Lp,s are doomed!
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TILRAY BUYS BEER
Tilray is expanding its market share by buying beer brands. In particular, Tilray announced a deal to buy eight beer and beverage brands from Anheuser-Busch Companies LLC.
According to the U.S. Securities and Exchange Commission, the deal is worth $85 million. Tilray will pay for the beer brands in cash.
Tilray says this purchase will triple their sales to 12 million cases of beer a year. If successful, Tilray’s purchasing of eight beer brands will elevate them to the fifth-largest craft beer operation in the United States.
This begs the question – Is Tilray even a cannabis company anymore?
Tilray’s buy of eight beer brands from Anheuser-Busch includes ciders and seltzers. The eight brands are:
10 Barrel Brewing Co.
Blue Point Brewing Co.
Breckenridge Brewery.
Hiball Energy.
Redhook Brewery.
Shock Top.
Square Mile Cider Co.
Widmer Brothers Brewing.
Tilray already owns Alpine Beer, Green Flash Brewing, Breckenridge Distillery, Happy Flower CBD (producing nonalcoholic cocktails), Montauk Brewing, and SweetWater Brewing.
Tilray CEO Irwin Simon said in a statement that the acquisition “both solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy.”
He also said Tilray’s beer brands would help them leverage THC-based beverages.
“Upon federal cannabis legalization,” he said, “we expect to leverage our leadership position, wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximize all commercial opportunities.”
Shares of Tilray rose significantly in response to the news.
SHOULD CANNABIS COMPANIES DIVERSIFY INTO ALCOHOL?
Tilray’s purchase of eight beer brands from Anheuser-Busch has its critics.
Some believe a cannabis company shouldn’t diversify into non-cannabis brands, especially alcohol.
Alcohol companies have long been at odds with the cannabis movement.
First, there is the elephant in the room. Alcohol is a poison, whereas cannabis is a medicinal herb.
Alcohol causes health problems, whereas cannabis heals.
Many former problem drinkers have gone “Cali sober,” where they substitute cannabis for booze.
We don’t have to stretch that far into history to discover what Anheuser-Busch really thinks of pot.
As late as 2010, they donated thousands of dollars to prevent cannabis legalization.
Before 2018, when they announced InBev to develop cannabis-infused beverages, Anheuser-Busch had been a long-time anti-cannabis lobbyist in Washington and elsewhere.
Will this association with alcohol (and Anheuser-Busch) negatively affect Tilray’s brand?
What about in the long term?
Time will tell, but so far, shareholders are happy about Tilray’s purchase of eight beer brands.
POOR STRATEGY ON ANHEUSER-BUSCH’S PART?
Tilray buying eight beer brands from Anheuser-Busch is looking good for their bottom line.
But what about Anheuser-Busch?
Why did they sell?
The beer giant has been on a rocky road in 2023. The company’s flagship product, Bud Light, has been at the center of consumer boycotting.
Earlier this year, Bud Light partnered with a transgender activist – Dylan Mulvaney – for a marketing campaign that backfired completely.
The backlash wasn’t surprising, considering the more conservative-leaning customer base of the product.
As well, Dylan Mulvaney is incredibly sexist. (His idea of being a woman, for example, is saying, “I’m fine,” when you’re not—reinforcing negative stereotypes of women.)
Bud Light and its parent company have lost nearly $400 million in sales and laid off hundreds of workers as customers switch to Modelo and other beers.
The issue comes back to cannabis consumers. Will they trust a cannabis brand that also deals in alcohol?
Or is a cannabis company trying to straddle both worlds?
The financials look good for Tilray but don’t be surprised if contentious cannabis consumers take their business elsewhere.
Then again, contentious cannabis consumers tend to avoid these corporate conglomerates like the plague. Tilray started in Canada, where weed is legal, but the “illicit” market still accounts for nearly 80% of all sales.
Tilray buying beer brands is just another brick in the corporate-state wall enclosing around us.
FOOTNOTE(S)
https://www.globenewswire.com/news-release/2023/08/07/2720135/0/en/Tilray-Brands-Announces-Agreement-to-Acquire-Eight-Beer-Beverage-Brands-From-Anheuser-Busch-Fueling-Tilray-s-Future-in-the-U-S-Craft-Beer-Industry.html
https://www.businessinsider.com/big-alcohol-donates-money-to-fight-legalization-of-pot-2010-9
Remember that they had to legalize after freaks took the government to Supreme Court.
Heads 🏆.
So Health Canada had to legalize.
Job was given to police chief.
They implemented a doomed cannabis légalisation as they were against cannabis.
L’égalisation became just a way to sell shares to suckers.
Growing mold is not what folks want.
beer
TILRAY BUYS BEER BRANDS
Avatar photoCALEB MCMILLAN·AUGUST 9, 2023
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Tilray is expanding its market share by buying beer brands. In particular, Tilray announced a deal to buy eight beer and beverage brands from Anheuser-Busch Companies LLC.
According to the U.S. Securities and Exchange Commission, the deal is worth $85 million. Tilray will pay for the beer brands in cash.
Tilray says this purchase will triple their sales to 12 million cases of beer a year. If successful, Tilray’s purchasing of eight beer brands will elevate them to the fifth-largest craft beer operation in the United States.
This begs the question – Is Tilray even a cannabis company anymore?
TILRAY BUYS BEER BRANDS
Tilray Buys Beer Brands
Tilray’s buy of eight beer brands from Anheuser-Busch includes ciders and seltzers. The eight brands are:
10 Barrel Brewing Co.
Blue Point Brewing Co.
Breckenridge Brewery.
Hiball Energy.
Redhook Brewery.
Shock Top.
Square Mile Cider Co.
Widmer Brothers Brewing.
Tilray already owns Alpine Beer, Green Flash Brewing, Breckenridge Distillery, Happy Flower CBD (producing nonalcoholic cocktails), Montauk Brewing, and SweetWater Brewing.
Tilray CEO Irwin Simon said in a statement that the acquisition “both solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy.”
He also said Tilray’s beer brands would help them leverage THC-based beverages.
“Upon federal cannabis legalization,” he said, “we expect to leverage our leadership position, wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximize all commercial opportunities.”
Shares of Tilray rose significantly in response to the news.
SHOULD CANNABIS COMPANIES DIVERSIFY INTO ALCOHOL?
Tilray Buys Beer Brands
Tilray’s purchase of eight beer brands from Anheuser-Busch has its critics. Some believe a cannabis company shouldn’t diversify into non-cannabis brands, especially alcohol.
Alcohol companies have long been at odds with the cannabis movement.
First, there is the elephant in the room. Alcohol is a poison, whereas cannabis is a medicinal herb. Alcohol causes health problems, whereas cannabis heals. Many former problem drinkers have gone “Cali sober,” where they substitute cannabis for booze.
We don’t have to stretch that far into history to discover what Anheuser-Busch really thinks of pot. As late as 2010, they donated thousands of dollars to prevent cannabis legalization.
Before 2018, when they announced InBev to develop cannabis-infused beverages, Anheuser-Busch had been a long-time anti-cannabis lobbyist in Washington and elsewhere.
Will this association with alcohol (and Anheuser-Busch) negatively affect Tilray’s brand? What about in the long term? Time will tell, but so far, shareholders are happy about Tilray’s purchase of eight beer brands.
POOR STRATEGY ON ANHEUSER-BUSCH’S PART?
Tilray Buys Beer Brands
Tilray buying eight beer brands from Anheuser-Busch is looking good for their bottom line. But what about Anheuser-Busch? Why did they sell?
The beer giant has been on a rocky road in 2023. The company’s flagship product, Bud Light, has been at the center of consumer boycotting.
Earlier this year, Bud Light partnered with a transgender activist – Dylan Mulvaney – for a marketing campaign that backfired completely.
The backlash wasn’t surprising, considering the more conservative-leaning customer base of the product.
As well, Dylan Mulvaney is incredibly sexist. (His idea of being a woman, for example, is saying, “I’m fine,” when you’re not—reinforcing negative stereotypes of women.)
Bud Light and its parent company have lost nearly $400 million in sales and laid off hundreds of workers as customers switch to Modelo and other beers.
So long as Tilray’s beer brands don’t insert themselves into the culture war, then Tilray’s purchase should pan out successfully.
The issue comes back to cannabis consumers. Will they trust a cannabis brand that also deals in alcohol?
Or is a cannabis company trying to straddle both worlds?
The financials look good for Tilray but don’t be surprised if contentious cannabis consumers take their business elsewhere.
Then again, contentious cannabis consumers tend to avoid these corporate conglomerates like the plague. Tilray started in Canada, where weed is legal, but the “illicit” market still accounts for nearly half of all sales.
Tilray buying beer brands is just another brick in the corporate-state wall enclosing around us.
FOOTNOTE(S)
https://www.globenewswire.com/news-release/2023/08/07/2720135/0/en/Tilray-Brands-Announces-Agreement-to-Acquire-Eight-Beer-Beverage-Brands-From-Anheuser-Busch-Fueling-Tilray-s-Future-in-the-U-S-Craft-Beer-Industry.html
https://www.businessinsider.com/big-alcohol-donates-money-to-fight-legalization-of-pot-2010-9
You won’t purchased that 59 Burst anytime soon… lol
Maybe going back to school in order to get better wages.
Once you reach 250 k yearly salary, you can have a regular life. Lol
Playing Russian roulette is a bitch.
I invest me money not to lose it… lol
Life is too 🩳.
Heads don’t drink alcool.
Not healthy!
Mixing alcool and canna is another futuristic dud… lol
A cannabis naive proposition that is doomed right from the start!!!
It is estimated that more than 140,000 people (approximately 97,000 men and 43,000 women) die from alcohol-related causes annually, making alcohol the fourth-leading preventable cause of death in the United States behind tobacco, poor diet and physical inactivity.
Just as they want to implement a warning ‘’alcool is not healthy’’ on beer cans. Lol
It is estimated that more than 140,000 people (approximately 97,000 men and 43,000 women) die from alcohol-related causes annually, making alcohol the third-leading preventable cause of death in the United States behind tobacco, poor diet and physical inactivity.
Who are you going to call?
The initial hype has long gone and never to return…
Home / Legal
Marijuana reform faces ‘more challenging’ environment in Congress under GOP
author profile pictureBy Chris Roberts, Reporter
March 13, 2023
Rep. Nancy Mace, of South Carolina, is on U.S. House Speaker Kevin McCarthy’s good side.
On the surface, the Republican congresswoman‘s loyalty should be good news for marijuana legalization’s prospects on Capitol Hill.
Mace is a leading conservative voice for marijuana reform.
And McCarthy, a California Republican, won the gavel after a protracted leadership fight, relying on steady support from moderates such as Mace to survive a revolt led by the far-right House Freedom Caucus.
But as for the marijuana industry’s hopes for significant reform in the 118th Congress, Mace offers only a cold, hard reality.
“It’s more challenging. It’s certainly more challenging under Republican rule,” she said.
Marijuana will struggle for attention in the current Congress despite promising signs demonstrating the issue’s continued success.
Although marijuana legalization has spread to red states including Missouri, where adult-use sales began last week, and a majority of Americans profess support in polling for legalization, lawmakers, lobbyists and other interested observers interviewed for this story suggest that modest reform – let alone major, revolutionary change such as federal legalization – remains years away.
“Nobody is expecting to get a whole lot done, this year or next,” said one prominent cannabis lobbyist, who was granted anonymity in order to speak freely.
“That’s the general opinion from staffers involved with cannabis on both sides of the aisle.”
Key obstacles
There’s a consensus that marijuana is not a concern for McCarthy, who represents a conservative part of California where legal commercial cannabis, including retail dispensaries, are banned.
“This is not a priority for him and never has been,” Rep. Earl Blumenauer, an Oregon Democrat and chair of the House Cannabis Caucus.
There’s also a recognition that key committees where marijuana-related bills need to be heard to become law will instead become obstacles – such as the House Judiciary Committee, now chaired by Ohio Republican Jim Jordan.
Jordan has already indicated his priorities are investigations involving:
The notorious laptop belonging to President Joe Biden’s son Hunter.
The U.S. intelligence community’s behavior.
Immigration at the southern U.S. border.
In early conversations with cannabis interests, Jordan’s team was “very candid,” another lobbyist said. “Anything else is not going to get a lot of committee time.”
On that same committee, friendly faces such as Ed Perlmutter, the retired Colorado Democrat who was the main driving force of the SAFE Banking Act in the House, have been replaced by Texas Republican Rep. Chip Roy, to whom NORML assigned a D- rating.
Some observers note that marijuana is one topic where agreement can be found between moderates such as Mace and Freedom Caucus hardliners including Rep. Matt Gaetz, the Florida Republican who defied McCarthy until the end.
Others point out that Jordan could allow legislation through his committee without a full hearing.
But on the aggregate, in the House, “You’re down an Ed Perlmutter, and up a Chip Roy,” said one federal cannabis lobbyist speaking anonymously. “From cannabis’ perspective, that’s not as helpful.”
All this adds up to an agenda where marijuana will struggle to compete for committee time.
Future of States Reform Act
Mace indicated on Friday that she will reintroduce the States Reform Act, her vision of federal legalization that removes marijuana from the Controlled Substances Act and leaves most of the remaining questions to be answered by state law.
Her bill will join a rescheduling proposal written by Rep. Greg Steube, a Florida Republican.
In addition, observers expect a reintroduced SAFE Banking Act, likely to be sponsored by Rep. Dave Joyce, an Ohio Republican, as well as the reappearance of other bills that failed to make much headway in the past Congress.
Early indications are that even SAFE Banking will encounter the same problems that thwarted progress in December.
Mace – like many others – pointed out that 100 Republicans in the House did vote in support of SAFE Banking, a much sought-desired measure that would protect financial institutions working with state-legal marijuana businesses from federal regulators.
But she also acknowledged the reality that Republican leadership has other priorities.
“There’s not as much support, which is a mistake,” Mace said. “SAFE Banking is the easiest bill to do. It’s the easiest bill to champion for.
“The holdup was in the Senate, with Senate Republicans,” she added. “It wasn’t the House.
“I plan on talking to our leadership and making the case. But, right now, it is the House that is very unpredictable.”
Adding to the hurdles facing marijuana reform: the looming 2024 presidential election.
In less than a year, both houses of Congress “will be consumed with the presidential election” and find little time for other business, Mace said.
“It’s basically an abbreviated term.”
The Senate battleground
In the Senate, Democrats now enjoy a slim 51-49 majority, with the extra seat occupied by Pennsylvania Democrat John Fetterman, a longstanding marijuana reform supporter.
That means Senate Majority Leader Chuck Schumer and Democrats’ priorities enjoy a freer hand in key committees.
And early indications are that Schumer will prioritize cannabis banking reform after efforts failed last session.
But it also means that any bill will need at least nine Republican votes as well as the entire Democratic caucus to defeat any filibuster under the chamber’s cloture rule.
Multiple observers told us that Senate Minority Leader Mitch McConnell remains steadfastly opposed to allowing a vote that would reveal a split in his caucus.
Schumer and McConnell’s offices did not respond to requests for comment.
“The dynamics in the Senate mystify me,” Blumenauer said, offering a take shared by other Americans in and out of the Capital Beltway while nonetheless sounding an optimistic note.
The 117th Congress, he said, ended with more progress on marijuana than at any other time over the past 50 years, with President Biden:
Signing a cannabis research bill into law after issuing pardons for certain low-level federal marijuana offenders.
Launching an administrative review of marijuana’s status under the Controlled Substances Act.
As for SAFE’s demise, Blumenauer offered a familiar postmortem: The votes were there, if the showdown had only happened.
“I will just tell you they had legislation they could have brought to the floor,” he said. “One of the reasons why I wanted a vote (on SAFE Banking) was to show that we had more than 60 votes. There’s no question in my mind.
“But I’m not second-guessing them. We’ll continue to try and provide opportunities, but it is really important for advocates of all stripes to understand how important it is to get this SAFE Banking bill passed.”
He added that, “not only will it help largely minority dispensaries, it will give us a marker of where we are. I think it will break the floodgates, and we’ll be able to move for additional reform.”
Provided, of course, that the 118th Congress can find the time and inclination.
Where are you illegal little monkeys???
Busy making lots of money i suppose…
Capitalist at work!
Hard workers, i’m told.
And, they know what they are doing but.
There you go…
Home / Canada
Canadian producers destroyed over 500 tons of cannabis since 2018
author profile pictureBy Matt Lamers, International Editor
July 13, 2021
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
(This is the first installment in a series examining Canada’s mountain of unsold cannabis.)
Canadian producers have destroyed millions of packaged cannabis products and hundreds of tons of unpackaged marijuana since adult use was legalized in late 2018, according to data acquired by Matt.
Industry experts suggest the large-scale destruction reflects a variety of factors, ranging from low-quality product to a lack of retail outlets and stockpiling ahead of the 2020 launch of Cannabis 2.0 products such as edibles and concentrates.
The destroyed production underscores the woes licensed producers have faced the past three years and sheds light on the sheer amount of cannabis that has gone unsold in Canada since the launch of recreational marijuana sales in the country in October 2018.
Roughly 447,118 kilograms – or nearly 500 tons – of unpackaged dried cannabis was destroyed by licensed producers between 2018 and 2020, according to the data provided to Matt by Health Canada, the federal body tasked with regulating cannabis production in the country.
However, the actual amount in tons of destroyed cannabis is believed to be much higher because the unpackaged figure doesn’t account for packaged cannabis – defined by Health Canada as marijuana held in stock and ready for sale.
In addition to the nearly 450,000 kilograms of destroyed unpackaged cannabis, almost 6 million packages were destroyed in 2019 and 2020.
Those destroyed packages consisted of:
3,783,397 packages of dried cannabis.
1,500,396 packages of extracts.
714,491 packages of edibles.
943 packages of topicals.
Health Canada did not say why the cannabis was destroyed by producers, but industry sources cite various reasons for regular destruction, including:
Clogged sales channels, as provinces opened stores slowly in the early years of legalization.
Cannabis was produced before appropriate licenses had been secured, such as a sales license.
Low-quality production.
Production for testing only.
Producers stockpiling cannabis in 2019 for the launch of 2.0 products, such as edibles and most extracts, in 2020.
Moreover, the overall amount of destroyed cannabis has been growing steadily since late 2018.
Reported destroyed unpackaged dried cannabis from October to December 2018 was 11,548 kilograms, or 10% of production.
A year later, that total rose to 155,780 kilograms, or 15% of production.
In 2020, Canadian licensed producers destroyed 279,837 kilograms of unpackaged cannabis, or almost 20% of the 1,473,767 kilograms of dried cannabis produced that year.
“In commercial horticulture, a 5%-8% annual loss can be expected due to insect infestations, plant disease, crop failures and bad weather. If companies are destroying 15% or more of their inventory, it should be very alarming to owners and shareholders,” said Ryan Douglas, owner of the Ryan Douglas Cultivation consultancy and master grower for Canopy Growth predecessor Tweed from 2013 to 2016.
“Massive waste and repeated crop failures in commercial horticulture are the exceptions, not the norm, and it’s no way to run a profitable business.”
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
Bursting inventories
As of the end of 2020, roughly 1,141,092 kilograms of dried cannabis were sitting in inventories of federal license holders, provincial wholesalers and retailers. Ninety-five percent was with federal license holders.
The inventoried cannabis combined with the destroyed products reveals that a minimum of 1,591,092 kilograms of cannabis went unsold as of the end of 2020.
Douglas noted that any new industry has its growing pains.
In this case, Canadian cannabis executives clearly were looking at overly rosy sales forecasts. That, in turn, led to large stockpiles of unsold product and excessive production capacity.
“I think the excitement and easy access to capital helped to exacerbate the issue in Canada,” Douglas told Matt.
If the product was destroyed because it was unsaleable, Douglas said, that would indicate producers were unable to grow quality cannabis as they scaled up their output.
He said that likely stemmed from a couple of factors.
“One, the quality wasn’t there in the first place,” he said.
“Second, many head growers didn’t have the experience to handle a massive jump in production capacity. Going from 20,000 square feet indoors to more than 100,000 square feet of greenhouse production is a giant leap.
“If a cultivation team doesn’t have experienced leadership to manage this change, the end product will suffer.”
‘Infested with aphids and mildew’
Mary Durocher, president of Fox D Consulting in southwestern Ontario, said the levels of destruction indicate an oversupply of poor-quality cannabis as well as a lack of diversity of cultivars coming to market – something upcoming markets in other countries could learn from.
She said some large-scale cannabis producers in Canada have been seeing crop losses of 30% annually.
Agricultural industries such as corn, soybeans and wheat typically see around 5% crop loss, she said.
“Publicly traded producers who have product that is unsaleable will store it and destroy small amounts quarterly so it doesn’t affect their financial statements,” she said.
“There are producers out there who have had product for four years sitting in their vaults. They’re waiting to destroy it so it doesn’t look bad and it doesn’t affect their books.
Durocher said the large amount of stored and destroyed cannabis is indicative of companies lacking experience growing cannabis at such a large scale.
“We have a lot of product infested with aphids and mildew,” she said.
“I haven’t seen a client have anything less than a 20%-30% crop loss annually. That’s pretty standard for the industry, but most people won’t tell you that.”
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
How destruction happens
Karina Lahnakoski, a partner of Deloitte’s risk advisory practice, said the actual federal regulation doesn’t prescribe the method of destruction.
Because there is no regulation behind how you must destroy the cannabis, companies can use one of several methods, she said.
“The kitty-litter method,” where cannabis waste is combined with kitty litter before disposal, is still a method license holders are using. “It’s not very efficient,” Lahnakoski said.
“A lot of companies have moved to incineration or a composting method,” she said. “The requirement is you break down the cannabis so it can’t propagate or can’t be consumed, so it’s not taken from the waste stream.
“It is completely up to the company, and we haven’t seen a standard.”
“Generally, if a company doesn’t have a lot of waste, they still tend towards that kitty-litter method, but larger companies are starting to move towards incineration.
“I’ve seen one company that has built-in their own incinerator because they anticipated having more waste.”
Home / Cultivation
Germany’s scaled-back cannabis law still faces EU hurdles
Bonno
August 7, 2023
Germany’s cannabis ambitions could still be partially incompatible with European Union law, even though Berlin significantly scaled back the initiative, according to the country’s parliamentary research unit.
In particular, the research body noted, Germany’s plan for cannabis clubs would be “complicated” in terms of EU law because members would be consuming recreational cannabis they did not grow themselves, according to the Brussels-based Euractiv news outlet.
After first unveiling a blueprint for recreational cannabis legalization in October 2022, Germany’s draft framework was then sent to the European Commission – the EU’s executive branch – for vetting to ensure its compatibility with EU and global drug laws.
However, that process did not go according to plan for the German government, which then backpedaled on its blueprint.
Germany stripped almost all commercial elements from the law in the new plan, instead presenting a two-pillar approach:
Nonprofit associations would be allowed to jointly cultivate cannabis for adult-use purposes and distribute it to members for consumption.
Regional pilot projects with commercial supply chains would be rolled.
The parliamentary research unit now suggests that even those limited ambitions might run afoul of EU rules.
Euractiv quoted a European Commission spokesperson, who said EU law requires member countries to ensure that activities linked to trafficking in illegal drugs are punishable, including cannabis.
ADVERTISEMENT
Germany published the draft law for the first pillar of its cannabis legalization process in July.
It’s unclear if the assessment by the parliamentary research unit will have any impact on the timing of that law, which is expected to reach the federal Cabinet for approval this month.
I wish they paid their taxes like good corporate should.
Photo by Larysa and Feng Yu/stock.adobe.com
Canada’s federal government accounts for a growing share of the unpaid debts racked up by failed cannabis companies, lending credence to claims the nation's nascent adult-use industry is suffering from pricey fees and heavy taxation.
A review of recent insolvency filings by MJBizDaily found that the Canada Revenue Agency, the federal tax collection body, and Health Canada, the national department in charge of regulating cannabis production, are commonly among the biggest unpaid creditors for insolvent marijuana producers.
In the 2021-22 fiscal year, various levels of government collected more than 1.5 billion Canadian dollars ($1.2 billion) from the cannabis industry via excise tax, other taxes (such as sales taxes) and various fees, including the annual regulatory fee.
However, the amount of unpaid federal excise tax and fees has skyrocketed.
Licensed producers owed the Canada Revenue Agency CA$192.7 million as of March 31, 2023, while unpaid regulatory fees jumped to almost CA$4 million.
“It's increasingly clear that, for many cannabis companies, insolvency is the result of a formula where taxes and fees squeeze out such a big proportion of the overall price,” George Smitherman, CEO of the industry group Cannabis Council of Canada, told MJBizDaily International Editor Matt Lamers.
Poor quality cannabis grown at scale has to be destroyed and most of their grow cannot be sold.
Fierce competition, a glut of product and falling wholesale prices are also weighing on this doomed industry.
They do have to fix the mold problem…
Growing at scale is not smart.
Mold is your enemy.
You are pumper. Lol
Due Diligence?
You will get out of poverty.
You will be able to lay down payements to purchase a home.
Who knows… possible retirement?
I guess your Tilray,s crap does,nt have a “good distribution”… lol
Tell Simon to better distribute… lol
Mold is difficult to distribute but… lol
—Regarding growth: Most large Canadian cannabis producers are only capable of growth via dilutive and costly M&A.
Examples: Canopy and Tilray have spent billions on M&A and their cannabis sales still declined from 2022 to 2023. Meanwhile, investors own less and less of the firm. Exception to the rule is GoSing. Dude has millions invested.
You are confusing Tilray and Budweiser?
Budweiser makes money.
Tilray waisted billions.
True, Tilray known how to grow excellent high quality cannabis that is all the rage.
Simon knows cannabis.
When I asked some Canadian cannabis CEOs 'you're still producing way more cannabis than you're selling; where's it all going to end up?'
Their answer, almost always: Export
This is one of the factors that has led to billions in losses.
When I asked some Canadian cannabis CEOs 'you're still producing way more cannabis than you're selling; where's it all going to end up?'
Their answer, almost always: Export
This is one of the factors that has led to billions in losses.
TILRAY COMEBACK?
B. AUGUST 4, 2023
Is Tilray making a stock market comeback?
The last year has been brutal for cannabis stocks. Whether because of failed banking reform in the United States or the incompetent anti-business ideology of the Communist Chinese puppet government in Canada – the cannabis industry is taking a beating.
But is Tilray the outlier? Is this (formerly Canadian, now New York-based) pharmaceutical-cannabis company worth the investment?
Is Tilray making a comeback?
Compared to last year, Tilray’s revenue has grown by 20%. Its gross profit margin is up 37%. Tilray’s fourth-quarter earnings placed its cash and equivalents at $448.5 million.
With a market cap of $1.28 billion, Tilray blows its competitors out of the water. Compare Tilray’s comeback to Aurora Cannabis ($180 million market cap) or Canopy ($288 million).
Of course, 2022 saw Tilray with record low stock prices. It’s no secret the Federal Reserve’s monetary tightening has affected the long-term outlook of many companies.
Analysts suspect Tilray’s position to improve based on this belief that interest rates aren’t going up any further. That inflation has “moderated,” and it’s back to business as usual.
The Tilray comeback isn’t just thanks to cannabis sales, however. Tilray is also involved with alcohol, “wellness,” and distribution—the distribution segment of their operation accounts for almost half of their revenue.
Of course, cannabis is part of the potential Tilray comeback. They just launched a new line of THC-infused drinks and acquired HEXO. This acquisition increases their Canadian cannabis market share by 13%.
Analysts aren’t convinced the HEXO buy was a good one, however. The Quebec-based company saw a 50% decline in year-over-year revenue for its last quarter. That’s a net loss of $86.5 million.
Nevertheless, Tilray expects growth between 11% to 27%. It’s also anticipating positive free cash flow next year versus the outflow of $12.9 million in fiscal 2023.
SKEPTICS OF CORPORATE CANNABIS
The problem with the Tilray comeback is the numbers. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) are not entirely accurate measures of profit. Tilray still needs to generate a net profit. They reported a net loss of $119 million in the fourth quarter.
The CEO admits that betting on American legalization is no longer an option. The company has a solid footing in European markets, especially with distribution in Germany.
But the company also never posts quarter-over-quarter results, which is a red flag for investors. Critics will say that no growth, no earnings, and no margin stability don’t make for a good cannabis company.
Their new THC-infused sparkling drinks (under its RIFF brand) are isolate products, which means consumers won’t receive the entourage effect from other beneficial cannabinoids. Another dud.
Tilray also operates in the legal Canadian market, where the underground legacy growers and retailers still account for 80% of the cannabis market.
A good chunk of Canadians are unhappy with overpriced, irradiated corporate weed. Many prefer the mom-and-pop farmers they’ve been using for years.
Corporate balance sheets won’t overturn thousands of years of plant medicine. The Tilray comeback is likely investor fiction.
Like the belief that inflation is a naturally occurring aspect of free markets and that central banks can “cool” it by raising interest rates.
Or the belief that a company with a 47% decreased stock price from last year, with a $119 million loss, and which doesn’t expect to be profitable by 2026, is making a comeback.
Simon is a master grower.
—Still on production, he said "When people started talking about thousands of kilos and metric tons (for export), I was thinking, 'Where are those tons going?'"
Exactly.
Simple fact: There are more countries that want to export cannabis than import it.
—Still on production: Erkelens told me "I never had an idea of expanding without demand, thinking the world’s demand would grow (to reach my production)"
This is the opposite of how large 🇨🇦 producers operated, thinking global LEGAL demand would rise to meet their overproduction
Home / Cultivation
Canadian growers destroyed a record 425 million grams of cannabis last year
A graphic showing the amount of Canadian cannabis that is destroyed since 2018
(This is the first installment of a two-part series on the destruction, supply and sale of regulated cannabis products in Canada.)
Canadian licensed producers have destroyed a growing amount of cannabis every year since adult-use legalization nearly four years ago, with 2021’s record quantity far exceeding the product sold that year.
The latest data signals that some Canadian mass-producers might need to further rein in output to bring it more in line with forecasted sales, after years of trying to rightsize capacity so they’re not growing more than they’re able to sell.
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All told, Canada’s federally licensed marijuana producers destroyed a record 425 million grams – or 468 tons – of unsold, unpackaged dried cannabis last year, according to Health Canada data.
Last year’s total was up more than 50% from the 279 million grams of dried cannabis that was destroyed in 2020. LPs destroyed 155 million grams in 2019.
Seattle-based analytics firm Headset estimates that sales of dried cannabis and pre-rolls amounted to 293 million grams last year in four key provinces, indicating destroyed inventory again exceeded sold production.
Headset monitors sales in Alberta, British Columbia, Ontario and Saskatchewan, which together account for approximately three-quarters of all legal sales of recreational marijuana products in Canada.
In addition to the destruction of unpackaged dried cannabis, more than 7 million packaged cannabis products across the country were sent for destruction in 2021, according to the Health Canada data.
Quantities of destroyed cannabis include:
3,576,232 packages of dried cannabis.
1,118,148 packages of extracts, including vapes.
2,421,823 packages of edibles, including beverages.
15,359 packages of topicals.
Headset tracked cannabis sales of 104 million packaged units in 2021 – indicating that, unlike unpackaged dried cannabis, sales of packaged merchandise far exceeded the amount that was destroyed.
The Health Canada data does not include the weight of the packaged production.
Widespread destruction
Destruction has been growing in Canada’s young cannabis industry after the largest producers funded and built out more production capacity than the industry needed after the launch of recreational sales in October 2018.
Most of the biggest greenhouse transactions led to direct real estate losses worth millions of dollars and “balance sheet adjustments” worth billions of dollars in inventory and other asset write-downs, previous MJBizDaily reporting found.
In fact, cannabis producers in Canada sold less than 20% of their production between legalization in 2018 and the end of 2020.
Since 2018, almost 900 million grams of unpackaged dried cannabis has been destroyed by licensed producers because of overproduction and quality issues – a weight approximately equal to 650 Toyota Prius cars.
That figure would easily pass the 1 billion-gram mark when destroyed packaged marijuana is accounted for.
Bloated balance sheets
Stewart Maxwell, a cannabis crop consultant based in British Columbia, said some large producers might be putting off destruction to make their balance sheets look better than they really are.
“I think some of the larger producers just want cannabis in their inventories. Even if they never sell it, it still looks good on your books to have assets,” he said.
“A lot of producers aren’t destroying products when it’s ready to be destroyed, even though it’s no longer marketable.”
Across all product categories in Canada, the amount of packaged product sitting in corporate inventories far exceeds the amount of packaged merchandise that is sold.
That imbalance indicates that high levels of inventory destruction could continue for some time.
In December, for instance, 14 million packaged units of extracts were stashed in inventories of producers, wholesalers and retailers.
In the same month, sales amounted to less than 3 million units in recreational and medical channels.
Roughly 19 million units of cannabis edibles were packaged and ready for sale in December. Only about 4 million units were sold, according to government data.
Cannabis topicals inventory reached 550,000 units, compared with sales of 65,000 units.
Meanwhile, roughly 36 million packaged units of dried cannabis were in inventory that month, with sales reaching 9.6 million units.
Packaged cannabis destroyed in Canada by product type
Product type 2020 2021 Percent change
Dried cannabis units 2,642,779 3,576,232 35.32%
Cannabis extracts units 1,337,364 1,118,148 -16.39%
Edible cannabis units 714,485 2,421,823 238.96%
Cannabis topicals units 943 15,359 1528.74%
Showing 1 to 4 of 4 entries
Source: Health Canada
The imbalance primarily lies with licensed producers, not wholesalers or retailers, the Health Canada data suggests.
Maxwell warned that the overproduction will make life difficult for most new entrants into the industry.
“I’m a crop consultant. I make my living teaching people how to grow more weed. But quite often, my first meeting is uncomfortable,” he said.
“A majority of the time, I’m telling people, ‘I’m sorry, but you’re going to fail.’ And they usually don’t hire me when I tell him that, but that’s the reality if you’re just getting into this industry (now).
“The odds are, even if you are a good actor and you have substantial financial assets behind you, the numbers are not good for anyone. Because of these issues – oversupply. Cannabis can’t find its real price point.”
Demand forecasting
One of the companies navigating Canada’s tumultuous cannabis market better than some of its larger competitors is cultivator Organigram Holdings.
The New Brunswick-based company has managed to grow its overall market share and sales, while most of its main rivals have seen their sales crash and write-downs skyrocket over the same period.
A recent report by New York-based financial services firm Cowen noted that some Organigram rivals experienced sales declines upwards of 39% year-over-year in the second quarter of this year.
Organigram’s sales, by contrast, rose 60%.
How?
CEO Beena Goldenberg said part of the reason is that Organigram sells most of what it produces, avoiding the massive destruction and write-downs facing larger competitors.
“No. 1, Organigram built out our capacity over time. We had mistakes, too. But in the last couple of years, we’ve been producing based on our sales forecast,” she said in a phone interview.
Goldenberg said not overproducing requires a deep understanding of what your customers want to buy and why.
“Like anything else, it’s all about making sure you’re producing what a consumer wants,” she said. “Quality is becoming the determining factor.”
She said markets are stabilizing enough to make accurate forecasts, “and you shouldn’t have massive amounts to write off. You should be working with the provinces on making sure you have an optimized (product) lineup.”
Cannabis is an agricultural product, Goldenberg said, so consumers don’t want something that’s six months to two years old.
“I think we’re performing very well because we have fresh products in the marketplace all the time. It’s not aged six months, nine months,” she said.
Being able to deliver fresh products boils down to three factors, she said:
Forecast accuracy.
Measured investments in inventory.
Customer service.
“In my whole career, not specific to cannabis, it is always (finding) that balance between forecast accuracy and investment in inventory and customer-service levels. You have to optimize those three factors,” Goldenberg said.
She said Organigram is sitting on about three weeks of inventory.
“That is critical to our process,” she said. “We look at what we need, and we produce accordingly.”
—Regarding growth: Most large Canadian cannabis producers are only capable of growth via dilutive and costly M&A.
Examples: Canopy and Tilray have spent billions on M&A and their cannabis sales still declined from 2022 to 2023. Meanwhile, investors own less and less of the firm.
Tilray’s molded bunk will eventually find new happy customers.
But you will be a billionnaire…
Mexico, Colombia, Germany, Israel, US, NZ, etc were all supposed to have legal and functional, nationally-regulated adult-use cannabis markets by now, judging by the billions of $ Canadian corporations dumped into those markets.
None of them do.
Re-Doomed!👍️
Why must cannabis producers be so cautious with global expansion?
Because the legal/regulatory development needed to make money almost always takes years/decades longer than expected.
And sometimes the legal outcome is a market with limited or no commercial opportunity at all!
DOOMED
Which Canadian cannabis companies have the most SKUs on the market, and is the strategy working?
1) Tilray: 606
2) Canopy Growth: 227
3) ?
Figures compiled by analyst Pablo Zuanic
Are Canada's largest licensed cannabis producers flooding provincial wholesalers with massive amounts of (mostly) unsellable SKUs to lock out smaller competitors?
Bedrocan owes profit to its focus on medical cannabis: Q&A with founder Tjalling Erkelens
B. Bohn
August 2, 2023
Are medical and adult-use cannabis effectively the same thing, and can businesses thrive in both markets?
Some executives and regulators will tell you there is no real difference, but Bedrocan founder Tjalling Erkelens isn’t one of them.
The Veendam, Netherlands-headquartered cannabis producer does not waver from its focus on and belief in medical cannabis and operates under a clear distinction from adult use – despite the hype that often comes with new recreational markets.
Erkelens says the focus on medical is part of the core reason for Bedrocan being a profitable cannabis producer.
“People were asking me, ‘Why don’t you do rec?’ I said, that will take my focus off what I’m really trying to do. I think adult use in the end will be a bear market – the lowest price will prevail,” he said in an interview with B. Bohn.
Erkelens spoke about what it takes to run a profitable medical cannabis company in Europe, the opportunity in Germany and expanding into new markets such as Denmark.
When Canadians were spending billions to expand their cannabis businesses globally, in countries with no meaningful sales, you didn’t follow them. What did you know that they didn’t?
I want to spend money responsibly.
That’s more or less the old-fashioned moral here in the Netherlands and in Europe in general – if you have investors on board, use and spend their money wisely and make your company profitable.
What I have always been doing is producing on demand. That is a core rule in the company. Figure out the demand, then live up to that level and, if needed, expand.
Overproduction is a major problem in the industry, not just in Canada. Why is producing on demand so important to you?
Produce what you can sell, and don’t produce what you cannot sell.
Your biological assets will go up not in smoke or vape, but they will end up in the trash can in the end, because in the pharmaceutical world, there are expiration dates.
I never had an idea of expanding without demand, thinking the world’s demand would grow (to reach my production).
When people started talking about thousands of kilos and metric tons (for export), I was thinking, “Where are those tons going?”
If you want to sell cannabis in Europe as a medical product, as a pharmaceutical product, you better know what you’re doing.
I have seen North Americans approach this basically from an adult-use attitude and not from a true medical attitude – especially on the cultivation side.
Your cultivated product should have a level of standardization – genetically and chemically – that allows it to be processed as a true pharmaceutical product.
What else is core for Bedrocan?
Your product is also core. You need to know what you’re producing.
If you’re the CEO of a (cannabis) company, you need to know your cultivation department inside out.
You need to know the genetics of your product inside out.
We started with small-scale production. That is where I learned.
Why are you expanding into Denmark now and not five years ago, like most of your competitors?
There was no definitive regulation in Denmark that allowed for commercial export. That only happened two years ago.
There was a pilot program for Danish patients.
A lot of Canadian companies went to Denmark in the hope that the pilot program would be finalized and become part of the law, which eventually happened in the end. (Most Canadian cannabis companies have exited Denmark.)
But those are the things (regulatory and legal evolution) I cannot bet on.
I cannot bet on a regulation or law that is still in the pilot phase and then spend millions on something that might end in a few years again.
So we waited until May 2021, when the Danish parliament approved the definitive law for production, cultivation, processing and exporting.
Now it is law, so we can go there.
Why now? Because of demand. We have demand for product. It’s not a wild idea for us to set up a production facility in Denmark.
The production capacity has been sold for everything we are building now, so I know what I’m getting when I open that facility.
I know the people working there will not be fired two years after it opens.
What I also know is my numbers on production, revenue and profit. I know those numbers already. That’s the way we operate.
What’s your goal for Bedrocan?
Bedrocan will diligently but carefully expand its activities – and footprint if needed – to wherever legitimate demand for its products becomes apparent.
Bedrocan is not focusing on business leadership nor domination but, rather, on fulfilling the needs of patients and their professional caregivers in the most ethical and sustainable way possible.
Medical demand is rising on multiple fronts, on the patient and scientific side, because of the quality and standardized level of our products.
What about recreational cannabis?
I see too many risks in the adult-use market business-wise.
It’s very unwise to mix two totally different markets – to mix them in one company.
One of the mistakes in the boardrooms is when they think cannabis is just cannabis, but that’s not the case.
Cannabis for medical purposes is a very different product compared to cannabis for recreational use.
Medical cannabis is strictly about standardized products, proven quality and efficacy.
One of the things we’re doing is clinical research.
We opened up our clinical research unit just this year because we now have the money to do it.
We’re basically bankrolling everything ourselves.
This is the road we have chosen, to grow incrementally on demand.
Scientific and clinical research for us is a very important leg to stand on.
Some North American businesses bet heavily – and lost – on Germany’s original plan for full legalization. What did you expect and why?
In the German situation, there was unbelievable optimism, but I had never been optimistic about that situation from the beginning.
The political optimism that was there two years ago – we immediately said they’re not going to make it and it isn’t going to work.
Germany as a country will not trespass on (United Nations) and European rules. That’s impossible, because Germany is the driving power in Europe.
In Europe, we are also dealing with a number of countries that don’t want to legalize at all.
I’m still surprised Germany found a compromise (for regional trial programs), but they still have to check back in with the European Union again before they launch the plan for social clubs and homegrows.
What they did in the meantime is separate medical from rec, and I am very happy about that.
Ontario is lowering its markups on pot, as cannabis companies struggle to stay afloat
What's uncertain: will the change reduce pot prices or boost the bottom line of businesses?
Mike Crawley · CBC News · Posted: Jul 30, 2023
A hand reaches for a canister of cannabis.
The provincial agency that distributes all legal cannabis in Ontario is reducing its wholesale markups, starting in September. It's not yet clear what impact the changes will have on the prices consumers pay for pot. (Justine Boulin/CBC)
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Cannabis retailers and producers hope an upcoming move by Ontario's pot distributor to lower its price markups will help an industry still struggling to compete with the illicit market.
Ontario Cannabis Store, the Crown agency that has a monopoly on legal distribution in the province, is changing its pricing structure starting in September. The changes will reduce most wholesale markups that OCS imposes on cannabis products it sells to retailers, lowering its profit margin.
What remains to be seen is the impact the reduction will have on prices consumers pay for pot or on the bottom line of cannabis companies.
Lowering the wholesale markups is a good first step by OCS, says George Smitherman, president and chief executive of the Cannabis Council of Canada, the industry group that represents licensed producers.
"There is no doubt that the reduction in markups at the Ontario Cannabis Store is beneficial to the cannabis industry," Smitherman said in an interview. "We'll be looking forward to celebrating future steps."
A woman wearing a surgical mask, a hairnet, and scrubs stands among plants in a licensed cannabis production facility.
There's been a recent surge in licensed cannabis producers in Canada laying off staff and seeking creditor protection. (Catherine Paradis/Radio-Canada)
The cannabis sector in Canada has had little to celebrate recently. It's going through a grim year of financial trouble, especially among producers.
Aleafia Health Inc., a TSX-listed company with three cannabis production facilities in Ontario, announced on Tuesday it's gone into bankruptcy protection.
Fire & Flower, a retail chain with 90 locations across five provinces, filed for bankruptcy protection in June.
B.C. producer Tantalus Labs filed for insolvency last month and laid off nearly all its staff.
Canopy Growth, one of Canada's biggest producers, announced 800 layoffs and the closure of its Smiths Falls, Ont., headquarters in February, after racking up $2.6 billion in losses in less than a year.
The business environment for cannabis producers is quite challenging and many are struggling to be profitable, says Smitherman.
"The scenario for a lot of companies is that they just can't find enough, after fees and taxes and markups, to be able to pay their bills and to justify what was a many, many, billions of dollars of capital investment," Smitherman said.
He says the OCS markup accounts for "a very significant proportion of the end cost that the consumer pays" for pot.
Photo of David Lobo standing in front of some cannabis products on shelves.
David Lobo is president and CEO of Ontario Cannabis Store, the agency that controls legal distribution in the province. He says OCS's reductions in its wholesale markups will amount to around $60 million per year. (Tina MacKenzie/CBC)
PUBLICITÉ
Currently, the OCS wholesale markup adds on average 31 per cent to what's called the landed cost of cannabis. That's the price that licensed producers charge OCS, which includes the federal-provincial excise tax of $1 per gram.
OCS is moving to new markup rates of 25 per cent on most cannabis products and 23 per cent on dried flower.
Ontario's making a killing on pot sales. But are retailers getting killed in the process?
The agency has reviewed its pricing policies over the past year and believes the time is right to make these changes, says David Lobo, president and chief executive of OCS.
"With this pricing approach, we will be much more in line with a number of other jurisdictions," Lobo said in an interview. "We've been able, with the size of our market, to really put a competitive product out to consumers and I think that's going to continue to be the case."
OCS estimates the changes will save the industry $60 million next year.
To put that amount in context: OCS moved $1.1 billion worth of wholesale cannabis and made $184 million in profit in 2021-22. The agency is yet to publish its financial report for the 2022-23 fiscal year.
A close up of cannabis bud.
The price that Ontario consumers pay for cannabis in licensed retail outlets includes a $1/gram federal-provincial excise tax, an OCS wholesale markup of 31 per cent, plus 13 per cent HST. (Jonathan Castell/CBC)
What happens to pot prices?
People in the cannabis sector say they're not sure yet how the reduced markups will affect the price that customers pay for pot in Ontario after they kick in on Sept. 11.
"We will see once it's rolled out where the dollars flow," said Lobo. "There may be some additional margin room that producers choose to keep, there will likely be some margin room that flows down to retailers and there will probably be some that ultimately flows to consumers."
A spokesperson for a prominent cannabis retailer says he doubts the changes will significantly bring down the prices that consumers pay.
"I don't think they'll see a difference in retail pricing," said Cameron Brown, communications officer for The Hunny Pot, which has 20 locations across southern Ontario. "I think most products that consumers are buying today on shelves will remain fairly close to the same price."
Court approves cannabis 'fire sale' as Tantalus Labs goes bankrupt
Brown says he believes most of the savings will go to licensed producers and retailers will see little of it.
Legal pot has been getting cheaper in Ontario.
Prices have generally dropped since 2019 largely because of a glut of supply as well as the explosion in retail stores, now numbering some 1,500 across the province, says Michael Armstrong, an associate professor at Brock University who monitors the sector.
A nighttime photo of two retail cannabis shops side-by-side, with signs saying 'True North Cannabis Co.' and 'High Ties Cannabis Store.'
There are now more than 1,500 licensed pot shops in Ontario, a number that retailers say is saturating the market. (Alistair Steele/CBC)
"There's lots of competition that has squeezed the margins for both producers and retailers in the cannabis industry in Canada in general, and Ontario in particular," said Armstrong in an interview.
Despite those squeezed margins, Armstrong believes producers and retailers might still pass some of their savings from the lower OCS markups on to consumers in the form of lower prices in an attempt to carve more market share away from illicit dealers.
FRONT BURNERWill the legal weed business be okay?
Canada must help legal cannabis sector compete with the illicit market, experts say
Nearly five years after legalization, estimates by OCS and the Cannabis Council of Canada suggest that the illicit market still accounts for more than 40 per cent of sales in Ontario.
"We can't be selling ounces for $50 just to compete with the illicit market," said Brown.
At the same time as it reduces its wholesale markups, OCS will increase the markup it puts on the products it sells direct to consumers from its own website. OCS says that will give private-sector retailers a better chance to compete with the provincial agency on price.
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Home / Legal
No timeline on Biden administration marijuana rescheduling, DEA chief says
July 28, 2023
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The Biden administration has yet to provide the U.S. Drug Enforcement Administration a “specific timeline” to complete its review of marijuana’s status under federal law, the agency’s chief told members of Congress on Thursday.
That prompted one lawmaker to vow to speed things along.
“We’re going to get this moving,” said U.S. Rep. Steve Cohen, a Democrat from Tennessee.
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Last fall, President Joe Biden triggered an “administrative review” of marijuana’s classification in the Controlled Substances Act.
Public health agencies, including the U.S. Food and Drug Administration and the Department of Health and Human Services, are currently reviewing published science and data.
That includes data from medical marijuana programs submitted by state regulators.
After the science is considered, health agencies deliver a recommendation to the DEA.
That process will “hopefully” be completed by the end of the year, Health Secretary Xavier Becerra said in June.
But on Thursday, DEA Administrator Anne Milgram was less specific.
According to The Hill, Milgram told pro-marijuana members of Congress that the DEA to date has “not been given a specific timeline” to consider rescheduling and offer its own recommendation to the president.
“I have not heard of a timeline from them,” she told Rep. Matt Gaetz, a Florida Republican.
“So I don’t know.”
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Biden has said he supports federal medical cannabis legalization and marijuana decriminalization.
Rescheduling would be a boon to the marijuana industry, which has long called for tax relief.
Rescheduling marijuana, currently classified as a Schedule 1 controlled substance, would mean cannabis businesses would no longer be subject to the tax restrictions under Section 280E of the federal tax code
Home / Cultivation
Share consolidation sweeps marijuana industry as stock prices flop
author profile pictureBy Solomon Israel
July 31, 2023
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Women, minority execs show few gains in U.S. cannabis industry, according to the latest data from the MJBiz Diversity, Inclusion and Equity Report. Get your copy here.
Image depicting consolidation of cannabis stock shares
(Illustration by morzan/stock.adobe.com)
In the face of slumping marijuana stock prices, publicly traded Canadian cannabis producers and U.S. ancillary companies are increasingly turning to share consolidations to maintain their listings on the Nasdaq exchange.
Canadian grower Canopy Growth Corp. is the latest to announce plans for a share consolidation after the company ran afoul of the Nasdaq’s minimum bid-price requirement.
Nasdaq-listed cannabis companies that have completed share consolidations include Canadian producer Hexo Corp. – now part of Tilray Brands – which consolidated shares in December 2022, and fellow Canadian grower Organigram Holdings, which consolidated shares in early July.
Massachusetts-based marijuana ancillary company Agrify Corp. also consolidated shares in July.
Although negative sentiment surrounding cannabis stocks could potentially change because of external factors, all signs suggest more share consolidations to come: Several cannabis producers and ancillary firms are under Nasdaq warnings regarding their low share prices, and share consolidations are a possible solution.
High-profile examples include Canadian producer Aurora Cannabis and Village Farms International, the British Columbia-headquartered parent company of cultivator Pure Sunfarms.
Equity analyst Nadine Sarwat, the London-based director of North American cannabis with Bernstein Research, said she wouldn’t be surprised to see the share-consolidation trend continue.
“Because we aren’t seeing any indication that the problems that are causing these issues are being solved,” she said.
For example, the Canadian government’s review of its cannabis legalization law is running late, Sarwat observed.
“And unless you believe that there is going to be a meaningful change there, that then becomes really difficult to say (that) a lot of these companies are going to see a far rosier future,” she said.
“And then in the U.S., we’re still seeing meaningful price compression in cannabis – there’s a lot of excess supply, depending on the state, federal (reform) isn’t very clear yet,” Sarwat continued.
“That’s not to say that the industry cannot be successful in 10 years, but there is more to suggest that the pain is going to continue before it gets better.”
Equity analyst Jesse Redmond, head of cannabis at Florida-based Water Tower Research, explained that in bullish times, when certain equities have gained significant value, companies have chosen to split their shares in order to lower the price of each share.
Such share splits make the stock “more accessible to investors. … You’d wake up the next day with four times as many shares at a quarter of the price,” he said.
“Traders figured out that once companies announce stock splits – and especially the day after they happen – typically the shares rally, because people like getting more shares, and the lower stock price sometimes opens up a name to more retail investors.”
Share consolidations, also called reverse share splits, are the opposite: Outstanding shares are combined, increasing the value of each share.
“Mathematically, they’re both a zero-sum game,” Redmond said.
A company’s market capitalization is not affected by either a share split or a share consolidation.
However, share consolidations can help a company keep their listing on a major exchange such as the Nasdaq.
Such listings are particularly important at a time when funding remains in short supply for cannabis operators.
Nasdaq share-price warnings
The latest wave of high-profile cannabis share consolidations has been driven by the listing requirements of the Nasdaq stock exchange, which requires stocks to maintain a $1 minimum closing bid price.
If a stock trades below that $1 minimum for 30 consecutive business days, the Nasdaq issues a warning and grants a 180-day period for the company to regain compliance.
A second 180-day period might be granted to companies trading on the Nasdaq Capital Market, one of the exchange’s three tiers.
Cannabis companies are listed on all three tiers, which also include the Nasdaq Global Select Market and the Nasdaq Global Market.
Staying above that $1 minimum is clearly presenting a challenge for several Nasdaq-traded cannabis producers – a distinctly Canadian and international group, since U.S. plant-touching companies can’t list on the Nasdaq because marijuana remains illegal under federal law.
“On one hand, what you’re seeing is continued challenges in the fundamentals of these companies,” Bernstein analyst Sarwat said.
Those challenges aren’t all the companies’ fault, she added: Canada’s cannabis excise tax structure presents an obstacle to profitability, and restrictions on cannabis marketing make it “difficult to bring up brand equity, which is how you justify charging the higher price.”
But Sarwat said some companies do bear responsibility for their own woes, such as overbuilt production capacity and poor quality products.
“And now you’re seeing those companies having to significantly pare back capacity, and it has impacted their financial performance, and that’s now being reflected in lower share prices,” she said.
Until recently, Sarwat added, higher marijuana equity valuations were maintained somewhat on hopes for U.S. federal legalization and an accompanying inflow of capital from major institutional investors.
“And now you’re having a realization that that federal change is probably not going to happen anytime soon, and that’s also depressing the stock prices.”
In addition to Aurora and Village Farms, international cannabis companies Akanda Corp. and Clever Leaves Holdings have been given share-price warnings, Nasdaq’s noncompliance list shows.
Several U.S. ancillary cannabis companies have made the Nasdaq’s naughty list for the same reason:
Marketing and loyalty platform Springbig Holdings.
E-commerce platform Leafly Holdings.
Technology company Akerna Corp., which has moved to exit the cannabis industry.
Advertising and technology firm WM Technology, parent company of Weedmaps.
‘Uncertain time for cannabis’
Consolidating shares doesn’t guarantee a permanent solution to the Nasdaq’s minimum bid-price requirement, since equity valuations are at the whim of market forces.
Even after Organigram consolidated its stock, for example, its Nasdaq-traded shares declined to less than $1.50 after the company reported third-quarter earnings.
Cannabis equity analyst Redmond believes marijuana investors are increasingly focused on profitable companies, moving away from metrics including adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and toward metrics such as operational cash flow and free cash flow.
“During this uncertain time for cannabis, I think people are starting to gravitate toward the less speculative businesses that are less reliant on the debt markets,” he said.
Redmond anticipates that cannabis businesses with trouble generating cash flow will see their share prices continue to drop.
“And, in some cases, those will drop below $1 and then we’ll find ourselves needing to do more of these reverse (share) splits,” he said.
However, Redmond added that positive U.S. political progress, including cannabis banking reform and the potential for rescheduling or even descheduling marijuana, could improve the MJ sector’s fortunes.
If such political progress causes U.S. cannabis stocks to rally, he expects that would affect American ancillary MJ companies and Canadian cannabis producers as well.
“When people get bullish on cannabis, or they see positive headlines about cannabis, a lot of the big players still can’t invest in the (over-the-counter-traded) and the (Canadian Securities Exchange-traded) names,” Redmon said.
“… I think you’ll see money come into those Nasdaq-listed names because they tend to have better liquidity, and they’re more accessible to the bigger, institutional-type investors, especially the ones with the quantitative programs that might be trading off of the headlines.”
Crappy growth to the moon!
TILRAY TO THE MOON!
PHOTO spyrakotLEGAL Senate Vote on SAFE Banking Act Likely Delayed Until Fall
Legislation to give cannabis businesses access to banking services will not get a Senate vote before summer recess.
ByA.J. HerringtonPublished on July 27, 2023
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A bill to give cannabis operators access to common banking services will not see a vote in the US Senate this summer, according to media reports, despite the hopes of Democratic leaders and businesses in the regulated marijuana industry.
Don Murphy, a lobbyist with the Marijuana Leadership Campaign, revealed on social media on July 20 that Ohio Democratic Sen. Sherrod Brown, the chair of the Senate Banking Committee, told him that the legislation, known as the Secure and Fair Enforcement (SAFE) Banking Act, wouldn’t receive a markup hearing this week as expected. Without the hearing, which gives lawmakers the opportunity to offer amendments to the bill, the legislation is unlikely to receive a floor vote in the Senate before the summer recess on July 31, delaying passage of the measure until this fall at the earliest. The Senate is slated to return from recess on September 5.
“Time to make early vacation plans Twitter friends,” Murphy tweeted on July 20 “Chairman Brown on the prospect of a #SAFEBanking vote, ‘Not next week.’”
If passed, the SAFE Banking Act would give cannabis businesses operating legally under state law access to traditional banking services by barring federal banking regulators from prohibiting, penalizing or discouraging financial institutions from providing such services. The bill provides similar protections for associated businesses providing services to state-legal cannabis operators, such as attorneys and property owners.
The legislation also prohibits federal banking regulators from terminating or limiting a bank’s federal deposit insurance because the bank is providing services to legal cannabis businesses. Regulators would also be barred from recommending or incentivizing banks to halt or reduce services to companies in the cannabis industry or taking any action on a loan to an owner or operator of a cannabis-related entity.
Cannabis Industry Operates Largely In Cash
Under current federal statutes, financial institutions that provide services to legal cannabis businesses face strict regulatory and reporting requirements put in place to prevent money laundering. As a result, few banks will serve the regulated cannabis industry and businesses are forced to operate largely in cash, making businesses, their customers and their employees more vulnerable to crimes, including armed robbery.
Originally introduced in 2019, the SAFE Banking Act also provides a safe harbor from criminal prosecution, civil liability and asset forfeiture for financial institutions that provide banking services to cannabis businesses, including the banks’ officers and employees. For the first time, the most recent version of the legislation extends similar safe harbor protections to Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI), which serve underserved communities that face challenges in accessing capital and provide affordable access to financial services, to ensure they can also serve cannabis businesses.
Ohio Rep. Dave Joyce, the lead Republican sponsor of the legislation in the House, noted in a statement to Marijuana Moment on Thursday that his chamber of Congress “has passed the SAFE Banking Act seven times with strong bipartisan support.”
“I am disappointed to see continued delays in the upper chamber and strongly encourage my colleagues in the Senate to act swiftly on this critical legislation,” he added.
Ten-Year Anniversary of Cannabis Banking Legislation
Congress first considered legislation to give state-legal cannabis businesses access to banking services a decade ago with the introduction of 2013’s Marijuana Businesses Access to Banking Act from former Rep. Ed Perlmutter (D-CO). The legislation has strong bipartisan support in both houses of Congress but has failed to gain traction with leadership in the Senate after success in the House several times over the past decade.
“The ten-year anniversary of the first introduction of the SAFE Banking Act is an inauspicious one,” Morgan Fox, political director of the National Organization for the Reform of Marijuana Laws (NORML), said in a statement. “It’s frustrating that after such a long time—and after this narrowly-tailored commonsense reform has been repeatedly approved in the people’s chamber—its forward movement in the Senate remains in question.”
Brett Gelfand, the CEO Of CannaBIZ Collects, a cannabis collection agency representing more than 800 cannabis and CBD clients, said that the latest delay for the SAFE Banking Act will hinder the growth of the industry because most financial institutions will continue to refrain from providing banking services and extending credit to cannabis businesses. The ongoing lack of financial services could have further repercussions in the cannabis industry, he said, if the lack of capital causes cannabis businesses to curtail extending credit to each other.
“One unexpected upside of SAFE Banking not passing is that it might force the cannabis industry to finally tighten credit and collection policies,” Gelfand says. “As most banks won’t extend credit facilities to cannabis companies, it’ll force the companies to be more selective in who they offer trade credit to, and the terms under which they offer this credit. This hopefully will lead to better credit and collection policies across the board.”
Good one : Fantino bites the dust… lol
Aleafia, started by ex-police, goes into creditor protection
Published on July 27, 2023 by David Wylie
Freshly machine-trimmed buds from Aleafia's first harvest at its highly automated Niagara Greenhouse Facility.
Cannabis company Aleafia, which had former Toronto police chief and politician Julian Fantino among its founders, is now in creditor protection.
Fantino once compared legalizing weed to legalizing murder. He then went on to launch Aleafia with Raf Souccar, an undercover drug officer who later became director-general of the RCMP drugs and organized crime section. Both men stepped down as directors in 2020.
Lender RWB demanded that struggling Aleafia settle its debts.
The company announced this week it has been granted creditor protection by the Ontario Superior Court of Justice to restructure the business and financial affairs, as well as potentially seek a buyer.
“After careful consideration of all available alternatives and consultation with legal and financial advisors, the board of directors of each member of the Aleafia Group determined that it was in the best interest of the Aleafia Group and its stakeholders to seek creditor protection under the CCAA,” the company says.
Julian Fantino doesn’t regret jailing people for cannabis
Fantino told the Toronto Sun in 2004 that legalization wouldn’t cut down on crime. Further, he told the paper: “I guess we can legalize murder too and then we won’t have a murder case.”
In a 2017 interview with CBC’s As It Happens, host Carol Off brough up Fantino’s police record.
“As chief of police in Toronto, you were very strict about drugs. You put people in jail. There are young people who are in jail because of people like you. You don’t see any contradiction between your past life as chief of police?”
Replied Fantino: “Not at all.”
“You’re making a huge mistake if you believe that I put everyone in jail that I came across that had marijuana. I gave all kinds of people all kinds of breaks,” he added.
Fantino is a good prick.
Divvy, Emblem fall under Aleafia umbrella
Aleafia sells cannabis in Canada, as well as Australia and Germany. It also operates a virtual medical cannabis clinic in Canada staffed by physicians and nurse practitioners.
The company owns three licensed cannabis production facilities and produces a diverse portfolio of products, including dried flower, pre-roll, milled, vapes, oils, capsules, edibles, sublingual strips, and topicals.
They sell under brand names Divvy, Emblem, Sunday Market, Bogart’s Kitchen, and Kin Slips.
The Toronto Stock Exchange (TSX) is expected to halt trading.
@mattgaetz isn’t doing this for the people but to get rich. Gaetz, Bashears&Burnett the husband of Kim rivers who is CEO of trulieve changed the language of the medical bill right before it passed to make sure the Florida market had little competition&the patients are suffering.