29 Mar Corona-Cannabis Update #4: Mexico Legalization Slowing, Canada Labs Recruited

We are starting our second week of official stay at home directives here in New York as the infection and death tolls rise worldwide. Let’s keep focused on those positive aspects of our lives, including the declaration of the cannabis business as essential and continuing to operate in most states. Here is today’s update on how the coronavirus tragedy is impacting the marijuana and hemp industries.

• Mexico legalization stalled. The Mexican Senate has put off most of its planned activity for now due to the crisis. With an April 30 deadline, imposed by Mexico’s Supreme Court, to complete legalization of adult use of cannabis, there is now some doubt as to whether that can be accomplished in time.
• Canada labs help with testing. The Canadian health authorities have reached out to cannabis testing labs, hoping they will help with a major backlog of COVID-19 testing. This is part of an outreach to a variety of labs there to determine if they have capacity to assist.
• No loans to CT cannabis companies. To its credit, Connecticut has launched a program to make no-interest loans of up to $75,000 to local small businesses impacted by the virus. Unfortunately, Gov. Ned Lamont (D) has chosen to make certain industries ineligible for loans, including real estate, adult entertainment, firearms and cannabis. This follows similar action by the Small Business Administration on the federal side, which is denying loans to marijuana (but not hemp) businesses.
• Merger canceled. A proposed $850 million acquisition by a major US multi-state operator (MSO) of a privately held MSO based in Chicago has been called off. There were numerous sources of delays leading to cancellation, but the press release included a reference to COVID-19 as impacting operations in government agencies needed to approve the deal.
• Cannabis tech could be helpful. An interesting report indicates that several cannatech businesses may be able to assist in the crisis. One company has a platform for administering antiretroviral drugs that they believe could be used to improve delivery and effectiveness of these drugs. Another seeks to allow so-called PCR or polymerase chain reaction machines to help test for COVID-19. These machines are used to check for bacteria and pathogens in cannabis growing. The FDA is examining.

Sales nationwide continue strong, according to reports. For example, a few days ago Arkansas reported selling more cannabis than any other single day. My thoughts on this dreary Long Island Sunday? Maintaining positivity. Mexico will get the legalization job done, maybe delayed. Let’s hope that more states choose to include cannabis in their assistance and loan programs and not follow the bad CT example suggesting cannabis is as “controversial” as guns or strip clubs (also, real estate Ned?). Still very few capital markets deals or mergers, and announced deals more and more are falling by the wayside. This too shall pass, but some MSOs are going to start facing serious cash issues not too long from now. And go cannabis tech! That vertical in our industry is in its very early stages as we watch some tech rock stars begin to enter the space for the first time. Keep an eye on that! Until next time, please stay safe everyone and take care of each other..