Medical Cannabis and Psychedelic Reforms Reshaping Mental Health Markets
The landscape for medical cannabis and psychedelic therapies has rapidly shifted in just a few weeks following recent executive actions in the US.
Between the formal rescheduling of medical cannabis to Schedule III and an executive order aimed at accelerating mental health treatments, several pockets of the market are emerging as clear beneficiaries.
A new era for cannabis?
The federal move toward cannabis rescheduling began in May 2024.
However, a postponed interlocutory appeal over a year ago left the process in limbo until acting Attorney General Todd Blanche signed the final order placing state-licensed medical cannabis into Schedule III on April 23.
Soon after, the Drug Enforcement Administration (DEA) announced it would begin accepting applications for federal protection from medical cannabis businesses. The Department of Justice also said that a new administrative hearing will begin on June 29 to address the broader rescheduling of “all cannabis.”
For major cannabis operators like Curaleaf Holdings (CSE:CURA,OTCQX:CURLF), Green Thumb Industries (CSE:GTII,OTCQX:GTBIF), Cresco Labs (CSE:CL,OTCQX:CRLBF) and Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF), the primary catalyst is the removal of the Section 280E tax burden.
The treasury department and Internal Revenue Service expect rescheduling “to have significant positive tax consequences” for medical cannabis businesses, and will soon issue guidance on how 280E relief applies.
“Historically, this provision has driven effective federal tax rates as high as 70 percent or more, materially constraining cash flow and distorting financial performance,” said Terry Mendez, CEO of Safe Harbor Financial, in an emailed statement. “Relief from 280E should improve operator liquidity, financial transparency, and credit quality, all of which are foundational to sustainable banking relationships.”
While this step de-risks the medical cannabis landscape, it leaves intact the core regulatory and compliance constraints: no federal legalization and no tax relief for adult‑use providers.
“It does not replace the need for comprehensive federal reform,” said Mendez. “A durable solution will require congressional action, including passage of the SAFER Banking Act, along with clear and consistent federal guidance that aligns financial services policy with the scale and legitimacy of today’s state-legal cannabis industry.
Adam Stettner, CEO of FundCanna, noted the structural implications:
“The order begins to formalize a federal pathway for medical cannabis within an established regulatory framework, including DEA registration, reporting, and compliance requirements aligned with Schedule III substances.
“This introduces a higher bar for operational discipline while signaling to institutional capital that parts of the cannabis market are becoming more standardized and financeable.”
Gennaro Luce, founder and CEO of EM2P2 and CannaLnx,…
Read More: Medical Cannabis and Psychedelic Reforms Reshaping Mental Health Markets