The buzz in the Windy City's cannabis sector might just translate into a financial high, thanks to expected federal reforms. Pot businesses in Illinois, including major players like Cresco Labs and Green Thumb Industries, are on the brink of major tax benefits and smoother access to loans with the anticipated reclassification of marijuana by the federal government.
The DEA's reported move to reschedule marijuana from a Schedule I to a Schedule III controlled substance, as revealed by the Chicago Tribune, is poised to allow cannabis companies to deduct typical corporate expenses, akin to other businesses. The shift could see Cresco save an estimated $70 million to $80 million annually, with Verano Holdings eyeing around $80 million in savings, and Green Thumb Industries could pocket up to $100 million.
While Illinois' cannabis consumers might not immediately notice the difference, industry insiders are buoyant. "It strengthens every cannabis operator's balance sheet and makes us all significantly healthier organizations," Cresco CEO Charlie Bachtell conveyed his optimism, as quoted by the Chicago Business. Rescheduling could also spell out wider marijuana reforms that have been long in discussion, suggest CEOs in the cannabis sector.
Finding themselves gasping for air in a market inundated with high taxes and intense competition, cannabis companies are likely to welcome this regulatory breathing room. "Taxes were strangling these companies," Morgan Paxhia, co-founder of Poseidon Asset Management, told the Chicago Business. "Now all a sudden we’re talking about a growth sector again."
Despite the financial elixir this reclassification promises, some critics have raised alarms. Kevin Sabet, president and CEO of Smart Approaches to Marijuana, admonished the decision, arguing that it may fuel addiction and other health concerns, according to the Chicago Tribune. "A drug isn’t medicine because it’s popular," he said, highlighting that the raw plant has not passed established safety and efficacy protocols.
