(NewsNation) — The federal government may soon reclassify marijuana as a less dangerous drug, marking a major shift in policy that could benefit cannabis businesses and consumers alike.

The new proposal won’t legalize recreational weed nationwide, but it would reclassify marijuana so it’s no longer considered a Schedule I drug alongside heroin, LSD and ecstasy.

Instead, marijuana would move to the less tightly regulated Schedule III tier next to drugs like ketamine and anabolic steroids, which have accepted medical uses. The change would open the door for new research and ease the tax burden on cannabis businesses.

“It’s a necessary step because it opens up people’s minds and understanding that this plant does have medical utility,” said Saphira Galoob, executive director of the National Cannabis Roundtable.

But rescheduling marijuana, which Galoob called an “incremental step,” won’t address all of the challenges facing the legal cannabis industry, particularly when it comes to accessing loans at major banks.

Here’s what the proposal could mean for companies and consumers.

What’s the biggest change for businesses?

Rescheduling will lead to lower tax bills for marijuana companies that haven’t been able to take the same deductions as other businesses.

Under the federal tax code, businesses associated with “trafficking” Schedule I or Schedule II substances can’t deduct expenses like rent and payroll, which other companies can write off. Cannabis industry groups say their businesses often end up paying tax rates that are 70% or more.

For some, the current tax burden has added up to as much as $80 million a year in extra costs, a Chicago-based CEO told the Chicago-Sun Times.

If marijuana is reclassified as a Schedule III substance, the federal deduction rule would no longer apply, cutting cannabis companies’ taxes significantly.

Aaron Smith, CEO of the National Cannabis Industry Association, told NewsNation the tax implications would have a “significant positive impact” on legal cannabis businesses that have been subjected to the “unfair” provision of the tax code.

Galoob called the existing tax rules “unacceptable” and said the barriers have held back small businesses in the sector.

Will weed cost less at the dispensary?

The good news for consumers is that lower tax bills for businesses could lead to better prices at the dispensary.

“I would expect some of that savings to be passed along to consumers,” Smith said.

More broadly, the tax savings will make it easier for businesses to reinvest and grow their companies. In turn, that will create more jobs and put more money into the economy, Smith pointed out.

Galoob thinks those positive spillover effects will lead to a more efficient cannabis market, ultimately reducing price pressures. That shift would also help restrain the illegal market, which continues to thrive.

“As a regulated market becomes more efficient, the illicit market goes away and goes down,” she said.

Today, the price of weed varies significantly from state to state and any future price reductions are sure to reflect local supply and demand.

In Illinois, where the cannabis market is dominated by a few major brands, the average item price was almost 90% higher than the rest of the U.S. in 2023, according to Headset — a cannabis market research company. By comparison, Washington state has over 1,000 distinct brands and prices are among the lowest in the country.

Other states, like Oregon, have already seen retail prices plummet in recent years due to a weed surplus that’s resulted, in part, from restrictions on interstate sales.

Will it be easier for marijuana businesses to get loans?

Major banks have long been reluctant to do business with cannabis companies due to the drug’s legal status and experts say rescheduling is unlikely to change that.

“Cannabis would still be illegal under federal law, and that is a line many banks in this country will not cross,” Blair Bernstein, a spokesperson for the American Bankers Association, told the Associated Press.

For that reason, marijuana businesses may still have trouble securing loans and setting up accounts — a longstanding challenge for the industry.

Today, only about 10% of U.S. Banks and roughly 5% of all credit unions provide cannabis-related businesses with accounts, Reuters reported.

The difficulty accessing capital has led operators to rely entirely on cash, making them targets for robberies. That credit crunch has also limited the opportunity for small businesses to grow.

Advocates say the persistent financial barriers underscore the importance of the bipartisan SAFER Banking Act. The bill — which is currently being considered by federal lawmakers — would provide protections for federally regulated financial institutions serving legitimate marijuana businesses.

“Businesses that are operating in this space deserve to be able to pull every lever and access every aspect of growing, building, and developing a thriving, highly regulated business like everyone else does,” Galoob said.

Smith echoed the need for federal legislation and called on Congress to pass the bill “without further delay.”