Focus: Companies With Cannabis-Based Drugs Eye IPOs, Private Funding Boost After US Reclassification (Reuters)

Companies developing cannabis-based medicines say US moves to loosen restrictions on the drug could unlock private funding and the public markets, providing a lifeline to the struggling cannabis industry. The U.S. Department of Justice last week rescheduled FDA-approved medicines and state-regulated medical marijuana products, making it easier for companies to bank and receive tax credits and deductions. The government also plans to quickly reclassify marijuana broadly, a potential boon for companies that sell for recreational use and have contended with a weak consumer spending climate and competition from illegal sellers. "We have heard directly from VCs and other investors that rescheduling will get the capital flowing again," said Brett Schuman, the San Francisco-based co-chair of the Cannabis practice at Goodwin law firm. Schuman said some banks have covenants in loan and credit agreements that prevent clients from investing in cannabis, with some of these constraints applying only to the drugs that are classified as Schedule I. That US classification, which includes heroin and LSD, is for drugs deemed to have no accepted medical use and high potential for abuse.

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