Scot Crow and Benjam Sobczak of the cannabis practice at Dickinson Wright the impact of federal Schedule III reclassification and the increasing, albeit complex, role of private equity (PE) in the cannabis sector.
Experts agreed that moving to Schedule III, while providing significant tax relief through the repeal of Section 280E, would not immediately open the floodgates to traditional banking services or major PE funds due to continued federal illegality and existing 'sin clauses' in investment documents.
The current influx of specialized lenders and PE is largely driven by necessity, as distressed operators default on unsustainable loans, forcing lenders to take over assets they cannot easily resell.