Ziel Now Offering Financing and Leasing Options for Cannabis Cultivators

Change moves slowly at the federal level, especially if cannabis is involved. Since the first recreational market opened in 2012, not much has been done for the industry or its financial situation, although some recent efforts have been made. For example, the U.S. House of Representatives passed the SAFE Banking Act seven times since 2019. The Senate Banking Committee passed its SAFER Banking Act in September 2023. Even the Department of Health and Human Services (HHS) recommended cannabis be rescheduled to Schedule III in August of 2023. Yet, cannabis cultivators are still struggling to find financial backing and continue to carry the weight of 280E, hurting cash flow.

Although there are proponents for and against the rescheduling recommendation, one major benefit the cannabis industry has acknowledged is the elimination of the 280E Internal Revenue tax code that’s currently burdening all plant-touching businesses. Under Schedule I, plant-touching businesses can only deduct costs of goods sold from their federal taxes, meaning things like rent, utilities, advertising, and payroll aren’t allowed as deductions. Schedule III substances don’t have to comply with 280E, so those businesses currently struggling under a federal tax rate that can sometimes be as high as 80 percent[2] would have a greater chance of survival.

Relieving that tax burden is significant and necessary when considering the other changes that could come with cannabis rescheduling. For example, if the plant were to be rescheduled to Schedule III, medical marijuana goods would become subject to the same medical laws and requirements as other drugs in Schedule III like anabolic steroids and Tylenol with codeine. That means, for medical markets, there would be much greater oversight by the Food and Drug Administration (FDA). With no current FDA involvement or broad standards for the types of testing medical cannabis products must pass before being eligible to sell, regulatory laws across the country are likely to experience major changes.

One potential implication of FDA cannabis regulation could be standards around mold and yeast content, something that currently varies by state. While some states have fairly strict laws around mold and yeast counts, like Massachusetts and Louisiana, others, like Connecticut and Florida, have taken a more lenient approach. Although we don’t yet know how the FDA might change mold and yeast count regulations, businesses should be prepared for change around current state-level standards.

On that topic, the FDA’s potential involvement means eligible cannabis brands may finally be able to claim USDA Organic status. However, it’s important for brands to recognize that, as it currently stands, food products treated with ionizing radiation to reduce yeast and mold counts are ineligible to be USDA Organic by FDA standards. It’s fair to assume cannabis products treated with ionizing radiation, such as X-ray, will also be ineligible for USDA Organic status, especially medical products.

Instead, the FDA could implement its current rule for food products treated with ionizing radiation and require cannabis products treated with that technology to be labeled with the Radura, the international symbol that signifies a product has been irradiated. This label update could have a negative impact on a brand’s consumer trust and loyalty.

Time will tell whether the US federal government decides to reschedule marijuana as a Schedule III substance, but one thing that’s for certain is change at the federal level is coming, and cultivators need to have a plan in place for whenever federal oversight begins. For those concerned about passing regulatory compliance for mold and yeast content but not willing to compromise their product with ionizing radiation, non-ionizing radiation like Radio Frequency could be the answer.

Radio Frequency is already used to remediate foods like nuts and seeds, which are all regulated by the FDA. The technology is approved for USDA Organic operations as it has no impact on a product’s molecular structure. It simply uses long radio wavelengths to create an oscillating electromagnetic field around and within the product, causing moisture molecules to sync with the vibration and rotate in unison with it. The friction this generates creates enough heat to kill microbial pathogens without getting too hot to degrade or decarb THC, maintaining the chemical integrity of the plant.

Ziel is the cannabis industry’s leader in Radio Frequency remediation, having been granted the first-ever U.S. Patent for processes that include the treatment of cannabis with Radio Frequency in 2020. To learn more about what Ziel can do for your operation in preparation of federal change, contact us today.

Financing Ziel RFX

Financing your Ziel RFX allows you to own your machine on day one. Along with your machine, you’ll get our Service Plan free for a year which includes:

  • Bumper-to-bumper warranty
  • Online Dashboard that provides access to all your COA data and processing parameters
  • Consults with our engineers and scientists to optimize your post-harvest operations

You have the option to extend both the Service Plan and warranty once your financing term is completed.

We will facilitate the financing with our partners for no extra charge. Learn more about what’s needed to finance your Ziel RFX here.

Leasing Ziel RFX

Leasing your Ziel RFX allows you all the benefits of owning a machine but with the flexibility to walk away at the end of your lease term. Additionally, leasing offers the advantage of conserving your cash upfront. The out-of-pocket spend on day one of leasing your Ziel RFX is a little more than 5% of the out-of-pocket spend that comes with purchasing the machine outright.

Our partners offer lease terms as short as two years and as long as five years, giving you the flexibility to set terms that work with your business goals and projections. If you do decide you want to continue using RF as your preferred microbial control solution, you have the option to purchase your Ziel RFX for $1.00 at the end of your lease term.

With your lease, you’ll also get our Service Plan included for the duration of the entire lease, so you can operate your business with confidence. Similar to our financing option, we’re happy to negotiate your lease terms for you at no extra cost. Click here to read more about what’s needed to lease the Ziel RFX.

Buying Ziel RFX

There is always the option to buy your Ziel RFX outright. Like our financing and leasing options, a one-year bundled Service Plan is included in the purchase price.

Purchasing your machine allows you to immediately incorporate it into your standard operating procedures (SOPs), plus you become eligible to be one of our Authorized Tolling Partners and provide microbial reduction services to smaller and mid-size operators in your area.

Which Option Is Best For Your Cannabis Business?

To help you determine the best payment terms for your situation, we’re also excited to announce the release of our updated Business Case Calculator that incorporates leasing and financing options. Use it to quickly and easily determine if you have a worthy business case to justify moving forward with an investment in the Ziel RFX.

Using our Business Case Calculator, you can input and adjust your:

  • Current harvest volume per year
  • Percentage of harvest that fails microbial testing
  • Wholesale pricing for dried flower and trim

From there, you can select your inputs (interest rate, down payment, and term) to evaluate what your monthly out-of-pocket payment will be for either leasing or financing.

Financial Advantages of Working With Ziel

Apart from our financing and leasing options for cannabis cultivators, and the average $1.1 million each of our customers recovers in lost revenue each year, there is another potential bottom-line benefit to the Ziel RFX. You may be able to depreciate your machine each year to reduce your taxable income.

This will require review with your accountant and financial advisors, but with the Ziel RFX as a part of your SOPs, you may have the option to claim its depreciation under your costs of goods sold (COGs). This could reduce the amount of taxes your business must pay under 280E.

Get Started with Ziel RFX

Explore our Business Case Calculator to determine your optimum financial solution. If you have questions or are curious about how to get started with your financial application for the Ziel RFX, get in touch with us today. We’re happy to help you narrow down the right financing or leasing option for your operation.