – Colorado, California and 10 other state attorneys general called upon the U.S. Drug Enforcement Administration to classify cannabis as safe for medical research, potentially paving the way for next steps towards federal cannabis decriminalization. 

The DEA currently classifies cannabis as a Schedule I substance, which means it is recognized as a substance with high potential for abuse, no currently accepted medical use, and lack of accepted safety for use under medical supervision. Other Schedule I substances include heroin, LSD and MDMA. Moving cannabis to Schedule III would mean recognizing cannabis as having a moderate to low potential for abuse and a currently accepted medical use. Schedule III substances include ketamine, testosterone, and barbiturates. 

This classification would allow for cannabis to be prescribed by healthcare providers and would come with lower administrative, civil, and criminal sanctions against illicit use and sale. The coalition advancing reclassification includes Colorado, California, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Nevada, Oregon, Pennsylvania, and Rhode Island. 

“While we are not all aligned on the wisdom of fully legalizing cannabis, we do agree, however, that a state-regulated cannabis industry better protects consumers than the illicit marijuana market or the unregulated intoxicating hemp-derived marketplace,” wrote the 12 attorneys general in their letter to the DEA. 

The letter also claims that the regulated cannabis marketplace will exceed $53 billion in 2027, serving as a boon for state and federal tax revenue, and that current classification prevents cannabis business owners from taking tax deductions that could be used to improve public health and law enforcement outcomes. 

“Because Section 280E of the Internal Revenue Code prohibits anyone violating Schedules I or II of the Controlled Substances Act from taking ordinary business deductions, moving marijuana to Schedule III will remove a major obstacle for legitimate cannabis operators. Eliminating this tax burden via re-scheduling will allow licensed, regulated cannabis companies to expand their investments into the state programs and focus on public health and safety in collaboration with law enforcements [sic] efforts,” continued the letter.

Currently, normal business relations between cannabis business and banks are a financial risk due to the drug’s classification. Even if cannabis were to be rescheduled, normal business relations with cannabis firms would still be a financial risk for banks unless cannabis is completely descheduled from the controlled substances classification, federal regulators issue new financial guidance as a result of a classification change, or federal legislators pass a law protecting banks that service cannabis businesses in states where such businesses are legal. 

The SAFE Banking Act, which would have protected banks from penalties for servicing cannabis businesses where legal, was introduced in 2023 but failed to advance.