A standing room crowd attended the April 15 public hearing on a proposal by a Chicago-based marijuana company to open a store in the former Scott Credit Union at 9122 S. Kedzie Ave.

“The residents raised some really good points and the petitioner wanted an opportunity to address them,” said Village Trustee Norman Anderson.

So a second public hearing will begin at 6:30 p.m. Monday, June 17 in the Village Hall Board Room, 9418 S. Kedzie Ave.

Evergreen Park Mayor Kelly Burke said some people who spoke at the April 15 hearing were against the proposal and some were in favor of the village getting its first marijuana dispensary.

“It’s a mixed bag.”

Burke said she also has heard a variety of opinions from residents she meets and in emails she has received.

The 1937 Group, named for the Marihuana Act of 1937, is requesting an ordinance change and special use permit to open in Evergreen Park.

Marijuana stores have spread throughout Illinois since recreational use of the drug became legal in the state in 2020. The state lists more than 70 cannabis dispensaries open in Cook County, including in Burbank, Chicago Ridge and Tinley Park, as of May 21, 2024, but none have yet received zoning approval in Evergreen Park.

“There isn’t a cannabis dispensary within 3 1/2 miles of Evergreen Park,” Sonia Antolec, the chief legal officer for 1937 Group, said in April. “That revenue is going and those jobs are going to other communities.”

People at the April 15 public hearing questioned company officials about their revenue projections, security at the business and its traffic impact.

Kimberly Fornek is a freelance reporter for the Daily Southtown.

Pending its final inspection from the state, Tim O’Hern, COO of Nature’s Grace and Wellness, the dispensary’s management services partner, said Bud and Rita’s is scheduled to open the week of June 10.  A grand opening with onsite vendors and food trucks is also scheduled for late June, he said.

“Bud and Rita are actually my grandparents,” O’Hern told Pioneer Press. He said the dispensary would have the look and motif of a ’50s diner and is set to reflect the family-owned company’s backstory. The O’Hern family founded Nature’s Grace and Wellness in 2014 and cultivates and manufactures cannabis from its own farm. The company also opened a Bud and Rita’s location in Chicago’s Avondale neighborhood in April.

O’Hern said the dispensary, located at 5960 W. Touhy Ave, is located in the building that used to house the Italian restaurant Graziano’s Brick Oven Pizza, a “long-standing staple of the Niles community” that was open for 30 years. He said he worked closely with the restaurant owners when they made the decision to close.

In January, a competing dispensary, Green Rose, opened its doors at 4656 W. Touhy in Lincolnwood, nearly a mile and a half east of Bud and Rita’s. When asked if he was concerned about competition, O’Hern said that Bud and Rita’s is in a very dense region, with multiple traffic patterns.

“There’s a lot of traffic and commerce happening on the Touhy Avenue corridor  there in Niles. It seemed like a very good opportunity to service the community.”

Bud and Rita’s also has over 40 parking spots, according to O’Hern.

O’Hern said the company did not have any firm expectations on sales for the year, in part because the legalized sale of recreational cannabis is still so new to Illinois.

According to the Niles municipal code, the village receives a 3% tax from all cannabis sales. According to budget documents, the village received $36,000 in cannabis taxes for the 2023 fiscal year and $37,000 for the 2024 fiscal year, when only one dispensary operated in Niles.

In April, the U.S. Drug Enforcement Administration signaled that it was considering rescheduling cannabis from a Schedule I drug, the same category as ecstacy and heroin, to a Schedule III drug, defined as drugs with “moderate to low potential for physical and psychological dependence,” the same category as some anabolic steroids and testosterone.

“As cannabis continues to be normalized, nationally and throughout the state of Illinois, we expect cannabis to be around for a really long time,” O’Hern said. “Consumer adoption, we think, will continue to grow as we proceed.”

Once the dispensary is fully staffed, O’Hern expects it to have between 25 and 30 employees. It will be open seven days a week from 9 a.m. to 9 p.m.

The measure had bipartisan support and easily passed the Senate, but stalled in the House of Representatives at the end of the legislative session Wednesday. Divisions among factions of the cannabis business community again torpedoed the bill.

Pritzker called for regulating hemp products, which can be intoxicating and are widely sold without age restrictions.

“I believe that an unregulated product like this, which has clearly caused some health problems, ought to be regulated by the state,” he said.

Hemp, defined as cannabis with less than 0.3% delta-9 THC, the component that gets users high, is legal under federal law. But producers have found ways to chemically derive intoxicating byproducts such as delta-8 and delta-9 THC that are sold in vape shops and gas stations. As a result, in some cases, adolescents have ended up being hospitalized for overdoses.

“The current unregulated market undermines social equity license holders who have long worked to establish a legal, well-regulated business,” Senate Majority Leader Kimberly Lightford said. “As we move toward regulation of hemp and delta-8 products, we must do so in a way that is equitable and provides opportunities within the evolving industry.”

Unlicensed hemp business owners feared that Lightford’s proposed restrictions, while protecting hemp beverage makers, would have put many of them out of business. Hemp advocates again called for requiring testing and labeling of products, and establishing a minimum age for customers to be 21 or older, which they say responsible companies already do.

“It feels good to still be alive,” said Charles Wu, owner of Chi’Tiva, a hemp grower and retailer. “But the problems have not been solved. We want regulations for 21-plus and packaging and labeling standards, but there’s never been a compromise.”

A separate controversy arose in the licensed cannabis industry over a wide-ranging “omnibus” bill would have allowed all dispensaries to sell to medical patients without imposing a retail tax. Instead, medical patients will remain restricted to getting the discount at only the 55 original medical dispensaries in the state.

That means both that the market favors large established companies that own most of the medical dispensaries, and that some patients remain in rural dispensary “deserts” where they have to travel more than 25 miles to get their products.

The proposal also would have allowed curbside pickup and drive-thru windows, remote online doctor exams, reduced barriers to people with criminal records working in the industry, and repealed certain cultivator and craft grower taxes.

The Cannabis Business Association of Illinois, which represents many large companies, supported both a hemp crackdown and the expansion of medical cannabis.

“We are disappointed the House failed to pass needed reforms to our state’s cannabis laws and will continue to allow synthetic hemp products that are sickening children and adults to be sold with no oversight,” Executive Director Tiffany Chappell Ingram said. “Despite overwhelming bipartisan support for these measures in the Senate, there is clearly more work to do to educate legislators about these important matters.”

The Cannabis Equity Coalition of Illinois blamed large Chicago-based cannabis company Green Thumb Industries (GTI) for lobbying to oppose medical dispensary expansion.

The nonprofit coalition, which represents small business owners and advocates, called for a boycott of GTI products and Rise dispensaries, saying they were “under siege by corporate greed!”

The Illinois Independent Craft Growers Association wrote a letter to the governor, calling for expanding medical marijuana discounts to all dispensaries.

“GTI’s opposition to this change is an attempt to maintain their monopoly on being able to offer the tax advantages to medical card holders, preventing new and smaller dispensaries from entering the medical market, which limits competition and harms patients and local craft growers,” the letter stated. “This has to stop. Our legislators need to focus on the 140,000 medical patients and not on those companies that lobby the hardest.”

Green Thumb issued a statement that it has always supported patient access to legal cannabis.

“We have a history of championing patients, including leading advocacy efforts to ensure patients could access their products during the pandemic, and most recently, preserve curbside pickup services for patients,” the statement read.

The proposed measure, HB 2911, GTI said, “included language that was neither operationally viable nor comprehensive enough for what Illinois patients deserve, such as requiring patient lanes or offering delivery services. Illinois legislators recognized the concerns and will continue working on this with the goal of passing it during veto session (this fall).”

The proposed ban by lawmakers is meant to rein in a wild west of hemp products that includes knockoff and mislabeled edibles and vapes that are sold without age limits or regulations. But producers say lawmakers can save businesses and jobs by tightly regulating and taxing hemp instead.

“Banning and killing this segment of the industry, with no process to discuss what to do, seems really excessive and unfair,” Marz Community Brewing Co. founder Ed Marszewski said.

Hemp beverages have been a lifeline in the past year or so for craft brewers, who’ve seen beer sales fall since the COVID-19 pandemic.

In Minnesota, where hemp beverages are regulated and taxed, they are generating sales taxes of more than $1 million a month.

Mars’ brewpub in McKinley Park began making hemp beverages like Power of Flower and Juniper Fizz in 2019. Some contain CBD, the nonintoxicating component of hemp, while others contain THC, the part of pot that gets users high.

Other brewers like Hopewell Brewing in Logan Square, Noon Whistle Brewing in Lombard and Naperville, and Engrained Brewing in Springfield also make hemp drinks.

The Illinois Craft Brewers Guild has 300 member companies that employ about 6,000 people, but reports about 40 breweries closed in the past two years.

“The fact that members can access a new revenue stream is incredibly important,” Executive Director Ray Stout said. “This ban could pull the rug out from beneath our feet.”

The ban, as originally proposed by state Sen. Kimberly Lightford, would put a two-year moratorium on all intoxicating hemp products, including those sold widely at vape shops and gas stations, until a committee can propose regulations. A newer version, put into an existing bill for fast approval, would allow the sale of products, but only by businesses licensed under the current state cannabis law.

Hemp business owners say that would cause widespread closures of businesses and put many people out of work. Instead, they are calling for restricting products to adults 21 and older, requiring testing and labeling of potency and purity, and imposing a wholesale tax of 10% plus a retail tax of 10%.

State-legal cannabis companies have pushed for the legislation, saying it’s unfair they have to follow tight restrictions while hemp businesses are unchecked.

While marijuana remains illegal under federal law, federal lawmakers legalized hemp in 2018, defining it as cannabis or cannabinoids with less than 0.3% delta-9 THC. But processors have figured out how to derive intoxicating cannabinoids, such as delta-8 and delta-9 THC, from hemp, creating the current controversy.

Further complicating the matter, some licensed cannabis companies also produce hemp-derived products.

Tiffany Ingram, executive director of the Cannabis Business Association of Illinois, representing licensed weed companies, called the hemp products “Frankenstein weed” that tests have shown sometimes contain contaminants or much higher or lower doses than labeled.

“This is why Illinois needs to push pause on these products,” she said.

While there are some bad actors, hemp brewers like Marszewski say responsible companies use the same labs as cannabis companies to accurately test and label their products, and deserve a chance to sell their nonalcoholic drinks.

Marszewski sees the ban as a money grab by billion-dollar cannabis companies to eliminate their startup competition.

“The hemp industry allows people who don’t have deep pockets to start a business, employ people and pay taxes,” he said. “These attacks are merely a way for cannabis companies to maintain their monopoly.”

In 2022, an estimated 17.7 million people reported using marijuana daily or near-daily compared to 14.7 million daily or near-daily drinkers, according an analysis of national survey data. In 1992, when daily pot use hit a low point, less than 1 million people said they used marijuana nearly every day.

Alcohol is still more widely used, but 2022 was the first time this intensive level of marijuana use overtook daily and near-daily drinking, said the study’s author, Jonathan Caulkins, a cannabis policy researcher at Carnegie Mellon University.

“A good 40% of current cannabis users are using it daily or near daily, a pattern that is more associated with tobacco use than typical alcohol use,” Caulkins said.

The research, based on data from the National Survey on Drug Use and Health, was published Wednesday in the journal Addiction. The survey is a highly regarded source of self-reported estimates of tobacco, alcohol and drug use in the United States.

From 1992 to 2022, the per capita rate of reporting daily or near-daily marijuana use increased 15-fold. Caulkins acknowledged in the study that people may be more willing to report marijuana use as public acceptance grows, which could boost the increase.

Most states now allow medical or recreational marijuana, though it remains illegal at the federal level. In November, Florida voters will decide on a constitutional amendment allowing recreational cannabis, and the federal government is moving to reclassify marijuana as a less dangerous drug.

Research shows that high-frequency users are more likely to become addicted to marijuana, said Dr. David A. Gorelick, a psychiatry professor at the University of Maryland School of Medicine, who was not involved in the study.

The number of daily users suggests that more people are at risk for developing problematic cannabis use or addiction, Gorelick said.

“High frequency use also increases the risk of developing cannabis-associated psychosis,” a severe condition where a person loses touch with reality, he said.

Hemp entrepreneurs came out Tuesday in favor of a state legislative proposal to license hemp sales, require testing and labeling of their products, prohibit products that look like well-known snack brands, and limit sales to those 21 and over. The bill would create 10% wholesale and a 10% retail sales taxes, and an unlimited number of $500 licenses.

That proposal stands in contrast with a bill backed by the Cannabis Business Association of Illinois, which would prohibit sales of hemp-derived intoxicating products.

Jennifer Weiss, founder and CEO of Cubbington’s Cabinet in Chicago, which sells hemp products, fears that the opposing bill would set such strict limits that it would even prevent sales of non-intoxicating products such as CBD.

“We would have to shut our doors, as well as hundreds of other Illinois companies,” she said. “Let’s not go backward with out-of-touch prohibitions.”

Potentially at stake is the future direction of the cannabis industry in Illinois. Currently, a split between state and federal law has created a stark contrast between the marijuana and hemp industries.

Both marijuana and hemp are grown from the same cannabis plant. State law has legalized marijuana, which gets users high through a component called delta-9-THC. Marijuana remains illegal federally. In 2018, Congress legalized hemp, which is defined as cannabis having less than .3% delta-9-THC, and so was meant to allow sales of non-intoxicating products like CBD.

But hemp processors figured out how to synthetically derive other intoxicating cannabinoids from the plant, such as delta-8 or delta-10, or even delta-9-THC. The CDC issued a health advisory in 2021 warning of adverse events involving consumption and insufficient labelling of delta-8, similar to delta-9 intoxication.

State weed licenses remain very limited and expensive, and are subject to strict testing and labeling requirements, meant to ensure their purity and potency. In contrast, unlicensed hemp is being sold in vape shops, corner stores and gas stations across the country, with no age or other restrictions.

As a result, sales of hemp products have exploded into a $28 billion industry, even larger than the legal cannabis market, by one estimate. The recent move by federal regulators to relax restrictions on cannabis would not likely affect the hemp THC conundrum. As a result, some licensed cannabis businesses have even resorted to selling hemp-based products.

Last month, some lawmakers and the Cannabis Business Association of Illinois, which represents the licensed cannabis industry, called for a ban on intoxicating hemp products until an advisory committee can recommend how to proceed.

Tiffany Chappell Ingram, the association’s executive director, issued a statement again calling for a “pause” of hemp intoxicant sales pending further studies.

“We look forward to working with legislators to find a path forward that empowers consumers, protects minors and ensures the state’s adult-use cannabis law lives up to its full promise, including uplifting social equity license holders and communities disproportionately impacted by the war on drugs,” she said.

State Rep. La Shawn Ford, a Chicago Democrat and chief sponsor of the bill to regulate hemp, said lawmakers shouldn’t kill a multi-billion dollar industry, and create an illegal market.

“Prohibition doesn’t work, and Illinois should reject going backward,” he said.

John Murray, CEO of Sustainable Innovations in Rockford, said his company is using its larger hemp business to help finance its licensed cannabis venture.

While licensed dispensary owners could be undercut by hemp businesses, they could operate in both spheres, he said.

“We believe we can do both, and we are doing both,” he said.

The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, the Associated Press reported Tuesday.

The proposal, which still has to be reviewed by the White House Office of Management and Budget, would recognize the medical uses of cannabis and acknowledge it has less potential for abuse, but it would not legalize marijuana for recreational use.

ct-Illinois-marijuana-Michigan

Indiana has become a marijuana island, as Illinois and Michigan allow for medical and recreational use. In Ohio, medical marijuana was legalized in 2016 and voters in November approved a measure to legalize recreational use, while in Kentucky medical marijuana will be legal in January 2025, according to the respective state agencies.

Gov. Eric Holcomb has maintained throughout his tenure that he would not take action to legalize marijuana in the state while it remained illegal at the federal level.

Rep. Mike Ayelsworth, R-Hebron, and Rep. Hal Slager, R-Schererville, both said they haven’t heard from the Republican caucus about supporting legalizing marijuana in Indiana, in any form, since the federal action was announced.

“I don’t see that (the federal action) changes anything as far as the benefits of legalizing it,” Slager said. “This is one more attempt at politics, at currying votes with certain people.”

Former State Sen. Karen Tallian said the DEA action “has the possibility of helping” Indiana legalize medical marijuana, which would align with the proposed federal action. But, that would depend on who is elected the next governor, as Holcomb leaves office in January, she said.

“There’s no excuse not to do a medical program,” Tallian said. “We’re behind the times.”

Tallian said when she was in the legislature for 16 years she proposed many pieces of legislation to legalize marijuana. At the start of the 2020 legislative session, Tallian was the only legislator to speak at a rally outside of the statehouse calling for marijuana reform in the state.

“When I was there, the Republicans did everything they could do to not have their people vote on it,” Tallian said.

Initially, Tallian said she was the only legislator filing legislation to legalize marijuana. In the last few years of her tenure, Tallian said other legislators started filing similar bills.

“I don’t think that the number is going to get smaller,” Tallian said.

State Sen. Rodney Pol, D-Chesterton, said in a statement he would’ve liked to see the federal government legalize marijuana and include restorative justice elements in its implementation, but said the DEA’s action was a “step in the right direction.”

With this possible action, Pol said it will change the way Indiana legislators talk about legalizing marijuana.

“When I talk to my colleagues about marijuana now, it will no longer be in a category with other drugs we can all agree to be purely harmful and addictive substances,” Pol said. “The rescheduling of marijuana gives us a new place to restart that conversation.”

Pol said he hopes the Republican supermajority will pay attention to this federal action.

“For too long, communities of color, struggling veterans, and countless people suffering from a variety of serious conditions in our state have suffered under our draconian approach to marijuana. We spend way too much money putting people in jail instead of collecting tax revenue off of legal sales to help people,” Pol said.

Aylesworth said he supports legalizing medical marijuana because studies have shown it helps veterans manage their PTSD symptoms. But, Aylesworth said he does not plan on proposing legislation to legalize medical marijuana.

When it comes to recreational marijuana use, Aylesworth said he hasn’t yet decided how he feels about that measure because he’s heard various arguments for and against recreational use.

While the Republican caucus hasn’t yet discussed marijuana since the federal action, Aylesworth said it’s likely it will in the coming months.

“I imagine we will later in the summer,” Aylesworth said.

While many marijuana legalization bills have been proposed in the legislature, Slager said, the majority of the caucus doesn’t support the measure. Until the Food and Drug Administration determines the medical benefits of marijuana, it’s unlikely the legislature will move forward with legalizing marijuana, he said.

Slager said there are no benefits to legalizing marijuana other than an increase in revenue for the state.

“I don’t believe that the state should be in the business of gaining tax revenue at the cost of other things,” Slager said.

akukulka@chicagotribune.com

But advocates for marijuana legalization hope a federal regulatory shift could eventually change the minds — and votes — of some state policymakers who have been reluctant to embrace weed.

“It is very common for a state legislator to tell me, ‘Well, I might be able to support this, but … I’m not going to vote for something that’s illegal under federal law,’” said Matthew Schweich, executive director of the Marijuana Policy Project, which advocates for cannabis legalization.

Although a proposal to reclassify marijuana would not make it legal, “it is a historic and meaningful change at the federal level that I think is going to give many state lawmakers a little less hesitation to support a bill,” Schweich added.

The U.S. Drug Enforcement Administration has proposed to shift marijuana from a “Schedule I” drug, which includes heroin and LSD, to a less tightly regulated “Schedule III” drug, which includes ketamine and some anabolic steroids. Federal rules allow for some medical uses of Schedule III drugs. But the proposed change faces a lengthy regulatory process, which may not be complete until after the presidential election.

In the meantime, the proposed federal change could add fresh arguments for supporters of ballot measures seeking to legalize marijuana. Florida voters will decide on a constitutional amendment allowing recreational cannabis this November. Public votes could also be held in several other states, including South Dakota, where supporters plan to submit signatures Tuesday for a third attempt at legalizing recreational marijuana.

Following two previous failed attempts, a Nebraska group is gathering signatures to get two measures onto this year’s ballot: one to legalize medical marijuana and another to allow private companies to grow and sell it.

In North Dakota, criminal defense attorney Mark Friese is a former police officer who is backing a marijuana legalization ballot initiative. He said the proposed federal reclassification could immensely help this year’s initiative campaign. North Dakota voters rejected legalization measures in 2018 and 2022 but approved medical marijuana in 2016.

“The bottom line is the move is going to allow intelligent, informed discussion about cannabis legislation instead of succumbing to the historical objection that marijuana is a dangerous drug like LSD or black tar heroin,” Friese said.

Others aren’t so sure the reclassification will make a difference.

Jackee Winters, chairperson of an Idaho group backing a ballot initiative to legalize medical marijuana, said it’s tough to get would-be supporters to sign their petition.

“People are literally afraid to sign anything in Idaho that has to do with marijuana,” she said. “They’re afraid the cops will be coming to their house.”

The proposed federal change may have little affect in 24 states that already legalized recreational marijuana for adults, or in an additional 14 states that allow medical marijuana. But advocates hope it could sway opinions in a dozen other states that either outlaw cannabis entirely or have limited access to products with low levels of THC, the chemical that makes people high.

Georgia has allowed patients with certain illnesses and physician approval to consume low-THC cannabis products since 2015. But until last year, there was no legal way to buy them. Eight dispensaries are now selling the products.

The Georgia Board of Pharmacy last year also issued licenses for low-THC products to 23 independent pharmacies, but the federal DEA in November warned pharmacies that dispensing medical marijuana violated federal law.

Dawn Randolph, executive director of the Georgia Pharmacy Association, said a federal reclassification of marijuana could open the way for pharmacists to treat marijuana products “like every other prescription medication.”

In other states, such as Tennessee, elected leaders remain hesitant to back either medical or recreational marijuana. Tennessee Senate Speaker Randy McNally, a Republican, previously said he wouldn’t support changing state law until the federal government reclassifies marijuana.

Illinois pot businesses could gain tax benefits, easier loan access under DEA reclassification

But after reports about the DEA’s recommended reclassification, McNally still held off on supporting any push to legalize medical marijuana.

Removing marijuana as a Schedule I drug “would only start the conversation in my mind. It would not end it. There would still be many issues to resolve if the downgrade to Schedule III happens as proposed,” he said Thursday.

A proposal to legalize medical marijuana died in a Kansas Senate committee without a vote this year, and an attempt to force debate in the full Senate failed by a wide margin. The strongest and most influential opposition came from law enforcement officials, who raised concerns that any legalization could invite organized crime and make it difficult to assess whether people are driving under the influence.

Kansas Bureau of Investigation Director Tony Mattivi considers the DEA effort to reschedule marijuana “misguided and politicized,” KBI spokesperson Melissa Underwood said.

The head of the South Carolina state police force also has opposed efforts to legalize medical marijuana, saying it opens the door to other drug use. A legalization bill backed by Republican state Sen. Tom Davis passed the Senate this year but has stalled in a House committee.

“It’s difficult to rewire a lot of people who have been conditioned to think of marijuana in a certain way,” said Davis, who vowed to push a medical marijuana bill again next year if reelected.

Although not fully embracing medical marijuana, Iowa and Texas both have laws allowing limited access to some cannabis products with low levels of THC. Some Texas cities have passed ordinances allowing small amounts of marijuana. But a similar effort in Lubbock, home to Texas Tech University, was derided in a Facebook post by Republican state Rep. Dustin Burrows as part of “nationwide effort by the left to undermine public safety.”

In Wyoming, a decade of pro-marijuana efforts through ballot initiatives and legislation has gotten nowhere. Gov. Mark Gordon, a Republican, has been ambivalent about legalizing medical marijuana and opposes legal recreational pot. The GOP-led Legislature didn’t even debate the latest bill to decriminalize marijuana and legalize medical marijuana.

Yet one organizer, who helped unsuccessful petition efforts in 2022 and 2023, hopes federal reclassification of marijuana nudges more lawmakers to support legalization.

“Resistance will be a lot less palpable,” legalization advocate Apollo Pazell said.

The proposal would move marijuana from the “Schedule I” group to the less tightly regulated “Schedule III.”

Illinois pot businesses could gain tax benefits, easier loan access under DEA reclassification

So what does that mean, and what are the implications?

What has actually changed? What happens next?

Technically, nothing yet. The proposal must be reviewed by the White House Office of Management and Budget, and then undergo a public-comment period and review from an administrative judge, a potentially lengthy process.

Still, the switch is considered “paradigm-shifting, and it’s very exciting,” Vince Sliwoski, a Portland, Oregon-based cannabis and psychedelics attorney who runs well-known legal blogs on those topics, told The Associated Press when the federal Health and Human Services Department recommended the change.

“I can’t emphasize enough how big of news it is,” he said.

Budtender Rey Cruz weighs cannabis for a customer at the Marijuana Paradise on Friday, April 19, 2024, in Portland, Ore. (AP Photo/Jenny Kane)

It came after President Joe Biden asked both HHS and the attorney general, who oversees the DEA, last year to review how marijuana was classified. Schedule I put it on par, legally, with heroin, LSD, quaaludes and ecstasy, among others.

Biden, a Democrat, supports legalizing medical marijuana for use “where appropriate, consistent with medical and scientific evidence,” White House press secretary Karine Jean-Pierre said Thursday. “That is why it is important for this independent review to go through.”

If marijuana gets reclassified, would it legalize recreational cannabis nationwide?

No. Schedule III drugs — which include ketamine, anabolic steroids and some acetaminophen-codeine combinations — are still controlled substances.

They’re subject to various rules that allow for some medical uses, and for federal criminal prosecution of anyone who traffics in the drugs without permission.

No changes are expected to the medical marijuana programs now licensed in 38 states or the legal recreational cannabis markets in 23 states, but it’s unlikely they would meet the federal production, record-keeping, prescribing and other requirements for Schedule III drugs.

There haven’t been many federal prosecutions for simply possessing marijuana in recent years, even under marijuana’s current Schedule I status, but the reclassification wouldn’t have an immediate impact on people already in the criminal justice system.

“Put simple, this move from Schedule I to Schedule III is not getting people out of jail,” said David Culver, senior vice president of public affairs at the U.S. Cannabis Council.

But rescheduling in itself would have some impact, particularly on research and marijuana business taxes.

What would this mean for research?

Because marijuana is on Schedule I, it’s been very difficult to conduct authorized clinical studies that involve administering the drug. That has created something of a Catch-22: calls for more research, but barriers to doing it. (Scientists sometimes rely instead on people’s own reports of their marijuana use.)

Schedule III drugs are easier to study, though the reclassification wouldn’t immediately reverse all barriers to study, Culver said.

What about taxes (and banking)?

Under the federal tax code, businesses involved in “trafficking” in marijuana or any other Schedule I or II drug can’t deduct rent, payroll or various other expenses that other businesses can write off. (Yes, at least some cannabis businesses, particularly state-licensed ones, do pay taxes to the federal government, despite its prohibition on marijuana.) Industry groups say the tax rate often ends up at 70% or more.

The deduction rule doesn’t apply to Schedule III drugs, so the proposed change would cut cannabis companies’ taxes substantially.

They say it would treat them like other industries and help them compete against illegal competitors that are frustrating licensees and officials in places such as New York.

Cloud 9 Cannabis employee Beau McQueen, right, helps a customer, Saturday, April 13, 2024, in Arlington, Wash. The shop is one of the first dispensaries to open under the Washington Liquor and Cannabis Board’s social equity program, established in efforts to remedy some of the disproportionate effects marijuana prohibition had on communities of color. (AP Photo/Lindsey Wasson)

“You’re going to make these state-legal programs stronger,” says Adam Goers, an executive at medical and recreational cannabis giant Columbia Care. He co-chairs a coalition of corporate and other players that’s pushing for rescheduling.

It could also mean more cannabis promotion and advertising if those costs could be deducted, according to Beau Kilmer, co-director of the RAND Drug Policy Center.

Rescheduling wouldn’t directly affect another marijuana business problem: difficulty accessing banks, particularly for loans, because the federally regulated institutions are wary of the drug’s legal status. The industry has been looking instead to a measure called the SAFE Banking Act. It has repeatedly passed the House but stalled in the Senate.

Are there critics? What do they say?

Indeed, there are, including the national anti-legalization group Smart Approaches to Marijuana. President Kevin Sabet, a former Obama administration drug policy official, said the HHS recommendation “flies in the face of science, reeks of politics” and gives a regrettable nod to an industry “desperately looking for legitimacy.”

Some legalization advocates say rescheduling weed is too incremental. They want to keep the focus on removing it completely from the controlled substances list, which doesn’t include such items as alcohol or tobacco (they’re regulated, but that’s not the same).

Paul Armentano, the deputy director of the National Organization for the Reform of Marijuana Laws, said that simply reclassifying marijuana would be “perpetuating the existing divide between state and federal marijuana policies.” Minority Cannabis Business Association President Kaliko Castille said rescheduling just “re-brands prohibition,” rather than giving an all-clear to state licensees and putting a definitive close to decades of arrests that disproportionately pulled in people of color.

“Schedule III is going to leave it in this kind of amorphous, mucky middle where people are not going to understand the danger of it still being federally illegal,” he said.

Peltz reported from New York. Associated Press writer Colleen Long in Washington contributed to this report.

The Associated Press reported that the Drug Enforcement Administration will move to reclassify marijuana from Schedule I to Schedule III. Rather than continuing to classify cannabis with much stronger drugs such as heroin and LSD, the move would put pot in the same class with certain prescription drugs such as codeine, ketamine, steroids, and testosterone.

The change will not be immediately noticeable to most consumers in Illinois, where medical and recreational use already are legal under state law. But it may have a huge impact on weed businesses, allowing them greater ability to take tax deductions for business expenses and making it easier to get loans.

“I’m hopeful it will open the door for financial institutions to provide capital, specifically to smaller players,” said Reese Xavier, CEO and managing partner of HT23 Growers, a Black-owned craft cannabis company trying to get money to start production in Chicago Heights.

With increased competition and cheaper access to capital, customers might see better pricing, he added.

Others warned of harmful fallout from the move.

Kevin Sabet, president and CEO of the not-for-profit Smart Approaches to Marijuana, said public health officials, law enforcement and substance abuse treatment experts opposed the change.

He challenged the decision, saying that the raw plant has never passed safety and efficacy protocols, and that it would encourage further addiction, and could lead to further cases of psychosis, depression and IQ loss.

“A drug isn’t medicine because it’s popular,” he said.

The change should allow greater research into the effects of cannabis, and could help the industry pass the SAFER Banking Act, which would allow greater access to banking services and reduce reliance on cash.

Currently, federally-licensed banks generally are reluctant to work with a federally illegal business.

Charlie Bachtell, CEO of industry giant Cresco Labs, based in Chicago, said the change marks an important shift in attitudes toward the plant that could help pass the banking legislation.

“Patients and consumer should embrace finally getting recognition from the federal government that cannabis has medicinal value,” he said.

Verano, another cannabis company based in Chicago doing business in multiple states, issued a statement that it expected to see $80 million in savings from being able to deduct business expenses. It anticipated additional payment methods for customers, more vendors participating in the industry and U.S. stock exchanges warming to the idea of listing cannabis companies.

Verano founder and CEO George Archos said the decision should help amend the effects of the war on drugs that has negatively affected society, especially people of color.

“We’re excited for this potential monumental step forward in support of cannabis legalization, and look forward to seeing further progress at the federal level,” Archos said.

Scott Redman, founder of the Illinois Independent Craft Growers Association, welcomed the change, but said it could lead to unintended consequences, such as greater federal regulation. Pharmaceuticals under Schedule III generally are held to strict manufacturing standards.

“It’s a step into the right direction, but it opens a whole Pandora’s box,” he said. “This could very well be one of those be careful what you ask for situations.”