With so many American states legalizing medical and adult-use cannabis, it’s no surprise that entrepreneurs are joining the rapidly growing industry. Federal illegality, though, makes it tough for these pioneers and their investors to make money.
Scaling a business that’s prohibited from selling product outside the state in which it’s produced is quite challenging. Add the onerous federal 280E tax—which disallows normal business expenses and can lead to income tax being due even when a company isn’t even profitable—and it’s no wonder that we aren’t seeing a bull market in cannabis producers or retailers.
Last month, I suggested that investors looking to capitalize on cannabis legalization would be wise to explore international options. While the United States has yet to embrace cannabis legalization at the federal level, several other countries have created federally legal medical cannabis programs.
Our neighbors to the north and south are on board. Mexico recently legalized (but hasn’t yet