DEA Rescheduling Of Cannabis Could Create Over 50,000 Jobs, Industry Group Notes In Public Commentary
The Drug Enforcement Administration (DEA) holds the key to the future of cannabis industry. The Minority Cannabis Business Association (MCBA) submitted a compelling public comment, advocating for the rescheduling of marijuana from Schedule I to Schedule III. This move, they argue, would significantly boost the cannabis industry, potentially creating over 50,000 jobs by 2030.
This comment is one of over 39,000 posted on the DEA public commentary registry, with the deadline for submissions closing on Monday July 22. The report aligns with the Department of Justice’s (DOJ) call for detailed economic input on the rescheduling proposal, reported Marijuana Moment.
Economic Impact Analysis
The MCBA’s analysis details dire economic consequences if the DEA does not move forward with rescheduling. “Without tax reform that comes with rescheduling, many small and minority marijuana licensees will go out of business, resulting in major economic losses and unemployment.”
A key factor in these financial struggles is IRS Code 280E, which prevents marijuana businesses from deducting ordinary business expenses. This results in higher taxable income and federal tax expenses. The report estimates that the industry has paid at least $2.2 billion in tax overpayments compared to other sectors. Rescheduling would eliminate these excess taxes, leading to substantial savings and increased profitability.
Financial Impact Of Rescheduling
The survey, involving 206 marijuana licensees across 32 states, paints a troubling picture of the industry’s financial health. Only 27% of respondents report profitability with 41% breaking even and 36% operating at a loss. Overall, more than 80 percent of businesses cited financial and tax issues as major challenges.
The survey further demonstrates that small, minority-owned and women-owned businesses have less access to capital, resulting in greater financial vulnerability. The 280E tax burden drains the limited funds of small businesses more rapidly than bigger companies.
A majority of cannabis businesses are small, with over 82% classified as such, mirroring national trends seen in the broader economy. And minorities tend to be involved in managing this small business: 46% of the places are women-owned and 15% are owned by a Black or African American.
Job Creation In The Cannabis Industry
Rescheduling marijuana would not only provide tax relief but also stimulate job creation and economic activity. The MCBA projects that the move could add 55,500 jobs by 2030, generating up to $2.7 billion in additional wages and $5.6 billion in new economic activity.
“Rescheduling would lead to substantial tax savings and increased profitability for marijuana businesses”, although “the majority of our members and constituents would be better served by removing marijuana from the schedule of controlled substances entirely,” per the report.
- Read Next: Cannabis Rescheduling: When Will It Happen? Expert Lays Out Timeline, Risks And Wild Cards
Cannabis rescheduling seems to be right around the corner. Want to understand what this means for the future of the industry? Hear directly for top executives, investors and policymakers at the 19th Benzinga Cannabis Capital Conference, coming to Chicago this Oct. 8-9. Get your tickets now before prices surge by following this link.
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