The Impact of Cannabis Rescheduling on the Industry: What Business Owners Need to Know

Cannabis rescheduling has been a topic of significant discussion and anticipation within the industry. Recently the DEA voted to reschedule cannabis from a Schedule 1 substance to a Schedule III, which will have profound implications for businesses operating in or entering this sector. For business owners, understanding these changes and preparing accordingly is crucial for navigating the evolving landscape.

Understanding Cannabis Rescheduling

Cannabis had been classified as a Schedule I substance under the Controlled Substances Act (CSA), indicating that it is considered to have a high potential for abuse and no accepted medical use. However, growing advocacy and scientific evidence supporting the medical benefits of cannabis led to successful calls for reclassification, which acknowledges its medical use and could potentially alter regulatory requirements.

Key Implications for Business Owners

1. Regulatory Changes

One immediate consequence of rescheduling cannabis would be changes in regulatory requirements. Businesses may face new standards for compliance, including changes in licensing, testing, and product labeling. It’s essential for business owners to stay informed about these regulatory modifications and adapt their operations accordingly to ensure compliance.

2. Access to Banking Services

One of the most significant challenges currently faced by cannabis businesses is the lack of access to banking services. As a Schedule I substance, cannabis-related businesses often struggle to secure banking services, leading to reliance on cash transactions. Rescheduling cannabis will pave the way for improved access to banking, allowing businesses to operate more securely and efficiently.

3. Investment Opportunities

Rescheduling cannabis is likely to attract increased investment in the industry. With reduced regulatory uncertainty and enhanced legitimacy, investors may view cannabis-related ventures as more attractive. Business owners should be prepared for potential influxes of capital and the competitive advantages that may arise from increased investment.

4. Tax Implications

The current tax treatment of cannabis businesses under Section 280E of the Internal Revenue Code is highly restrictive, prohibiting standard business deductions. Rescheduling cannabis could potentially modify these tax provisions, allowing businesses to benefit from deductions similar to those available in other industries. Understanding and planning for these tax changes will be essential for financial management.

5. Market Expansion

As legal and regulatory barriers decrease, the market for cannabis products could expand significantly. Business owners should strategize on how to scale their operations to meet increased demand. This may involve optimizing supply chains, expanding product lines, and enhancing marketing efforts to capture a broader consumer base.

Preparing for the Future

Stay Informed

Continuous monitoring of legal and regulatory updates is crucial. Engaging with industry associations, legal experts, and regulatory bodies will help businesses stay ahead of changes and ensure readiness for implementation.

Build Strategic Partnerships

Establishing relationships with financial institutions, investors, and other stakeholders will be beneficial in navigating the transition. These partnerships can provide valuable resources and support during periods of change.

Invest in Compliance

Investing in compliance infrastructure now will pay off in the future. Developing robust compliance programs and ensuring that all aspects of the business are prepared for new regulatory requirements will minimize disruptions and enhance operational stability.

Focus on Education and Training

Educating and training employees on new regulations and compliance standards will be vital. Ensuring that staff are well-informed and capable of adapting to changes will strengthen the overall resilience of the business.


The potential rescheduling of cannabis represents a transformative moment for the industry, offering new opportunities and challenges for business owners. By understanding the implications of these changes and proactively preparing, businesses can position themselves for success in a dynamic and evolving market. Embrace this period of transition with a strategic approach, and your business will be well-equipped to thrive in the new regulatory landscape.


Elizabeth Morris
Elizabeth Morris Chief Operating Officer/Principal With over 20 years of experience working in operations for startup organizations across various industries, Elizabeth has a proven track record of building high-performing teams and a deep commitment to providing superior customer care, most recently in her role at Dynamic Alternative Finance. Her passion lies in helping to grow businesses and empower burgeoning entrepreneurs in emerging industries to accomplish their goals. Elizabeth brings her comprehensive understanding of operational tools and keen insight into the evolving business development needs of alternative industries to help empower the DAF team and elevate the client experience.