NJ lawmakers pass legalization bill (CURLF, GTBIF, TRSSF, CCHWF, ACRGF)
Yesterday, NJ lawmakers passed a bill establishing a regulatory framework for the state’s adult-use market. It now awaits Gov. Phil Murphy’s (D) signature to become law.
Key points of the bill include:
- The state will grant a max of 37 marijuana cultivation licenses to commercial growers in the first 24 months of the bill's enactment. This cap does not apply to microbusinesses or those that employ 10 or fewer people.
- In the first 24 months of the bill's enactment, the bill would not permit a licensed cultivator, manufacturer, wholesaler, distributor, or delivery service also to be a licensed retailer, and vice versa, plus a cultivator or manufacturer could only concurrently hold two licenses (either another cultivator or manufacturer license). A wholesaler could hold one other distributor license. However, these restrictions would not apply to a medical alternative treatment center deemed to possess one of each type of cannabis license class concurrently. These initial restrictions are not conducive to vertical integration.
- Municipalities can prohibit cannabis businesses. Those that allow adult-use sales could levy a 2% tax and retain the revenues.
- The bill establishes a 7% sales tax. 70% of all cannabis sales tax revenue are designated for ‘impact zones,’ or community disproportionately impacted by marijuana prohibition. Impact zones include Atlantic City, Camden, East Orange, Irvington, Newark, Paterson, and other communities. The other 30% is slated for funding the Cannabis Regulatory Commission’s operations. 100% of a ‘social equity excise fee’ on cultivations would also go to impact zones.
A few state officials have suggested that adult-use sales would likely begin in the back half of 2021.
Ontario reaches 36.2% in legal market share (CGC, HITIF, FFLWF)
In a new quarterly report from Ontario's government-operated Ontario Cannabis Store (OCS), private retailers sold C$173.9 million of cannabis versus the OCS selling C$30.5 million at a roughly 85/15 split. By the end of Q3, Ontario had 183 stores, a YoY increase of 73%. Currently, Ontario has over 280 stores due to a recent acceleration of retail store authorizations. According to Stats Canada, the illicit market still has an overwhelming share, with only 36.2% of Ontario cannabis sales coming through the legal market. However, that share did increase by 10% sequentially, suggesting that the increase of retail store authorizations is an effective tool in combatting the illicit market. Dried flower continues to be the preferred method of consumption, comprising close to 60% of sales. Vapes was the second most popular product category at 15%, and pre-rolls came in third at 12%. The OCS also reported that it again beat illicit marijuana prices with an average price per gram of CA$6.41 versus illicit costing CA$8.17.
Gage Cannabis secures $20M investment, plans to go public in Q1 2021
Michigan-based Gage Cannabis, led by ex-Canopy CEO Bruce Linton, announced that it had secured a minimum of $20 million investments from JW Asset Management (JWAM). The investment will accelerate Gage’s retail and cultivation footprint and enable the company to pursue accretive acquisitions. JWAM has been an active investor in the cannabis space since 2014, investing in many of the industry leaders, including TerAscend.
After being ousted as CEO from the company he founded, Linton joined Gage as executive chair in September 2019. Gage has operations only in Michigan and anticipates sales of approximately $13.2 million in Q3 2020. Gage opened its first retail location in September 2019, and presently, the company supports five dispensaries, three cultivation facilities, and one processing facility throughout Michigan. The company plans to double its retail footprint by the end of the first quarter of 2021. Gage plans to go public on a Canadian stock exchange sometime in Q1 2021.
The Michigan market has been on a tear through the coronavirus pandemic, with monthly sales doubling from March to September. September’s sales represent $688.6 million in YTD sales or $1.27 billion in annualized revenues.
