May 1, 2024 - News

What marijuana's federal reclassification means for Colorado

A small, plastic case with an led light containing dried marijuana flower sits next to a small portable pad, while a hand gestures toward the pad.

Marijuana is displayed for sale in a Euflora cannabis dispensary store in Denver. Photo: Patrick T. Fallon/AFP via Getty Images

Marijuana business leaders in Colorado are celebrating the Biden administration's decision to reclassify cannabis as a less dangerous drug.

Why it matters: It could signal a paradigm shift for an industry struggling locally with slumping sales, regulatory hurdles and weak tourism.

State of play: The new rule moves marijuana from a Schedule I to a Schedule III drug, which the DEA defines as substances with "a moderate to low potential for physical and psychological dependence."

  • Schedule III drugs include ketamine and anabolic steroids, while Schedule I drugs include heroin and ecstasy.

What they're saying: Chuck Smith, president of the board of directors for Colorado Leads, a group made up of cannabis business leaders, on Tuesday called the decision, "a major step in the right direction.

  • "This is a remarkable about-face by the DEA," Brian Vicente, founding partner of Denver-based cannabis law firm Vicente LLP, said in a statement on Tuesday.
  • Colorado Gov. Jared Polis, a Democrat, in a statement said he was "thrilled" with the decision.

Between the lines: Smith says reclassifying cannabis could allow business deductions to retain more revenue and employ staff and it could mean a fairer tax rate — he suggested they're currently "targeted" by high rates due to federal tax code.

The intrigue: U.S. Sen. John Hickenlooper, D-Colorado, and 21 other congressional members, sent a letter last week to U.S. Attorney General Merrick Garland and the DEA lobbying for the change.

What's next: While the step is notable, insiders say more is needed to ensure the industry succeeds, including legalizing marijuana on the federal level.

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