GOLD FLORA DATE CHANGE
We are moving the GFC black Book from 12/27 @ 2 PM to 12/28 @ 10 AM
Last week, we added Gold Flora to our Cannabis Position Monitor and rated it with a LONG BIAS, reflecting our positive outlook on the stock. This vertically integrated California cannabis company represents a significant expansion of our cannabis coverage into the nation's largest legal marijuana market. Please join us for a Black Book on December 28 at 10 AM, where we will share our initial analysis on Gold Flora. The discussion will provide insights into the company's business model, growth strategies, and investment potential as a publicly traded cannabis cultivator and distributor in the booming California market.
We look forward to exploring the opportunities and prospects for Gold Flora with you.
Cannabis Subscribers, CLICK HERE for event details (includes video and materials link)
Anne says: Anne Milgram Leads DEA Through Historic Cannabis Rescheduling Process.
In June 2021, Anne Milgram was sworn in as the Drug Enforcement Administration (DEA) Administrator, leading the agency's 10,000 employees across 334 global offices. The Biden administration expressed its intention to reschedule cannabis on October 6, 2022. This was announced as part of a statement on marijuana reform par, which the administration made good last week. Before joining the DEA, Milgram served as New Jersey's Attorney General from 2007-2010. As Attorney General, she was the chief law enforcement officer for the state, overseeing all state and county prosecutors and 30,000 local officers. She spearheaded significant reforms of the Camden Police Department that established it as a model for data-driven community policing. More recently, Milgram was a Professor at NYU School of Law, developing programs on using technology and analytics in law enforcement.
Now it's Anne's turn to set the stage for the next wave of cannabis reform.
On August 29, the U.S. Department of Health and Human Services (HHS) issued a letter advising a shift for cannabis from Schedule I to Schedule III, putting the Drug Enforcement Administration (DEA) into the limelight. The DEA has been reviewing the HHS's rescheduling recommendation and other evidence to decide if cannabis should be moved to Schedule III. While the HHS findings are authoritative, the DEA can consider additional concerns. The timeline and outcome are uncertain; many believe a decision is imminent, especially the news from last week. If rescheduling is pursued, typical federal rulemaking would ensue, though legal and procedural delays could slow the process. Concurrent efforts to shape associated policies and regulations would be critical for current and prospective cannabis companies. Depending on what Anne says, the DEA's resolution might trigger a cascade of legal and policy responses aimed at either contesting or fine-tuning the legal fabric around cannabis. In summary, while the move to Schedule III would not solve all legal conflicts, it would significantly benefit the state-regulated cannabis industry by reducing legal risks, improving research access, and providing substantial financial relief:
Reduced Criminal Penalties: The shift to Schedule III would likely diminish the severity and duration of criminal penalties associated with cannabis. This change would reflect a softer stance on cannabis at the federal level, potentially influencing state-level enforcement and penalties.
Enhanced Research Opportunities: Moving cannabis to Schedule III would facilitate greater access to research. This is because Schedule III substances face fewer restrictions compared to Schedule I drugs, which are considered to have no accepted medical use and a high potential for abuse.
Financial Relief: The current classification of cannabis under federal tax law imposes heavy financial burdens on state-regulated cannabis businesses. The move to Schedule III would likely alleviate some of these burdens, particularly concerning IRS Code section 280(e). This section disallows businesses from deducting ordinary business expenses if they are associated with trafficking a Schedule I substance. The reclassification would potentially end the application of this tax code section to cannabis businesses, significantly reducing their effective tax rates and improving cash flow. With increased capital availability, the cannabis industry could see a surge in research, infrastructure, and responsible growth investments. This would enable the industry to expand and mature more rapidly.
Continued Legal Conflict: Despite these benefits, the move to Schedule III would not resolve the existing conflicts between state and federal cannabis laws. Cannabis products would still need to undergo the U.S. Food and Drug Administration's (FDA) drug approval process to be lawfully marketed under federal law. Therefore, products that are legal under state laws but have not received FDA approval would continue to exist in a legal gray area.
Decreased Enforcement Likelihood: The reclassification could reduce the likelihood of federal enforcement of prohibition policies against cannabis, moving federal policy closer to public opinion, which increasingly supports cannabis legalization.
Increased Access to Capital and Financial Services: The end of the application of section 280(e) would likely lead to increased availability of capital and greater access to financial services for state-licensed cannabis operators. This change would make banking and funding cannabis ventures more attractive and less risky.
Unveiling Green Horizons: The Transformative Journey of Marijuana Decriminalization
The MSOS ended the week only down (2.1%) after a +8.6% rally on Friday on the heels of the Biden pardon proclamation. There was a slight outflow of 1.3 million out of the MSOS last week. In a decisive move, President Biden has announced a sweeping pardon for all U.S. citizens and lawful permanent residents previously ensnared by charges or convictions of simple marijuana possession, attempted possession, or usage, as defined by federal and D.C. statutes. This blanket pardon encompasses those who faced legal action and those who did not, focusing solely on minor marijuana-related offenses, excluding other controlled substances or more severe criminal activities. Non-citizens outside the lawful residency parameters at the time of their offense are not covered under this pardon. The process involves the Attorney General and a pardon attorney, who will scrutinize applications and bestow pardon certificates to those meeting the criteria.
Industry ramifications:
- It lifts the heavy burden of past minor marijuana offenses, clearing hurdles in employment, housing, and education for thousands.
- This action aligns with Biden's broader agenda of decriminalizing minor drug offenses and advancing racial justice reforms.
- It hints at potential future reforms in marijuana policies under the current administration.
- The retroactive nature of this pardon brings relief to many who faced charges in eras of stringent enforcement.
- This federal stance starkly contrasts with specific state policies resisting marijuana offense pardons, highlighting a national policy divide.
