Joe Biden announces key step to ease weed regulations. What does this mean in California

The Biden administration has taken a key step in reclassifying marijuana as a lower-risk drug, the president announced Thursday, moving closer to removing it from a federal category that considers it more dangerous than fentanyl.

“This is monumental,” President Joe Biden said in a video post on the X social media platform. “Today, my administration took a major step to reclassify marijuana from a Schedule I drug to a Schedule III drug. This is an important step towards reversing long-standing inequalities.”

Moving marijuana from Schedule I to Schedule III will not make it legal at the federal level. But it would allow some federal tax deductions for legal businesses in California struggling under the burden of high state taxes, open up research opportunities and lead to some criminal justice relief, experts say.

Late last month, the U.S. Attorney General circulated a proposal to reschedule marijuana sales. Today’s action sets a clearer timeline for weed reclassification, ranging from several months to a year.

Distributors of Schedule I and Schedule II drugs cannot claim federal tax credits due to Federal Code Section 280E.

If pot is placed on Schedule III, placing it among less regulated controlled substances like ketamine and anabolic steroids, legal California marijuana businesses would be able to claim tax credits for basic operating costs – payroll, utilities, rent, office supplies and other needs – which can be used by other companies.

Marijuana experts say this relief is needed in California.

California imposes a 15% excise tax on legal marijuana, paid by consumers and passed on by retailers, and local governments can impose further taxes. The taxes, which went into effect in 2018 after the state legalized recreational marijuana through a voter-approved ballot initiative in 2016, have put many licensed businesses out of business, Cody Stross, director of general manager of Northern Emeralds marijuana company in Humboldt County.

Many legal California marijuana businesses have not renewed their cultivation licenses, failed to pay taxes or have closed their operations since the taxes went into effect, said Stross, who also serves on the board of the National Cannabis Industry Association. It is easier to sell on the illegal market in California, further limiting legal dispensaries.

Experts say the effects of reclassifying marijuana would be felt mostly outside California, which is one of 24 states where marijuana is legal for recreational use and one of 38 where it is legal for medical use.

Schedule III drugs are easier to study, which means that ultimately marijuana research can be conducted with fewer restrictions. There will finally be some relief in the criminal justice system, said Luke Scarmazzo, the last known person from California to be held in federal prison on cannabis charges.

People facing federal cannabis crimes could use a medically necessary defense in court, he said in an interview earlier this month. And the mandatory minimum, i.e. the standards that judges follow when issuing sentences, may be lower, he added.

Federal Progress

On Thursday, the U.S. Department of Justice, which oversees the U.S. Drug Enforcement Administration, filed a notice of proposed rulemaking with the Office of the Federal Register, the government’s official journal of the agency’s policies, proposals and public notices.

The Notice of Proposed Rulemaking – the official document explaining the agency’s plan – will be published in the Federal Register. This gives you 60 days to respond publicly. The DEA administrator can then appoint an administrative law judge to consider the evidence and make a scheduling recommendation.

Finally, the Department of Justice sets a schedule and publishes the rule in the Federal Register.

The agency may decide not to downgrade marijuana’s federal classification. However, given the administration’s push for reclassification, this is unlikely.

“Today’s announcement builds on the work we have already done to pardon a record number of federal crimes for simple possession of marijuana,” Biden said. “This complements the actions we have taken to reduce barriers to housing, employment, small business lending and more for tens of thousands of Americans.”

“Listen people, no one should be in jail for simply using or possessing marijuana,” he added. “Period.”

Illegal marijuana sellers will still be subject to federal penalties if the drug is listed on Schedule III.

Yet the federal government rarely charges fees to cannabis users and sellers whose activities are legal under state law.

Pot is currently a Schedule I drug, the most closely regulated group of controlled substances that includes heroin, LSD and MDMA. Schedule I drugs are drugs that have no accepted medical use and have a high potential for abuse. Schedule III drugs allow certain medical uses.

“Currently, marijuana is classified at the same level as heroin and more dangerous than fentanyl. We are finally changing this,” Vice President Kamala Harris said in a video sent Thursday to X. “We are well on our way to making it happen.”

In 2022, Biden asked the Department of Justice and the Department of Health and Human Services to review the marijuana schedule.

“Far too many lives have been upended by a failed approach to marijuana, and I am committed to righting those mistakes,” Biden said. – You have my word on that.