Colorado’s response to the federal reclassification of medical cannabis ranged from industry leaders celebrating long‑awaited progress to youth‑advocacy groups warning that the change heightens the need for stronger protections for kids.

The U.S. Justice Department and the Drug Enforcement Administration today announced that medically-approved cannabis has been moved from Schedule I to Schedule III under the Controlled Substances Act.

Gov. Jared Polis said in a statement Thursday that it was “high time” the federal government caught up to states like Colorado that have led on safe, regulated medical and adult-use cannabis.

Polis said the change will help move policy in a “more rational direction” in areas such as research and removing business barriers while improving public safety. He noted there’s more work to be done to fully reschedule cannabis, but that today’s decision is a step in the right direction.

The move has been in the works at the White House since at least 2022. The order issued April 23 impacts marijuana and marijuana products regulated by a state medical marijuana license. A statement from the Department of Justice said action “recognizes the longstanding regulation of medical marijuana by state governments and the need for a common-sense approach to this reality.”

Schedule I drugs are those with no currently accepted medical use and a high potential for abuse. That includes heroin, LSD, marijuana, ecstasy, methaqualone, and peyote.

Schedule III drugs have moderate to low potential for physical and psychological dependence, according to the DEA. That includes products containing less than 90 milligrams of codeine per dosage unit (Tylenol with codeine), ketamine, anabolic steroids and testosterone, and now, medical marijuana.

Colorado voters legalized medical marijuana in 2000 for approved patients and with medical consent. That has included coverage for conditions such as cancer, chronic pain, epilepsy, glaucoma, HIV or AIDS, multiple sclerosis and nausea.

In 2012, Colorado became the first state in the nation to authorize marijuana use for recreational purposes.

According to the Centers for Disease Control and Prevention, as of February 2024, 47 states, the District of Columbia, and three territories, Guam, Puerto Rico, U.S. Virgin Islands, allow for cannabis use for medical purposes. 

Mara Sheldon, a senior policy advisor at Holland & Knight, has represented Colorado at the federal level on the cannabis issue.

Cannabis is still illegal, she told Colorado Politics, because it’s still on the Controlled Substances list.

Where things will change because of rescheduling: Colorado has a good regulatory system in place, which she calls the “gold standard,” and the change will align federal policy more with what Colorado has been doing for years.

It also gives state regulators, investors and businesses room to breathe, she said. “What we’re hoping is that legalization is coming, sooner rather than later.”

On the research side, Sheldon said this should lead to better research data on pain management, neurological conditions and opioid treatment, for example.

The federal government doesn’t fund research because it’s been illegal, but today’s action should help with research down the road with the Food and Drug Administration, she said.

Where things won’t change for now: banking reform.

Banking reform still needs the SAFER Banking Act to pass in Congress, she said, noting that the president has said he would sign it. However, no member has introduced the bill in the current Congress.

The SAFE Banking Act was an effort started in 2013 by U.S. Rep. Ed Perlmutter of Colorado, who worked for nine years to get it passed. It won approval seven times in the House but never reached the Senate floor for a vote.

Chuck Smith of Colorado Leads, an alliance of cannabis business leaders, said the administration’s action is an historic step forward in “aligning federal policy with science and the reality on the ground in states like Colorado.”

The immediate impact on the cannabis industry is narrow, Smith said, and that’s primarily for medical marijuana businesses, not the recreational dispensaries and businesses.

Smith said the state-licensed medical marijuana businesses have a path forward to operate within a new federal registration framework. For recreational businesses, their day will have to wait until a broader federal rulemaking takes place.

Hybrid businesses – those that operate both medical and recreational dispensaries – should expect different treatment for registration, tax and compliance purposes, Smith added.

Smith also noted the potential for tax relief for the industry as a result of rescheduling. The biggest change is from section 280E of the Internal Revenue Service Code, which prohibits marijuana businesses from deducting business expenses from gross income, even in states that have legalized it.

On the other side of the issue, Henny Lasley of One Chance to Grow Up said in a statement Thursday that “there has never been a greater need for robust protections for kids in marijuana policies than right now.”

Parents and trusted adults must be educated on the harms to developing brains, including the impact of “ultra potent commercialized products,” Lasley said.

Any conversation about marijuana should include the harmful effects it has on kids, she added.