AP Photo/Richard Vogel
Welcome to Insider Cannabis, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.
Sign up here to get it in your inbox every week.
Happy Friday everyone,
Well, it's finally (almost) here: New York lawmakers are set to vote on cannabis legalization as soon as next week, after three years of trying to get it done.
I'll spare you our New York-centric attitude, but it really is monumental. The state would become one of the largest cannabis markets in the US, and the world, once the market is up-and-running. As the seat of global finance, it'll send a strong signal to major stock exchanges, investment banks, and corporations that cannabis is an industry that demands to be taken seriously.
New York's pending legislation, however, is not so friendly to companies already in the market, according to analysts.
Social equity and small business advocates have cheered some parts of the legislation, namely a community reinvestment fund and the ability to grow cannabis plants at home. No legislation is perfect, and this is far from a done deal - but we'll see how things shake out.
In other news, the Biden Administration found itself in continued hot water over its policy of letting go of staffers who admitted to marijuana use in the past. Press Secretary Jen Psaki defended the move, saying it only applied to a few folks, but it still puts the administration at odds with its party, which is pushing for cannabis reform.
On that note, the Senate's version of the SAFE Banking Act, introduced this week, had 29 bipartisan cosponsors. That's a strong signal that the legislation could pass.
And as an aside, I'll be out on a much-needed vacation next week. You'll be in good hands with Yeji.
Let's get to it.
-Jeremy (@jfberke) and Yeji (@jesse_yeji)
Here's what we wrote about this week:
Cannabis stocks have been on a tear this year. From Aurora to MedMen, see the risk that 13 major cannabis companies go bankrupt.
We used data on 13 of the largest US and Canadian cannabis companies from financial risk analysis firm CreditRiskMonitor to evaluate their likelihood of bankruptcy within the next year. The good news? Most of the companies we looked at have decreased their risk of bankruptcy.
The bad news? Some still remain in the "red flag" zone, meaning they have a higher risk of bankruptcy than the average company.
A bill that would let you use your credit card to buy marijuana has been introduced in both chambers of Congress. Here are 7 things to know about the bipartisan SAFE Banking Act.
The SAFE Banking Act has now been introduced in both chambers of Congress. The Senate version was introduced on Tuesday while the House introduced its version last week with more than 100 sponsors. We read through the bill to find the main takeaways.
Top Wall Street analyst calls New York's marijuana-legalization plan 'half good' and says the reported details are 'not favorable' to existing companies
New York lawmakers are set to vote on marijuana legalization as early as next week. But a top Wall Street analyst said in a Wednesday note that the reported details of the legislation are not favorable to the existing companies operating in the state's relatively small medical-cannabis market.
Executive moves
- David Lobo became the new interim president and CEO of The Ontario Cannabis Store, which distributes cannabis across Canada's most populated province. Lobo replaces Thomas Haig.
- TerrAscend CEO Jason Ackerman will be replaced on an interim basis by board chairman Jason Wild while the company searches for a full-time replacement. Wild said on Twitter that Ackerman was fired.
- Jeffrey Lashar, formerly of West Marine and Crocs, will be taking over as CFO of Grow Generation following Monty Lamirato's retirement.
- Louie Reformina was promoted to CFO of Turning Point Brands, a cannabis accessories company that owns Zig-Zag, among other notable brands.
- The US Cannabis Council, an industry trade group, appointed a board of directors including Dr. Rachel Knox, a cannabis medicine specialist, among other notable names.
Deals, launches, and IPOs
- Psychedelics company Mydecine began trading on the NEO Exchange on Tuesday, after migrating from the Canadian Securities Exchange.
- Greenrose Acquisition Corp, a cannabis SPAC, is acquiring four cannabis companies, including Shango Holdings and Theraplant, for a total of $210 million.
- Cannabis fintech startup Leaf Trade closed a $5.5 million Series A funding round led by Artemis Growth Partners.
- High Tide Holdings is acquiring cannabis e-commerce company Smoke Cartel for $8 million in stock.
Policy moves
- New York lawmakers reached a deal to legalize adult-use cannabis in the state. A vote is expected next week. The details of the bill are not yet public, but the New York Times and other media outlets are reporting that "consumption lounges" and home grow would be permitted.
- New Mexico Governor Michelle Lujan Grisham announced that she plans to hold a special session to pass cannabis at the end of this month after plans to pass adult-use stalled during the regular legislative session.
- A Connecticut House Committee approved a bill to legalize marijuana. State lawmakers are working to reconcile the bill with Gov. Ned Lamont's plan, which differs in key areas like growing cannabis at home and social equity provisions, among others.
- In response to a question about why some White House staffers lost their jobs for past cannabis use, White House press secretary Jen Psaki told reporters that the outcome was a result of working with the security service and pointed out that the substance was "still illegal federally." A group of 30 lawmakers, including Rep. Earl Blumenauer and Rep. Barbara Lee signed a letter encouraging the Biden Administration to overhaul its practices, The Daily Beast reports.
- New York mayoral candidate and former Citigroup executive Ray McGuire released a comprehensive cannabis plan for the city, the first mayoral candidate to do so. The plan will prioritize job creation and capital investment for minorities and others who have been historically affected by prohibition.
- The Last Prisoner Project and The National Association of Criminal Defense Lawyers are launching the Cannabis Justice Initiative, in order to help those convicted with marijuana-related charges clear their records.
Earnings Roundup
- Trulieve released its Q4 results on Tuesday, reporting $168.4 million in revenue and $3 million in net income, as well as $521.5 million in revenue for the full year. The company guided to $815-$850 million in revenue for 2021.
- TerrAscend released its Q4 results on Tuesday, reporting C$65.3 million in net sales and a C$109.3 million net loss, as well as C$198 million in revenue for the full year. The company guided to $290 million in revenue for 2021.
- Charlotte's Web released its Q4 results on Thursday, reporting $26.9 million in revenue and a $14.7 million net loss.
- Cresco Labs released its Q4 results on Thursday, reporting $162.3 million in revenue and a $23.4 million net loss, as well as $476.3 million in revenue for the full year.
- GrowGeneration released its Q4 results on Thursday, reporting $62 million in revenue for the quarter and $5.3 million in net income for the year. The company guided to $415-$430 million in revenue for 2021.
Chart of the week
Black and Hispanic New Yorkers were disproportionately arrested for cannabis in New York City over the past decade, according to a report by the Drug Policy Alliance and CUNY's Public Science Project at the Graduate Center. Between 2010-2020, half of all cannabis-related arrestees were Black and around 35% were Hispanic.
What we're reading
Banks happy to let cardholders buy weed online, lawyers say (American Banker)
Lighting up later in life (The New York Times)
The losing fight to keep marijuana smokers out of government (The Washington Post)
Japan's Pot Laws Are Harsh, But Its Pensioners Invest in Growers (Bloomberg)
How cannabis companies can vet celebrity partnerships, avoid embarrassing pitfalls (Marijuana Business Daily)