The fate of medical cannabis to be decided by the DEA in the next few weeks
Finding an industry with a higher growth potential than marijuana is easier said than done. First approved in California in 1996, today medical marijuana is legalized across half of the country. The last two states to legalize medical marijuana – Ohio and Pennsylvania – have done so without putting the matter to vote by residents of the state. In addition, recently we have seen four states – Alaska, Colorado, Oregon and Washington – as well as Washington DC legalize cannabis for recreational use.
As far as the growth figures are concerned, they are off the charts. A renowned cannabis research company, ArcView Market Research, has stated that a compound annual growth of 30% is possible between the years 2015 and 2020. Based on ArcView’s estimated $6.7 billion in sales for 2016, the marijuana is expected to continue to grow in the next four years, with legal sales expected to reach a staggering $22 billion by 2020.
The amount of taxable revenue that can be generated from the legalization of marijuana is just as impressive. According to a 2014 NerdWallet report, countrywide marijuana legalization would bring in tax revenues of approximately $3.1 billion annually. Note that states often generate revenue in terms of licensing fees for processors, growers and businesses as well. Although the revenue being generated currently through legal sales will not help to close major deficits in the budget, it is playing a crucial role in providing funds for drug abuse programs, education and law enforcement in selected states. .
Federal Laws Have Always Been a Problem for the Marijuana Industry
The schedule 1 status of marijuana at federal level is a huge problem faced by the industry for the longest of time. A schedule 1 drug is a substance with no medical value and has a high potential for abuse. Cannabis-based businesses have to face two major disadvantages due to the schedule 1 status of the plant.
First off, adverse tax implications are triggered. This means that business selling illegal substances cannot take tax deductions, so they have to pay tax on their gross profits, rather than net profits. The second disadvantage is that the schedule 1 status of marijuana has forced banks and other financial institutions to stay on the sidelines, with only 3% willing to deal with cannabis businesses, making business expansion difficult. Security is also seriously affected as most cannabis business can only deal in cash.
However, with times changing and technology advancing, some medical studies have shown that marijuana may indeed have medicinal value. Epidiolex – a liquid cannabidol-based formulation – is currently undergoing late-stage studies at GW Pharmaceuticals and has shown to reduce the frequency of seizures among patients with Dravet syndrome. Similar results are expected from investors in the two late-stage trials on patients suffering from Lennox-Gastaut syndrome.
Moreover, marijuana itself has shown positive effects on a variety of ailments, such as type ulcerative colitis, Type 2 diabetes and cancer. These studies are promising to say the least, and have given marijuana enthusiasts hope that the DEA just might reclassify the plant. Who knows, that time could be coming soon?
This Could Be a Game-Changing Marijuana Decision
Over the next couple of weeks, the DEA is expected to reach a decision on whether it will reclassify marijuana away from its schedule 1 drug classification, or not. Keep in mind that if they were to reschedule marijuana, then its consumption would immediately become legal throughout the country, thereby making room for cannabis to prosper. Not only this, it would also get rid of the two aforementioned disadvantages that are preventing the industry from reaching its full potential.
The FDA has already given the DEA its recommendation regarding marijuana’s scheduling, but the DEA administration is yet to reveal what their recommendation was. According to Inc.com, the DEA is already working on conducting its own analysis, which will help them find out the kind of potential abuse marijuana could possess.
The DEA has an array of options to choose from. First, it could deschedule marijuana completely, thus putting it on par with alcohol and tobacco. Second, it could place a schedule ranging between 2 to 5 on the plant. Note that the substances scheduled between these ranges are widely recognized for their medical benefits, but the closer they are classified to schedule 2, the greater their perceived addictiveness. Finally, selected substances within marijuana could be legalized and the plant itself illegal.
A Reschedule Does not Necessarily Mean Good News!
Wide-ranging implications can result from whichever option the DEA chooses to go with. If cannabis is descheduled completely, the marijuana industry would be able to flourish in all of the states. This also means that investors will finally recognized these companies, and even provide them with much-needed investments.
If cannabis is only rescheduled, though, then chaos may follow. While a schedule 2 drug classification would legalize marijuana, it will also lead to a complete transformation of the marijuana industry. Since schedule 2 drugs are still considered prone to abuse, it is highly likely that the FDA would step in and introduce regulations to control the industry.
This also means regulating the processing and growth of cannabis. In fact, the FDA would also have the freedom to get involved in the clinical aspects of cannabis’s medical use, and this means that studies will need to be conducted to prove that marijuana has medical benefits to offer for a variety of ailments. In addition, if cannabis is sold without adhering to the guidelines set by the FA, producers and sellers could face criminal punishments or hefty fines. Advertising, packaging and labeling of marijuana would have to gain approval from the FDA as well.
The DEA has not given a specific date as to when it will make its ruling. However, it is expected to come in the next few weeks. And one thing is for certain, it will bring major implications for the cannabis industry!
How do you think this will turn out?? Leave your comments!