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Welcome to the Cannabis Corner, where we provide you with the latest updates and insights from the cannabis industry. As we close out the first quarter of 2025, several significant developments have shaped the landscape, and we look forward to what the second quarter may bring.

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California's Enforcement Efforts: California has made substantial strides in combating illegal cannabis operations. The <a href="https://cannabis.ca.gov/about-us/about-dcc/unified-cannabis-enforcement-taskforce-ucetf/" target="_blank" rel="noopener">Governor’s Unified Cannabis Enforcement Task Force</a> (UCETF), along with other state agencies, seized over $316 million worth of unlicensed cannabis products. This includes the eradication of 212,681 illegal cannabis plants and the seizure of 120,307 pounds of illegal cannabis. These efforts underscore the state's commitment to supporting the licensed market and ensuring community safety.

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Federal Rescheduling Hearings: Movement on legalizing cannabis at the federal level has seen progress, though it looks like there will be more wait and see at this point. Hearings to evaluate the rescheduling of cannabis from Schedule I to Schedule III of the <a href="https://www.dea.gov/drug-information/csa" target="_blank" rel="noopener">Controlled Substances Act</a> have been pushed back for at least three months, and it appears that the new administration may have higher priorities.

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As we move into the second quarter, several key areas will be under close watch:

Regulatory Changes: Continued discussions and potential decisions on the federal rescheduling of cannabis are unlikely to happen in the near term but will be an important next step for the industry. We will learn more at the end of April, but it looks as if the conversation on rescheduling will be moved out if it is addressed at all. If cannabis is moved to Schedule III, it will mark a historic shift in federal policy, potentially easing restrictions, changing the implications of 280E, and fostering growth within the industry.

Hemp THC: With federal cannabis legalization still uncertain, almost every major cannabis company in the US and Canada has started selling THC-infused beverages. Further the hemp-derived THC market is predicted to grow to nearly $14 billion this year, and the alcohol industry has taken notice at this point. Hemp-derived THC offers cannabis companies a new revenue stream as fewer states launch adult-use or medical cannabis programs. However, we can expect to see more states banning hemp-derived THC products, as any federal legislation (including an update to the status quo under the 2018 farm bill) seems unlikely in the current federal government.

Market Dynamics: The enforcement actions in California are expected to have ripple effects across other states, prompting similar initiatives to crack down on illegal operations. This could lead to improvement in the regulated market, benefiting both consumers and legitimate businesses.

Industry Conferences: The upcoming <a href="https://www.benzinga.com/cannabis-conference" target="_blank" rel="noopener">Benzinga Cannabis Capital Conference</a> in Chicago from June 8-10 will be a significant event for industry stakeholders. And I am excited to announce that the team of <a href="https://www.michaelbest.com/People/Christopher-Schreiber" target="_blank" rel="noopener">Chris Schreiber</a>, <a href="https://www.michaelbest.com/People/Matthew-Bartling" target="_blank" rel="noopener">Matt Bartling</a>, <a href="https://www.michaelbest.com/People/Benjamin-Johnson" target="_blank" rel="noopener">Ben Johnson</a> and I will return to the conference this year! It will provide a platform for discussing the latest trends, investment opportunities, and regulatory updates, helping to shape the future of the cannabis sector.

Close-up of green cannabis leaves against a soft, blurred background.

Close-up of green cannabis leaves with soft natural light and a blurred yellow background.

Cannabis Corner: April 2025 Update

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