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After the post-pandemic downturn caused many businesses in the cannabis industry to struggle, many marijuana professionals are now predicting a more lucrative 2024. The post-COVID period saw the addition of several more states to America’s nascent marijuana industry, and the country made significant strides in its efforts to legalize marijuana at the federal level. In addition, President Joe Biden issued a mass pardon for marijuana offenders, and his administration has indicated that it is seriously considering rescheduling the controversial plant at the federal level.
Industry professionals are now looking at 2024 with renewed optimism even though the state-legal cannabis industry is likely in for a lot of turbulence. Ed Schmults, CEO of California-based company StateHouse Holdings Inc., says the U.S. Health and Human Services recommendation to the Drug Enforcement Agency (DEA) to move cannabis from Schedule I of the Controlled Substances Act to Schedule III is welcome news, even though it came 10 years late.
Although rescheduling would call for significant levels of legislative effort and time, Schmults is optimistic that the federal government will take the steps needed to move cannabis to Schedule III. He says an implementation timetable of around 12–18 months would be more reasonable than the six-month timeline discussed by some industry players. While descheduling cannabis outright would offer a much better path for the nation’s cannabis industry, Schmultz noted, transferring the drug to Schedule III is a “big step in the right direction.”
David Goubert, president and CEO of multistate marijuana operator AYR Wellness, says that multistate operators will be more focused on their companies’ financial health and will likely prioritize cash-flow generation coupled with lean and efficient operations. He added that if cannabis rescheduling and 280E changes happen as many industry players anticipate, cannabis businesses would start paying fewer annual taxes and would be better equipped to pay down their debt.
The legalization of recreational cannabis in Ohio, Florida and Pennsylvania could also lead to “significant deleveraging” by mid-decade, Goubert says.
Poseidon Asset Management cofounder Morgan Paxhia predicts that next year will be the most exciting and eventful year in the legal cannabis industry’s history. He predicts that while policymakers will reclassify cannabis as a Schedule III substance, “Congressional hijacks” following such a historic legislative development as lawmakers try to take credit could stifle the cannabis industry’s progress and levy a high 14% excise tax on businesses.
However, he notes that the SAFER Banking Act likely won’t make any progress in 2024. Instead, Paxhia expects lawmakers to introduce a ‘=”Garland memo-like protection” alongside rescheduling.
As 2023 draws to a close, many in the cannabis industry, such as Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF), may be fine-tuning their plans to capitalize on any regulatory changes that could be made at the federal level in the coming year or years.
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