PENNSYLVANIA TO THE POLLS
Between slowing patient growth and falling prices, PA has been a headwind for many operators in the state, but the sentiment could change on Tuesday.
The primary in Pennsylvania is upon us, and cannabis is a hot issue but not as a ballot measure. In the Democratic Senate primary, Pennsylvania Lt. Gov. John Fetterman and Rep. Conor Lamb have different track records on the issue. Fetterman is a big supporter of cannabis, so much so that he sells a “Legal Weed for PA” t-shirt on his campaign website. Lamb, meanwhile, is a newly-minted supporter. He voted for a federal cannabis decriminalization bill in the House last month after previously voting “no” on the legislation in the last Congress. Fetterman has said that he’ll make federal cannabis legalization a significant priority if he makes it to the Senate. Lamb has not made similar promises. More importantly, for Senate Majority Leader Chuck Schumer, chances of getting a legalization bill through his chamber are that this Pennsylvania seat is one of the Democrats’ best chances to flip. If the Democratic nominee can beat out the Republican nominee for Sen. Pat Toomey’s seat, it may help Dems keep hold of the Senate. The primary is tomorrow, and Fetterman has been polling at least 30 points above Lamb.
HOW WILL SAFE BANKING HELP?
The most asked question at Hedgeye LIVE was about SAFE and its impact on the industry.
The truth is that SAFE itself may not change much, but it will be a catalyst for further change. SAFE may not change anything about how the American banking system approaches the cannabis industry. “While passing the SAFE Act would help, probably a great deal, I don't think it's the panacea that many people think it's going to be,” said Camden Fine, former president and CEO of the Independent Community Bankers of America. “I don't think it would just open up the floodgates of banks doing business with legalized cannabis businesses.” The primary reason is that cannabis is still federally illegal. While SAFE gives banks more protection from federal interference, it can’t remove all possible ways that federal regulators could make business difficult for a bank that chooses to serve the cannabis industry if they choose to. It does not do much for minority businesses, as the problems facing minority businesses are more significant than simply the fact that cannabis is illegal. Minority businesses already face more significant hurdles in getting venture capital and bank loans in the United States, and SAFE would not change that. Most banks want to see a track record of business ownership, and for many with past criminal records, that type of business ownership was never possible. Even banks that want to make their standards more flexible for cannabis businesses will have to meet federal underwriting standards, and if someone doesn’t meet federal standards, the banks will not extend a loan. If the SAFE Act passes, it's better for the minority businesses than not passing, but not a lot will change.
If SAFE passes and the Financial Crimes Enforcement Network (FinCEN) can update Cannabis regulations, we can begin to get a real sentiment change around cannabis industry stocks.
AYRWF is a LONG, and this was an essential milestone for AYRWF - NJ approval should come in a week!
Last week, Ayr Wellness announced that the Massachusetts Cannabis Control Commission had granted a final license to sell adult-use cannabis at its AYR Back Bay dispensary in Boston. The Boston dispensary executed a Host Community agreement with the City of Boston's Cannabis board in November 2020. The company executed two additional HCAs in the Greater Boston area in October 2020 -- one in Watertown and a second in Somerville, where the company currently operates a medical dispensary. Ayr will continue to work closely with the CCC to move toward final approval to commence adult-use operations at all three locations.
