Marijuana Reclassification to Impact Oklahoma Cannabis Industry

The reclassification of medical marijuana is expected to impact Oklahoma’s licensed medical providers more than consumers.

In a closely watched decision announced April 23, Acting Attorney General Todd Blanche moved state-regulated marijuana to Schedule III, reclassifying it as a less harmful substance. The change occurred only two months after Governor Kevin Stitt called for another statewide vote to put an end to the program entirely.

However, the change is limited in scope, applying only to state medical marijuana programs and tightly regulated cannabis products authorized by the Drug Enforcement Administration for purposes such as research. This means that the change only applies to medical products sold directly from dispensaries or other licensed medical providers and not ‘street’ dealers.

Following the rescheduling of marijuana from one (no accepted medical use/high potential for abuse) to three (low potential for abuse), dispensaries across the state will be required to apply for registration with the DEA as its sole purchaser, which is required to accept registration requests unless it conflicts with public interest or U.S. treaty obligations. 

This does not mean that the DEA will be running dispensaries. Instead, it would own licensed warehouses where the product would be held until cultivators are able to access it for a fee. 

Businesses seeking to register with the DEA have a 60-day window following the publication of the rule in the Federal Register to submit their applications, allowing them to carry on regular business under the existing state legal framework. Blanche has given the DEA 6 months to review the initial rush of applications for approval. 

This means there’s no guarantee for approval after the 60-day period, and businesses that wish to continue operating must apply before time is up.

The reclassification provides a significant tax break to dispensary owners by undoing a ban on claiming business expenses. The business tax for dispensaries did not matter as much when the medical marijuana industry was in its infancy, and there were only a handful of growers in the state.

Unlike the highly competitive market we see today, staying in business was nearly impossible at the previous tax rate of 70% to 80%, according to Mango Cannabis CEO Michael Khemmoro. 

The new rule will also make cannabis research much easier due to the absence of the Schedule I red tape. Previously, researchers were only able to get products through rare DEA-licensed bulk manufacturers. However, following this change, they will no longer face civil or criminal liabilities from purchasing from regulated businesses. 

Cannabis research is experiencing significant growth, exploring its therapeutic advantages for conditions such as pain and epilepsy. At the same time, there is a critical examination of potential risks associated with cognitive development and mental health, particularly emphasizing the role of the endocannabinoid system.

Recent studies indicate a correlation between high-strength THC and diminished working memory in young adults. Meanwhile, legal changes, including the rescheduling to Schedule III, are paving the way for more comprehensive clinical trials.

Oklahoma Medical Marijuana Authorities, which is the agency that provides licensing, is hopeful that the new ruling will spur new avenues of research that will strengthen the agency’s mission to protect patient health.