A new analysis from Bank of America says cannabis rescheduling is “likely” to happen before the next presidential election.
Last week, President Joe Biden formally acknowledged that marijuana will be changed from a Schedule I substance to a Schedule III substance.
This “tectonic shift” in policy has been widely anticipated since April 30, when the Associated Press reported that Drug Enforcement Administration (DEA) officials confirmed support for the move, which was later confirmed by the Justice Department. was.
The White House has since declined to respond to questions on the subject, but statements from Biden, Vice President Kamala Harris, and White House Press Secretary Karine Jean-Pierre move the reclassification process forward. It was confirmed beyond any doubt that this was the case.
Despite confirmation of the move from the country's highest office, a number of sources noted there were still potential hurdles to overcome before the rescheduling could take place.
Chief among them were scheduling concerns, raising questions about whether the process, which typically takes months or even years, could be completed before the November election.
Furthermore, given that the decision was not made by the Drug Enforcement Administration (DEA) and the process did not follow the normal framework adopted by the administration, this decision could be subject to judicial challenge. Gender was brought up.
But Bank of America analysts said a 35-page supporting memo from the Office of General Counsel (OLC) could “prove critical” in overcoming these hurdles. He suggested that there was.
according to active investoranalysts believe that “the biggest potential obstacle to rescheduling cannabis…is the possibility of legal challenges.”
The OLC memo lists a series of potential objections to the legal challenges this measure is most likely to face, alongside an FDA/HHS review that outlines the matter from a scientific perspective, stating: It's going to be very difficult for the court to overturn this case.''
“Furthermore, we believe that the fact that these memos are already in place, given the reasoning behind them, will greatly expedite the timeline for a final rule, which will be finalized before the November election. I think it is highly possible.”
Analysts said that apart from the tax benefits for cannabis companies that come with the schedule change, the real upside is the potential for a “listing” on a major stock exchange and subsequent institutional investment.
“In addition to the schedule change, which provides a significant cash flow boost for U.S. businesses, they will now pay the regular effective corporate tax rate, compared to the 80%-plus effective corporate tax rate they currently pay, making it the most What will be interesting to see is whether that will happen or not, leading to increased uplisting and institutional ownership.”
Nevertheless, they cautioned that it is not yet clear whether a move to Schedule III alone will be enough for major exchanges and institutional investors to ultimately support the cannabis industry.
“We think the outlook will improve significantly if we look at incremental reforms such as Schedule III and SAFE banking, as well as the possibility of a new call memo.
“If it’s not enough for an exchange like the Nasdaq, we almost certainly think it will be for an exchange like the TSX. Listing is permitted.”
