Alabama public health regulators have withdrawn their opposition to the federal government’s decision to move medical cannabis into a lower drug schedule, marking a change in the state’s position as its long-delayed cannabis program gets underway.
The Alabama Public Health Committee unanimously voted to rescind its opposition. The committee had rejected the federal shift in May, only weeks after the Justice Department issued its final order placing state-authorized medical marijuana in Schedule III.
State officials said the health department’s attorneys had addressed the issues that prompted the original objection. Under Alabama law, federal changes involving controlled substances automatically take effect at the state level unless the health committee files an objection within 30 days.
The panel submitted its objection on May 21, setting off a review that eventually produced a hearing on July 22. During the proceeding, conservative opponents raised concerns about potential effects on children and mental health. Only one cannabis operator spoke in favor of the federal change.
The DOJ completed the rescheduling process in April following an order issued by President Trump in December. The action shifted federally regulated medical cannabis from Schedule I, the most restrictive category, to Schedule III.
Alabama’s initial challenge did not amount to a decision to reject the federal classification altogether, according to legal experts cited in coverage of the dispute.
One significant consequence of the federal change involves IRC’s Section 280E. That provision prevents businesses involved in Schedule 1 or 2 substances from deducting many ordinary operating expenses. Moving cannabis to Schedule 3 removes that federal tax restriction for affected businesses.
The policy change comes as Alabama continues building a medical cannabis industry that has faced years of legal disputes. The state finally began sales in June, after litigation repeatedly disrupted efforts to launch the program.
The state currently has three operational dispensaries, while seven additional locations are expected to begin business in the coming months. Alabama could have close to 40 dispensaries once the system reaches its permitted capacity.
State law also provides for as many as 12 cultivation licenses and four processing licenses. Four dispensary licenses can be issued as well, with each holder permitted to run up to three locations. Meanwhile, five vertically integrated licenses remain tied up in ongoing legal challenges.
Alabama lawmakers approved medical cannabis in 2021. Regulators awarded the first business licenses two years later, but lawsuits over the licensing process prevented the market from opening as planned.
Now that operations are open, the marijuana movement, including enterprises like Canopy Growth Corp. (NASDAQ: CGC) (TSX: WEED), can count the state as one more addition to those that have a legal market for marijuana in the country.
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