THE TLDR
President Trump has announced that a decision on rescheduling marijuana will soon be forthcoming. So what does that mean if it happens? If the drug is rescheduled under the Controlled Substances Act, it would make addiction profiteers richer and assist fentanyl-dealing Mexican and Chinese cartels and the CCP by supercharging profits in an industry they are deeply involved in.
THE ISSUE
The Trump administration faces a pivotal choice on marijuana. A chorus of industry-funded voices is demanding that the administration follow former President Biden’s lead and move it from federal Schedule I to Schedule III.
The idea is a bad one and a holdover from the Biden administration, which made a recommendation to reschedule weed. The process it used in doing so departed from years of federal precedent.
Trump following this recommendation would be a public health disaster for a number of reasons.
An avalanche of new data shows that weed increases the chances you’ll die from heart issues, can cause psychosis and other major psychological issues, screws up your epigenetics and even rots your teeth.
But one underdiscussed aspect of rescheduling?
It would provide major tax relief for addiction profiteers.
THE CONTEXT
Under the Controlled Substances Act, drugs are placed in schedules by the federal government using a five-part system.
Schedule I, where marijuana currently sits, is for drugs with no currently accepted medical use and a high risk of abuse.
That’s where weed belongs: Raw marijuana has no accepted medical use and a high risk of abuse (although some marijuana-derived chemicals are used in FDA-approved medicines).
Substances in Schedule I face a lot of federal-level restrictions.
One is that businesses selling them fall under a provision of tax law called Section 280E.
THE LAW
Here’s what 280E says:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
What this means in practice is that if someone runs a weed business in a legal state, when April rolls around they can’t claim the deductions that a business selling lemonade or widgets or anything else can.
What are some of those deductions?
Things like employee wages, rent, utilities and marketing costs.
As long as weed stays in Schedule I, in other words, businesses selling it will have to eat a significant amount of costs that legitimate, legal businesses do not.
It follows that if you’re doing something illegal you shouldn’t get a benefit from Uncle Sam. And, as far as public health is concerned, this is a very, very, very good thing.
WHAT’S NEXT
But let’s say the Trump administration follows the politically motivated recommendation to reschedule marijuana.
What happens then?
Well, this chart from the non-partisan Tax Foundation pretty much says it all:
This data shows a possible reduction from an effective 116% rate to a 21% rate.
That means billions more dollars being spent on advertising to hook kids and target vulnerable communities, compliments of the federal government.
Moving weed off of schedule I also means massive relief for businesses selling a chemical linked to severe mental health problems, cardiac death, uncontrollable vomiting, and tooth decay.
But it gets worse. Those same writers (and again, these people are non-partisan) note that:
Further, rescheduling, by making profitability much easier to achieve, would dramatically reduce a large, industry-wide barrier to entry and enable entrepreneurs/small business founders to gain a stable foothold in the industry. This would increase industry competition, driving innovation and investment. Rescheduling would also decrease tax code complexity and compliance costs, which are often so burdensome on their own that several cannabis companies have changed their entire business and ownership models (e.g., shifting to employee stock ownership plans) in attempts to qualify for different, more favorable tax treatment.
In public-health terms, “innovation” and in addiction industries means more addiction and harm to society.
THE CHINA CONNECTION
But it gets even worse.
As state after state and city after city has shown, when you supercharge the legal weed market you supercharge the illegal market too—just look at New York, with an estimated 3,600 illegal weed shops against mere dozens of legal ones.
Recent investigative reporting has shown that Chinese and Mexican cartels are operating “legal” state-licensed marijuana companies in Maine, Oklahoma, and beyond.
Therefore, rescheduling marijuana means we give cartels dealing fentanyl and engaged in human trafficking a giant tax break. It means they get a giant financial incentive to keep up all of their efforts.
And here’s where it gets really scary.
The CCP is deeply interlinked with America’s illegal trade, with shady connection between groups allegedly involved in illegal grow ops nationwide and top-level Chinese officials.
Which means that rescheduling will hand a free gift to America’s biggest strategic competitor via these various enterprises.
It would be bad for public health. Bad for our communities. And bad for America.