With most state legislatures finishing their 2019 sessions with little to show cannabis-wise (except for Illinois), we naively thought the pace of cannabis news updates would slow down. But no sir!!
1. The Big Boom! Boom!
How else to describe the surprising cashiering of Bruce Linton as co-CEO of Canopy Growth, the world’s largest cannabis company? Linton was everywhere in the media and in the public mind as THE cannabis person of influence.
But that was before disappointing financial results induced the Canopy Growth board of directors to suddenly fire Linton. The board is dominated by Constellation Brands, the US Fortune 500 company best known for Corona and Modelo beer and which invested $4bln (US) into Canopy Growth last year.
Mark Zekulin, Linton’s co-CEO, will also resign after a new CEO is hired, making a clean break from prior management.
Linton and Zekulin co-founded Canopy Growth with the conversion of an abandoned Hershey’s chocolate factory in Smith Falls, Canada, in 2013, and they have been utterly unstoppable … until now.
Linton appeared to be building for the long term, with the hope of leading the creation of a stable, ethical international cannabis industry structure from scratch. Constellation Brands perhaps disagreed with the execution of this vision.
The Motley Fool article we embedded in our May 29th update, seems prescient now.
See our caption: “Do You Beat ‘Em Or Do You Join ‘Em.” The article describes the strategic positioning of the major cannabis players, and the risks inherent to each strategy. See the article again here
That was less than 2 months ago, and the Canopy Growth risk has already been realized, that is, a start-up which chooses to take in gobs of investment cash risks the loss of its unique voice.
2. New Jersey. Who knew that New Jersey would play second fiddle in this update?
In more cannabis news updates, with the recent defeat of recreational-use cannabis, New Jersey initially sought an expansion of its medical marijuana program. It announced in early June, 2019, that it would consider up to 108 licensed marijuana companies in the state. There are now only 6 licensed cannabis firms open for operation in the state and an “RFA” was announced (“Request For Applications”) in pursuit of this policy.
But this RFA was quickly withdrawn. New Jersey was re-thinking its ambitions.
On July 1, 2019, a revised RFA was announced and that RFA is linked here:
Plans have been scaled back so that only 24 additional establishments will be authorized, 15 of which will be dispensaries, all of which will be balanced geographically throughout the state. Applications will be available on or before July 15 and must be submitted by August 21/22, depending on the type of license and operation. See the above link for further information.
3. The State of CBD.
Since the passage of the United States 2018 Farm Bill, a CBD product containing .3% or less in THC content is no longer a Schedule 1 drug under the Controlled Substances Act. So, no more federal prison for mere possession. But can you sell it?
That’s where things get really confusing. The US Food and Drug Administration currently forbids the sale of ingestible CBD, even as the FDA concedes that it has few resources to control explosive edibles growth. The FDA is extending to July 16, 2019, the time to take public comment in connection with its creation of a national CBD usage and marketing regulatory regimen.
But the FDA’s delay in establishing this regimen is inducing states to jump into the vacuum. See the article in Hemp Industry Daily here
Some local jurisdictions permit edibles. Some do not.
The New York City Health Department has banned the sale of CBD infused food and beverage products as of July 1, 2019, with fines of between $200-$650 kicking in on October 1. (Parenthetically, under the Farm Bill, the US Dept. of Agriculture and the states are supposed to coordinate the regulation of non-edible CBD and hemp products. The USDA has announced that it will complete an “Interim Final Rule” for hemp production by August 2019.)
News from retailers
Confusion aside, we’ve previously described how CVS, Walgreens and Kroger will sell CBD products in their stores, mostly in the nature of beauty and skin products.
CNBC now reports that Green Growth Brands will be selling CBD products in its stores, and intends to become a pervasive presence in malls across the United States, including Roosevelt Field Mall in Nassau County, New York. See the article here
And just in time too.
Mall owners across the country are facing extraordinary store closures by renowned brands, such as The Gap, Charlotte Russe, Pier 1, etc. CBD is projected to become a $22bln business by 2022, and most consumers want to see and touch the product in person before they buy. CBD is the perfect antidote for anxious brick and mortar mall owners – and the surrounding communities they support.
4. Short Takes
- Massachusetts reports that after 6 full months of recreational use, aggregate sales are just under $140mm, and that result is even more the remarkable because of the very slow roll-out in that state.
- California, in attacking the illegal cannabis market, seized 20 tons of illicit plants over the course of 4-day raid in Buellton, about 140 miles north of Los Angeles.
- Perhaps as a sign of a mature market in California, cannabis retailers are charging producers for shelf placement. See the Marijuana Business Daily here
- It looks like edibles will finally be allowed in Canada as of October 17, 2019, but product will not likely be available until mid-December.
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