To have a conversation about cannabis in your state or any other jurisdiction, call Jamie at 302-750-9678 or schedule a conversation.
greenco is an East Coast cannabis advisory specializing in
macro & micro strategy, expansion,
industry research &
intelligence, municipal outreach and
market mechanics for regulators, stakeholders, and operators in adult-use and medical marijuana markets.
Forecasting state-based demand and supply imbalance, the price compression timetable, cannabis M&A's volatile valuations, and preparing for deal breaking delays in 2025's frothiest markets with a focus on the rollout of adult-use in
Connecticut,
New Jersey, Maryland, Pennsylvania,
Delaware, Ohio, and Florida.
The dismissal of the Boies lawsuit by the Massachusetts District Court was expected, but the goal was always to fail so the case can be appealed, ultimately on up through to the Supreme Court. Next stop is appeal to the
First Circuit in Boston with a ruling hopefully by year end. Best case scenario has the Boies path to victory taking years so there will be lots of developments to confuse and excite the space. This landmark litigation has even been blamed by the DEA as they attempt to drag rescheduling out as long as they can.
Threats to "reclassification," as rescheduling cannabis to S3 is now being called, are still rumbling, but the ALJ ("Administrative Law Judge") hearing is scheduled for 12/2/24 and a duration of two weeks or less will be the next positive signal. There will certainly be litigation and an attempt at an injunction to hold up the final rule being implemented, though a judge may simply reject that on the grounds that the request is without merit. The most bullish scenarios have a final rule coming late January 2025 and the reasonably bearish pushing that into the summer.
- December 2 : ALJ hearing (could run two weeks or longer)
- ALJ will compile all the evidence and make a rescheduling recommendation to the DEA
- DEA will consider, then issue a final rule by publishing it in the Federal Register
- The Final Rule will become effective 30 days after publication
Finally, all eyes are on the November 5 Florida ballot for obvious reasons and Yes on 3 is looking to poll in the mid-60s. Unlikely, but the industry could see a grand slam if North Dakota and South Dakota legalize, Nebraska legalizes medical, and Arkansas expands it's existing medical program.
The cannabis space will be more daunting than ever in 2025.
And the stakes are now so much higher as industry mechanics develop in two dozen state-based markets. Cannabis isn't remotely recession-proof and the 10-year (to never) wait for federal legalization has completely turned off institutional and retail investors. Regulatory reform is a bad bet, the East Coast has quickly become cannabis country and even calculated growth requires outsized CAPEX.
Rescheduling cannabis from S1 to S3 seemed effectively a done deal though the mic drop catalyst that the publicly traded company stocks desperately need will now come in 2025 instead of being part of any October surprise.
280E relief looks to be a 2025 avent and the IRS has come right out and said that MSOs taking the refunds ahead of time is uncool.
Institutional capital and pubco uplisting is still beyond the horizon though some pensions and other allocators are looking to move money toward cannabis. While state-based banking reform has gained momentum, SAFER isn't happening and the CSRA and intoxicating hemp will occupy any lame duck congress cannabis discussion. Even some of the stronger holdout operators are starting to fold in the trickiest markets like California, Oregon, Oklahoma, New Mexico, Michigan and Massachusetts.
As financing remains scarce, the pinch is felt industry wide with smaller single-state operators and cultivators nearly everywhere taking the biggest hit. Capital is far too constrained to sustain the measures of price compression and normalization being experienced across the heavily and even not so heavily taxed mature markets. Operators trying to stand up licenses in NY, NJ, CT, MD and DE are starved for the necessary resources.
Call or text Jamie at 302-750-9678 today to discuss your current place in the cannabis industry and plans for the uncertainty and undeniable growth that lies ahead.
