The Cannabis Wire Daily newsletter is sent to C-Wire Plus subscribers every weekday morning at 7 a.m. Excerpts are published here later in the day. Don’t miss the full picture. Subscribe now.
Should Washington tax cannabis by potency? A new report tackles the question.
A handful of researchers, including cannabis tax expert Pat Oglesby and analysts from BOTECAnalysis, examined through interviews how the Washington State Liquor & Cannabis Board implemented their cannabis tax.
The report pays special focus on how regulators could replace the current 37% ad valorem tax basis, in part or entirely, with a THC potency tax. (Ad valorem tax, Latin for “according to value,” is a type of tax determined by the value of a transaction, like a sales tax.)
“A potency tax is likely to affect consumer purchasing habits to an unknown extent, and it is currently impossible to quantify any public health gains resulting from those effects,” the report concludes, adding that it’s “not feasible” to estimate the potential revenue swings, positive or negative, due to switching from an ad valorem to potency tax.
“However, the considerable costs relating to the implementation of a cannabis potency tax in Washington State, as well as both theoretical and practical challenges in doing so, are better known. Therefore, at present, any change in the tax structure would require embracing large known costs and additional unknown costs in exchange for unknown benefits.”
New Jersey’s medical cannabis program continues to grow.
The state’s Department of Health tweeted yesterday that the program now has more than 60,000 registered patients. This is an increase of 10,000 since late July, when the count was just over 50,000. Still, this is only half the size of New York’s program, which now has just nearly 110,000 certified patients.
While New Jersey’s program is nearly a decade old, it only recently expanded because former Governor Chris Christie opposed all forms of cannabis, while Governor Phil Murphy, who took office last year, made access a priority.
As Cannabis Wire recently reported, New Jersey and New York are preparing for another adult use legalization push in 2020 (as efforts in both states failed this year).
Massachusetts Cannabis Control Commission’s major vape announcement.
The state’s top cannabis regulators have ordered a quarantine on all cannabis-vape products, except for products for flower for use by medical cannabis patients.This is the most significant vape-related announcement by state officials following Governor Charlie Baker’s temporary ban, announced in September, on all vape products, whether for tobacco or cannabis.
One reasoning for the quarantine is the CDC’s breakthrough announcement on Friday, which Cannabis Wirecovered, that identified vitamin E acetate in every one of 29 lung fluid samples tested.
The Commission wrote that its “existing testing regulations and protocols do not require testing for vitamin E acetate. Based on current manufacturing processes, it is possible that legal marijuana products sold in the state could contain vitamin E acetate or other potential ingredients of concern.”
Another reason is that, earlier this month, Massachusetts Superior Court Judge Douglas Wilkins determined that all cannabis regulation falls under the authority of the CCC, and, on November 7, the CCC voted to take on the development of cannabis vaping regulations.
You can read the CCC’s full announcement here.
Cronos, Tilray, and Acreage kick off the quarter’s earnings season.
Cronos yesterday announced its Q3 2019 earnings, among other news from the company, which is the first in the cannabis industry to receive major tobacco investment (Altria, $1.8 billion).
First, the numbers: the company’s net revenue increased to C$12.7 million, up from C$3.8 million in the same quarter last year.
Also, on the Altria front: the maker of Marlboro nominated Jody Begley, SVP of tobacco products for Altria, to Cronos’ board of directors. A vacancy was left when K.C. Crosthwaite, which Altria also appointed, had to resign from Cronos’ board in order to take over in September as CEO of JUUL, another company in which Altria is a major stakeholder.
Altria will also use its own distribution network for Cronos’ new hemp-derived CBD product announced yesterday, called PEACE+. This, according to the announcement, will help Cronos “to access the U.S. convenience store retail channel in order to gain consumer insights prior to expanding distribution more broadly.”
(Also, ICYMI, Cannabis Wire broke the story that Altria is lobbying on hemp in the US, a first for a major tobacco company.)
Then came Tilray’s earnings, which were far stronger than Cronos’.
The company’s Q3 2019 revenue rose to $51.1 million (US) from $10 million in the same quarter last year, a more than 400% increase. It’s losses, though, increased, too, from $18.7 million in Q3 last year to $35.7 million this quarter. That said, those moves that led to losses drove gains, for example, the international expansion and the acquisition of Manitoba Harvest, a brand you can find in a Whole Foods checkout line.
The company made some major announcements this quarter, too: in the US, the company is running clinical trials at NYU School of Medicine; in Canada, Tilray announced its joint venture with Anheuser‐Busch InBev, Fluent Beverage Company, will sell CBD drinks; and in Europe, the company’s Portugal facility exported medical cannabis to Germany, and imported medical cannabis oil into Ireland.
And, finally, Acreage, which is in the process of getting acquired by Canopy Growth, pending federal legalization in the US, reported $22.4 million in revenue, up from $5.5 million in the same quarter last year; meanwhile, losses remained significant.
CEO Kevin Murphy said in a statement, “The last six months have been challenging for the entire industry, but as I have emphasized since day one, this is a long game.”
