For months, Senate Majority Leader Chuck Schumer has said that he is working on a bill to federally deschedule cannabis and that he would do all he could to advance the legislation, even without President Joseph Biden’s support. Schumer recently unveiled a draft of his comprehensive cannabis reform, the Cannabis Administration Opportunity Act, which would remove marijuana from the Controlled Substances Act, let states decide how to legalize cannabis, and launch social equity programs that would help disadvantaged communities, among others.
Although the draft legislation faces a Herculean challenge in advancing past the U.S. Senate, experts are already weighing in on how it will affect the players in the American cannabis industry. There will definitely be winners and losers if Schumer’s bill, or any other federal cannabis legislation for that matter, were to advance and become law.
Most experts agree that the immediate beneficiaries would be large, well-capitalized companies, with 3C Cannabis Consulting CEO Nic Eastley predicting that the “big dogs” will be the major winners. This would include multistate operators such as Curaleaf in Massachusetts and Green Thumb Industries in Illinois; cannabis product brands that have a national footprint such as California-based Cookies and Wana Brands in Colorado; retailers with shops in in-traffic locations such as the Las Vegas strip-based Planet 13; and Canadian products that are poised to expand into America.
Small multistate operators with relatively little investment along with indoor cultivation as well as mainstream businesses that aren’t in the cannabis space such as tobacco companies and alcohol distributors that have the capital and infrastructure and capital to enter the cannabis market and dominate also stand to benefit from federal legalization.
However, this doesn’t mean that only the larger companies will be enjoying the spoils. Thanks to extensive social equity requirements, smaller businesses will be offered protections against much larger firms with extensive capital and given the opportunity to flourish. Smaller craft marijuana farmers would especially benefit from interstate commerce, but states are likely to fight entry from outside companies in a bid to protect local businesses from competition.
If Congress were to pass the SAFE Banking Act, which would protect banks and credit institutions that transact with cannabis businesses from federal reprisals, single-state operators and smaller multistate operators would have increased access to funding at lower interest rates. Presently, smaller businesses are paying interest rates between 11%–20% while larger operators have leveraged their equity to achieve interest rates below 10%. Ultimately, it is the larger businesses that will benefit, thanks to their existing infrastructure and substantial capital.
However, the entire cannabis industry will be the final winner since companies such as American Cannabis Partners and all other sector players will have fewer regulatory inconsistencies to deal with.
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