August brought a whirlwind of activity in the cannabis industry as the US Drug Enforcement Administration (DEA) set a date for a long-awaited public hearing on the rescheduling of cannabis.
While this date delays the process until after the election, it is still possible that cannabis will be rescheduled before current President Joe Biden leaves office on January 25, 2025.
As anticipation builds, companies are beginning to better position themselves for changing market dynamics — August also brought the first-ever cannabis stock buybacks, as well as a new partnership between two multi-state operators.
State markets also made news last month, with Ohio seeing a strong launch of recreational sales, Delaware starting to accept license applications and New York’s legal market growing amid a crackdown on illicit sales.
Meanwhile, Missouri’s governor issued an executive order to ban sales of hemp-derived THC products, including beverages, which are popular in the state. So far the move is receiving heavy resistance.
Keep reading to discover more about these industry-shaping events.
In its quarterly filings, the company also shared a new position on its federal tax liability by claiming the company is no longer subject to Section 280E of the Internal Revenue Code. Section 280E prohibits businesses involved in the sale of cannabis from taking tax deductions or credits for expenses related to their operations.
“I don’t know that these people have fully considered and appreciated what the consequences are, and they’re much more severe than people realize,” Wykowski said, referring to a 20 percent penalty — on top of unpaid taxes — the IRS could impose on companies seeking a refund if the claim is ultimately rejected.
Curaleaf said it would amend its tax return from 2022, but admitted that the Internal Revenue Service (IRS) is not likely to agree with Curaleaf’s position and would likely audit the company. Shares of Curaleaf closed almost 6 percent lower following the earnings report.
Later, on August 20, the company’s Board of Directors authorized a stock buyback program worth US$10 million of common stock over 12 months.
It directed the Department of Health and Senior Services to embargo all products named in the executive order, and directed the Missouri Division of Alcohol and Tobacco Control to prohibit unregulated psychoactive cannabis products from being sold in liquor-licensed facilities.
Curio Wellness and Ascend Wellness Holdings, two cannabis multistate operators, have formed a manufacturing and distribution partnership to help both companies expand into new markets.
Under the terms of the deal, Ascend will manufacture and distribute Curio’s products in Illinois and New Jersey, where Ascend has a considerable presence, and in Massachusetts. Curio, headquartered in Maryland, will do the same for Ascend’s cannabis products in Maryland and Missouri.
The deal provides a cost-effective way for both companies to enter new markets.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Leave a Reply