BIDEN DIVIDES WEED VOICES

Former Vice President Joe Biden appears to have a prohibitive lead in the Democratic Primary. His likely place on top of the ticket has divided cannabis notables, since he’s one of the few candidates to oppose legalization.
Canna Law Blog

  • Notably, Steve DeAngelo tweeted that he has “seen the repeated sell out of the cannabis freedom movement by the Dems. They say nice things during the election, then act like Republicans when they win.”
  • Veteran cannabis journalist David Bienenstock responded that he’d be voting against Trump because he fears “Real Capital F Fascism.”
  • Bienenstock previously wrote a Leafly story headlined “Joe Biden’s drug war record is so much worse than you think.”

This week Biden said he would legalize, and then corrected himself.
Marijuana Moment

NOVEMBER BALLOT NEWS

Recent developments in several potential state ballot initiatives show cannabis reform is in play in virtually every state:

Meanwhile, the coronavirus could derail New York’s push to legalize REC through the legislature.
Leafly

PSYCHEDELICS CHEER UP RATS

LSD and psilocybin, but not ketamine, produces “persistent antidepressant-like effects” in rats, a study found.
American Chemical Society

  • The study found ketamine, which has also attracted interest as a behavioral drug, produced only a transient anti-depressant like effect.
  • The study also suggests “a subjective existential experience may not be necessary for therapeutic effects” of psychedelics.

COVID-19: THE NEXT INDUSTRY CRISIS

As it shuts down normal life in much of the U.S., the coronavirus pandemic is likely to have dire consequences for some cannabis companies, Alan Brochstein writes at New Cannabis Ventures:

  • Brochstein: “Deeply-discounted equity offerings from [MSO] Harvest and [Canadian MED company] Tilray are likely a harbinger of more stock sales ahead as companies with inadequate capital struggle for survival…We think the most important thing now is to understand that many companies aren’t likely to survive without substantial dilution to existing shareholders.”
  • More Brochstein: “Unfortunately, COVID-19, the second black swan event in six months [after the vaping crisis], could prove to be more fatal to cannabis companies than the vaping crisis. Quite simply, capital has become more scarce overall.”
  • NCV‘s Global Cannabis Stock Index fell 25% in January and February, and is now down almost 50% on the year.
  • Attorney David Feder posted on what it could mean for business contracts.

Chicago store MOCA Modern Cannabis suspended REC sales to focus on serving MED patients, who may have compromised immune systems.
Chicago Tribune

The disease is also devastating cannabis events businesses, both consumer and business focused. Leafly compiled a list of cancelled and postponed events. Short version: Nothing is happening through 4/20.

  • 420-friendly mainstream events like SXSW and Coachella are also off.
  • Colorado’s cannabis tourism sector is struggling.
    Westword
  • The virus endangers The Stranger (Seattle) and The Portland Mercury, two cannabis friendly alt-weeklies.

However, for predictable reasons, the crisis seems to be increasing demand for cannabis.

  • The Hollywood Reporter: “People are in scarcity mode. The streets are emptier, but specific businesses like grocery stores and dispensaries are seeing more people than usual — and people are stocking up and purchasing in bulk,” says Steve Lilak, the head of sales for California cannabis company NUG. “I’ve seen regular customers buying three or four of what they normally buy just one of in L.A. dispensaries.” He adds that one Hollywood shop he spoke with saw 1,000 customers on Wednesday when they usually see that amount on a Saturday.
  • In addition to food, hoarders are stockpiling liquor, weed and guns. Rumor has it that 120 proof liquor kills germs.
    L.A. Times

BUSINESS BOOMS…IN OKLAHOMA

The Associated Press finds a couple of legalization refugees who fled Humboldt County for Oklahoma. It’s because Oklahoma is one of the easiest places to run a cannabis business.

  • “A combination of factors — including a remarkably open-ended law and a red state’s aversion to government regulation — have created such ideal conditions for the cannabis industry that entrepreneurs are pouring in from states where legal weed has been established for years,” Sean Murphy writes.
  • Six percent of the state’s 4M residents have a MED card, and opening a dispensary is as easy as opening a taco stand. A dispensary license costs $2,500, can be filled out online and is approved within two weeks.
  • Oklahoma has 2,300 dispensaries, the second most per capita after Oregon.
  • University of Oklahoma football coach Lincoln Riley essentially called for college sports to update their marijuana policy.
    The Athletic

California, which has about 600 dispensaries, saw pot taxes exceed $1B in 2019. WW California has more.
OC Register

POT BOOSTS HOME PRICES: STUDY

A study of home prices in Colorado and Washington state found legalization may lead to increased housing prices.
Marijuana Moment

  • The study found neighborhoods saw a 7% bump in housing prices after a dispensary opens.
  • “Concerns about the potential effect on crime rates and the difficulty in policing impaired driving have been cited as reasons to slow-walk the path to full recreational legalization,” the study’s authors write. “This research contributes to the discussion, providing evidence that recreational marijuana legalization (RML) has large positive spillover effects on the local housing market.”

MED FOR VETS BILLS ADVANCE IN HOUSE

The House Veterans’ Affairs Committee advanced two bills which would increase veterans’ access to MED.
The Hill

  • One bill, sponsored by Rep. Lou Correa (D-Calif), would require the VA to research MED on PTSD and related conditions.
  • The second bill, sponsored by Rep. Earl Blumenauer (D-Ore.) would permit VA providers to offer MED cards.
  • VA doctors currently can’t discuss therapeutic MED use with patients.

CANNABIZ BRACES FOR CORONAVIRUS

The global coronavirus panic is the latest crisis set to roil the cannabis industry. 
MJBiz

Thus far the cannabis supply does not appear directly threatened. But companies anticipate disruptions with vape related hardware, the vast majority of which comes from China. WW California has more.
MarketWatch

  • “We’re in the middle of this capital crunch – this Darwin phase… And (coronavirus) is only exacerbating the situation, because it’s just causing uncertainty,” Morgan Paxhia, managing director of cannabis investment firm Poseidon Asset Management said.
  • Matt Karnes, founder of consultancy GreenWave Advisors, said the sectors’ public companies, already hammered by their dismal stock performance, are most vulnerable. 
  • At the same time, it may create opportunities for investors as valuations deflate to more reasonable levels, Merida Capital Partners managing partner Mitch Baruchowitz said.
  • As China’s hemp industry suffers, the virus also creates an opportunity for U.S. hemp growers.
    Canna Law Blog
  • The virus has led to the cancellation of industry events in Israel and California. Some, such as the NoCo Hemp Expo in Denver, appear to still be on.
    MJBiz
  • If the virus continues to spread, it could cancel 4/20 events.
  • The crisis could also delay New York Gov. Andrew Cuomo’s effort to legalize REC.
    Marijuana Moment

Leafly looks at how the epidemic may change cannabis use.

  • The post tells users to stop sharing joints and other inhaled consumption methods. Users may also want to invest in a “bong condom,” like the “Mouth Peace” from Moose Labs.
  • If you catch corona virus, MED use may not be a good idea. 

Here’s a thought I didn’t see anyone else share: A major crisis that forces people to spend more time at home surely has some upside for the cannabis industry.

DISTRESSED WEED ASSETS: THE NEXT FRONTIER

In a WEEDWEEK EXCLUSIVE, I interviewed Joe Caltabiano, outgoing co-founder and president of Cresco Labs, the Chicago-based MSO.

  • We discussed the Illinois market, where he sees opportunity and whether it was a mistake for Cresco to go public.
  • Going forward, Caltabiano is excited to search for value in distressed assets:

“Some people, they may have a great license, but have been deploying money towards a part of their company that really doesn’t have the long term value. So you have to look at the core assets that you have within the company and sometimes divest or exit some of the other things. Occasionally from time to time people hang on to the wrong parts of their business or get married to the wrong parts of their business.Sometimes it takes an outsider coming in and looking at how to monetize a business in a different way.”

He’s not the only one thinking this way. Former MedMen CFO James Parker, who sued the company, is looking at distressed assets at his new firm Trava Capital.

  • MJBiz also takes a broader look at the distressed assets opportunity.