ACT December Cannabis Accounting News
Following a sweeping victory at American ballot boxes in November, more exciting developments appear on the horizon for the cannabis industry. Is the U.S. government truly considering legalizing cannabis? Could the United Nations officially recognize the medical benefits of cannabis? Will the holiday season help pandemic-battered cannabis businesses recoup some lost profits? If December breaks the way of the cannabis industry, the start of 2021 could be a bold new world for cannabis entrepreneurs large and small.
U.S. House to vote on the MORE Act
On Dec. 4, the U.S. House of Representatives approved the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act by a vote of 228 to 164. The MORE Act would immediately deschedule cannabis from the U.S. Controlled Substances Act (CSA) and legalize interstate commerce for the cannabis industry.
The MORE Act also includes measures that: leave regulation of cannabis industry to the state; pave the way for full access to banking and financial services for cannabis companies; end the 280E tax code consideration that prevents cannabis businesses from taking normal business deductions; and open the door for national and international cannabis trade.
While the House passed the measure, it is less certain how it would fare in the U.S. Senate. As two runoff elections for Senate seats in Georgia are set for Jan. 5, control of the chamber hangs in the balance. If the Democrats win both runoff elections, they would gain control of the Senate; however, even then ultimate passage of the bill remains uncertain.
The approval of the MORE Act represents the first such action on cannabis legislation since the House approved the SAFE Banking Act. It is also the most significant vote to date, effectively overturning cannabis prohibition. Whether the House’s vote is symbolic or practical is another story altogether.
Could 2020 be a big holiday season for cannabis?
The cannabis industry, like many others, took a hit when the COVID-19 pandemic forced many businesses to shutter and lay off employees. While many cannabis dispensaries were deemed essential and continued operating, less disposable income means less sales – everyone felt the pinch.
However, there are some indicators that things are turning around as the holidays near, prompting hopes of a “green rush.” There is precedent for this as well. According to market research organization Headset found that every category of cannabis product received a bump in sales the week leading up to Christmas. Topicals, edibles, and beverages enjoyed the largest boost, rising over the previous four weeks of sales by 38%, 31%, and 26%, respectively. But flower and concentrates also saw pre-Christmas increases in sales.
This year, pandemic-fatigued cannabis businesses are already seeing a boost. Brands that invest in holiday and end-of-year marketing could hope to capture some of the holiday sales fervor.
Virginia forms work group to explore cannabis legalization
Yet another state may be preparing to legalize cannabis, as Gov. Ralph Northam announced his intention to introduce legislation legalizing adult-use cannabis. The legislation is expected at the state’s General Assembly meeting in January.
“Our Commonwealth has an opportunity to be the first state in the South to take this step, and we will lead with a focus on equity, public health, and public safety,” Northam said in a statement.
Virginia currently has a legal medical cannabis program, and it has decriminalized the possession of cannabis. Now, the state has established a working group to examine how other states devised and implemented their own adult-use cannabis program. That group already released a tome of recommendations, including the establishment of a “Cannabis Cabinet” designed to oversee the implementation of the new industry and focus on ameliorating impacts from the War on Drugs.
If the legislation Northam plans to introduce should be passed before any of the states that approved legal cannabis ballot referendums adopt legislation of their own, Virginia would become the 11th state to legalize adult use cannabis. It would also become the first state in the southern U.S. to legalize adult use cannabis.
United Nations prepares to acknowledge medical benefits of cannabis
The first week of December also included an international victory for the medical cannabis community, as the United Nations reclassified cannabis and recognized its therapeutic potential. The Dec. 2 vote was close: 27 to 25 with one abstention. However, at the end of the session, the United Nations recognized for the first time that cannabis could offer medical applications.
This move, while largely symbolic, could accelerate global legalization and research efforts. The recommendation for the vote came from the World Health Organization (WHO) and was approved by the UN’s Commission on Narcotic Drugs (CND).
The vote was delayed in March 2020 as CND members reportedly required time to hold meetings to exchange perspectives on the implications of adopting the recommendation.
Don’t wait, ACT today
In a burgeoning industry such as the cannabis industry, it is important to have an accounting partner you can turn to. From helping you navigate the seemingly constant changes in the industry to setting the stage for your long-term success and business growth, knowledgeable and experienced partners are of the utmost necessity. That’s why our team keeps a close eye on the cannabis industry and new developments, to bring you the best service and strategy possible. For sound financial advice and tax planning, don’t wait – ACT today!