The most action in the march toward federal legalization of recreational marijuana typically occurs during election years – 2024 will be no different for one of the top cannabis trends.
At the state level, Pennsylvania and Florida could potentially join the legal cannabis industry. Indiana, which did not appear to be entering the legal cannabis space previously, may also join the march toward legalization after introducing a ballot initiative for November.
Regarding federal progress, let's not forget to mention the SAFER Banking Act. There is no indication that the Act will ever progress on Capitol Hill and the issues it hoped to address will likely be resolved through other channels.
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Politicians seeking reelection may continue to discuss SAFER to garner support, but that ship has sailed. As an American voter, it is embarrassing to see that our elected officials have been unable to get more done involving this act since it was introduced years ago.
We are not the only ones frustrated about the lack of federal progress, leading others to explore separate channels, such as the judiciary branch. One example of this is the Boies Schiller Flexner lawsuit against Attorney General Merrick Garland. It would not be surprising to see Garland come forward with a memo similar to the Cole memo of years ago. If he does, it would be a meaningful step in the right direction.
We're watching a potential reclassification of cannabis at the federal level
Another meaningful step in the right direction would be the reclassification of cannabis under the Controlled Substances Act. There is a high probability that the Drug Enforcement Agency (DEA) will follow the Department of Health and Human Services' (HHS) recommendation to reclassify cannabis as a Schedule 3 substance.
We are all waiting on this move and believe it could be announced on April 19, 2024, since the 20th is a Saturday. Democratic leaders like Senators Chuck Schumer and Cory Booker may hold press conferences and try to take a victory lap, but they haven't played a significant role in this moment.
Will Congress pursue an excise tax?
We will also monitor Congress as federal lawmakers may attempt to pursue an excise tax once the 280e tax burden is removed. The potential excise tax is a political tool and we will ultimately see an unnecessarily punitive tax rate of 14%.
Implementing an unnecessary tax such as this would be unfortunate because the legal industry is battling an illicit market and the exploding intoxicating hemp market that is free of excise or 280e taxes lacks regulation. We expect Congress to act here, forcing intoxicating hemp into the legal, regulated channels.
The progress that can be made in 2024 will revive the animal spirits of cannabis and a tidal wave of liquidity will pour in. An influx of liquidity will allow debts to get refinanced and equity-raising to return, saving companies that are not surviving otherwise. Not to mention, it may open the door for the first U.S. operator to appear on a major U.S. stock exchange. Assuming we see the above come to fruition, 2024 will be the most exciting year ever in the legal cannabis industry.
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