Trade to Black Podcast: Cresco Labs and DEA Policy Changes

The TDR Three Key Takeaways regarding Cresco Labs and Cannabis Regulation:

  1. Cresco Labs CEO discusses DEA’s new cannabis scheduling proposal.
  2. Cresco Labs’ strategic responses to DEA regulatory changes discussed.
  3. CEO Bachtell optimistic about future cannabis regulation impacts.

On Friday we interviewed CEO of Cresco Labs, Charlie Bachtell, who discussed the growing state of cannabis regulation. This conversation comes at a crucial time, following the DEA’s acceptance of recommendations to potentially reschedule cannabis—a change that could greatly affect the industry.

Charlie Bachtell shared his insights into this important period, emphasizing the potential effects on Cresco Labs‘ operations and strategic positioning. “My understanding is legally, those timeframes are not explicit, they’re just based on precedent. So, I would expect, at a general level, that this is going to follow a fairly traditional process. I think that’s for the better,” Bachtell stated, highlighting the procedural expectations.

The discussion explored the specifics of the U.S. Drug Enforcement Administration’s recent steps towards recognizing the medicinal value of cannabis, as advocated by the Department of Health and Human Services. CEO of Cresco Labs did not avoid the business implications, noting, “Some of that will be influenced by the process that unfolds over the coming weeks. But I would say overall, it doesn’t change much in the short term. In the medium term, though, I do think you’re talking about a significant P&L implication that comes from the rescheduling.”

The broader implications of such regulatory changes were also a focal point, with Bachtell discussing how past interactions with legislators have shifted perceptions and fostered a more informed dialogue regarding cannabis regulation. “I think the industry has done a much better job over the last couple of years of educating the legislators to get them to understand the importance of what we’re working on here and why they need to do it,” CEO of Cresco Labs added.

Interviewed with CEO of Cresco Labs, Charlie Bachtell

Addressing the potential tax ramifications of rescheduling, Bachtell shared insights into strategic shifts within the industry, spurred by successful actions from other market players. “I would expect there to be. At the end of the day, I think the success of Trulieve in getting the IRS to actually send checks has been a catalyst for everybody to reevaluate their tax strategy. I think this is, while happening likely in 2024, you do have HHS, who has the authority when it comes to the science, taking their position and making it public in 2023, that cannabis has medicinal value,” he explained.

When asked about the timing of these changes, particularly in relation to the upcoming federal election, Bachtell responded, “We’ll know more as these incremental steps come out and we get official positions and schedules that get disclosed as we go through the process.”

Reflecting on the historical significance of these developments, Bachtell concluded, “We’ve never been here before. We’ve never had anything at a federal level. So it’s a nice new step to be standing from when this finally gets across the finish line.”

For those following the trajectory of cannabis regulation and its implications for cannabis stocks like Cresco Labs, this episode of the Trade To Black Podcast offers invaluable perspectives and forecasts. It captures a moment of significant potential change that could redefine the cannabis industry in the United States. 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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