As key election results unfold, Z&A hosted a panel to examine how growth opportunities in 2025 could vary under Harris vs. Trump.

As key election results unfold, Pablo Zuanic of Zuanic & Associates (Z&A) hosted a panel with industry experts to examine how the outcomes and potential shifts under either Harris or Trump could shape cannabis debt financing, regulatory changes and growth opportunities in 2025.

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Consolidation And Scaling Challenges

Panelists Peter Sack of Chicago Atlantic Group REFI, Dan Neville of AFC Gamma AFCG , and Erich Griffin-Mauff of FiSai Investments provided insights on key issues for cannabis-focused debt providers, including regulatory impacts, M&A complexities, and anticipated financing innovations. 

The panelists agreed that 2025 will likely be a year of consolidation, especially for top multi-state operators (MSOs) and smaller companies struggling to compete. Erich Griffin-Mauff emphasized, “Scaling is crucial, but so is quality management,” adding that consolidation could save $25–40 million per acquisition by reducing duplicated costs. 

However, as Dan Neville pointed out, large-scale mergers often struggle due to state-specific regulatory restrictions on ownership and asset transfers. “Smaller, state-level M&A is more feasible,” he noted, citing the failed Cresco-Columbia Care merger as a cautionary example of forced asset sales due to low market valuations.

Regulatory Outlook: Rescheduling, SAFE Banking And Challenge Of Legalization

Federal rescheduling remains a likely near-term regulatory change, with panelists anticipating it within a year. Zuanic highlighted that rescheduling could ease the burden of Section 280E, which disallows tax deductions for cannabis businesses. “Rescheduling would remove liabilities and improve cash flow for operators,” said Sack, though the SAFE Banking Act stalled by political disagreements remains uncertain.

Vice President Harris’s campaign promise to legalize cannabis federally also came under scrutiny. “It’s an aspirational goal at best,” Sack commented, with panelists noting that federal legalization would require cooperation across state lines, a complex undertaking unlikely shortly. Griffin-Mauff added, “The concept sounds good on paper, but it’s far from the immediate horizon.”

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Tax Debt And 280E Liabilities: Balancing Risk And Compliance

Tax liabilities under Section 280E weigh heavily on cannabis companies, which are taxed at unusually high rates. Dan Neville noted that some operators are filing as if 280E doesn’t exist to manage cash flow, despite potential penalties. This approach complicates M&A and lending, especially in states requiring full entity acquisitions rather than asset purchases. “Tax debt often complicates acquisitions and could further slow M&A activity,” he explained.

Alternative Financing Structures Post-Legalization

Federal legalization could bring new financing options to the cannabis sector, panelists noted. Dan Neville suggested that regulatory change might pave the way for mezzanine debt, unsecured lending, and other innovative financing models, allowing companies more flexible capital access beyond today’s Unitranche model and all-asset liens. However, Sack emphasized that these developments hinge on a stable federal framework and will likely take time to materialize.

Emerging Markets: Hemp-Derived Products And Cautious Interest

Panelists briefly discussed hemp-derived products, particularly drinks, which are drawing some interest in the cannabis sector. However, they viewed this category as too nascent for substantial capital investment. “This feels like CBD in 2018,” said Neville, pointing to the lack of regulatory clarity and distribution channels that currently limit institutional investor involvement.

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Election Outcomes And Capital Strategy Impacts

As election results settle, adult-use legalization in key states could stimulate growth. However, panelists advised caution, with Neville noting that operators in states like Florida need to plan for both outcomes. 

Overbuilt markets could pose risks if adult use doesn’t pass. Debt demand remains high, with around $2.5 billion in refinancing needs by 2026. 

Griffin-Mauff concluded, “Refinancing and capital needs will drive debt market activity, with opportunity for high returns for those strategically positioned in the capital stack.”

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