As federal cannabis rescheduling looms, many in the industry are cautiously optimistic about the potential impact. Michael DeGiglio, CEO of Village Farms, says the changes could be just the beginning of the road to meaningful reform.

DeGiglio, who spoke during an interview at the recent Benzinga Cannabis Capital Conference, shared his thoughts on the challenges the cannabis industry faces despite the possibility of cannabis being moved to a Schedule III classification. While he acknowledged the potential benefits, particularly in reducing the cost of debt and access to capital, DeGiglio expressed frustration over the lack of progress in federal policy.

"No Policy Movement for Four Years"

Reflecting on the current state of cannabis reform, DeGiglio didn’t mince words. "It's been a disaster, in my opinion, four years of really no policy movement whatsoever," he said.

Despite operating one of the largest cannabis cultivation facilities in the world, Village Farms — like many other cannabis companies in the U.S. — is still unable to participate in the domestic market due to federal restrictions fully. The company, based in the U.S., has been forced to focus its efforts abroad, particularly in Canada and Europe, where cannabis laws are more favorable.

Who Will Regulate Cannabis?

DeGiglio pointed out that even if cannabis is moved to Schedule III, many uncertainties remain: "Who’s going to regulate cannabis in the U.S.? Is it going to be the FDA? Where's that funding going to come from? Is Congress going to be involved?"

These questions, according to DeGiglio, are critical to the future of the industry, as the regulatory framework for cannabis in the U.S. is far from settled.

Banking and Financial Challenges

One of the most immediate impacts of rescheduling would be on cannabis businesses’ access to capital. DeGiglio noted that many multi-state operators (MSOs) are struggling financially, with some reportedly unable to pay their IRS tax bills.

"I think many companies need it," he said, referring to the tax relief with a Schedule III designation. He also emphasized that larger companies, particularly those already cash flow positive, would benefit the most from these changes.

Long-Term Optimism Despite Frustration

Despite the challenges, DeGiglio remains committed to the cannabis industry and its future. "I'm all in, and I'm still the largest shareholder of Village Farms," he said, expressing optimism about the business’s medium- to long-term prospects.

While rescheduling cannabis would be a positive first step, DeGiglio argues that much more needs to be done to create a viable and sustainable cannabis market in the U.S. The road ahead is filled with regulatory and financial hurdles, but for leaders such as DeGiglio, the potential rewards make the challenges worth facing.

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