On April 30, 2024, the cannabis industry and legalization movement collectively felt a potential seismic shift, as it appears that cannabis will be rescheduled from Schedule I to III. If completed, the reclassification expects to provide the cannabis market with far greater legal, financial, and production leeway. 

One day before the industry shaking news, digital wholesale management platform LeafLink released its U.S. Cannabis Market Report for Spring 2024. The report features many positive takeaways from recent market developments, such as: 

• 21% year-over-year market increases in national retail sales  
• Approximately $11.2 billion in wholesale transactions, an 18% increase from 2023   
• 10% increase in year-over-year per pound flower sales on LeafLink

Rescheduling’s Potential Impact

The report also delves into the potential impact created by rescheduling. Ben Burstein, LeafLink analyst and report author, spoke with Cannabis Tech Talks to elaborate on what rescheduling could mean. 

Burstein noted many uncertainties, including the potential impact on state regulations and federal tax structures, remain. “But there’s a few areas that we can feel very confident about and very excited for the future of the industry,” he said, highlighting the removal of tax code 280e from the equation. 

Burstein said cannabis brands are taxed at a gross margin line, with average companies often paying around 40% to 50% under 280e. He said the current cannabis tax rate is 3.5x of the S&P average. The report’s author said moving to Schedule III should allow cannabis brands to deduct standard operational. 

He and many others feel such a move could drastically improve the financial situations of many cannabis brands. Burstein said, “There’s all these parts of the industry that just haven’t really developed because they’re very expensive from a taxation perspective.”

Stay tuned for our full chat with LeafLink’s Ben Burstein coming soon. In the meantime, check out past episodes of Cannabis Tech Talks to hear from other experts, operators, and enthusiasts in the cannabis space. 

Photo by Jeff W on Unsplash