On the Verge Of Transformation: Cannabis Industry Eyes Regulatory Relief Says Verano CIO

Zinger Key Points
  • Cannabis industry prepares for potential rescheduling which could bring operational benefits and investment changes
  • Rescheduling could lead to more mergers and market opportunities, fueling optimism for the industry's future.

At the recent Benzinga Cannabis Capital Conference, Aaron Miles, chief investment officer at Verano, discussed the anticipated regulatory changes that could substantially reshape the cannabis industry’s economic and operational frameworks.

Highlighting the potential rescheduling of cannabis, Miles outlined its broad implications for business operations, financing, and market valuations, painting a picture of a future brimming with opportunities for industry stakeholders.

Potential Benefits of Cannabis Rescheduling

Miles emphasized the operational benefits that rescheduling could bring to cannabis companies.

“The rescheduling of cannabis could allow us to operate more like a typical business, a substantial benefit indeed,” he noted. This change would enable more straightforward access to federal banking and credit card processing, significantly altering the current financial framework for cannabis enterprises.

He also highlighted the burdensome taxes under the current system, mentioning, “We’ve quantified it to around $80 to $90 million in excess taxes that we have to pay, which could potentially be eliminated.”

Adjusting Investment Approaches

Looking at potential changes in investment strategies, Miles explained how the anticipated regulatory changes could enhance Verano’s market positioning.

“If rescheduling occurred and we were valued appropriately as a business—since we currently feel tremendously undervalued—it would alter our acquisition potential,” he remarked.

This reassessment could lead to more mergers and increased investments, especially in promising areas like Florida, where changes in adult usage laws could provide substantial market opportunities.

Outlook for 2024 and Beyond

Reflecting on the future, Miles expressed optimism about the trajectory of the cannabis industry, regardless of the existing regulatory challenges. “Everyone’s waiting for the DEA rescheduling. It’s big news, for a good reason,” he pointed out. He also highlighted recent positive developments, such as new states legalizing adult use and more favorable financial handling of cannabis operations. 

“We generated $73 million in free cash flow last year without federal changes. The potential for the cannabis industry remains substantial,” Miles asserted, underlining the industry’s resilience and capacity for significant financial performance, instilling confidence in the audience about the industry’s future.

Cannabis rescheduling seems to be right around the corner. Want to understand what this means for the future of the industry? Hear directly for top executives, investors, and policymakers at the 19th Benzinga Cannabis Capital Conference, coming to Chicago this Oct. 8-9. Get your tickets now before prices surge by following this link.

Photo: Courtesy of (NikolayFrolochkin and ganjaspliffstoreuk by Pixabay

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