Archconservative Republicans and their network of influence have recently taken a staunch stand against the legalization of marijuana.
The largest Congressional GOP faction affirmed its national position on cannabis, saying that it should remain federally prohibited and suggested adolescent consumption could be tied to suicide and violent crime with more studies.
The 156-member caucus named the Republican Study Committee (RSC), published a 12-page agenda piece with more than 80 policy recommendations and 10 ideological tenets meant to reiterate the latest update in archconservative doctrine.
The section that touches on the issue of cannabis, titled “Protecting Children from Dangers of Drugs,” states that cannabis’ federally illegal status “has not stopped more and more states and localities from legalizing it under their own laws,” the statement says.
“This has led to an explosion of marijuana use among children, which is having a hugely negative impact on their health. Congress should not legalize marijuana, while also taking steps to constrain this new industry’s ability to harm children.”
The write-up adds, “At the very least, Congress should direct the CDC to gather data and conduct studies on the health impacts of THC use during childhood and early adolescence with a special focus on deaths by suicide and those involved in violent crime to provide Congress and the public with further information about these dangers.”
The memo also says that Congress should pass RSC chairman Rep. Jim Banks’ (R-IN) bill — supported by more than one-fourth of the Senate, Marijuana Moment reported — called, “Protecting Kids from Candy-Flavored Drugs Act,” which would raise criminal penalties for those who manufacture or distributes drugs “that are disguised as candy,” such as edibles.
In a press release regarding the agenda, Banks said that the “Biden presidency has failed America’s families.”
“Over the past two years, families have lost savings, flexibility, and control over childrearing to increasingly hostile and far-left ideologues,” he added. “Republicans need to position themselves as the party of families. Next Congress we need to focus on reforming the tax code to create more families, passing pro-life legislation, protecting parents’ pocketbooks, and giving them back control over their kids’ education.
All these policies are popular and proven, and we’ve seen the difference parents can make on election day. If Republicans can contrast our efforts with Democrats’ record of intrusion and control then I think parents will play a pivotal role in 2022 and 2024.”
RSC released a policy agenda that empowers parents, protects children, and builds an economy that puts families first.
The consensus around the issue isn’t unanimous, though.
“There’s never going to be 100 percent agreement on any issue, in any party,” a spokesperson for Brian Mast (R-FL), who co-chairs the Congressional Cannabis Caucus, told Marijuana Moment. “Rep. Mast shares the Committee’s desire to protect kids from dangerous substances, but believes that, ultimately, marijuana legalization is an issue that should be left up to the states.”
“He would like to see Congress focus its efforts on national security issues including securing the border and keeping drugs—especially those laced with fentanyl and other deadly substances—from making their way into our communities,” the Mast staffer said.
A spokesperson for Rep. Tom McClintock (R-CA) — who, along with Mast, voted for a comprehensive, Democratic-led marijuana legalization bill in April — told the outlet that her boss “disagrees with that provision” of the RSC memo.
Also last week, GOP pundit and former top Trump advisor Kellyanne Conway appeared on Fox News to criticize openly pro-cannabis Pennsylvania Lt. Gov. John Fetterman’s decision to hang up a flag displaying a marijuana leaf on the balcony of the Pennsylvania state Capitol. Fetterman is a Democrat.
“He put the marijuana flag up — he thought that was funny,” Conway said. “He’s trolling his opponent — he thinks that’s funny.
Conway also appeared to falsely conflate deaths from fentanyl overdoses in Pennsylvania with marijuana consumption in the state.
She added, “Here’s what’s not funny: that there’s been a doubling of overdose deaths in Pennsylvania while he’s been in office from 2015 to 2021. Fentanyl is rankling every corner of this state.”
The claim that the state has seen a doubling of marijuana overdose deaths is not true. Additionally, Fetterman has only been in the state office since 2019.
Overdose deaths in the state rose 3% from 2020 to 2021, according to the Pennsylvania Office of Drug Surveillance and Misuse Prevention. Most occurred due to opioids, as the proliferation of deadly prescription drugs and their illicit spin-offs remain an actual crisis. No death occurred due to cannabis consumption.
Additionally, national data from Centers for Disease Control and Prevention on drug-involved overdose deaths from 1999 to 2020 does not even list cannabis in its metrics.
In response to Conway’s Sept. 26 commentary, former Washington Post correspondent David Weigel pointed out that CDC data on 2020 fatal drug overdoses numbers in the state has eclipsed any other where cannabis was legally allowed, lending to more commonly corroborated findings that cannabis has yet to reportedly kill someone.
“In Pennsylvania specifically, troubled areas are riddled with people struggling with opioid addiction, which was documented in the Kensington neighborhood of Philadelphia last month. But Salonreports that the majority of central Philadelphia is gentrified and the drug crisis is better off than it has been in the past. Focusing only on the state’s troubled areas doesn’t provide an accurate picture,” High Times wrote.
Fetterman is currently facing off against GOP celebrity doctor Mehmet Oz for a U.S. Senate seat this election season.
TerrAscend said that it has entered into a multi-year agreement with TRP — the cannabis holding and operating company with the exclusive rights Cookies products — to cultivate and manufacture Cookies products in the Keystone State.
“Pennsylvania has always shown Cookie’s love and we could not be more excited to expand our reach on the East Coast with our partner TerrAscend,” said Berner, co-founder and CEO of Cookies. “We’re excited to launch a fresh menu of California flavors, in what has become a very strong and important market for cannabis in the US.”
The company said that it will soon launch Cookies products at each of the company’s ‘Apothecarium’ and ‘Keystone Canna Remedies’ dispensary retail chains in Plymouth- Meeting, Lancaster, Thorndale, Bethlehem, Allentown and Stroudsburg.
The trio has already made strides together in the New Jersey market, where the group launched “Cookies Corner” — a portion of the store dedicated to Cookies products — at a TerrAscend ‘Apothecarium’ dispensary.
“TRP is excited to partner with TerrAscend to bring some of the most desirable genetics out there to the patients of the Pennsylvania, and are looking forward to providing patients with the full Cookies experience when we open our flagship stores in the commonwealth” said TRP co-founder and CEO Brandon Johnson.
Strains from Cookies premium genetics will be made available at TerrAscend dispensaries, as well as Cookies stores owned and operated by TRP that are slated to open in the coming months.
“It’s exciting to announce this agreement and continue to collaborate with Berner and his team on sharing these world-class products with patients in Pennsylvania“, said Jason Wild, executive chairman of TerrAscend.
Cannabis companies are cheering a court ruling that will allow the sale of vape products in the state again. Yesterday a Commonwealth Court judge ruled that Pennsylvania medical marijuana companies could resume selling vapes that were taken off the shelves in February in a controversial recall. Earlier this year, the state regulators published a list of over 500 vape products they deemed could not be sold because they did not meet FDA requirements. However, products included in the recall had previously been approved by the state Department of Health for more than three years and the recall specifically focused on medical marijuana vaporization products that contained terpene additives.
Two lawsuits resulted from the recall. According to Law360, “Medical Marijuana Access and Patient Safety Inc., a nonprofit made up of dispensaries, growers, processors, certified patients that use medical marijuana vaporization products, and other industry stakeholders, filed suit against three high-ranking members of the state DOH in February in Pennsylvania state court.” At the time, the court authorized the recalled products to be held in quarantine instead of being destroyed until a decision was reached.
One of the companies affected by the case, Jushi Holdings (CSE: JUSH) (OTCQX: JUSHF) released the following statement:
On behalf of Pennsylvania’s medical marijuana patient community, we would like to extend our appreciation to the Commonwealth Court for its thoughtful assessment of the facts and circumstances upon which DOH’s February recall of tested, approved medical marijuana vaporization products containing terpenes was based, and for the subsequent orders issued on June 2 and June 15 allowing responsible operators to again make these products accessible to patients.
In light of the Court’s Orders, impacted products will be back on the shelves of BEYOND/HELLOTM dispensaries today and the shelves of our partner dispensaries across the Commonwealth in the coming days.
After receiving documents and testimony offered by MMAPS, the Court came to the unambiguous conclusion that DOH “failed to present any evidence” of potential harm to medical marijuana patients associated with the recalled products,” noting that the Department did not call any witnesses or present any evidence of patient complaints or adverse events during the preliminary injunction hearing.
Under Pennsylvania law, all medical marijuana products, including the recalled vaporization products, are subject to rigorous, redundant safety and quality testing and Department approval before they can be manufactured or dispensed. As to the recalled products specifically, DOH was neither able to cite a safety or quality testing deficiency nor a single adverse event relating to any recalled products.
“The Court’s June 2 and June 15 Orders are about more than just preserving patient access to tested, approved, and for many patients, effective medical marijuana products – they deliver peace of mind to thousands of Pennsylvanians that health risks cited by the Department could not be substantiated in any way or any extent. In fact, the Court noted the Department itself approved the recalled products for patient use following stringent quality and safety testing and found no evidence of a single adverse event related to any recalled product.” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder for Jushi Holdings Inc.
It seems Pennsylvania’s medical marijuana program has pulled flavored vapes. Last week, On February 2, 2022, the Pennsylvania Department of Health (DOH) posted a list of known additives that it says were not approved by the FDA (Food & Drug Administration) for inhalation. Then on Friday February 4, 2022, the Pennsylvania DOH issued a withdrawal of these products by many of the leading cannabis companies in the state. The products mostly seem to include flavors like citrus, candies and cookies.
The DOH sent a letter to patients and caregivers on February 4th saying that some of the additives were approved by the FDA in non-inhalable products, but were not approved for inhalable products. They issued a mandatory recall for all the products.
The companies included on the list were:
AES Compassionate Care
Curaleaf (OTC: CURLF)
GTI Pennsylvania (OTC: GTBIF)
Pennsylvania Medical Solutions
One company not on the list was Tilt Holdings (OTC: TLLTF), which wasted no time in letting the market know it wasn’t included.
“We have always been intently focused on manufacturing products that are safe, consistent, and effective for our patients,” said CEO Gary Santo. “While we do not have enough information available to comment on the DOH’s stance with respect to the use of certain additives, we want to make it clear to our patients, investors and other stakeholders that none of our products were named in the recall. TILT will continue to support our brand partners and other cannabis operators as the regulated industry seeks a resolution that prioritizes product conformance to the new additive restrictions released by the Pennsylvania DOH on Friday.”
Pittsburgh Business Times reported that since 2018, “There have been $2.8 billion in total sales, including $1.1 billion from growers and producers to dispensaries and $1.7 billion from the dispensaries to more than 582,000 registered patients and caregivers.”
Ayr Wellness Inc. (OTCQX: AYRWF) is buying Pennsylvania-based PA Natural Medicine, LLC, which operates three licensed retail dispensaries in the Commonwealth of Pennsylvania. The deal is valued at $80 million but could see an extra $40 million if milestones are met. The deal is expected to close in the fourth quarter and Ayr said that it expects to rebrand the stores once the transaction is complete.
“Our goal across our footprint is to develop scale and meaningful presence in each of our markets. Today’s announcement builds on our already strong position in Pennsylvania, where we have built a tremendous foundation since entering the state just a few months ago. Our three Ayr Wellness stores, open an average of less than six months, are run-rating at over $7 million in annualized revenue per dispensary and our cultivation facilities are producing some of the best reviewed flower in the state,” said Jonathan Sandelman, Ayr Wellness Founder, Chairman and CEO.
PA Naturals has locations in the college towns of Bloomsburg and State College, as well as Selinsgrove, PA, and operates under the retail banner “Nature’s Medicine”. The terms of the transaction include upfront consideration of $80 million, made up of $20 million in stock, $25 million in seller notes, and $35 million in cash. An earn-out of up to $40 million, based on 2021 EBITDA hurdles, is payable in Q1 2022 and includes a maximum additional cash payment of $10 million with the remainder paid in stock and notes.
In 2018, PA Natural Medicine was described as a partnership between Nature’s Medicine, a medical marijuana company based in Arizona, and two Pennsylvania businessmen, Tony DePaul and Austin Meehan. As of June 3, the Pennsylvania Department of Health reported that 548,468 patients were registered with 349,272 active certifications.
“With such great momentum in this market, we are expanding our retail presence with the acquisition of PA Naturals, a three-store operation in central Pennsylvania with some of the best operating metrics in the state and a complementary footprint to our existing six licenses. We look forward to welcoming the great people of PA Naturals to the Ayr team,” he concluded.
Ayr Wellness said in August that it expects revenues to be approximately $800 million in 2022 and adjustedEBITDA at $300 million. The revenue estimate increased from $725 million to reflect contributions from recent acquisitions and additional expansion (including into Illinois). No doubt with this additional acquisition, the numbers could rise again.
Pennsylvania has only legalized medical marijuana, but the numbers make it look as if it is adult use cannabis driving the sales. Cannabis data company Headset recently expanded its reach into Pennsylvania and published its first full market report based on consumer insights and real-time market data. The report found that over the past twelve months, Pennsylvania’s medical cannabis sales have escalated, and between April 2020 and March 2021, Pennsylvania’s medical markets brought in $909.4 million. Medical sales grew 120% in the first quarter of 2021 to $267.8 million from last year’s $121.5 million for the same time period.
The report also determined that Pennsylvania stands out among other U.S. markets with the largest average basket sizes so far this year, at $123.88 per basket. In addition, Pennsylvania’s average basket size was 2x as high as Michigan’s and 1.5x as high as Oregon’s.
“With close to $1B in sales in the last 12 months and growing at an incredible pace, we are thrilled to bring unprecedented insight into this exciting market, ” said Cy Scott, Founder and CEO of Headset. “As cannabis operators continue to make significant investments into Pennsylvania having access to extensive analysis, forecasts and a comprehensive understanding of this complex market as it continues to grow will be critical to success.”
Flower Is The Winner
Like most cannabis consumers, flower is the form factor of choice – despite being medical patients. It is even growing in market share. Flower was 38% of the market in March 2020 and is now 45% as of march 2021. Vape pens have dropped in market share, but still remain in second place taking 35% of the market. Concentrates had the highest average item price at $61, and tinctures, flower and vapor pens followed closely behind with an average item price of more than $50.
Pennsylvania is the 5th largest state by population and is expected to be a big market with rapid growth. A new survey from Muhlenberg College’s annual public health poll found residents want full legalization.
“The trend on public support for legalization of marijuana in Pennsylvania is clear, with support growing for the eighth year in a row,” Chris Borick, director of the college’s Institute of Public Opinion, said in a statement accompanying the survey results. “As the state government considers this policy option, the public is increasingly coming to the conclusion that they support legalization.” A record level (58%) of adult Pennsylvanians support the legalization of marijuana in the Commonwealth, marking the 8th consecutive wave of this survey that support for legalization has increased in the state.
Jushi Holdings Inc. (OTCMKTS: JUSHF) said it is planning a $50 million expansion project in Scranton, Pennsylvania which is expected to create more than 100 more new jobs in the Scranton area. The company said it plans to nearly double the square footage of its subsidiary’s grower-processor facility from approximately 90,000 sq. ft. to more than 160,000 sq. ft. in a phased expansion.
In 2019, the company opened the medical marijuana dispensary BEYOND / HELLO Scranton.Jushi already employs 70 people in the Scranton area and once this expansion is completed, it will have added 17 new jobs to the region. For the expansion, the company also plans to hire all local construction, electricians, and vendors for its expansion efforts.
“The medical cannabis market in Pennsylvania is rapidly growing and with our products in high-demand, this investment will significantly expand our cultivation capacity and market share,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of Jushi. “This is a robust operating environment and with the market intelligence gained through our eight currently operating BEYOND / HELLO™ retail dispensaries, we believe that patient demand for high-quality, medical-grade cannabis products is still far from being satisfied. We are very excited by the opportunity ahead of us in Pennsylvania, and as one of the fastest-growing jobs sectors in the U.S., Jushi and its subsidiaries look forward to bringing additional new local jobs and tax dollars to the region and further investing in Scranton’s economy and community.”
Pennsylvania’s Republican legislature continues to block the adult-use legalization measure despite the state’s widening budget gap. PA Governor Tom Wolf has been pushing for the legalization of cannabis for adults and looking for ways to close the budget gaps. If adult-use legalization were to pass in PA, the cannabis industry would likely double to triple in size, which would only create more taxes for state and local coffers and jobs in PA. The state is also facing pressure from its border with New Jersey which is planning on fast-tracking the legalization of adult-use cannabis. This could negatively impact the medical market in the state.
Jushi said that the majority of the approximate 70,000 sq. ft. expansion project will be focused on increasing the facility’s canopy space, which upon completion will nearly triple to approximately 98,000 sq. ft. In a statement, the company said that the first phase of the expansion is expected to come online in mid-2021 and the final phase will be completed by the second quarter of 2022. In total, Jushi expects to invest approximately $50 million in the expansion project, which is expected to create more than 100 new jobs in the Scranton area. Jushi (through its subsidiary Pennsylvania Medical Solutions, LLC), will work with Innovative Industrial Properties Inc. (NYSE: IIPR) (through its subsidiary IIP-PA 1 LLC) to partially finance the expansion project via an upsize to the existing lease agreement between the parties. The expansion project is subject to the company’s successful completion of certain milestones, including receipt of all local and state approvals and permits, and the finalization of a mutually agreed lease amendment with Innovative Industrial Properties Inc. related to the Facility.
The company reminded investors that it recently completed an expansion project in the third quarter of 2020, which included increasing the facility’s indoor cultivation from approximately 20,000 sq. ft. to approximately 45,000 sq. ft. (~33,000 sq. ft. of canopy) and supplementing the current CO2 extraction with new Class I, Division 1 ethanol extraction technology. The facility produces high-quality, indoor-grown flower and extracts and is strategically located within minutes of Interstate 81, Interstate 84 and the Pennsylvania Turnpike, enabling efficient wholesale distribution to the 98 dispensaries currently operating across the commonwealth, including the Company’s eight operational BEYOND / HELLO™ dispensaries. The facility is expected to supply the company’s subsidiaries and other licensed retail facilities.
I would like to say kudos to Pennsylvania Governor Tom Wolf for finally calling on the Pennsylvania General Assembly to legalize adult-use cannabis. It would have been better if he had actually thought through what he was proposing and meant it.
Last week, the governor said that he would like to legalize cannabis in order to bring in more revenue for the state and he thinks that selling cannabis in the state liquor stores is the way to do it.
“My hope is that with the pandemic and the hit that we have taken to revenues that there might be a little more interest in it now. And I think that we have had a little more time to see what’s happening in places like Colorado with revenues for example. This might be one way to plug a hole….We have a state store system that would be an ideal way to distribute it,” said Wolf.
Wolf spoke about how he would like funds left over from the CARES Act and tax revenue from cannabis sales to help turn the tide of the pandemic induced recession that has hit the commonwealth, but Senator Daylin Leach the sponsor of SB350 known as the “gold standard” for adult use legalization calls the governor’s plan a nightmare.
“I think it would be unresponsive to the consumer, a bureaucratic nightmare, discourage innovation and kill large parts of the industry right off the bat. Sure, we could do it. We could do it in a way that is less profitable, less advantageous, we can do it in a way that is lesser all around. I don’t know why we would do this,” said Leach.
Wolf’s proposal would make Pennsylvania the only state-run cannabis market in the country and we all know how well things go when the government takes over. If the state runs cannabis sales, it eliminates the retail market opportunity, a key driver of market competition, which means consumers will be the ones taking the hit in their pocketbooks. It will also constrain the product market, keeping out the smaller less capitalized brands, less flexibility in what brands will be sold and less chance of innovation.
Leach says that the governor’s plan is a political nonstarter and his state store announcement did more damage than good.
“He has made it (legalization) far less likely to pass. Republicans hate the state system, they are looking to shut down the state system, not expand their portfolio. Other than sign medical, he did nothing to help us pass medical. Wolf’s efforts to pass legalization have been clumsy and ham-handed enough.”
Knowing that Republicans are opposed, and every other state has passed on a government takeover of their cannabis markets, doesn’t it seem obvious that his proposal is a poison pill? Does it not seem intentionally designed to fail? There is plenty of precedents that makes it clear from every state why no government in its right mind would take this approach.
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