Weekend Update
Snippets from the week that was.
The following is a sampling of Cannabis Confidential of last week.
Dawn of the Dead
Five upcoming catalysts could awake the space.
Cannabis Wire reports that cannabis banking reform attracted more congressional lobbying attention than any other cannabis legislation. Several entities listed SAFER Banking on their lobbying disclosures for Q323, including Bank of America, Mastercard, the NRA, CBOE, GlaxoSmithKline and The International Association Of Machinists And Aerospace Workers.
A new survey of Ohio lawmakers suggests that a majority—54%—believe voters will approve a ballot initiative on November 7th to legalize marijuana in the state, with a majority of both Democratic (63%) and Republican (52 %) lawmakers saying it will pass despite the GOP-controlled Senate passing a resolution urging voters to reject it.
“Things could change for banking reform if the DEA takes a recent suggestion made by the Department of Health and Human Services calling for marijuana to be reclassified as a Schedule III drug under the Controlled Substances Act. This would represent a critical shift from its Schedule I status, one of the main reasons why cannabis companies remain deprived of banking access.”
Extremely rare pot discovered 50 years ago is finally available in California
Holding Pattern
The D.C. dysfunction continues.
It remains to be seen who emerges from the world’s saddest reality show but with two wars raging and 24 days left until the government shuts down, the dysfunction we’ve witnessed is the exact opposite of the leadership needed to navigate the global crises.
Viridian on capital market activity: Illinois now leads all states in total capital raised at $385M, New York ranks second at $383M and California ranks third in total invested capital at $305M for the LTM period ended 10/20/2023.
Taking Stock of TerrAscend
Marijuana as medicine: Everything you need to know
Hairy Carrie
Ghosts of the past continue to haunt canna.
The U.S. House of Representatives saga came to an abrupt end today when Rep. Mike Johnson (R-LA) secured enough votes to grab the leadership gavel. While Johnson has long been a cannabis hawk, there’s still a few ways that SAFER Banking could emerge from the 118th Congress.
Separately, bipartisan House lawmakers refiled a bill to federally legalize marijuana, while taking steps to preserve existing state cannabis markets. Sponsored by Rep. Nancy Mace (R-SC), the States Reform Act was first introduced in 2021 as an option to a Democratic-led legalization proposal that cleared the House twice in recent years.
Yesterday, U.S. canna fans were quietly hoping that Rep. Tom Emmer (R-MN) would find enough support to grab the gavel in the House given he's a hard yes on SAFER Banking. His bid lasted all of four hours.
Today, we awoke to find Rep. Mike Johnson (R-LA) as the Speaker Designate, which would presumably not play as well for specter of SAFER Banking given the summary below, per Marijuana Moment:
Rep. Mike Johnson (R-LA)
Johnson, who serves as vice chair of the Republican conference, has consistently voted against cannabis-related legislation, including bills to safeguard banks that work with state-licensed marijuana businesses in 2019 and 2021.
He did, however, cosponsor a coronavirus relief bill in 2020 that included the text of the SAFE Banking Act—language that was vocally opposed by several of his GOP colleagues.
The congressman voted against a spending bill amendment to protect all state cannabis program from federal intervention in 2019, and then he did not vote on the measure in 2020. He also did not vote on legislation to federally legalize marijuana in 2020 and 2022.
Johnson voted against a bill to streamline cannabis research last year and did not participate in a vote on an amendment to prevent security clearance denials for people over past marijuana use alone
Two points to ponder:
1. We presume some horse-trades are made before any Speaker becomes Speaker and there are a lotta Reps from all sides of the GOP spectrum in favor of SAFER Banking.
2. Given how much time it took to clean up the House—and knowing there are higher priorities and 23 days until a shutdown—SAFER might transition to an amendment to be added to a must-pass bill, perhaps without ever seeing the House floor.
^ why timely passage through the Senate remains the near-term priority; once done, it will become part of the conversation among the Four Corners when that time arrives.
Order in the Court!
U.S cannabis sues the U.S. Government.
A coalition of major marijuana businesses represented by an influential law firm has filed a much-anticipated lawsuit against the U.S. attorney general, seeking to block the federal government from enforcing cannabis prohibition for state-legal activity.
“What was once a single-minded federal crusade against the cannabis plant has been replaced with an ambivalent set of inconsistent policies, some aimed at reducing federal interference with state efforts to regulate marijuana.”
The group is represented by the powerhouse law firm of David Boies, best known for high-profile litigation seeking the breakup of Microsoft, representing former Vice President Al Gore in the 2020 presidential election and defending disgraced movie mogul Harvey Weinstein.
The sector continues to trade trapped and headline dependent as patience continues to thin and buyers continue to strike. For those who have done their best to remain resolute in the face of adversity, the hit parade seemingly has no end.
We should have a better line-of-sight on SAFER w/in a few weeks and by this time next year, 280E should be a fart in the wind. Time will tell—therein lies the duration risk—but let’s remember some of these companies are already winning despite the status quo.
Aaron ‘Touch of’ Grey at AGP: SIII is factors more important than SAFER Banking…
…and his timing…
“A DEA Proposed Ruling Could Come Next Month to Early Next Year, Based on History.”
…syncs with the VIII Cap note that we recently highlighted. If they’re right, we are officially in the active zone for more red headlines.
Cape Fear
U.S canna retests the lows.
A bipartisan group of House lawmakers has called on on the DEA to pursue a “full descheduling” of marijuana, according to a letter obtained by Punchbowl News.
“The decision to schedule marijuana was rooted in stigma rather than an evidence-based process, and it is time to fully remedy this wrong. Moving marijuana to Schedule III would be an important step in the right direction, but it is not sufficient to correct the wrongs of federal prohibition or to meaningfully address the federal-state gap on cannabis policy.”
In an interview on Higher Exchanges last night, Joshua Schiller said the plaintiffs’ strategy in the lawsuit that was filed yesterday is to get their challenge to the U.S. Supreme Court within the next two years. In his own words,
“Since I started working with cannabis businesses maybe as long as seven years ago, the next big thing has been right around the corner: ‘Congress is about to’—fill in the blank,” Schiller said. “Our clients have decided we can still look around the corner and hope there’s a legislative solution, but let’s decide whether we can create a permanent change by getting to the courts.”
There’s another twist: In 2021, U.S. Supreme Court Justice Clarence Thomas, one of the most conservative justices on the bench, denounced the federal government’s inconsistent approach to marijuana policy and even suggested that outright national prohibition may be unconstitutional. Speaking about the 2005 case, he opined,
“the Federal Government’s current approach to marijuana bears little resemblance to the watertight nationwide prohibition that a closely divided Court found necessary to justify the Government’s blanket prohibition [in the previous case]. If the Government is now content to allow States to act ‘as laboratories’ ‘and try novel social and economic experiments,’ then it might no longer have authority to intrude [and] a prohibition on intrastate use or cultivation of marijuana may no longer be necessary.
A colleague shared that he checked a borrow and couldn’t locate any MSOS shares to borrow at one of the Street’s biggest primes:
Jefferies on the lawsuit:
Enjoy your weekend, be safe, hug a kid/ your pet and please enjoy responsibly.
/end
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CB1 has positions in / advises some of the companies mentioned and nothing contained herein should be considered advice.