Tag: rescheduling

Posted on by Seth A. Goldberg

Overwhelming Support for Rescheduling or De-scheduling Cannabis in DEA Comments

Seth Goldberg
Seth A. Goldberg

The public comment period for the DEA’s proposed rulemaking to reschedule cannabis from a Schedule I controlled substance to a Schedule III drug has ended. Approximately 43,000 comments were submitted! As Headset reports, this is the most comments received in response to a DEA proposed rule, and the comments were overwhelmingly in favor of cannabis either being moved to Schedule III or being de-scheduled and fully legalized altogether.  According to Headset, 9 out of 10 comments were in favor of removing cannabis from Schedule I, with 35% of commenters supporting rescheduling and 57% supporting de-scheduling.  Of course, many of the proponents of de-scheduling would support rescheduling as opposed to leaving cannabis under Schedule I. In contrast, just 7% of commenters advocated no change. 

Posted on by Duane Morris

Filling Credit Risk Gaps for Cannabis Businesses

Tracy Gallegos, partner and team lead of the Duane Morris Cannabis Industry Group,  is quoted in American Banker about CTrust’s recently launched Cannabis Trust Score and its impact on the industry.  […]

“Until there’s a rescheduling, obtaining traditional banking loans is going to be a significant hardship for plant touching operators,” said  Gallegos, referring to cannabis’ classification as a Schedule 1 controlled substance, which exposes banks to potential money laundering investigations, which prevents most banks from lending to cannabis businesses. […]

“Having a company like CTrust provide a credit score is an indicator of credit worthiness, but it won’t do anything to solve any of the issues that the banks are facing in terms of the banks being penalized for engaging in business with what the federal laws still consider an illegal activity.”

Read the full article on the American Banker website.

Posted on by Duane Morris

DEA Rescheduling, Pa. Legalization Efforts May Breathe New Life Into Cannabis Practices

Duane Morris cannabis industry group team lead Paul Josephson spoke with The Legal Intelligencer on Pennsylvania cannabis legalization as the Drug Enforcement Administration has officially moved to reschedule marijuana from a Schedule I to a Schedule III substance.

“There’s not a legal practice area that hasn’t touched or worked for our cannabis practice here,” he said, although he and other attorneys emphasized the potential growth in financing work should rescheduling and local legalization efforts go through.

“Removing this from Schedule I … it provides immediate tax relief to companies in the cannabis business,” Josephson said, explaining that as the law currently stands, cannabis businesses aren’t allowed to deduct business expenses when they calculate and pay taxes, resulting in razor-thin profit margins. “When rescheduling happens, when that monkey comes off the back of the industry, it will improve cashflows for everyone in the business and allow for more investment.” Read more on the Duane Morris website.

Posted on by Duane Morris

The American Lawyer Features Duane Morris on Cannabis Rescheduling

Seth Goldberg, partner and team lead of Duane Morris’ Cannabis Industry Group, spoke with The American Lawyer about how the firm is preparing for cannabis rescheduling.

“What makes reclassification a watershed event is that it frees up capital and allows for more growth and allows for potential consolidation and more successful companies, more competition with respect to multistate operators and get back to a place of equity investment,” said Goldberg.

“We have been preparing for that, and lawyers in each of our practice areas—whether IP, corporate, employment—who have cannabis practices are already thinking about how they‘re going to advise clients in the cannabis industry and also outside of the cannabis industry with respect to how reclassification impacts that type of law.” […]

The combined impact on cannabis businesses of tax liabilities and lack of access to financing “can’t be overstated,” Goldberg said. Removal of 280E “will have an immediate impact on operator balance sheets,” he said. Continue reading “The American Lawyer Features Duane Morris on Cannabis Rescheduling”

Posted on by Seth A. Goldberg

DEA Recommendation to Reschedule Cannabis is Imminent

Seth Goldberg
Seth A. Goldberg

Multiple news sources reported today that the DEA will be recommending rescheduling cannabis to a Schedule III drug.  The recommendation will then lead to a public comment period and then a Final Rule will be issued, so the actual reclassification of cannabis is months away.  However, as with recent moves toward rescheduling, such as the HHS recommendation and President Biden’s directive to study whether to reschedule, today’s news and the forthcoming recommendation will boost the cannabis market, as operators and investors look forward to a better performing industry resulting from the reclassification.  The actual reclassification will have an immediate impact on operator profitability, as IRS Code 280E, which prevents cannabis operators from deducting normal business expenses, will no longer apply to cannabis businesses.  This is just one of the very significant changes to the industry that will spur more capital and more growth.  Banks and other sources of capital that have been reluctant to enter the space may finally get off the sidelines and join the game, which would obviously be the shot in the arm the industry has needed for some time.  

Posted on by Duane Morris

Marijuana Bankruptcy Reform Could Be Inching Closer for US Operators

Distressed U.S. marijuana operators remain largely unable to access bankruptcy relief, an ongoing challenge in a tough industry where business failures are common. But with federal marijuana rescheduling possible in the near future – and with signs of shifting attitudes in recent bankruptcy court cases – reform could be somewhere over the horizon.

Duane Morris’ Ryan Spengler is cautiously optimistic that progress in court rulings, combined with rescheduling, could help open the door to new bankruptcy options for U.S. plant-touching marijuana companies. Read the full article on the MJBiz Daily website.

Posted on by Duane Morris

What Rescheduling Could Mean For Cannabis Bankruptcies

Lawrence J. Kotler, Seth A. Goldberg and Ryan Spengler authored the Law360 article, “What Rescheduling Could Mean For Cannabis Bankruptcies.”

More than 75% of the U.S. population lives in states that have legalized cannabis for adult and/or medical use. Pursuant to a 2022 directive from President Joe Biden, a 2023 recommendation of the U.S. Department of Health and Human Services, and a scientific review released in January supporting the HHS’s recommendation, the U.S. Drug Enforcement Administration is now evaluating whether to reclassify cannabis as a Schedule III drug.

Read the full article. 

Posted on by Duane Morris

How Regulatory Reforms Could Reshape M&A Pulse In Cannabis Industry

Tracy Gallegos, partner and team lead of the Duane Morris Cannabis Industry Group, discussed the cannabis industry’s mergers and acquisitions (M&A) landscape at the Benzinga Cannabis Capital Conference on September 27, 2023.

The discussion also touched upon the rescheduling of cannabis, with differing opinions on its likelihood. Ms. Gallegos said she skeptical due to formal rulemaking processes and international treaty considerations.

Read the full article on Benzinga.com. 

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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