Business
US, Canadian marijuana stocks surge, decline after Biden announcement
Shares of publicly traded cannabis companies surged late Thursday and then declined Friday morning after U.S. President Joe Biden’s surprise announcement that he would direct the government to review the federal drug scheduling of marijuana and issue pardons for federal MJ-possession offenses.
The cannabis stock rally included exchange-traded funds that track the regulated cannabis industry.
The AdvisorShares Pure US Cannabis ETF was up about 34% in less than an hour on Thursday, Bloomberg News reported.
The ETFMG Alternative Harvest ETF was up Thursday by almost 20%, according to Reuters.
Both ETFs had given up some of their Thursday gains by Friday morning.
Shares of many U.S. multistate marijuana operators and ancillary companies – including Columbia Care, Cresco Labs, Curaleaf Holdings, Green Thumb Industries, Verano Holdings and WM Technology – mostly followed a similar pattern, shooting up late Thursday after the White House announcement.
The shares then declined to varying degrees during the first half of Friday trading.
A number of major publicly traded Canadian cannabis companies also experienced major share-price gains late Thursday followed by significant declines Friday, including Canopy Growth Corp., Cronos Group, Sundial Growers and Tilray Brands.
Despite cannabis investors’ exuberance after Biden’s unexpected announcement, analysts warned that the president’s plan to review marijuana’s drug scheduling status would be lengthy and complex.
The process could also be “prone to various political influences,” Tamy Chen, cannabis equity analyst for Toronto-headquartered BMO Capital Markets, wrote in a Friday morning research note.
Still, analysts believe Biden’s announcement could bode well for the passage of the Safe Banking Act.
Pablo Zuanic, managing director at New York-based investment banking firm Cantor Fitzgerald, noted that the president’s federal pardons plan “begins the process of ‘restorative justice,’ called for by members of Congress like Sen. (Cory) Booker.”
On the other hand, Viven Azer, an analyst for New York-based Cowen, wrote that Biden’s move “could deprive cannabis advocates of the momentum they need to pass the SAFE Act.”
Although Biden’s Thursday announcement is “a positive development and shift in posture,” Azer wrote Friday, it “is largely symbolic and does not explicitly offer any near-term catalysts for (cannabis) equity valuations.”
U.S. cannabis share valuations “have been largely depressed because of its Schedule 1 status,” Owen Bennett, a cannabis equity analyst for New York-based investment bank Jefferies Group, wrote on Thursday.
“As a result, major exchanges won’t list these names and the vast majority of institutions won’t invest due to fear of federal prosecution.”
However, rescheduling marijuana and other developments could lead to cannabis equity “uplistings and a significant inflow of new institutional capital,” Bennet added.
Meanwhile, the spike in cannabis share prices poses a potential risk to the industry, Andrew Carter, Christopher Growe and Matthew Smith, analysts for St. Louis-based investment research firm Stifel GMP, warned on Friday.
“Regardless of the long-term implications, the near-term outperformance (of cannabis stocks) could facilitate continued irrational investment that has plagued the sector with the consequences of the late 2020/early 2021 surge manifesting in oversupply and saturation across the value chain in North America,” they wrote.
Solomon Israel can be reached at solomon.israel@mjbizdaily.com.
Source: https://mjbizdaily.com/us-canadian-marijuana-stocks-surge-decline-after-biden-announcement/
Business
New Mexico cannabis operator fined, loses license for alleged BioTrack fraud
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Business
Marijuana companies suing US attorney general in federal prohibition challenge
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Business
Alabama to make another attempt Dec. 1 to award medical cannabis licenses
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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