"There isn't enough information available about how it would be implemented. That will heavily impact if it's considered beneficial enough, or if more is needed," says Meilad Rafiei, CEO of WeCann. After the announcement was made that the DEA agrees to reschedule cannabis from Schedule I to Schedule III, the industry is now waiting for more clarification on the actual impact this will have on the industry. "I want to be optimistic that even if it is not rolled out properly, it will bring benefits to a percentage of operators. What percentage that is, will be determined by how it is implemented. Still, the more that can take advantage of the benefits of rescheduling, the better it is for the industry as a whole."
Improving cash flow
While things are still uncertain, what are some of the benefits the industry can expect to notice? "Financial institutions, banks and lenders in particular, will be able to do business with licensed cannabis businesses more easily," Meilad says. "This will result in lower fees for the operators when it comes to their banking, as well as availability to more lending options with lower rates and fees. If rescheduling also results in operators being able to avoid 280E, cash flow will improve throughout the industry. This will allow and encourage operators and investors to continue to invest in their businesses and expand their footprint."
In fact, eliminating the 280E tax burden is seen as one of the main benefits of rescheduling. "Ideally, all legal operators will be able to avoid 280E as a whole, which would have an amazing impact on the industry. Besides the financial freedom it provides to operators through lending and improved cash flow, investors will see these improved financial statements and will hopefully be inspired to invest more in the industry."
On top of that, according to Meilad, interstate commerce now becomes more of a possibility. "Since there is precedence on how to legally distribute schedule III products across state lines, lawmakers will have the ability to make those changes within their own states and regulate them accordingly."
Stringent requirements?
Yet according to Meilad, it is also possible that the rescheduling will have negative effects for cannabis operators. "For example, if the requirements to be considered approved by the federal government as a 'Schedule III operator' are too stringent, it could limit the number of operators that can become approved. That would give the approved operators a massive advantage over the rest of the industry. Then there is the concern that this will result in another layer of taxes and fees the federal government will levy against the operators. As we all know, the last thing the industry needs is more fees."
For more information:
WeCann
www.wecannca.com