A Very Unhappy Christmas

Authored by Michael Sassano, the CEO of Somai Pharmaceuticals

A Very Unhappy Cannabis New Year

All through the house, not a creature was stirring—not even a Congressperson as time ran out to advance cannabis reforms in 2022.. United States politics once again upended the global cannabis market and it was a bloodbath selling spree. As if the continued 2019 drop would never end, the 2020 fake-out run foreshadowed what would come next legislatively. The Un-SAFE Banking Act, the HOPE-less Act, and the No-GRAM Act are better names for current regulatory pushes. 

Policymakers have provided one disaster after another while questing for minimal viable laws or amendments to support an industry overstressed by taxation and improper regulation. In the cannabis industry, you cannot even open a bank account. And we wail about what Russia did to Brittney Griner, which to be clear was unacceptable, all while the U.S. should be ashamed that people are jailed in some states for cannabis enterprise and celebrated in others.

A Healthy Market Would Actually Be Possible with Legislative Support

As the lame-duck session ended, it was finger pointing on the Democrats side while Mitch gloated. Meanwhile, the market and entrepreneurs completely lost faith in any possible passage of the three acts not just for this year, but even next year. Despite politicians on both sides of the aisle claiming they have the votes, it’s clear that Senate Majority Leader Charles Schumer (D-NY) and Senate Republican Leader Mitch McConnell (R-KY) used cannabis as a pawn. Cannabis was dumped again. The 75% decline since the start of the year is a savage beat down for the industry that needs capital to grow further. It wouldn’t be so bad if this were the first time, but despite having passed the SAFE Banking Act in Congress seven times, it stays unenacted. It is hard to believe that in a capitalist country like the U.S., a nearly $30 billion industry remains predominantly a cash business. 

It’s also shocking that the U.S. cannot accept the clear results of clinical trials and already-approved pharmaceutical applications for cannabis. The U.S. forces cannabis businesses to grapple with high taxation via the archaic tax code 280E designed to keep cocaine traffickers as tax-paying citizens. Not receiving reasonable tax write-offs like a regular business isn’t the worst part: it’s the crushing taxation schedules. States average a 15% tax on the grown product at an arbitrarily chosen price, effectively sucking all profit out of the cultivation side to a point where states like California had to end the tax. Just try buying cannabis legally; the added taxation on sold products is so high that the illicit market is thrilled to keep a healthy market share.

Big Biz Lobbyist Maneuvers Render Cannabis Immobile

The big business lobbyists have politicians locked into a never-ending chase-the-tail game. Ultimately, entrepreneurs, patients and clients suffer from this political dysfunction: Big Pharma doesn’t want to lose market share to their pain medicines; Big Tobacco doesn’t want to lose out on the cannabis smokable market; Big Alcohol doesn’t want to be left out by another competitor to their cash cows; Big Distribution wants a piece of the action (which is difficult due to state-to-state rules). The list of the groups that either want the industry to suffer or want a piece of it is extensive. Correspondingly, cannabis lobbyists are outgunned when buying a politician (or a few) when these acts come up.

How Likely Is Common Sense to Prevail?

You would think that affirming states’ right to choose cannabis enterprise is a no-brainer. It’s basic common sense that allowing standard banking is good for the economy and ensures $30 billion isn’t sitting outside the U.S. banking and possibly tax system. Every level of policy keepers, from the Drug Enforcement Agency to a local police force, now can agree that arresting people for medicine is a poor use of time and resources. Yet here we are still hopelessly watching the market crash while not one of three simple legislative acts couldn’t even land in a huge omnibus package that included everything from gardens named by politicians to even more military spending for wars. Instead, they are filled with all sorts of crap special interest groups have paid to cram in there. But NO cannabis aid. What a dysfunctional disaster! It’s incredible that a few widely-accepted and watered-down-to-almost-meaningless acts still cannot get the minimum lines they’re due out of more than 10,000 pages.

Authored by Michael Sassano, the CEO of Somai Pharmaceuticals

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