The SAFE Banking Act failed to get through Congress this year, with Senate Majority Leader Chuck Schumer blaming Senate Republicans for keeping the bill from passing. Congress’s failure to pass SAFE means that communities across the country are still vulnerable to crime and forced to operate as all-cash businesses. Not only that, many small cannabis businesses will still lack access to support from banks and financial institutions.
“We had very good bipartisan support. We had hoped to get it done. I worked for months with different Republicans, led by Senator Daines (R-MT) – but at the last minute, both Senators Toomey and McConnell opposed it,” said Schumer. “It is bipartisan. It has the support of many groups. We’re going to go back at it next year.”
The cannabis industry will long remember Schumer as the worst Senate majority leader to date. He lied, wasted time, and has now crumbled to McConnell’s pressure. Schumer holds arguably one of the most powerful positions in Congress and has nothing to show for it. We have a real problem in this country when elected officials do not uphold their primary function, which is to represent the American people.
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iAnthus Explores Takeover M&A news continues throughout the cannabis industry. The Canadian and U.S. cannabis company iAnthus Capital holdings is exploring a potential sale after receiving offers from prospective acquirers. The company operates dispensaries in New York under the Be. retail brand. We’re not overly excited about these rumors of a group buying iAnthus as the marijuana stock, which trades on the Canadian Securities Exchange, is down 65% this year.
Assets have degraded significantly over the years due to the many challenges iAnthus brought upon itself. Groups have tried to raise assets to buy distressed cannabis operators before, but the strategy is generally perplexing. Most of these distressed assets are not worth saving. Further, we see higher quality opportunities where new money goes towards generating growth versus paying off past issues.
NYC Creates Task Force for Unlicensed Cannabis Stores New York City has started the game of whack-o-mole by trying to tamper down the numerous illicit retailers the city has let proliferate. Mayor Eric Adams announced the creation of a joint task force to weed out illegal dispensaries. More than 100,000 products worth $4 million were confiscated over the last two weeks. Adams also said that illegal store operators would be educated about how cannabis licensing works, but some still face a shutdown.
“To those who believe this is going to become the Wild, Wild West of cannabis sales, we are saying clearly and loudly ‘No, it is not,'” Mayor Adams said at a press conference. “Our goal is not to incarcerate. It is to confiscate and educate.”
We appreciate the approach of attempting to reset the landscape for New York’s legal operators without using incarceration as their stick, but the city is very far behind. New York should also consider monetary fines against landlords that accept rent from illegal operators. We have seen this approach work in areas like Los Angeles to a lesser degree, but that seemed more related to a lack of enforcement efforts.
New Jersey Recreational Cannabis Sales Reached Over $100 Million in Q3Meanwhile, New Jersey’s legal cannabis industry continues on its positive growth trajectory. Third-quarter adult-use cannabis sales in the state exceeded $100 million for the first time. The New Jersey Cannabis Regulatory Commission (NJ-CRC) (opens in new tab) reported a 46% increase from the prior quarterly total. The state started adult-use sales in April and reported $5 million in marijuana tax revenue from the first ten weeks of sales.
“We have now awarded 36 annual licenses for recreational cannabis businesses to New Jersey entrepreneurs, including 15 for dispensaries,” said NJ-CRC Executive Director Jeff Brown. “Those businesses alone will be a significant growth of the market. With more locations and greater competition, we expect the customer base to grow and prices to come down.”
New Jersey has the chance to be a healthy market for a lengthy amount of time, given the continued growth of taxes generated and collected. The lack of capital flowing in our industry will keep the state’s supply in check, and there is little to no interest in building excessive amounts of expensive cultivation. We are also seeing a decent progression of retail openings, which should keep a bid on wholesale pricing. This dynamic is a welcome divergence from other markets in the early stages of bringing supply offline.