I’ve been representing clients in California’s cannabis industry since 2018. Our firm has been representing businesses in the space for many years before that, in states with more mature licensing programs. One of the most common mistakes we see in new cannabis markets is businesses that rely too much on federal legalization happening.
For example, lots of businesses back in 2018 in California took the view that they could expand at all costs and grab market share, because federal legalization (and investor capital) was inevitable. Federal legalization still hasn’t happened, and investor capital dried up in most cases a few years ago (more on that below). Indeed, just like when these states started licensing, cannabis is still on Schedule I of the Controlled Substances Act (CSA), 280E is still a nuisance, big banks still won’t bank cannabis money, and so on.
As I’m sure all of our readers are aware, the Department of Health and Human Services (HHS) apparently made a recommendation to DEA to move cannabis to Schedule III of the CSA recently. I say “apparently” because HHS’s letter to DEA is redacted to the point of uselessness. But in any case, a change within the federal government appears
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