Picture this: The U.S. Department of Justice (DOJ), typically known for its buttoned-up culture, is now crowdsourcing opinions on cannabis commerce.

The DOJ is seeking public input on its proposal to reclassify marijuana, with the goal of drawing diverse opinions from supporters, stakeholders, critics, and other interested parties. The notice soliciting public comment is set to be officially published in the Federal Register on Tuesday, May 21.

In a previous announcement about the impending comment period, the DOJ stated that “marijuana is subject to a number of State laws that have allowed a multibillion-dollar industry to develop.” The department acknowledged that reclassification would exert “distinct economic impacts,” especially in regard to federal tax policy and pharmaceutical research.

The DOJ’s initiative to reclassify cannabis to Schedule III from Schedule I under the Controlled Substances Act (CSA) already has sparked enormous public interest. The comment period expires in 60 days.

The initiative to reclassify marijuana has generated a powerful tailwind for marijuana equities across the board. Once the change occurs, consumer spending on pot is likely to surge.

According to sentiment tracking data released May 2 by polling firm CivicScience, nearly half (45%) of Americans express a favorable opinion toward the reclassification effort (see chart).

The DOJ’s advanced draft notice, posted last Thursday, explicitly requests feedback on the economic ramifications of this proposed rule. The DOJ has stated that it will revise the rule if necessary based on the comments received.

The department also recognized that this change could have a “significant economic impact on a substantial number of small entities,” primarily because the current prohibition on state-licensed cannabis businesses claiming federal tax deductions under IRS code 280E would no longer apply if marijuana is reclassified to Schedule III.

“If marijuana is ultimately transferred to Schedule III, section 280E would no longer serve as a statutory bar to claiming deductions for those expenses,” the DOJ noted.

Additionally, small entities involved in marijuana research might face new research protocols from the U.S. Drug Enforcement Administration (DEA) if working with a Schedule III substance instead of a Schedule I substance. However, the DOJ is currently unable to estimate how many small entities might be affected by this change and seeks further comments to inform their analysis.

President Joe Biden, in announcing the rescheduling action last Thursday, aligned it with his belief that no one should be incarcerated for cannabis possession.

Advocates have largely welcomed the rescheduling decision, noting it as the first federal acknowledgment in over half a century of the medical value and relatively low abuse potential of a plant legalized in various forms across most states.

Conversely, activists have pointed out that rescheduling does not equate to federal legalization or offer redress for those criminalized over marijuana. Die-hard pot prohibitionists have urged the DEA to maintain marijuana’s Schedule I status and are expected to legally challenge any reform.

DEA Administrator Anne Milgram has indicated that an administrative hearing might be held to gather more input before a final decision.

The Congressional Research Service (CRS) commented on May 1 that while the DEA is likely to implement reclassification, the change wouldn’t harmonize state markets with federal law. The CRS noted that Congress retains the power to address the federal-state policy gap “before or after” the reform is enacted.

Senate Majority Leader Chuck Schumer (D-NY) and colleagues have reintroduced a bill to federally legalize cannabis, though its chances are uncertain in the currently divided Congress. Accordingly, the November 2024 elections will prove pivotal for the marijuana industry.

Meanwhile, the top Democrat in the U.S. House has stated that the Biden administration’s rescheduling move is a “step in the right direction” but emphasized the need for congressional action to pass Schumer’s legalization bill.

Biden also has issued two rounds of mass pardons for individuals convicted of federal marijuana possession offenses. However, a Schedule III reclassification would not legalize cannabis or release those still incarcerated for cannabis-related crimes.

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John Persinos is the editorial director of Investing Daily.

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This article previously appeared on Investing Daily.