What’s Next for Cannabis in 2022-Part 2

What’s Next for Cannabis in 2022-Part 2

What’s Next for Cannabis in 2022-Part 2: What Federal Government Will Get Done to Help the Cannabis Industry in 2022. Cannabis CEOs aren’t waiting around for the US government to legalize. Some are eyeing international markets for expansion. The CEOs say they expect narrow reform around banking ahead of legalization. If you really wanted to create an industry that’s dependent on gangs and cartels, make it all cash. It’s almost like the system that is there now is oriented towards promoting things that we don’t want,” said Sen. John Hickenlooper (D-Colo.), speaking at The Hill’s Regulating Cannabis event. If you own or operate a cannabis-related business, don’t expect to jump on the refinancing bandwagon the next time home loan interest rates drop. In fact, your best bet is probably to purchase your home—and any other assets—outright, in cash. Because cannabis is still federally illegal, FDIC-insured banks are unlikely to consider income from a marijuana business in a mortgage application, which eliminates the possibility of homeownership for many cannabis business owners. If you can’t afford to buy a home without financing, you may need a cosigner, and you’ll probably pay higher rates and fees to offset your apparent risk. In that same vein, cannabis businesses can’t generally apply for standard business loans, removing a layer of financial protection that’s available to most entrepreneurs.

What's Next

And you won’t get any tax breaks on your business, putting you at another disadvantage relative to other business owners. Because the Federal Government maintains you are a common criminal, 280E does not allow for tax write-offs. Taxes for the cannabis industry range from 50% to 90%. That is razor slim margins. Cannabis investors in the last two weeks have seen a whipsaw that would be in high demand at Six Flags or Hershey Park but has been painful when investing in an already volatile asset class. The excitement around legislative catalysts to re-rate the sector higher has hung over the market for the last fifteen months and provided periods of exhilaration. However, it has also left investors nauseous as follow-through has been hard to come by. As a result, an industry that offers extraordinary growth, while supporting multiple social, lifestyle, and ESG trends has felt a bit like a roller coaster. At the root of the recent volatility was the excitement created by a Republican-led legislation package that aims to federally legalize cannabis while leaving the states to govern social equity and criminal justice issues.