CAOA Archives - Green Market Report

StaffJuly 22, 2022
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15min400

Despite the forward progress of having some new cannabis legislation, industry insiders and top executives seem less than thrilled with the Cannabis Administration and Opportunity Act or (CAOA). Yesterday, U.S. Senator Cory Booker (D-NJ), Senate Majority Leader Chuck Schumer, (D-NY), and Senate Finance Committee Chair Ron Wyden, (D-OR) today introduced comprehensive legislation that would end the harmful and out-of-touch federal prohibition on cannabis by removing cannabis from the federal list of controlled substances and empowering states to implement their own cannabis laws. HELP Committee Chair Patty Murray (D-WA) and HSGAC Committee Chairman Gary Peters (D-MI) also co-sponsored the legislation.

According to Senator Booker, the legislation establishes a federal regulatory framework to protect public health and safety, prioritizes restorative and economic justice to help undo the decades of harm caused by the failed War on Drugs, ends discrimination in the provision of federal benefits on the basis of cannabis use, provides major investments for cannabis research, and strengthens worker protections. By decriminalizing cannabis at the federal level, the CAOA also ensures that state-legal cannabis businesses or those in adjacent industries will no longer be denied access to bank accounts or financial services simply because of their ties to cannabis.

However, many expressed skepticism about it. Here are their comments:

Matt Hawkins, Founder and Managing Partner, Entourage Effect Capital

“Although we see the long-awaited introduction of CAOA as another positive sign for eventual federal cannabis reform, the Democrat-proposed bill will have a tough time passing the Senate. It is perhaps most important to take stock of its language, as we could see portions of CAOA added to future bills that have a better chance of passing. Democrats are likely to lose the House in November’s midterms, so we expect the party to fight extra hard to pass a cannabis bill before they lose the opportunity, especially given the current administration’s perceived shortcomings in progressing other federal priorities.”

Troy Datcher, CEO, The Parent Company:

“The Senate’s historic introduction of a bill decriminalizing cannabis on the federal level marks the beginning of a new direction after nearly a century of the failed policy of cannabis prohibition in the United States. In the coming weeks, we look forward to a robust debate on The Cannabis Administration and Opportunity Act and will be watching closely to see whether the bill appears likely to obtain the support necessary for passage in the Senate.

While engaged in this important and necessary debate about the best policy framework for cannabis legalization, we urge the Senate to not lose sight of those reforms that have broad bipartisan support, such as the SAFE Banking Act, expungement of cannabis convictions and efforts to lower the barriers to entry for minority cannabis operators. These reforms are urgently needed to create the equitable and thriving cannabis industry we are hoping to build in the United States.”

Morgan Paxhia, Co-founder & Managing Director, Poseidon Asset Management

“We see the CAOA is a nonstarter. The cannabis industry could be thankful, excluding the harm caused by lack/adverse Federal action, for the little to no work done on this bill as it helps demonstrate the validity of SAFE. We still see little to no probability of Federal progress but the odds of SAFE happening in 2022 went up today post the release of CAOA.”

Ryan G. Smith, Co-Founder and CEO, LeafLink

“With $33 billion in retail sales and more than half a million jobs created, the cannabis industry is an important economic engine. Yet for too long, the absence of federal action has disadvantaged state-regulated cannabis companies and has led to a patchwork of state regulations to try to support these markets and achieve important goals around equity and entrepreneurship.

“LeafLink is committed to fostering healthy and equitable cannabis markets, and we’re pleased to see the Senate take an important step toward aligning federal and state law. As a New York-based company, we applaud Majority Leader Schumer’s prioritization and championing of federal cannabis reform and encourage legislators to take thoughtful action to support the industry’s future.”

Joseph Dowling, CEO of CV Sciences

“For far too long, cannabis and CBD regulations across the United States have been a patchwork of rules with no true federal guidance, making it difficult to make approved claims on products and ensure standardized consumer safety protocols. I am thrilled to finally see a bill reach Congress that will affect cannabis on the national level, potentially paving the way for federal regulation of cannabis, CBD and hemp products and enhancing consumer safety.”

Kyle Kazan, CEO Glass House Brands

“While we continue to build a multi-billion dollar cannabis industry and debate the details of legalization, many thousands of people are wasting away behind bars. Within this bill are the keys to their cells, and that’s the reason to support it. The time for discussion is over, and we must act as though it is our loved ones who are watching precious moments of their lives tick away. Pass this bill.”

Nick Kovacevich, CEO Greenlane

“Everyone knows that the current Democratic leadership is eager to legalize cannabis, but the fear is that they won’t be able to find a path through Republican resistance. The fact that a Republican is dropping a legalization bill is very encouraging because it will display a middle ground toward accomplishing this ever-important goal — the legalization of cannabis. Furthermore, this is a smart move by the GOP since they are gaining momentum into the midterms and cannabis is such a popular issue with the voters. If successful with cannabis legalization, it could result in broad election success come a year from now.”

Rob Sechrist, President Pelorus Equity Group

“At a time when the cannabis industry has added hundreds of thousands of jobs, millions in tax dollars, and large-scale infrastructure projects without government handouts, this measure would be a meaningful step forward towards continuing the economic growth that cannabis has created. A more targeted approach is the most likely to get the bipartisan support necessary to get the 60 votes required in the Senate. We look forward to seeing State laws being deconflicted from Federal law as soon as possible.”

While the CAOA was getting all the attention, several executives preferred to switch the attention to the legislation offered by Republican Nancy Mace called the States Reform Act. 

Kim Rivers, CEO Trulieve

“The States Reform Act is a consequential step in the right direction for common sense cannabis reform at the federal level. Our current piecemeal approach to legalization is not only unnecessarily cumbersome from a compliance perspective, but ultimately stymies the long-term growth of the legal industry. Allowing our existing federal structure to regulate cannabis businesses will allow legal companies to operate by a set of standardized guidelines, which ultimately bolsters consumer trust and minimizes risk for investors. Until the bill is passed, Trulieve believes Congress must still prioritize passing the SAFE Banking Act to ensure cannabis companies can fully access the financial resources they need to scale.”

Joe Bayern, CEO Curaleaf 

“We’re incredibly encouraged by this proposed bill, which is a thoughtful approach to decriminalization and includes common sense parameters for existing state markets, regulation, taxation, safe harbor, criminal justice reform, age-appropriate restrictions, hiring practices and veterans’ access. We are grateful to Representative Nancy Mace for blazing another trail in the quest to destigmatize this plant and unlock the economic and job creation opportunities of our emerging industry, along with the health and wellness possibilities for millions of Americans who have already demanded an alternative to traditional routes of medication and relaxation.”

Jon Sandelman, CEO Ayr Wellness

This bill represents the latest step towards the mainstreaming of the U.S. cannabis sector. This industry has thrived despite federal illegality, delivering results and experiencing incredible growth despite headwinds of all types. The industry and its participants of all sizes deserve the opportunities that federal reform will provide.

We applaud the courage we’ve seen on both sides of the aisle in addressing this important issue, most recently Rep. Mace who added a new Republican voice to the discussion of common-sense cannabis legalization. While this discussion is still in its early phases, we believe it is important that both sides of the aisle are actively engaging in conversation to create a fair, safe and regulated cannabis industry that benefits all stakeholders, including local communities and those disproportionately impacted by the War on Drugs.”

Abner Kurtin, CEO Ascend Wellness

“U.S. Representative Nancy Mace (D-SC) has introduced a strong middle-ground solution to federal cannabis legalization with the States Reform Act —[it’s not as ambitious as the CAOA but is more productive than the STATES Act, and thus more likely to see the 60 votes needed to pass the Senate. The presentation of a Republican-led cannabis reform bill is a huge milestone for cannabis, proving that leaders on both sides of the fence recognize the major importance of our industry in terms of public health, local and state tax growth and the creation of hundreds of thousands of U.S. jobs. Although we would have liked more emphasis on social equity initiatives, we’re glad to see measures in the bill support increased access to the legal market, small businesses and re-entry into society for those with nonviolent cannabis offenses.”

Jim Cacioppo, Chief Executive Officer, Chairman and Founder Jushi Holdings

“Jushi commends U.S. Representative Nancy Mace, D-SC, for her interest in responsibly bringing an end to federal cannabis prohibition and her excellent work in preparing the States Reform Act. Representative Mace’s States Reform Act is a comprehensive, thoughtful measure that strikes a commonsense balance between supporting important public health, safety, and welfare priorities on the one hand, and ensuring disproportionate enforcement of minor, non-violent cannabis possession crimes cannot continue to harm communities across our country on the other.

Given the critical mass of U.S. jurisdictions that have legalized cannabis for at least one purpose, it is especially noteworthy that the States Reform Act acknowledges and protects states’ rights. Representative Mace’s bill proposes a model that would ensure the will of the people in each state is reflected through the scope and character of their legal cannabis program, if any. And, with respect to public safety, the federal tax structure proposed in the bill is smartly fixed so legal cannabis products can be price-competitive with illicit market cannabis products – which will help stamp out the organized criminal enterprises presently supplying the bulk of illicit cannabis in the U.S. from our neighborhoods. Further, by removing federal barriers to cannabis-related medical research and access to ordinary business services, U.S. doctors and scientists could begin much-needed clinical studies in earnest, and states could spur economic development, create new business ownership opportunities, and job creation in urban, suburban, and rural communities alike on the people’s terms.

 


StaffJuly 21, 2022
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7min160

The Daily Hit is a recap of the top cannabis business stories for July 21, 2022.

ON THE SITE

Zynerba Enters New Equity Deal Worth $20 Million

Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE) struck an equity purchase deal on Thursday for up to $20 million with Chicago-based firm Lincoln Park Capital Fund (LPC). Lincoln Park Capital is expected to provide financial flexibility and is aligned with Zynerba’s long-term strategy for value creation, the company said. Read more here.

Cannabis Stocks Go Green On New Legislation

Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) formally filed the Cannabis Administration and Opportunity Act (CAOA) today. The long-anticipated legislation was met with cheers by the beleaguered cannabis stocks, which mostly jumped in value on the news. Read more here.

BDSA Says Nearly 50% of Americans Can Get Legal Cannabis

Cannabis data tech company BDSA released findings from its Consumer Insights Survey, which showed that cannabis consumer markets continue to expand as more states approve adult-use cannabis and acceptance of legal cannabis increased among consumers. BDSA noted cannabis consumer “milestones” that had been achieved, including nearly 50% of Americans currently with access to legal cannabis. Read more here.

The Psychedelics Clinic Trials Conundrum

When a psychedelic substance gets to Phase 3 trials, like the one completed by the Multidisciplinary Association for Psychedelic Studies (MAPS) with MDMA in August 2021, there is a general sense of relief. It’s been a long journey from Phase 1 for most substances in a clinical trial process—up to four years for Phase 3 alone in some cases. And only 33 percent of experimental drugs move from Phase 2 to Phase 3. Read more here.

IN OTHER NEWS

InterCure Ltd.

InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) (TASE: INCR) today announced record preliminary financial results for the second quarter of 2022. All amounts are expressed in Canadian dollars ($) or New Israeli Shekels (NIS), unless otherwise noted. Record revenue estimated to be $36 million (NIS 95 million), more than double the revenues of the second quarter of 2021 and representing sequential growth of over 9%. Read more here.

22nd Century Group, Inc.

22nd Century Group, Inc. (Nasdaq: XXII), an agricultural biotechnology company in hemp/cannabis and hops advanced plant technologies, today announced that it has entered into definitive agreements with institutional investors for the purchase and sale of 17,073,175 shares of its common stock at a purchase price of $2.05 per share in a registered direct offering priced above market under Nasdaq rules. The company also agreed to issue to the investors unregistered warrants to purchase up to 17,073,175 shares of common stock. Read more here.

Zelira Therapeutics

Zelira Therapeutics Ltd (ASX: ZLD,OTC-QB: ZLDAF), a global company in the research, development and commercialization of clinically validated cannabinoid medicines, is pleased to announce that its groundbreaking insomnia medication Zenivol™ has achieved formal approval from German regulatory authority BfArM to launch in the German medical cannabis market. Read more here.

Incannex Healthcare Limited

Incannex Healthcare Limited (Nasdaq: IXHL) (ASX: IHL), a clinical-stage pharmaceutical company developing unique medicinal cannabinoid pharmaceutical products and psychedelic medicine therapies for unmet medical needs, is pleased to announce that it has received approval from the Bellberry Human Research Ethics Committee for a phase 1 clinical trial investigating its proprietary multi-use, anti-inflammatory drug IHL-675A. Read more here.

Delic Holdings Corp

Delic Holdings Corp (CSE: DELC) (OTCQB: DELCF) (FRA: 6X0), a provider of new medicines and treatments, announced its first annual earnings for 2021 and reported revenue in excess of USD$1.5MM and increased net assets from USD$2.1MM in 2020 to USD$10MM. Delic continues to focus on accelerating growth through the expansion of its national chain of Ketamine Wellness Centers (KWC) and the addition of numerous new programs and services. Read more here.

Green Meadows

Green Meadows, a vertically integrated cannabis company based in the heart of Southbridge, Mass., has announced key new leadership changes to position the company for continued growth in the New England cannabis market, including the first non-family member to be appointed to the C-Suite with Max Jones joining as Chief Operating Officer. Bob Patton, co-founder and former CEO, is now chairman and his son and fellow co-founder, Chris Zawacki, has been promoted from COO to CEO. Dan Donahue has been appointed to Vice President Cannabis Operations and Josh Turner is now the Vice President of Cultivation. The expansion of the leadership team will support the rapid maturation of the business. Read more here.

Pervasip Corp.

Pervasip Corp. (OTCPK: PVSP), a developer of companies and technologies in high value emerging markets, today announced the decision to reduce the Company’s authorized shares and provide new guidance on reverse splits. Read more here.

Metrc

Metrc, the most trusted and experienced provider of cannabis regulatory systems in the U.S., announced its new contract with the State of Rhode Island to support the State’s regulation of medical cannabis, the company’s 22nd government contract to date and fifth so far in 2022. Read more here.

 


Debra BorchardtJuly 21, 2022
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Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) formally filed the Cannabis Administration and Opportunity Act (CAOA) today. The long-anticipated legislation was met with cheers by the beleaguered cannabis stocks, which mostly jumped in value on the news.

The 296-page legalization bill looks very similar to an earlier version, which was a mere 163 pages. The new language better defines hemp to address situations where more THC ends up in the final product than currently allowed. According to Marijuana Moment, the bill also has revisions concerning cannabis industry workers’ rights, a federal responsibility to set an impaired driving standard, banking access, expungements and penalties for possessing or distributing large quantities of marijuana without a federal permit.

“For far too long, the federal prohibition on cannabis and the War on Drugs has been a war on people, and particularly people of color,” Schumer said in a press release, adding that CAOA “will be a catalyst for change by removing cannabis from the federal list of controlled substances, protecting public health and safety, and expunging the criminal records of those with low-level cannabis offenses, providing millions with a new lease on life.”

News of the CAOA filing had been trickling out causing the MSOS ETF to rise more than 20% since bottoming on June 30 at 10.08. Of course this is way below the ETF’s top of 55 in February 2021.

Bullish For Stocks

Pablo Zuanic of Cantor Fitzgerald wrote a report released today, “We think the revised CAOA is bullish for cannabis stocks (all else equal), especially in the context of depressed valuations, the recent rally notwithstanding. If Senator Schumer’s cannabis reform bill (as filed this morning) were to be passed by Congress, it would be a watershed (read bullish) event for U.S. cannabis stocks. But we are doubtful it will have 60 votes in the Senate, so we will closely monitor his comments and those of Republicans in the coming days – i.e., the bill sponsors’ willingness to compromise.”

He went on to say, “Not coincidentally, Sen Booker begins committee hearings on Tue 7/26 on decriminalizing cannabis at the federal level. All that said, the revised CAOA bill (Cannabis Administration and Opportunity Act) seems to have taken input from a wide range of constituencies since the draft was first filed in mid-July last year (with some new business-friendly provisions), and this makes us think the sponsors could (?) consider a narrower (incremental) piece of legislation later this year (even in the lame duck). So, at this stage, we would not rule out any scenarios and think investment risks are to the upside.”

“Two initial thoughts: the revised bill seems to pass the buck on de-scheduling to the DOJ (why not just legislate? does this help get more votes?), but on the other hand calls for FinCEN to allow banks to service licensed cannabis businesses (we think this would be enough for US exchanges together with de-scheduling). We have said all along, the reform news tape is binary, and tough to predict, but we remain buyers of the top MSOs,” he wrote.

Safe Banking

Zuanic did note that the bill has again been attached to the Defense Bill (NDAA). “We remain skeptical Sen. Schumer will allow SAFE without broader social equity provisions, but it cannot be ruled out (especially given increased lobbying by a number of parties, including Treasury Secretary Yellen, leading Senators, state AGs). But even if passed, SAFE would not lead to de-scheduling and hence there would be no exchange uplisting for US cannabis stocks. Of course, it would help the industry in terms of access to borrowing and to a broader set of banking services. SAFE does not provide a framework to regulate cannabis,” he said.

The Financial Crimes Enforcement Network (FinCEN) he said would need to update or issue new guidance clarifying to banks and credit unions that the policy change means that they can lawfully service legitimate cannabis businesses.

The SBA would also get into the act with a 10-year pilot program through the federal Small Business Administration “for intermediary lending” to provide “direct loans to eligible intermediaries that in turn make small business loans to startups, businesses owned by individuals adversely impacted by the War on Drugs, and socially and economically disadvantaged small businesses.”

Mark Lozzi, CEO of Confia said, “We are hopeful about the newly introduced legalization bill, which includes social equity provisions. Until we have a solid system in place through legalization, including non-predatory banking opportunities, we will continue to see distrust of our industry, while compounding the challenges of transparency, regulation, and oversight. Social equity is a crucial part of cannabis legalization, and no business or individual deserves to be left behind. Confia has developed a social equity program as an actionable way for us to impact and contribute toward creating equality for all in the industry. We hope the new bill will receive support, and ultimately become law. As we are in the early stages of the cannabis industry’s legitimacy, we recognize it will take collaborative action and engagement in order to make a long-term sustainable impact.”


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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