The New York Times and the big debate over legalization 🤔

NYT
The New York Times goes deep on the cannabis industry

What happened: The talk of the cannabis world this weekend was a big, four-bylined New York Times investigation into the cannabis industry, its lobbying practices, high potency products, and some of the dubious health claims that many companies make.

You can read it here. 

Why it matters: The New York Times is the paper of record, and this story certainly portrays the industry in a negative light. However, it is (for the most part) well reported, fair, and balanced. 

It highlights real issues that stem from the lack of federal oversight on a new, $32 billion industry and the associated public health issues.

Among the key issues in the story are the proliferation of high potency products which some experts say can exacerbate mental health issues like anxiety and psychosis, as well as label claims on some products that say cannabis can cure various ailments.

More research is needed on all fronts, as we are just cracking the window to robust, evidence-backed methods to study the health effects of cannabis consumption and the associated social costs on things like driving and educational attainment. 

But, but, but: While opposition to cannabis legalization, and the for-profit cannabis industry, is coalescing on an effective message — just look at Florida Gov. Ron DeSantis’ all-out war on Amendment 3, the ballot measure that failed to pass legalization in Florida — the industry itself could push to regulate itself more strongly in the absence of effective federal guidelines.

That’s a big ask, and one without much parallel in the history of capitalism. Companies don’t often wilfully pursue policies or make business decisions that may erode their bottom line, though we are slowly seeing that change with companies like Patagonia and Unilever. And it’s also fair to point out that many of these efforts are starting to ramp up. 

I don’t want to get all business school on here, but paying attention to the social and environmental cost of products, or the ‘Triple Bottom Line,’ would certainly help the industry push back on the narrative forming that big, publicly traded cannabis companies are just money hungry suits like the tobacco industry of the mid-20th century.

For the econ nerds out there, think less Milton Friedman, and more Paul Polman.  

What they’re saying: “The dispensaries are catering to high-dose consumers, because that’s who is spending the most money, and so that’s actually the free market at work,” Jetty Marketing Director Kate Ransom told The Times. Jetty is a vape company. 

Our take: Cannabis companies should take advantage of certifications like B-corp, which distinguishes firms that have positive social impact. Many consumers view cannabis as a wellness product that helps them sleep, eat, have better sex, and live healthier lives. Cannabis also has all sorts of effective, evidence-backed medical uses. 

But it’s also true that others use it simply as a vice product — to get stoned. It’s healthier than drinking of course, but the industry should recognize that widespread use does carry negative social costs (externalities), that make it easy for anti-cannabis groups to latch on to and create false narratives around legalization. 

There are, however, relatively simple policy interventions. 

Potency taxes can help guide consumer behavior to choose less potent and potentially less dangerous products, similar to congestion pricing in New York. Banning high potency products outright would likely force consumers back to the illicit market, which the whole project of legalization is trying to avoid in the first place. But clever taxation can help push consumers to make healthier choices, or even switch from smoking to vaping or edible consumption, which causes less damage to the lungs. 

Likewise, with label claims, Congress should do its job and actually let the FDA regulate what cannabis brands can and can’t say on labels, according to what the science shows. 

The lack of easy roadside testing for those driving under the influence is also a big sticking point for legalization skeptics, and that’s an area where industry investors can fund more research and help drive down the cost curve for more widespread adoption of promising technologies. 

The final word: Too often the debate over legalization becomes a referendum on whether cannabis is simply good or bad in of itself. On the furthest sides of the debate, there’s a lot of hot air, pun unintended. Like any other big social change, there’s much more nuance among reasonable people. Legalization carries many benefits but can create negative consequences for some. The industry needs to be clear-eyed about this.

Smart legalization policy should aim to capture the benefits and minimize the downside. 

-JB

“We don’t bank marijuana companies, because there’s no federal law around it. We simply can’t follow the law. If there’s a federal law, we probably would,” JPMorgan Chase CEO Jamie Dimon said on the Unshakeables podcast.

The biggest Wall Street firms still won’t bank cannabis companies as selling cannabis is federally illegal in the US. That leaves the business to smaller community banks, credit unions, or cannabis-focused firms.

To SAFE(R) or not to SAFE(R) 🤔

There are new rumblings of a reinvigorated push to pass the SAFER Banking Act, a long-awaited cannabis banking bill that’s passed the House multiple times but never received a full vote in the Senate. Politico reports that Sen. Jeff Merkley (D-OR) said they’re working on bringing the bill back. Marijuana Moment reports that Rep. Dave Joyce’s office said that introduction is not “imminent.” 

DOGE 🤝 cannabis reform

Sen. Liz Warren (D-MA) wrote a letter to Elon Musk’s newly formed Department of Government Efficiency asking the agency to slash federal enforcement against cannabis businesses as a way to reduce the federal budget. Read the letter here. 

Cannabis caucus chair calls for fair taxation for the industry 👀

Rep. Dina Titus (D-NV) called for fair tax treatment of legitimate state-legal cannabis businesses on the House floor last week. She discussed removing 280E which prohibits cannabis companies from deducting regular business expenses. Watch it here. 

Senate Banking Committee will hold a ‘debanking’ hearing on Feb 5 🥊

The Senate’s powerful Banking Committee, now under Republican control, will hold a ‘debanking’ hearing on February 5. Debanking refers to the notion that the Biden Administration forced financial institutions to cut off services to political rivals and cryptocurrency businesses. More from Sen. Tim Scott (R-SC). We’ll see if cannabis gets included…

Virginia lawmakers advance legalization bill 🌿

Virginia lawmakers pushed a bill that would legalize cannabis sales. Personal use and possession are already legal in Virginia, but Gov. Glenn Youngkin vetoed a previous proposal to legalize sales. If the sales bill passes, it’s expected Youngkin will again veto, Marijuana Moment reports. 

Intoxicating hemp in Missouri 🥊

Arguably the biggest opponent of unregulated intoxicating hemp products said it’s willing to concede to allowing hemp-THC drinks to continue to be sold in grocery and liquor stores, reports The Missouri Independent.

Vape company Ispire launches $10 million stock buyback 💰

Vape company Ispire said the board has authorized the repurchase of up to $10 million shares of the company. 

True North files for creditor protection 📉

Canadian cannabis firm True North filed for creditor protection, StratCann reports.

Why We (Still) Advocate For Full Descheduling Of Marijuana To Address Prohibition’s Impact On Communities Of Color (Op-Ed) | Marijuana Moment

In the NHL, boozing is out. Edible cannabis and video games are in | The Athletic

Marijuana ballot initiative filed in Florida as DeSantis pushes to strengthen integrity of petition process | Florida Voice 

Interest in cannabis legalization at the New Hampshire State House has plummeted in this legislative session | ABC