Last week we summarized the various states that had marijuana or industrial hemp on their ballot this mid-term season. Voters in four of the five states with marijuana or industrial hemp on the ballot passed their various measures.
Cannabis is a hot topic in the news. On October 17, 2018, our friends to the north made headlines when cannabis was officially legalized for adult use. As the November 6 midterm elections draw closer in the United States, we’ve compiled a round-up of ballot initiatives across the country that will ask voters to weigh in on a variety of marijuana and industrial hemp initiatives.
Ballotpedia.com maintains a database of local ballot measures extending back to the beginning of the century. According to the website, there have been 164 cannabis-related local ballot measures in California since 2000. Amazingly, 77 of them—or 47 percent—appeared this year, a remarkable spike in number.
Husch Blackwell Partner Steve Levine and the Cannabis team were featured in the Sacramento Business Journal on September 19, 2018. In the article Steve explores California’s laws and regulations on the emerging cannabis industry. Husch Blackwell opened our Sacramento office doors on January 2 of 2018.
Husch Blackwell is proud to support @TheNCIA Northern California #CannabisCaucus on Tuesday, October 9 in Santa Rosa, CA. NCIA’s Cannabis Caucus event series has quickly become the gold standard event for professionals serving the cannabis industry! Join the industry’s most influential leaders for an evening of hors d’oeurves, cocktails (cash bar) and the latest organizational and federal policy updates. A registration link can be found here. Please use promo code HUSCH75 for 75% off tickets to this event.
Husch Blackwell Cannabis team attorneys Steve Levine and Meghan Brennan will participate in today’s #DENStartupweek events by speaking on a panel on the topic of the States of Cannabis. Since Colorado legalized the cultivation, manufacturing and sale of cannabis, cannabis has grown from small mom and pop operations to a large scale agribusiness, and regulations have followed suite. Attendees will learn about the spectrum of state, local and international regulations that have developed since initial legalization. Panelists will also discuss the impact such regulations have on the industry and trends they are seeing due to the very different approaches to cannabis regulation. The panel will discuss the differences between the United States and the uncertainty at the federal level and Canada, where cannabis was legalized at the federal level. Megan and Steve will join other panelists Alyssa Samuel and Dylan Sheji. The panel will be held from 10:15am – 11:15am. Location is the offices of Akerman LLP at 1900 Sixteenth Street, Suite 1700.
“U.S.-listed shares of Canada-based Canopy Growth Corp. soared almost 30% Wednesday, after liquor seller Constellation Brands Inc. said it will invest another CAD $5 billion, or about $4 billion, in the diversified cannabis company.”
What does this mean?
Investment continues to be poured into Canadian marijuana companies listed on US stock exchanges (See Tilray listing on NASDAQ). This most recent investment is likely do to the already $700 million return that Constellation has earned from its previous investment into Canopy of $100 million. Obviously the alcohol industry views the marijuana industry as a threat and Constellation is taking big steps to ensure it is diversifying in an effort to create further shareholder value. This investment further emphasizes the missed opportunities for many cannabis companies operating here in the US due to the fact that cannabis is still federally illegal.
On Friday, August 10, Husch Blackwell Partner Chris Ottele will speak on the topic of Coats v DISH at the Marijuana and Banking Conference held at the Grand Hyatt Denver in downtown Denver, CO. This program is designed to provide critical information to bankers interested in serving the burgeoning marijuana industry and those who want to avoid banking it – as well as to public officials and others who want to understand the issue. The full conference brochure can be found here.
Tilray became the first US IPO on Nasdaq on July 19th by a marijuana company. The company priced 9 million shares at $17 apiece and by the end of the day, closing at $22.39, a jump of slightly more than 32 percent on day one. As the date of posting this blog and the second day of trading, the price has hit a high of over $31, another jump of approximately 38 percent.
What does this mean?
Clearly the national securities exchanges (i.e. NYSE and Nasdaq) in the United States are getting increasingly comfortable with the listing of plant-touching businesses operating in Canada. What they are not comfortable with, are plant-touching businesses operating in the United States. As a result, plant-touching businesses operating in the United States – except for Colorado – are only able to list on either a Canadian exchange (i.e. the CSE) or on the over-the-counter-bulletin (i.e. OTCQB or OTCQX).
Tilray’s total revenue in 2017 was only $20.5 million but its resulting valuation on the public market is a multi-billion dollar valuation. Thus this company has taken advantage of the United States robust public markets that NO plant-touching operating business in the United States can even list with because of the fact that marijuana is still illegal at the federal level.
I wonder what the valuation of these Canadian companies would look like if our much stronger United States’ companies were afforded the same opportunities and there was a change in federal law in the United States? There are companies in Colorado that have operated for almost 10 years and have annual revenues in excess of $100 million…I have a feeling there would be a substantial market adjustment for many of these public companies.