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Published by: StockWatchIndex Editorial Team
Rainer Poertner, Chief Analyst
Without question, the US cannabis industry is in trouble, at least if you judge from the continuing closure of cultivation facilities and dispensaries and stock prices of the companies in our portfolio purchased in January 2022. At that time, StockWatchIndex (SWI) invested in a portfolio of what we believed to be the most promising companies in the cannabis industry and began monitoring their share prices, return on Investment, and capitalization. In anticipation of Federal legalization and now rescheduling, Most analysts (including us) expected a steady expansion of legal operations and improved financial performance reflected in increasing share prices. It has been painful, to say the least. But, we have not sold and are not going to.
The Wheels of Government turn Slowly
We believe that Federal Legalization and Rescheduling
might not be the incredible Boost expected
The Biden Administration announced plans in May to move cannabis to Schedule III, which would move cannabis to a less-restricted level federally. The DEA has scheduled a December 2 hearing for expert testimony. After that, the typical government obstacle course of required approvals, objections, and appeals that end in court decisions begins.
Rescheduling Imminent?
If cannabis were rescheduled under the federal Controlled Substances Act, legal marijuana businesses in California would see a reduction in federal tax burdens. Currently, licensed cannabis businesses are locked out of many traditional banking services. Rescheduling will increase financial transparency and allow businesses to deduct expenses such as payroll and rent from their federal corporate income taxes. The move to a less restrictive schedule will grant cannabis businesses greater access to financial services, potentially attracting new investments and further increasing share prices.
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