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US: "Rescheduling of cannabis could reshape banking, affect FinCEN and IRS regulations"

The U.S. Health & Human Services Department (HHS) recommendation to reschedule cannabis from a Schedule I to a Schedule III drug1 will transform the cannabis industry and create new opportunities for banking and financial services providers.

Robert Mann, Co-Founder & CEO of StandardC, noted that if approved, HHS's recommendation to reschedule cannabis from Schedule I to Schedule III would be a crucial step, and the first at the Federal level, to improve the financial viability of the licensed cannabis industry in these key areas:

  1. With the elimination of IRS 280E, cannabis companies may be able to deduct standard business expenses in Federal tax filings.
  2. Eliminating prohibitions from investing in Schedule-I-related companies would allow significant new investment from private equity and venture capital.
  3. Enabling lenders to perfect a security interest in licensed cannabis business collateral.
  4. Developing therapeutic drugs would be vastly simplified, opening up new funding opportunities for cannabis-related drug development and research.
  5. Enabling bankruptcy protection for licensed cannabis businesses.

Richard Laiderman, former head of global treasury for VISA and Co-Founder and chair of StandardC, has weighed in on this breaking news. "Rescheduling cannabis to Schedule III may allow dispensaries to accept credit card payments. Credit card payments may supplant cash transactions if this occurs, reducing the risks and costs associated with cash-only operations."

Cannabis banking experts, including Robert Baron, commented, "While changes will inevitably occur, financial institutions looking to serve this market segment must implement risk management tools to evaluate and monitor cannabis businesses. This is where StandardC's business underwriting & monitoring tools are perfectly suited to meet their Bank Secrecy Act and customer due diligence obligations."

Source: StandardC

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