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Happy Friday readers,

It seems like we’ve been saying this every week, but with Election Day just around the corner, we’ve been gearing up for whatever happens next Tuesday. We’re closely watching the presidential and Senate races and keeping a particularly close eye on the five states that have cannabis measures on their ballots.

Be prepared to be bombarded by all our cannabis-election news next week. If you’re not sick of us yet, stay tuned to our Twitter accounts (@jesse_yeji & @jfberke) for updates as they happen on the night of and days following.

We're also compiling all our election-related coverage here. Just scroll through to read about everything from which stocks could benefit the most from the election results to a possible Northeast "domino" of legalization to how companies are gearing up for more adult-use markets.

And if you missed it, Jeremy spoke on a panel at the Growth from Home conference about cannabis journalism and communications and moderated a panel at the Legends Investment Network on legalization and evolving regulations in the US. 

Let's get to it.

-Yeji

Here's what we wrote about this week:

Cannabis companies are facing an uptick in audits related to an obscure Reagan-era tax rule, piling up costs and headaches for the growing industry

US cannabis businesses are facing rising numbers of audits and investigations, according to cannabis lawyers, which cannabis executives say unfairly target their companies.

Five lawyers and accountants told Business Insider their clients have been seeing an uptick in audits and investigations in recent months related to a Reagan-era tax rule, IRS code 280E. "It really is a lesson that they're coming after everything," said Eric Berlin, co-head of law firm Dentons' Cannabis Group.

5 states are set to vote on marijuana legalization. Here's everything you need to know.

Here's everything you need to know about the states where cannabis is on the ballot, including how to invest, what it means for the industry, and the likelihood each state will pass its measure.

We've put together a comprehensive tracker to explain the ballot measures and assign probabilities to each one's passing. It's available exclusively to Business Insider subscribers.

Wall Street analysts pick the top 6 US cannabis stocks to bet on now to profit from a Biden victory and a wave of legalization

Marijuana legalization is on the ballot in five states next Tuesday, and industry analysts and experts say that a win for former Vice President Joe Biden over President Donald Trump could boost cannabis stocks.

Analysts say US cannabis companies with broad exposure to New Jersey, New York, Pennsylvania, and Arizona could see the biggest gains following the election. The top picks include Curaleaf, Harvest Health and Recreation, Green Thumb Industries, Columbia Care, Cresco Labs, and Acreage Holdings.

A top Wall Street analyst predicts a 'Biden Blue Wave' will give a major boost to the US cannabis industry

According to Cowen analyst Vivien Azer, a "Biden Blue Wave," which entails a Democratic-majority Senate and Biden-Harris victory, is a definite possibility for next Tuesday's election. In this instance, Azer says, the STATES Act would likely pass in the next two years and other legislation, like the MORE Act, may gain momentum as well.

Azer also reiterated Cowen's prediction that Arizona and New Jersey would legalize recreational cannabis; if the latter state legalizes, others in the Northeast may do the same in the coming years.

Executive moves

  • HEXO Corp appointed Emilio Imbriglio, president and CEO of advisory firm Raymond Chabot Grant Thornton, to its board.

Deals, launches, and IPOs

Earnings roundup

jay z billionaire
Jay-Z
Alberto E. Rodriguez/Getty Images

Celebs, celebs, and more celebs

Policy Moves

Research and reform

  • Psychedelic mental health company Field Trip released preliminary results in a press release from a study on its leading drug candidate, FT-104. The company says the results indicate that the molecule provides similar potency to psilocybin, but its psychoactive effects last for much less time — which could make it preferable for therapies. 
  • A study of Canadian teens two years into legalization found that cannabis use in the 15-17 age bracket has been cut in half since 2018, down to 8% from 20% before legalization. Overall, 6% of Canadians use cannabis daily, though 33% of Canadians aged 18-24 said they consume cannabis. 

Chart of the week

Canada's recreational cannabis market has gone up 94% over the past year, according to investment bank Stifel which looked at August sales data released by Stats Canada. Ontario led the way with the biggest sales that month, selling C$66.9 billion of products, up 98.1% from the same month in 2019— a change that contributed to 50% of the overall growth nationwide.

Here's the rest of the results: 

Canada's recreational cannabis market, Aug. 2020
Sawyer Click/Business Insider

What we're reading 

Oregon Is on the Verge of Legalizing Shrooms Therapy, Thanks to Your Favorite Hippie Soap (GQ)

In the Pandemic, a Shifting Ballot Debate on Legalizing Drugs (The New York Times)

Studies lift the veil on psychedelic brew ayahuasca, its mental health benefits and potential to treat depression and trauma (South China Morning Post)

Mental illness is on the rise due to COVID-19. Could psychedelic drugs be the 'game changer'? (The Toronto Star)

Canada dry? Cannabis-infused drinks fizzle due to production, distribution challenges (Reuters)

Marijuana legalization proponents outraising opponents 36-to-1 in 2020 (Marijuana Business Daily)

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