Impact of Government Cuts and Rescheduling of Cannabis in the US

I’m sitting on the steps of the U.S. Capitol on a grey afternoon, a faint smell of weed from an activist’s vape pen mixing with the whiff of political BS in the air. A throng of protesters holds up a banner: “Deschedule Cannabis NOW,” while across the street, a suited politician ducks into a lobbyist-filled room to discuss trimming the federal budget. The scene is a gonzo journalist’s dream and nightmare: promises of reform clashing with bureaucratic delays, the counter-culture quite literally on the Capitol’s doorstep. As I spark a discreet joint (federally illegal, ironically, on this federal land), I delve into the tug-of-war between policy reform and penny-pinching politics that defines the cannabis landscape in the USA today. This is a story of two steps forward, one step back – where economic potential and public opinion are soaring high, but parts of the government remain strangely stuck in the weeds.

Promises vs. Reality in Cannabis Reform: Rewind to late 2022 – optimism was in the air for federal cannabis reform. The President himself made a surprise announcement: a blanket pardon for federal simple possession offenses and an instruction for regulators to review cannabis’s insane Schedule I status (Schedule I is for the most dangerous drugs, and yes, that’s where marijuana absurdly sits alongside heroin). Advocates like me were stoked. After decades of federal inertia, it felt like, “Wow, the feds might finally join the party 37 states have already started.” Fast forward to today, and where are we? Caught in a bureaucratic slow-mo fight that could only happen in Washington. Rescheduling – moving cannabis from Schedule I to somewhere lower – is the hot topic. In August 2023, the Department of Health and Human Services (HHS) made a historic recommendation to reclassify cannabis to Schedule III . That was huge: it’s the first time a federal agency has officially said, “Hey, this weed thing? Not as bad as we’ve been saying.” Schedule III would recognize some medical use and reduce regulations, though notably not legalize it. But even that modest change has become a slog. The DEA (yes, the same DEA that hunted hippies in the 70s) has to sign off, and they’re dragging their feet like it’s 1975. Meanwhile, Congress is gridlocked on broader legalization bills. The MORE Act, which would remove cannabis from the Controlled Substances Act entirely, passed the House in a blaze of glory – twice – only to die in the Senate graveyard, victim of partisan games. The SAFE Banking Act, aimed at letting cannabis businesses use banks, has been teased so many times that it’s practically a running joke in the industry (“SAFE Banking will pass right after hell freezes over or Congress actually agrees on something”). It’s a bizarre disconnect: public polls show about 68% of Americans favor full legalization. Most states have some form of legal cannabis. Yet here in DC, federal law remains in prohibition-era mode, and the reforms get tangled in broader political fights. It’s like the train has left the station and the federal engineers are still debating whether to lay tracks.

The Rescheduling Rollercoaster: Let’s zoom in on this rescheduling drama because it’s a microcosm of the larger issue. Cannabis is currently Schedule I, meaning the feds officially see “no accepted medical use and high potential for abuse.” That classification has been a ball-and-chain for researchers and a handy excuse for prohibition for 50 years (thanks, Nixon). If the DEA heeds HHS and moves it to Schedule III, what changes? For one, it would acknowledge cannabis has medical use (duh, as proven by millions of patients and state programs). It would also ease some draconian federal restrictions: researchers could study it more freely, and cannabis companies might finally get relief from the dreaded 280E tax rule (which currently treats them like illegal drug traffickers, disallowing normal business deductions – crippling their finances). In short, rescheduling to III would be a big economic boost for the industry – potentially saving companies hundreds of millions that now go to Uncle Sam in extra taxes. However, it wouldn’t solve everything. Cannabis would still be federally illegal for recreational use, and the FDA could actually get more involved (since Schedule III drugs like certain painkillers require prescriptions – a double-edged sword scenario). Some advocates actually fear a Schedule III status could invite Big Pharma to dominate and push out the current industry, but let’s not get ahead of ourselves. Descheduling (completely removing from the schedules) is the holy grail, effectively treating cannabis like alcohol or tobacco federally. That’s what many activists demand, and even a bunch of U.S. Senators recently urged the DEA to do  . But expecting the U.S. government to leap straight from Schedule I to descheduling is like expecting a sloth to win the 100m dash – not impossible, but highly unlikely without a miracle. So, we ride the rollercoaster: every few months a headline pops “DEA might reschedule cannabis soon,” stocks surge in a frenzy, then months of silence. It’s enough to give an advocate whiplash. Historical context: we’ve been here before – petitions to reschedule in the past (in 1972, 1995, etc.) were denied by DEA every time, citing flimsy logic. But now, with an HHS recommendation and majority public support, the DEA is under unprecedented pressure. The cynic in me thinks they’ll stall as long as possible, possibly until after the 2024 elections, because why make a decision when you can punt it in Washington? Yet, there’s a sense that the tide has turned. Even if slow, the federal bureaucracy is creaking toward acknowledging reality. It may be Schedule III, or maybe even Schedule II (though that’s less likely and arguably worse for the industry than III). Either way, this rescheduling process is highlighting the broader theme: the federal government is trying to catch up to the people, with painful sluggishness.

Budget Cuts and Broken Promises: Now, layer on top the latest wrinkle – government cuts. In classic fashion, even as one arm of the feds talks reform, another is slashing resources. Case in point: federal funding for cannabis research and support programs remains paltry. Politicians love to say “we need more research,” but then they allocate peanuts for it. The NIH’s cannabis research grants largely still focus on abuse and addiction rather than potential benefits (a legacy of decades of bias). When belts tighten, guess what research is first on the chopping block? The unconventional stuff – and cannabis still wears that label in many agencies. I heard from a researcher at a major university who had a grant proposal to study medical cannabis pain treatment effectively ghosted after some federal budget trims – priorities shifted to other areas. On the flip side, consider how Congress holds DC (the District of Columbia) hostage: every year, there’s a budget rider (the Harris Amendment) that prevents DC from spending its own money to regulate cannabis. DC residents legalized adult-use back in 2014, but thanks to Congress’s control of DC’s budget, the city can’t set up sales – leading to a messy “gift economy” of quasi-legal weed. This absurd situation persists because of one congressman’s ideology and budget shenanigans, and attempts to remove the rider got axed in spending bill negotiations (budget cuts of a different kind – cutting out what DC wanted to do). Then there’s the matter of federal agencies and their funding: The DEA and ONDCP (Office of National Drug Control Policy) still pour millions into anti-cannabis enforcement and messaging. Will those budgets be cut as more states legalize and there’s less political appetite for a war on weed? Possibly – and that could actually be a positive cut, freeing up funds for treatment and education instead of pointless interdiction. But we haven’t seen it yet; the federal drug control budget overall remains huge, with cannabis still in the mix. Another element: economic stress (like a recession or pandemic recovery) usually makes governments look for new revenue – and legal cannabis tax revenue can be very tempting. Ironically, the tighter the budget, the more states (and eventually feds) might embrace cannabis to fill coffers. We saw a wave of states legalize in part for tax money. At the federal level, some cynics believe Congress will only act once they’re convinced they can’t squeeze more money out of not acting. Right now, the illegality ironically collects them some taxes via 280E as mentioned, but if they reschedule, they’ll likely impose a federal excise tax to make up for it. It’s all a cynical numbers game in those marble halls.

Industry in Limbo: The economic prospects of the cannabis industry – one of the fastest-growing sectors in the U.S. over the past decade – hang in a strange limbo due to these federal shenanigans. We have a multi-billion dollar industry employing hundreds of thousands of Americans, but because of federal illegality, these businesses operate on a knife’s edge. They can’t access normal banking (cue armored cars and cash safes), can’t get routine small business loans or bankruptcy protections, and get hammered by excessive taxes. I’ve toured dispensaries in California and Colorado that are as professional as any pharmacy, yet they manage cash like a 1920s speakeasy because Congress can’t pass banking reform. These burdens have started taking a toll – 2022 and 2023 saw a wave of cannabis company layoffs, some businesses shuttering, and a chilling effect on investment. Big banks and institutional investors largely stay out due to federal law, meaning the industry can’t fully mature. One exec told me, “We’re a $30 billion industry stuck in handcuffs until DC wakes up.” The slow march toward federal legalization is frustratingly out of sync with on-the-ground reality. Meanwhile, you have government cuts in unrelated areas indirectly hurting cannabis too: for instance, when the federal budget tightens, social services or grants that might fund community programs (like cannabis expungement clinics or medical cannabis education) get less attention. Even state programs depend on some federal cooperation – e.g. if federal funding for opioid addiction treatment is cut, states have fewer resources to integrate cannabis-based therapies as alternatives. It’s all connected in the policy ecosystem.

Cultural Patience Running Thin: Amid these policy battles and budget bean-counting, the culture around cannabis in America keeps evolving. And it’s leaving the government behind. You’ve got veterans lobbying Congress with heartbreaking stories of how VA policies (federal) won’t let them use cannabis for PTSD, even though it’s legal in their state and it helps them quit opioids. You’ve got grandmothers in Iowa illegally ordering CBD online for arthritis because federal law and some state laws still haven’t caught up. The populace is increasingly seeing the federal stance as not just outdated, but cruel and nonsensical. There’s a rebellious edge to how people are responding – civil disobedience in plain sight. I attended the annual “Cannabis Smoke-In” protest at Lafayette Square by the White House. A cloud of illicit smoke wafted over the presidential residence as activists deliberately lit up at 4:20 PM, daring law enforcement to do something. Nobody was arrested. It struck me: the culture has changed so much that even the enforcers often shrug at public pot smoking, at least in tolerant cities. Yet on paper, the laws lag. It’s a surreal dichotomy to live in. Many Americans now assume federal legalization is inevitable – it’s the “when, not if” question. That has perhaps made people impatient. The rebellious voice in the cannabis community is now targeting the foot-dragging and the half-measures. “Rescheduling to III? Cool, but not enough – free the plant entirely,” is a common refrain. There’s also frustration with how government inaction hurts those most vulnerable: lack of federal reform means no interstate commerce, which means small farmers in legal states can’t tap national markets and are going bankrupt with oversupply while consumers in prohibition states still support illicit trade. It’s an economic inefficiency and injustice perpetuated by federal lag. And let’s not forget the social equity aspect: advocates point out that without federal expungement and reparative measures, the legacy of the drug war continues to harm communities of color disproportionately. Some modest federal grant programs were proposed to support state expungement efforts, but guess what – they got caught in budget debates and weren’t funded. Government cuts strike again, right where we need investment to undo past harms.

In this first-person immersion on Capitol Hill, I feel the weight of history and hypocrisy. On one hand, I’m surrounded by activists who are essentially begging the government to let weed be treated normally, for science and economics to prevail over stigma. On the other hand, I see politicians paying lip service to reform while nickel-and-diming the efforts that would make it real. The push-pull is maddening but also oddly invigorating – change is happening, just not the way we imagined. It’s coming in fits and starts: a bit of progress here (say, the FDA finally considering regulating CBD products since the 2018 Farm Bill boom), a setback there (like some states doubling down on harsh laws, or Congress failing yet again to pass SAFE Banking). The economic impact of full federal legalization is projected in the tens of billions, with hundreds of thousands of new jobs – a tantalizing prize in an era of economic recovery. But budget politics and inertia delay reaping that harvest. Global trends add pressure too: U.S. neighbors Canada and Mexico have moved toward legalization (Canada fully federal legal since 2018, Mexico’s Supreme Court mandated it though implementation is slow). The U.S. risks looking like the outdated prude on the international stage. I sense that within a few years, the absurd contradictions will become untenable. Perhaps a new Congress or administration will finally bite the bullet. Until then, we navigate this twilight zone: where cannabis is simultaneously an outlaw and an essential business, where states carry the torch of innovation and the feds offer faint light from behind. It’s provocative and confounding – a true American political saga. As I stub out my joint and listen to the echo of chants for justice down Constitution Avenue, I remain hopeful. The arc of history is bending toward legalization, even if the federal government is the last to catch the vibe. In the immortal words adapted from the Grateful Dead: “What a long, strange trip it’s been” – and it’s not over yet.