23 Mar Corona-Cannabis Update #2: Cannabis “Essential,” Big CBD Merger

I continue to hope you are all staying safe and social distancing amid all this craziness. Here is today’s quick update on information about our industry, its response to the coronavirus crisis and your humble blogger’s thoughts on the same.

• “Essential” business. Most states, especially those with legal medical cannabis, have declared the cannabis industry “essential” amid the closing of all non-essential businesses in many states. This is generally true in Canada as well. This among reports, previously covered here, that cannabis sales are accelerating amid the coronavirus crisis. Some stores remain fully open, others with curbside or other delivery.
• CBD merger announced. One of the biggest publicly held US CBD producers just announced signing of a $99 million value acquisition of a public company making topical products combining active pharmaceutical ingredients with hemp extract.
• Cuomo wants to “fast track.” NY Gov. Andrew Cuomo (D) is facing potentially gargantuan losses in future tax revenues thanks to the crisis. This morning he confirmed that he wants to “fast track” the state legalization effort in the normal legislative session that ends in June.
• Stocks outperforming S&P. According to Benzinga, while cannabis stocks have taken a hit, losses have not been nearly as bad as the overall market. This may reflect the surging sales and continuing business activity.
• Prisoner releases accelerating. More and more states are starting to release “at-risk” prisoners more likely to contract the virus, including elderly and those with compromised immune systems. This following a number of prisoners having contracted the virus living in very close quarters and interacting with guards and others who are in the general community.

What does all this mean? The cannabis industry likely will weather the coronavirus storm better than many. Interesting business opportunities are beginning to develop, we will keep you apprised. We should see a bit more consolidation, and hopefully some additional financings especially for those with stronger balance sheets. The crisis may accelerate the state legalization process as governments become more anxious about their revenue sources. And more compassionate prisoner releases, especially of those with lower level marijuana crimes, would go a long way to achieving social equity in the legalization process. Stay tuned and see you in a few days. Stay safe everyone!!