How will a federal reclassification of marijuana affect Colorado’s struggling industry?

COLORADO SPRINGS, Colo. (KRDO) - The Drug Enforcement Administration (DEA) could move to reclassify Marijuana as a much less dangerous drug, according to what sources are telling the Associated Press. The changes still face a few steps before they go into effect, but according to local experts, the reclassification is "likely" to happen.

Currently, Marijuana is scheduled as a Schedule I drug, alongside substances like heroin and LSD, according to the DEA. For medical marijuana business owners in Colorado Springs, the current DEA classification scheduling translates as a heavy tax burden.

"The first change would be from a tax perspective," dispensary owner Tom Scudder said. "As this industry has developed in the legal sphere, [we] have been paying taxes at an obscene level."

Scudder, a dispensary owner and vice-chair of the Marijuana Industry Group, says that's because of an IRS tax code called 280E, which prohibits businesses from benefitting from tax deductions or credits if the business deals with Schedule I or II controlled substances, which marijuana currently fits under.

For Scudder, the re-scheduling would change the financial landscape for his business in an industry that's seen a massive decline statewide over the past couple of years.

"Most of the businesses here in the last few years in Colorado have not made any money, and a lot of them have lost a lot of money. And so this will reverse that to some extent," Scudder said.

Scudder says he also deals with intense scrutiny and regulation from state authorities for day-to-day business practices, something that is not likely to change with a scheduling change by the DEA, according to Scudder.

"The state regulates and keeps track of all of the medicine from what they call seed to sale. So when you put a seed in the ground, you have to let the state know in their state-regulated system and up to the point where you sell it and it's any of its final forms," Scudder said.

Scudder also says that medical or recreational customers will likely not see a shift in pricing when they stop at the dispensary, however, since pricing in marijuana mostly has to do with supply and demand and other factors.

The DEA has to officially move to reschedule the drug before it finally goes to the Department of Justice for approval.