Week In Review: Ohio Cannabis Market Faces Challenges; New Jersey Moves Forward with Cannabis Consumption Lounges; NFL & University of Regina Partner in Groundbreaking CBD Study

LOS ANGELES–Welcome to the far too-exciting world of cannabis and psychedelics, where it’s a tale of two markets: there’s innovation and progress in full swing in some parts of the country, while in other parts, the industry is on the ropes largely due to collapsing cannabis prices and lack of access to capital, making cannabis business models very challenging.  This week’s ‘Week In Review’ is a roundup of key developments in the industry, showcasing the news from key companies and people making news in the space.

Capital Markets

Cannabis stocks surged for the fourth consecutive week, with the US cannabis MSOS ETF experiencing an impressive uptick of +8.06%, while the global YOLO index rose by +4.96%. These gains reflect growing optimism surrounding political advancements in the US, propelling MSOS’s year-to-date surge to +30.10% and YOLO’s rise to +15.55%. Notably, since the HHS rescheduling recommendation on August 29, MSOS has outpaced YOLO by +42.29%, marking a remarkable increase of +88.05%.

Trulieve (CSE: TRUL, OTCQX: TCNNF) witnessed a substantial 27.88% increase this week, boosting its year-to-date rise to +65.94%. This surge follows Governor Ron DeSantis’ announcement of anticipated adult-use cannabis appearing on Florida’s ballot. With operations in Pennsylvania, poised for potential adult-use approval in 2024 and the promise of 280E removal, Trulieve eyes significant growth opportunities.

Curaleaf (TSX: CURA, OTCQX: CURLF) observed a modest gain of +4.50% this week, coinciding with the opening of its inaugural adult-use store in New York’s Hudson Valley. Despite this positive development, New York’s sluggish approval process and lax enforcement against illegal establishments have impeded the adult-use rollout, challenging Curaleaf’s expansion efforts.

Headlines

COMPLIANCE ALERT! Cannabis Business Owners need to act on a new law called the Corporate Transparency Act which took effect January 1st 2024. In 2021, Congress passed the Corporate Transparency Act which creates a new beneficial ownership information reporting requirement.This is part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

MEANWHILE…in California, Catalyst CEO Elliot Lewis presented a detailed overview of his lawsuit against the CDTFA at the recent Beard Bros Friday Sesh Live event in Malibu, Los Angeles. Presenting at the networking event, Lewis explained how the voter approved Prop 64 law granted California excise taxing authority on cannabis & cannabis products. The rate of 15% was originally to be collected by retailers. The statutory definition of this taxing authority is specific to mean only the flower or products made from the plant should be taxed. Non-taxable portions of the sale, defined as “cannabis accessories” are defined to mean ANYTHING other than flower or products directly derived from the plant. In other words, CDTFA have been taxing legal elements like packaging and batteries at the sky-high cannabis tax rates. See our review of the Beard Bros event here.

We also have updates here for the New York market: https://highlycapitalized.com/insights/challenges-persist-in-new-yorks-transition-to-legal-cannabis-market-amid-illicit-trade/

Week In Review:

#1. Ohio Cannabis Market Faces Challenges Amid Optimism for Adult-Use Expansion: – Ohio’s medical cannabis market, one of the nation’s most strictly regulated, showed signs of plateauing in 2023, with an increase of just 1.2% in annual sales compared to the previous year. This marks a significant slowdown from the explosive growth observed in the market’s early years, according to a Crain’s Cleveland analysis.

#2. New Jersey Moves Forward with Cannabis Consumption Lounge Regulations; The New Jersey Cannabis Regulatory Commission (CRC) is taking significant strides in the realm of cannabis consumption with the unanimous approval of regulations for consumption lounges, a pivotal development in the state’s cannabis industry. The decision, made during a meeting on January 17, marks a progressive step towards actualizing these lounges in New Jersey.

#3. Indiana Residents Lean Toward Cannabis Legalization, New Poll Indicates: – As Indiana’s legislators convene for a new session, the topic of cannabis legalization takes a prominent place in the agenda, bolstered by recent findings from the 2023 Hoosier Survey. Conducted by the Bowen Center for Public Affairs at Ball State University, the survey unveils a growing inclination among Indiana residents towards cannabis reform, signaling a potential shift in the state’s legislative approach to cannabis.

While the expansion presents potential advantages for smaller retail operators seeking to offload their stores, some insiders in Ontario’s cannabis retail industry advise caution, noting that buyers’ offers may not align with sellers’ expectations.

Psychedelic Market Highlights:

#1. Pioneering the Future of Concussion Management: NFL and University of Regina Partner in Groundbreaking CBD Study: In a significant legislative move, Rhode Island Representative Brandon Potter (D) has introduced a bill aimed at reforming the state’s approach to psilocybin, the active compound in “magic mushrooms.” The bill, H 7047, proposes a temporary allowance for the cultivation, possession, and sharing of up to one ounce of psilocybin, with its provisions set to expire in July 2026.

#2. Incannex Healthcare Concludes Phase 2 Trial of Psilocybin Therapy for Anxiety Disorder, Awaiting FDA IND Application; Incannex Healthcare Inc., a pharmaceutical company in the development of medicinal cannabinoid and psychedelic medicine therapies, has recently completed a significant milestone in its PsiGAD-1 clinical trial. This Phase 2 study, focused on evaluating the company’s proprietary psilocybin treatment for generalized anxiety disorder (GAD), successfully completed dosing and treatment protocols for all 72 participants.

This study is designed to assess the efficacy and safety of Beckley Psytech’s unique intranasal formulation of synthetic 5-Methoxy-N, N-Dimethyltryptamine (5-MeO-DMT), known as BPL-003. The trial follows the U.S. FDA’s approval for the Phase 2b study of this short-acting psychedelic compound, a first in its category. CCR’s involvement in this trial reinforces its position as a leader in psychedelic clinical research and aligns with its commitment to exploring innovative mental health solutions.

Events

Highly Capitalized are pleased to announce we will be filming the high and mighty of the cannabis industry at the forthcoming MJ Unpacked in Atlantic City in April.  Stay tuned to Highly Capitalized for more updates as the cannabis and psychedelic industries continue to shape the future at the intersection of wellness and innovation. Subscribe to our newsletter and follow us on LinkedIn.