QUINCY (WGEM) – Lower federal tax rates await the cannabis industry after President Donald Trump’s reclassification of cannabis.
On Thursday, President Donald Trump reclassified cannabis as a Schedule III narcotic instead of a Schedule I. It’s a landmark change for the cannabis industry in terms of a push for federal legalization and is financially beneficial.
“Now with the Schedule Three, the local or individual provider will have a little bit more profit,” said Quincy University Economics Professor Cynthia Haliemun.
As a Schedule I narcotic, cannabis companies were under the IRS’s 280E code. The code states that a Schedule I narcotic can only deduct its sold goods from taxes. However, with the reclassification, the code no longer applies.
“Now they can deduct utilities and space to sell the marijuana,” Haliemun explained.
Another aspect of the reclassification is research. Schedule III narcotics have much less stringent regulations than Schedule I narcotics when it comes to research.
“[People] can do some investment like research or something that in the schedule one they are not allowed to do that,” Haliemun said.
While cannabis is not legalized on the federal level yet, its reclassification opens up cannabis industries to be able to also reach out to big banks for loans and credit.
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