Throughout 2022, several more states — Missouri, Rhode Island and Maryland — legalized recreational cannabis. That's a total of 21 states plus Washington, D.C.
This bodes well for Canada-based companies such as High Tide Inc HITI, which have been busy grabbing market share across True North. But when it comes to U.S. expansion, it's still an "uphill battle" due to lack of regulation, CEO Raj Grover tells Benzinga.
"Our main focus with respect to U.S. expansion and our advocacy right now is to try and see if capital markets provisions currently found within other cannabis bills can be incorporated into SAFE+," Grover says. "We consider success in this regard to be an uphill battle in the short term; however, medium to long-term success is possible."
See Also: High Tide CEO On M&A, New Products And 3 Factors Holding The Cannabis Stock Back
Grover is of course talking about the bipartisan Secure and Fair Enforcement Banking Act (SAFE). The bill wouldn’t legalize cannabis at the federal level, but it would essentially fix many of the banking and commerce issues that currently plague the industry.
For example, banks currently avoid marijuana-based businesses, making them very cash-heavy and much more vulnerable to theft and violent crimes.
"SAFE+ represents the most significant cannabis reform package to get legislative approval in the U.S., and we expect it to have a positive impact on the general market sentiment," Grover adds.
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'Focused On The Now'
SAFE+ came close to passing as part of the fiscal 2023 National Defense Authorization Act (NDAA) earlier this month. But it was dropped from the legislation at the behest of Senate minority leader Mitch McConnell, who called it "unrelated liberal nonsense."
After that fumble, a bipartisan group of about two dozen federal lawmakers asked President Joe Biden last week to “recognize the merits of full descheduling,” which would remove cannabis from the list of controlled substances, making it a legal substance and open to research.
Descheduling, or rescheduling, cannabis could also result in opportunities for NASDAQ-listed companies like High Tide to commence cannabis sales in the U.S., Grover explained.
"As well, the indications we are getting from sources in Washington suggest that the White House would like the Justice Department and the Department of Health and Human Services to complete their review of how cannabis is scheduled within six to 12 months," he said. "However, our U.S. strategy is not dependent on federal legalization."
High Tide boasts almost 2.5 million U.S. customers through its various consumption, accessories and CBD e-commerce platforms, which sets the company up to take advantage of U.S. cannabis sales as soon as it's able, without exposing itself to the risk of de-listing, Grover explained
This strategy is very similar to the one High Tide executed in Canada, where it has amassed 141 locations across British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.
"We’re focused on what’s in front of us right now, which is Canadian brick-and-mortar expansion, U.S. e-commerce expansion and exploiting the pending opportunity in Germany," he said.
German Chancellor Olaf Scholz, in October, put forward plans to legalize cannabis. This would make it one of the first countries in Europe to make weed legal.
"We have also had some incoming interest in our CBD brands from potential buyers in the Middle East," Grover added.
Next: 10 Predictions For The Cannabis Industry In 2023
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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