How difficult is it to survive in the world of cannabis?
On the one hand, the marijuana industry is nascent as the plant has been stigmatized for decades. Being illegal at the federal level makes it much more complicated to operate. On the other hand, the sector continues to progress. Every year more states and countries embrace it, and new studies confirm the vast potential of marijuana’s healing properties that our ancestors knew about centuries ago.
So it is difficult, but not impossible, to maneuver in the cannabis field.
Often seen as one of the biggest challenges is the lack of access to banking and financial services due to marijuana’s Schedule 1 status, which the DEA classifies as having no accepted medical value and a high potential for abuse.
That said, some financial institutions want to partner with legal cannabis operators. To find out more Benzinga reached out Sahar Ayinehsaziana partner at Vincent LLPIt’s the Los Angeles office. Ayinehsazian specializes in corporate transactions and chairs the firm’s Banking and Financial Services Access Group. Vicente LLP, one of the first cannabis, hemp and psychedelic law firms in the country, provides services that include licensing, regulatory compliance, policy, intellectual property and litigation.
Ayinehsazian told Benzinga that “finding the right advisors, being fully compliant and looking for the right financial institutions,” are some of the potential solutions to the banking challenges marijuana operators are facing.
“There are an ever-growing number of banks and credit unions that provide services to cannabis-related businesses — the trick is to approach them correctly and make sure you become the type of business they are looking for,” he said.
Ayinehsazian will share his insights at Cannabis Market Spotlight Benzinga: California event on February 22 In Culver City, California in the thought-provoking panel “Lessons from Leadership: The New Paradigm of Growth.”
All cannabis is complex
On the complexity of regulatory issues, he told us that “all cannabis is complex, but the most complex regulatory issues arise with new regulations or changes to existing regulations – it can be difficult to understand how these regulations are used in practice. Most misconception common knowledge about the cannabis industry is that we are all risk takers and live on the edge; the reality is that most of us in this industry are all extremely focused on compliance and constantly checking to make sure we are following every single applicable rule.”
First of all, regulatory compliance
In January, the government released hundreds of pages of documents related to the ongoing review of cannabis’ status under federal law, confirming that the Department of Health and Human Services (HHS) recommended that the DEA reclassify cannabis as Schedule III under the Controlled Substances Act. This means that HHS has recognized some medical value of marijuana and rescheduling is being considered. We asked Ayinehsazian how much would change in the marijuana industry in terms of regulatory issues, banking and taxes if cannabis were reclassified to Schedule III.
“I think even if we rescheduled regulatory compliance would still be of great importance,” he said. “However, banking and taxation would be greatly improved: The current banking problems we face due to federal lawlessness would be greatly alleviated, as would the federal tax problems associated with 280E.”
280E is an IRS tax code, which states that “no deduction or credit shall be allowed in the operation of a business involving trafficking in a controlled substance.” This means that until cannabis is removed from a list of federally controlled substances, there will be no tax deductions or credits given to legal cannabis operators.
Ayinehsazian said that in terms of taxation and banking, both reprogramming and deprogramming would be more or less the same thing. “In terms of regulatory requirements, deprogramming might be a little bit less of a burden, but I think no matter what, we’re still looking at regulatory compliance as being incredibly important.”
To learn more and have a chance to meet Sahar Ayinehsazian and many others who are making positive and essential changes in the cannabis industry, come and join us on Cannabis Market Spotlight Benzinga: California.
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Photo: SaharAyinehsazian/VicenteLLP KayleKaupanger/Unsplash