Today is April 20, 2018. While the banks are open and school is in session, businesses in the cannabis industry are quietly celebrating the unofficial 4/20 holiday, and with good reason! Just four months into 2018 the industry has much to celebrate. The momentum of the legalization battle has clearly shifted and new opportunities are emerging everywhere. The story of “420” is rather interesting and more culturally relevant than professionally focused, needless-to-say, it remains a linchpin in the legalization and advocacy arena.
With that said, we at ELLO are celebrating 4/20 in our own way. It is our mission to act as guides helping our clients navigate the thrills and spills of the emerging cannabis industry, shaping and implementing best practices every step of the way. So, today we are taking a step back to survey the landscape, and share our thoughts on recent developments affecting the industry, its advocates and entrepreneurs, and ELLO itself.
New and Unexpected Allies Joining the Fight
An exciting new change is the emergence of surprising industry advocates. Just last week, former Republican Speaker of the House John Boehner announced he was joining the board of Acreage Holdings, a multi-state cannabis corporation. In Boehner’s words: “my thinking on cannabis has evolved. I’m convinced de-scheduling the drug is needed so we can do research, help our veterans, and reverse the opioid epidemic ravaging our communities.” Despite initial surprise at the announcement, we at ELLO, and the cannabis community at large, are happy to offer Boehner a hearty welcome and look forward to the good he can effect with his deep connections in Washington DC.
Hot on the heels of the Boehner news, Colorado Senator Cory Gardner (R) made a surprising announcement of his own. Just a week ago, Gardner released a statement saying that President Trump had assured him that the Department of Justice would not interfere with Colorado’s legal cannabis market. This was a shocking reversal of the administration’s stance to this point, most notably Attorney General Jeff Sessions’ repeal of the Cole Memo last January. While we are cheered by this news, we also know that Trump’s promise is not a rubber stamp validating cannabis states-rights. To date, the Trump administration has not clarified or provided further detail on this stance, leaving many questions unanswered. So while we welcome Trump’s statement, we are only cautiously optimistic they indicate real policy change.
The Food and Drug Administration announced that they unanimously support the first-ever government approval of medicine derived from the cannabis plant (not synthetic) and are paving the way for clearance by the end of June. Although not finalized, this is a tremendous marker for the future of the cannabis industry and advanced cannabis-based therapies for patients who suffer from ailments that have not been solved by existing pharmaceutical products in a safe and effective manner.
Feeling the Early Tremors of a Cannabis Jobs Boom
More good news for the cannabis industry arrived via a bullish analysis by data analytics firm New Frontier Data, which predicted that the legal cannabis industry could create over 280,000 jobs by 2020. This is a conservative estimate, as it does not adjust for the likelihood that other states will join the legal cannabis industry. With that said, this feels like the tip of the iceberg and it is truly exciting to know that our industry is providing a reliable livelihood for so many dedicated and passionate supporters.
At ELLO, we have been feeling the rush of enthusiasm and are doing our best to support the cannabis industry’s needs. To continue to meet growing demand, we’ve taken the lead from our affiliate MGO and have been providing Staffing Solutions services to our clients over the past year. By combining our industry experience with a deep network of seasoned professionals, we offer guidance and support for businesses as they evolve complex operational, financial and regulatory compliance processes.
To support the continued growth of the industry and to ensure ELLO is the go-to partner for cannabis companies navigating and leveraging emerging markets, we’ve strengthened our management team with new hires. Dan Nichols has been named a Director with ELLO and will focus on providing capital markets and financial advisory services to cannabis clients, including preparation for and advising on capital raising, M&A, and strategic guidance. His extensive experience providing investment banking and capital markets advisory services in the cannabis arena will be of great benefit to our growing client base.
Additionally, Paula Saidy has been named as Outsourced Services Leader across the cannabis practice. Saidy will contribute her experience in private industry and public finance to help small- to mid-level companies with outsourcing, CFO advisory, system implementations, and business process automation. She will also continue to help large scale enterprises with streaming finance processes and finding the right balance of people, process and technology.
New Legislation Showing the Industry’s Path Forward
Two recent legislative developments have been cause for an optimistic outlook in the cannabis industry. In California, legislators have introduced AB 3157, which seeks to temporarily cut the state cannabis Excise Tax – from 15% to 11% – and suspend the Cultivation Tax, until June 1, 2021. The intent is to energize the legal market and attract new businesses and customers, while also providing a competitive advantage against entrenched black market operators. The bill is still under review, but we are optimistic that successful precedents in Colorado and Washington (which also adjusted cannabis tax rates) will spur further progress. Stay tuned to ELLO as we track the bill closely and provide guidance for navigating the demands of tax payment and regulatory compliance.
We are proud to welcome Massachusetts onto the growing list of states with legal medical and adult-use cannabis. The state’s legislature voted to legalize cannabis and the market will be open this summer. Just this week, applications for licenses have started rolling in and advocates across the state are cheering the progress. We are proud to be providing best practices to cannabis operations across the nation and are enthusiastic about helping the emerging businesses in Massachusetts establish optimal financial and operational systems. Not to mentioned, accelerated discussion in New Jersey, New York and other large markets to roll out adult-use programs. The Northeast is finally heating up to be a robust medical and adult-use market.
And finally, just this morning we learned that Senate Minority Leader Chuck Schumer, D-N.Y., is introducing legislation that would decriminalize cannabis at the federal level. Schumer’s legislation would de-schedule cannabis, establish funding for women- and minority-owned marijuana businesses, open the path to more research on cannabis’ impact on public health, and create a federal regulatory authority. While this news is fresh, it is truly a sign of the times that a high-profile politician would support the legalization cause.
A Year of Experimentation … and Celebration
We feel that despite some hiccups and disruptions, the cannabis industry has taken great strides down the path toward being well-respected, well controlled and regulated, and fully sustainable. We have a long way to go to maturity, but we are on the right path. Public opinion continues to shift and recognize the benefits the cannabis industry can provide – from the therapeutic benefits of cannabis use, to the thousands of jobs being created across the nation. While many trials remain ahead, we are truly optimistic that with responsible guidance, the cannabis industry will continue to grow to the benefit of all.