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Fewer research analysts covering cannabis underscores industry woes

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Cannabis industry earnings calls have been a little quieter this year.

Fewer research analysts are covering the U.S. marijuana industry, which experts say reflects the challenging economic headwinds facing the industry, including high taxes, high interest rates, rock-bottom stock prices and the slow pace of federal MJ reform.

New York-based Cantor Fitzgerald and Cowen are among the more notable financial-services firms that have dropped coverage of U.S. plant-touching cannabis companies.

“It speaks to the unhealthy state of our industry,” Jesse Redmond, the managing director of the cannabis sector and head of research at Florida-based Water Tower Research, told MJBizDaily.

U.S. cannabis stocks have taken a beating in the past 18 months.

The AdvisorShares Pure US Cannabis ETF – which tracks major U.S. marijuana stocks under the symbol MSOS – has fallen to just over $5 from a high of more than $56 in February 2021.

In addition, cannabis companies are increasingly turning to debt financing rather than equity raises, which means there’s a smaller audience for research.

Low share prices and fewer mergers and acquisitions, initial public offerings and other types of banking activities mean there’s less revenue to fund research, Redmond said.

“Without that activity, there aren’t the revenues to justify paying the person to write the research,” he said.

The recent shake-up includes:

  • New York-based Cantor Fitzgerald, which has stopped covering all U.S. marijuana companies except for WM Technology, which operates the Weedmaps platform, after the departure of analyst Pablo Zuanic.
  • New York-based Cowen, which was recently acquired by Canada-based TD Bank, is no longer covering U.S. cannabis companies. But analyst Vivien Azer will include the industry’s larger trends as part of her beverages, tobacco and cannabis portfolio.
  • Jon DeCourcey, a former analyst covering the cannabis industry, is no longer with financial services firm BTIG, which specializes in investment banking, institutional trading and research. He is now head of investor relations at Florida-based multistate cannabis operator Ayr Wellness, according to DeCourcey’s LinkedIn profile.

Neither Cantor Fitzgerald, Cowen nor BTIG responded to requests from MJBizDaily for comment.

Many other financial-services firms are still providing coverage of U.S. plant-touching companies, such as Florida-based Water Tower Research, New York-based capital markets company Viridian Capital Advisors, Toronto-based Echelon Wealth Partners and Vancouver, British Columbia-based Canaccord Genuity.

Analysts have been ‘a little too optimistic’

When Cowen became the first big financial-services firm to initiate coverage in 2019, investors said it lent legitimacy to the burgeoning industry.

Back in 2019, both operators and service providers were optimistic that federal legalization and/or the SAFE Banking Act would be passed in Congress.

Industry officials also were increasingly hopeful that big institutional investors would take an active interest in the U.S. cannabis industry – a move that could have provided key funding to companies.

But none of that has happened.

Instead, retail investors still make up the bulk of investment in U.S. cannabis, Water Tower’s Redmond said.

And retail investors can often access research only if they pay for it or are clients of the financial-services firm producing it.

That optimism might have also bled into analyst research.

“We’ve all been a little bit too optimistic,” Redmond said.

Between price targets and predicting the passage of SAFE Banking, many analysts through the second half of 2022 underestimated the impact of factors such as high interest rates, falling wholesale cannabis prices and high taxes.

“I think that even the ones that were doing the research and getting it out, maybe it wasn’t that helpful for people,” Redmond said.

Cannabis ‘not ready for prime time’

But the industry has other issues in addition to overly optimistic forecasting from analysts and slow movement on federal cannabis reform, Matt Karnes, founder of New York-based cannabis financial consultancy Greenwave Advisors and a former sell-side and buy-side analyst, told MJBizDaily.

Plenty of cannabis companies are still finding their footing, he said, pivoting out of oversaturated legal markets and looking for promising paths to profitability.

Another sign of the industry’s immaturity?

A disproportionate number of cannabis companies have restated their financial results, he said, showing that the industry is still mastering the accounting intricacies of the sector.

“You make your investment based on what comes out on a quarterly report,” Karnes said.

“And then two quarters later – oops! How is that supposed to give any investor confidence?”

With fewer analysts covering cannabis, Karnes said, it could contribute on a small level to the enormous difficulties U.S. plant-touching companies are having attracting investment in the industry.

But, he noted, there are still analysts covering U.S. plant-touching operators, such as Matt Bottomley at Canaccord Genuity and Andrew Semple at Echelon Wealth Partners.

“It’s a slight incremental negative,” he said of the impact on raising capital.

“But I don’t think the industry was necessarily ready for prime time.”

Source: https://mjbizdaily.com/fewer-research-analysts-covering-cannabis-underscores-industry-woes/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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