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Ross Gerber Sounds Alarm on Cannabis Industry Federal Restrictions
Ross Gerber, the co-founder, president, and CEO of Gerber Kawasaki Wealth and Investment Management, is raising his voice about the impact of outdated federal laws on the cannabis industry and the broader U.S. economy.
Preparing for Change
The Impact of Federal Rescheduling
Gerber touched on the major change that federal rescheduling of cannabis could bring. While this may reduce some financial pressures, it is not a cure-all. "While rescheduling would be a step in the right direction, companies need to be prepared for the changes that would come with it," he explained. He elaborated that companies must focus on staying financially sound and adapt to new regulations that could accompany federal shifts.
He underlined that leadership is paramount in these challenging times. "The companies that can refinance their debt and reduce costs will be better positioned to take advantage of the opportunities that come with legal changes," he added.
The Cost of Federal Restrictions on Cannabis
Gerber emphasizes the detrimental effects of the federal government’s outdated stance on cannabis. “The federal government’s over-taxation of cannabis companies is not just stifling their growth; it’s also costing the U.S. economy valuable contributions from an industry that is ready to thrive,” he said.
The 280E tax code specifically imposes severe financial burdens on cannabis businesses. This not only makes profitability challenging but also shuts many out of traditional financial services and capital markets. Because of federal restrictions, these companies are often forced to finance through costlier Canadian markets.
Borrowing Rates for cannabis businesses are alarmingly high. "Cannabis businesses are borrowing at rates as high as 15% to 20%, which is unsustainable in the long term," Gerber noted. This underlines the financial strain these companies endure under current federal laws.
A Call for Federal Reform
At the upcoming Benzinga Cannabis Capital Conference in Chicago this October, Gerber will address these crucial issues. He contends that the current legal framework represents a missed opportunity for economic growth. "By keeping these companies on the fringes of the financial system, the U.S. is missing out on the economic benefits that a fully legal and thriving cannabis industry could provide," Gerber said.
Upcoming Discussions at the Conference
This conference will serve as a vital platform for discussing these pressing issues. Gerber and other industry leaders will offer strategies for navigating the challenging legal and financial landscape.
Conclusion
As the cannabis industry grapples with outdated federal laws and financial restrictions, Gerber’s insights highlight the broader economic implications. His advocacy for reform is a call to action for industry leaders to prepare for potential changes that could reshape the industry.
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