May 8, 2024 - News

What reclassifying cannabis could mean for Mass. businesses

A Coast Cannabis employee measures the cannabis-infused gummies that should go in each bag and opens a bag to put the allotted gummies.

A Coast Cannabis employee in 2022 measures the number of cannabis-infused gummies that will go in the packaging. Photo: Steph Solis/Axios

The prospect of rescheduling cannabis has revived hopes for Massachusetts business owners that they'll face fewer hurdles to operating like a company in any other industry.

The big picture: The reclassification of cannabis would trigger a seismic shift in U.S. drug policy.

  • Federal officials will have to revisit everything from international treaties restricting marijuana distribution to rules around how banks can or cannot interact with cannabis-related businesses.

Reality check: The reclassification wouldn't fully legalize cannabis use, and the Feds could ultimately pick and choose what restrictions could still apply to cannabis as a Schedule III drug.

  • The government could continue to block cannabis companies from claiming deductions for businesses expenses.
  • It could also create confusion about whether dispensaries, delivery services and growers are governed by the Federal Drug Administration or state cannabis officials who have established their own regulatory systems.

State of play: The announcement raises more questions than it provides answers, says Angela Brown, co-founder and CEO of Coast Cannabis.

  • But for now, she and other business owners are looking forward to the possibilities that reclassification could bring.

Here's what she and other business leaders in Massachusetts said:

💰 Brown: Coast Cannabis would benefit from being able to deduct business expenses on its federal income tax returns.

  • Massachusetts started letting cannabis companies deduct business expenses, known as 280E deductions, on state tax returns in 2022.
  • The other game-changer with reclassification could be financing. Coast, which operates in two states, would likely seek loans or deals to fund marketing services as it expands across New England.
  • Lenders typically refuse to fund marketing plans for cannabis companies.

💰 Blandine Jean-Paul, VP of marketing at Ethos: Rescheduling could enable Ethos to file federal 280E deductions and refinance its debt.

  • The change could also let Ethos and other cannabis companies advertise on radio or social media platforms that are off limits for promoting Schedule I drugs.
  • Jean-Paul, a Braintree resident, also said the rescheduling could make it easier for employees to secure lines of credit for home repairs or other personal expenses.
  • "I [could] feel like a regular employee working for a regular company," Jean-Paul says.

🔬 Charlotte Hanna, Rebelle founder: Hanna, CEO of the South Boston dispensary, is excited about the prospect of scientists getting more access to cannabis in clinical trials.

  • "This will create immense economic opportunities while allowing more people to experience the healing power of this miraculous plant," she says in a statement
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