Why invest in an enterprise that violates federal laws and not take action to change this law?
By Aaron Smith of the National Cannabis Industry Association
Cannabis industry faces unprecedented challenges. Oversupply, labor shortages and supply chain disruptions are forcing companies into a more efficient operation. Cannabis is still struggling to achieve financial success due to the crushing regulatory environment and high tax rates.
Cannabis businesses, in an attempt to save money and improve the industry, are moving away the type of advocacy necessary to keep the industry sustainable. This short-term approach is a disaster.
Now is the time to push for reform
The industry’s current problems are driving people away from the primary directive that should be the priority: federal policy reforms to change cannabis dramatically in this country.
How would the cannabis industry change if it was not burdened with Section 280E? This taxation mandate is so extreme that it doubles or even triples the amount cannabis businesses pay in comparison to other small businesses. This creates a situation where only the most well-funded companies survive, while many small businesses are forced to shut down.
What would happen if everyone had equal access to loans? What would be the impact of legalizing interstate commerce on small cannabis companies’ bottom lines? The cannabis industry needs to address these issues and make progress in order to bring about positive changes.
Out of Sight Out of Mind
The federal ban is the main cause of cash flow problems in the industry. The SAFE Banking Act was not passed by Congress last year, and the pace of progress is disappointingly slow this year. Reforms to 280E, and other important policy proposals, are being considered but will take some time.
Simply put, until Congress makes cannabis a top priority, there will be no change and institutional investors are going to continue to hold back their money due to federal inaction. It is for this reason that industry members need to be involved in convincing their Congressional Representatives and Senators why cannabis should become a priority.
The cannabis industry needs to speak up now. The industry needs to be heard, whether it’s joining an advocacy group or directly contacting their Congressperson (and repeatedly). Even if half of the industry comes together, there is a greater chance for change.
Due to the disparities between lobbying efforts at the federal levels, grassroots campaigns will be the ones that make the difference. Comparatively, the cannabis sector spends a very small amount on Capitol Hill. The companies that lobby represent only a few cannabis operators.
Few MSOs are actively lobbying on behalf of their companies. Will their policies benefit Main Street Cannabis and small businesses, or just increase profits and market shares for a few? When federal legalization happens, it is important to ensure that all cannabis operators, large and small are on the same playing field.
In the national cannabis dialogue, all cannabis businesses must have a united voice, particularly small, independent operators.
Choose Advocacy and Not Apathy
Budgeting for advocacy work is a worthwhile investment that will not only help businesses survive but also give them a chance to thrive. The legal cannabis industry may not be killed by Big Pharma, alcohol or tobacco lobby. The industry’s own apathy is likely to cause an implosion. We are responsible for the success of our industry and need to take a seat at a table to bring about change.
Cannabis operators and investors hope favorable reforms will happen on their own. This is like gambling with your fortunes on others’ success. Why would you invest in a cannabis business that is against federal law, and then not do anything to change it?
Aaron Smith, co-founder and CEO of the National Cannabis Industry Association is the largest trade organization representing legal cannabis businesses across the U.S.
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