Arizona Cannabis trends.
The Arizona cannabis market had another tough month as September monthly sales came in at ~$148M compared to over ~$149M the previous month which comes out to a 0.9% decline in sales on a MoM basis and a 5.9% decline on a YoY basis. This is the 7th consecutive month that the state saw a YoY decline in sales which is due to the pricing pressure occurring in this market. Price per product was down 1.2% MoM and 5.2% YoY while products sold saw an increase of 0.3% MoM. Arizona hasn't seen a price-per-product increase in cannabis products in 16 months when comparing it to the previous year.
Canadian Producers Unpaid Taxes.
We have written in the past about the struggles occurring in the Canadian cannabis industry, so this comes as no surprise to anyone, but many cannabis businesses have failed to pay their taxes on time as these companies are prioritizing staying open rather than paying the government. In the first half of the year, cannabis companies in Canada have failed to pay nearly ~$72M USD in taxes, which is close to double last year's number. Roughly 66% of all cannabis companies regulated by the Canadian government are struggling to pay their tax bill. “When you factor price compression, excessive (federal and provincial) taxation and provincial distribution fees, to name a few, there is not a lot of margin left, which is forcing licensed producers to prioritize their payables to stay afloat,” said Anthony Giorgi, Sensi’s chief executive. “They’re basically using their CRA excise tax as working capital. They need the working capital to keep running the company.” Many have been calling for cannabis reform in Canada siting that it is nearly impossible to successfully run a profitable business the way the industry is currently set up. mjbizdaily.com
White House Drug Czar.
The White House Drug Czar came out yesterday saying that there is "clearly" some sort of medical benefits to cannabis use and that the rescheduling/descheduling process should follow the science. “The simple fact is that you follow the research that you have, and you make decisions based on the science that is available to you,” Rahul Gupta (Director of the Office of National Drug Control Policy) said. “And we do know that today, we have more research available than we had just simply 10 years ago. So it is time, as the president has asked for, to take a look at the scheduling of marijuana as a Schedule I drug.” Gupta is the same guy who worked to implement West Virginia's medical cannabis program. “Still, we need to make sure that we’re working to have a process through it, and that’s exactly why last week President Biden made these announcements,” he said. “It’s really important to follow these steps as the president has outlined because marijuana is currently scheduled as a Schedule I drug and it’s treated the same…as heroin and LSD and it’s important for us to take a look at that.” It's a positive sign that we had a follow-up to Biden's announcement two weeks ago, but it is still a long road before we will get any type of real movement/change.
