The year 2019 has certainly been a busy one for Cannabis Wire. In September, we launched C-Wire Plus, our subscription service, which comes with our daily newsletter and access to original research and databases.
Stay tuned, because we’re gearing up for a bigger 2020, and looking forward to hitting the ground again right after the holidays. If you’d like to work together in 2020, we’re actively planning editorial and business partnerships. Email anytime: firstname.lastname@example.org.
Meanwhile, a look back at a year of change and at where we are now. Here are some of the major developments we covered in 2019, and will continue to cover in 2020:
Northeast states are *this close* to legalizing. (And so are some others.)
While New York and New Jersey lawmakers tried and failed to legalize this year, any Northeast state that hasn’t yet legalized stands a strong chance of doing so in 2020.
New York Governor Andrew Cuomo hosted the Regional Cannabis Regulation and Vaping Summit in October, which brought together governors, lawmakers, and regulators from New York, Connecticut, New Jersey, Pennsylvania, and Rhode Island, which all have yet to legalize, and from Massachusetts and Colorado, which already have. The goal was to discuss policies and coordinate on a regional approach to legalization.
Pennsylvania stands a particularly good chance of legalizing next year. Pennsylvania Governor Tom Wolf and Lt. Governor John Fetterman have called for adult-use cannabis legalization, and a report released by the two argued that the state’s residents overwhelmingly favor legalization.
Where things could be delayed in these states are around equity, and around taxes (How should cannabis be taxed, and where should that money go? To equitable efforts? Schools? Treatment? All of the above?). There’s a lot to hammer out.
While there’s rising agreement that legalization must be equitable, there’s not a ton of agreement on just how to do that. This was, in part, the impetus for the Tri-State Cannabis Equity Summit in New York City, during which issues related to incarceration, licensure, and capital were discussed as priorities for an equitable legalization push in New York, New Jersey, and Connecticut.
Other states are hosting serious adult use legalization efforts, too. In Florida and Arizona, for example, legalization campaigns are pulling in serious money, primarily from industry sources.
Hemp legalization: the regulatory grappling has begun.
The year 2019 was a big one for hemp growers, manufacturers, and processors. But it was a pretty punishing one in some ways, too, especially as the industry stalls in regulatory gray areas, both domestically and globally.
Plenty of countries actively participate in the international hemp industry, and a handful of others are preparing to join. Yet, despite the widespread production, distribution, and use of hemp, there is no international consensus on how to define hemp, leading to confusion.
And where are those Food and Drug Administration rules to guide the CBD industry, anyway? In May, the FDA held a historic hearing on the public health and safety concerns related to CBD, in order to help it craft such rules. The overall themes during the hearing?—CBD products are showing up on shelves coast-to-coast, more research is needed, and everyone from lawmakers to CBD-product manufacturers are desperate for the FDA to step up to the plate and make some sense of the mess that has resulted from unregulated CBD in America.
While FDA rules haven’t landed yet, there are strong hints as to where they are headed.
In a pre-Thanksgiving news dump, the Food and Drug Administration laid out new “safety concerns” regarding CBD products. This consumer update included the FDA’s strongest statement to-date as to what its long-awaited regulations might be for the wildly popular cannabis compound when it comes to food:
“Based on the lack of scientific information supporting the safety of CBD in food, the FDA is also indicating today that it cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food.”
Meanwhile, the US Department of Agriculture in October released its interim final rule on domestic hemp cultivation, which the hemp industry has awaited since the passage of the 2018 Farm Bill late last year legalized hemp. These rules do indicate some of the products allowed to contain CBD, in advance of the FDA’s rules. When hemp producers file the required acreage report with their local Farm Service Agency, for example, they will have to state the use of that acreage. The four options are fiber, grain, seed, and, significantly, processing. This latter option is for hemp “grown for extraction of plant resin (which includes cannabidiol (CBD) and other phytocannabinoids). Resin is used in oils, lotions, cleansers, bath, or other pharmaceutical or topical products.”
In addition the long-overdue USDA rules on hemp cultivation, the industry got another, small boost: While banks remain reluctant to offer services to cannabis plant-touching companies, in early December, four federal agencies and state bank regulators released a statement that “emphasizes” that “banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp,” as long as all parties are following the law.
And, at the early December American Bankers Association meeting, a JPMorgan Chase rep told Cannabis Wire that the company is banking hemp as well as hemp-derived CBD businesses. “When it comes to CBD and hemp, given the fact that it is no longer a controlled substance, we definitely are more amenable.”
Cannabis gets its first vote in Congress.
While legalization remains an issue that attracts more full-throated support from Democrats than Republicans, support is increasingly bipartisan as more members of the GOP embrace cannabis law reform.
There were two historic votes on cannabis in Congress this year. The House passed the SAFE Banking Act in September, the first standalone cannabis legislation to get a vote in Congress. “You can’t put the genie back in the bottle,” said Colorado Representative Ed Perlmutter, the primary sponsor of the bill. “Prohibition is over. Our bill is focused solely on taking cash off the streets and making our community safer. And only Congress can take these steps to provide this certainty for businesses, employees, and financial institutions across the country.”
And in November, the House Judiciary Committee held a vote and passed the Marijuana Opportunity Reinvestment and Expungement Act—the first cannabis legalization legislation to get a vote in Congress.
One giant question mark, though, is whether the MORE Act will maintain momentum in the full House. And any cannabis legislation today faces a tough road in the Republican-led Senate. On top of that, a lot of political capital and energy has been sucked up by the impeachment hearings of President Donald Trump. So we’ll see what 2020 brings for these bills.
There were other major Congressional hearings on cannabis this year: At a June House Committee on Veterans Affairs hearing, the VA refused to support any of the four bills under consideration calling for more cannabis research and access for veterans. In July, the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security hosted a hearing, titled Marijuana Laws in America: Racial Justice and the Need for Reform. The broad focus among witnesses was to urge Congress to federally legalize cannabis in order to “repair the harm” done to the communities most affected by the War on Drugs.
The industry’s first major public health scare.
This year, lung injury, or EVALI, brought public health concerns about vaping and e-cigarettes to the desks of federal regulators, members of Congress, governors, and other elected officials.
The problem seemed to be everywhere. As of December 4, a total of 2,409 reports of EVALI had been confirmed, from all fifty states, and fifty-two deaths had been confirmed in twenty-six states and the District of Columbia. The Centers for Disease Control started holding reporters’ briefings about these incidents and now regularly releases the latest EVALI numbers.
“Data suggest the outbreak might have peaked in mid-September,” the CDC said in a mid-December update, reiterating in the email that “although the number of reported cases appears to be declining, states are still reporting new hospitalized EVALI cases to CDC on a weekly basis.”
In September, during a Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce hearing, “Sounding the Alarm: The Public Health Threats of E-Cigarettes,” federal lawmakers grilled officials from the Food and Drug Administration and Centers for Disease Control and Prevention on their inaction over the rising number of illnesses and deaths around the country linked to vaping.
“There is clearly a massive regulatory failure that allowed for this to happen,” Massachusetts Representative Joseph Kennedy said at the hearing.
Other regulators and legislators have weighed in. In October, the Senate Caucus on International Narcotics Control held a hearing called “Marijuana and America’s Health: Questions and Issues for Policy Makers.” During the first panel, the US Surgeon General, Jerome Adams, and Nora Volkow, director of the National Institute on Drug Abuse, spoke about cannabis use among young people and pregnant individuals, barriers to research, and vaping-related illnesses.
California Senator Dianne Feinstein asked, “Are vaping devices well enough known? Do they bring on death?” Feinstein seemed to stumble over how to ask the question, reiterating, “if you use a vaping device, are you more apt to die?” Volkow responded, “Not necessarily, if you are using a device that has quality control.”
Also in October, the California Assembly hosted a hearing that stretched over four hours to address illnesses linked to cannabis and tobacco vaping products, as well as “deficiencies” in the state’s cannabis regulations.
Equity takes center stage.
It is now safe to say that just about every serious cannabis legalization effort going forward will include some sort of equity provision (in short, ensuring those communities affected by the disproportionate enforcement of cannabis laws are prioritized as the cannabis industry is built). The debate over how to legalize has evolved since Washington and Colorado first legalized cannabis for adult use in 2012, back when equity was hardly discussed. And the debate’s also evolved since 2016, when four states legalized for adult use, none with equity provisions baked in from the beginning.
In 2019, Illinois became the first state to legalize adult use cannabis possession and sales by legislature, and it did so with equity clearly in mind. And while Massachusetts legalized in 2016, the state officially launched its Social Equity Program this year, the nation’s first. At the same time, the complexities of equity came to light, as disagreements over equity provisions factored into the failure of adult use legalization efforts in New York and New Jersey.
When we asked Denver’s top cannabis regulator what was top of mind at the state’s annual Marijuana Management Symposium, the largest cannabis-focused gathering of regulators and lawmakers, the answer was, for the first time, “equity.” And finally, as Northeast governors coordinate on regional adult use legalization, the Minority Cannabis Business Association hosted the first Tri-State Cannabis Equity Summit in New York to ensure that equity would be part of the earliest conversations.
At the Congressional level, Presidential candidate Cory Booker declared this spring that he would no longer support cannabis legislation that does not prioritize justice. And when the SAFE Banking Act got a House vote, a historic first for a cannabis bill, it didn’t come to pass without several organizations, including the ACLU, the Drug Policy Alliance, and Human Rights Watch, writing to lawmakers to say justice and equity should come before business. This led to a House committee vote on a sweeping piece of legalization legislation focused on equity and social justice, the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act) of 2019, another historic first.
Alcohol, tobacco, and pharma double down….
Late last year, we saw the first major alcohol and tobacco investments in the cannabis industry. First, in August, Constellation Brands (maker of Corona beer and SVEDKA vodka) said it would invest $4 billion into Canopy Growth, the highest valued cannabis company in the world. Then in December, Altria (maker of Marlboro cigarettes) said it would invest $1.8 billion into Cronos Group, another Canadian cannabis company.
But this year, these industries took it to the next level. Constellation Brands lobbied on both the SAFE Banking Act and the STATES Act this year. Anheuser-Busch Companies, Inc. (maker of Budweiser and Stella Artois) lobbied on “government oversight of cannabis in food products.” (Late last year, the company announced a $100 million partnership with Canadian cannabis company Tilray to roll out CBD and THC drinks in Canada.)
On the tobacco company front, Altria began to lobby on hemp, a first for a major tobacco company. And in the pharma company universe, Greenwich Biosciences, the US subsidiary of GW Pharmaceuticals—the UK-based company that got the first ever cannabis plant extract based medicine approved by the FDA last year—has registered to lobby in every single state, as well as federally. (GW is the world’s oldest and largest pharmaceutical company solely focused on producing medicines derived from cannabis plants, which it grows in Britain.)
…and other major lobbying ramped up.
Cannabis Wire broke much more lobbying news this year, in addition to the stories detailed above. Canadian cannabis giant Canopy Growth, for example, began to lobby in the US. We dug into filings and also learned that several of the largest multistate operators in the US are increasingly lobbying at the federal level, and the legislative change they care about, above all else, is access to banking.
Counties and cities across California, Nevada, and Oregon are joining the big push for access to financial services for the cannabis industry, lobbying Congress to address the regulatory and public safety concerns that arise around a cash-heavy business.
We also broke that Big Ag has entered the federal hemp lobbying arena. One of the world’s largest food processors, the Chicago-based Archer Daniels Midland Company, is lobbying on industrial hemp at the federal level. The company is one of the four biggest agribusinesses in the world and the first to openly lobby on the subject.
A globe poised for reform.
We knew we were in for some serious global movement this year when, in January, the World Health Organization recommended changes to the scheduling of cannabis in international drug control conventions. In Vienna in March, the United Nations’ Commission on Narcotic Drugs opted to postpone a vote on those recommendations, and the vote is now expected in March 2020.
Throughout the year, it seemed that there wasn’t a place on earth where cannabis law reform conversations weren’t taking place. In South America, lawmakers in Argentina, Brazil, and Chile crafted draft legislation that seeks to allow home grows for medical purposes. Laws continued to pass across the Caribbean. Over in Europe, Luxembourg officials have been working throughout the year to determine how the tiny European country could become the first to legalize cannabis for adult use, including cannabis “study visits” to the Netherlands, Portugal, and Canada.
There has been a great deal to watch. Here’s a timeline of some other major global cannabis moves:
In January, the Israeli Cabinet approved a bill to allow medical cannabis exports, unlocking the door to a market expected to yield one billion new shekels (about $272 million dollars) in tax revenue per year.
In February, Members of the European Parliament approved a motion for a resolution on cannabis for medicinal purposes, a decision that, though not binding, calls upon the EU’s twenty-eight Member States to prioritize scientific research in the field and reconsider domestic legislation.
In mid-July, a Salvadoran lawmaker introduced a bill to legalize cannabis for medical use, as well as legalizing domestic production and imports for this purpose.
In August, Australian Prime Minister Scott Morrison’s administration announced that it would prioritize licensing for large cannabis-related projects, a new policy meant to boost the medical cannabis industry and ramp up economic growth in Australia, where medical use for patients with a doctor’s prescription has been allowed since 2016.
In September, Paraguay’s Ministry of Public Health and Social Welfare announced that it will begin to process applications for the licensing of cannabis production, industrialization, and commercialization—strictly for medical and research purposes.
In October, France officially greenlit a medical cannabis pilot program, which will start small. And while Mexico’s Senate missed the Supreme Court’s deadline that month to approve a cannabis legalization bill—a historic vote on full-scale regulation of a cannabis industry in the country is expected in April 2020.
In November, the Dutch Senate gave the final vote needed in favor of a four-year experiment that will force coffee shops to buy cannabis only from legal, city-approved growers, starting as soon as 2021 in ten cities. This will finally begin to regulate the production that supplies the Netherlands’ famous coffee shops. Also in November in the UK, Sativex and Epidyolex were approved for reimbursement by the NHS for some conditions, though health officials say product costs are too high, and benefits too low, for patients with chronic pain. (Doctors had been waiting for this report from NICE, the advisory body to the National Health Service, since last fall, when the therapeutic use of cannabis was legalized.)
And finally, in December, Brazil’s health regulator, Anvisa, approved new guidelines for cannabis-based products, although it sided with the government in refusing to legalize domestic cultivation.
The bubble deflates.
This time last year, it seemed nothing could stop the momentum around cannabis stocks. Horizons Marijuana Life Sciences Index ETF, the first of its kind, hit $1 billion in assets. But it has been more or less downhill since then for the cannabis market, and Horizons ETFs said in October that cannabis has lost its “buzz.”
The final earnings reported this year were dismal, especially for Canadian cannabis companies. The highest valued cannabis company in the world, Canopy Growth, had a particularly weak quarter, and then-CEO Mark Zekulin said on the earnings call, “It’s been a challenging couple of quarters in the cannabis sector.” Terry Booth, CEO of Aurora Cannabis, another top-valued cannabis company, blamed poor earnings on “distribution and regulatory headwinds.”
Then came the layoffs. In October, two large Canadian cannabis companies, HEXO and CannTrust, both announced cuts. HEXO cut 200 employees due to “regulatory uncertainty” and a “changing market.” HEXO CEO and co-founder Sebastien St-Louis said in the announcement, “This has been my hardest day at HEXO Corp.” CannTrust’s layoffs were due less to market changes and more to the fallout from the discovery that the company was cultivating cannabis in hidden and unlicensed rooms. The company, which now faces delisting from the New York Stock Exchange and the Toronto Stock Exchange, laid off 140, or a quarter of its workforce.
In November, the US company MedMen said that as part of a ninety-day plan to realign the company toward profitability, it would lay off 190 employees and sell licenses and assets. “Given market conditions, capital allocation is more critical than ever,” said MedMen’s co-founder and chief executive officer, Adam Bierman.
MedMen was also one of several companies to terminate or scale down a major M&A deal. The company in October killed its $682 million merger with PharmaCann. That same month, Curaleaf scaled back its Cura acquisition deal, once valued at $1 billion, “due to changes in market conditions since the original merger agreement.” And, the following month, Cresco Labs scaled back its Origin House acquisition deal, once valued at $823.5 million, because “the equity market environment has changed meaningfully since we first announced this proposed transaction … this has presented challenges.”
Steve Hawkins, president and CEO of Horizons ETFs, said in a statement in October, “While there are some that are decrying the ‘marijuana moment’ over, there is a silver lining to these significant sector declines, and that is valuations are now more aligned with fundamentals, establishing a more balanced entry point for investing in cannabis.”
Meanwhile, 2019 was a great year for Cannabis Wire.
As founders, we had a productive year, which sometimes meant really putting ourselves out there. Co-founder Alyson Martin made a number of public radio appearances, including: WNYC’S Brian Lehrer Show for New York’s Pot Politics (March 2019); Reefer, Managed: Who Will Get to Sell Weed? (April 2019); and the Northeast Cannabis Legalization Update (July 2019); the WNYC and Colorado Public Radio national collaboration on 4/20, “Ask a Legal State: A National Conversation About Pot” (April 2019); and All Things Considered, Bags Of Cash, Armed Guards And Wary Banks: The Edgy Life Of A Cannabis Company CFO (April 2019).
In January, Alyson was also interviewed for The Atlantic podcast called The Masthead to discuss 25 Years of Reefer Madness.
Cannabis Wire founders also moderated and spoke on a number of panels, including: CWCBExpo in June, where Alyson spoke on a panel about the need for an increase in rigorous, uncompromising cannabis journalism; AvantPay in October, where Alyson moderated a panel (every panelist was a woman!) discussion about the role and impact of local regulation; The Arcview Group’s International Cannabis Investor Forum in October, where Alyson conducted a 1×1 discussion about the future of the global industry with a director at the Canadian Securities Exchange; and finally, Cannabis Europa in November, where Alyson moderated a panel about transatlantic cannabis partnerships. Co-founder Nushin Rashidian also appeared on a panel about cannabis journalism at the Cannabis Media Summit in October.