Cannabis Leaders Express Mixed Feelings Over Fed Interest Rate Cut

Earlier this week, the U.S. Federal Reserve announced it was cutting interest rates for the first time in four years. The move comes as a cooling economy replaces inflation as a primary concern.

The half-percentage-point cut brings rates down from 5.3% to about 4.8%, lowering borrowing costs for consumers and businesses.

It's certainly an inflection point in the U.S. economy. Yet it begs the question: What will this bode for the legal cannabis industries? With mixed feelings, several industry leaders weighed in.

John Mueller, CEO and co-founder of Greenlight , a multistate cannabis operator, sounded a positive note, feeling the timing couldn't be better as it will reap handsome dividends for the sector.

"The Fed's 50 basis point rate cut arrives at a strategic moment for the cannabis industry as many operators are renegotiating new debt packages to take advantage of the expanding market," he said. "With current tax rates over double those of traditional businesses, this rate cut plus the imminent rescheduling of marijuana will allow operators to expand and innovate as we continue to cut into the opioid crisis and reduce overall health costs in America."

Robert Beasley, CEO of Fluent Cannabis Care , a multistate cannabis company headquartered in Tampa, doesn't think the interest cut will have any measurable impact on the industry due to the federal illegality. That could change when rescheduling happens.

"Unlike other industries, we don't benefit from prime ratings and our lending options are much more limited," explained Beasley whose company has operations in Pennsylvania, Florida and Texas. "The real financial breakthrough for cannabis businesses will come with rescheduling, which will likely broaden the pool of available lenders and open the door to traditional capital markets – offering rates more in line with other sectors."

Adam Wilks, CEO of Carma HoldCo , a holding and licensing company focused on celebrity cannabis brands, agreed that the Federate Reserve interest rate cut will likely not have an immediate impact on the cannabis sector because of the lack of traditional financing access. However, it will be a boon for businesses that are outside the space.

"Lower rates may help ease the cost of capital throughout parts of the supply chain, but generally most cannabis businesses are forced to seek alternative financing due to the lack of traditional financing options," said Wilks. "Financing is critical for retailers and brands who need to adapt quickly to consumer demand and remain competitive in such a challenging industry. Ultimately, lower interest rates are good for the macroeconomic environment – and we hope this will trickle down into the cannabis space – but until cannabis is rescheduled or federally legalized, the impact remains to be seen."