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JAMA Psychiatry: How is legalization changing cannabis use patterns in teens and young adults?
Researchers examined survey results from 505,796 respondents, of which 77.24% were 26 years or older, and found that teenagers aged 12-17 with past-year cannabis use disorder rose from 2.18% to 2.72% after legalization, “a 25% higher increase than that for the same age group in states that did not” legalize. The study was published in JAMA Psychiatry.
For people 26 and older, their past-month cannabis use after legalization rose from 5.65% to 7.10%, past-month frequent use increased from 2.13% to 2.62%, and past-year cannabis use disorder rose from 0.90% to 1.23%.
The study concluded that “although marijuana legalization advanced social justice goals,” the slight bump in risk of teens developing cannabis use disorder, and increased frequent use and cannabis use disorder among adults aged 26 and older “are a potential public health concern.”
“To undertake prevention efforts, further studies are warranted to assess how these increases occur and to identify subpopulations that may be especially vulnerable,” the study concluded.
17 orgs send letter to Senate and House leadership, asking lawmakers to allow D.C. to regulate cannabis.
The letter, sent to the House and Senate appropriations and financial services committees, asks that lawmakers strike an appropriations rider that has blocked the District of Columbia from creating a regulatory structure for cannabis sales. In 2014, 71% of voters in the District voted to legalize cannabis for adult use. But, so far, that’s only meant home grow.
Among the organizations signing the letter: ACLU DC, Drug Policy Alliance, NORML, SSDP, Northwestern’s Pritzker School of Law, and The Sentencing Project.
“It is critical that Congress support D.C.’s right to home rule and the ability to spend local tax dollars as they deem fit, especially in regard to the regulation and taxation of marijuana. We are requesting the Appropriations conferees amend the current rider (section 809(b) of Title VIII) by striking language that limits D.C.’s local authority on this matter,” the letter reads.
Charlotte’s Web eyes FDA CBD regs as “potential revenue catalyst.”
Yesterday, Charlotte’s Web Holdings, behind one of the oldest and most recognizable brands in the CBD industry, reported its Q3 2019 earnings. Revenue rose to $25.1 million from $17.7 in the same quarter last year, and its gross profit hit $17.9 million.
CW products are now in thousands of stores in the US, including grocery chain Kroger Co. and the Vitamin Shoppe. CEO Deanie Elsner noted in a statement that most of the company’s mainstream partners only sell its topical CBD products as they await word on ingestible products from the Food and Drug Administration. “This indicates the potential revenue catalyst of a broad adoption of ingestible products.”
Elsner continued, “We are prudently investing in the expansion of our production and distribution capacities as planned, ahead of anticipated FDA regulatory clarity that could enable wider adoption of our product portfolio. We remain hopeful that broad political support will help drive quick regulatory resolutions in 2020.”
Cresco Labs scales back Origin House deal.
In April, multistate operator Cresco Labs announced it would acquire Origin House, one of the largest distributors in California, in an $826 million deal. This will give Cresco a significant footprint in the largest market in the US, but it is the distribution angle in particular that bodes well for the company as more states move to legalize. A distribution-level license is relatively new in adult use laws, and an entity with expertise in that segment of the industry will have a competitive advantage across the US on the long run.
(Also, one year ago, Origin House acquired another California-based cannabis company, RVRDistribution, and RVR founder Ted Simpkins joined its board. Simpkins’ experience in distribution is significant, as he is a former executive of Southern Wine & Spirits, the largest wine and spirits distributor in the US.)
But the cannabis market looks different today than it did in April. And this is in part why, at the end of October, for example, Curaleaf halved its Cura acquisition deal.
In May, Curaleaf agreed to acquire the Select brand and its operations from Cura Partners. The deal was going to involve just over 95 million subordinate voting shares of Curaleaf, and now that number has been reduced to 55 million “due to changes in market conditions since the original merger agreement,” Curaleaf announced.
Now, those additional shares will be distributed when Curaleaf hits certain “revenue targets.” When announced, the deal was worth nearly $1 billion, and now, due to both a reduction in Curaleaf’s value and the reduction in shares, it is worth far less than half of that.
In yesterday’s Cresco-Origin House announcement, the state of the market came up again, as these companies, like Curaleaf, are simply not valued as they once were, and therefore neither is the deal. Origin House CEO Marc Lustig said, “The equity market environment has changed meaningfully since we first announced this proposed transaction,” adding that “this has presented challenges.”
So, what’s changing? One, Origin House has locked down ~$30 million in financing that will be used by the combined company when the deal goes through. And, two, the number of shares Cresco is parting with will be reduced from “0.8428 of a subordinate voting share of Cresco Labs for each Common Share … to 0.7031” for each, and from “84.28 Cresco Shares for each class A compressed share of Origin House” down to 70.31.
