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LAS VEGAS – Industry stakeholders speaking on an MJBizCon panel Wednesday expressed optimism that the Biden administration will reschedule marijuana as a less dangerous drug in the months ahead, a move that would allow cannabis businesses to escape the steep taxes levied under Section 280E of the federal tax code.
At the same time, however, the panelists acknowledged the current difficulties facing the industry as well as the need to take risks to reap potential benefits down the road.
Consider the case of industry veteran Virgil Grant.
Serving six years in a federal prison for operating a state-legal medical marijuana business in California wasn’t enough to deter Grant from working in the cannabis industry.
Grant, now the CEO of the California Cannabis retail chain as well as the co-founder of the California Minority Alliance and the Southern California Coalition, said the challenges of working in marijuana have been ongoing.
Just recently, Grant said his bank closed his account, making payroll, lease payments and other pressing issues impossible.
Rather than giving up, Grant is doubling down, advocating for passage of the SAFER Banking Act – which he said would help him access capital and other crucial services that every industry relies on – and the end of imposing Section 280E on cannabis companies.
“280E has got to go,” he said.
Risk versus rewards
Grant appeared onstage at MJBizCon alongside Trulieve Cannabis CEO Kim Rivers, National Cannabis Roundtable Director of Policy David Mangone, Hub International Chief Sales Officer Jay Virdi, Vangst International co-founder and CEO Karson Humiston and moderator Saphira Galoob, the executive director of the National Cannabis Roundtable advocacy group.
The session, titled “Cannabis Industry Outlook: Trends, Obstacles and Strategies to Survive,” focused on the risks industry players are taking with the hope they’ll reap great rewards in the long term.
For Kim Rivers of multistate operator Trulieve, those risks mean investing $40 million in adult-use legalization advocacy in its home state of Florida and seeking a $143 million tax redemption from the IRS for payments made between 2019 and 2021.
“This is not us not paying our taxes,” Rivers said of the refund effort.
She said Trulieve has opted against deferring payment of the taxes owed under 280E, as some companies have done.
“We can’t really do that because we have the money to pay our taxes,” Rivers said, noting that Trulieve opts to pay its taxes on time and in full.
But she is crossing her fingers that the nearly $150 million IRS refund the company is seeking will come through at some point, telling the audience: “We’ll let you know if any big checks come through.”
‘Better have resilience’
But all of this risk-taking – and, in the interim, surviving – will take a great deal of resilience, the National Cannabis Roundtable’s Galoob said at the conclusion of the session.
“You better have resilience in your heart,” she said.
“Because that’s what you’ll need to survive.”
In the day’s first presentation, members of the MJBizDaily editorial team – Chris Casacchia, Solomon Israel and Chris Roberts – listed a string of predictions for the coming year that includes the reclassification of marijuana from Schedule 1 to Schedule 3 and the elimination of the 280E tax penalty.
Also on that list:
- The takeover of the marijuana industry by major pharmaceutical firms “does not happen,” Roberts said, noting that fears of a takeover by “big pharma” are overblown.
- More states will legalize recreational marijuana, with Florida and Pennsylvania at the top of the list.
- Investors will become increasingly interested and “more realistic” about putting their money in the cannabis industry, Roberts predicted.
- Cannabis will be a “nonissue” in the 2024 presidential election, given the bipartisan support for federal marijuana reform.
Kate Robertson can be reached at kate.robertson@mjbizdaily.com.
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