Possible pot reclassification has local hemp shops pining for cannabis sales

(KSTP) – The federal government is moving closer to reclassifying marijuana to be considered a “less dangerous” drug, setting up a simmering of stigma and major business benefits for companies selling cannabis.

During this year’s State of the Union address, President Joe Biden said he was directing his Cabinet to review the federal classification of marijuana. Just a couple months of later, the U.S. Drug Enforcement Administration is answering those calls.

If the feds follow through, marijuana would be reclassified from a Schedule 1 drug to Schedule 3 — moving it away from the same category as drugs like LSD and heroin and putting it in line with drugs with accepted medical uses like anabolic steroids and ketamine.

What it wouldn’t do is legalize cannabis for recreational use at the federal level, but those in the cannabis business say it could save them a lot of money.

“It’s a boon for current cannabis operators and future cannabis operators,” said Shawn Weber, board president of the Minnesota Cannabis Growers Cooperative & Industry Council.

“As operators, [we would be] able to operate like a normal business,” Weber said, referring to how federal taxes currently work for businesses that sell cannabis.

Right now, tax code 280E applies to those operations, which does not allow them to write off many business expenses. That can result in a tax rate as high as 70%. That rate would sharply decrease with reclassification.

“This is a huge relief for a lot of business owners,” Mike Gawlik, chief executive officer of Natreum.

Natreum currently has seven shops around the metro that sell hemp-based products with plans to add cannabis choice when the state allows.

Gawlilk says lower taxes would allow him and the shops to invest in their employees.

“Higher-level employees offers higher-quality education for customers, which ultimately props the business up,” Gawlik said.

Several more steps are ahead before anything is official, including a review from the White House Office of Management and Budget and a public comment period.