?? Want to know what's coming for cannabis in 2020?
This article was published 1/15/2019 on Cannablurbs, a weekly newsletter covering the business, strategy and policy of legal cannabis. If you liked it, sign up here!
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Going Legit: WeedMaps has apparently lived up to its summer pledge to drop unlicensed retailers’ ads from its platform by 2020, as total California retail listings dropped from over 5,600 to just 2,920. With just 1,181 licensed retailers in the state, it appears that some illicit businesses are still present, perhaps by poaching state license numbers from actual legitimate businesses, or by including “hemp” and “CBD” to recharacterize their listings.
Why It Matters: Even with some illegal businesses still abusing WeedMaps’ self-serve ad publishing platform, it’s a big step in the right direction to delist so many businesses. The bigger questions: will these businesses remain unlisted, or will their ad numbers start to increase again? Also recall that WeedMaps has a fairly robust SaaS side to its business, where they have been one of a few providers willing to offer their software to illicit players. It remains to be seen if those (lucrative) accounts have been dropped, where they head next for their software needs, and how it impacts WeedMaps' financial outlook.
Fixer Upper: In more good news for California’s legal market, California governor Gavin Newsom announced plans to simplify state regulatory and tax systems, the complexity of which advocates claim have hindered legal markets from gaining share. Newsom’s plan includes centralizing licensing authority from the three different agencies currently responsible for enforcement to a new Department of Cannabis Control, as well as reorganize where and how taxes are collected. While changing the actual tax rate wasn't part of the package, the issue was included as an item for future discussion, indicating a willingness to listen regarding the overall tax burden.
Why It Matters: This isn’t totally unexpected, as there’s been a tremendous push from advocates for reform and a clear desire to improve the situation on the government side. In full candor, it’s a pleasant surprise to see the state move so directly and swiftly. These are meaningful steps (especially if tax rates are adjusted). Should the changes be impactful, it wouldn’t be surprising to see other legalized and legalizing jurisdictions emulate them. Nevertheless, the devil is in the details (and execution) - here’s hoping it pans out.
Closing Deals: U.S. multi-state operator Cresco Labs has closed the acquisition of California distributor Origin House. The deal was originally announced nine month ago in April to a eye-popping price of over $800 million, but had been held up by both regulatory review and the sliding stock prices seen across the industry. The two companies had renegotiated terms in November, in a move that was likely critical to closing, but resulted in a final value of roughly $400 million.
Why It Matters: Deals aren’t dead! This is one of the few mega-mergers from early last year that’s succeeded, and it’s somewhat transformative. Cresco is one of the largest U.S. players by many metrics, but this substantially increases their footprint in California, where they’d only had minor operations. Moreover, for Cresco, it’s a dead on fit with their stated strategy, which focuses on brands and wholesale distribution. The acquisition not only positions Cresco as a leading distributor serving 65% of California dispensaries, but also gives them the ability to push their own brands in the U.S.’s biggest market.
2020 Forecast: 5 Hot Predictions For The New Year
We’re pulling out our crystal ball and bringing some of our biggest predictions for the year over the next five weeks. Stay tuned!
#1: Pathways to cannabis research in the U.S. will see major improvement.
The Situation: There’s a fairly established consensus around the negative impact that our current research paradigm has. Schedule I status has made initiating research incredibly difficult, while the use of only one source of low quality weed (what up, University of Mississippi) constrains supply and raises comparability issues. The head of the National Institutes of Health even acknowledges the hurdles, as does the director of the National Institute on Drug Abuse and various other agencies. Heck, researchers are even importing cannabis from other countries.
What’s Coming: Lawmakers recognize the problem (even GOP ones!) - a House panel is actually evaluating the research roadblocks today, and there’s multiple bills in Congress designed to specifically address the issue (or just legalize marijuana fully). 2020 will see the research situation improve, as the mounting political pressure forces the DEA to open up alternative sourcing options beyond Ole Miss.
Quick Hits
- Harvest Alleges Illegal Activities at Falcon: Wait... are deals dead? At least this one - Harvest is trying to claw back money, while claiming Falcon was engaging in illegal activities. Never a dull moment!
- Federal Reserve Bank Examines Marijuana Industry’s Growth: The Fed focused on Colorado, which seems to be reaching maturation (e.g. stability, lower growth).
- Cannabis Delivery Drones Could Soon Be In Seattle Skies: Does this mean we can expect sky pirates harpooning weed delivery drones soon? Dream big!
- Marijuana’s Money Man: People personally enriching themselves in not illegal but potentially shady ways during cannabis transactions? What else is new?
- Ohio Petition Seeks to Add ‘Browns/Bengals Fan’ As Cannabis Qualifying Condition: Honestly, pretty messed up to let people live in such long, chronic pain.
Research Rips
- CBD Has Therapeutic Role In Many Mental Health Disorders, But Further Studies Needed
- Medical Marijuana Leads To More Sex, But Less Contraception
- Cannabinoids Can Reduce Nausea
- CBD Can Be Effective In Treating Anxiety And Other Parkinson’s Symptoms
- Marijuana Does Not Have A Statistically Significant Effect On Labor Productivity
- Cannabis Exposure During Pregnancy May Adversely Impact Fetal Growth
State-by-State
- Alabama Attorney General Opposes Medical Marijuana Legislation
- New York Governor Renews Call For Legalization
- Medical Marijuana Qualifies For Mississippi 2020 Ballot
- Tennessee Lawmaker Reintroducing Bill That Would Allow Medical Cannabis
This article was published 1/15/2019 on Cannablurbs, a weekly newsletter covering the business, strategy and policy of legal cannabis. If you liked it, sign up here!