Verano CEO Predicts Cannabis Rescheduling, Companies Uplisting

The exec also addressed the effect of state offsets for 280E.

Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) CEO George Archos predicted with some confidence during the company’s second quarter earnings call Tuesday that the current classification review by the Biden administration will give publicly traded U.S. marijuana companies the chance to uplist to major stock exchanges by at least rescheduling the drug.

Archos reminded stakeholders on the call that Verano is a part of the U.S. Cannabis Council, which has been lobbying the Biden administration on the issue since the review was launched last year.

“With a rescheduling or descheduling status still on the horizon, we will continue our involvement at the federal level to help push progress forward,” Archos said. “We ultimately anticipate that some form of federal action will create large changes for the industry, including the possibility of an uplisting to U.S. exchanges.”

Uplisting to the New York Stock Exchange or the Nasdaq could open the capital floodgates for many public cannabis companies and offer significant financial relief for operators such as Verano.

Although the Illinois-based multistate operator has reported business conditions on the upswing and recast its financial guidance for this year to increase free cash flow projections to $65 million-$75 million, the company is still carrying $227 million in tax liability, CFO Brett Summerer noted on the call Tuesday.

That debt load, however, is offset by some state-level tax credits designed to minimize the pain from the 280E provision in the federal tax code, which prevents cannabis companies from claiming standard business tax deductions.

Archos said 280E offsets passed into law in Connecticut, Illinois, and New Jersey were a “major victory” that have saved Verano millions already.

“We’re down from about $250 million to about $225 million” in tax debts, said Verano CFO Brett Summerer. “The state portion is a healthy portion, but not all of that, and that’s essentially a direct result of the 280E rollbacks that we saw in Illinois and New Jersey. So it’s high single-digit, low double-digit sort of savings.”

And with the increased free cash flow, Summerer said, the company is debating whether to continue paying down its tax debts or some of the debts it owes to Chicago Atlantic or perhaps invest it in expansion.

“All options are on the table,” Summerer said.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.

One comment

  • Tommy

    August 9, 2023 at 4:23 pm

    Great stuff as always John!


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