Potential cannabis rescheduling leaves many divided

On August 30, top Biden administration health officials recommended that the United States Drug Enforcement Administration reclassify marijuana as a Schedule 3 substance — the same level as Tylenol with codeine. Cannabis companies across the country rejoiced after hearing the announcement. If cannabis were to be rescheduled, it would dramatically reduce the amount of federal taxes these companies pay each year.

According to an analysis by cannabis research firm Whitney Economics, marijuana companies paid an excess of $1.8 billion more in federal taxes in 2022 compared to non-cannabis businesses. Cannabis companies are prohibited from deducting expenses from their taxes like other businesses because they’re selling a Schedule 1 substance.

The rescheduling of cannabis would also expand the potential for research. Many scientists are reluctant to pursue cannabis research because of the heavy federal requirements associated with Schedule 1 substances: registering with the DEA, undergoing background checks, tracking and discarding the drug and more. There can be numerous state requirements as well.

While much more needs to happen before tangible effects are felt — including a separate DEA review and possibly a judicial review — the health officials’ statement that cannabis has medical value has been referred to as a “game changer” by folks on Capitol Hill. Advocates and policy experts, however, say rescheduling marijuana under the Controlled Substances Act does not address the racial justice issues caused by current cannabis laws. Many of these advocates believe rescheduling is a far cry from the promises of decriminalizing cannabis for personal use that President Joe Biden made during his presidential campaign.

“It takes people who already have access, who already have resources, who already have connections, who already have politicians in their pocket, and it gives them a leg up,” Natacha Andrews, executive director of the National Association of Black Cannabis Lawyers, told The Hill. “It doesn’t address the over-policing, it doesn’t address the immigration issues, it doesn’t address the access to federal services, and it’s not in alignment with what 38 states have done to regulate and legalize.”

Karen O’Keefe, director of state policies for the Marijuana Policy Project, said in the same article that the only path toward true racial justice would be the complete legalization of cannabis. Legalization, according to O’Keefe, should also include reparative justice.

“Reparative justice measures things like removing the stigma, removing old criminal convictions, freeing prisoners, having set up so you have employment training and assistance for disproportionately impacted and Black and brown communities to own cannabis businesses,” she said. “So, at the bare minimum, I think legalization is what’s needed federally.”

While the DEA doesn’t have a deadline to respond to the rescheduling request, many suspect that a recommendation from the DEA is likely before the presidential election in November 2024.

Cannabis labor market update

For the first time since regulated marijuana markets opened in the United States, the number of cannabis jobs has declined during the past year, according to a February report by Denver-based marijuana industry recruiting firm Vangst. The firm found there were 417,493 full-time equivalent retail and cultivation jobs in early 2023, a 2% drop from early 2022.

Global inflation, depressed cannabis prices, a lack of investment funds and oversaturation in mature markets have compelled marijuana companies to lay off workers. The most vulnerable job positions? Mid-management, human resources, compliance and marketing.

With the increase in employee layoffs, many mid-level managers are getting the axe.

“When you’re reducing the number of individuals within your organization, you don’t need as many layers in the middle to support those workers,” said Kara Bradford, CEO of the Seattle-based cannabis industry recruiting firm Viridian Staffing, in an interview with MJBizDaily. “That’s the reason why we see middle management getting laid off, and it’s not just in cannabis.”

Other positions that are being affected are those not perceived as “revenue generating,” Bradford said, including human resources, marketing and compliance, which are being outsourced to third-party providers. Hourly workers — harvesters, extraction technicians, packagers and other workers who get products to the market — have not been impacted. However, cannabis companies are turning to temporary workers because it’s more affordable and flexible than hiring permanent staffers.

Bradford and others who follow the cannabis labor market are concerned that hourly employees and salaried workers will leave cannabis for other sectors because of the industry’s struggles and other sectors’ abilities to offer attractive pay and benefits packages.

“One big trend right now is attrition. It’s higher now than it’s ever been for hourly workers,” Bradford said. “We’re competing for the same hourly worker talent as a lot of other industries right now.”