SAFE Banking Act Archives - Green Market Report

StaffNovember 30, 2022
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4min6890

The Daily Hit is a recap of cannabis business news for Nov. 30, 2022.

ON THE SITE

International Cannabis Reform Ramps Up in Europe, South America

Global cannabis reform is gaining momentum. What started as a ripple in three countries has become a global policy movement. While many countries, primarily in Africa and Asia, continue to ban cannabis, a hotbed of reform activity is transpiring everywhere else. Read more here.

Cannabis Company Finds Novel Solution to Real Estate Woes

After struggling to find a downtown office landlord willing or able to house its headquarters, one of Chicago’s publicly traded marijuana companies has found a different solution: moving to a massive apartment complex. Verano Holdings (OTC: VRNOF) (CSE: VRNO) signed a 12-year lease for roughly 25,000 square feet in the office portion of Three Old Town Park. Read more here.

Eleventh-Hour Lobbying Push for SAFE Banking Under Way

The clock is ticking on the current Congressional session, with the 535-member body set to adjourn for the two-year cycle on Jan. 3. With that, the fate of the SAFE Banking Act is still very much up in the air, with no solid intel about exactly what will happen to the measure. Read more here.

SpringBig to Cut Nearly One-Quarter of Staff

SpringBig Holdings Inc. (Nasdaq: SBIG) will cut 23% of its staff in an effort to “right-size its expense structure,” the company announced Wednesday. The staff cuts, which total 37 positions, will be undertaken through layoffs and attrition. Read more here.

Latest cannabis earnings:

IN OTHER NEWS

Icanic Brands Co.

Icanic Brands Co. (CSE: ICAN) (OTCQB: ICNAF), a multistate operator of premium cannabis brands in California, reported sales of $7 million for the quarter ended Sept. 30, a year-over-year increase of 180%. The company reported a net income for the period of $10.6 million. Read more here.

TerrAscend Corp.

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF), a North American cannabis operator, announced that its subsidiary, WDB Holding MI Inc. (DE), and all subsidiaries of TerrAscend refinanced an existing senior secured term loan of $55 million. The amendment provides for a senior secured term loan with a principal amount of $25 million, plus incremental term loans of $30 million at the option of TerrAscend. Read more here.

Franchise Global Health

Franchise Global Health Inc. (TSXV: FGH) (FRA: WV4A) reported revenue of $11.9 million for the third quarter of 2022, a year-over-year increase of $11.7 million. The company noted that during the quarter, it entered into an agreement to acquire Flora Growth Corp. (Nasdaq: FLGC).


John SchroyerNovember 16, 2022
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This article has been updated to include clarification from Curaleaf on the statements made by Boris Jordan. 

The modern marijuana industry is headed toward massive consolidation that will eventually feature just a handful of companies atop a global supply chain, predicted Curaleaf Executive Chairman Boris Jordan during an appearance at an investor forum this week.

Jordan, speaking during Cannavest at MJBizCon in Las Vegas, told audience members that a close friend of his in the tobacco industry noted that the U.S. cannabis industry needs overlap in the supply chain to make products cheaper for consumers. That likely would lead to a similar supply chain model as tobacco, with only about four companies dominating the global market.

“This industry has to consolidate. There’s no way there’s going to be 35 or 40 or 50 or 100 cannabis companies 10 years from now,” Jordan said. “It’s probably going to be three to four large operators, all of whom are probably going to be closely doing what the tobacco industry has done, in terms of their supply chain and their costs, in order to be able to earn a very healthy margin.”

What makes the biggest tobacco companies so dominant, Jordan said, is they share resources and only differentiate on brands.

“They all use the same packaging. They all use the same paper. They all use the same machines. They all use basically everything the same, and they have different brands,” Jordan said of tobacco companies such as Altria and Philip Morris.

The tobacco companies “were able to bring (their) margins and costs so low that even in a high-tax environment, they earn a very healthy margin,” Jordan said.

Such a monumental shift may be closer than many think, he said, given what he’s hearing out of Curaleaf’s lobbying team in Washington, D.C. They indicate that the SAFE Banking Act still has a chance of becoming law this year, and that the Biden administration is focused on rescheduling cannabis within the next two years.

“We’re hearing from our people in Washington (D.C.) that they’re targeting a 2024 rescheduling of cannabis, from Schedule 1 to 3, 4, or 5,” Jordan said, adding that “there’s genuine bipartisan going on with SAFE Banking.”

If those two reforms come to pass, he said, “the two biggest impediments for the industry are gone,” referring to the 280E provision in the federal tax code and banking restrictions.

Jordan tacked on a warning, with a nod to the financial difficulties in much of the industry: “If we don’t get SAFE, you’ll see swaths of companies go out of business next year.”

Even the SAFE Banking Act, however, won’t be enough to drag publicly traded U.S. cannabis companies into profitability, Jordan indicated.

“If we get SAFE, we’re going to have a major reevaluation, but the real reevaluation will be when we get 280E (repealed). Because people need cash,” Jordan said, adding, “This industry, at some point in time, is going to be a dividend-paying industry.”

Overall, the Curaleaf executive projected optimism, both about chances for U.S. federal reform and about the opening of new markets in the next 12 months, particularly Germany, which is poised to legalize recreational cannabis.

“If they move and actually pass this, which we expect they will … that’s going to be almost an earthquake in the cannabis sector,” Jordan said about German legislation to launch an adult-use marijuana market. “I’m very excited. I think the way Germany goes, eventually the rest of Europe goes.”


Clarification from Curaleaf:

In response to the article, as posted, a spokesperson provided the following clarifying statement via email on behalf of Curaleaf:

We would like to clarify some of the misinterpretations surrounding the remarks Chairman Boris Jordan made during his keynote at Cannavest yesterday.

Curaleaf supports a diverse and inclusive industry; in fact, Boris has repeatedly said there is and should be room for players of every size in this industry. Curaleaf supports many brands on our shelves, and has
partnered with minority and small business operators, craft, and legacy farmers. We are hopeful that the federal government authorizes an industry that protects state licenses and minority-owned businesses. The first step to that is safe banking.

Boris was asked about long-term predictions for the industry and commented that he believes eventual consolidation to be inevitable, and that every consumer product industry in the world has consolidated into major operators. He said he thought cannabis would likely follow a similar path as the tobacco and alcohol industries, because it is a low-margin business that needs volume. The fact is today the top 5 operators in cannabis represent less than 2% of the US cannabis market; in alcohol and tobacco the top players represent 80% of the market.


Debra BorchardtFebruary 4, 2022
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Is the gazillionth time the charm for the cannabis banking legislation known as the SAFE Act? Yesterday, the U.S. House of Representatives officially attached the Secure and Fair Enforcement (SAFE) Banking Act to the full America COMPETES Act. A final vote in the House is expected today. However, it will them move to the Senate, where the legislation often fails to proceed any further.

The amendment comes from Colorado Democrat Rep. Ed Perlmutter and was preliminarily approved on a voice vote as part of an en bloc group with other amendments on Wednesday, according to Marijuana Moment but a roll call was requested. It was then passed in a 262-168 vote. In a Tweet, Perlmutter wrote:

I have filed #SAFEBanking as an amendment to #AmericaCOMPETES b/c cannabis-related businesses – big and small – are in desperate need of access to capital & the banking system in order to operate in an efficient, safe manner & compete in the growing global cannabis marketplace

Marijuana Moment also reported that there was no floor debate about the cannabis provision itself, demonstrating how relatively noncontroversial the bipartisan-supported reform is in the House.

“The SAFE Banking Act has been sitting in the Senate for three years and with every passing day their unwillingness to deal with the issue endangers and harms businesses, their employees and communities across the country,” Perlmutter said in a statement. “My work on this bill is far from over,” he continued. “As Speaker [Nancy] Pelosi and Senate Majority Leader Schumer are aware, going forward, I plan to pursue every possible avenue to get SAFE Banking signed into law.”

Many in the House have blamed Senator Chuck Schumer for not advancing the SAFE Act in the Senate. Schumer has longed for a broader more comprehensive legalization effort and continually pulls the banking legislation from larger pieces of legislation. This has created an opening for Republicans to court cannabis advocates. Even proponent of the “Big Lie” Rep. Mace found herself getting lots of attention from cannabis industry executives for a bill she proposed. Credibility was apparently not an issue for these executives that fawned over Mace, even though her freshman status made it unlikely she could get any legislation approved.

Mississippi Legalizes

While Washington debates easing banking rules for the current legal businesses, states continue to move ahead. This week Mississippi became the 37th state to legalize medical marijuana. On Wednesday Republican Gov. Tate Reeves signed into law the Mississippi Medical Cannabis Act. The bill known as S.B. 2095 was originally approved in January by the state Legislature. Voters had approved of legalizing medical marijuana as a ballot issue, but then the state Supreme Court struck it down on a technicality pushing the issue to legislators. The Governor wasn’t a big fan of the law saying on Twitter:

The “medical marijuana bill” has consumed an enormous amount of space on the front pages of the legacy media outlets across Mississippi over the last 3+ years. There is no doubt that there are individuals in our state who could do significantly better if they had access to medically prescribed doses of cannabis. There are also those who really want a recreational marijuana program that could lead to more people smoking and less people working, with all of the societal and family ills that that brings.

My goal from Day 1 (post Supreme Court ruling) has been to allow for the former and do everything in my power to minimize and mitigate – though knowing it is impossible to eliminate – the likelihood of the latter. After all, the overwhelming majority voted for a medical marijuana program in the 2019 election and I committed to supporting the will of the people.

I have made it clear that the bill on my desk is not the one that I would have written. But it is a fact that the legislators who wrote the final version of the bill (the 45th or 46th draft) made significant improvements to get us towards accomplishing the ultimate goal. Just a small sampling of the improvements we fought to include in the final version of the bill:

1. Reduces the total amount that any one individual can receive to 3 oz. per month. This one change will reduce the total amount by 40% from the original version (I asked for 50%). Said differently, there will be hundreds of millions of fewer joints on the streets because of this improvement.

2. The medical professional can only prescribe within the scope of his/her practice. And they have to have a relationship with the patient. And it requires an in-person visit by the patient to the medical professional.

3. Only an MD or DO can prescribe for kids under 18 and only with the consent of a parent/legal guardian.

4. An MD or DO must prescribe for young adults between the ages of 18-25.

5. The MSDH will promulgate rules regarding packaging and advertising, and I have confidence they will do so in a way that limits the impact on our young people.

6. Prohibits any incentives for the Industry from the Mississippi Development Authority.

7. Protects our churches and schools from having a marijuana dispensary within fewer than 1,000 feet of their location.

Because of these improvements to the program (as well as many other small ones that I am not mentioning), SB2095 will become law. I thank all of the legislators for their efforts on these improvements and all of their hard work. I am most grateful to all of you: Mississippians who made your voice heard.

Now, hopefully, we can put this issue behind us and move on to other pressing matters facing our state.

 

 

 


Debra BorchardtDecember 8, 2021
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In Congress, a new version of the National Defense Authorization Act (NDAA) did not include cannabis banking reform and the cannabis industry is pretty ticked off. The House originally passed its initial version of the NDAA in September that included the language that would protect banks that work with state-legal cannabis businesses. The new Act did not include those provisions. In a sort of hail mary pass, Rep. Perlmutter filed an amendment in committee to attach the marijuana language to the legislation— but he ultimately didn’t insist on a vote. Rep. Dave Joyce (R-OH), who is not on the Rules Committee but who is a co-chair of the Congressional Cannabis Caucus, said it is “incredibly disappointing” that the cannabis language was taken out of NDAA.

Marijuana Moment also reported that “the new defense bill also excludes an NDAA amendment filed by Sens. Dianne Feinstein (D-CA) and Brian Schatz (D-HI) that would have streamlined the application process for researchers who want to investigate cannabis as well as manufacture the plant to be used in studies. It also doesn’t include a separate Schatz-led amendment to federally legalize medical marijuana for military veterans who comply with a state program where they live.”

Senator Schumer has insisted on focusing on full marijuana reform instead of tackling safe banking as a separate issue. This latest iteration will now go through both chambers again before potentially being sent to the president’s desk.

Cannabis industry executives were not pleased, to say the least.

“It’s disappointing to see cannabis banking ignored by lawmakers, when the reality is countless cannabis businesses are dealing with great pressure to access affordable traditional financial services, while adhering to their financial compliance obligations, and in trying to do so, continue to face treatment of a second class citizen. Until we have a solid system in place for banking opportunities, we will continue to see distrust in and of our industry, while permeating the challenges of transparency, regulation, and oversight. With all that being said, I will have to admit that I am not surprised by the lawmakers decision in pulling the plug on formal cannabis legislation making its way into a bill. Supporting the cannabis industry on a federal banking level (not legalization) will come with much greater regulatory oversight, not less, and it is apparent that lawmakers and regulators are grappling with a program that will protect the financial system and all its stakeholders. There is no denying the need to address it, it’s just to what length will regulation take it.” – Mark Lozzi, CEO of Confia

“Safe Banking is needed in the cannabis industry like any other real industry, the pandemic has proven the resilience of this market and the government moving as slow as it does is sheer proof that this industry needs disruption from the banking community. Payzel has been designed to work with the true banking leaders of our space and has even awarded the real banking innovators who have stepped up to support the industry in the hundreds of millions already loaned into this space to drive growth forward. These banks are what we lovingly call Frontier Finance Institutions. ”  Todd Kleperis, Founder Payzel

“Even if the SAFE Banking Act had made it into the final version of the NDAA, I am skeptical that banks would have adopted it and openly started doing business with cannabis companies. To see real reform for the industry we need standalone legislation that becomes law, not a rider to a spending bill that needs to be reauthorized every year.” – Arnaud Dumas de Rauly, CEO & co-founder of the Blinc Group

 “The federal government has to address the current climate marijuana businesses are forced to operate in, and help the industry through effective legislation,” said Ryan Hale, Chief Sales Officer at Operational Security Solutions (OSS). “This industry faces serious compliance and security issues, and business leaders struggle to find solutions. Meanwhile, we also aren’t surprised, as forcing SAFE Banking into the NDAA was observed by many to be a way to force its passage, without effective discussion and bipartisan support that the issue deserves.” – Ryan Hale/Operational Security Solutions

“The hard truth is that many banks may be servicing cannabis companies without even realizing it. Eventually, this often leads to many regulation and compliance issues when they get discovered by larger financial organizations such as the IRS. Less than 700 banks in the US are knowingly serving cannabis companies because they are fearful of the potential consequences on the federal level. It’s a shame that SAFE Banking has been removed from the defense spending bill because, if passed, it could have encouraged many more financial institutions to create cannabis banking programs and allowed more cannabis-related businesses to end their high-risk, dangerous cash-only operations and operate with the same level of safety as other significant revenue-generating industries.” – Andrew Montgomery/HD Compliance

“It’s a shame but not a surprise that once again cannabis has been excluded from vital legislation in the US. The SAFE Banking Act could bring a lot of equity and security to the cannabis industry but still, it continues to be overlooked. Until we give cannabis companies fair and safe access to banking, it isn’t likely that the legal cannabis industry will outpace the rapidly growing illicit one. Many legitimate cannabis companies haven’t been able to spend the time or resources to join the legal cannabis industry because of the significant lack of banking and lending services. We are hopeful that other legislators will pick up the bill and either try to get support across the aisle once again as a standalone issue or weave it into other important legislation in early 2022.” – Blake Schroeder/Medical Marijuana Inc.

One voice reasoned that it actually may all work out.

“Perhaps, as some have suggested, this creates more of a potential opening for legalization in 2022. I personally think that’s correct, because the risk to the industry is that the President signs SAFE Banking, and then Congress does nothing else for a long time (because it already made an accommodation for the industry), leaving cannabis with modestly useful change to two aspects of doing business and nothing else. Or maybe, if the legalization push fails, there’s chatter about whether Congress might expand SAFE Banking to include non-bank financial services and 280E relief.” – Marc Hauser Counsel and Chair, Cannabis Practice Team at Reed Smith LLP, and Author of Cannabis Musings


Kaitlin DomangueJuly 15, 2021
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It’s time for your Daily Hit of cannabis financial news for July 15th, 2021. 

On the Site 

Harvest Health Leaves Oregon, Expands Florida Footprint 

Harvest Health & Recreation Inc.  (OTCQX: HRVSF) is done with Utah and expanding its Florida footprint. Harvest said it had completed the divestiture of its cultivation and processing operations in Utah for what it described as an immaterial amount of cash. 

The company said that a local operator bought the cultivation and processing operations located in Ogden, Utah. Following the sale, Harvest no longer has operations in Utah.

The Valens Company Sees Q2 Revenue Increase 

After the markets closed on Wednesday, The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) delivered its second-quarter financial results ending May 31, 2021. Valens reported that its revenue increased 16.1% to $20.5 million versus $17.6 million in the second quarter of 2020. The net loss was $8.6 million in the quarter versus $3.5 million for the same time period in 2020. 

Timbaland, Nas Invest In Cannabis Company Pure Beauty

California-based boutique cannabis brand Pure Beauty reported it has successfully raised $5 million in convertible note fundraising from a consortium of investors led by Gron Ventures, Subversive Capital, Ceres Group Holdings, and notable celebrities including Timbaland, Nas, and director Tom Kuntz, among others.

SAFE Banking Is NOT About Rich People Getting Rich

Despite some chatter, SAFE Banking is not about rich people getting rich. The SAFE Banking Act would address the lack of safety in the cannabis space, as well as provide a pathway for cannabis businesses to establish banking relationships. 

Psychedelic Fund Palo Santo Launches With $35 Million

U.S.-based psychedelic investment fund Palo Santo, has launched with an initial $35 million in capital raised and an active portfolio of 20 companies. The diversified venture fund said in a statement that it is focused on tackling the growing global mental health crisis by investing in innovative psychedelic-based and adjacent therapies that are poised to shape the future of psychiatry and fields beyond.

 

In Other News

Green Organic Dutchman Announces Q2 Revenue 

The Green Organic Dutchman (TSX: TGOD) (US: TGODF) announced their preliminary unaudited revenue for the second quarter. The company achieved $11.7 million in preliminary unaudited revenue, representing a quarter-over-quarter revenue increase of 30% and a year-over-year 143% increase. 

 

Neptune Reports Q4 Results 

Canadian cannabinoid extraction company, Neptune,  announced fourth quarter results this afternoon. (TSX: NEPT) The company reported $6.8 million in revenue, representing a 127% increase from the third quarter. 

Neptune reported a fourth quarter gross profit loss of $24.8 million, compared to the profit loss of $1.1 million during the same period in 2020. 

Reported fourth quarter gross profit loss of $24.8 million compared to a reported gross profit loss of $1.1 million in the comparable period in fiscal 2020 and reported fiscal year 2021 gross profit loss of $36.2 million compared to a gross profit loss of $1.8 million for the fiscal year 2020.


StaffMarch 18, 2021
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The Secure and Fair Enforcement (SAFE) Banking Act was reintroduced in the House of Representatives today. This bill, which was introduced by Reps. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Nydia Velazquez (D-NY), and Warren Davidson (R-OH), would provide a safe harbor for banks and other financial institutions working with state-legal cannabis businesses.

“Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long,” said Rep. Perlmutter. “It is time to enact SAFE Banking to align federal and state laws and reduce the public safety risk in our communities. I appreciate the partnership of the cannabis industry and businesses across this country who have added their voice to this effort. The SAFE Banking Act is an important first step to treating cannabis businesses like legal, legitimate businesses and beginning to reform our federal cannabis laws.”

In the last Congress, this legislation was the first cannabis policy reform bill brought to the floor of the House in recent history – with 206 co-sponsors – and was the first to be approved by either chamber of Congress with an overwhelming bipartisan vote of 321-103 in September 2019. The bill moved to the Senate but was delayed due to the onset of the coronavirus pandemic. The House also approved two separate pandemic relief bills last year that included the legislation’s language.

“At a time when small businesses need all the support they can get, and after cannabis businesses specifically have been providing essential services and generating significant tax revenues for states and the federal government with little to no financial relief, it is more imperative than ever to get the SAFE Banking Act passed into law,” said Aaron Smith, co-founder and CEO of the National Cannabis Industry Association (NCIA). “Lack of access to banking services continues to create serious unnecessary issues for public safety, transparency, and access to traditional lending that smaller operators desperately need. These businesses are contributing billions of dollars to the national economy every year, and need to be treated like any other legal regulated industry. We are grateful to the sponsors of this legislation who have generated strong and consistent bipartisan support year after year, and we are confident that it has a clear path to approval again.”

The NCIA said in a statement that the SAFE Banking Act would protect financial institutions from federal prosecution for providing banking and other services to cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. NCIA said, “The legislation would make traditional lending more accessible for the cannabis industry, helping alleviate the lack of access to capital that has presented major hurdles for smaller businesses. It would also mandate a study on diversity in the cannabis industry. The latest version makes clear that protections would extend to financial services providers working with the hemp industry as well.”

National Cannabis Roundtable First Vice Chair, Dr. Chanda Macias said, “SAFE is a win, win, win, for providers and their communities. It will create more jobs, more opportunity, and more public safety. We will work hard for passage of this key piece of bipartisan cannabis reform in this Congress.” A letter from the Roundtable also noted the bill’s opportunities for BIPOC communities. Social equity programs in states in which cannabis is legal are often hobbled from the outset because minority applicants cannot access traditional financial services to cover startup costs – like loans and lines of credit – that are available to every other legally operating business in the United States.” Dr. Macias added, “Offering those financial avenues could have a profound effect.”

Steve Hawkins, interim president of the U.S. Cannabis Council (USCC) and leader in civil and human rights, said.“While the SAFE Banking Act is not the only cannabis legislation the U.S. Cannabis Council (USCC) expects this session, it is integral to the success of the responsible cannabis industry of the future. This essential step forward will positively impact social equity candidates often redlined from receiving financial backing and even access to traditional banking services. The SAFE Banking Act provides access to financial services such as small business loans, which create equal opportunity, ensuring more diverse representation within the industry. The Act also protects public safety as the billions of dollars in annual retail revenues are from mostly cash transactions, creating targets for crime and unnecessarily endangering communities.”


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