Business
Psychedelics Industry Full-Steam Ahead, While Cannabis Sputters — Here’s Why
The psychedelics industry continues to attract investors with huge bankrolls, as psychedelics decriminalization efforts continue across the US, and broader psychedelics legalization efforts pick up speed.
Psychedelics companies look to be solidly on the rise this year without the need for any figure-finagling, fancy-dancing sleight of hand. The same can’t be said for the cannabis industry, which appears to be in the midst of a reset.
While both industries face limitations, it’s beginning to look like the psychedelics industry is stepping up to mainstream acceptance faster than cannabis did in its early days. Psychedelics is staying true to its medical roots, as it plays up how it can profoundly help treat mental health conditions. On the other hand, cannabis’ attention seems divided between medical and recreational use, with the goal of just achieving a high seeming to take priority.
According to Politico, most cannabis companies continue to hemorrhage red ink nearly a decade after Colorado and Washington became the first states to establish legal markets for anyone at least 21 years old. An analysis of financial filings from two dozen of the largest publicly traded U.S. operators shows that they collectively lost more than $550 million in the first six months of 2022 on revenues of nearly $4.5 billion.
The Politico report also noted that cannabis companies spent heavily last year to expand capacity due to misguided optimism about the prospects for loosening federal marijuana restrictions after Democrats won control of Congress and the White House. That led to a glut of product and plunging prices in many of the largest state markets, such as California, Colorado, Massachusetts, and Michigan.
The cannabis industry is facing some of the same setbacks that any maturing emerging industry faces, such as hostile takeovers (Agrify), critical political issues related to who controls and regulates the market, and a growing list of lawsuits.
Plus, there’s the cannabis black market, which continues to be a force to reckoned with, especially in California. In 2019, estimates place illicit cannabis market sales at around $8.7 billion in that state, while the legal cannabis market reported sales of around $3.1 billion that year, according to Statista.
Meanwhile, the psychedelics industry continues to attract investors with huge bankrolls, as psychedelics decriminalization efforts continue across the U.S., and broader psychedelics legalization efforts pick up speed in states like Colorado (Colorado Proposition 122 is on the ballot today), which could propel an even faster growth.
The U.S. government appears to be all in, adding fuel to the psychedelics development fire. For example, the U.S. Defense Advanced Research Project Agency (DARPA) in June 2020, gave the University of North Carolina and Dr. Bryan L. Roth (with the UNC Eshelman School of Pharmacy) a grant of nearly $27 million to create better medicines for treating mental illness using psychedelics and other psychoactive molecules. The work will capitalize on the UNC research already underway to develop new techniques to fully understand how drugs might affect signal processes inside cells to create drugs that are more effective.
The National Institutes of Health, which essentially ignored psychedelics from 2006-2020, jumped in to help in October 2021 with a $4 million grant (funded by NIH’s National Institute on Drug Abuse) to Johns Hopkins to study psilocybin and tobacco addiction.
The global psychedelic drugs market is expected to gain market growth in the forecast period of 2022-2029. Data Bridge Market Research analyses that the market is growing 13.3% in the forecast period of 2022 to 2029 and is expected to reach $6.5 billion by 2029 from $2.4 billion in 2021.
There are other examples of government and industry turning their efforts toward building the psychedelics industry as the cannabis industry struggles, but much will be ironed out over the next two years, as a string of advancing psychedelics clinical trials could quickly lead to FDA approval and drug development by late 2024. As with most things psychedelic, time will tell.
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/
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.”
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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