By Mrinalika Roy

May 13 (Reuters) - The U.S. pot sector could see an

influx of medical research funding from healthcare investors

amid renewed interest from pharmaceutical firms, should a

proposal to reclassify cannabis as a lower-risk substance be

approved, industry experts said.

The current classification as a Schedule I substance has

limited research into cannabis due to restricted access to

cannabis products, regulatory hurdles and funding limitations.

Federal research grants are essentially off the table, while

potential legal complexities put off many private foundations.

But that may change with the U.S. Justice Department's

proposal to reclassify cannabis.

"For years, pharma and biotech companies have viewed

cannabis as a market with enormous potential," said Michael

Johnson, CEO of Metrc, which makes software to track the

cannabis supply chain.

"With rescheduling, investment firms that previously had

clauses precluding them from investing may reconsider their

stance."

Currently, research with Schedule 1 substances requires a

more rigorous registration process, oversight from several

agencies and special storage arrangements.

Rescheduling would ease requirements such as the need to

store cannabis in a steel safe with video coverage and alarms

and lead to lower expenses, said Mark Bolton, head of global

public policy at Jazz Pharma, which makes the only U.S.

FDA-approved medicine derived from the marijuana plant.

Maridose LLC - one of eight companies on the Drug

Enforcement Administration's approved list to manufacture and

supply marijuana for research - said it has been receiving more

enquiries from both non-profits and commercial entities,

including state-licensed cannabis firms.

Reclassification will also free pot firms from the 280E tax

provision, allowing listing on major U.S. exchanges.

"We expect to see healthcare venture capitalists move

quickly to invest in cannabis-related research that can lead to

new cannabis startups," Metrc's Johnson said.

There has been increased interest especially from small

family offices and small hedge funds, AdvisorShares CEO Noah

Hamman said. AdvisorShares offers several exchange traded funds,

including Pure US Cannabis, the biggest U.S.-listed pot

ETF.

Experts, however, said a financial overhaul of the sector is

needed to attract bigger investors and banks.

"Rescheduling will spur more investment ... (but) will you

now see JPMorgan and some of the traditional blue-chip

investment firms willing to lend? That's probably going to take

a little bit more time," Zack Kobrin, partner at law firm Saul

Ewing, said.