Federal rescheduling of cannabis hasn't happened yet, but the companies that wait for it to act will be the ones most scrambling when it does. That was the central argument running through the latest episode of the Trade To Black podcast, presented by Flowhub, where hosts Shadd Dales and Anthony Varrell spoke with Terry Mendez, CEO of Safe Harbor Financial (NASDAQ: SHFS), about the financial and structural work cannabis businesses need to start doing today - before Schedule III becomes official.
The 280E Problem Is Leaving, But Its Damage Won't Fix Itself
Section 280E of the Internal Revenue Code has functioned for years as a blunt instrument against cannabis businesses. Because cannabis remains a Schedule I controlled substance federally, operators cannot deduct ordinary business expenses - payroll, rent, marketing - the way every other industry can. The result has been tax burdens that would be unrecognizable in any other sector, compressing margins and distorting the financial records of even well-run companies.
Rescheduling to Schedule III would end that. But here's the catch: removing 280E doesn't automatically clean up the financial mess it leaves behind. Mendez's argument on the podcast was pointed and practical - companies that have spent years operating under 280E often have intangible assets that were never formally valued, corporate structures that made sense for a high-tax regime but won't for a normalized one, and tax planning gaps that take time to address properly.
His firm's framework for post-280E preparation covers roughly ten areas, including restructuring corporate entities, formally valuing intangible assets like trademarks and customer data, and beginning to map which depreciation schedules and tax credits would become available. None of that happens overnight. The operators who begin that work now - ideally with dedicated tax planning talent brought in-house or on retainer - are the ones who will actually capture the financial relief rescheduling is supposed to deliver.
Virginia's Cannabis Bill Runs Into a Governor's Red Pen
The episode also turned to a developing situation in Virginia, where Governor Abigail Spanberger sent back last-minute amendments to the state's adult-use cannabis bill that surprised nearly everyone who had worked to pass it. The changes raised the excise tax from six to eight percent, pushed the launch date back by six months, and cut the number of available retail licenses from 350 to 200 through 2029.
That sounds like a set of modest technical adjustments. In practice, though, it was a significant rewrite of the policy that had already cleared the legislature with a supermajority. State lawmakers were openly frustrated - some reportedly weighing whether to send the governor the original unamended version and force her hand: sign it or veto it outright. The episode framed this as emblematic of a recurring pattern in state cannabis policy, where late-stage executive intervention can destabilize markets that operators are already trying to plan around.
Fewer licenses and a delayed launch don't just affect the businesses that were counting on entering the market. They ripple outward - affecting real estate decisions, staffing plans, banking relationships, and the investors who have been pricing in a specific timeline. A six-month delay on a state launch isn't a footnote. It's a material change to the business case.
Tilray's Dilution Problem, and What It Signals
Tilray drew a sharper critique. The company activated a new $180 million at-the-market share offering following a ten-for-one stock split - a move that Varrell assessed with little ambiguity. Continued share dilution combined with a strategy that has increasingly pointed toward craft beer acquisitions rather than cannabis operations makes it a difficult investment to defend, even if a rescheduling announcement produces a short-term price movement.
The broader implication is worth sitting with. Post-rescheduling enthusiasm will probably lift several cannabis stocks temporarily, including some that don't deserve the lift. Investors who aren't paying attention to balance sheet fundamentals - dilution history, debt load, whether the core cannabis business is actually generating returns - could mistake a sentiment rally for a structural improvement. Those are different things.
Hemp Operators Are Running Out of Runway
Mendez used part of his time on the podcast to address a quieter but urgent issue: hemp businesses currently processing payments through mainstream consumer platforms - Stripe, Square, Venmo, Apple Pay - need to transition to cannabis-compliant financial infrastructure well before the anticipated federal ban on intoxicating hemp products arrives later this year. Waiting until the ban lands means scrambling for banking and payment solutions under pressure, which is never cheap and rarely smooth.
Among hemp categories, Mendez identified cannabis beverages as having the most durable path forward. Their distribution model maps cleanly onto the existing alcohol infrastructure, they've found traction in age-gated retail settings, and they're positioned as a consumer product - not a pharmaceutical analog, not a supplement in a gray regulatory zone. That's a meaningful structural advantage when the rules tighten.
What ties all of this together is a single, practical observation: the cannabis industry's long habit of waiting for regulatory clarity before making operational decisions is itself a risk. Rescheduling, when it comes, will reward preparation. The companies that have treated the wait as an excuse to defer hard financial and structural work are likely to find the transition considerably less profitable than they expected.
