House leaders propose changes to MORE ahead of the floor vote
Judiciary Committee Chairman Jerrold Nadler (D-NY), the bill's lead sponsor, has submitted several modifications to the Rules Committee. In Nadler’s amendment, the MORE Act's modified tax provisions would have cannabis federally taxed at 5% for the first two years following implementation and then would successively increase by 1% annually until reaching 8%. After five years, taxes on cannabis products would be based on weight rather than price.
Another change requires the FDA and the U.S. Department of Health and Human Services to hold public meetings on “regulation, safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds” within one year of the bill’s enactment.
The MORE Act would decriminalize cannabis by removing it from the Controlled Substances Act, allow states to determine their regulations on commercializing cannabis, expunge convictions for non-violent cannabis offenses, and levy a federal tax on sales. The MORE Act, sponsored by Nadler and Vice President-elect Kamala Harris (D-CA), cleared the House Judiciary Committee last November and has been awaiting a floor vote from the House since. While the House's approval of the MORE Act would be largely symbolic with a Republican-controlled Senate, the vote could increase Biden's pressure to embrace full legalization.
Hydrofarm Holdings Group announces IPO launch (‘HYFM,’ GRWG)
Hydrofarm Holdings Group, Inc. (“Hydrofarm”), a hydroponics and specialty indoor gardening market supplier, announced plans to raise $130 million by offering 8.7 million shares of its common stock. The initial public offering price is expected to be between $14.00 and $16.00 per share. Hydrofarm expects to grant the underwriters a 30-day option to purchase up to an additional 1,300,000 shares of its common stock. Hydrofarm has applied to list its shares of common stock on the Nasdaq Global Market under the ticker “HYFM.”
The California-based company is a leading independent distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture, including high-intensity, grow lights, climate control solutions, and growing media, as well as a broad portfolio of innovative and proprietary branded products. Hydrofarm’s products primarily serve the cannabis industry in the U.S. and Canada.
For the 12 months ended September 30, 2020, the company earned $309 million in revenues. Founded in 1977, Hydrofarms has a network exceeding 2,000 wholesale customer accounts, with most of these wholesalers connected via the company’s proprietary e-commerce platform. More than 80% of its net sales are from specialty hydroponic retailers.
Hydrofarm’s IPO comes following significant legislative change on the state level and on the eve of possible federal legislative reform. Their competitor, GrowGeneration, has been on an acquisition spree in Q4, expanding their portfolio with acquisitions in the West Coast, Arizona, and Michigan.
Oregon track to cross the $1 billion in sales YTD milestone
The state of 4.2 million is on track to break $1 billion in sales according to preliminary data released by the Oregon Liquor Control Commission. The adult-use market launched five years ago and achieved a record $795 million in sales last year. Similar to other markets, the pandemic has catalyzed an acceleration in sales. The preliminary data for November suggests $1.01 billion in total legal sales. October’s sales suggest $1.18 billion in annualized revenues.
In comments to the Portland Business Journal, the executive director of the Oregon Liquor Control Commission said: “This profound moment shows that Oregon’s legal market is now the sustaining and dominant choice for Oregon consumers and an impressive contributor to Oregon’s economy. Now we need to continue to adjust our regulatory oversight so that it supports the cannabis industry’s entrepreneurial spirit, while at the same time developing strong consumer product safety standards that reinforce the quality found in Oregon’s cannabis marketplace.”
