The big benefit of owning your own business
is being able to write off expenses.
But how do you claim a tax deduction for
things that were once illegal in New York,
like marijuana plants and paraphernalia?
Well, now the DEA is
considering rescheduling,
sort of reclassifying cannabis that
would get rid of the IRS code that
prevents drug dealers from claiming
tax deductions for business expenses.
The Department of Health and Human
Services has already said marijuana
should not be in the same category.
It's called Schedule One as heroin and LSD.
Like it is right now.
Cannabis was listed as a Schedule One
drug in 1969 when Nixon was president.
Joining us live now is Joe Schaefer.
He's an attorney with Lippis
Matthias and coleader of the
firm's cannabis practice team.
In one report,
NBC News said Joe that this change
could save the marijuana industry
hundreds of millions of dollars a year.
So how crucial would this change
be for small business owners?
Yeah, by the way, thanks for having me,
Kelly. Great to be back on.
Look it this could be a real game changer,
especially for a lot of the
markets around the country,
whether it's New York or mature
markets like California, Oregon,
Washington, IL and Massachusetts.
Right now, cannabis business owners cannot
deduct cost of goods sold and there
are significant financial challenges.
Most federally charged or nearly
all federally chartered banks will
not even touch a cannabis business,
whether it's medical or adult use.
Sometimes we're having cannabinoid
have operators in New York
State having trouble with this.
So what what this really does is it
opens kind of financial services for
cannabis businesses which are otherwise,
you know, predominantly operating
in cash right now and hopefully
saving them in tax in the long term.
It's not final yet,
like you said,
but you know,
there's a lot of optimism with the
Health and Human Services letter
that came out the other day.
And at like you said,
in most of these stores right now,
if you go, you have to pay with cash.
There's high security not just for
the product, but because people are
going in there with wads of cash.
Would this change that?
Potentially, yeah.
And look, there have been a
number of industry solutions,
whether they're digital wallets.
But again, the majority of
these of these interactions and
they're getting better are cash.
So from a security standpoint,
certainly, you know,
I think if you open up federal banking
to can adult use cannabis businesses,
it makes the whole process run smoother,
whether that's being able to just
walk in and pay with a credit
card as opposed to going through,
like I said a digital wallet
or walking in with cash,
changing topics. Now what changes
would be made then to medical studies
that could be done with marijuana?
Because right now that's super restricted.
Super restricted, Yes, exactly.
And right now, because like you said,
cannabis is treated as a
schedule one substance under
the Controlled Substances Act,
it means there is both high potential for
abuse and the federal government sees no,
no medical benefit whatsoever.
So accordingly,
you have to jump through a number of major,
major hoops in order to even study
cannabis and to prove that you're not
a federal or a schedule one substance,
you have to demonstrate those
medical benefits.
But how it's a catch 22 because how
can you show it if you can't study it.
So this is where this Health and Human
Services letter really comes in and says,
hey, if we if we reschedule to schedule 3,
then you're going to be able to
conduct these clinical trials because
there is potential medical benefits
and we're seeing that because there
are so many states that have at
least a medical cannabis program.
I think it's 38 was the last
last number I read,
but I could be wrong about that.
So bottom line, where does
this stand right now?
Is there a timeline for when
the DEA could have a decision,
I don't know if I think the DEA dodged
that they they now have to conduct
their own independent investigation.
They're going to use the
recommendation from Health and
Human Services which was done in 11,
which was done in 11 months.
So the DEA has to do their own investigation.
But you know, I, I think the momentum is,
is truly strong right now that we might,
for the first time in the history
of of the like the legal adult
use markets and medical markets,
see a rescheduling,
which could really be a game changer and
help businesses out both small and big.
All right. Joe Shaffer,
an attorney with Lipis,
Mathias and Co leader of the
firm's cannabis practice team.
Thank you for sharing part of
your night with us. Thanks going.