Last week, the U.S Department of Health and Human Services (HHS) urged the Drug Enforcement Administration (DEA) to reclassify cannabis from Schedule I to Schedule III under federal law.
If rescheduled, cannabis would still be federally prohibited. However, it would allow for more scientific research as it would remove strict DEA processes for studies.
Additionally, it allow federal tax deduction for the cannabis industry and potentially support efforts for cannabis banking legislation, in particular, create new opportunities for banking and financial service providers, says Robert Mann, Co-Founder & CEO of StandardC.
FinCEN and IRS Regulations could be impacted, Mann notes, it could improve the financial viability of the licensed cannabis industry in a number of key areas.
For example, Mann highlights that, with the elimination of IRS 280E, cannabis companies may be able to deduct standard business expenses in Federal tax filings, and, eliminating prohibitions from investing in Schedule-I-related companies would allow significant new investment from private equity and venture capital.
Lenders will be able to perfect a security interest in licensed cannabis business collateral and licensed cannabis businesses would have bankruptcy protection.
Addtionally, developing therapeutic drugs would be vastly simplified, opening up new funding opportunities for cannabis-related drug development and research.
Richard Laiderman, former head of global treasury for VISA and Co-Founder and chair of StandardC, stated: “Rescheduling cannabis to Schedule III may allow dispensaries to accept credit card payments. Credit card payments may supplant cash transactions if this occurs, reducing the risks and costs associated with cash-only operations.”
Cannabis banking expert, Robert Baron, added: “While changes will inevitably occur, financial institutions looking to serve this market segment must implement risk management tools to evaluate and monitor cannabis businesses.”