USA: Biden on Weed!

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Biden’s fix for cannabis could become a big problem

On one hand, Biden’s shift on pot could potentially alleviate a lot of concerns that businesses and investors had about the growth of cannabis in the United States were he to become the 46th president.

On the other hand, the former vice president’s solution to the cannabis conundrum in the U.S. is worrisome, as it might create more problems than it solves. When questioned by CNN, Bates went on to add:

He [Biden] would allow states to continue to make their own choices regarding legalization and would seek to make it easier to conduct research on marijuana’s positive and negative health impacts by rescheduling it as a schedule 2 drug.

While this probably seems like a harmless, if not positive, statement by the Biden campaign, rescheduling marijuana to Schedule II from Schedule I — which would acknowledge that the drug has recognized medical benefits — could be a nightmare.

For starters, moving the drug from Schedule I to Schedule II wouldn’t alleviate the issues U.S. pot businesses have to contend with regarding Section 280E of the tax code. Section 280E disallows businesses that sell a controlled substance (either Schedule I or II) from taking normal corporate income tax deductions, save for cost of goods sold, which is often a small percentage of revenue. This usually leads to profitable marijuana companies paying exorbitant effective tax rates to Uncle Sam. Without the ability to take deductions available to so-called normal businesses, weed companies could struggle to hire new workers and expand.

However, the bigger issue at hand is that a Schedule II classification opens a new can of worms for the U.S. cannabis industry. Being recognized as having medical benefits would put the medical marijuana industry under the strict supervision of the U.S. Food and Drug Administration (FDA). The FDA could tightly control the marketing and labeling of medical marijuana packaging (which is already being done in our neighbor to the north by Health Canada), and it may very well oversee the manufacture of cannabis crops, ensuring cannabinoid consistency.

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