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.

Husch Blackwell is a lead sponsor of the Northern California Quarterly Cannabis Caucuses – next of which is to be held on Tuesday, July 10 in San Francisco, CA at the Hilton Financial District. The 3rd Quarter Cannabis Caucus will bring together executive level industry professionals, policymakers, regulators, and movement leaders to network, learn about emerging topics in the industry, and plug into NCIA’s efforts to advance the industry nationally. A registration link can be found here. Please use promo code HUSCH75 for 75% off tickets to this event.

 

On May 31, Husch Blackwell Cannabis team members Steve Levine and Marshall Custer will present on Marijuana and Industrial Hemp Industries: The Impact on Colorado’s Economy at the Denver Metro Chamber of Commerce. They will provide industry and legal insight related to the burgeoning marijuana and industrial hemp industries in Colorado. The program will also explore how not only operators are capitalizing on opportunities but also how ancillary businesses are also thriving. The program will be held from 7 to 9 a.m. at the Chamber.

The Hemp Farming Act of 2018 (the “Bill”) introduced by Senate Majority Leader Mitch McConnell, would provide a much needed stimulus for the United States rural economy. Given the pending risk of a trade war looming over agricultural businesses, the continuing decline in agricultural commodity prices, and the ever-present institutional risks facing producers, one might wonder why anyone would continue, let alone enter, the farming profession. The Bill offers hope, however, for the men and women who make their living off the land.

Why?

Diversification of crop production and strategic crop rotation are fundamental to a successful farming business. And, the planting and cultivation of hemp could be implemented into any number of crop rotations because it: (i) thrives in almost all climates; (ii) enriches the soil; (iii) uses less water than most other crops; and (iv) grows quickly. The Bill makes hemp a viable rotation crop by legitimizing it as an U.S. agricultural commodity through (i) advancing opportunities for hemp research, (ii) including it as a coverable commodity under the Federal Crop Insurance Act, and (iii) removing it from the Controlled Substances Act.

The Bill has bipartisan support and, for the sake of the rural economy and all those many industries who stand to deservingly benefit from its passage, we hope it soon becomes law.

 

The bill, known as the Hemp Farming Act of 2018, would legalize hemp, removing it from the federal list of controlled substances and allowing it to be sold as an agricultural commodity.  “By legalizing hemp and empowering states to conduct their own oversight plans, we can give the hemp industry the tools necessary to create jobs and new opportunities for farmers and manufacturers around the country,” McConnell said in a statement last week introducing the bill. The bill has bipartisan support.

This bill also seeks to end the grey area surrounding hemp-derived CBD extracts: “The term ‘hemp’ means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

What does this mean?

As I have previously stated, my hope was that this bill would not only deschedule industrial hemp as a controlled substance but provide clarity regarding hemp-derived CBD. This bill has done exactly that and now what remains to be seen is can Sen. McConnell get this over the finish line in its current form?