Cannabis Legalization and Cannabis Industry: Experts View

The TDR Three Key Takeaways regarding Expert views on Cannabis Legalization and Rescheduling:

  1. Dan Ahrens believes cannabis legalization takes a significant leap with Biden’s rescheduling move.
  2. Anthony Coniglio thinks new development impacts the SAFE Banking Act.
  3. Rescheduling is seen as a milestone, not the end, in cannabis legalization journey, Anthony Coniglio stated. 

On May 16, 2024, President Joe Biden’s announcement of the federal rescheduling of cannabis marked a pivotal moment in the cannabis legalization and cannabis industry. The shift from Schedule I to Schedule III signals a significant recognition of cannabis’s medical potential and sets the stage for substantial regulatory and market changes. To understand the implications of this development, we turn to insights from Dan Ahrens of AdvisorShares and Anthony Coniglio of New Lake Capital, who provide their perspective on what this means for the cannabis sector.

President Biden’s announcement represents a monumental shift in federal policy, with far-reaching implications for the cannabis industry. Dan Ahrens captured the significance of this news: “Today is momentous. It’s huge. I’m happy. I’m very positive it’s going through; there’s no turning back, but lots of steps in between.” This rescheduling is expected to alleviate some of the stringent regulations that have hindered research and industry growth, providing a clearer pathway for cannabis legalization.

Despite the historic nature of the announcement, the immediate market reaction was more subdued than many had anticipated. Ahrens observed, “The market, as I said, is not fully digesting this yet.” He emphasized the importance of understanding that this is just one step in a longer process, predicting multiple “legs up” and periods of volatility as the industry adjusts to the new regulatory landscape.

The prospect of increased institutional investment is one of the most anticipated outcomes of the rescheduling. However, as Anthony Coniglio pointed out, substantial barriers remain. “The multistate operators in the United States are still traded OTC. They’re still blocked at B of A Merrill. They’re still blocked at Morgan Stanley, UBS, and even my custody bank, Bank of New York Mellon. They’re not going to change something based on what the president says. They’re going to change something based on actual codified rules in place.”

One critical aspect of the rescheduling is its potential impact on the SAFE Banking Act. Coniglio expressed optimism that this development could provide the political momentum needed to pass the act, stating, “I think it provides political cover.” The SAFE Banking Act would allow cannabis businesses to access traditional banking services, which is currently a significant challenge due to federal restrictions.

However, both Ahrens and Coniglio cautioned that rescheduling alone might not be sufficient to trigger immediate uplisting on major stock exchanges. Coniglio explained, “When I look at this rescheduling, it’s not going to change that fact. Can New York and NASDAQ change their mind and change their policy? For sure they can, but I think, to Dan’s point, they’re going to need something to really rest their head on.” This highlights the necessity for a strong regulatory framework that provides clear guidelines and reassurances to financial institutions.

The rescheduling announcement is a critical milestone, but as both experts emphasized, it is part of a longer journey towards full normalization and legalization of cannabis. Coniglio noted, “This is a huge milestone on that path to normalization and legalization. This isn’t the destination. This is just one of those guideposts along the way.” The upcoming 60-day public comment period will be a crucial phase, allowing stakeholders to voice their concerns and influence the final regulations.President Biden’s announcement on cannabis rescheduling marks a significant turning point for the industry, offering a glimpse of the potential future landscape of cannabis regulation and market operations. As Ahrens aptly put it, “There’s a whole lot more information to be digested and to get codified.” The insights from Ahrens and Coniglio explains the complexity of the road ahead, but also the opportunities that lie in wait for an industry. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.

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