Episode Transcript
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Speaker 1 (00:01):
From the WA and M Studio on the campus of
Florida A and M University. This is Mary Forum Radio,
a weekly conversation on the education and research of the
medical marijuana being conducted at MUNI.
Speaker 2 (00:12):
Hi, I'm Heidi Outway, your host for this conversation on
cannabis virtual Form, brought to you by the Medical Marijuana
Education and Research Initiative at Florida and M University. In
this conversation, we're talking about the ripple effects of the
federal government's recent decision to classify marijuana as a Schedule
(00:33):
three drug and how banking and tax changes for legal
medical cannabis operators could impact patient costs and access. So
let's talk and learn about this subject with our guests.
Dasei Smith is the owner of a Zail Tax Advisor,
LLC based in Tampa, Florida. He is a Certified Public
(00:55):
Accountant regarded as the Cannabis CFO. Dase welcome to the
tell us more about yourself.
Speaker 1 (01:02):
Thank you. It's good to be here, Heidi. It's good
to be here in front of a ratler nation as
well as the entire state of Florida. I appreciate you
having me again. My name is Isaah Smith. I'm a CPA.
I'm the owner of Azel Tax Advisor. So my background
is all things accounting and tax started. You know, I
got my degrees at the University of South Florida out
(01:24):
here in Tampa, worked for some of the biggest firms
in the city. My background was originally more in real
estate taxation. There isn't too many cannabis legacy firms out here,
so you know, if you want to get into cannabis,
you have to, you know, roll up your sleeves and
get out there and network and connect with people in
the community. So I've been doing that and been able
(01:45):
to grow my firm and provide a lot of back
office solutions to companies in the cannabis industry, whether that
be the month and closing, the tax function from preparation
to quarterly and annaly annually plan as well as more
ancillary items like cap raising, you know, helping with licenses
and stuff like that.
Speaker 2 (02:06):
Well, I'm so excited to dig into this conversation with you,
So to everyone watching, please share the link to this
form on your social media channels so others can learn
about this topic. We also want you to tell us
what you think about this form. By completing the survey
that will be posted on Mary's social media pages, your
name will be entered into a drawing in June twenty
(02:28):
twenty six to win a one hundred dollars gift card
provided by one of Mary's partners. Now, let's start this
conversation on cannabis. So for a little background, Under the
Trump Administration's twenty twenty six marijuana rescheduling proposal, federal officials
move to reclassify cannabis from Schedule one to Schedule three
(02:49):
under the Controlled Substances Act. This signals a major shift
in federal drug policy and medical cannabis regulation, and it
impacts banking and tax policies that restricted medical medical cannabis operators.
One of the biggest challenges medical cannabis businesses in Florida
have faced is limited access to financial institutions. So does
(03:12):
a you're an expert on this, can you explain why
this occurred to financial institutions?
Speaker 1 (03:19):
So when pre rescheduling, right, the stigma and the thought
process with cannabis is that the risk profile was very high. Right,
if it's federally illegal, A lot of banks felt like, well,
are we going to be potentially aiding and embedding liability.
Are we going to be helping with, you know, money
(03:39):
laundering schemes, people who claim to be in business for
one thing, but they're doing something other than what they
had claimed. We're looking at you know, potential FBI c scrutiny,
BSA Bank Security Act regulations and red tape. Just a
lot of I guess for lack of better words, work
that had to be put forward, and you know, big
institutions are saying, is this worth our time? Right now?
(04:02):
What's the ROI for this sort of thing? So for
a lot of them that they've been hands off, but
with rescheduling and moving cannabis from schedule one to schedule three,
they're now saying, Okay, there's some level of familiarity with
this because we are currently working with companies that have
scheduled three substances right, antabolic steroids. Right. Companies like GMC
(04:22):
and other supplemental companies are already having banking solutions you
at cannabis to the equation. Now they're saying, okay, we
understand what needs to be done once this goes from
schedule one to schedule three. So in the short term,
what I would predict is you're going to see a
lot of regional banks and credit unions move forward first. Right.
For one example, I was at a trade show recently.
(04:45):
My alma monored the University of South Florida. Their credit
union was there. They were like, Hey, we want to
be at the front lines. We want to work with
cannabis companies. We want them to feel comfortable to eventually
come come to us and for their banking solution. And
so I'm already starting to build relationships with their representation.
In the long term, you're going to see more of
(05:07):
your bigger, more established commercial banks, especially if the June
hearing goes the way that I think it could, You're
going to see more implementation at the commercial level.
Speaker 2 (05:19):
Okay, so you reference the Junie what is that about.
Speaker 1 (05:22):
So the June hearing is going to be regarding if
they're going to allow cannabis to go full recreational. As
of right now, the executive order was to reschedule medical
cannabis from Schedule one to Schedule three. There is no
assult use right now at the federal level. So that's
going to be in June. If they go full reck,
(05:43):
I mean all bets are off, You're going to see
a lot of funding, banking and capital kind of flow
into the industry because at that point a lot of
the red tape has been removed for good.
Speaker 2 (05:55):
Yeah. So it's been a few weeks since the announcement
of the rescheduling of medical cannabis. What are the next
steps in this process at the federal level and in
states that have already legalized it.
Speaker 1 (06:06):
So from the federal level, there hasn't been a ton of,
you know, monumental movement after the executive order. I would
say the biggest thing right now is probably the d administration,
which has some business owners kind of hesitant because they're saying, hey,
you know what exactly are we signing up for? Right?
They understand that we do want, you know, two ade relief,
(06:29):
but are we exposing ourselves to potential scrutiny from the
DA down the road. I Mean, there's certain questions that
are being asked on there that they feel could potentially
put not only themselves from a business perspective, at risk,
but also some of their supply chain partners at risk.
Now in certain states, specifically here in Florida, Right, they
(06:49):
have a vertical integration system also known as seed to sell.
It's one license for the entire supply chain system. So
if you have a cannabis company here in Florida, you're
not only the dispensary, you're also the grower or the cultivator.
You know, you have the lab testing center. So I
wouldn't necessarily be too caught up on that from a
(07:10):
Florida perspective, but from other states, you know, it could
be a big deal if you have a mixed you system,
medical and reck like California, Nevada, some of those states.
This this is kind of it's throwing them through a
bit of a loop. Now again the June hearing, if
the Junie hearing, if the result of the Junie hearing
is full reck, then from my understanding, the DA registration
(07:34):
wouldn't really make a ton of sense at that point.
So some companies are saying, hey, let's let's wait and
see what happens, and you if it's still medical only,
then you know, potentially forward the DADA registration could make sense.
It's similar to the fence and regulations from last year.
If you remember the Trump administration that made all you
know companies sign up on this website do like an
(07:57):
annual report. I did it for a few of my clients,
and you know people soone they said, this doesn't make
any sense, it's unconstitutional, and then it went away, right,
I mean the work I had done for my clients
basically is obsolete. We still have the forms, but they're
not necessary anymore. That we could potentially see that with
the DA registration as a result of the joring.
Speaker 2 (08:16):
Yeah, so the reclassification of medical cannabis at the federal level,
I mean cannabis companies can now open up dispensaries anywhere
in the US.
Speaker 1 (08:25):
Well, there is still state regulations, right, so you can
open a medical dispensary in a state that allows that.
They're not every state, does, we know Florida does. Georgia
just became the forty first state to also implement a
medical program. So it just depends on the state that
you reside in. In Florida, you can't. Now. The issue
(08:46):
with Florida again is the vertical integration. It requires a
lot of capital to be put up front because again
you are the dispensary, you're the grower or the cultivator.
You have to have a lapt testing center, you have
to have buildings, you have to have lan that takes
tens of millions of dollars in a lot of ways,
and there just isn't a lot of funding right now
(09:08):
for everyone to kind of have an opportunity to open
those companies here in Florida, which has created almost a
monopolistic system for some of the bigger companies like you know,
care Leaf and truly.
Speaker 2 (09:20):
Yeah. Well, my understanding is that this is a cash
only business right now because very few banks or financial
institutions were, like you said, offering loans, lines of credit,
payroll insurance, or all these other things that happen within
a business. Right So, could this rescheduling create opportunities for
smaller medical marijuana operators or new opportunities for those who
(09:42):
may have been struggling to access capital before.
Speaker 1 (09:46):
Yes, I do think in the long term it could.
In the short term, maybe not immediately. I just me personally,
and I keep kind of going back to this. The
state market really is going to determine and how successful
their cannabis industry is going to be based on what
they have, you know, put in place. Again, if we
go back to what's going on here in Florida with
(10:08):
their seed to sell, you also know there's vertical integration.
It's still going to be really tough if you're saying
that one license is allowed for everything, and you have
to have the capital to be able to do all that,
because you can't just segment like, Okay, well we're just
going to focus on lab testing. You can't do that
here in Florida. You have to have the entire thing
(10:29):
start to finish, because Florida feels as though that's more
efficient to be able to trace the activity that's going
on within these companies. So that's really the biggest hang up.
It's not necessarily you know, reclassification happened at the federal level,
all bets are off here at the state level, it's
it's still very state regulated. Florida is extremely limited and
(10:51):
have one of the more stricter cannabis policies in the country. Yeah.
Speaker 2 (10:56):
Have all the states already just jumped on the announcement
and made some changes Other states, Yeah, so you.
Speaker 1 (11:03):
Are seeing that so shortly after reclassification was announced. Georgia
immediately kind of move forward with their medical program. We're
seeing states like Indiana, if I'm not mistaking, their governor
had kind of put in a provision a while ago
that if Trump reclassified cannabis they would then move forward
with a medical program. And now that that's happened, we've
(11:24):
seen more outcry from that state like, Okay, that happened.
You know, you have to keep your word. We want
to be able to have a medical program. So you know,
there's still eight or nine states left that don't have
any sort of cannabis policy whatsoever, and I think those
numbers are going to wind. Yeah.
Speaker 2 (11:42):
So I would imagine that patients who are watching and
listening to this show they hear, when they hear cannabis reclassifications,
some may think, well, this make my medical marijuana more
affordable now that it's been moved to a lower schedule.
So realistically, could that happens?
Speaker 1 (12:01):
So realistically, the answer is yes, in the long term.
Right in the in the immediate short term, with medical
cannabis going from Schedule one to Schedule three, we're going
to see a lot of two AD tax relief, which
is a really good thing. They're gonna a lot of companies,
from my from my understanding and my prediction just kind
of speaking from a business owner, they're going to use
(12:23):
that extra capital that's coming into their business to pay
off loans. Right, a lot of these companies are under
bank they're overleveraged, that they don't have the cash flow
that they had hoped you know, over the past few years.
They're going to use that first wave of relief to
stabilize operations. They're going to expand infrastructure, right, So a
lot of these on the consumer side that would be
(12:46):
more of a long term play, allow companies to kind
of get established first. I wouldn't necessarily expect any sort
of immediate price drop because it's gonna if you know,
these these companies have to really start to you know,
grow and expand. Yeah.
Speaker 2 (13:00):
Well, we referenced earlier that because of all the restrictions
that these are like cash only businesses, so medical marijuana
patients in Florida had to go in with cash. So
we actually have a question from Chaubun ninety nine if
we can bring that up, when do you think the
dispensaries will be given an option to use credit card
or other payment options instead of cash.
Speaker 1 (13:23):
I mean, I wouldn't expect that to be you know,
I would expect that to kind of be a more
immediate solution. We're already starting to see that. I mean,
even myself with my company, I'm meeting with payment processing
companies almost all the time. They're like, hey, we want
to be able to come in and help provide payment
processing solutions to some of your clients. So I'm already
(13:44):
in the midst of having those conversations. So just from
my personal understanding, a lot of this implementation should begin immediately.
Speaker 2 (13:52):
Yeah. So I would also think that medical marijuana patients
may be asking if all of this will make it
easier for them to add says this type of medicine
in Florida and across the nation where it's legal.
Speaker 1 (14:07):
Right. Well, you know, Schedule three, you know, has loosened
a lot of the restrictions. It's not going to be
a sweeping okay, you know all this stuff is just eliminated.
You know, a lot of this. Again, we understand how
the government works. We're seeing what's going on with the
Trump administration. A lot of stuff. It's very slow. It
just is you know, So my hope that yes, you
(14:27):
will be able to kind of get more uh you know,
options and availability with that, but you know, immediate, any
sort of immediate relief. I would just kind of tell
people to you know, to pause on that.
Speaker 2 (14:38):
Yeah, And I recall you know also that this, the
federal rescheduling that just occurred with medical marijuana came after
Congress tried to pass some banking reforms under the More Act.
So can you tell me a little bit about what
happened back then and whether or not the More Act
(15:00):
could actually come back to kind of move this forward,
especially with the hearing coming up in June.
Speaker 1 (15:06):
Yeah, great question. So the More Act, right, we're talking
about the marijuana opportunity reinvestment and spongement at so this
is considered or regarded as one of the more expansive
and aggressive bills that's ever been seriously considered into law.
My personal feeling why it's kind of sold is a
(15:28):
lot it's not necessarily by parts, just you know, for
better words, a lot of the Republican side. I feel like,
you know, it's hard to digest because what actually goes
into it, right, They want not just rescheduling, right what
we're talking about now the More Act. They want complete deschedule.
They want cannabis off this schedule altogether, no two ad relief,
(15:52):
no restrictions, full go, you know, free market economy with cannabis.
They also want complete expungement for people who are incarcerated.
You know, we're talking about nonviolent marijuana related offenses, a
lot of those men and women black and brown. It
also is introducing a standardized excess tax and a centralized
(16:14):
taxing system for the industry, so it targets a lot
of areas not just in finance, but also in legislation.
Also we're talking about, you know, social equity. You know,
people feel as though it's just it's too broad, too
much to digest at one time, and that's the reason
why it keeps kind of stalling out in the Senate.
(16:34):
Me personally, I think a good idea to kind of
be to break it up into chunks and attack it
piece by piece and try to make it more bipartisan,
because I just with the way the political climate is
right now, I would have a hard time believing that
something like that would just pass and make it through
the Senate, especially with you know, some of the individuals
that currently hold those seats.
Speaker 2 (16:56):
Yeah, you're involved in a lot of different cannabis related
in industries. Tell me a little bit about what you're
hearing from who they are, and what you're hearing from
them when it comes to all of these changes within
the cannabis reclassification.
Speaker 1 (17:10):
Yeah, so you know, kind of some of the biggest concerns,
you know, pain points for lack of better words, that
I'm hearing from a lot of these companies, business owners
people like that in the industry is they're saying, how
soon can we get two AD relief? Right? That's the
big thing?
Speaker 2 (17:24):
Right now, tell me what to tell me what two
AD relief is?
Speaker 1 (17:29):
Okay, So section you know I r S. Section two
AD basically states that cannabis companies, any any company scheduling
a traffic or trafficking a schedule one substance will not
have any access to tax deductions. Right, So how we typically,
you know, do a tax return. We have a revenue,
you know, your cost a good sold or you know,
whatever the case may be. And then you have your
(17:50):
operating expenses, right so your depreciation you build and your rents,
your labor costs, stuff like that. If you run a
cannabis company, you don't get access to any of that.
So if you're making a million dollars, your your biggest
tax break is going to be your cost of goods sold.
And if you aren't doing your cost accounting correctly, that
number is still going to be very high. So we're
(18:11):
seeing effective tax rates for some of these guys north
of sixty percent, right, I mean that that is really
I mean yeah, it can get very very taxing for
a lot of these companies. So they want to know
how soon can we get to ADE relief. From my understanding,
it would be as soon as April twenty twenty six,
when when the executive order is released. There are also
(18:34):
some people feel as though it could be as soon
as when you rest it with the DA. I don't
necessarily agree with that, because again, we just don't know
what's gonna happen in June. If June goes full rereck
to me that that doesn't really it wouldn't make much sense.
The other big question regarding to AD and tax relief
is is it going to be retroactive? Are we going
to be able to take, yes, this sort of thing
(18:56):
for tax years where again you know you're you're paying
six seven figures and taxes. Are we going to be
able to you know, apply to AD retroactively. That's right now,
there is no solid answer from that. Me personally, I wouldn't.
I don't have necessarily high expectations for retroactive to AD
relief just because amended tax returns are are frankly of pain.
(19:18):
The IRS is is very short staff in that in
that area. So you know, even and even if they
do right, just for from personal experience, let's say you
amend a tax return from you know, twenty twenty three
in the year twenty twenty six, I wouldn't even expect
a response maybe twenty twenty seven, twenty twenty eight. So
even if you do get you know, retroactive relief again,
(19:40):
it's it's just not it's not going to be anything
quote unquote immediate.
Speaker 2 (19:44):
Well, cannabis became legal implored almost ten years ago, so
would he dispensaries and operators be able to go back
ten years?
Speaker 1 (19:51):
And that's what people are asking, Like, we've been doing
this for a very long time. It is a relief
going to look like twenty twenty six is great, But
I've been getting you know, beat over the head by
the IRS for like eight years, you know, like what
do we have here? So again, you know, there's no
solid answer from that. And I don't want to go
out and live and say, hey, you know, expect a
three year you know period where you can go back retroactively.
(20:13):
I just don't have the answer from that, but I'm
from my own personal judgment dealing with clients as far
as going back into past tax years and a minute
tax returns. It's a brutal process, it really is. So
I just personally don't have high expectations for that.
Speaker 2 (20:28):
Yeah. So what other kind of questions are you getting
from cannabis businesses that you work with, especially when it
comes to their pain points?
Speaker 1 (20:35):
Yeah, So, again, the banking thing is big. Obviously a
lot of these these companies are cash only, you know,
they want to know how soon, you know, can we
get involved with you know, banking, whether it be regionally
or commercial. And then the payment processing thing. Uh, those
are probably two of the biggest pain points. And again
I would expect more immediate solutions from regional banks and
(20:58):
credit unions, with the commercial banks coming probably you know,
post June or maybe even you know, more forward in
the twenty twenty six or future years. But again, schedule three,
you know, the reclassification is a right step in the direction,
and to me it has offered some sense of hope
for a lot of companies that have been just trying
(21:19):
to maintain right, just trying to stay afloat, hang on,
you know, That's kind of what we've been saying at
a lot of these trade shows and events. Relief is coming,
changes coming, don't exit the market yet, you know, kind
of hold line, you know things, things are going to change.
Speaker 2 (21:34):
Well, I think this has been a very rich conversation.
You've answered all the questions that I had. Do you
have any kind of closing thoughts that you'd like to
share with our listeners and viewers before we wrap up
this really informative conversation.
Speaker 1 (21:48):
Yeah, absolutely, So. You know, I personally feel that the
cannabis and even the hemp industry presents a unique opportunity
for black men and women in this space. You know,
this is fam you right, We're representing a HBCU here,
So you know, I just urge, you know, any aspiring
black entrepreneurs or people who are trying to get into
(22:09):
the industry to take action now. Right. We are seeing,
and this is something I've been saying for the past year,
so a potential title wave coming, similar to fintech, similar
to the dot com bubble, you know, two areas that
we kind of sat on the sideline and watched all
this activity, watch mergers and acquisitions. We watched people become Rich,
(22:31):
markus Zuckerberg, pier till you know pay how all these
sort of wonderful and we weren't defense in it essentially
at all. This is another opportunity. You know, there aren't
too many booming industries just coming around, you know, every day,
and here's a potential one. So I think, you know,
if black entrepreneurs are out there, you have a cannabis brand,
(22:51):
you know, get get your books in order now right,
you know, have banking ready financials now, because once the
banking solutions come, they're not just going to bank with anyone.
They're gonna want to see audit ready financials. They're gonna
want to see tax returns. They're gonna they're gonna go
through the books. If you don't have someone on staff,
whether it be a CPA or whatever, you don't have
someone on staff, you're going to be behind. And when
(23:13):
those banking opportunities come, those payment processing opportunities come, you're
not going to be able to take advantage of it
because you weren't ready. You know, get ready. See you
know they say stay ready, so you have to get ready.
And that's kind of my message right now to all
the entrepreneurs out there, all.
Speaker 2 (23:27):
Right, well, Dase, Thank you so much for being a
guest on this Conversation on Cannabis virtual form brought to
you by the Medical Marijuana Education and Research Initiative at
Florida and M University. Thank you to everyone watching this program.
Tell us what you think about this form by completing
the survey post it in the comment boxes on Mary's
Facebook and YouTube pages. If you complete the survey, your
(23:49):
name will be injured into a drawing in June twenty
twenty six to win a one hundred dollars gift car
provided by one of Mary's partners. We want you to
stay connected with family and Mary to access educational information
and resources about legal medical cannabis use and the consequences
of illegal marijuana use in Florida. You can follow them
on social media or visit the fam You Marry website.
(24:12):
We also want to encourage you to go to the
Florida Department of Health Office of Medical Marijuana Use website
to learn how to obtain a legal medical marijuana in
the state of Florida. Thanks everyone. The views and opinions
of our invited guests are not necessarily the views and
opinions of Florida Agricultural and Mechanical University, or the Medical
(24:34):
Marijuana Education and Research Initiative
From the WA and M Studio on the campus of
Florida A and M University. This is Mary Forum Radio,
a weekly conversation on the education and research of the
medical marijuana being conducted at MUNI.
Speaker 2 (00:12):
Hi, I'm Heidi Outway, your host for this conversation on
cannabis virtual Form, brought to you by the Medical Marijuana
Education and Research Initiative at Florida and M University. In
this conversation, we're talking about the ripple effects of the
federal government's recent decision to classify marijuana as a Schedule
(00:33):
three drug and how banking and tax changes for legal
medical cannabis operators could impact patient costs and access. So
let's talk and learn about this subject with our guests.
Dasei Smith is the owner of a Zail Tax Advisor,
LLC based in Tampa, Florida. He is a Certified Public
(00:55):
Accountant regarded as the Cannabis CFO. Dase welcome to the
tell us more about yourself.
Speaker 1 (01:02):
Thank you. It's good to be here, Heidi. It's good
to be here in front of a ratler nation as
well as the entire state of Florida. I appreciate you
having me again. My name is Isaah Smith. I'm a CPA.
I'm the owner of Azel Tax Advisor. So my background
is all things accounting and tax started. You know, I
got my degrees at the University of South Florida out
(01:24):
here in Tampa, worked for some of the biggest firms
in the city. My background was originally more in real
estate taxation. There isn't too many cannabis legacy firms out here,
so you know, if you want to get into cannabis,
you have to, you know, roll up your sleeves and
get out there and network and connect with people in
the community. So I've been doing that and been able
(01:45):
to grow my firm and provide a lot of back
office solutions to companies in the cannabis industry, whether that
be the month and closing, the tax function from preparation
to quarterly and annaly annually plan as well as more
ancillary items like cap raising, you know, helping with licenses
and stuff like that.
Speaker 2 (02:06):
Well, I'm so excited to dig into this conversation with you,
So to everyone watching, please share the link to this
form on your social media channels so others can learn
about this topic. We also want you to tell us
what you think about this form. By completing the survey
that will be posted on Mary's social media pages, your
name will be entered into a drawing in June twenty
(02:28):
twenty six to win a one hundred dollars gift card
provided by one of Mary's partners. Now, let's start this
conversation on cannabis. So for a little background, Under the
Trump Administration's twenty twenty six marijuana rescheduling proposal, federal officials
move to reclassify cannabis from Schedule one to Schedule three
(02:49):
under the Controlled Substances Act. This signals a major shift
in federal drug policy and medical cannabis regulation, and it
impacts banking and tax policies that restricted medical medical cannabis operators.
One of the biggest challenges medical cannabis businesses in Florida
have faced is limited access to financial institutions. So does
(03:12):
a you're an expert on this, can you explain why
this occurred to financial institutions?
Speaker 1 (03:19):
So when pre rescheduling, right, the stigma and the thought
process with cannabis is that the risk profile was very high. Right,
if it's federally illegal, A lot of banks felt like, well,
are we going to be potentially aiding and embedding liability.
Are we going to be helping with, you know, money
(03:39):
laundering schemes, people who claim to be in business for
one thing, but they're doing something other than what they
had claimed. We're looking at you know, potential FBI c scrutiny,
BSA Bank Security Act regulations and red tape. Just a
lot of I guess for lack of better words, work
that had to be put forward, and you know, big
institutions are saying, is this worth our time? Right now?
(04:02):
What's the ROI for this sort of thing? So for
a lot of them that they've been hands off, but
with rescheduling and moving cannabis from schedule one to schedule three,
they're now saying, Okay, there's some level of familiarity with
this because we are currently working with companies that have
scheduled three substances right, antabolic steroids. Right. Companies like GMC
(04:22):
and other supplemental companies are already having banking solutions you
at cannabis to the equation. Now they're saying, okay, we
understand what needs to be done once this goes from
schedule one to schedule three. So in the short term,
what I would predict is you're going to see a
lot of regional banks and credit unions move forward first. Right.
For one example, I was at a trade show recently.
(04:45):
My alma monored the University of South Florida. Their credit
union was there. They were like, Hey, we want to
be at the front lines. We want to work with
cannabis companies. We want them to feel comfortable to eventually
come come to us and for their banking solution. And
so I'm already starting to build relationships with their representation.
In the long term, you're going to see more of
(05:07):
your bigger, more established commercial banks, especially if the June
hearing goes the way that I think it could, You're
going to see more implementation at the commercial level.
Speaker 2 (05:19):
Okay, so you reference the Junie what is that about.
Speaker 1 (05:22):
So the June hearing is going to be regarding if
they're going to allow cannabis to go full recreational. As
of right now, the executive order was to reschedule medical
cannabis from Schedule one to Schedule three. There is no
assult use right now at the federal level. So that's
going to be in June. If they go full reck,
(05:43):
I mean all bets are off, You're going to see
a lot of funding, banking and capital kind of flow
into the industry because at that point a lot of
the red tape has been removed for good.
Speaker 2 (05:55):
Yeah. So it's been a few weeks since the announcement
of the rescheduling of medical cannabis. What are the next
steps in this process at the federal level and in
states that have already legalized it.
Speaker 1 (06:06):
So from the federal level, there hasn't been a ton of,
you know, monumental movement after the executive order. I would
say the biggest thing right now is probably the d administration,
which has some business owners kind of hesitant because they're saying, hey,
you know what exactly are we signing up for? Right?
They understand that we do want, you know, two ade relief,
(06:29):
but are we exposing ourselves to potential scrutiny from the
DA down the road. I Mean, there's certain questions that
are being asked on there that they feel could potentially
put not only themselves from a business perspective, at risk,
but also some of their supply chain partners at risk.
Now in certain states, specifically here in Florida, Right, they
(06:49):
have a vertical integration system also known as seed to sell.
It's one license for the entire supply chain system. So
if you have a cannabis company here in Florida, you're
not only the dispensary, you're also the grower or the cultivator.
You know, you have the lab testing center. So I
wouldn't necessarily be too caught up on that from a
(07:10):
Florida perspective, but from other states, you know, it could
be a big deal if you have a mixed you system,
medical and reck like California, Nevada, some of those states.
This this is kind of it's throwing them through a
bit of a loop. Now again the June hearing, if
the Junie hearing, if the result of the Junie hearing
is full reck, then from my understanding, the DA registration
(07:34):
wouldn't really make a ton of sense at that point.
So some companies are saying, hey, let's let's wait and
see what happens, and you if it's still medical only,
then you know, potentially forward the DADA registration could make sense.
It's similar to the fence and regulations from last year.
If you remember the Trump administration that made all you
know companies sign up on this website do like an
(07:57):
annual report. I did it for a few of my clients,
and you know people soone they said, this doesn't make
any sense, it's unconstitutional, and then it went away, right,
I mean the work I had done for my clients
basically is obsolete. We still have the forms, but they're
not necessary anymore. That we could potentially see that with
the DA registration as a result of the joring.
Speaker 2 (08:16):
Yeah, so the reclassification of medical cannabis at the federal level,
I mean cannabis companies can now open up dispensaries anywhere
in the US.
Speaker 1 (08:25):
Well, there is still state regulations, right, so you can
open a medical dispensary in a state that allows that.
They're not every state, does, we know Florida does. Georgia
just became the forty first state to also implement a
medical program. So it just depends on the state that
you reside in. In Florida, you can't. Now. The issue
(08:46):
with Florida again is the vertical integration. It requires a
lot of capital to be put up front because again
you are the dispensary, you're the grower or the cultivator.
You have to have a lapt testing center, you have
to have buildings, you have to have lan that takes
tens of millions of dollars in a lot of ways,
and there just isn't a lot of funding right now
(09:08):
for everyone to kind of have an opportunity to open
those companies here in Florida, which has created almost a
monopolistic system for some of the bigger companies like you know,
care Leaf and truly.
Speaker 2 (09:20):
Yeah. Well, my understanding is that this is a cash
only business right now because very few banks or financial
institutions were, like you said, offering loans, lines of credit,
payroll insurance, or all these other things that happen within
a business. Right So, could this rescheduling create opportunities for
smaller medical marijuana operators or new opportunities for those who
(09:42):
may have been struggling to access capital before.
Speaker 1 (09:46):
Yes, I do think in the long term it could.
In the short term, maybe not immediately. I just me personally,
and I keep kind of going back to this. The
state market really is going to determine and how successful
their cannabis industry is going to be based on what
they have, you know, put in place. Again, if we
go back to what's going on here in Florida with
(10:08):
their seed to sell, you also know there's vertical integration.
It's still going to be really tough if you're saying
that one license is allowed for everything, and you have
to have the capital to be able to do all that,
because you can't just segment like, Okay, well we're just
going to focus on lab testing. You can't do that
here in Florida. You have to have the entire thing
(10:29):
start to finish, because Florida feels as though that's more
efficient to be able to trace the activity that's going
on within these companies. So that's really the biggest hang up.
It's not necessarily you know, reclassification happened at the federal level,
all bets are off here at the state level, it's
it's still very state regulated. Florida is extremely limited and
(10:51):
have one of the more stricter cannabis policies in the country. Yeah.
Speaker 2 (10:56):
Have all the states already just jumped on the announcement
and made some changes Other states, Yeah, so you.
Speaker 1 (11:03):
Are seeing that so shortly after reclassification was announced. Georgia
immediately kind of move forward with their medical program. We're
seeing states like Indiana, if I'm not mistaking, their governor
had kind of put in a provision a while ago
that if Trump reclassified cannabis they would then move forward
with a medical program. And now that that's happened, we've
(11:24):
seen more outcry from that state like, Okay, that happened.
You know, you have to keep your word. We want
to be able to have a medical program. So you know,
there's still eight or nine states left that don't have
any sort of cannabis policy whatsoever, and I think those
numbers are going to wind. Yeah.
Speaker 2 (11:42):
So I would imagine that patients who are watching and
listening to this show they hear, when they hear cannabis reclassifications,
some may think, well, this make my medical marijuana more
affordable now that it's been moved to a lower schedule.
So realistically, could that happens?
Speaker 1 (12:01):
So realistically, the answer is yes, in the long term.
Right in the in the immediate short term, with medical
cannabis going from Schedule one to Schedule three, we're going
to see a lot of two AD tax relief, which
is a really good thing. They're gonna a lot of companies,
from my from my understanding and my prediction just kind
of speaking from a business owner, they're going to use
(12:23):
that extra capital that's coming into their business to pay
off loans. Right, a lot of these companies are under
bank they're overleveraged, that they don't have the cash flow
that they had hoped you know, over the past few years.
They're going to use that first wave of relief to
stabilize operations. They're going to expand infrastructure, right, So a
lot of these on the consumer side that would be
(12:46):
more of a long term play, allow companies to kind
of get established first. I wouldn't necessarily expect any sort
of immediate price drop because it's gonna if you know,
these these companies have to really start to you know,
grow and expand. Yeah.
Speaker 2 (13:00):
Well, we referenced earlier that because of all the restrictions
that these are like cash only businesses, so medical marijuana
patients in Florida had to go in with cash. So
we actually have a question from Chaubun ninety nine if
we can bring that up, when do you think the
dispensaries will be given an option to use credit card
or other payment options instead of cash.
Speaker 1 (13:23):
I mean, I wouldn't expect that to be you know,
I would expect that to kind of be a more
immediate solution. We're already starting to see that. I mean,
even myself with my company, I'm meeting with payment processing
companies almost all the time. They're like, hey, we want
to be able to come in and help provide payment
processing solutions to some of your clients. So I'm already
(13:44):
in the midst of having those conversations. So just from
my personal understanding, a lot of this implementation should begin immediately.
Speaker 2 (13:52):
Yeah. So I would also think that medical marijuana patients
may be asking if all of this will make it
easier for them to add says this type of medicine
in Florida and across the nation where it's legal.
Speaker 1 (14:07):
Right. Well, you know, Schedule three, you know, has loosened
a lot of the restrictions. It's not going to be
a sweeping okay, you know all this stuff is just eliminated.
You know, a lot of this. Again, we understand how
the government works. We're seeing what's going on with the
Trump administration. A lot of stuff. It's very slow. It
just is you know, So my hope that yes, you
(14:27):
will be able to kind of get more uh you know,
options and availability with that, but you know, immediate, any
sort of immediate relief. I would just kind of tell
people to you know, to pause on that.
Speaker 2 (14:38):
Yeah, And I recall you know also that this, the
federal rescheduling that just occurred with medical marijuana came after
Congress tried to pass some banking reforms under the More Act.
So can you tell me a little bit about what
happened back then and whether or not the More Act
(15:00):
could actually come back to kind of move this forward,
especially with the hearing coming up in June.
Speaker 1 (15:06):
Yeah, great question. So the More Act, right, we're talking
about the marijuana opportunity reinvestment and spongement at so this
is considered or regarded as one of the more expansive
and aggressive bills that's ever been seriously considered into law.
My personal feeling why it's kind of sold is a
(15:28):
lot it's not necessarily by parts, just you know, for
better words, a lot of the Republican side. I feel like,
you know, it's hard to digest because what actually goes
into it, right, They want not just rescheduling, right what
we're talking about now the More Act. They want complete deschedule.
They want cannabis off this schedule altogether, no two ad relief,
(15:52):
no restrictions, full go, you know, free market economy with cannabis.
They also want complete expungement for people who are incarcerated.
You know, we're talking about nonviolent marijuana related offenses, a
lot of those men and women black and brown. It
also is introducing a standardized excess tax and a centralized
(16:14):
taxing system for the industry, so it targets a lot
of areas not just in finance, but also in legislation.
Also we're talking about, you know, social equity. You know,
people feel as though it's just it's too broad, too
much to digest at one time, and that's the reason
why it keeps kind of stalling out in the Senate.
(16:34):
Me personally, I think a good idea to kind of
be to break it up into chunks and attack it
piece by piece and try to make it more bipartisan,
because I just with the way the political climate is
right now, I would have a hard time believing that
something like that would just pass and make it through
the Senate, especially with you know, some of the individuals
that currently hold those seats.
Speaker 2 (16:56):
Yeah, you're involved in a lot of different cannabis related
in industries. Tell me a little bit about what you're
hearing from who they are, and what you're hearing from
them when it comes to all of these changes within
the cannabis reclassification.
Speaker 1 (17:10):
Yeah, so you know, kind of some of the biggest concerns,
you know, pain points for lack of better words, that
I'm hearing from a lot of these companies, business owners
people like that in the industry is they're saying, how
soon can we get two AD relief? Right? That's the
big thing?
Speaker 2 (17:24):
Right now, tell me what to tell me what two
AD relief is?
Speaker 1 (17:29):
Okay, So section you know I r S. Section two
AD basically states that cannabis companies, any any company scheduling
a traffic or trafficking a schedule one substance will not
have any access to tax deductions. Right, So how we typically,
you know, do a tax return. We have a revenue,
you know, your cost a good sold or you know,
whatever the case may be. And then you have your
(17:50):
operating expenses, right so your depreciation you build and your rents,
your labor costs, stuff like that. If you run a
cannabis company, you don't get access to any of that.
So if you're making a million dollars, your your biggest
tax break is going to be your cost of goods sold.
And if you aren't doing your cost accounting correctly, that
number is still going to be very high. So we're
(18:11):
seeing effective tax rates for some of these guys north
of sixty percent, right, I mean that that is really
I mean yeah, it can get very very taxing for
a lot of these companies. So they want to know
how soon can we get to ADE relief. From my understanding,
it would be as soon as April twenty twenty six,
when when the executive order is released. There are also
(18:34):
some people feel as though it could be as soon
as when you rest it with the DA. I don't
necessarily agree with that, because again, we just don't know
what's gonna happen in June. If June goes full rereck
to me that that doesn't really it wouldn't make much sense.
The other big question regarding to AD and tax relief
is is it going to be retroactive? Are we going
to be able to take, yes, this sort of thing
(18:56):
for tax years where again you know you're you're paying
six seven figures and taxes. Are we going to be
able to you know, apply to AD retroactively. That's right now,
there is no solid answer from that. Me personally, I wouldn't.
I don't have necessarily high expectations for retroactive to AD
relief just because amended tax returns are are frankly of pain.
(19:18):
The IRS is is very short staff in that in
that area. So you know, even and even if they
do right, just for from personal experience, let's say you
amend a tax return from you know, twenty twenty three
in the year twenty twenty six, I wouldn't even expect
a response maybe twenty twenty seven, twenty twenty eight. So
even if you do get you know, retroactive relief again,
(19:40):
it's it's just not it's not going to be anything
quote unquote immediate.
Speaker 2 (19:44):
Well, cannabis became legal implored almost ten years ago, so
would he dispensaries and operators be able to go back
ten years?
Speaker 1 (19:51):
And that's what people are asking, Like, we've been doing
this for a very long time. It is a relief
going to look like twenty twenty six is great, But
I've been getting you know, beat over the head by
the IRS for like eight years, you know, like what
do we have here? So again, you know, there's no
solid answer from that. And I don't want to go
out and live and say, hey, you know, expect a
three year you know period where you can go back retroactively.
(20:13):
I just don't have the answer from that, but I'm
from my own personal judgment dealing with clients as far
as going back into past tax years and a minute
tax returns. It's a brutal process, it really is. So
I just personally don't have high expectations for that.
Speaker 2 (20:28):
Yeah. So what other kind of questions are you getting
from cannabis businesses that you work with, especially when it
comes to their pain points?
Speaker 1 (20:35):
Yeah, So, again, the banking thing is big. Obviously a
lot of these these companies are cash only, you know,
they want to know how soon, you know, can we
get involved with you know, banking, whether it be regionally
or commercial. And then the payment processing thing. Uh, those
are probably two of the biggest pain points. And again
I would expect more immediate solutions from regional banks and
(20:58):
credit unions, with the commercial banks coming probably you know,
post June or maybe even you know, more forward in
the twenty twenty six or future years. But again, schedule three,
you know, the reclassification is a right step in the direction,
and to me it has offered some sense of hope
for a lot of companies that have been just trying
(21:19):
to maintain right, just trying to stay afloat, hang on,
you know, That's kind of what we've been saying at
a lot of these trade shows and events. Relief is coming,
changes coming, don't exit the market yet, you know, kind
of hold line, you know things, things are going to change.
Speaker 2 (21:34):
Well, I think this has been a very rich conversation.
You've answered all the questions that I had. Do you
have any kind of closing thoughts that you'd like to
share with our listeners and viewers before we wrap up
this really informative conversation.
Speaker 1 (21:48):
Yeah, absolutely, So. You know, I personally feel that the
cannabis and even the hemp industry presents a unique opportunity
for black men and women in this space. You know,
this is fam you right, We're representing a HBCU here,
So you know, I just urge, you know, any aspiring
black entrepreneurs or people who are trying to get into
(22:09):
the industry to take action now. Right. We are seeing,
and this is something I've been saying for the past year,
so a potential title wave coming, similar to fintech, similar
to the dot com bubble, you know, two areas that
we kind of sat on the sideline and watched all
this activity, watch mergers and acquisitions. We watched people become Rich,
(22:31):
markus Zuckerberg, pier till you know pay how all these
sort of wonderful and we weren't defense in it essentially
at all. This is another opportunity. You know, there aren't
too many booming industries just coming around, you know, every day,
and here's a potential one. So I think, you know,
if black entrepreneurs are out there, you have a cannabis brand,
(22:51):
you know, get get your books in order now right,
you know, have banking ready financials now, because once the
banking solutions come, they're not just going to bank with anyone.
They're gonna want to see audit ready financials. They're gonna
want to see tax returns. They're gonna they're gonna go
through the books. If you don't have someone on staff,
whether it be a CPA or whatever, you don't have
someone on staff, you're going to be behind. And when
(23:13):
those banking opportunities come, those payment processing opportunities come, you're
not going to be able to take advantage of it
because you weren't ready. You know, get ready. See you
know they say stay ready, so you have to get ready.
And that's kind of my message right now to all
the entrepreneurs out there, all.
Speaker 2 (23:27):
Right, well, Dase, Thank you so much for being a
guest on this Conversation on Cannabis virtual form brought to
you by the Medical Marijuana Education and Research Initiative at
Florida and M University. Thank you to everyone watching this program.
Tell us what you think about this form by completing
the survey post it in the comment boxes on Mary's
Facebook and YouTube pages. If you complete the survey, your
(23:49):
name will be injured into a drawing in June twenty
twenty six to win a one hundred dollars gift car
provided by one of Mary's partners. We want you to
stay connected with family and Mary to access educational information
and resources about legal medical cannabis use and the consequences
of illegal marijuana use in Florida. You can follow them
on social media or visit the fam You Marry website.
(24:12):
We also want to encourage you to go to the
Florida Department of Health Office of Medical Marijuana Use website
to learn how to obtain a legal medical marijuana in
the state of Florida. Thanks everyone. The views and opinions
of our invited guests are not necessarily the views and
opinions of Florida Agricultural and Mechanical University, or the Medical
(24:34):
Marijuana Education and Research Initiative
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