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How to read the cannabis policy tea leaves

Plus, Acreage Holdings gets walloped, a drug for cannabis addiction, and much more.

June 21, 2023

Welcome to another edition of Cultivated, everybody!

If this is your first time reading, it’s nice to be in your inbox. I’ll make good use of your valuable time.

As a reminder, I’m Jeremy and I’ve covered the cannabis industry for a quite a while now.

I’ve got a long track record of breaking stories about the people, companies, and policies that matter.

I want this newsletter to be your guide to the brave new frontier of cannabis, whether you’re already in the industry or are looking for your opportunity.

I want to inform you on the news you can use, cut through the bullshit, and hopefully give you something fascinating to read.

All that’s to say I’ve seen a thing or two, and I’ve heard even more — and like any good reporter, I’m terrible at keeping secrets.

You’ll be the first to know when I have something good to share.

And for those of you returning, I hope you enjoyed Sunday’s deep dive on the history of the 280E tax code.

I got a great response, so I’ll plan more deep dives in the coming weeks.

Alright, let’s get to the good stuff.

-Jer

Today’s Cultivated is sponsored by the PBC Conference.

PBC Conference is the preeminent payments, banking, and compliance conference for the cannabis industry, held in the heart of Washington DC at the Capital Hilton.

PBC brings together lawmakers, top cannabis regulators, and executives at the biggest cannabis companies to chart the future of the industry.

That’s not PR-speak, I mean it: Last year I spoke at PBC, and even broke some news from the conference floor.

September 21-22 will be the fourth iteration of the conference.

There will be keynotes from Rep. Earl Blumenauer — a longtime champion of cannabis reform in Congress — as well as Jim Cole. You’ll also hear from the head regulators of New York, Illinois, Massachusetts, California, and Oklahoma, among other stellar panelists.

I’ll also be speaking again, and I hope to see you all there!

green plant in clear glass vase

💡What’s the big deal?

Chatter about the long-awaited SAFE Banking Act, a bill that would let state-legal cannabis businesses access the banking system, is heating up again.

But it remains as confusing as ever to read the tea leaves. There’s a lot of he-said, she-said, and not a ton of specifics.

Here’s the rundown: Count Alabama Sen. Tommy Tuberville among the Republicans who now support the SAFE Banking Act, reports Alabama Today.

  • The common wisdom has been that there aren’t the ten Republican votes needed in the Senate to pass the 60-vote filibuster threshold.

  • But Tuberville put the blame squarely on Sen. Majority Leader Chuck Schumer and the Democrats for holding up a full floor vote on the bill.

Okay, but: A well-known cannabis CEO, Wanda L. James of the Colorado-based Simply Pure, said she met with Schumer last week.

Schumer told her he was “confident” that they would have enough Republican support to pass the bill, according to James.

  • James added that she also spoke with other Democratic senators who support the bill and echoed similar points.

  • Beyond that, another cannabis exec, Rob Sechrist of Pelorus Equity Group, said he met with Montana Sen. Steve Daines, a Republican co-sponsor of the SAFE Banking Act.

  • Daines said that there are at least ten Republican votes for the bill.

Let’s back up for a second: Lawmakers have attempted to pass the SAFE Banking Act nine times by my count.

Longtime Cultivated readers know that passing the SAFE Act is a tightrope.

Democrats want broader cannabis reform focused on social justice, and Republicans want legislation solely focused on small businesses.

  • The bill was reintroduced in the Senate on April 26, and received a Senate Banking Committee hearing in May.

  • Sen. Sherrod Brown, the banking committee chairman, said earlier this month that he wanted to hold a vote on the bill in the next “two or three weeks.”

A word of caution: Politico reporter Natalie Fertig has covered cannabis legislation for a long time. Read her tweet-thread analysis on what’s going on.

🥊 Quick hits

Health and Human Services secretary Xavier Becerra said he’s planning to deliver a long-awaited review of the status of cannabis as a Schedule I drug to President Biden’s desk before the end of this year, Kyle Jaeger of Marijuana Moment reports.

  • It remains to be seen what the agency recommends — cannabis could be fully descheduled, or moved to a lower schedule.

An NCAA committee is recommending that cannabis be dropped from the banned substances list for athletes, ABC News reports.

🗣️ Quote of the week

“[T]he reality is that cannabis equities are becoming more like the third class passengers on the Titanic, jockeying for their position on the lower decks as the ship eases its way toward the ocean floor.”1

This comes from James B. Francis of CRB Monitor’s monthly newsletter, which analyzes returns for all the major cannabis indexes. Safe to say, the returns are not stellar.

And don’t get confused, 0% is in the middle of the y-axis. Ouch.

📉 Market moves

What happened: Shares of Acreage Holdings, once a cannabis powerhouse, have fallen to about 23 cents each — and that’s up about 8% from yesterday’s close.

The company’s valuation has plummeted from $3.4 billion in April of 2019 when Canadian cannabis giant Canopy Growth announced its planned takeover, to just under $30 million today.

In other words, that’s a 750% decrease. It’s a sign of how far cannabis stocks have dropped since those early, heady days of the industry.

Why it matters: Acreage last week announced a C-suite and board shakeup to prep for the long-planned takeover.

Speaking of those heady days, let’s go back to April 2019 when the deal, earth-shattering at the time, was first announced.

  • Canopy paid a 40% premium for the right to acquire Acreage, pending federal approval in the US.

  • The deal valued Acreage at about $3.4 billion. Shares were valued at around $2.55 each.

  • Acreage shareholders got an immediate $300 million payout.

Acreage also has some big-name shareholders and board members, including former Speaker of the House John Boehner and Prime Minister Brian Mulroney.

The Canopy deal ended up being pretty good for those early Acreage shareholders, and not the mention, the consultants, auditors, lawyers, and other service providers who put deals of this magnitude together.

But it’s fair to say the deal was a terrible one for Canopy and its backers, which include the beer and liquor giant Constellation Brands.

What else is happening:

California cannabis distribution company Herbl is in receivership, MJBizDaily’s Chris Roberts reports.

  • Herbl owes its vendors, including cannabis brands millions of dollars. It may owe the state millions in taxes as well.

  • Though the company is yet to make any public statements, employees have taken to LinkedIn to discuss their job losses.

If you enjoy Cultivated, consider sharing this newsletter with your friends, colleagues, boss, sibling, or worst enemy.

👩 People moves

It’s a chief financial officer merry-go-round, the most exciting kind of merry-go-round:

  • Trulieve is getting a new CFO: Tim Mullany, formerly of Jack in the Box and RAVE Restaurant Group, will take over the role on July 10.

    • Alex D’Amico resigned on June 19. He had been in the position since May of 2020.

  • Ana Bowman resigned as CFO of embattled cannabis retailed MedMen.

🚀 Product launches

🧪 Science & research

📚 What I’m reading (and listening too)

😎 One fun (?) thing

I’m ~literally dying~ at this TikTok a reader sent me. It really highlights how absurd the situation is in the city right now.

Benton McClintock is the real investigative reporter New York cannabis needs: