Major cannabis policy shift possibly coming from Trump. Here's what it could mean for Long Island.

The Long Island cannabis industry could undergo a major shift if President Donald Trump follows through on his recent statements that he is considering federally reclassifying cannabis as a less dangerous drug.

The move could allow for more accessible banking services, expanded tax write-offs, and fewer financial hurdles for those in the industry, and new research opportunities for scientists, according to cannabis professionals and state officials.

When Trump said on Aug. 11 he was considering reclassifying cannabis in the coming weeks, he didn't set a deadline for the decision. He said then that he's "heard great things having to do with medical" usage of cannabis and "bad things having to do with just about everything else."

Gahrey Ovalle, the president of local advocacy and trade group Cannabis Coalition of Long Island, said that rescheduling is "common sense reform."

"I think it’s an issue that needs to be resolved, and we’re moving toward that, albeit glacially,"  Ovalle said. "We think it’s about time and long overdue."

Here's what you need to know about reclassification and how it could potentially impact Long Island’s cannabis industry.

How drug schedules work 

The DEA divides controlled substances into five schedules, with Schedule I substances considered to have no medical value. They include substances like heroin and ecstasy. While cannabis is legal in New York State, it’s federally outlawed and currently classified as a Schedule I drug, according to the U.S. Drug Enforcement Administration.

Trump said he is considering rescheduling marijuana as a Schedule III drug, which the DEA refers to as "drugs with a moderate to low potential for physical and psychological dependence." Schedule III drugs include substances such as ketamine, anabolic steroids and testosterone.

Experts emphasize that rescheduling is not the same as legalizing the drug; it would still be illegal federally unless Trump also pushed for lowering criminal penalties.

More financial access for dispensary owners

Dispensary owners face a number of hurdles related to reliable banking. Under the current system, most national banks won't work with dispensaries because of cannabis' federal illegality. Local dispensary owners say their banking options are limited and expensive.

"Obviously, from a banking standpoint, it really helps us out big time," said Dave Tubens, co-owner of Farmingdale dispensary Planet Nugg. "You’re at the mercy of what the banks dictate and what they will accept. It will open up a lot more opportunities for us to bank with different institutions."

Tubens said that Planet Nugg pays a large amount of fees to its current bank. Tubens didn't elaborate on how much, but he said he pays larger operational fees to his bank simply because he runs a dispensary.

Paul Lepore, owner of Happy Days Dispensary in Farmingdale, said that paying for cannabis confuses customers, because they can only use cash or debit cards.

"This is very confusing to people," he said. "Reclassifying would allow customers to shop like normal consumers," allowing them to use credit cards.

"The ability to use credit cards would be incredible," Tubens said.

A Schedule III drug classification would also allow both recreational and medical cannabis dispensaries to claim tax exemptions and write-offs, said Jason Little, an attorney who focuses on cannabis law at Uniondale-based firm Farrell Fritz.

The Internal Revenue Service prohibits businesses that sell Schedule I or II controlled substances from filing deductions or tax credits. If cannabis is reclassified as Schedule III, it will remove the restrictions for cannabis businesses such as dispensaries, allowing them to deduct normal operating expenses, according to Dr. June Chin, chief medical officer of the New York State Office of Cannabis Management. 

Better research potential

Researchers would have more access to legally grown cannabis and be able to do more research on its use, Chin said. 

"It allows researchers to get cannabis products from licensed producers more easily," she said. "They can conduct clinical trials, and this leads to better data on safety, efficacy and dosing."

Schedule I and II drugs are harder  to research than Schedule III drugs  because Schedule I and II drugs are generally considered to have limited or no medical uses, said Dr. Jarid Pachter, a physician at Stony Brook Medicine, who specializes in addiction medicine. 

"The data is limited," Pachter said. "The studies so far have been restricted, and the angle on most of them have been to find negatives associated with cannabis. To change it to Schedule III, it could potentially open the door to study edibles and other products from dispensaries for potential medicinal use."

Possible industry risks

Some cannabis professionals are concerned that the rescheduling of cannabis would lead to buyouts of growing operations and dispensaries by larger corporations, like large pharmaceutical companies.  

"Rescheduling is not necessarily a good thing for the smaller, independent operators," said Dave Falkowski, owner of Bridgehampton-based commercial growing company Open Minded Organics, noting that he’s concerned that big companies would swoop in and take business from smaller groups. "To be honest it should just be descheduled completely," he said, which would eliminate cannabis' status as a controlled substance. 

Tubens said that rescheduling could "open up the opportunity for big investors to come into the market," which creates "a lot of uncertainty for the little guys."