A major shift in federal marijuana policy could soon change how cannabis and some CBD businesses operate across Colorado.

State-regulated medical marijuana has been reclassified from the Schedule I category, which includes drugs like heroin, to Schedule III, which includes substances with accepted medical use, such as Tylenol with codeine.

In Colorado, more than 50,000 people are registered medical marijuana patients, a number that has declined in recent years as overall cannabis sales have dropped. In Denver, active medical marijuana store licenses have fallen from 152 in April 2022 to 83 in 2026.

The change does not legalize marijuana nationwide, but business owners say it could open doors that have been closed for years, including expanded research into its effects.

The reclassification also presents new opportunities for entrepreneurs. Jason Castellano, a manufacturer of hemp and CBD products, said the shift could allow dispensaries to expand operations.

“The reclassification of marijuana is going to open up a lot of opportunities for dispensaries,” Castellano said.

He said it could also allow businesses to produce more THC products for medical use and benefit from tax relief.

“I believe with the tax incentives and being able to write off certain business expenses that were otherwise not available,” he said.

Elvis Edwards, founder of a hemp-based skincare brand that includes CBD sunscreen, said he is optimistic about the change as he looks to expand into THC products.

“I’ve been waiting for this for a long time, for me it is the banking and new opportunities,” Edwards said.

For businesses operating under recreational licenses, however, the impact may be limited.

Brad Zasada, owner of Cannabis Brothers, said the change primarily benefits medical marijuana operators.

“It costs you a large portion of your revenues to operate, and you can’t deduct much of it on your federal taxes,” Zasada said.

Medical dispensaries are expected to benefit from relief under IRS code Section 280E, which has prevented cannabis businesses from claiming standard business deductions.

According to the Denver Department of Licensing and Consumer Protection, only five dispensaries in the city operate exclusively as medical marijuana businesses. Most hold both medical and recreational licenses.

Eric Escudero, a spokesperson for the department, said Denver is not issuing new medical marijuana licenses.

“There is no opportunity to apply for a brand new medical license for stores or cultivation,” Escudero said. “Those interested would need to acquire an existing medical business or look outside Denver.”

Federal officials say the reclassification is an initial step. A hearing scheduled for June 29 will consider broader changes aimed at providing clarity for patients, researchers and the industry.