Tag Archives: referendum

The Year in Cannabis (So Far)

By Joshua Weiss
No Comments

At the outset of 2020, the cannabis industry appeared poised for a series of incremental changes: a number of states were considering decriminalization and legalization measures, and support was growing for federal legislation allowing cannabis businesses access to banks and financial services. Then the COVID-19 pandemic hit, which disrupted state legislative sessions (and legislative priorities), obstructed signature gathering for ballot initiatives, and reshuffled federal priorities. However, despite all of these changes, the cannabis industry has seen significant developments across the country. Beyond of course the many challenges and losses brought by the pandemic and its aftermath, in some ways, it may prove a boon for the industry.

Legalization and Decriminalization

Currently around a dozen states have legalized cannabis for recreational use, while just under two dozen states allow use of medicinal cannabis. With support for legalization measures steadily growing in most states, a number of major states seemed poised to pass legislation legalizing recreational cannabis, including large potential markets in the Northeast such as New York, New Jersey, Connecticut and Pennsylvania. And in many other states, advocacy groups were well underway gathering signatures to qualify legalization measures for the November 2020 ballot. When the pandemic hit, however, state legislatures largely suspended their normal operations, and signature gatherers were stymied by stay-at-home orders and social distancing requirements.

Despite these major obstacles, legalization and decriminalization legislation has continued to move forward in a number of states, and still others will have legalization referenda on the ballot for November’s election. Perhaps more important than these initiatives themselves are the diverse states that are moving toward loosening of restrictions around cannabis: rather than being limited to a handful of especially liberal states, cannabis advocates are seeing tangible progress is every geographic area, among states whose political leanings span the spectrum.

Whether through the legislature or directly by the ballot, it seems likely some states will legalize adult use this year

While the Northeast corridor had planned to undertake legalization efforts in a coordinated fashion this year, those results were put on hold given the seriousness of initial COVID-19 outbreaks in the greater New York area. However, the New Jersey General Assembly nevertheless passed decriminalization legislation, though the matter has not yet cleared the New Jersey Senate, and the appetite for full-scale legalization remains strong there, with a ballot initiative going directly to voters in advance of the New Jersey Legislature considering the issue. The Commonwealth of Virginia enacted decriminalization legislation also, and a legislative caucus in Virginia has pledged to introduce recreational legalization legislation this summer when Virginia convenes a special legislative session. Voters in Mississippi and South Dakota will be able to vote on ballot initiatives to legalize recreational cannabis, and similar ballot initiatives are underway or likely in Arizona and Nebraska. Advocates in Arkansas and Oklahoma had also hoped to bring initiatives to the ballot, but have encountered practical and legal obstacles to gathering the required signatures in time for this year’s election.

These myriad initiatives reflect a strong shift toward legalization of recreational cannabis across the country, and the ability to continue gathering signatures and momentum despite stay-at-home orders and social distancing underscores the growing popularity of the movement. Whether through the legislature or directly by the ballot, it seems all but certain that the number of states permitting recreational cannabis will grow significantly this year.

COVID-19 Business Closures

As the COVID-19 pandemic took hold in the early months of 2020, most states instituted various forms of stay-at-home orders that required the closure of nonessential businesses. While these policies had—and continue to have—serious impacts on businesses of every type, cannabis companies have largely seen strong economic growth notwithstanding.

One of the most important developments in this space came in the context of state and local governments designating certain businesses as “essential” for purposes of business closure orders. In nearly every state to consider the issue—Massachusetts being the main outlier—state and local governments recognized cannabis companies as essential, which allowed them to operate during the shutdown.

The “essential” designation largely carried between both recreational and medicinal cannabis jurisdictions. And this matters because of what it means for the industry. State and local governments clearly realize the important medicinal role that cannabis plays for patients dependent on it for treatment, and the overlapping customer bases of mixed dispensaries further contributed to keeping cannabis companies open during the pandemic. Even in states where certain dispensaries operate solely in a recreational capacity, those jurisdictions recognized the importance of allowing access to a safe recreational substance, like alcohol, during prolonged stay-at-home orders.

Similarly, likely as a result of those same stay-at-home orders, cannabis companies largely saw significant increases in sales revenue. More customers visited retail establishments, and those customers often purchased more product per visit. This resulted in better-than-expected sales revenue for cannabis companies, and also produced increased tax revenues for state and local governments.

The cannabis industry saw more than just increased sales, however. In the process of issuing emergency rules for the cannabis industry during quarantine, a number of state and local jurisdictions either began to allow cannabis deliveries or expanded its availability, a shift in policy that may stick around well after the pandemic subsides.

One final impact of the pandemic may also help push legalization initiatives forward in the coming years: decreased tax revenue and major budget gaps. Due both to a decrease in economic activity like shopping and dining, as well as the unexpected health care costs associated with responding to the COVID-19 crisis, state and local budgets are expected to see significant shortcomings for years to come. In response, state and local governments are starting to see cannabis as a significant and viable source of tax revenue. For example, various cities in California that had previously been reluctant to permit recreational cannabis are beginning to welcome cannabis companies in hopes of making up for lost tax revenue. Similarly, in New Mexico, where legalization has remained a heated topic of discussion, Gov. Lujan Grisham has explicitly expressed her regret that the state failed to legalize cannabis, recognizing that tax revenues from the industry could have reached upwards of $100 million. Other state and local governments are coming to similar realizations, which should help propel expanded access to legal cannabis in coming years.

Federal Changes

Major changes in the cannabis industry in 2020 have not been limited to the states. In the midst of changes and crises across the country, the federal government has been making meaningful progress in two major respects, COVID-19 notwithstanding.

SAFE Banking Act language included in COVID-19 relief package legislation

First, cannabis companies are edging closer to having full access to banks, bank accounts and related financial services. The SAFE Banking Act, championed by Rep. Perlmutter, has made it through the House of Representatives and is currently in the Senate Committee on Banking, Housing, and Urban Affairs. However, as Congress continues to toil away at future COVID-19 relief legislation, political signals from Washington, D.C., suggest there is a reasonable likelihood that the protections of the SAFE Banking Act will be included, in some form, in the next round of major COVID-19 legislation out of Congress. The enactment of these banking provisions will provide substantial relief to cannabis companies who have largely been excluded from opening bank accounts and utilizing the services major banks provide. Additionally, allowing access to banks and their services should further facilitate the rapid growth in the cannabis economy we are witnessing elsewhere, and this movement could further legitimize the industry as part of a broader push for federal legalization.

Second, after a four-year delay, the DEA has finally proposed draft rules to expand the DEA’s limited cannabis research program. For decades, all cannabis research to date has relied on limited supplies of cannabis grown at the University of Mississippi. Now the DEA is finally following through on its promise to further develop, refine and expand its research program by allowing additional suppliers and market participants to play a role in cannabis research. While the rules proposed are not without detractors and critiques—and the rules themselves have not been finalized—this marks an important step forward to a better understanding of the effects of THC on consumers, not only because more research is needed to understand a substance consumed by millions annually, but also because the limited supply of cannabis on which researchers currently rely has been shown to differ substantially in appearance, consistency and chemical composition from cannabis that is commercially available in states across the country. With an expanded research regime comes the hope that scientists will be able to develop new and innovative cannabis-derived medications, while also furthering our understanding of how THC affects health and the body.

At every level of government, the year in cannabis so far has proven to be far more eventful than many predicted. And the COVID-19 crisis has not slowed progress. There appears to be continued momentum to further mature how cannabis is treated at every level of government, which signals that significant changes are on the horizon. Industry observers will be closely focused on how the rest of the year proceeds, especially with a presidential election on the horizon.


Editor’s Note: This article was revised to clarify that New Jersey has not yet decriminalized marijuana. A decriminalization bill passed the New Jersey General Assembly, but the New Jersey Senate has not acted as of this writing.

UKflag

British Cannabis Firms Facilitate First Bulk Shipment of Cannabis Into UK

By Marguerite Arnold
No Comments
UKflag

Move over Canopy Growth! Along with Aurora, Tilray, Wayland, Namaste and everyone else trying to break into the British cannabis market with authority. Ahead of all of them, a group of innovative start-ups just imported the first legal bulk medical shipment of cannabis into the country via a new entity designed to facilitate market access for such imports called Astral Health.

Jolly good show, as those on the ground due to benefit are no doubt thinking right now even if larger competitors are left in the proverbial cannadust for at least a few months.

That said, this is a larger gulf than it might otherwise be. Let’s not forget, Brexit, or etc. is due next month as Parliament disintegrates and Prime Minister Theresa May heads to Brussels for another fruitless round of “negotiations” that everyone except the occupants of Number 10 (Downing Street, the residence and office of the British government) seem to understand have gone nowhere for two years. What that does to firms entering the market, including in the cannabis space has yet to be understood.

On the Dutch side, the export was handled by the Office of Medical Cannabis. On the British side, the medicine will be sent to directly to pharmacies.

The cannabis will go to patients who have multiple sclerosis and chronic pain.UKflag

About The Companies Involved

Astral Health is a holding company and subsidiary of European Cannabis Holdings (ECH), which also worked alongside specialist pharmaceutical importer IPS Specials and another new start-up Grow Biotech, to bring the cannabis into the country legally.

Of all of them, ECH is perhaps the best known. It is a growingly influential investment company and one of the first (and few) “local” dedicated medical cannabis funds exclusively focused on the European space. ECH shares an office with Prohibition Partners, a cannabis consultancy and the organizer of Cannabis Europa, which just held a sell-out, standing room only conference in Paris. Both groups were also founded by Rob Reid, a Director of SOL Global, a Canadian listed cannabis company which has also made strategic investments of late – notably Greenlight Cannabis in Dublin, with a reach to 1,000 pharmacies across the UK and Ireland.

Most of the companies involved on the ground on this one, in other words, are start-ups. No matter the predominance of the larger Canadian companies in the news, the European cannabis space is starting not only to flourish, but do so in a way that is local, entrepreneurial, and in this case, ahead of the much larger, deeper-pocketed companies.

Niche Providers For Tense Times

In case anyone has forgotten, the deadline for Brexit is now in everyone’s immediate gunsights if not, before March, marked on the kitchen calendar. Even if it looks now like there might be a delay until 2021 or even another “people’s vote.”

Regardless of the outcome, the interim is going to be sticky going for some time.

And of course, imported cannabis, even from Holland, and even if fitting into “regular” unique medical ex-im categories, absolutely also faces this enormity of uncertainty as well. No matter how well the new trade pact with the United States (cunningly crafted to include pharmaceuticals) goes if and when Euro trade (including pharma and cannabis) falls off the cliff. There are also indications that the “emergency Brexit” medical stockpiles and emergency import routes now underway could conveniently aid the cannabis industry from the Euro side, as drugs and other essential medical supplies will be sourced from Belgium and sent into the UK through alternate routes to avoid Brexit delays and backlogs.

Just remember as the mess continues to devolve, no matter what happens, current British PM May is in a remarkably good position to benefit. Her husband, Philip May has been highlighted before for his financial involvement in both tech and cannabis pharmaceutical firms (see both Amazon and GW Pharmaceuticals which obtained the first medical cannabis import rights into the US for its CBD-based Epidiolex last year).

That is also why niche provision is such an interesting space in general in Europe, if not even more specifically the UK at present. No matter how unfair it also is to those who do not have the money to pay for their medication out of pocket (which is also in the cards as the NHS dithers if not disintegrates a little bit more). And in Europe that discussion is very pricey. Cannabis, without either public or private health insurance coverage to offset the cost, is unbelievably expensive. In the realm, right now, of as much as $3,000 a month at point of retail (pharmacies.) Those lucky enough to obtain pre-claim coverage however, pay as little as $12 for their monthly supplies.

In the UK right now, patients can obtain medical cannabis with a Schedule II prescription. However, just as in other legalizing countries in Europe, beyond price and approval issues, doctors have been reluctant to prescribe at all, and insurance approvals are complicated. Even before Brexit, supplies were scarce.

What happens come the end of March if the proverbial sheisehits the fan? That is a very good question. It is very likely that a patchwork of care networks will develop, driven by imports and the companies, if not families and patients behind them.

Regardless of what occurs in the daily particulars of politics, in other words, supply chain issues, particularly at the last mile, promise to be problems for some time to come. Even if all the hullaballoo over Brexit disappears in a wand waive of some Parliamentary fairy who magically appears in the nick of time and sprinkles dust over every MP making everyone come to their senses before Cliff Date arrives.

The Brexit Referendum
Image: Mick Baker, Flickr

Even in Germany, the struggle between patients and pharmacies in terms of supply, and further, supply matching prescription, are far from over two years into “legalization by insurance approval.”

It is very likely, in other words, that the specialized care required for timely import of cannabis in the UK in particular – no matter where it is sourced after Brexit – will require the unique kinds of knowledge that only British- or EU-based, highly focused start-ups can bring, at least in the immediate interim. For this reason, look for a lot of innovative “service focused” start-ups to come out of the next phase of both European and post Brexit cannabis industry developments.

And, as a result, more than a few surprise market entrant hybrids increasingly founded and sourced with both European and UK partners.


Disclaimer: ECH is a sponsor of MedPayRx’s go to market pilot program.

The Catalonian Crisis & Cannabis: The Quick Death Of A Newly Regulated Club Scene?

By Marguerite Arnold
No Comments

The politics of pot have always been strange. Everywhere. In the modern age of legalization, the battle lines around reform always seem to find expression in the faults if not flames of other highly divisive issues.

It has certainly been true in the United States. And now that has come to Europe.

Where Are The Spanish Fault Lines?

The recent independence bid of Catalonia, up until now, an “autonomous” region of Spain, has all the hallmarks of the same. Catalonia is, in essence a Spanish state, in the northeast corner of the country along the Mediterranean coast. The region also has, outside of its separatist ambitions, pioneered the cannabis club movement. Barcelona of course is the capital of it all. And since the summer of 2017, the continued legalization of the industry here has caused ripples throughout Europe on the recreational and medical cannabis fronts.

View of Barcelona from the Sagrada Família
Image: Michele Ursino, Flickr

Spanish politics are a bit complicated, but basically since the end of fascist rule in 1977, there are a few states with a little more independence from Madrid than others. Catalonia and Barcelona in particular have since flourished as both the economic powerhouse of the country and, incidentally, canna-club reform. Entrepreneurialism in general is high here.

But the idea of the Basques or Catalonia “succeeding” is about as unlikely as Scottish independence.

Why? Economics.

As a result then, where goes the newly legit cannabis club vertical? Will Madrid put a kibosh on that along with “home rule?”

Holland 2.0?

In many ways, Catalonia’s cannabis industry is the next iteration of Amsterdam’s coffee shops. The only difference has been a membership fee rather than an instant cash transaction at retail point of sale. That said, there are many obvious similarities. The supply chain feeding the clubs with product has up until now, flourished in between the grey lines of the law.

The same arguments for legalization also exist here as they do everywhere else – if not perhaps so colourfully. The Catalonian paella of legalization advocates include those who rely on the drug for medical purposes plus those who believe they should have the right to recreational use. And of course, this also includes the police. The latter of whom, who at one point, were seizing so that plants quickly overtook evidence rooms. Spanish creativity in reconverting existing real estate to undercover crop cultivation has created more crop than cops can track down if left unregulated.

Spanish national police trying to stop the independence vote resulted in violence Image: Gustavo Valiente, Flickr

However, much like the purple passions of Colorado, this discussion about legalization has also always been drawn, if not flamed, by passions that also occur along other fault lines. In the U.S., over the first decade of this century, legalization of marijuana and gay marriage literally split the country in two. Colorado in fact first voted to ban gay marriage before voting for recreational legalization. California was also an early mover in both gay marriage and legalizing medical cannabis.

The Spanish version of this, of course, is the current Catalan bid for greater independence. And this has plunged the country into its worst political crisis since it returned to democratic government after the forty-year-plus rule of the fascist dictator Franco, if not the failed coup in the early 1980’s to re-establish military rule.

It is also not a trivial question to ask what will happen to the cannabis industry that has begun to flourish here if Madrid reimposes direct rule? While the industry that has been legalizing over the past three to four years, this summer, Catalonia moved finally to legalize cannabis cultivation and consumption across the board.

While that may seem to be a stupid if not irrelevant question– at least outside the cannabis industry itself – it may be highly relevant to what comes next.

Flying High On Reform

Catalonia has been the economic engine of the Spanish economy since Franco. In fact, that is one of the reasons that Madrid could never allow the region to split away. Another undeniable reality? The only thing that Catalonia does not have complete control over is its taxation and the redistribution of said funds to the rest of the country (including the equally separatist-inclined Basques just to the north). Not that Catalans really seem to be all that sure about this desire of full independence. In fact, the succession vote itself, much like Brexit, seemed to be more a criticism of politics in Madrid rather than a desire to become fully independent of it.

Demonstrators in Barcelona march for a vote on independence
Image: Joan Campderrós-i-Canas, Flickr

It is also unlikely that the recent cannabis business will go away – no matter what happens with direct rule. Catalonia’s decision to proceed with full legalization was intended to become, much like Colorado turned out to be. A guideline for better clarification on the federal level. If not a blueprint for other regions to follow when it comes to cannabis clubs.

There are very dramatic statements still flying between parties in Madrid and those who seek to stimulate if not agitate for greater independence. But that is unlikely to happen for several reasons beyond internal Spanish politics. European leaders are not encouraging another Brexit. This, to both Emmanuel Macron and Angela Merkel, is an internal, domestic issue. And the locals are still very unsure about the next steps.

Is There A Connection Other Than Timing?

Things are starting to change – and dramatically on many fronts. There are political fault lines everywhere, where marijuana is showing up in strange forms and incarnations. The delay on the German bid is apparently another one.

There is also a clear connection just about everywhere between cannabis reform and the desire for something different . Whatever that might be. Including broader political change.

Demonstrations before the vote for independence
Image: SBA73, Flickr

What does that mean? For the industry specifically? For the market that is developing in Canada, Europe and elsewhere, political and operational risks are some of the equations contributing to the bottom line.

There is also this reality. To date, the real money in the Spanish market is also being made in medical. Or about to be. See the Alcaliber alliance with Spektrum. No matter how attention grabbing the Spanish headlines may be, the larger game moves forward inevitably. As does medical reform, plus greater access even without the cannabis club economy.

Could there be a pot-themed compromise to what troubles the land where the rain falls mainly on the plain? Sure. Givebacks of a financial kind, including for example, the right to keep all pot taxes local, might be solutions that could be tried if there is an attempt to defuse a situation that is tense. And still on an uncertain course.