Cannabis Industry Prepares for Federal Reform Amid Uncertainty
The cannabis industry is poised for significant change as it anticipates federal reform. Industry leaders are strategizing to navigate regulatory challenges and prepare for a future of expanded legal opportunities
Key Points
- 1Verano Holdings seeks relief from IRS Code 280E to reduce tax burdens
- 2Federal rescheduling of cannabis is crucial but not a complete solution
- 3Industry leaders emphasize the need for comprehensive cannabis reform
- 4Verano is expanding its product line and relocating to adapt to market changes
- 5State-level legalization efforts in Virginia, Pennsylvania, and Florida present new opportunities
As the cannabis industry eagerly awaits federal reform, George Archos, CEO of Verano Holdings, continues to advocate for his company to be treated like a standard business entity. At the forefront of his concerns is the burden imposed by Internal Revenue Code section 280E, which prevents cannabis businesses from deducting normal business expenses. This has resulted in Verano paying up to $100 million in excess taxes, funds that could have been used for expansion and innovation. The hope is that federal rescheduling of cannabis will alleviate these financial pressures, a sentiment echoed by many in the industry
The discussion around federal cannabis reform was a key focus at MJBizCon, where industry leaders gathered to strategize on navigating the current regulatory landscape. Shanita Penny, executive director of the Coalition for Cannabis Policy, Education and Regulation (CPEAR), and Charlie Bachtell, CEO of Cresco Labs, joined Archos in a panel to discuss the future of cannabis policy. They emphasized that while rescheduling cannabis to Schedule 3 under the Controlled Substances Act would be a significant step forward, it is not a panacea. The industry must continue to advocate for comprehensive reform that addresses various regulatory challenges
The 2018 Farm Bill, which redefined hemp, was a legislative victory for the cannabis sector, yet it did little to resolve the issues faced by operators in the regulated market. The bill allowed the hemp industry to flourish, but cannabis businesses continue to struggle under restrictive federal regulations. For companies like Verano and Cresco, achieving 'normalcy' in operations depends on further policy advancements that reduce financial and operational burdens. This includes addressing discrepancies in tax regulations and banking restrictions that currently hinder the industry's growth
Despite the slow pace of federal reform, Verano Holdings is proactively preparing for a future where cannabis is fully integrated into the legal business framework. The company has relocated its headquarters from British Columbia to Nevada, a strategic move to position itself advantageously in the evolving U.S. market. Additionally, Verano is expanding its product offerings, notably with the launch of the Hyphen oil vaporizer platform, which caters to consumer demand for innovative cannabis products. These initiatives reflect a broader industry trend of adapting to market conditions while anticipating regulatory changes
Looking ahead, Verano and other multistate operators are keeping a close watch on state-level developments, particularly in Virginia, where adult-use sales are set to begin by November 2026. The potential for adult-use legalization in Pennsylvania and Florida, where Verano has significant operations, also presents promising opportunities. These developments underscore the importance of remaining agile and responsive to both state and federal policy shifts. As Archos stated, the company is committed to monitoring and adapting to market dynamics to maintain its competitive edge in the burgeoning cannabis industry