Credit cards, advertising and more: Cannabis restructuring means growth

With President Donald Trump’s order last week to reduce the redistricting rate of cannabis, the industry’s leading businesses are unveiling their growth strategies.

MariMed, Ascend Wellness Holdings and other key players are focusing on expansion, innovation and operational improvement as closed doors begin to open.

The reorganization exempts the $32 billion US legal marijuana industry from 280E of the Internal Revenue Code, promising immediate benefits in the form of federal tax exemptions. The restructuring is expected to encourage large institutional investors to enter the cannabis space and reduce borrowing costs.

But at the same time, multi-state operators will have to prepare for more regulation, such as traditional accounting and auditing, according to Norman Yousif, CEO of cannabis store chain Off The Charts.

How restructuring can boost the growth of the cannabis industry

With the cost of capital likely to decrease, Ascend Wellness CEO Sam Brill is determined to charge more for the expansion of MSO stores and improve financial efficiency. New York-based Ascend Wellness plans to expand into new regions and acquire other businesses. The vertically integrated company operates in Illinois, Michigan, Ohio, Massachusetts, New Jersey, Pennsylvania and Maryland.

Although it won’t happen soon, Brill expects his stores to be able to accept credit cards, which will improve customer convenience and basket sizes, while streamlined banking will improve overall efficiency.

“The fact that customers can use credit cards is a game changer for our industry,” Brill said. “It expands their wallet. Money puts pressure on customers because they have to think about the money they have today.”

For Jon Levine and the Massachusetts-based MariMed team, restructuring is a green light for aggressive growth. Removing the 280E burden will give the MSO better cash flow and allow it to expand into new states more quickly than it otherwise would.

“We weren’t just looking at CBD, but this gives us an opportunity to help people who can use Medicare and Medicaid,” said Levine.

Curio Wellness founder Wendy Bronfein said her company is already in a position to benefit from the restructuring. The Maryland-based company plans to expand health research and products, especially regarding small cannabinoids and specific health conditions.

“We built our institutions through the lens of thinking that we would be governed by the FDA,” said Bronfein, who started the company with his father, Michael Bronfein. “The unexpected episode is the conversation that’s happening around the limited accessibility of cannabinoids. We have a few strategic products that can transition into that market and can be transferred to dispensaries.”

Curio has had a scientific advisory board since its inception, and the Chairman of the board Dr. David Casarett, a professor of medicine at Duke University, thanked Trump when the executive order was signed, saying, “I never thought this day would come.

Reprogramming can transform the innovation of cannabis

But with prohibitionists vowing to challenge the upcoming marijuana reregulation through the courts — and the exact date when marijuana will be reregulated far from clear — not all companies are making plans to expand.

Village Farms International, for example, is listed on Nasdaq under the ticker VFF, but is registered as a Canadian company. Because of its U.S. listing and the illegality of marijuana, the company is focused on the global cannabis market rather than the United States, said CEO Michael DeGiglio.

“We want to be more active in the US market, but we can’t go in without understanding what the rules are,” DeGiglio said. “We will help draft laws and continue to fight to make sure they get into force. We will work with policy makers.”

Reorganizing the US, Tilray announced the formation of Tilray Medical USA Inc. on 18 Dec. to enhance its commitment to the development and growth of medical cannabis.

Chairman and CEO Irwin Simon said Trump’s signing of the executive order creates “a credible foundation for medical cannabis research, clinical development and regulatory clarification.”

“It also shows a future shaped by innovation, responsible governance and evidence-based policy,” Simon said in a statement. “We believe this landmark decision is a major catalyst for positive change in the medical, healthcare and business communities across the US and an important step toward more comprehensive rules and regulations.”

Colorado-based Green Dot Labs founder and CEO Alana Malone said the restructuring represents significant progress after more than a decade of navigating an uncertain organizational landscape.

“It begins to address long-standing barriers such as limited access to banking and significant tax burdens, while opening the door to increased investment in research, innovation and product development,” Malone said in a statement.

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.