420 with CNW — Rescheduling Cannabis Could Lead to Broader Acceptance by the Mainstream Medical Industry

Moving cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA) could have significant implications for medical cannabis recommendations by doctors and potential insurance coverage for marijuana treatments. Currently, doctors refrain from prescribing state-regulated medical cannabis due to the risk of losing their licenses given that it lacks approval from the U.S. Food and Drug Administration (FDA).

Even if the Drug Enforcement Administration (DEA) reschedules cannabis, the prohibition on doctors prescribing state-regulated medical marijuana (MMJ) products would persist. Nevertheless, doctors could continue to recommend non-FDA-approved cannabis products to individuals seeking MMJ cards, allowing them to register as marijuana patients in their states.

Moving cannabis to Schedule III would enable doctors to prescribe FDA-approved marijuana medicines. This would align with the current practice where physicians are authorized to prescribe Schedule III substances, such as Tylenol with codeine, only if they have FDA approval.

Leah Sera, codirector of the University of Maryland’s Graduate Studies in Medical Marijuana program, highlighted that physicians prescribing Schedule III substances would be a substantial change. However, she warned that the scope may not be as extensive as the current dispensary offerings. FDA approval would still be necessary, requiring marijuana drugs to undergo the approval process before prescription, sale and dispensing in pharmacies.

Rescheduling might stimulate increased research and development of marijuana-based drugs. However, the lengthy FDA approval process means that prescriptions for new cannabis-related products could be years away, according to Justin Brandt of the Bianchi and Brandt law firm.

Sera notes that while rescheduling won’t permit doctors to prescribe medical cannabis from state-licensed dispensaries, it could positively impact their attitudes toward the substance. “Rescheduling might not directly allow prescriptions for state-licensed dispensary products, but it could foster informed discussions between medical providers and patients about marijuana and its potential benefits and risks,” she stated.

Attorney Eric Berlin, an attorney at Dentons Law Firm, states that moving marijuana to Schedule III could also render FDA-approved cannabis products eligible for insurance coverage. Currently, insurance covers only FDA-approved drugs.

However, there are exceptions, as some states such as New York, New Mexico, New Jersey, New Hampshire, Minnesota and Connecticut allow workers’ compensation reimbursement for medical cannabis. In contrast, others do not obligate insurance carriers to reimburse for medical marijuana costs. Some states, such as Massachusetts, outright prohibit insurance coverage for medical cannabis.

Julie Schum of the Quintairos, Prieto, Wood and Boyer law firm noted that insurers might find covering medical marijuana more cost-effective than opiates since at least 30% of worker’s compensation claims involve opiate prescriptions. Such a decision would lead to a lot more insured people opting for medical cannabis products from enterprises such as Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) if they were sure insurance would cover the cost.

About CNW420

CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.

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420 with CNW — Regulators in New York Reach Settlement Regarding Marijuana Business Licensing

Cannabis regulators in the state of New York have reached a settlement with veterans who had filed a suit over the licensing process in the state. The settlement’s completion will allow an injunction that was effected from August to be lifted. The temporary injunction, which was enacted by the state’s Supreme Court, has prevented hundreds of holders of conditional adult-use retail dispensary licenses from launching their businesses.

Regulators in the state launched the recreational retail-dispensary program to afford those who were disproportionately affected by the drug war before marijuana became legal an opportunity to enter the legal marijuana industry. The program’s objective was to create a cannabis industry that was centered on social equity.

When filing their lawsuit, the veterans claimed that the regulators acted ultra vires and violated marijuana law by giving preference in the application process, instead of opening it to the general public as stipulated by the law. The veterans also asserted that the award system breached the state’s constitution, citing that under the law, disabled veterans could qualify as economic and social applicants, which entitled them to certain licensing benefits and priorities.

The agreement between the veterans and regulators in the state has happened at a time when there’s considerable change in how regulators in the state approach the rollout of marijuana licensing. Earlier in September, regulators expanded their licensing program to allow for more diversity between applicants. This decision allowed multistate operators to enter the market, which was at the time dominated mainly by a restricted number of entrepreneurs and unlicensed dispensaries.

This lawsuit isn’t the only legal challenge marijuana regulators in the state of New York face either. In March, medical cannabis operators in the state filed a complaint against the regulators. Their objective was to secure license issuance for all applicants of retail dispensary licenses. The operators asserted that the agencies hadn’t fulfilled their duties as stipulated by the law and that their actions had endangered the safety and health of the people of New York.

Last year, Variscite, a company based in Michigan, also filed a lawsuit against the regulators. The aim was to obtain a preliminary injunction against licenses awarded in specific regions of the state. The company argued that the preference for in-state operators by the licensing program prevented interstate commerce, and in turn, violated the dormant commerce clause. The case was resolved earlier in May, with the Cannabis Control Board approving a settlement.

The cannabis industry is always engaged in efforts to improve one policy or the other due to how stringently prohibition was enforced, and the progress made in New York is likely to be welcomed by industry actors elsewhere, such as Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF).

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CannabisNewsBreaks – Lexaria Bioscience Corp.’s (NASDAQ: LEXX) DehydraTECH(TM) Shown to Improve Oral Performance of GLP-1 Drug in Human Pilot Study

Lexaria Bioscience (NASDAQ: LEXX, LEXXW), a global innovator in drug delivery platforms, today announced positive interim results from a human pilot study currently underway evaluating DehydraTECH(TM) technology for the oral delivery of the glucagon-like peptide-1 (“GLP-1”) drug semaglutide, which is available commercially in the branded product Rybelsus(R). A prominent university research center is performing the study, comparing a single 7 mg semaglutide dose of a Rybelsus tablet (“control”) to a matching dose from Rybelsus that had been compound formulated in capsule form using DehydraTECH processing technology enhancements (“DehydraTECH GLP-1”). According to the update, blood was examined by a third-party laboratory using a validated bioassay 18 times over the first 10 hours and once again 24 hours after dose administration. Subjects were monitored in the study site over the entire 10-hour duration post dosing, and then allowed to depart, resume normal activities and return to the study site the following day for performance of the 24-hour evaluation time point.

The first post-baseline blood was sampled 20 minutes after oral administration and, at that point in time, the DehydraTECH GLP-1 blood semaglutide level was ~125% higher than that of the control. At each of the 19 blood sample time points, the DehydraTECH GLP-1 blood semaglutide levels were higher than control levels. Further, the DehydraTECH GLP-1 peak was achieved faster at 120 minutes (as compared to 160 minutes for the control) and with a 16% higher blood semaglutide level than the control. Notably, the blood semaglutide levels achieved with the control were proportional to those achieved by other researchers in similar single dose cross-over Rybelsus development informing studies, further suggesting that the blood semaglutide level gains evidenced by the DehydraTECH GLP-1 formulation were distinct relative to the commercial product.

To view the full press release, visit https://cnw.fm/PmGCN

About Lexaria Bioscience Corp.

Lexaria’s patented drug delivery technology, DehydraTECH(TM), improves the way active pharmaceutical ingredients (“APIs”) enter the bloodstream through oral delivery. Since 2016, DehydraTECH has repeatedly demonstrated the ability to increase bio-absorption with cannabinoids, antiviral drugs, PDE5 inhibitors and more. DehydraTECH has also evidenced an ability to deliver some drugs more effectively across the blood brain barrier. Lexaria operates a licensed in-house research laboratory and holds a robust intellectual property portfolio with 37 patents granted and many patents pending worldwide. For more information, visit the company’s website at www.LexariaBioscience.com.

NOTE TO INVESTORS: The latest news and updates relating to LEXX are available in the company’s newsroom at https://cnw.fm/LEXX

About CannabisNewsWire

CannabisNewsWire (“CNW”) is a specialized communications platform with a focus on cannabis news and the cannabis sector. It is one of 60+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, CNW is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, CNW brings its clients unparalleled recognition and brand awareness. CNW is where breaking news, insightful content and actionable information converge.

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Software Effective Solutions Corp. (SFWJ) Is ‘One to Watch’

MedCana announced in May 2023 full-scale production of non-THC cannabis for export to Europe
The company earlier in 2023 commenced construction of crop production infrastructure at sites in Central and South America
MedCana has engaged in talks with the government of Argentina about starting production in that country
The company in 2023 acquired the assets of Tokan Corp., including an ERP software platform for the cannabis industry

Software Effective Solutions (d/b/a MedCana) (OTC: SFWJ) is a global infrastructure and holding company in the cannabis industry. MedCana currently has five companies focused on pharmaceutical cannabis production, as well a software company focused on managing processes for plant-to-patient operations. The recent acquisition of an irrigation and greenhouse technology company has rounded out MedCana’s portfolio of holdings.

MedCana’s focus is on developing clients and companies in Latin America, initially in Colombia, and partnerships with laboratories, research facilities and hospitals throughout the world. MedCana is building the technology, laboratories, growing facilities and scientific teams to provide premium pharmaceutical-grade cannabis extracts to the world.

MedCana’s goal is to be the world’s premier resource for pharmaceutical cannabis products. The company believes its advantage is its global view and reach. From initial cultivation to final product, MedCana aims to help partners produce pharmaceutical CBD and other extracts that will have no equal.

The company’s mission is to utilize its technology to partner with and develop companies that provide premium pharmaceutical-grade cannabis extracts with absolute integrity, sustainability and social responsibility. MedCana’s team of pharmaceutical scientists includes some of the most respected chemists in the world. They aim to ensure that the company’s customers and partners create premium cannabis extracts that meet the growing worldwide demand. MedCana’s software is designed to ensure traceability and quality from seed to finished product.

MedCana is headquartered in Austin, Texas, with offices in Colombia.

Production

MedCana announced in May 2023 the beginning of full-scale production of non-THC cannabis for export to Europe in response to high demand in that market. This expansion comes after the successful completion of full crop cycle testing and infrastructure development at production sites in Columbia.

The recent acquisition of the assets of Tokan Corp., a software company focused on creating an enterprise resource planning (“ERP”) platform for the cannabis industry, and Eko2O S.A.S., a greenhouse and irrigation engineering company, has positioned MedCana for explosive growth in the region.

As a MedCana subsidiary, Eko2O SA will increase the company’s revenue potential in Central and South America. The subsidiary specializes in the construction and distribution of greenhouses and sophisticated irrigation platforms. A positive outlook has resulted from the company’s expansion as it investigates new opportunities for greenhouse and irrigation system installations in Panama and Uruguay. These opportunities are expected to accelerate Eko2O’s development and strengthen its position as a top supplier of innovative agricultural solutions in cannabis and other sectors that are quickly moving to high technology agricultural production.

In addition, MedCana has started talks with the government in Argentina about possible incentives for beginning operations in that country as part of its ongoing worldwide development strategy. Support from the Argentinean government and the start of new operations there would greatly increase MedCana’s market share in Latin America and solidify the company’s position as the market leader in the cannabis industry.

Market Opportunity

According to a report by Grand View Research, a San Francisco-based market research and consulting company, the global cannabis extract market was valued at $3.5 billion in 2022 and is expected to expand at a CAGR of 20% from 2023 to 2030 to be worth more than $15 billion.

Growing demand for cannabis extracts, including oils and tinctures, and the increased legalization of marijuana for the treatment of different chronic ailments like arthritis, Alzheimer’s, anxiety and cancer are driving the expansion of the industry. The marijuana derivative industry is flourishing due to a greater understanding of its various medical benefits.

Management Team

Jose Gabriel Diaz is CEO of MedCana. He has successfully built, grown and sold multiple telecom companies. He was senior vice president of sales at IP Communications, a national high-speed data provider. He also founded Reallinx, a national data carrier later sold to GTT Communications. Additionally, he is currently president of the A.E.M. Business and Entrepreneurship Association in Austin, Texas.

Claudio Jiménez Cartagena, QF, Ph.D. is Chief Scientific Officer at MedCana. He joined MedCana after working with Sosteli Pharma as Technical Director and serving as a director consultant for the Corporation for Agricultural Industrial Development at the University of Antioquia in Colombia. Before that, he worked as the scientific director at the Institute of Food Science & Technology. He holds a bachelor’s degree in pharmaceutical chemistry, a master’s degree in basic biomedical sciences and a doctoral degree in Environmental Engineering from the University of Antioquia.

Julián Alberto Londoño Londoño, Ph.D., is Senior Vice President of Operations at MedCana. He previously served as general manager for the Corporation for Agricultural Industrial Development, and as Chief Scientific Officer at Sosteli Pharma in the Resource Management Department. He has developed multiple U.S. patents, and recently served as senior advisor to the Secretariat of Agriculture Development for the Government of Antioquia. He holds a doctorate in Chemical Sciences from the University of Antioquia.

For more information, visit the company’s website at www.MedCana.net.

NOTE TO INVESTORS: The latest news and updates relating to SFWJ are available in the company’s newsroom at https://cnw.fm/SFWJ

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420 with CNW — NORML Deputy Director Calls Out Republican Politicians for Trying to Subvert Voters’ Wishes on Marijuana

Paul Armentano, who works as deputy director at NORML, a nonprofit aimed at advocating for the reform of marijuana laws, recently penned a post for The Hill in which he expressed concerns about a growing trend in which GOP lawmakers in different states have actively taken steps to subvert the wishes of voters with regard to marijuana legalization. Recently, Ohioans made a decisive choice in favor of Issue 2 — a citizen-driven ballot initiative marking a significant step toward legalizing the cultivation, possession and sale of recreational cannabis.

The vote was in line with a broader national trend where, across the United States, a substantial two-thirds majority, spanning Republicans, Democrats and Independents, supports the legalization of marijuana. Notably, of the 24 states that have embraced legalization, more than one-half have done so through direct public votes.

Ahead of the Ohio election, polls conducted by Baldwin Wallace University left little room for uncertainty regarding public sentiment. Issue 2 found strong backing from diverse demographic groups, transcending educational backgrounds, religion, race, age, political affiliations and gender. The widespread support indicated a clear mandate from the people for a change in marijuana policy.

Given this expansive public backing, one might expect elected officials to mirror the enthusiasm for cannabis legalization. However, this is not the case, particularly among GOP politicians. In the lead-up to Ohio’s election, prominent figures such as GOP Governor Mike DeWine and other Republican leaders actively campaigned against the initiative. Moreover, the GOP-led Senate went a step further, passing a resolution condemning the legislation, with the Senate leader expressing intentions to amend certain provisions of the newly approved law that he found objectionable. The flexibility offered by the statutory nature of Issue 2 allows state lawmakers to make legislative changes.

This resistance from GOP officials post-election mirrors patterns observed in other states. In 2020, despite 54% of South Dakotans voting in favor of a constitutional amendment supporting recreational marijuana, GOP Governor Kristi Noem initiated litigation challenging the vote, eventually nullifying the election results. Similarly, in Mississippi, a GOP mayor’s litigation successfully overturned the votes of 74% of state residents who had approved a ballot legislation in 2020 for legal cannabis access.

The trend extends to Florida, where the GOP attorney general seeks to preemptively thwart a proposed marijuana legalization initiative slated for the 2024 ballot. Despite gathering more than a million signatures and enjoying majority support among Florida voters, the fate of the proposal now rests with the state’s Supreme Court.

Regardless of personal views on marijuana legalization, the undemocratic maneuvers employed by some GOP lawmakers should raise concerns. In a well-functioning democracy, elected officials are expected to represent the views of their constituents. However, on the matter of marijuana law reform, GOP lawmakers frequently sidestep or actively undermine the expressed will of the voters. This poses a potential risk, given the increasing bipartisan backing for legalization.

Marijuana industry players such as Tilray Brands Inc. (NASDAQ: TLRY) (TSX: TLRY) are likely to keep an eye on how this form of pushback to cannabis policy reform will pan out over the coming years.

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420 with CNW — Study Suggests Cannabis Enables Users Quit Prescription Sleep Medications

A recent study into the sleep habits of marijuana users facing sleep difficulties shows that a majority of participants prefer cannabis over other sleep aids, citing improved outcomes the following morning and fewer side effects. The consumption of CBD, THC and myrcene-infused joints or vaping products emerged as particularly popular choices among participants.

Contrasted with conventional sleep aids or abstaining from them altogether, respondents conveyed a heightened sense of refreshment, focus and improved functionality in the mornings after using cannabis. This was coupled with a decrease in nausea and headaches. However, users did acknowledge some adverse effects, such as waking up feeling groggy, anxious and irritable.

The study, undertaken by psychology researchers from Washington State University (WSU) and published in the “Exploration of Medicine” journal, is the first to compare marijuana to both over-the-counter (OTC) sleeping medication and prescription sleep aids (PSAs). According to Carrie Cuttler, coauthor of the study, cannabis did not exhibit a hangover effect, differentiating it from alcohol and long-acting sedatives. However, lingering effects SUCH AS sleepiness and mood alterations were reported.

The survey, conducted through the Strainprint medical cannabis app, involved 1,216 participants. A substantial 64.9% disclosed experiencing sleep issues for a minimum of five years, and nearly 70% claimed to have utilized marijuana for sleep aid for at least a year. About 38% had been employing marijuana for sleep assistance for one to three years.

Approximately 82% of marijuana users do not currently rely on PSAs or OTC sleep medications. However, more than one-half admitted to having used those substances in the past, signaling a shift toward perceiving marijuana as a superior option. More than 50% of respondents also revealed using marijuana every night to facilitate sleep, predominantly through smoking joints (46.1%), vaping flowers (42.6%) or marijuana oil (42.5%) before bedtime. Edibles and vape pens were chosen by nearly one-third, while 14.6% opted for cannabis capsules.

Although inhaled forms of cannabis were generally favored, the researchers noted a preference for smoking and vaping among those with sleep issues due to the rapid onset and the high percentage reporting difficulty falling asleep. The surprising observation was the lesser popularity of edibles or capsules, which have a more prolonged effect and could be more beneficial for maintaining sleep.

Concerning product composition, most participants favored high-THC products (60%), with 21.7% choosing a balanced THC–CBD blend. Myrcene emerged as the most popular terpene (49%), followed by linalool, limonene and beta-caryophyllene. Respondents attributed the positive effects of marijuana on sleep to its ability to relax both the body (81%) and mind (83%). It was also seen as preventing sleep interruptions (36.3%) and promoting deeper (56.2%) and longer (41.6%) sleep.

Among the 526 participants who used prescription and OTC sleep aids alongside marijuana, a significantly higher number reported feeling more refreshed, focused and functional after using marijuana compared to other sleep aids or none at all. They also experienced less nausea and fewer headaches. However, some side effects, such as dry mouth and red eyes, were more prevalent with cannabis use. Notably, participants reported more extended sleep durations and fewer nighttime awakenings when using cannabis alone compared to traditional sleep aids. Despite potential side effects, researchers suggested that cannabis’s side effects might be more tolerable than those associated with conventional sleep aids.

Acknowledging the survey’s bias toward individuals already using cannabis, the researchers stressed the need for future research to incorporate more objective sleep measures for a comprehensive understanding of cannabis’s effects on sleep.

It is eye-opening that despite what the prohibitionists say about marijuana, consumers are increasingly relying on products from cannabis companies such as SNDL Inc. (NASDAQ: SNDL) to attain improved sleep and reduce their reliance on prescription sleep aids.

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420 with CNW — Gallup Poll Finds Most Americans Disenchanted with Federal Drug Policy

A new survey has found that more than 50% of Americans believe the country has lost ground in the war on drugs. The poll, conducted by Gallup, also showed that 24% of respondents believed America had made progress. This is quite a difference from responses given on the same query in a 2019 survey, which stood at 30% for losing ground to 41% for making progress.

This difference can be attributed to growing concern and awareness about the opioid epidemic, which has seen many individuals fall victim to drugs such as fentanyl. The shift may also reflect increased awareness on how the criminalization of drugs by the federal government has failed to produce any positive outcomes.

The analysis also showed that 75% of Republicans believed America had made no progress on illicit drugs while only 12% held positive views. Most Independents also held negative views as per the poll results, with 52% believing that the situation was worsening and only 22% believing progress had been made. With regard to Democrats, 27% felt the situation was getting worse while 40% believed they had seen improvements.

The report noted that it was possible that the media had played a role in fueling the negative perspective on the drug war, with some coverage feeding into a narrative that associated the misuse of some substances with progressive politicians and policies. The poll also found that about 74% of Americans thought the drug problem was extremely severe, with Independents and Republicans rating the situation in their local areas similarly at almost 40%. Democrats, on the other hand, were less likely to believe this, with only 27% reporting these sentiments.

While the drug issue in the country wasn’t explicitly defined, Gallup noted that the results were released at a time when the number of individuals succumbing to overdoses of dangerous drugs was rapidly increasing. In its conclusion, the polling firm stated that the general public was the most pessimistic it had ever been with regard to the illicit drug problem in the country. It further noted that increasing concern about the nation’s progress could make drugs an even more significant campaign issue in the 2024 presidential elections, which would in turn put more pressure on candidates to formulate plans to address the issue.

Thus far, all Republican primary debates for presidential candidates have touched on the fentanyl overdose epidemic, with candidates such as former New Jersey Gov. Chris Christie emphasizing the importance of focusing on addiction treatment and preventative care. Others, such as the current governor of Florida, Governor Ron DeSantis, have called for a militarized response that targets drug traffickers.

The discontent that the American population has regarding the way the federal government has handled drug policy echoes the frustrations that the marijuana industry and its actors such as TerrAscend Corp. (TSX: TSND) (OTCQX: TSNDF) go through as they endeavor to serve their customers while adhering to state laws and trying to navigate contradictory federal law at the same time.

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420 with CNW — Could Rescheduling Make Marijuana Interstate Commerce Possible?

There is optimism among some marijuana executives that the federal government’s potential reclassification of cannabis from Schedule 1 to Schedule 3 could open the door for interstate commerce in marijuana products. However, legal experts in the marijuana industry caution that this optimism is only partially warranted.

Schedule 3, along with Schedules 4 and 5, currently allows interstate commerce only for drugs that have received approval from the FDA. This approval includes drugs such as testosterone, ketamine, anabolic steroids and certain formulations of THC, such as Syndros, Marinol and dronabinol.

The crucial factor, according to Bianchi and Brandt attorney Justin Brandt, is FDA approval. Only cannabis products approved by the FDA would be eligible for interstate commerce under Schedule 3. However, the legalization of medical marijuana at the state level does not automatically grant it Schedule 3 status. It remains separate from FDA approval and the Controlled Substances Act (CSA), making it technically federally illegal.

While non-FDA-approved cannabis products would remain federally illegal, the prevailing belief is that rescheduling will deter federal authorities from interfering with state-law-compliant cannabis enterprises.

Over the past decade, Congress has consistently passed budget legislation preventing the use of federal funds to crack down on state-regulated marijuana businesses. This legislative trend has contributed to the federal government largely leaving marijuana companies alone, despite the substance’s Schedule 1 classification.

The potential move to Schedule 3 is expected to further reduce federal interference with compliant businesses that adhere to state laws. Moreover, if states have established agreements allowing for interstate commerce under specific conditions, as seen in Washington, Oregon and California, federal intervention could be even less probable.

Hawaii is also testing federal cannabis enforcement boundaries with legislation allowing state-licensed companies to sell wholesale marijuana to businesses on other islands. However, the legislation acknowledges that state law does not override federal marijuana prohibitions, emphasizing the inherent risks involved in such activities.

Jaclyn Moore, CEO of Big Island Grown, who completed the first interisland transport under these regulations, underscores the importance of compliance. She recognizes the uncertainty regarding federal interference and advises businesses to prioritize compliance, particularly given the greater need for enforcement against the illicit market.

Eric Berlin from global law company Dentons suggests that FDA approval for marijuana products would facilitate full engagement in interstate commerce, potentially opening avenues for states to enact certain levels of interstate trade. Nabis CEO Vince Ning acknowledges that while rescheduling may not change the legal landscape for state-regulated cannabis products, it could influence federal law enforcement policies and attitudes toward interstate commerce.

Entities such as Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) are likely to weigh their options once federal law eventually makes it possible for interstate commerce in marijuana products to take place.

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420 with CNW — Congressional Researchers Say High Federal Taxes on Marijuana May Hamper Industry’s Economic Potential

The Congressional Research Service recently published a report that cautions legislators to consider the possible consequences of levying high taxes on cannabis products in the event that marijuana gets legalized federally. This comes as Congress considers several reform initiatives and the DEA concludes its review of marijuana scheduling and makes a decision on whether or not to reclassify cannabis as a Schedule 3 drug under the Controlled Substances Act, as recommended by the U.S. Health and Human Services Department.

In a previous report, the nonpartisan research body argued that the DEA was likely to reschedule cannabis based on previous precedents. In its most recent report, the body states that the potential economic impacts of recreational cannabis could be major considerations in any actions taken by Congress on the drug, warning that reliable federal scientific data on this particular topic is scanty given the substance’s ongoing prohibition.

The report advised that Congress gather additional data through agencies such as the Bureau of Economic Analysis as well as Bureau of Labor Statistics. The report also discussed the possible descheduling or rescheduling of cannabis, arguing that imposing federal taxes on the drug much like the taxes levied on tobacco could affect the drug’s economic development capacity.

The Congressional Research Service explained that a balanced approach was needed when it came to marijuana taxes, noting that legislators would need to consider the benefits of increased revenue vs. the drawbacks of a possible consumer resistance against high taxes that may permit the black market to proliferate. It then cited some studies whose findings posit that high tax rates levied on cannabis — and the consequent high prices for recreational cannabis products could heighten the odds of potential consumers turning to the untaxed illicit market.

The body also presented a counterargument, claiming that high cannabis taxes could even deter some individuals from trying the substance altogether, particularly those who were new to adult-use cannabis and weren’t likely to buy from the illicit market. In addition to this, it pointed out modest bits of legislation that could relieve some of the peculiar financial challenges cannabis businesses in legal states faced due to prohibition. This includes the Secure & Fair Enforcement Regulation (SAFER) Banking Act, which was cleared in September by the Senate’s Banking Committee.

This measure would create a safe haven from federal law for transactions with state-sanctioned recreational cannabis businesses and any entity handling the proceeds from such transactions, as well as restrict the ability of federal regulators to terminate a deposit account for a recreational cannabis business. Currently, however, the bill is yet to advance to the House.

With the right federal regulatory framework in place, enterprises such as Innovative Industrial Properties Inc. (NYSE: IIPR) that serve marijuana businesses could grow and thrive.

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420 with CNW — Survey Shows Growing Investor Interest in Cannabis MSOs

A recent survey indicates a growing optimism among institutional investors towards U.S. marijuana multistate operators (MSOs). Conducted by Calgary-based ATB Capital Markets, the survey involved 23 institutional investors, primarily hedge funds.

Frederico Gomes, the lead author of the report and a marijuana equity analyst, highlighted the increased bullish sentiment among investors, driven primarily by the potential rescheduling of marijuana by the federal government. The survey reveals that about 61% of respondents believe U.S. marijuana MSOs will outperform the S&P 500 in the next year. However, despite this positive sentiment, Gomes notes that the capital influx has not yet aligned with the bullish outlook from an institutional perspective.

The likelihood of the U.S. government rescheduling cannabis from Schedule 1 to 3 within the next 18 months was perceived as 75% by the surveyed investors. Yet, the majority of them reported either no change or reduced exposure to MSOs in the past six months. This indicates a cautious approach, possibly due to past regulatory uncertainties.

Investors expressed a 50% probability of Congress passing the SAFER Banking Act, legislation facilitating financial institutions to serve state-legal marijuana businesses without federal repercussions. This uncertainty is attributed to past failures in marijuana banking reform legislation and political ambiguities surrounding the new GOP speaker of the U.S. House of Representatives, Mike Johnson.

ATB sought to understand the factors influencing investors’ willingness to invest more in MSOs. Cannabis rescheduling emerged as the top priority for nearly 61% of respondents. On the other hand, the possibility of more MSO stock listings on the Toronto Stock Exchange (TSE) was deemed to be the least significant element.

Regarding capital allocation preferences, investors indicated a preference for MSOs to prioritize deleveraging and debt repayment, with organic growth being the second-most desired behavior. Mergers and acquisitions were not favored, and share repurchases ranked as the least-desired way for MSOs to allocate capital.

While investors displayed increased bullishness towards U.S. MSOs, their outlook on Canadian licensed retailers and producers was less optimistic, with 60% expecting underperformance compared to the S&P 500. The negative sentiment in Canada is attributed to poor operating results and shareholder dilution.

Interestingly, the survey revealed that only 52% of investors expressed interest in Canadian marijuana retailers and producers. This disparity can point to a possible acquisition opportunity for investors who are not conventional thinkers in the Canadian marijuana market.

Gomes noted that investors are wary due to past setbacks and are waiting for signs of improvement in terms of profitability and sustainable operations. The report notes that achieving sustainable profitability and positive free cash flow is seen as the most crucial factor, followed by a reduction in excise taxes.

As the policy direction of the United States becomes more clear after the U.S. Drug Enforcement Administration releases its rulemaking recommendation, cannabis companies such as Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF) may attract more investor interest.

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