Cannabis Trends to Watch For in 2024

Cannabis trends and investment activity in 2024 are likely to be influenced by election outcomes and the reclassification of cannabis at the federal level.

marijuana plant in gold pot with gold ornaments and streamers next to it
(Image credit: Getty Images)

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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Morgan Paxhia
Contributing Writer

Morgan Paxhia is Managing Director and Co-Founder of Poseidon Investment Management. With over 10 years experience in investing and finance, Morgan has developed a deep understanding of individual company analysis, portfolio construction, and risk mitigation. This content is not intended to provide any investment, financial, legal, regulatory, accounting, tax or similar advice, and nothing should be construed as a recommendation by Poseidon Investment Management, LLC, its affiliates, or any third party, to acquire or dispose of any investment or security, or to engage in any investment strategy or transaction. An investment in any strategy involves a high degree of risk and there is always the possibility of loss, including the loss of principal. This content should not be considered as an offer or solicitation to purchase or sell securities or other services. Any of the securities identified and described herein are for illustrative purposes only.  Their selection was based upon nonperformance-based objective criteria. The content presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Past performance is not indicative of future results.