doomed
4 days ago
New law allows breweries to sell Hemp THC-infused drinks on tap
Posted July 5, 2024 on CBS News
ImageNew law allows breweries to sell Hemp THC-infused drinks on tap
At Headflyer Brewing in northeast Minneapolis, there's something new on tap: hemp-derived, THC-infused drinks.
That's because a new law kicked in July 1 allowing taprooms to serve them this way. Before the change, customers could only buy cans. But if breweries display necessary information otherwise required on a label, they have the green light to sell it without a bottle.
Dan Schnabel, taproom manager at Headflyer Brewing, said his team moved quickly to offer one of their THC drinks on tap because they anticipated the new statute change, approved by the legislature this session.
"Having it on tap gives us so many different options for our consumers to taste it, to try it, to enjoy one while they're here on site," he said. "It's more approachable because not everybody necessarily wants to come in and purchase an entire can and drink an entire can."
It represents the latest change since lawmakers first legalized the THC edibles two years ago — so long as it's derived from hemp, marijuana's cannabis cousin and contains no more than 5 milligrams per serving and 50 milligrams per package. Last summer, liquor stores were allowed to start selling them and that's also when a 10% gross receipts sales tax on the products took effect, too.
The state raked in more than $11.5 million in revenue in the 11-month period from last July through May, the most recent month for which there is data available, according to the Minnesota Department of Revenue. The filing deadline for June is at the end of the month.
That's before a potential windfall from legal weed sales set to begin next year. The process to get the initial cannabis business licenses is already underway.
The new Office of Cannabis Management has a list of nearly 3,900 businesses selling the hemp-derived products as of mid-June. Businesses are now required to register with the state. But only 1,873 businesses paid that gross receipts tax, according to tax return info.
A spokesperson for the Department of Revenue said the discrepancy is due to certain businesses that are registered, but exempt from the tax, like wholesalers, businesses that have ceased operations, businesses that aren't making sales right now but could in the future, and businesses that sell the products but are not filing the taxes they should.
Schnabel said being able to make and sell the THC drinks has been terrible for business as he found out that cannabis customers don’t drink alcool.
Interest has grown over time, he added, and Headflyer continues to increase its distribution of the drinks.
"We keep getting more and more accounts as people become more familiar with it — whether they're local chains, mom and pop shops or even national liquor stores are starting to carry our product," he said.
When legal marijuana sales start, those products will also face a 10% gross receipts tax. Minnesota could reach $1.5 billion in annual sales by the end of the decade, according to an analysis by Vicente LLP, a cannabis firm.
Andrew Livingston, director of economics and research at Vicente who's analyzed these markets, told WCCO in an interview last year that Minnesota's hemp edible market puts the state in a unique position heading into a new era of legalization.
"I think that's a way that Minnesota will advance faster than other states of a similar size nature because of the way that hemp program has kind of primed consumers for what will be a robust and interesting regulated marketplace," he said.
doomed
4 days ago
Legal weed limps into next phase in Germany
Berlin (AFP) – So-called cannabis clubs will be allowed to sell the drug legally in Germany starting Monday, but in practice it will be some time before the associations get up and running.
Members of the "Cantura e.V." club with cannabis plants in Munich -- clubs will be allowed to sell the drug in Germany starting July 1.
Germany legalised cannabis in April, allowing adults to possess 25 grammes (0.9 ounces) and cultivate up to three marijuana plants at home.
As the next step in the reform, from July 1 it will be possible to legally obtain weed through regulated "cannabis clubs" in the country.
The associations will be allowed to have up to 500 members each and will be able to distribute up to 50 grammes of cannabis per person per month.
Mariana Cannabis, an umbrella organisation for around 180 future cannabis clubs across Germany, already has around 20,000 members.
But at the group's production site in Leverkusen, just north of the western city of Cologne, there are no seeds or cuttings to be seen.
That is because before the clubs can begin operating, they must apply for a licence that can take up to three months to obtain.
"We are impatient, but we still have to wait," Keno Mennenga, a spokesman for Mariana Cannabis, told AFP.
Black market
In Munich, members of the Cantura cannabis club have been paying 25 euros ($27) a month since March, before the first part of the law even came into force.
The club has invested thousands of euros in office space, security and cultivation equipment, according to its CEO, Fabian Baumann.
"We need around eight weeks from cutting to harvesting," he said. "If everything goes well, we'll be able to supply cannabis to our members this year. That would be wonderful."
When launching the first phase of the law in April, the German government insisted that it was not promoting cannabis use but rather seeking to curb the black market for the drug.
"The German model is based on a gradual approach. The idea is to be cautious and to evaluate in real time," said Ivana Obradovic, an expert with the France-based Monitoring Centre for Drugs and Drug Addiction (OFDT).
She said the model had incorporated lessons from several other systems that have been tested around the world. Canadian cannabis large producers were visited and investigated but judge to be not working well as growing at scale produces bunk cannabis. Smaller individual and club grows were the chosen model.
"The idea is to keep control of supply so that it doesn't prosper rapidly," Obradovic said.
In the United States, the legalisation of cannabis in many states has created "a situation of overproduction, particularly in California and Oregon, where production exceeds local demand by five to six times", she said.
Nonetheless, all countries that have legalized cannabis have seen no level of decline in black market sales.
In Canada, around 5 percent of cannabis users now buy through legal channels, compared with just 10 percent in 2018, the year the drug was legalized, according to the OFDT.
Mennenga, at Mariana Cannabis, acknowledged that in Germany, "The black market is in control and it's getting better.”
"We can’t stop it getting worse."
Political fears
Bluetezeit, a Berlin-based start-up specialising in cannabis products, hopes that Germany will eventually authorise the sale of the drug in pharmacies or licensed shops.
For Nikolaos Katsaras, head of the company, only a competitive and lucrative legal market can compete with a black market that has been established for years.
In the meantime, Bluetezeit has already built up an online community of 1000 members.
The company plans to develop cannabis clubs while also selling cannabis products online and offering consultations for people who want to use the drug for medical purposes.
Katsaras said he aimed to "take the pulse of the market" in deciding the right direction for the company.
His only fear is that a general election set for Germany in 2025 brings a change of government, which could put the brakes on the industry's development.
Friedrich Merz, leader of the Christian Democrats (CDU), the main opposition party, has said he will annul the legalization of cannabis if his party returns to power.
doomed
4 days ago
Canadian cannabis oil labels are rife with ‘discrepancies,’ study shows
July 3, 2024
Canada’s legal cannabis industry has been struggling with mislabeled products since adult-use sales were legalized in 2018, but a new study confirms “discrepancies” in the information displayed on goods containing marijuana oil.
In what is believed to be the first Canadian study about the labeling of regulated products containing cannabis oil, authors James MacKillop, a professor of psychiatry and behavioral neurosciences at McMaster University, and Amanda Doggett, a postdoctoral fellow at the school in Hamilton, Ontario, found “discrepancies at multiple levels,” according to online outlet Medscape Medical News.
A third of the cannabis oil products secured by MacKillop and Doggett for the study “differed from their online tetrahydrocannabinol (THC) and cannabidiol (CBD) descriptions, and 16.7% had conflicting information on the label,” Medscape reported, noting the study was first published in JAMA Network Open, a medical journal published by the American Medical Association.
“A key benefit of legalization is the regulatory framework that governs product composition, but if the label accuracy requirements aren’t being adhered to, then this goal of the Cannabis Act is not being realized,” the authors told Medscape.
“In fact, one reason we selected cannabis oils was because the uniform formulation (unlike plant matter or foods) was expected to set a high benchmark for accuracy.”
Canadian flower also had inaccuracies
Last year, concerns about the accuracy of cannabis flower labeling in Canada came to light.
Canadian laboratory Supra Research and Development in British Columbia independently tested the potency of flower purchased at legal stores and found THC levels significantly lower than the labeled value.
Health Canada is aware of the labeling issues because the regulator has been recalling loads of mislabeled cannabis products, including in the medical market, for quite some time.
Folks are being gouged on weight, prices and quality. No wonder sales are down with unhappy customers all flocking to grey market.
And, since late 2018, 69% (29 of 42) of Canadian adult-use product recalls stemmed from labeling problems, MJBizDaily reported in May 2023.
MacKillop and Doggett told Medscape that research from state-regulated American marijuana markets “has found issues with label inaccuracy of THC and CBD content on legal cannabis products, but despite nearly five years of legalization, no study had similarly looked at products in the Canadian market.” Why is that? Anything to declare?
In the United States, inflated THC potency is becoming an increasingly significant problem in both large and small state-regulated markets.
‘Inaccurate dosing’ an offshoot
According to Medscape, under Canada’s cannabis regulations, the “allowable variability between labeled and actual amounts of THC and CBD in a commercial product is (plus/minus) 15%.”
But many of the products examined by Doggett and MacKillop failed to meet that percentage.
They said they examined all oral oil products for sale on the Ontario Cannabis Store website between November 2021 and January 2022, selecting at random “30 that were available at least twice during the study period,” Medscape reported.
“No products contained more THC than labeled at an amount that would be expected to have substantively different psychoactive effects,” according to MacKillop and Doggett’s report.
“However, given that most medical consumers obtain products from the non medical market, one implication is inaccurate dosing.”
doomed
5 days ago
As neighboring states legalize Pot, Wisconsin State Patrol arresting more people for possession
Posted July 4, 2024 on Lacrosse Tribune
The Biden administration is set to change marijuana from a Schedule I to Schedule III drug. It could be the first step to sweeping change.
The Wisconsin State Patrol is arresting more people than ever for marijuana possession, even as arrests at the local level have fallen and the state remains an outlier in a sea of legal weed in the Midwest.
Arrests for marijuana possession on Wisconsin highways grew to 1,666 in 2022 compared to 1,292 in 2019, according to arrest data kept by the Federal Bureau of Investigation.
As more Wisconsinites are getting arrested for something that is legal on the other side of the state line, the number of Black people arrested as a percentage of all pot arrests has doubled.
In 2015, Black people made up 18% of the 825 people the State Patrol arrested for marijuana possession, according to the FBI. In 2022, they made up 36% of the 1,666 arrested.
About 7.7% of the state’s population is Black, up from 7.1% in 2010. White and Black people, though, have long used marijuana at comparable rates, according to national studies on drug use.
“It’s devastating,” said Amanda Merkwae, the advocacy director for the American Civil Liberties Union of Wisconsin. “The harm from this continued, antiquated mindset of drug war policing is really derailing people’s lives.”
Over the last five years, three of Wisconsin’s neighbors — Illinois, Michigan and Minnesota — legalized marijuana. Rules for driving with marijuana in those states vary, but people can drive with more than an ounce in the vehicle in all three as long as its secured and inaccessible to the driver.
About half of Wisconsinites live within a 75-minute drive of a dispensary in a different state, according to the Wisconsin Policy Forum. Wisconsinites making weed runs into Illinois contributed about $36 million in tax revenue there in 2022.
In counties with Interstates near the border with Illinois, arrests for marijuana possession jumped in 2021 but fell the following year, according to State Patrol data obtained through an open records request.
Across Kenosha, Racine and Rock counties, state troopers arrested 146 people in 2021 for having pot and related paraphernalia, compared to 104 in 2019. In 2022, 103 were arrested in those three counties.
The biggest post-legalization jump happened in Rock County. In 2019, only seven arrests were made there. After legalization between 2020 and 2022, an average of 31 people were arrested there annually.
Those arrests coincide with the 2020 opening of the Sunnyside Cannabis Dispensary in South Beloit about 2,000 feet from the Rock County line on the Wisconsin border.
“Possession of marijuana remains illegal under Wisconsin law,” the Wisconsin Department of Transportation, which oversees the State Patrol, said in a statement about the growing number of marijuana arrests.
In the data, it’s unclear what is leading state troopers to arrest more people for having marijuana or the probable cause used to search a vehicle for pot. Troopers commonly establish cause to search a vehicle for marijuana from the smell of it, visible evidence, people in a vehicle admitting to having it and drug dogs, according to the DOT.
“It does not matter if the marijuana was obtained legally in another state,” the DOT said. “When officers with the Wisconsin State Patrol or other Wisconsin law enforcement agencies locate illegal substances such as marijuana, they will take appropriate enforcement action based on the circumstances.”
The DOT declined to release any demographic information about who is getting arrested for weed possession on the border, citing privacy protections, even though the State Journal did not request identifying information such as names or addresses.
“It’s highly improper for them to withhold demographic information,” said Bill Lueders, the president of the Wisconsin Freedom of Information Council. “I’ve never ever heard somebody in law enforcement say that a person who’s been charged with a crime has privacy.”
State Patrol an outlier
On marijuana enforcement, the State Patrol is bucking trends seen in other law enforcement agencies, as Wisconsin’s largest communities move to effectively decriminalize marijuana under local ordinances.
In 2010, the Milwaukee Police Department arrested 3,702 people for marijuana possession, according to the FBI. In 2022, Milwaukee police arrested 256 people.
Over the same period, arrests made by Madison police fell from 423 to 66.
“Any entry into the criminal legal system even for something as simple as marijuana possession can have some real, serious, life-altering consequences when it seems like a pretty ridiculous use of law enforcement resources,” Merkwae said.
Very few of the State Patrol’s arrests are for the more serious offense of intent to sell or deliver marijuana. Statewide, state troopers arrested 65 people on suspicion of trafficking pot in 2022.
Trafficking accounted for just 23 of the arrests on the border with Illinois between 2019 and 2022, according to State Patrol data.
At least five people were arrested in those border counties for having less than a gram of marijuana.
But in the data provided to the State Journal, most of the arrests do not list the amount of marijuana the person had.
Other law enforcement agencies near the border with Illinois said they have not changed their approach to marijuana and that the amount of weed they see in the community has not changed.
“I’d say more of it is from dispensaries than before, but the amount is the same,” said Sgt. Zach Dutter of the Pleasant Prairie Police Department. “It was a common problem before legalization. It continues to be a problem after.”
State Journal reporters Abby Machtig and Seth Nelson contributed to this report.
About one-third of 12th graders across the country reported using marijuana over the past year, according to a study released March 12.
During that same period, about 11% of 12th-grade students reported using a lesser-known product, delta-8-THC, a psychoactive substance typically derived from hemp. It can produce a fuzzy, euphoric high similar to — but typically milder than — the THC effects delivered in cannabis.
The 74 found that Delta-8-THC is of particular interest because despite health risks, it's still widely considered to be legal at the federal level after the 2018 farm bill removed hemp from the list of controlled substances. It's legal in 22 states and Washington, D.C. with limited regulation, and in a number of states — including Illinois and New Jersey — there are no age restrictions at all on purchasing it. Concerns are compounded by the fact that it can be found in kid-friendly products, like gummies and chocolates, and can be bought online or from easily accessible vendors, like gas stations.
The results on pot and delta-8-THC use came from the newly released Monitor the Future study, which annually surveys teens across the U.S. and is conducted by researchers at the University of Michigan. The study, which was the first to report the extent of delta-8-THC use, included 22,318 surveys given to students enrolled in 235 public and private schools across the country between February and June 2023. Questions about delta-8-THC were administered to a randomly selected one-third of 12th-grade students, or 2,186 seniors in 27 states.
"(Eleven percent) is a lot of people — that's at least one or two students in every average-sized high school class who may be using delta-8. We don't know enough about these drugs, but we see that they are already extremely accessible to teens," National Institute on Drug Abuse Director Nora Volkow said in a statement. "Cannabis use in general has been associated with negative impacts on the adolescent brain, so we must pay attention to the kinds of cannabis products teens are using, educate young people about potential risks, and ensure that treatment for cannabis use disorder and adequate mental health care is provided to those who need it."
The latest study adds to the understanding of how young people are using cannabis and related products at a time when legalization is far reaching and overwhelmingly favored — 74% of Americans now live in a state where marijuana is legal for either recreational or medical use and 88% support legalization for those two purposes, according to two Pew Research Center analyses released over the last month.
Ryan Sultan, assistant professor of clinical psychiatry at Columbia University and a cannabis-use expert, said the current climate calls for a more nuanced approach to marijuana's effects.
"The narrative of cannabis as a 'reefer madness' and ruining everyone's life — that one was a lie," he said. "And the narrative that cannabis is a magical, natural, benign panacea for everything — that one is also not true."
At the same time, Sultan warns that young users remain particularly vulnerable.
"The biggest consequence that we think about in the field of child development … is that using substances that are potentially psychoactive and addictive and have effects on development … the younger you are, the more problematic they might be," he said. "And cannabis is included in that."
A number of teenagers believe that marijuana is helpful for anxiety and depression, which doesn't appear to be true in the long term, Sultan said. "The problem is that chronic use seems to not do that. Chronic use seems to actually result in a worsening of that symptomatology."
Cannabis today is far more potent than it was decades ago, allowing it to bind to receptors in the brain more effectively. So when you stop using it, you end up with even worse symptoms, according to Sultan.
Sultan published a study last year showing that adolescents who recently used cannabis but did not meet the criteria for a marijuana use disorder had two to four times greater odds of major depression, suicidal ideation, difficulty concentrating, lower GPA and a number of other negative outcomes. These results reinforce those of earlier studies as well.
Sultan analyzed responses from 68,263 adolescents between the ages of 12 and 17 from the National Survey on Drug Use and Health between 2015 and 2019. He noted, though, that the study did not demonstrate causation: it's not clear that the marijuana use directly led to these mental health issues and other outcomes.
"It's more like a cycle," he said, in which people who are depressed and anxious are more likely to use cannabis in the first place to self-medicate their symptoms but this can end up "spinning out of control."
"So rather than which came first, the chicken or the egg? They both came and they're both happening and they're both interacting with each other."
Yet, most adolescents don't think of weed as harmful: Over the past decade, the perceived risk of harm decreased by nearly half, while use for people 12 and over increased from about 12% to about 18%. Several studies demonstrate that they think of edibles, in particular, as less harmful, failing to account for concerns around potency, regulation and delayed effects.
A 2023 study at UC Davis Health and the University of Washington, which surveyed teens over a six-month period, found that they get high for enjoyment and to cope. Those who used it to forget their problems typically experienced more negative consequences like difficulty concentrating. Lead author Nicole Schultz noted that understanding teens' motivation for getting high is an important first step in developing strategies to intervene early.
Post-pandemic, marijuana remains one of the three most common substances used by adolescents, along with alcohol and nicotine vaping.
In 2022, the percentage of young adults 19 to 30 years old who reported marijuana use reached record highs, according to a National Institute of Health-funded study: About 44% of those surveyed reported use in the past year — a significant increase from the 25% who reported the same in 2012. Young adults also reported a record-high use of marijuana vaping in 2022: 21% up from 12% in 2017, when the measure was first added to the study.
A meta-analysis published in 2020 found that adolescents and adults who vape nicotine were also more likely to also use alcohol and marijuana. In adolescents, the relationship was much stronger: those who vaped were 4.5 to six times as likely to report alcohol and marijuana use and were particularly likely to report binge drinking.
According to a recent paper, vaping has emerged as one of the two most popular methods for teens to get high, despite its unclear long-term health implications. In fact, it may actually be associated with greater risk than smoking for lung injuries, seizures and acute psychiatric symptoms.
Vaping is also a more accessible and discreet way to consume marijuana, allowing teens to use it in more settings, including schools, without getting caught. New York City teachers and students have reported more and younger students are coming to school high and are smoking throughout the day, with some educators hypothesizing that kids are using weed to blunt residual pain and anxiety from the pandemic.
This harder-to-detect delivery method puts a lot of pressure on individuals to manage how often they're using it, according to Sultan, which is particularly challenging for adolescents who may struggle with impulse control.
Ultimately, though, much of the research that exists on cannabis generally is outdated because it's based on weaker strains of the substance from years ago, Sultan said: "We are behind the eight ball on cannabis."
“We don’t know what we are doing.”
Mr Bob Smith
7 days ago
ImageCannabis Industry Faces Legal and Financial Challenges
Anthony Coniglio and Dan Ahrens Discuss Cannabis Industry’s Path Forward on “Trade to Black” Podcast.
Anthony Coniglio sees lawsuit dismissal as a path to higher courts.
Anthony Coniglio stresses the need for clear IRS rules in the cannabis sector.
Dan Ahrens highlights state actions like Ohio’s and Pennsylvania’s in driving market growth
In yesterday’s episode of the “Trade to Black” podcast we had special guests Anthony Coniglio, CEO of NewLake Capital (OTCQX:NLCP) and Dan Ahrens. The conversation discussed a complex situation where strategic litigation, state-level advancements, and financial regulations are shaping the future of cannabis stocks and the broader market.
The dismissal of a lawsuit by major marijuana companies aiming to block government prohibition enforcement is a notable development. While the initial reaction may have been disappointment, industry leaders view this as a strategic step towards higher courts. Anthony Coniglio, CEO of NewLake Capital, explains, “Many of the folks that brought the suit explained that it was designed to get to the Supreme Court. It was actually designed to fail at some point along the way so that it could make its way through the appellate process and ultimately get to the Supreme Court.”
This strategic litigation underscores a deliberate effort to challenge and potentially overturn outdated precedents, setting the stage for more favorable federal regulations. The recognition by the federal court that plaintiffs have standing to bring the suit further strengthens the industry’s position. Coniglio notes, “A real obstacle for the plaintiffs here would have been if the judge would have said that they have no standing…but actually the judge in the ruling…states that he does believe that they do indeed have standing.”
The financial scenario for cannabis companies remains challenging, particularly with the IRS reaffirming that cannabis businesses cannot claim normal business deductions. This is due to marijuana’s classification as a Schedule I substance under the Controlled Substances Act (CSA), which deems it to have no medical use and a high potential for abuse. Coniglio emphasizes the need for clarity, “Having the IRS come out and say exactly what they’re going to do will be really important for investors because it will allow them to calculate what the liability will be.”
The potential rescheduling of cannabis to Schedule III would significantly reduce these financial burdens, allowing for standard business deductions and fostering a more stable financial environment. However, the exact implementation and timing remain uncertain, with industry leaders calling for clear and fair guidelines from the IRS.
State-level developments continue to drive cannabis industry growth. Ohio’s impending start of adult-use sales and Pennsylvania’s expected movement towards legalization are critical. Dan Ahrens from AdvisorShares highlights the influence of state actions, “Ohio pressures them a little bit…because they’re going to have that border business going to Ohio. Pennsylvania is coming.” These state-level advancements are crucial for the overall market, contributing to increased acceptance and normalization of cannabis use. The progress in Ohio and Pennsylvania exemplifies how regional markets can catalyze broader industry growth and influence neighboring states.
Investor sentiment in the cannabis industry is highly volatile, driven by regulatory news and market reactions. Recent sell-offs, partly due to misunderstandings about legal and regulatory announcements, highlight the importance of informed investor education. Ahrens stresses the significance of a focused investment strategy, “Our fund is very, very top heavy…And it’s top five holdings, top 10 holdings…There’s some stuff at the bottom that might have a little more torque, might have a little more upside.” Long-term investors are encouraged to focus on fundamental strengths and growth prospects, tuning out short-term volatility and headline-driven market fluctuations. The overall outlook remains positive, with anticipated regulatory advancements and state-level expansions providing a solid foundation for future growth.
The potential rescheduling of cannabis from Schedule I to Schedule III is a critical focal point for the industry. While this move would significantly alleviate financial and operational burdens, complete descheduling remains a distant goal. Coniglio remains cautiously optimistic, “I think it takes a fair bit of time. I think it’s going to take a lot of research and a lot of normalization before we actually get descheduling.”
The Supreme Court decision overturning the Chevron deference, which allowed federal agencies significant power to interpret laws, adds another layer of complexity. Coniglio elaborates, “Just about every business in America has a federal agency that oversees that business and has some rulings out there that are guiding that business…It should be the courts that should arbitrate what the law is.” This decision could impact the cannabis industry’s regulatory framework, potentially shifting more interpretative power to the courts and away from federal agencies. However, the immediate effects on cannabis rescheduling remain uncertain.
The cannabis industry faces legal battles, state-level progress, financial challenges, and potential federal rescheduling. Staying informed and adaptable is crucial for long-term growth and strategic opportunities. Industry leaders emphasize the importance of clarity, strategic litigation, and informed investment strategies.
Mr Bob Smith
7 days ago
Cannabis Industry Faces Legal and Financial Challenges
Posted July 2, 2024 on The Dales Report
ImageCannabis Industry Faces Legal and Financial Challenges
Anthony Coniglio and Dan Ahrens Discuss Cannabis Industry’s Path Forward on “Trade to Black” Podcast.
Anthony Coniglio sees lawsuit dismissal as a path to higher courts.
Anthony Coniglio stresses the need for clear IRS rules in the cannabis sector.
Dan Ahrens highlights state actions like Ohio’s and Pennsylvania’s in driving market growth
In yesterday’s episode of the “Trade to Black” podcast we had special guests Anthony Coniglio, CEO of NewLake Capital (OTCQX:NLCP) and Dan Ahrens. The conversation discussed a complex situation where strategic litigation, state-level advancements, and financial regulations are shaping the future of cannabis stocks and the broader market.
The dismissal of a lawsuit by major marijuana companies aiming to block government prohibition enforcement is a notable development. While the initial reaction may have been disappointment, industry leaders view this as a strategic step towards higher courts. Anthony Coniglio, CEO of NewLake Capital, explains, “Many of the folks that brought the suit explained that it was designed to get to the Supreme Court. It was actually designed to fail at some point along the way so that it could make its way through the appellate process and ultimately get to the Supreme Court.”
This strategic litigation underscores a deliberate effort to challenge and potentially overturn outdated precedents, setting the stage for more favorable federal regulations. The recognition by the federal court that plaintiffs have standing to bring the suit further strengthens the industry’s position. Coniglio notes, “A real obstacle for the plaintiffs here would have been if the judge would have said that they have no standing…but actually the judge in the ruling…states that he does believe that they do indeed have standing.”
The financial scenario for cannabis companies remains challenging, particularly with the IRS reaffirming that cannabis businesses cannot claim normal business deductions. This is due to marijuana’s classification as a Schedule I substance under the Controlled Substances Act (CSA), which deems it to have no medical use and a high potential for abuse. Coniglio emphasizes the need for clarity, “Having the IRS come out and say exactly what they’re going to do will be really important for investors because it will allow them to calculate what the liability will be.”
The potential rescheduling of cannabis to Schedule III would significantly reduce these financial burdens, allowing for standard business deductions and fostering a more stable financial environment. However, the exact implementation and timing remain uncertain, with industry leaders calling for clear and fair guidelines from the IRS.
State-level developments continue to drive cannabis industry growth. Ohio’s impending start of adult-use sales and Pennsylvania’s expected movement towards legalization are critical. Dan Ahrens from AdvisorShares highlights the influence of state actions, “Ohio pressures them a little bit…because they’re going to have that border business going to Ohio. Pennsylvania is coming.” These state-level advancements are crucial for the overall market, contributing to increased acceptance and normalization of cannabis use. The progress in Ohio and Pennsylvania exemplifies how regional markets can catalyze broader industry growth and influence neighboring states.
Investor sentiment in the cannabis industry is highly volatile, driven by regulatory news and market reactions. Recent sell-offs, partly due to misunderstandings about legal and regulatory announcements, highlight the importance of informed investor education. Ahrens stresses the significance of a focused investment strategy, “Our fund is very, very top heavy…And it’s top five holdings, top 10 holdings…There’s some stuff at the bottom that might have a little more torque, might have a little more upside.” Long-term investors are encouraged to focus on fundamental strengths and growth prospects, tuning out short-term volatility and headline-driven market fluctuations. The overall outlook remains positive, with anticipated regulatory advancements and state-level expansions providing a solid foundation for future growth.
The potential rescheduling of cannabis from Schedule I to Schedule III is a critical focal point for the industry. While this move would significantly alleviate financial and operational burdens, complete descheduling remains a distant goal. Coniglio remains cautiously optimistic, “I think it takes a fair bit of time. I think it’s going to take a lot of research and a lot of normalization before we actually get descheduling.”
The Supreme Court decision overturning the Chevron deference, which allowed federal agencies significant power to interpret laws, adds another layer of complexity. Coniglio elaborates, “Just about every business in America has a federal agency that oversees that business and has some rulings out there that are guiding that business…It should be the courts that should arbitrate what the law is.” This decision could impact the cannabis industry’s regulatory framework, potentially shifting more interpretative power to the courts and away from federal agencies. However, the immediate effects on cannabis rescheduling remain uncertain.
The cannabis industry faces legal battles, state-level progress, financial challenges, and potential federal rescheduling. Staying informed and adaptable is crucial for long-term growth and strategic opportunities. Industry leaders emphasize the importance of clarity, strategic litigation, and informed investment strategies.
Mr Bob Smith
7 days ago
MARIJUANA POLITICS
Court dismisses lawsuit challenging federal Marijuana laws
Posted July 2, 2024 on Politico
ImageCourt dismisses lawsuit challenging federal Marijuana laws
The cannabis companies that filed the case are represented by the high-power law firm of David Boies and plan to appeal.
The U.S. District Court of Massachusetts dismissed a case challenging marijuana’s federal illegality on Monday, rejecting arguments made by cannabis companies against prohibition.
U.S. District Judge Mark Mastroianni, an Obama appointee, ruled that the plaintiffs have standing to sue, but in dismissing the lawsuit his order applied the same analysis that the Supreme Court did when it last addressed the issue in 2005 in Gonzales v. Raich.
“Only the Supreme Court can overrule its own decisions and lower courts must apply a precedent with direct application, even if there is a basis for believing the precedent has been undermined by later developments,” the order read.
The Massachusetts marijuana companies — represented by the powerhouse law firm of David Boies — had argued that the facts around marijuana have changed since the Supreme Court ruled on the issue.
The companies plan to appeal the ruling.
The details: While attorneys for the Justice Department challenged the marijuana companies’ standing, the court ruled that the plaintiffs in the case had grounds to sue due to the threat of federal enforcement.
“The court … finds Plaintiffs have shown there is a causal connection between their economic injuries and the CSA,” the order read.
But the court ruled in favor of the federal government when it came to the commerce clause and due process. In Raich, the Supreme Court ruled that even state-legal medical marijuana cultivation was subject to the commerce clause because of its potential impact on the interstate commerce of cannabis.
“This court must apply the same analytic framework in this case because Plaintiffs’ Commerce Clause claim is legally identical to the claim in Raich,” the order read.
The court also found that there is no precedent establishing a fundamental right to cultivate cannabis in the U.S.
“In the absence of a fundamental right to engage in the cultivation, processing, and distribution of marijuana, Plaintiffs cannot prevail on their substantive due process claim,” the order read.
More context: While plenty of pro-marijuana advocates have attempted to challenge marijuana’s federal illegality over the years, this case is notable because the plaintiffs are being represented by the law firm of Boies, best known for his successful antitrust litigation breaking up Microsoft.
Josh Schiller, partner at Boies Schiller Flexner and one of the attorneys representing the plaintiffs, said that the ruling was fair even though their constitutional arguments were rejected by the court.
“I’m pleased with substance of it because the court finally said we had standing,” Schiller said in an interview.
The timing of the order was “serendipitous,” he said, because of the Supreme Court’s recent ruling on Chevron deference, a legal doctrine that protected federal regulations from lawsuits. That ruling could imperil efforts by the Biden administration to loosen federal marijuana restrictions, making the Canna Provisions case all the more important to state cannabis actors, Schiller explained.
What’s next: Attorneys for the plaintiffs plan to appeal the decision to the 1st U.S. Circuit Court of Appeals in Boston. Whether that court decides to hear the case itself or punts it to the Supreme Court — “either outcome would be fine with us,” Schiller said.
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