Here on the Marijuana Minute, you will find the top stories from around the industry in this week’s Cannabis Industry News Recap for the week of April 15th – 21st, 2019.
Pot Sales Fell in February as Producers Hoard Supply Ahead of Edibles Launch
Canadian sales of dried cannabis flower in February declined to the lowest level since legalization, as producers continued to stock up on marijuana ahead of the launch of edibles later this year, according to Health Canada.
Canadians bought 6,671 kilograms of cannabis in February, down about nine percent from the prior month, and the lowest amount since the last two weeks in October when 6,415 kilograms were sold, according to data released by Health Canada late Wednesday.
Toronto’s Third Legal Cannabis Store Opens This Week
Nova Cannabis will be the third legal cannabis retailer to open in Toronto. The Alberta-based weed brand has definitely missed the April 1 opening deadline (as did most retailers across Ontario) but it looks like its first Toronto location is gearing up to launch this week. The store finally received its license from the AGCO on Saturday, and the exterior of its 3,000-square-foot store at 499 Queen Street West (in the old American Apparel building) appears ready to go. The official opening will be this Saturday (that’s 4/20) at 9:00 a.m.
Cannabis Companies say They are Growing Enough Pot, They Just Can’t Deliver it
One pesky stamp has become the symbol of a continuing problem in Canada: Pot producers struggling to get enough cannabis to market, at least in the ways that buyers want it.
Pot producers had to scramble to apply the required excise-tax stamps with no glue as legalization kicked off last October, and many are still having to apply them by hand to some packages months later as supply issues continue. While Organigram (TSXV: OGI) (OTCQX: OGRMF) has figured out how to automate its production of some products, the Moncton, New Brunswick-based company still must manually apply the tax stamps onto its raw-marijuana containers, Chief Executive Greg Engel told MarketWatch in an interview Monday.
Pot Sales Expected to Double on Special Day
Cannabis retailers should prepare themselves for a minimum doubling of sales on April 20, the stoner’s Fourth of July, according to new data. The origins of 4/20 are obscure, but the most common story is about a group of 1970s high-school students who’d meet outside their school at 4:20 p.m. to search for a legendary abandoned marijuana crop (which, needless to say, they never found). Whatever its source, 4/20 has become the busiest cannabis sales day of the year, according to data provider Headset Inc.
It was the industry’s single biggest day of sales in 2018, with sales up 111 percent compared with the four Fridays before and after the holiday, according to Headset, which compiled sales data from Washington state, California, Nevada, and Colorado.
Ontario Opens Agricultural Grants to Cannabis Cultivators
Dozens of cost-sharing grants offered by the province of Ontario and Canada’s federal government are now available for licensed cannabis cultivators. The funding is provided in part through the Canadian Agricultural Partnership – a 3 billion Canadian dollar ($2.2 billion) initiative that supports agricultural businesses of all kinds across the country. Fifty-six separate cost-sharing programs for producers are available in Ontario.
“As far as eligibility for cannabis producers and processors, they are eligible for program funding under the same rules as any other project: It must be legal and the project must meet merits and outcomes of project categories,” said Dave McLeod, project analyst with the Ontario Ministry of Agriculture.
Pot Prices Higher Than Ever After Legalization
Numbers released this week by Statistics Canada say cannabis prices have risen an average of 17 percent since last October. In Nova Scotia, the average price — legal or black market — went from $7.29 to $8.73 per gram, up 19.7 percent.
The biggest change was in New Brunswick, up an average of 30.5 percent, while the lowest change was in British Columbia, with an increase of just 3.7 percent. The numbers are based on consumer submissions to Statistics Canada since legalization. Halifax marijuana advocate Melanie Stephen says she’s not surprised, given the way the government chose to roll out legalization.
“It was done so hastily, without any thought,” Stephen tells NEWS 95.7’s The Todd Veinotte Show.
Baby Boomers Enticed by Legal Cannabis Market, Can Afford to Pay More for Pot
Cindi Phelps never imagined herself running a pot shop. She smoked weed as a teenager, but as an adult she says she became “cranky” about cannabis, endlessly lecturing her kids and judging everyone who touched the stuff.
It was only when she neared 50 that she realized marijuana could soothe her pain from a chronic health issue. Now that she manages the Tamarack Cannabis Boutique in Kimberley, B.C., Phelps can relate to customers who are nervous about trying pot for the first time in decades – or ever.
Georgia Lifts Ban on Commercial Medical Marijuana Production
Georgia Gov. Brian Kemp has opened the state to commercial medical cannabis cultivation, signing a bill to create new business opportunities in the Peach State’s limited MMJ program.
The measure outlines the first opportunities for private businesses to grow and sell cannabis. Georgia launched its limited MMJ program in 2015, though the cultivation, manufacture or sale of THC products was not permitted.
The new law keeps Georgia’s THC cap at 5% but allows for six growing licenses to be granted to private companies – two for larger organizations and four for smaller businesses.
Alabama Lawmakers Unanimously Approve Marijuana Decriminalization In Committee Vote
An Alabama Senate committee unanimously approved a bill on Wednesday that would decriminalize possession of small amounts of marijuana. In an 11-0 vote, the Senate Judiciary Committee advanced the legislation, which will now head to a full Senate vote. The same committee passed a similar bill last year in a narrower 6-4 vote, though a related proposal was defeated by a House panel. The legislation would revise penalties for possession of varying amounts of cannabis.
People caught with one ounce or less would be punished by a $250 fine for the first two offenses and a $500 fine for subsequent offenses. Possession of more than an ounce but less than two ounces would be considered a class A misdemeanor. And possession of more than two ounces would be a class C felony, punishable by up to 10 years in prison.
Here’s How Much Marijuana Businesses Pay in Taxes
Although marijuana is illegal under federal law, cannabis businesses in the United States still pay federal taxes on gross income. They are not allowed any deductions or credits for business expenses, by law, which can mean an effective federal tax rate as high as 90%. The US government collected an estimated $4.7 billion in taxes from cannabis companies in 2017 on nearly $13 billion in revenue. Unlike most American businesses, which pay electronically or by check, most of these marijuana firms are unbanked and were forced to pay their federal taxes in cash, something the IRS is still trying to get a handle on.
At the state level, marijuana for non-medicinal adult use is legal in nine states and taxable in seven, which also impose costs on each sale:
State Financial Regulators Press Congress To Allow Marijuana Banking Access
The top financial regulators in 25 states and U.S. territories are joining together to pressure Congress to pass legislation allowing marijuana businesses to store their profits in banks.
“It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space. The looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties is not conducive to a legal, regulated marketplace,” the officials wrote to House and Senate Democratic and Republican leaders in a letter on Monday.
Congressional Democrats Hold First-Ever Marijuana Reform Panel At Policy Retreat
For the first time, congressional Democrats held a policy retreat that featured a panel dedicated entirely to marijuana reform and the need to repair the harms of the war on drugs.
The panel at House Democrats’ gathering took place last Thursday morning, with reform advocates sharing their perspective on cannabis legislation moving through Congress and discussing not just why legalization is important but emphasizing how a legal cannabis system should be implemented. That marijuana should be legalized seemed to be accepted as a foregone conclusion at the event, which attracted no opponents and contained no discussion of whether to end prohibition. Instead, conversations centered on how to shape the legal industry.
Marijuana Legalization is Very Popular
The three major national polls in America are increasingly converging on one point: Marijuana legalization is very popular in the US. The latest finding, from the recently released General Social Survey by NORC at the University of Chicago, shows that 61 percent of people supported marijuana legalization in 2018. That’s up from 57 percent in 2016 and 31 percent in 2000 — a rapid shift in public opinion in less than two decades.
The other two big national surveys on the topic have found similar results. Gallup put support for marijuana legalization at 66 percent in 2018, up from 60 percent in 2016 and 31 percent in 2000. Pew put it at 62 percent in 2018, up from 57 percent in 2016 and 31 percent in 2000.
Chart of the Week: Colorado 4/20 Sales Spike Higher Than Other Recreational Cannabis Markets
Despite competing with newer adult-use marijuana markets in other states that also attract swarms of tourists, Colorado’s established recreational cannabis business arena remains a steady retail sales leader on April 20 – the unofficial marijuana holiday known as 4/20.
According to data provided by Flowhub, a Denver-based marijuana software company, and Headset, a Seattle-based cannabis analytics firm:
- Retail cannabis sales in Colorado on Friday, April 20, 2018, hit $9.1 million – 128% higher than the average Friday (compared to the four Fridays before the holiday and the four Fridays after).
- 4/20 sales spiked higher in Colorado than in other adult-use states that legalized recreational use after the Centennial State, including California (103%), Nevada (106%) and Washington (97%).
- Flower – including bud, pre-rolls and shake – dominated Colorado sales, making up 60.5% of products sold on April 20, 2018. Concentrates accounted for 27% of sales with edibles at nearly 10%.
Legal Weed Remains Stalled in N.J. as Politicians Don’t Know How to Solve This Big Issue
As New Jersey’s leaders aim to pass a bill by the end of next month to legalize marijuana in the state, they’re grappling with a damned-if-they-do, damned-if-they-don’t dilemma that’s threatening their efforts.
After more than a year of debate and wrangling, Gov. Phil Murphy and his fellow top Democrats remain a few votes short of the number they need to pass the measure — a cornerstone of Murphy’s agenda — in the state Legislature. A big impediment to closing the gap is a provision that would clear the record of any resident who had been convicted of possessing between up to 5 pounds of weed.
Inability To Ship Across State Lines Hurts Cannabis Businesses, Especially Small Operators
One of the defining challenges of the cannabis industry to date has been the inability of businesses to move products across state lines. Because cannabis remains illegal at the federal level, state-licensed cannabis businesses must cultivate, produce, and sell their products all within the confines of the state in which they are licensed. Nothing can cross state lines, even if the business is licensed in two contiguous states. One state is trying to change that, but it’s doubtful that effort will gain traction.
While this situation is extremely burdensome on all cannabis businesses, it’s especially problematic for the small mom-and-pop operators who are not well capitalized and don’t have access to traditional banking services. As I’ve written about in previous columns, regulatory hurdles in the cannabis industry benefit wealthy entrepreneurs over small mom-and-pop operators.
Euro Stakeholders Take a Stand in Germany Over ‘Novel Foods’
Hemp food stakeholders in Europe have taken a stand over hemp extracts in Germany after that country’s Federal Office of Consumer Protection and Food Safety (BVL) last month declared CBD may not be sold in food.
Calling the declaration, published March 20 on BVL’s web site, “strange and incomprehensible,” the European Industrial Hemp Association (EIHA), rebutted the ruling in a sharp and detailed 10-page letter April 11.
“Consumer and employees of (EIHA) members… are confused. Some (EIHA) members… that legally produce and/or sell CBD-containing cannabis products for consumption are quasi-publicly classified in a sort of ‘illegal industry’ and discriminated against,” the letter said.
Aphria, Wayland Face Challenge over German Marijuana Cultivation Contracts
Germany’s efforts to get domestic medical cannabis cultivation up and running took another step forward Wednesday, as the German Federal Institute for Drugs and Medical Devices (BfArM) confirmed the winners of nine of the 13 available lots for the first round. Four of the lots – granted to Aphria and Demecan in the preliminary results – were challenged by an unsuccessful applicant, according to a BfArM news release.
Graham Farrell, vice president of communications for Wayland Group – a joint venture partner with Demecan – downplayed the challenge.
What Countries are Supplying the UK with Medical Marijuana?
In the last 20 years, Britain has become the world’s largest legal producer and exporter of medical marijuana – yet remains one of the most anti-cannabis countries in the world. Confused? Well, there’s no time to waste! As British red tape around cannabis regulation begins to loosen, this could be the dawning of a lucrative new industry that savvy investors need to be aware of.
Since November 2018, medicinal cannabis products have been legalised for prescription in the UK by specialist doctors in a limited number of circumstances. Currently illegal to possess, grow, distribute or sell for recreational purposes, marijuana is defined as a Class B drug with a maximum penalty of five years in prison for possession plus an unlimited fine or up to 14 years in prison for unlicensed dealing, unlicensed production, and unlicensed trafficking, an unlimited fine, or both. Simplified, current UK laws on cannabis state that:
Why Sweden’s Government Bought Aurora Cannabis and Canopy Growth Stock
On average, more than 32 million shares of Aurora Cannabis (TSX: ACB) (NYSE: ACB) are traded on the New York Stock Exchange (NYSE). For Canopy Growth (TSX: WEED) (NYSE: CGC), the average trading volume is much lower — around 8 million shares. There’s no way to know who’s doing all this buying and selling of these top Canadian marijuana stocks. But we do know who at least one buyer was last year.
Sweden’s government-run AP7 pension fund first bought shares in Aurora and Canopy Growth in 2018, according to Swedish business magazine Affärsvärlden. The AP7 pension fund initially invested 63 million Swedish kronor, with the valuation since then soaring to 100 million Swedish kronor this spring, according to a report from Sweden’s public television broadcaster, SVT News.
Why is this Swedish government pension fund investing in pot? And why Aurora Cannabis and Canopy Growth? There’s a simple explanation.
Brazilian Cannabis Import Authorizations top 1,000 in the First Quarter of 2019
Brazilian authorities continued to approve permits to import medical cannabis at an increasing rate through the first quarter of 2019.
According to data provided to Marijuana Business Daily, Brazil’s National Sanitary Surveillance Agency (ANVISA) granted 884 new authorizations and 170 renewals during the first quarter of 2019 – more than one-third of all the authorizations that were handed out in 2018. Medical marijuana patients in Brazil must apply to ANVISA for individual permits, which have a maximum validity of a year but can be renewed.
Australia’s First Ever Crop of Taxpayer-Funded Pot: Historic Medical Marijuana Greenhouse Opens in Sydney
Australia’s first ever tax-payer funded medical marijuana greenhouse has opened in Sydney. The Federal Government relaxed medical cannabis restrictions in March 2018, paving the way for the greenhouse’s creation.
The medical marijuana grown by the NSW state government and will be used to treat those with severe medical conditions such as cancer and epilepsy.
The medical marijuana grown in the greenhouse will be used to treat those with severe medical conditions such as cancer and epilepsy. The greenhouse is currently in the research stage but once plants can be consistently grown with the same properties, they will be available for purchase.
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