The global cannabis industry is moving at a breakneck pace, with evolving laws, endorsements and research constantly pouring forth about the plant. Keep up to date with our summary of the industry at large.
The gears of the global economy screeched to a halt when the novel coronavirus pandemic began to spread. Storefronts are closed, workers have been furloughed, and in many ways, the world has hit the pause button while it tries to deal with the fallout from the virus.
Despite all of this, the global cannabis industry has continued to move at full-force and is in fact one of the few industries that are still thriving. This is thanks to the designation of dispensaries as an “essential” store in the United States and Canada which has allowed them to remain open, with many seeing sales spikes as a result.
Keep up with the ever-changing texture of the cannabis landscape with our recap of this weeks cannabis news.
Cannabis Dispensaries Continue to See Record Profits
If there were ever a universal language, money would certainly qualify. And in this case, cannabis dispensaries are talking loudly.
Michigan, for example, legalized recreational cannabis on December 1st last year, and for that month, brought in $7 million in retail cannabis sales. By February this year, Michigan’s cannabis sales had doubled. And since then, the states cannabis sales have continued growing rapidly, now generating over $7 million per week. From May 4–10, the state saw $7.9 million in recreational sales.
Similarly in Illinois, cannabis dispensary sales also continued to climb, rising from February’s $35 million in sales, and March’s $35.8 million by hitting $37.2 million in April. This was the second-highest earning month since Illinois first legalized recreational cannabis.
Lastly, Ohio reported similar gains, this time coming from its medical marijuana industry as recreational cannabis isn’t yet legal in the state. March and April were Ohio’s two strongest months for medical marijuana sales, reaching $12.9 million during four weeks in March and $14.2 million over four weeks in April. These figures are an increase compared to $10.7 million in sales in February.
The cannabis industry’s continued strength amid the COVID-19 pandemic stands in direct contrast to almost every other facet of the economy and serves as a solid case for onlookers that the industry is here to stay. Though it should be said that the cannabis holy day, 4/20, fell in April, likely contributing to this spike in sales.
The Marijuana Industry is Included in The Second Coronavirus Stimulus
The legitimization and successes of the cannabis industry amid COVID-19 is certainly a positive thing for cannabis advocates and enthusiasts, however, despite their continued strength amid the pandemic, cannabis dispensaries weren’t included in the first Coronavirus stimulus package known as the CARES Act. On top of this, dispensaries remain unable to access financial institutions due to the federal illegality of the plant.
Though this could all be about to change, as this week, the Democrat-led House of Representatives introduced the HEROES Act, (Health and Economic Recovery Omnibus Emergency Solutions) which included a section on allowing the cannabis industry to access financial institutions without fear of reprisal.
The marijuana banking clause mirrors prior legislation known as the SAFE Banking Act, which was a previous effort to allow cannabis companies to access banks. Whether the HEROES Act will be approved in the Senate in its current form remains to be seen, though Republican leader Mitch McConnell has already shown that he doesn’t support the cannabis provisions, stating that “the word ‘cannabis’ appears in this bill 68 times. More times than the word ‘job’ and four times as many as the word ‘hire.’”
Republicans are largely deeming the cannabis banking provisions as a partisan move by the Democrats, with the Trump Administration stating that the HEROES Act is “dead in the water.”
It looks as though cannabis companies may have to wait a little longer before putting their increased revenues in the bank.
Virginia Decriminalizes Marijuana
Virginia has pushed ahead with efforts to decriminalize cannabis, becoming the 27th state to no longer threaten jail time for those possessing small amounts of marijuana. The new law, H.B. 972 was signed yesterday by Governor Ralph Northam, and will go into effect on July 1st.
As it stands, minor marijuana possession offenses in Virginia can be punishable by up to 30 days in jail, along with a criminal record, and restrictions on driving.
The decriminalization law will reduce penalties for marijuana possession up to one ounce to a civil violation, which will come with a $25 fine and no risk of arrest or criminal record.
Researchers Suggest That Cannabis consumption Could Prevent COVID-19
According to a Canadian team of researchers, early evidence suggests that certain strains of cannabis may be able to effectively prevent coronavirus from entering the human body.
The researchers believe this is because of a receptor known as angiotensin-converting enzyme II (ACE2) — which allows the coronavirus to infect a human host. The team, led by a professor of Biological Sciences from the University of Lethbridge, Dr. Igor Kovalchuck — believes that cannabis use may serve to modulate these “gateways” in human hosts which could lower our vulnerability to the virus.
“If there’s no ACE2 on tissues, the virus will not enter.”
Kovalchuck’s team has chosen to focus exclusively on varieties of cannabis that contain high levels cannabidiol (CBD) — having thus far identified 13 useable strains out of more than 800 — which they believe will aid ACE2 enzyme levels.
Massachusetts Reopens Marijuana Dispensaries
Amid the COVID-19 pandemic, Massachusetts was the only state to shut its cannabis dispensaries, having closed them on March 24th. Now, after nearly two months of lockdown, cannabis dispensaries will be able to reopen within the state for curbside delivery, occurring alongside a general reopening of the Massachusetts economy.
The reopenings will officially begin on May 25th, though the two months of inactivity caused many cannabis companies to furlough workers or cease their employment entirely, which may cause permanent damage to the Massachusetts cannabis industry and by extension, the economy at large.
The damages done to Massachusetts are only worsened when we remember than cannabis companies cannot access financial institutions or the Paycheck Protection Program which has kept other industries afloat amid the economic downturn brought by COVID-19.
Time will tell if the closure of the state’s cannabis dispensaries has done permanent damage to the industry.
Canada’s Cannabis Industry Generates Billions, But Black Market Still Thrives
Since legalizing cannabis for recreational purposes in October 2018, Canada’s legal cannabis industry has generated $3.96 billion to the country’s GDP, according to Statistics Canada data mentioned on Bloomberg News.
According to recent data, over five million Canadians, representing 16.7 percent of the total population, admitted to using cannabis within the past three months. The number of people consuming cannabis regularly in Canada remains unchanged from pre-legalization statistics and reflects a growing shift as sales move away from the black market and toward legal avenues. It’s estimated that the black market for cannabis has shrunk 21% since October 2018.
Despite this, however, the billions added to the country’s GDP remain overshadowed by the estimated illicit cannabis sales occurring within the country, which are believed to have generated $4.13 billion.
This is largely due to the well-known lack of physical stores in the country, making legal avenues cannabis generally inaccessible when compared with illicit sales, particularly in Ontario.
Now, a new report entitled the BCMI Cannabis Report has emerged, detailing the precise amount of stores that are lacking in Ontario. The report believes that Ontario needs to increase its points of sale by 1,400 points in order to bring the province up to the one-per-10,000 people mark that Colorado and Alberta enjoy.
Similarly, Quebec is lacking in physical stores, with the editor of the report, Chris Damas, estimating that Quebec’s “point of sale deficiency” is at 95%, translating to needing 800 additional physical stores to satisfy consumer demand.
Aurora Cannabis Enters U.S. Market and Shares Climb 25%
Aurora Cannabis (NYSE:ACB) has continued making headlines this week, following last week’s more than 120% surge in Aurora shares after the company released better-than-expected results in its latest financials. Notably, Aurora managed to minimize the financial hemorrhaging that has been consistent for many quarters, shrinking the operational losses from CA$119.6 million reported in the last quarter to CA$83.6 million in the most recent results.
This was coupled with an increase in Aurora’s net revenue, which rose from CA$56 million last quarter to CA$75.5 million this quarter.
Now, the company has once again made a splash that sent Aurora shares climbing 25%, following the announcement that the Canadian cannabis giant will enter the United States market through the acquisition of a market-leading CBD company, Reliva LLC. The foray into the U.S. market follows comments the company made in April last year stating: “having a major presence in the U.S. is nonnegotiable for any cannabis company that intends to call itself a global leader.”
The price tag on the acquisition came in the form of a $40 million all-stock deal in exchange for all of the issued and outstanding membership interests of Reliva, with an additional $45 million in cash and stock to be provided to Reliva if certain financial targets are met.
The move should immediately improve Aurora’s margins as Reliva is presently profitable, having generated $10 million in revenue in 2019.
The deal is expected to be closed in June.
This article originally appeared on The Green Fund — APAC Region’s leading source of cannabis information.