What marijuana's federal reclassification means for Colorado

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.

• Deductions on business expenses could be crucial for dispensaries, which often operate on tight margins, writes Axios Pro Rata's Dan Primack.

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.

• The U.S. Department of Health and Human Services supported the reclassification last year.

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.