This week, what is perhaps the most consequential hearing in the history of the US, and indeed the global cannabis industry, is taking place in Arlington, Virginia.
The Administrative Law Judge (ALJ) hearing, expected to determine whether adult-use cannabis follows medical cannabis into Schedule III, is now in its second week of three.
In the 10 or so weeks since acting Attorney General Todd Blanche issued a final order moving two categories of cannabis from Schedule I to Schedule III, namely cannabis contained in an FDA-approved drug product (covering only Epidyolex), and cannabis subject to a state medical cannabis licence, the rationale for investing in the sector has already shifted meaningfully.
As MEDCAN24 reported last month, some of the US’ largest MSOs are awaiting the outcome of the ALJ hearing before offering their stock to investors on the country’s premier stock exchanges. Although the recategorisation of adult-use cannabis would save these companies a major headache, the smart investment strategy may already be to focus on the medical cannabis vertical.
The pathway, not the plant
During the first ‘green wave’ of the late 2010s and early 2020s, the companies that commanded the most attention were the ones able to raise the most money and expand the fastest.
Having learned the hard way that this model was inherently flawed for both for the companies and their investors, the attention has shifted to companies able to formulate, standardise and clinically validate a product, with the supply chain in place to dispense it widely.
The new holy grail for cannabis operators is no longer sheer financial heft, but specialists with well educated drug development strategies and watertight IP.
A Schedule III substance can be manufactured, distributed and dispensed by an entity holding a valid DEA registration, researched without the constraints that made Schedule I studies so difficult, and taken through the FDA approval process as a prescription medicine.
With that in mind, will the approval of adult-use cannabis for rescheduling render this point entirely redundant?
Mark E. Merritt, a former equity research analyst who now writes on the global cannabis industry, argues that wider rescheduling commoditises cannabis. In markets like Canada and even Germany’s more restricted medical market, the influx of cannabis has driven a race towards low-price, high-THC cannabis.
What is harder to commoditise are the proprietary formulations, delivery mechanisms, clinical data and an established brand. A more liberal market, on this reading, hollows out the cultivators and pushes value towards the companies that own that layer.
Rescheduling also leaves the pharmaceutical route untouched. It does not permit cannabis to be sold as an ordinary product across state lines, a cannabinoid medicine still has to complete the full New Drug Application process to be prescribed nationally. That route is open only to companies already doing the formulation and clinical work, regardless of what happens to adult-use.
Most investors, Merritt argues, read cannabis companies off their share charts and have missed the businesses being built from the ground up to develop pharmaceutical medicines. He adds that the number of firms combining low-cost supply, a proprietary formulation platform, a real revenue base and a clinical pipeline is close to none.
READ MORE…
Avicanna, a case study
Avicanna, listed on the Toronto Stock Exchange as AVCN, is a commercial-stage biopharmaceutical company that has spent a decade building around cannabinoid medicine rather than recreational supply.
It runs four connected business units. Rho Phyto is its portfolio of proprietary, standardised non-inhaled medical products across oral, sublingual, topical and transdermal formats. MyMedi.ca, the former Shoppers Drug Mart medical cannabis platform it took over in 2023, links patients with physicians and pharmacists and generates the bulk of current revenue.
A pharmaceutical pipeline develops indication-specific candidates in areas including chronic pain, dermatology and neurological disorders. Underpinning all of it is Santa Marta Golden Hemp (SMGH), the 60%-owned Colombian subsidiary that supplies active pharmaceutical ingredients and cultivates organic, GACP-certified flower in partnership with Grupo Daabon, one of the largest organic agriculture groups in South America.
The commercial argument is that these units reinforce one another. Colombian supply feeds low-cost, high-quality input into a formulation business, which is commercialised through a medical platform that generates real-world patient data, which in turn seeds the clinical pipeline.
Merritt describes the result as a self-reinforcing intellectual-property system rather than a collection of assets, and argues it is transferable to new markets precisely because Avicanna is not the finished-product manufacturer but the holder of the formulations and delivery technology, including a fast-emulsion platform relevant to the edibles and beverage categories.
The company had its strongest year to date. It reported revenue of C$25.5m for the year to December 31, 2025, which was broadly flat on 2024 revenues.
Although its revenue failed to grow, its gross margin rose to 53% and it reported positive adjusted EBITDA of C$0.31m in the fourth quarter, seeing it near break-even for the year as a whole. It carries no debt.
All of that sits against a market capitalisation of around C$15 million, with the shares trading near C$0.13. Merritt believes the company is significantly undervalued.
The market’s scepticism, however, is not irrational. Revenue has been flat for several quarters, and the medical-affairs investment needed to reignite top-line growth is exactly what a capital-starved company struggles to fund. The stock has fallen from a peak above C$7 to pennies. Its largest shareholder has been selling steadily for more than a year, an overhang that caps the price regardless of what the underlying business does, and the company has repeatedly raised small amounts of equity to stay funded, most recently through private placements in February and June.
Merritt reads the falling share price as the product of a selling shareholder and negative sentiment rather than a deteriorating business, and therefore as the opportunity itself. He believes a more medical, rescheduled global market will eventually force a re-rating.
That is a thesis, not a fact, and his own disclosure that he holds the stock should be read alongside it. He goes on to speculate that cultivation costs could fall to US$0.10 to US$0.25 per gram, based on interviews with chief executive Aras Azadian, alongside a long-run valuation running into the billions.
Proceedings in Arlington are due to conclude no later than 15 July, though the ALJ’s recommendation is non-binding and the DEA administrator faces no deadline to act on it.
Whatever the outcome, the direction the April order looks unlikely to reverse. value in a more medical, more regulated market keeps migrating towards companies that can formulate, standardise, dispense through regulated channels and generate clinical evidence.
This week, what is perhaps the most consequential hearing in the history of the US, and indeed the global cannabis industry, is taking place in Arlington, Virginia.
The Administrative Law Judge (ALJ) hearing, expected to determine whether adult-use cannabis follows medical cannabis into Schedule III, is now in its second week of three.
In the 10 or so weeks since acting Attorney General Todd Blanche issued a final order moving two categories of cannabis from Schedule I to Schedule III, namely cannabis contained in an FDA-approved drug product (covering only Epidyolex), and cannabis subject to a state medical cannabis licence, the rationale for investing in the sector has already shifted meaningfully.
As MEDCAN24 reported last month, some of the US’ largest MSOs are awaiting the outcome of the ALJ hearing before offering their stock to investors on the country’s premier stock exchanges. Although the recategorisation of adult-use cannabis would save these companies a major headache, the smart investment strategy may already be to focus on the medical cannabis vertical.
The pathway, not the plant
During the first ‘green wave’ of the late 2010s and early 2020s, the companies that commanded the most attention were the ones able to raise the most money and expand the fastest.
Having learned the hard way that this model was inherently flawed for both for the companies and their investors, the attention has shifted to companies able to formulate, standardise and clinically validate a product, with the supply chain in place to dispense it widely.
The new holy grail for cannabis operators is no longer sheer financial heft, but specialists with well educated drug development strategies and watertight IP.
A Schedule III substance can be manufactured, distributed and dispensed by an entity holding a valid DEA registration, researched without the constraints that made Schedule I studies so difficult, and taken through the FDA approval process as a prescription medicine.
With that in mind, will the approval of adult-use cannabis for rescheduling render this point entirely redundant?
Mark E. Merritt, a former equity research analyst who now writes on the global cannabis industry, argues that wider rescheduling commoditises cannabis. In markets like Canada and even Germany’s more restricted medical market, the influx of cannabis has driven a race towards low-price, high-THC cannabis.
What is harder to commoditise are the proprietary formulations, delivery mechanisms, clinical data and an established brand. A more liberal market, on this reading, hollows out the cultivators and pushes value towards the companies that own that layer.
Rescheduling also leaves the pharmaceutical route untouched. It does not permit cannabis to be sold as an ordinary product across state lines, a cannabinoid medicine still has to complete the full New Drug Application process to be prescribed nationally. That route is open only to companies already doing the formulation and clinical work, regardless of what happens to adult-use.
Most investors, Merritt argues, read cannabis companies off their share charts and have missed the businesses being built from the ground up to develop pharmaceutical medicines. He adds that the number of firms combining low-cost supply, a proprietary formulation platform, a real revenue base and a clinical pipeline is close to none.
READ MORE…
Avicanna, a case study
Avicanna, listed on the Toronto Stock Exchange as AVCN, is a commercial-stage biopharmaceutical company that has spent a decade building around cannabinoid medicine rather than recreational supply.
It runs four connected business units. Rho Phyto is its portfolio of proprietary, standardised non-inhaled medical products across oral, sublingual, topical and transdermal formats. MyMedi.ca, the former Shoppers Drug Mart medical cannabis platform it took over in 2023, links patients with physicians and pharmacists and generates the bulk of current revenue.
A pharmaceutical pipeline develops indication-specific candidates in areas including chronic pain, dermatology and neurological disorders. Underpinning all of it is Santa Marta Golden Hemp (SMGH), the 60%-owned Colombian subsidiary that supplies active pharmaceutical ingredients and cultivates organic, GACP-certified flower in partnership with Grupo Daabon, one of the largest organic agriculture groups in South America.
The commercial argument is that these units reinforce one another. Colombian supply feeds low-cost, high-quality input into a formulation business, which is commercialised through a medical platform that generates real-world patient data, which in turn seeds the clinical pipeline.
Merritt describes the result as a self-reinforcing intellectual-property system rather than a collection of assets, and argues it is transferable to new markets precisely because Avicanna is not the finished-product manufacturer but the holder of the formulations and delivery technology, including a fast-emulsion platform relevant to the edibles and beverage categories.
The company had its strongest year to date. It reported revenue of C$25.5m for the year to December 31, 2025, which was broadly flat on 2024 revenues.
Although its revenue failed to grow, its gross margin rose to 53% and it reported positive adjusted EBITDA of C$0.31m in the fourth quarter, seeing it near break-even for the year as a whole. It carries no debt.
All of that sits against a market capitalisation of around C$15 million, with the shares trading near C$0.13. Merritt believes the company is significantly undervalued.
The market’s scepticism, however, is not irrational. Revenue has been flat for several quarters, and the medical-affairs investment needed to reignite top-line growth is exactly what a capital-starved company struggles to fund. The stock has fallen from a peak above C$7 to pennies. Its largest shareholder has been selling steadily for more than a year, an overhang that caps the price regardless of what the underlying business does, and the company has repeatedly raised small amounts of equity to stay funded, most recently through private placements in February and June.
Merritt reads the falling share price as the product of a selling shareholder and negative sentiment rather than a deteriorating business, and therefore as the opportunity itself. He believes a more medical, rescheduled global market will eventually force a re-rating.
That is a thesis, not a fact, and his own disclosure that he holds the stock should be read alongside it. He goes on to speculate that cultivation costs could fall to US$0.10 to US$0.25 per gram, based on interviews with chief executive Aras Azadian, alongside a long-run valuation running into the billions.
Proceedings in Arlington are due to conclude no later than 15 July, though the ALJ’s recommendation is non-binding and the DEA administrator faces no deadline to act on it.
Whatever the outcome, the direction the April order looks unlikely to reverse. value in a more medical, more regulated market keeps migrating towards companies that can formulate, standardise, dispense through regulated channels and generate clinical evidence.
Cannabis Law Resources in Poland
Explore essential legal pages about cannabis cultivation, sales, and medical product regulations in Poland. These resources will guide you through permissions, certifications, and compliance requirements.
-
Polish News Registration and Interests of Cannabis Businesses
-
Permissions for Cannabis Sales in Poland
-
Authorization for Importing or Manufacturing Medical Products
-
Permission for Manufacturing or Importing Medical Products
-
Certificate of Good Manufacturing Practices (GMP)
-
Registration of Medical Products in Poland