Eagle-eyed viewers of HBO’s Last Week Tonight this past Sunday were treated to a very informative, frequently hilarious rant by host John Oliver into some of the marijuana-related issues we - and pretty much anyone else involved with the cannabis industry - have been talking about for some time.
Using the change in legalization support (12% in a 1969 poll to approximately 60% today) as a launch point, Oliver’s nearly 17 minute piece delved into:
Federal scheduling of marijuana ("Marijuana is classified as a [DEA] schedule one drug - the highest classification alongside heroin. Schedule two, a step down, features drugs like cocaine and methamphetamine. Marijuana is not a schedule one any more than a hedgehog is an apex predator".)
The difficulty of legally studying marijuana scientifically (advance approval is required from the FDA, the Justice Department and the National Institute on Drug Abuse, leading to wait times as long as 6 years)
Banking challenges – state-legal marijuana businesses are still federally illegal, and must literally deal in cash in most cases.
Unintended consequences of mixed regulation from state to state while federal prohibition still exists; Oliver cites Kentucky’s MMJ legislation, which includes no accommodations for legal marijuana distribution and, rather than (federally legal) doctor recommendations for MMJ, requires a (federally illegal to write) doctor’s prescription for it – so while medical marijuana is technically legal in Kentucky, there is no legal way to obtain it.
The potential for financially ruinous consequences of seemingly profitable cannabusinesses due to IRS 280E – because cannabis producers, processors and retailers are “trafficking” in federally illegal substances, they may not (under IRS rule 280E) deduct normal business expenses even though they must declare all the income from them – so after overhead, purchase costs, payroll and other normal expenses, it’s possible to have a tax bill well in excess of the actual profits.
Of course Oliver is quick to point out the Obama-era Cole memo, directing the federal government to focus its resources in other directions than state-legal cannabusinesses…but that was then, and this is now.
Overall, a very thoughtful, meticulously detailed segment that informs as well as it entertains. Highly recommended.
Dan Ogden is a 20+ year veteran of the executive search industry, having covered operations, regulatory and consulting verticals within capital markets as well as data science, data analytics and, more recently, the cannabis industry within search firm and internal corporate HR leadership roles. Dan is Principal of the practice at Delta 9 Search.
Aleks Novikova is Research Lead at Delta 9 Search, the only dedicated cannabis industry executive search firm in the Western Hemisphere, and has been with the company since the get-go, working directly on its marketing and recruiting efforts.
To find out how Delta 9 can help your company identify and attract the key executives it needs to thrive and grow in the cannabis industry, shoot us an email or give us a ring at 212.390.8190.