The Trump Administration is in the process of reviewing how the federal government treats marijuana products, which could boost research and provide tax relief for providers in states like Louisiana that have officially sanctioned medical cannabis programs.
There’s also a chance the federal government will loosen up in its approach to marijuana even outside of a strictly medical context. How that process plays out could upend the state’s carefully calibrated cannabis program in ways that are impossible to predict.
“I am hopeful that this rescheduling, not just from a corporate perspective, but from a patient perspective, is a step towards treating cannabis like ordinary medicine,” says Jacob Irving, who speaks from both perspectives.
Irving suffers from cerebral palsy. When he was in college, he looked into cannabis-based drugs that might be able to alleviate his muscle spasms.
He would discover that medical marijuana technically had been legal in Louisiana since 1991, and his condition qualified under the law. But state lawmakers had never set up a system to make medical cannabis available.
He met with then-Sen. Fred Mills, a pharmacist who became the Legislature’s leading champion for medical marijuana. The first committee hearing in 2014 for Mills’ bill was a “bloodbath,” recalls Irving, who is now director of government affairs for Ilera Holistic Healthcare, one of Louisiana’s two approved marijuana producers.
Between the 2014 and 2015 sessions, Alison Neustrom, a cancer patient and advocate for medical marijuana, died. Her father, Mike Neustrom, was sheriff of Lafayette Parish, which Irving says helped ease law enforcement resistance, and the Alison Neustrom Act passed in 2015.
But while 42 states and Washington, D.C., now allow some form of medical marijuana, the federal government has been treating cannabis like a Schedule I drug with no medical value. Under the Biden Administration, the Justice Department and Drug Enforcement Administration proposed reclassification, and the DEA was in the midst of the review process when Trump came into office.
In April, acting Attorney General Todd Blanche signed an order reclassifying state-licensed medical marijuana and FDA-approved marijuana products as less-dangerous Schedule III drugs. He went around the traditional review process, pointing to a law that allows the attorney general to classify drugs that the U.S. must regulate pursuant to an international treaty.
Indiana and Nebraska have sued to overturn the order, which they say violates the Administrative Procedure Act. The case briefly included Louisiana, though Attorney General Liz Murrill pulled out of the lawsuit.
“The industry in Louisiana, and in fact across America, they’re in a holding pattern waiting for guidance to come out of the DEA hearings,” says John Davis, president of Good Day Farm Louisiana, the state’s other official producer. “We know that there’s strong momentum on the federal level to move medical marijuana under a state-authorized program from Schedule I to Schedule III.”
If allowed to stand, the order is expected to lead to significant tax relief for marijuana providers, who currently are not able to deduct common business expenses and consequently pay an effective federal tax rate of 60% or more in some cases, says Peter Prevot, a CPA who is the executive director of the Louisiana Association for Therapeutic Alternatives.
Louisiana retailers have registered with the DEA, as required to benefit from rescheduling, Prevot says. None has received any sort of official approval yet, he says, but he doesn’t think there will be any problems because “we’re one of the more well-regulated programs out there.”
“Some state-level programs are going to see setbacks, others are not,” Prevot adds.
The IRS has not yet issued any guidance. But it’s possible that affected businesses will be able to claw back some of the taxes they paid in prior years by filing amended returns.
The order also clarifies that cannabis researchers won’t be penalized for obtaining state-licensed marijuana or marijuana-derived products.
“It just got a lot easier to actually do real research on medical cannabis products and therapies, which is something that we’re really excited about,” Irving says.
One major question that hasn’t been discussed much outside of cannabis industry circles is whether medical marijuana now falls under the Interstate Commerce Clause of the U.S. Constitution. That would seem to be the case, unless there’s a special carve-out specifically for marijuana, an attorney who works in the industry says.
So state-approved producers might gain the ability to sell across state lines. That could provide a growth opportunity for Louisiana producers, Prevot says.
Medical marijuana
