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During a recent panel discussion at MJBizCon, industry insiders expressed hope for a positive shift in the status of marijuana under the Biden administration. The anticipation is that marijuana could be rescheduled, potentially reducing the burdensome taxes imposed on marijuana businesses by Section 280E of the federal tax code.
However, amid this optimism, the panel acknowledged the existing challenges in the industry and the necessity of taking calculated risks to unlock future benefits. An illustrative example is Virgil Grant, an industry veteran who, despite enduring a six-year federal prison sentence for operating a legally sanctioned medical cannabis business in California, remains undeterred in his commitment to the cannabis sector.
Grant, now the CEO of a California marijuana retail chain and cofounder of the California Minority Alliance and the Southern California Coalition, highlighted the ongoing challenges faced by the industry. Recently, his bank closed his account, creating significant obstacles for essential financial operations such as payroll and lease payments. Rather than succumbing to these challenges, Grant is actively advocating for the passage of the SAFER banking bill, emphasizing its potential to facilitate access to crucial services and capital. He also advocates for ending the imposition of Section 280E on marijuana companies, a sentiment shared by fellow industry stakeholders.
At MJBizCon, Grant shared the stage with other prominent figures, including Kim Rivers, CEO of Trulieve Cannabis, and David Mangone, director of policy at the National Cannabis Roundtable. These individuals participated in a session titled “Cannabis Industry Outlook: Trends, Obstacles, and Strategies to Survive,” which delved into the risks undertaken by industry players in the hope of long-term rewards.
For Rivers, the risks involve a substantial investment of $40 million in advocating for adult-use legalization in Florida and pursuing a $143 million tax redemption from the IRS for payments made between 2019 and 2021. Rivers clarified that Trulieve, unlike some companies, has chosen not to defer tax payments under 280E, emphasizing its commitment to paying taxes in full and on time.
Despite these financial risks, Rivers remains optimistic about the potential $150 million IRS refund. “We’ll let you know if any big checks come through,” he said. The overall theme of the session emphasized the resilience required to navigate the current challenges and uncertainties in the cannabis industry.
In the first presentation of the day, MJBizDaily editorial team members presented predictions for the coming year. These included the reclassification of marijuana from Schedule I to III and the possible elimination of Section 280E. Other predictions encompassed the unlikelihood of a takeover of the cannabis industry by major pharmaceutical firms, increased legalization of recreational cannabis in states such as Pennsylvania and Florida, growing interest from investors in the marijuana industry and the diminishing significance of marijuana in the 2024 presidential election due to bipartisan support for federal cannabis reform.
The expected easing of the tax burden on the marijuana industry in the United States would make it possible for industry actors such as Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) to earn a decent profit from their operations, gaining the financial muscle to push ahead with bringing more innovative products to market.
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