Did Governor Gavin Newsom on Sunday Change the course of the Cannabis Industry?
Interstate commerce in legal cannabis took a giant step forward this week when California Governor Gavin Newsom signed a bill allowing the state to enter agreements with other states to regulate trade without waiting for federal legalization.
California Senate Bill 1326, authored by State Senator Anna Caballero, allows California to enter agreements with other adult use or medical states upon either an indication of tolerance from the U.S. Department of Justice or an opinion by the California Attorney General that doing so will not place the state in legal jeopardy. Add to that, on the other side of the country, at the other end of the traditional cannabis supply chain, New Jersey Senate President Nicholas Scutari, who championed adult-use legalization in the Garden State, has introduced S3012, his state's own interstate commerce bill.
The industry is capital-constrained, and cultivation takes time to build. New Jersey needs weed, and California/Oregon has plenty; how long will it take NJ to pass its own interstate commerce bill? I like 2023!
Some quotes on what the implications are:
"Every advance in legal cannabis has happened because states led the way, with the U.S. DOJ indicating its tolerance for state regulation of what was otherwise federally illegal," said Adam J. Smith, president of the Alliance for Sensible Markets, who wrote and championed Oregon's interstate cannabis law in 2019. "States regulating the movement of existing supply to meet immediate demand is just rational economics. If governors of states with legal markets move forward, there is every reason to believe that our current DOJ will tolerate that." "We are seeing real leadership from the Governors of Oregon and California toward state-regulated commerce," Smith said. "Federal legalization is on the horizon, but states can't wait for Congress to fix legal cannabis. That's never been a winning strategy."
Tahir Johnson, an equity licensee and owner of Simply Pure Trenton, one of New Jersey's first independent retail locations set to open by the end of this year, said, "New Jersey's independent and minority-run businesses in retail, distribution, delivery, product development, wellness, and so on will wait years for a steady supply of quality cannabis. Out of the gate, we'll be at the mercy of a few large, industrial-scale suppliers, and that cannabis is likely to be overpriced and less sustainably grown than what's available now on the West Coast. Opening that supply chain would benefit cannabis consumers in New Jersey, not to mention my business and hundreds of businesses like mine."
"Farms and brands across California are struggling due to the state silos around production and the lack of legal retail since the onset of the regulated market," said Joyce Cenali, COO of Sonoma Hills Farm. "Opening up access to even a few new adult-use markets or underserved medical markets would be worth billions to the California industry. It would likely save hundreds of businesses and thousands of jobs."
Lauren Coté, the co-founder of the Cannabis Distribution Association (CDA), a co-sponsor of SB 1326, believes that allowing states to opt-in to interstate commerce now could hasten the end of federal prohibition. "This legislation serves a dual purpose of creating interim pathways to market for legacy operators while applying pressure on Congress to decriminalize and de-schedule cannabis. Interstate agreements in the existing and continued environment of federal tolerance will bring us one step closer to federal reform."
INVITE - THE FUTURE OF CANNABIS IS INTERSTATE COMMERCE
We will publish our rationalization for why we see the opportunity for Interstate State legalization in 2023 on Friday, 09/23. Following that On Monday, September 26th, we will host a call with Adam J. Smith, the Alliance for Sensible Markets president. To talk about how he sees the future of interstate commerce in the Cannabis industry.
In our deck and the call, we will address some of the following:
- The Cannabis Dilemma
- States take a leadership role
- Improving basic economics
- Proof of concept
- Implications of Industry benefits and challenges.
California's governor is reshaping the industry by beginning to give a lifeline to all the "consuming" states by lowering the cost of goods to allow for the industry's success and jump-start the failing state-led social equity programs.
Cannabis/Consumables Pro Subscribers CLICK HERE for event details (includes video and materials link; Calendar link CLICK HERE)
Curaleaf Holdings
Conquering the world of Cannabis
CURLF yesterday today announced the completion of its agreement to acquire a 55% stake in Four 20 Pharma GmbH, a fully EU-GMP & GDP licensed German producer and distributor of medical cannabis. Boris Jordan, Executive Chairman of Curaleaf, stated, "We are pleased to complete the transaction with Four 20 Pharma. I am thrilled to welcome Torsten and Thomas to the Curaleaf family. Our early focus on Europe has given Curaleaf a formidable strategic asset and a strong foundation in one of the industry's critical global markets. Curaleaf is the only U.S. MSO uniquely positioned to capitalize on the opportunity." With the close of the transaction, Curaleaf has solidified a strategic pathway to acquire complete control of Four 20 Pharma after two years of the commencement of adult use in Germany, which is slated to begin in early 2024. Miles Worne, President of Curaleaf International, said, "Four 20 Pharma is an ideal asset to accelerate our growth in Germany as the country readies for its conversion from medical cannabis to adult use. Curaleaf International continues to build our platform in eight markets, and this deal further underscores our aspiration to be a major player in the European market and the global industry leader."
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