Emily Paxhia, managing director at Poseidon Investment Management, joins Cheddar News.  

What Biden's Marijuana Pardon Means for U.S. Economy and Midterms

and joining us now to discuss is Emily Pack C, a co founder and managing director at Poseidon asset management. Emily welcome to the show, so glad to have you here at the new york stock exchange with me. So great to be here with you. Thank you for having me now. You know, biden's call is obviously a historic one. It's expected in terms of those pardons to affect about 6500 people. But given that there are so many more on the state level that could potentially get left behind if those governors don't actually move forward following suit how impactful is this really for the industry? It's incredibly impactful because we have not seen a move like this at the federal level in a positive direction around cannabis. And this administration has been very slow to act on some of their campaign promises around cannabis reform. A lot of us in the industry really do care about the criminal justice reform aspect of this. So that step alone is very important. But of course it does have a fiscal impact on the industry and that is a signaling to the industry around where we can go in terms of the scheduling cannabis and bringing it up onto the list of exchanges and creating access to banking reform, etcetera etcetera. I want to talk about that other component of this which was of course the review of federal policy that he president biden asked, you know, xavier Becerra of health and human services and also Attorney General Garland to do what has to happen in order for that to move forward. And are we likely to see something happen before the midterms. Right. So I think there's a two path approach here actually there's multiple paths going on right now. But the fact that he asked for this to happen, we know they're digging in on it and there was expression to from health services that they were going to try to expedite this. We know these things take time probably 100 and 80 days, we'll see what happens next. But we are hoping hoping for a D. Schedule or a rescheduling below schedule three or to schedule three because that would allow for taking this out of the schedule one and it would create thanking access. It would create a tax reform for the industry which is sorely needed because these businesses have really strong fundamentals but their effective tax rates are so high that it's very difficult to get to that cash flowing perspective. So this would be a tremendous reform for the industry and I might add on a day like today where we saw the C. P. I. Landing where it is and we're feeling the stress of the core uh alcohol prohibition was ending during the Great Depression and a good portion of the tax proceeds from alcohol revenue helped to drive the new deal and I can't help but think about the rhymes of history given where we're headed. Jamie Diamond calling for a recession in the next six months having cannabis may this shift could be tremendously beneficial to the government. Speaking of benefits. You know, some critics are suggesting that this move by biden is a political one coming in advance of of course, democrats facing tough elections this mid terms. Do you think that this could help the party especially given that there are about a handful of states that are considering cannabis legalization in this fall? Yeah, I think it could be incredibly helpful. The last gallup poll showed this poll positively at 91%. And even the Newsmax poll showed that the GOP support around this is 74%. I can't think of an issue where we're more aligned in this country today. So I think this was absolutely a move to pull it out near the midterms were a short attention span nation. And so you have to do these things close to the election. So, I imagine we're gonna see more talking about this, not just from biden but from local politicians as well as the senator. So, I think everybody's gonna be watching this issue going into the midterms. I want to circle back to what you were talking about here in terms of the business impacts of this. Of course, this is just a review, as you said, it could take some time to get a real federal policy change here. But obviously investors are taking the win. We saw major cannabis companies really surging. Do you think that optimism is justified? I do you think that optimism is justified when you look at the multiples versus the growth rate in the profiles of these businesses, They absolutely can command a much higher valuation. So we do anticipate we'd see a re rating of these companies. I mean that day alone, P. S. D. N. E. T. F. Was up 28%. So it was a tremendous day. You know, we've seen volatility since then as people are trying to fill this out. But I think what's most important is that private industry will lead the way while the government is so this out. So I anticipate, we'll see consumer products companies getting in institutional investors, private equity stepping to the table that have not been here before, while they anticipate this changes in process. Absolutely. And you know, we are in a bit of an economically volatile time, you know, inflation and these challenges have come for pretty much every sector. So considering that, how are you and considering of course the big news that we heard from President biden, How are you thinking about investing right now? How would you advise your clients to thinking about investing moving forward? Yeah, we've, so we've been investing since 2014 in cannabis and our thesis has remained the same focused on fundamentals, focus on strong teams focused on companies that are building for the long term and that has really helped us to sidestep some of these wild cycles of an emerging market. I mean, we've definitely felt the pain, but it's a part of the process of building a mature industry. And so we will just stay focused on these really strong companies that are adding value adding value for the long term. And we think about when more institutional capital comes into the industry who they're going to be looking at, because that's where you're gonna see the real growth and the real multiples coming in. Emily, thank you so much for joining us. I'm so glad to have you here on the floor of the Nicey. Thanks again for your time. That's Emily Spaccia, co founder and managing director of Poseidon asset management.