The federal reclassification of marijuana isn’t a pipe dream (so to speak). It’s about to become a reality.

Long coveted by marijuana advocates, reclassification is encountering little opposition on Capitol Hill, even from conservative lawmakers. As I explain below, the financial stakes are enormous.

Days after the Justice Department announced that it was expediting plans to move marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA), the non-partisan Congressional Research Service (CRS) asserted in a new report that reclassification of weed “appears likely.”

In the report released May 2, the CRS also outlined marijuana policy considerations for lawmakers, especially the “gap” between federal and state laws.

“Given the current marijuana law and policy gap between the federal government and most states, there are a number of issues that Congress may address,” the CRS report said. “These topics include, but are not limited to, marijuana’s designation under the CSA, financial services for marijuana businesses, federal tax issues for these businesses, oversight of federal law enforcement and its role in enforcing federal marijuana laws, and states’ implementation of marijuana laws.”

The recent decision by the U.S. Drug Enforcement Administration (DEA) to shift cannabis to Schedule III under the CSA signals a significant turning point in the movement towards ending cannabis prohibition. Reclassification (as depicted in the following graphic) would alleviate the undue legal and tax burdens placed on cannabis enterprises.

Sources: DEA, HHS

According to projections from cannabis data company BDSA, this regulatory change will have far-reaching effects, extending beyond the cannabis sector to impact the broader economy. The highlights of the recent BDSA report:

Anticipated Market Growth: BDSA’s latest forecasts suggest substantial expansion in the legal U.S. cannabis market. U.S. sales totaled $29.5 billion in 2023. Sales are expected to grow to $32.4 billion this year and reach $46 billion by 2028, with an expected annual growth rate of nearly 10% from 2023 to 2028. Emerging adult-use markets, including Connecticut, Maryland, Missouri, New Jersey, New York, and Illinois, are projected to witness the fastest growth.

Expansion of Adult-Use Markets: The surge in market size is predominantly propelled by the widening reach of adult-use markets across the nation. BDSA data indicates that around half of the U.S. adult population in states where cannabis is legalized now partakes in its consumption.

Global Market Dynamics: The global legal cannabis market also is witnessing explosive growth, with anticipated sales of $58 billion by 2028. Presently, the U.S. accounts for approximately 56% of total global cannabis sales and is anticipated to uphold its lead.

Economic Ramifications: The burgeoning cannabis industry has the potential to invigorate economic activity and generate employment in areas where cannabis is sanctioned. This isn’t solely about the cannabis sector; it’s also about rectifying longstanding social disparities and furnishing opportunities for those impacted by cannabis prohibition.

BDSA points out that one of the major challenges faced by marijuana companies is limited access to banking services due to federal regulations. Reclassification should ease these restrictions, making it easier for cannabis businesses to obtain banking services, loans, and other financial instruments. This would improve their operational efficiency and reduce costs. Pot companies also would be able to claim ordinary tax deductions that are currently denied to them because of marijuana’s Schedule I status.

Many canna-businesses don’t have access to banking services, which means they must rely on cash which in turn makes them vulnerable to crime. Hence the introduction in Congress of bills to make it easier for banks to service marijuana companies, without fear of penalties. These bills have passed the House several times but remain bottled up in the Senate. The election in November 2024 could prove a game-changer for marijuana.

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I regularly write about the opportunities in cannabis. But I also want to emphasize the big profits that await you in crypto.

Read This Story: Cannabis and Crypto: The “Disruptive Duo”

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John Persinos is the editorial director of Investing Daily.

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