TROY, Mich. (WXYZ) — President Donald Trump signed an executive order Thursday reclassifying marijuana from a Schedule I drug to a Schedule III drug, moving it from a category that includes heroin to one that includes painkillers like Tylenol with codeine.
The move represents a significant softening of the federal government's stance on cannabis and could have major implications for both medical research and the cannabis industry.
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"This classification order will make it far easier to conduct marijuana-related medical research, allowing us to study benefits, potential dangers and future treatments," Trump said during the signing ceremony in the Oval Office.
"As a researcher, it's really difficult to do this type of work. It's still illegal at the federal level," said Hillary Marusak, an associate professor in the Department of Psychology and Behavioral Neurosciences at Wayne State University School of Medicine.
Marusak conducts research on both the potential risks and medical uses of marijuana.
"It's actually a really exciting treatment target for things like anxiety and post-traumatic stress disorder and pediatric epilepsy," Marusak said.
At New Standard Cannabis, manager Natalia Cardenas has seen firsthand how marijuana helps customers with various medical conditions.
"I have always been a little more prone to depression," Cardenas said, explaining her own use of marijuana for mental health.
She says she frequently sells products to customers dealing with physical ailments or issues with sleep.
"Back pain, knee pains, and now we have topicals for them, we have patches, and all that stuff is only going to get better with research and the science behind everything," Cardenas said.
While Marusak supports the rescheduling, she noted it actually does little for research and instead pointed to the need for more federal funding.
"At first glance, it seems like a real win for cannabis science and research, but I feel like the gesture changes little by way of research.”
Related video: President Trump reclassifies marijuana, making it easier for medical use
Major tax relief for cannabis companies
One major impact of rescheduling involves Section 280-E of the IRS tax code, which has severely limited business deductions for cannabis companies.
“Under this tax code, we cant write off anything other than the cost of goods. So all our rent, all of our employees time, our marketing expenses, any normal business expense that any normal business in this county would be allowed to write off, cannabis companies are not allowed to write this off,” said Nick Hannawa, chief legal counsel at Puff Cannabis Company. "We are one of the most harshly taxed industries in the entire country."
While the change won't happen until the rescheduling is finalized, it marks a huge change for cannabis companies.
"Millions and millions of dollars that companies were paying that now they won't have to pay anymore because they will be treated like every other business in this country," Hannawa said.
Banking challenges remain
However, Hannawa cautioned that the order does not federally legalize marijuana. While it could attract new investment, it likely won't mean you can use a credit card at a dispensary anytime soon.
"The compliance costs of banking cannabis is high, and that's kept a lot of banks out of it," said Ross Sloan, senior vice president for cannabis banking at Dart Bank. “I do think it will change things overtime, but it wont happen overnight.”
Congressional opposition
Despite the order coming from the Trump administration, several Republican members of Congress expressed disapproval.
"Yeah, I quite frankly disagree with the president on that one," said Republican Sen. Cynthia Lummis of Wyoming.
"We have so many drug issues and so forth and we want to be protective of our young people, so no I don't think he should reclassify," said Republican Sen. John Hoeven of North Dakota.
"I think it's a dangerous drug, and I'm not so sure that's a good decision, but we'll see how it plays out," said Republican Sen. Lindsey Graham of South Carolina.
The cannabis industry is now looking toward passage of the SAFER Banking Act, which would make it easier for cannabis companies to work with major commercial banks and credit card companies.
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