DEA hearing on U.S. cannabis reclassification postponed to 2025

The Drug Enforcement Administration (DEA) has postponed from December 2, 2024 to early 2025 its hearing on the cannabis reclassification.

The hearing will hear expert testimony on the question of whether cannabis should be reclassified as part of the Controlled Substances Act and was initially part of a two-year effort by the Biden administration.

History of the reclassification effort

Efforts to reclassify cannabis began in October 2022, when President Biden has ordered an accelerated review of the federal status of cannabis, The current classification as an Annex I substance was a «failed policy».

Following this directive, healthcare regulators have issued a recommendation in August 2023 for cannabis to be reclassified in the Table III, which recognizes its «accepted medical use» in the United States.

This classification would distance cannabis from its alignment with substances like heroin, which are considered to have no medical use, and could potentially open doors for the US cannabis industry to access federal tax deductions and financial support.

Hearing postponed

The DEA Chief Administrative Judge John Mulrooney, has postponed the hearing, scheduled for early December, to enable a more detailed background check to be carried out on the 25 experts and participants nominated.

This additional procedural step raises fears that the Biden administration's efforts to implement reprogramming will be further delayed. Mulrooney's order requires additional information by November 12, including details of each participant's position on the rescheduling proposal and any potential conflicts of interest with the DEA or Justice Department.

The list of participants at the hearing includes a diverse group representing different perspectives within the industry and law enforcement. They include Aaron Smith, CEO of National Cannabis Industry Association, and Shane Pennington, administrative law attorney representing Village Farms International.

Leading anti-cannabis voices such as Smart Approaches to Marijuana, are also present.

Impact on industry of reclassification to Appendix III

If cannabis is reclassified in Schedule III, one of the biggest impacts will be financial. Currently, the section 280E of the Internal Revenue Code prevents cannabis companies to make the usual tax deductions due to their classification in Appendix I.

This tax burden has caused considerable problems for cannabis businesses. This tax burden has posed considerable problems for cannabis businesses, as they cannot deduct rental costs, salaries and other typical business expenses, which has a considerable impact on profitability.

David Culver, Senior Vice President of’U.S. Cannabis Council, While we are disappointed by any delay, we remain confident in the process,« he said.

He added that the delay could ultimately help strengthen the case for re-evaluation, especially given the bipartisan support for this policy change. However, for cannabis companies, the delay means an extended period without the long-awaited tax relief that Schedule III status would offer.

The delay pushes the hearing beyond the President Biden's term of office, The new hearing schedule could coincide with the inauguration of the future president in January 2025. The vice-president Kamala Harris and the’former President Donald Trump, respectively Democratic and Republican candidates, both expressed their support for the reclassification effort..