Category: Interviews

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Controlled Substance Act Employment Issues ESOPs (Employee Stock Ownership Plans) Interviews Meet Blank Rome Mergers and Acquisitions

ESOPs for Cannabis Companies: A Strategic Solution to 280E Tax Hurdles

Scott Moskol recently spoke with Investing News Network about how employee stock ownership plans can offer tax advantages and foster sustainable expansion for U.S. cannabis companies. Read an excerpt below:

In light of Section 280E of the US Internal Revenue Code, which significantly inflates effective tax rates by prohibiting standard business deductions for companies trafficking in Schedule I substances, employee stock ownership plans (ESOPs) have gained traction as a strategic countermeasure in the cannabis space.

While the transition of medical marijuana to Schedule III has provided some tax relief, adult-use cannabis continues to be classified as a Schedule I substance, keeping the burden of 280E in place for many.

But as federal rescheduling efforts progress, will the complexity of an ESOPs remain necessary?

The Investing News Network recently interviewed Scott H. Moskol, partner and cannabis practice co-chair at Blank Rome, to explore how these structures benefit the sector and what could be next.

[…]

Moskol described ESOPs as “especially salient for the cannabis industry” because they effectively restore cashflow that 280E would otherwise strip out. He mentioned Massachusetts operators Canna Provisions and Theory Wellness as companies that have completed ESOP transactions and “continue to grow,” as well as at least one ESOP-owned business in Maine, where higher state income tax rates can make the ESOP tax advantage more meaningful.

Illicit, a company that was backed in an ESOP transaction by a lender client of Moskol’s firm, was also cited by Moskol as an example of how these structures can support growth. After completing its ESOP, Illicit is now looking to use the cashflow that’s been freed up “to make certain strategic acquisitions.”

Ultimately, tax savings from ESOPs can be used to shore up operations, acquire new assets, pay down debt or even purchase real estate that’s currently being leased. All of those moves can strengthen EBITDA, improve balance sheets and make a business more attractive as a future sale or initial public offering candidate, or if institutional investors begin to apply more traditional valuation frameworks to the sector.

To read the full article, please click here.

“ESOPs for Cannabis Companies: A Strategic Solution to 280E Tax Hurdles,” by Meagen Seatter, was published in Investing News Network on June 1, 2026.

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Banking and Restructuring Controlled Substance Act Interviews Legislation Regulatory Compliance

What Cannabis Lenders Think Rescheduling Will Mean for Capital Markets

Gustav Stickley V —

The prospect of federal rescheduling of cannabis has the lending community buzzing. We recently sat down with Alex Mazza, Director of Underwriting at Chicago Atlantic Group, as well as Michelle Haughton and Bobby Boyda of Needham Bank, to get their take on what rescheduling could mean for borrowers, lenders, and the broader capital markets.

Stronger Borrowers, Bigger Demand

One of the most immediate effects lenders anticipate is a meaningful improvement in borrower credit profiles, particularly for operators with retail operations. With the burden of Section 280E potentially lifting, operators should see more available cash on their balance sheets, thus deepening the pool of eligible borrowers. Mazza emphasized that this will drive increased demand for capital—but crucially, not an immediate increase in capital supply. In his view, new lenders are unlikely to rush into the industry given cannabis’ continued federal illegality and the robust internal processes required to set up a cannabis lending program.

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Banking and Restructuring Controlled Substance Act Interviews Legislation Meet Blank Rome Mergers and Acquisitions Regulatory Compliance

Cannabis Rescheduling: Will the Vault for Cannabis Banking and Financial Services Finally Be Opened?

Scott H. Moskol and Lauren Medeiros Forster —

Whether you are a cannabis operator, lender, or investor, you have probably been hearing a lot of buzz about the potential rescheduling of cannabis from Schedule I to Schedule III under the federal Controlled Substances Act, especially following President Trump’s recent executive order directing federal agencies to initiate the process of rescheduling marijuana and reviewing related regulations. It is an exciting development, and there is plenty of reason for optimism, but let’s take a look at what this shift could change (and likely not change) when it comes to banking, lending, and financial services in cannabis.

  1. The Banking Landscape: Evolution, Not Revolution

It is likely that rescheduling cannabis to Schedule III will not dramatically change what banks are presently required to do under the Bank Secrecy Act (the “BSA”) and the 2014  FinCEN guidance on banking marijuana-related businesses. These BSA-related compliance obligations (i.e., the enhanced due diligence, suspicious activity reporting, and monitoring requirements) will not vanish as a result of rescheduling. Banks will still need to navigate a complex regulatory and compliance environment, and if you are a financial institution already working with cannabis operators or you are a cannabis business already working with a financial institution, your day-to-day relationship will not change.

What the industry is hoping for, however, is that rescheduling will prompt federal regulators to issue amended or entirely new guidance on how banks can engage with the cannabis industry. That kind of updated regulatory framework could open doors to more streamlined processes and potentially reduce some of the friction that has defined cannabis banking for years but more importantly bring in new financial institutions providing banking and lending services to the industry. Eyes should be kept on Treasury and the banking regulators—their next moves will matter once cannabis is rescheduled.

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Banking and Restructuring Controlled Substance Act Interviews Legislation Meet Blank Rome Mergers and Acquisitions Regulatory Compliance

Closing the Hemp Loophole: What Monday’s Farm Bill Update Means for Delta-8 and Hemp-Derived THC

Marc A. Polito —

At Blank Rome’s 9th Annual State of the Cannabis Industry Conference, Frank A. Segall, partner and co-chair of the firm’s Cannabis practice, asked a panel—including Joseph Andreae, CEO of CULTA, Jared Maloof, CEO of Standard Wellness, Ed Schmults, CEO of Firelands Scientific, and Jim Scott, CEO of Statehouse Holdings—what is the number one issue confronting the cannabis industry today? All four chief executives unanimously echoed the same sentiment: the number one issue confronting state-regulated cannabis operators today is the unregulated hemp market, which has become a growing thorn in their sides as the hemp market picked up steam over the past few years. Well, with new action by lawmakers yesterday, it appears this issue is on the brink of being resolved!

Over the past six years, the hemp industry has transformed from a niche agricultural sector into a national marketplace for diverse cannabinoid products. That transformation was catalyzed by the 2018 Farm Bill, which legalized hemp by defining it as cannabis with no more than 0.3 percent delta-9 tetrahydrocannabinol (“THC”) on a dry-weight basis. What resulted from this was an unintended market: intoxicating hemp-derived cannabinoids such as delta-8 THC, delta-10 THC, and other analogs produced from cannabidiol (“CBD”) isolates through chemical conversion. The “hemp loophole,” as it came to be known, allowed psychoactive products to proliferate in convenience stores, restaurants, and online and circumvented the strict controls applied to state-licensed cannabis.

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Interviews

Blank Rome State of the Cannabis Industry Panelist Interview Series: Jacques Santucci, Opus Consulting President

Max M. Borg —

We’re looking forward to welcoming experts and industry leaders from across the country to our Eighth Annual State of the Cannabis Industry Conference next month, where we’ll learn from their unique strategic insights, experiences, and expertise on the cannabis industry.

As the conference draws closer, we are featuring a series of interviews with several of our panelists. These conversations will provide a glimpse into their diverse backgrounds and perspectives, and give our readers and conference attendees a preview of the compelling topics we will be showcasing at the conference.

For our latest interview, we sat down with Jacques Santucci, President of Opus Consulting.

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Interviews

Blank Rome State of the Cannabis Industry Panelist Interview Series: James Daley, Needham Bank Senior Vice President and Director Structured Finance

Max M. Borg —

We are looking forward to welcoming experts and industry leaders from across the country to the Eighth Annual State of the Cannabis Industry Conference. Our panelists and speakers will offer their unique strategic insights, experiences, and expertise on the cannabis industry.

To continue our interview series, we are featuring a new interview with banking industry veteran James Daley, Senior Vice President and Director Structured Finance at Needham Bank. The new Structured Finance team provides customized financing solutions of $10 million or more to support the growth plans of businesses headquartered primarily in Massachusetts.

  • Can you describe Needham Bank’s role in the cannabis industry and your role at Needham?

Needham Bank is providing senior secured debt facilities, ranging in size from $3,000,000 to $75,000,000. This capital is used by both direct and indirect cannabis companies for a variety of applications.

At Needham Bank, I manage all of Commercial and Industrial Banking (lending and treasury) and all of Cash Management for the Bank. Cannabis lending rolls up through one of my teams, Structured Finance. 

  • Does Needham Bank target particular cannabis businesses to lend to? What are some common features of the businesses that Needham invests in? 

For lending inquires we are focusing on Multi State Operators (“MSOs”) and large regional direct and indirect cannabis companies. We are staying away from Single State Operators. For treasury opportunities, the Needham Bank team is looking to support operators that have an up-and-running business, slightly past the infancy stage, with a primary focus similar to the lending strategy for large scale, regional, and MSO operators.

  • What are some subtle “red flags” that might deter you or your team from investing in a potential opportunity?

When we see business plans that set unrealistic expectations. Many operators new to the industry think they will be profitable overnight. That is hardly the case. 

  • What would our readers find surprising about lending to cannabis businesses? 

The debt instrument is really basic and straight forward. It is not complicated at all.

  • What are some important lessons you’ve learned as a lender in the cannabis industry, and how have those lessons impacted your team’s current strategy?

Don’t overspend! Operators are spending way too much money to get their business off the ground. Keep plans simple. Focus on operations, focus on margins. These facilities are NOT real estate loans. They are operating businesses that require constant production, oversight, and management. We look at construction budgets very closely, and we upgraded our construction engineer program to take a finer look at budget and building processes to ensure clients are not overspending, are staying on budget, and to ensure they are staying on time.

Register now for Blank Rome’s 8th Annual State of the Cannabis Industry Conference!

Join us in person or via live stream on October 21, 2024. RSVP here: bit.ly/3AJprRA

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Interviews

Blank Rome State of the Cannabis Industry Panelist Interview Series: Patrick Kim, Altmore Capital Co-Founder and Managing Director

Max M. Borg —

The Blank Rome team is thrilled as we gear up for the Eighth Annual State of the Cannabis Industry Conference!

We are looking forward to welcoming experts and industry leaders from across the country who will offer their unique strategic insights, experiences, and expertise on the cannabis industry.

In anticipation of the conference, we will be featuring interviews with several of our panelists. These conversations will provide a glimpse into their diverse backgrounds and perspectives, and give our readers and conference attendees a preview of the compelling topics we will be showcasing at the conference.

For our first interview, we sat down with Patrick Kim, co-founder and managing director of a leading provider of capital to the cannabis industry, Altmore Capital. Prior to founding Altmore Capital, Patrick was a partner at the Williams & Connolly law firm in Washington, D.C. At Williams & Connolly, Patrick represented a variety of major financial institutions and investment funds, including several top-tier private equity firms, in a range of commercial litigation matters and government investigations. Patrick offers a unique perspective on financing within the cannabis industry due to his legal background.

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