Momentum is building to ease existing restrictions on cannabis use both nationwide and in Pennsylvania, hinting at potential growth opportunities for local cannabis businesses and legal practices serving the industry.

The Drug Enforcement Administration has officially moved to reschedule marijuana from a Schedule I to a Schedule III substance, potentially alleviating tax burdens on cannabis businesses; and Pennsylvania’s legislature is eyeing legalizing the sale of cannabis for adult recreational use, although the policy changes at both the national and state level will take some time. [...]

Duane Morris cannabis practice co-leader Paul Josephson was slightly less optimistic on the timeline for federal rescheduling, describing a window between six months and two years for rescheduling to go through, barring additional litigation.

Where’s the Work?

According to Josephson, his firm already does a fair amount of work for the cannabis industry in terms of labor, financing and investment, and even intellectual property work.

“There’s not a legal practice area that hasn’t touched or worked for our cannabis practice here,” he said, although he and other attorneys emphasized the potential growth in financing work should rescheduling and local legalization efforts go through. 

“Removing this from Schedule I … it provides immediate tax relief to companies in the cannabis business,” Josephson said, explaining that as the law currently stands, cannabis businesses aren’t allowed to deduct business expenses when they calculate and pay taxes, resulting in razor-thin profit margins. “When rescheduling happens, when that monkey comes off the back of the industry, it will improve cashflows for everyone in the business and allow for more investment.”

In particular, Josephson continued, rescheduling will help incentivize investment in the industry [...]  

And as for Pennsylvania, previous cannabis legalization bills have been stalled in committee and failed to make it to the state Senate floor, leaving marijuana’s fate in the state up in the air.

Gov. Josh Shapiro pushed for the legalization of recreational cannabis in his 2024 state budget address, but his predecessor Tom Wolf also came out in support of the change in 2019 and pushed for it in his final years of office,

Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.