Is Delta-8 on the way out?
The U.S. Drug Enforcement Administration (DEA) is proposing changes to federal drug-control laws that would ban almost all delta-8 THC products currently on the market and significantly upend the country’s $5 billion CBD industry. Delta-8 THC is derived from hemp, which became nationally legalized in 2018 with the passing of the Farm Bill. Delta-8 has not been studied, and side effects are not understood. That is why 14 states have already banned the sale of delta-8 products in their states, but that doesn't stop online sales. This news comes after the DEA had its annual conference in Houston, where Terrence Boos (chief of the DEA Diversion Control Division’s Drug & Chemical Evaluation Section) indicated the new THC limit for hemo would be no more than 0.1% THC on a weight to weight basis. Boos’ presentation also indicates that federal drug laws would capture any cannabinoid “manufactured synthetically rather than [sic] produced by extraction from the plant.”
Acquisitions aren't what they used to be.
Yesterday, TerrAscend (TRSSF) announced it has entered into a definitive agreement to acquire Derby 1 (Peninsula Alternative Health), a medical dispensary in Maryland. The transaction will add a second dispensary to the Company’s Maryland footprint before adult-use sales, which will begin on July 1, 2023. Under the terms of the agreement, TerrAscend will acquire Peninsula Alternative Health for $22.1M. It will only cost them $1.5M in cash, with the remainder in a combination of existing debt, a seller’s note, and stock. Peninsula Alternative Health is one of the highest-performing medical dispensaries in Maryland, with a net revenue run rate in 2023 of approximately $14M. Adding a second, high-performing medical dispensary in Maryland is an important step in our strategy to become a market leader in the state,” said Jason Wild, Executive Chairman of TerrAscend. “We expect Peninsula to quickly become one of our highest-performing dispensaries nationwide. With less than 30 days until the launch of adult use in Maryland, we are focused on additional acquisitions and reaching the four-dispensary cap as our northeast business unit will soon be operating in Maryland under the same successful business model we built in NJ.”
Banking & Rescheduling
House Representative Barbara Lee from California, who is the co-chair of the Congressional Cannabis Caucus, is pushing the Biden administration to take action before the next election on rescheduling cannabis. She also believes that it is possible to pass a scaled-back banking reform bill in Congress but understands that isn't a guarantee with Republicans in control of the House. “I’m not sure if we could, given the composition of this Congress, that we can get anything passed that would make sense,” she said. “We probably should have done it last year when [Democrats] were in control, but we didn’t.” She goes on to discuss actions that the Biden administration has taken, “I don’t want this lingering because next year is an election year. And you know what’s going to happen then. Folks will be all over the place,” she said. “So we have to urge them to get this done now.” It is hard to imagine a cannabis banking bill passing Congress before the next election, but the Biden administration rescheduling cannabis is definitely in the cards and would be a positive policy win to hit the campaign trails with if they can get it done.
