Water Tower Hour Recap
Poseidon was founded by siblings Emily and Morgan Paxhia in 2013, making their first fund one of the longest-running dedicated cannabis investment funds. The Poseidon team has focused on a diversified strategy covering a range of company stages and industry subsectors across the capital spectrum. Now in its 10th year of conducting due diligence, deploying capital, and serving on multiple company board of directors, the team is considered a leader in the cannabis industry. Co-Founder and Managing Director Morgan Paxhia joined us on The Water Tower Hour to discuss the potential major changes on the horizon for US cannabis. On August 30, the United States Department of Health and Human Services recommended rescheduling cannabis from Schedule I to Schedule III. The next step is a review by the DEA and a ruling by the Attorney General. The onerous 280E tax code that prevents US plant-touching operators from taking ordinary deductions applies to Schedule I and II drugs. Removing 280E would make these businesses instantly more profitable, allow more cannabis research, and help open the investing landscape. Paxhia shared how he thinks this process will evolve, potential time frames, and how it will affect Poseidon’s portfolios. We discussed which stocks have gone up the most and why they have outperformed. SAFE Banking is also working its way through the Senate and may see a Senate vote this fall. Paxhia explained the importance of SAFE Banking and how it disproportionately benefits small cannabis companies. US cannabis is a state-led growth story. We have 23 adult-use states, and the next major opportunities are in Ohio, Pennsylvania, and Florida. We dug into Florida’s market, the huge population, and how impactful moving to adult-use would be for Trulieve (CSE: TRUL, OTCQX: TCNNF). Finally, Paxhia shared the risks he’s monitoring as we head into 2024. Equity raises may lead to dilution, especially as more debt-laden operators attempt to improve their balance sheets. You can listen to the episode on Apple Podcasts, Google Podcasts, and Spotify, as well as our website.
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