While federally decriminalizing marijuana could have “the greatest effect” on Nevada’s legal cannabis industry, reclassifying it as a less-dangerous drug could ease tax-related burdens for the businesses, according to a 2024 state-mandated report.

The Nevada Cannabis Advisory Commission’s findings were republicized Thursday, shortly after President Donald Trump announced the federal government was reclassifying the drug from Schedule I — akin to heroin — to Schedule III alongside ketamine and some steroids.

Under reclassification, state-legal cannabis businesses would be able to deduct expenses with the Internal Revenue Service, “the same as any other company would do,” the report said.

Recreational cannabis has been legal in Nevada since 2017 after voters approved it the previous year.

Forty U.S. states and the District of Columbia have legalized medical marijuana, with Nevada joining the list at the start of the century.

“Rescheduling marijuana corrects the Federal government’s long delay in recognizing the medical use of marijuana and will vastly improve research on safety and efficacy,” according to a White House fact sheet.

‘Navigate the changes ahead’

Nevada’s Cannabis Compliance Board regulates the drug and will continue to do so following Thursday’s announcement.

“As President Trump signs an executive order reclassifying cannabis, the Nevada Cannabis Compliance Board is prepared to navigate the changes ahead alongside industry and state lawmakers,” the agency said in a statement. “The CCB will continue to regulate licensing matters and oversee compliance measures from seed-to-sale, upholding public health and safety.”

Rescheduling cannabis will have “less of an effect” on the industry than decriminalization, according to Nevada’s study, required through the 2023 Legislature.

Rep. Dina Titus, D-Nevada, is an advocate of legal cannabis at the federal level.

“Now let’s de-schedule cannabis entirely,” she reacted on X to a news story about Trump’s announcement.

UNLV’s Cannabis Policy Institute Director Riana Durrett called the policy change “a step in the right direction” but noted that “I don’t think there will be immediate changes in access to medical or adult use cannabis.”

Rescheduling cannabis would facilitate medical research and garner interest from the pharmaceutical industry, the report said. The Federal Drug Administration would still need to approve medical uses.

“I appreciate seeing movement in the right direction for a substance that was overly criminalized in the United States and hope that with more research and policy discussions the cannabis plant will continue to become more available as medicine and allowed for adult use, as appropriate,” Durrett in a statement.

She lauded the federal government’s “significant change” in its approach to the drug.

“This change reflects America’s tendency to make incremental progress, but I hope it also reflects growth from the failed War on Drugs, especially as it relates to cannabis,” Durrett wrote.

The federal change would have limited implications for criminal justice reform, according to the report.

“Because federal criminal penalties for marijuana are tied to weight or quantity and not schedule placement, criminal penalties for marijuana crimes encapsulated in the (Controlled Substance Act) would not change with rescheduling.”

Added the report: “However, other residual impacts could include a reduction in cannabis-related arrests, with the potential for a reduction in violent police-citizen encounters and an overall reduction of incarceration and other governmental costs.”

Banking, insurance and criminal penalties

The Nevada report noted that the cannabis industry is hampered by limited banking opportunities, and will continue to be if the drug is not decriminalized.

“The reasons that large banks continue to refuse to provide traditional banking services to the cannabis industry is because the sale of cannabis is a violation of the CSA and a federal crime, given marijuana’s placement on the list of controlled substances,” the report said.

Proposed federal legislation to ease those restrictions has advanced but has not made it out of Congress.

Rescheduling “would not automatically result in health insurance carriers covering medical cannabis as a prescription medication for any medical condition or targeted population,” the report said.

However, it could increase access to insurance for the cannabis businesses, it added.

The Nevada commission proposed state legislative changes in case cannabis was federally rescheduled or legalized.

Contact Ricardo Torres-Cortez at rtorres@reviewjournal.com.