Week In Review: Over 2.3 Million Cannabis Convictions Pardoned in U.S. Since 2018; West Virginia Eyes Cannabis Legalization in Fight Against Fentanyl Crisis ;VA to Explore Psychedelics for PTSD and Depression

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.

Straight out of the gates in 2024, cannabis stocks continued their strong start in the new year, with US cannabis MSOS ETF gains 13.12%, global YOLO ETF up by 9.11%. Positive sentiment driven by potential DEA agreement with HHS’s Schedule III recommendation. Schedule III recommendation could eliminate 280E tax code for US operators. Notable performers include The Cannabist (NEO:CBST, OTCQX: CBSTF) +34.50%, Cresco (CSE: CL, OTCQX: CRLBF) +32.03%, and AYR (CSE: AYR, OTCQX: AYRWF) +23.89%. Less leveraged operators with positive cash flow show modest gains

• • Green Thumb Industries (CSE: GTII, OTCQX: GTBIF) +5.40%
  • Verano (NEO: VRNO, OTCQX: VRNOF) +8.93%
  • MariMed (CSE: MRMD, OTCQX: MRMD) +1.89%

The impetus behind this week’s rally stemmed from “news” that the DEA is “now conducting its review” of cannabis as a Schedule I drug. This information, reported by Punchbowl News on January 3, originated from a letter dated December 19 from DEA Acting Chief Michael Miller to Congressional Cannabis Caucus Co-Chair Rep. Earl Blumenauer. Observers closely monitoring the industry suspect that the DEA likely initiated its review shortly after the HHS recommended Schedule III on August 29.

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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 is set to win his lawsuit against the CDTFA. 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 

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 Over 2.3 Million Cannabis Convictions Pardoned in U.S. Since 2018: – In a significant move towards criminal justice reform, U.S. state courts have pardoned or expunged over 2.3 million cannabis-related convictions since 2018, with about half a million cases resolved in the last year alone. This data, revealed in an updated analysis by NORML, underscores the shifting legal landscape around cannabis in the United States.

#2.West Virginia Eyes Cannabis Legalization in Fight Against Fentanyl Crisis; As West Virginia’s legislative session unfolds, the topics of cannabis legalization and the fentanyl crisis are taking center stage. Senate President Craig Blair, speaking at a press event on January 5, indicated that cannabis could play a role in combating the state’s escalating fentanyl problem, although he was unsure if legalization would occur this year.

#3. Tilray Brands Q2 Report: Tilray Brands, Inc., Cannabis and consumer packaged goods industries, has announced its financial results for the second quarter of fiscal year 2024, ended November 30, 2023. The company has reported a record net revenue of $194 million, marking a significant 34% increase over the previous year’s quarter. This growth is primarily attributed to substantial gains in both the cannabis and beverage alcohol sectors.

Psychedelic Market Highlights:

#1 DEA Clarifies Legality of Psychedelic Mushroom Spores, Highlighting Regulatory Complexities; The U.S. Drug Enforcement Administration (DEA) recently provided a crucial clarification on the legal status of psychedelic mushroom spores. According to a statement from Terrence Boos, Chief of the DEA’s Drug and Chemical Evaluation Section, these spores are not considered controlled substances under the Controlled Substances Act (CSA) as long as they do not contain the Schedule I substances psilocybin or psilocin.

#2 VA to Explore Psychedelics for PTSD and Depression ;  In a groundbreaking move, the Department of Veterans Affairs (VA) is funding research into the therapeutic potential of psychedelics for treating mental health conditions like post-traumatic stress disorder (PTSD) and depression in veterans. This initiative, a first in decades, signals a significant shift in the VA’s approach to mental health treatment.

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.

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.