CANNABIS SEASON

The cannabis industry is undergoing a radical transformation driven by federal reclassification and shifting product trends. Key developments include the Department of Justice's reclassification of marijuana to Schedule III , the rise of pre-rolled joints and cannabis beverages, increased regulation of psychoactive hemp derivatives (such as Delta-8 and THCA), and the continued consolidation of state markets.

1. Federal reclassification and financial relief. Change in Schedule III:

· The Department of Justice officially moved state-licensed medical cannabis from Schedule I to Schedule III.

• Tax relief: This reclassification allows legal medical cannabis businesses to deduct standard business expenses, effectively ending the huge financial burden of Section 280E.

• Stock market listing: Multi-state operators (MSOs) are restructuring and seeking to list on major U.S. stock exchanges such as the NYSE and NASDAQ, potentially avoiding the need for Congress to pass traditional banking legislation.

2. Product trends:

• Pre-rolls and beverages. Pre-roll dominance: Pre-rolls have overtaken traditional flower to become the best-selling product category by unit volume, driven largely by multipack options and infused products.

• Beverage boom: Cannabis-infused beverages are experiencing explosive growth, becoming a key emerging product category in dispensaries and taking market share away from traditional alcohol.

· Low-dose options: Low-dose and occasional-consumption edibles and beverages are in vogue as brands seek to demystify consumption and appeal to social and mainstream consumers.

3. Repression against hemp and THCA: Closing legal loopholes:

· Congress and regulatory agencies are aggressively pushing measures to ban or strictly limit intoxicating hemp derivatives, such as Delta-8 and THCA, as part of ongoing discussions on the Farm Bill and Appropriations.

· Total THC limits: Operators are forced to rebalance their product portfolios, moving away from synthetic cannabinoids or those that exploit legal loopholes and towards strictly regulated and licensed cannabis.

4. Evolution and consolidation of the state market:

• Slow expansion: States are steadily implementing markets for recreational and medicinal use, although legislative friction persists. For example, the launch of the retail cannabis market in Virginia suffered a major setback after an unexpected veto by the governor.

• Market consolidation: Older, more traditional markets (such as Colorado and California) are experiencing oversupply, strong price pressure, and corporate takeovers, giving large institutional funds and MSOs control of multiple state operating permits.

• Increased compliance: Regulators in established markets like Massachusetts are implementing stricter compliance measures, including testing requirements to prevent THC potency inflation.

Yes, we are undeniably in a "cannabis moment," defined by unprecedented cultural destigmatization, ever-increasing legal access, and a rise in daily consumption. It has gone from being a marginal countercultural symbol to a common element in health, wellness, and the economy.

Alexandra Suárez

CHIEF FINANCIAL OFFICER BV CORP

@highmommas