Akanda Corp. Provides Update on Scheduling Policy in US Aims to Be Among First International Movers in US Pending Approval
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Insights
The potential rescheduling or descheduling of cannabis by U.S. federal authorities could have significant implications for the financial landscape of the cannabis industry. For companies like Akanda Corp., this policy shift could open the doors to capital markets previously wary of the legal risks associated with cannabis businesses. As a Schedule III substance, cannabis companies would likely see increased investor interest and a more favorable environment for raising capital. Moreover, the ability to list on major exchanges such as NASDAQ would provide additional liquidity and access to a broader investor base.
However, the transition to a new regulatory framework may come with challenges. Companies will need to navigate the evolving compliance requirements and may face increased competition as the market becomes more accessible. Additionally, while the forecasted growth of the U.S. cannabis market is promising, it is predicated on continued state legalization and favorable federal policy outcomes. Investors should closely monitor these developments as they will have material implications for market dynamics and company valuations.
From a legal standpoint, the removal of cannabis from Section 280E of the Internal Revenue Code could be transformative for cannabis businesses. Currently, this section disallows deductions and credits for any business trafficking in controlled substances, as defined by Schedule I and II of the CSA. This has placed a significant financial burden on cannabis companies, effectively taxing them on gross profit rather than net income. Should this change, cannabis businesses could see a substantial reduction in their effective tax rates, improving profitability and potentially attracting more investment into the sector.
It's also important to note that while federal rescheduling or descheduling may align with public sentiment and state laws, it does not automatically legalize cannabis nationwide. State laws would still vary and businesses would need to comply with a patchwork of regulations. The transition period could also see legal uncertainties and challenges as federal and state laws converge.
Consumer demand and market growth projections for the U.S. cannabis industry suggest a robust expansion trajectory. According to the Brightfield Group, the market could nearly double by 2028. This growth is underpinned by a combination of factors, including increased legalization at the state level, evolving consumer attitudes and a growing acceptance of cannabis's medical and recreational uses.
For Akanda Corp. and similar entities, strategic positioning to consolidate U.S.-based operators could be a pivotal move to capitalize on market expansion. However, the success of such strategies will depend on the company's ability to execute mergers and acquisitions effectively, integrate operations and achieve economies of scale. It's essential to consider competitive responses, as other players in the industry are likely to pursue similar consolidation strategies in anticipation of federal policy changes.
London, United Kingdom--(Newsfile Corp. - February 2, 2024) - Akanda Corp. (NASDAQ: AKAN) ("Akanda" or the "Company"), an international medical cannabis company, today announces it is actively following the developments in federal US policy to reschedule and/or deschedule cannabis under the Controlled Substances Act ("CSA"). The Company believes rescheduling may reinvigorate capital markets and could lead to changes in NASDAQ and NYSE rules on listing plant-touching U.S. companies. Should this occur and provided NASDAQ rule changes, Akanda has strategic plans to become a leader in consolidating US-based operators.
The Company believes there would be additional benefits from improvements in US scheduling policy such as removing state-legal cannabis businesses Section 280 of the Internal Revenue Code, allowing them to deduct business expenses. The Company notes that according to consumer researchers such as the Brightfield Group, the US cannabis industry is poised to continue growing this decade. In 2022, the U.S. cannabis market reached
Rescheduling
A U.S. Department of Health and Human Services ("HHS") report was made public on January 29, 2024. The August 2023 report submitted to the Drug Enforcement Agency (DEA), recommended that cannabis be rescheduled as a Schedule III controlled substance. Rescheduling cannabis under the CSA, 21 U.S.C. § 812(b) requires three findings: (1) it has a lower potential for abuse than other Schedule I and II drugs; (2) it has currently accepted medical uses; and (3) it may lead to moderate or low physical dependence or high psychological dependence.
Descheduling
On January 29, 2024 U.S. Senators Alex Padilla (D-Calif.), Elizabeth Warren (D-Mass.), John Fetterman (D-Pa.), and eight of their Democratic colleagues, including U.S. Senate Majority Leader Chuck Schumer (D-N.Y.), sent a letter to U.S. Attorney General Merrick Garland and U.S. Drug Enforcement Administration (DEA) Administrator Anne Milgram, urging the DEA to remove marijuana from Schedule I of the CSA. The letter follows a recent recommendation from the U.S. Department of Health & Human Services (HHS) that marijuana be rescheduled from Schedule I to Schedule III. The Senators are calling for a complete descheduling of marijuana, consistent with state law, public sentiment, and the need to eliminate draconian criminal and civil penalties for marijuana use.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the Company's securities, nor shall there be any sale of such securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended.
About Akanda Corp.
Akanda is an international medical cannabis and wellness platform company seeking to help people lead better lives through improved access to high quality and affordable products. Akanda's portfolio includes Holigen, a Portugal-based cultivator, manufacturer and distributor with an EU GMP certified indoor grow facility; CanMart, a UK-based fully licensed pharmaceutical importer and distributor which supplies pharmacies and clinics within the UK. The Company's seed-to-patient supply chain also includes partnerships with California-based Cookies, the most globally recognized cannabis company in the world; Cansativa Group, a leading importer and distributor of medical cannabis in Europe; and Cellen Life Sciences' Leva Clinic, one of the first fully digital pain clinics in the UK.
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Investor Contact
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Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Akanda's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Akanda's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". Forward-looking information may relate to anticipated events or results including, but not limited to business strategy, product development and sales and growth plans. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Akanda does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.
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[1] https://blog.brightfieldgroup.com/brightfields-2023-us-cannabis-market-forecast.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/196661
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