Home News Cannabis Company Awaits Federal Reform

Cannabis Company Awaits Federal Reform

502
0

BOONTON, N.J.–TerrAscend, a prominent cannabis company, is closely monitoring potential federal cannabis reform before incorporating any benefits into its operating strategy, according to Chief Executive Ziad Ghanem.

Ghanem acknowledges that progress in Washington can be slow and unexpected roadblocks can emerge, particularly within the cannabis industry. “In most cases, common sense prevails, but we have learned that common sense does not always apply to cannabis,” he stated during an interview at TerrAscend’s cultivation and processing facility in Boonton, N.J. “Therefore, we formulate our strategies independently of any potential reform.”

Nonetheless, Ghanem holds a cautious optimism that recent developments surrounding cannabis indicate a shift from “if” to “when” the federal government will relax its restrictions on the industry.

Over the past few months, two significant avenues for regulatory changes have emerged. These changes could lead to reduced taxes and improved access to banking services for cannabis companies. The primary aim is to eliminate major obstacles faced by state-licensed cannabis businesses operating in a country where the product is considered illegal.

In late August, the Department of Health and Human Services urged the Drug Enforcement Agency to reschedule marijuana as a less dangerous substance. This action would alleviate the burdensome tax regime currently preventing state-licensed cannabis companies from enjoying the same federal tax deductions on business expenses as companies in other industries.

Industry analysts speculate that the DEA may reschedule marijuana as early as this month or in early 2022, given the Biden administration’s support for the cause and the typical duration it takes for the agency to review recommendations from HHS.

“The logical path suggests they will adopt the HHS’s recommendation,” expressed the CEO. “If that occurs, we will finally operate like a normal industry.”

The Potential Impact of Tax Reform on TerrAscend

TerrAscend, a leading cannabis company, is considering the potential implications of a significantly lower tax liability. According to the CEO, if the company were able to deduct business expenses, it could have added over $30 million to its bottom line for this year alone, and more than $40 million for the following year.

However, analysts surveyed by FactSet have projected that TerrAscend will record a net loss of $46.6 million in 2023. Despite this forecast, TerrAscend executives are actively exploring various options for utilizing the extra cash. The CEO describes the uncertainty as a “great problem to have.”

Another potential reform that could greatly benefit TerrAscend and the cannabis industry as a whole is legislation from Congress. In September, a key U.S. Senate panel advanced a bill known as the SAFER bill. If passed, this bill would allow marijuana businesses in states where cannabis is legal to collaborate with traditional banking institutions and gain access to financial services available to most other industries.

Although the SAFER bill still faces considerable hurdles before becoming law, TerrAscend is closely monitoring its progress, particularly regarding its borrowing and refinancing goals. The CEO believes that the bill, or at least its fundamental objectives, will eventually come to fruition. However, he acknowledges that its prioritization within a divided Congress remains uncertain.

Despite the unpredictable nature of both Congress and the Biden administration’s efforts, the CEO of TerrAscend remains optimistic about the potential for significant change in the near future. He believes that the industry’s longstanding challenges are beginning to crumble under the weight of various cracks and leaks.

Overall, TerrAscend and other cannabis companies are eagerly anticipating potential tax reforms and legislative advancements that would greatly benefit their operations and financial standing.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

  +  73  =  79