Cannabis in the news March 13, 2019

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News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean most to you as a Canadian investor.

1. New Mexico is poised to become the first U.S. state with government-run cannabis stores and a mandate to subsidize medical cannabis for its poor.

Under a bill supported by Democratic state senators, and a minority of their Republican counterparts, government-run pot shops would control the bulk of sales. The legislation would also require users consuming marijuana in public to carry receipts as a way of better identifying and limiting black market sales.

Legislators are also looking to include a provision to subsidize medical cannabis for poor people with “debilitating medical conditions” who might not otherwise be able to afford treatment.

Direct government sales mean a higher market share for the state. It is pledging to use those funds to support employment and counselling programs in communities “disproportionately affected by past federal and state drug policies.” New Mexico will also provide training programs for those looking to get into the cannabis industry.

2. An $850 million merger deal in the U.S. is highlighting growing interest in the country’s rapidly expanding cannabis industry.

Harvest Health & Recreation Inc. will now acquire Verano Holdings LLC for about $850 million in what’s believed to be the largest cannabis deal in U.S. history.

The combined company will have licenses to operate up to 200 facilities in 16 states and territories. Among those are 123 cannabis dispensaries. That will make it one of the biggest multi-state operators in the country.

The deal “will give us a leadership position in one of the largest cannabis markets in the world,” says Harvest Executive Chairman Jason Vedadi.

Investor interest has been rapidly shifting from Canada, which legalized recreational pot use in October, to the U.S., where states are rapidly legalizing but the drug remains illegal federally.

U.S. consumer spending on legal cannabis is expected to reach $22.2 billion U.S. by 2022, while Canadian spending is forecast to hit $5.9 billion U.S., according to a January report by Arcview Market Research and BDS Analytics.

3. Health Canada is now looking into whether the sponsorship of a children’s charity by two cannabis firms last October violated its newly-enacted cannabis laws.

As part of their October 2018 sponsorship of Kids, Cops & Computers for the Merry Go Round Children’s foundation, Canopy Growth Corp and Halo Labs displayed their logos.

That may, in fact, have constituted an effort to market cannabis.

While the Cannabis Act, governing the industry and the sale of pot, does not prohibit the sponsorship of a person, entity, activity or facility, it does block the promotion of cannabis. That includes displaying, referencing or otherwise using brand elements of cannabis.

Health Canada says that it is gathering facts and information about the sponsorship incident to determine whether there was a breach of the Act.

4. A U.S. law firm is suing that country’s border services, alleging it must disclose documents used to justify banning Canadian cannabis workers.

U.S. Customs and Border Protection (CBP) has the right to question travellers to the U.S. on a number of subjects, still the lawsuit challenges its legal authority to permanently bar Canadians who work in the cannabis industry.

The lawsuit, filed last week in a Washington federal court, cites a July Toronto Star article that first reported the practice of banning Canadian cannabis workers. It alleges CBP has also improperly withheld documents requested under the Freedom of Information Act (FOIA).

The lawsuit’s goal is to force the release of those requested documents, which would reveal the legal basis behind CBP bans. That could uncover whether the enforcement of such a policy is actually legal under U.S. law.

5. Health Canada is warning all cannabis producers that pop-up windows on their websites are failing to block underaged Canadians from accessing sensitive information.

Many cannabis companies have simple “age gates” that either ask a visitor to click a button to attest that they’re of age or a couple of buttons that prompt them to indicate their province and birth date.

Industry insiders have also voiced concerns about the effectiveness of those screens in keeping young teens off of their websites.

They’ve called for more onerous verification systems—so-called know-your-client (KYC) software—to block underaged web users.




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