The Florida Division of Elections (DOE) released the campaign finance activity report from the first quarter of the year on Thursday, showing $14,875,000 in new contributions from a range of businesses ahead of the state Supreme Court ruling that officially cleared the cannabis measure for the ballot.

Trulieve, the main financial backer of the initiative, led the pack again with $9.225 million in donations during the first quarter. That follows the company previously contributing about $40 million as advocates worked to collect more than one million signatures to qualify for ballot placement.

The campaign Smart & Safe Florida announced last week that it had secured the new funding from donors “committed to helping ensure victory this fall.”

Here’s a breakdown of who donated to support the legalization measure in the first quarter of 2024:

• Trulieve: $9.225 million
• Verano Holdings: $2.25 million
• Curaleaf: $2 million
• Ayr Wellness: $500,000
• Green Thumb Industries: $500,000
• Cresco Labs: $400,000

Two other individuals also contributed $21.10 and $1.53 in the most recent quarter.

If Florida voters approve a marijuana legalization initiative at the ballot, that could actually “improve quality of life” for residents—in contrast with the governor’s recent comments to the contrary—the CEO of Trulieve said this week.

“The sky has not fallen” with Florida’s implementation of medical cannabis legalization under an earlier initiative, “and folks see that choice is a good thing,” Trulieve CEO Kim Rivers said during an interview on The Dales Report’s “Trade To Black” podcast on Monday.

Will Floridians ultimately pass the measure with at least 60 percent of the vote as is required for constitutional amendments in the state? Rivers says, “Hell yeah.”

The comments about quality-of-life implications of cannabis legalization follow Florida Gov. Ron DeSantis’s (R) prediction that voters will reject the marijuana initiative this November. He called the proposal “radical” and argued that it will “reduce the quality of life” in the state.

DeSantis, for his part, said last week that enactment of the reform would mean “this state will start to smell like marijuana in our cities and towns,” which seems to be a particular concern for the governor, who has previously complained about the smell of cannabis in other jurisdictions.

“It will reduce the quality of life,” he said, adding that Florida already has a medical cannabis program that his administration implemented following voter approval of the reform in 2016.

“Do we really need to do more with that?” he asked. “Do we want to have more marijuana in our communities? I don’t think it’ll work out well, but it is a very, very broad amendment.”

Rivers said that “DeSantis has been consistent for a long time around his comments around the smell and around, you know, not necessarily being excited about having marijuana everywhere. I think there’s some additional education that needs to happen there, which we’ve been working on.”

As drafted, the measure if approved would change the state Constitution to allow existing medical cannabis companies in the state like Trulieve to begin selling marijuana to all adults over 21. It contains a provision that would allow—but not require—lawmakers to take steps toward the approval of additional businesses. Home cultivation by consumers would not be allowed under the proposal as drafted.

Adults 21 and older would be able to purchase and possess up to three ounces of cannabis, only five grams of which could be marijuana concentrate products. The three-page measure also omits equity provisions favored by advocates such as expungements or other relief for people with prior cannabis convictions.

Separately, economic analysts from the Florida legislature and the the governor’s office estimate that the marijuana legalization initiative would generate between $195.6 million and $431.3 million in new sales tax revenue annually if voters enact it. And those figures could increase considerably if lawmakers opted to impose an additional excise tax on cannabis transactions that’s similar to the ones in place in other legalized states.

Here’s what the Smart & Safe Florida marijuana legalization initiative would accomplish:

• Adults 21 and older could purchase and possess up to three ounces of cannabis for personal use. The cap for marijuana concentrates would be five grams.
• Medical cannabis dispensaries could “acquire, cultivate, process, manufacture, sell, and distribute marijuana products and marijuana accessories to adults for personal use.”
• The legislature would be authorized—but not required—to approve additional entities that are not currently licensed cannabis dispensaries.
• The initiative specifies that nothing in the proposal prevents the legislature from “enacting laws that are consistent with this amendment.”
• The amendment further clarifies that nothing about the proposal “changes federal law,” which seems to be an effort to avoid past legal challenges about misleading ballot language.
• There are no provisions for home cultivation, expungement of prior records or social equity.
• The measure would take effect six months following approval by voters.

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Here’s the full text of the ballot title and summary:

The Florida Chamber of Commerce released a poll in January showing that a marijuana legalization initiative that may appear on the November ballot enjoys majority support from likely voters—but not quite enough to meet the state’s steep 60 percent threshold for passage.

Other previous polls have found that voters are well-positioned to pass the legalization initiative with more than enough support. For example, the University of North Florida put out a survey in December that showed 67 percent of voters back the proposal.

Meanwhile, there’s significant interest in how former President Donald Trump, a Florida resident, will vote on the cannabis initiative, and whether he will publicly support or oppose it.

Also, a Florida bill that sought to cap THC potency if voters approved the legalization initiative at the ballot died this session, much to the relief of cannabis advocates and stakeholders.

Legislation to restrict consumable hemp products and ban delta-8 THC was approved by lawmakers and awaits DeSantis’s action.

Separately, a House subcommittee recently advanced a medical marijuana bill that would waive patient registration and renewal fees for service-disabled military veterans.

Despite his opposition to the initiative, DeSantis, the former GOP presidential candidate who dropped out of the race in January, previously accurately predicted that the state’s highest court would ultimately allow the measure on November’s ballot.

Attorney General Ashley Moody (R) successfully petitioned justices to prevent an earlier 2022 legalization initiative from receiving voter consideration.

DeSantis also weighed in on another relevant cannabis policy issue earlier this year when, while still a presidential candidate, he said that he doesn’t believe the federal gun ban for state-legal marijuana consumers is constitutional. Florida’s former agriculture commission, Nikki Fried, brought a lawsuit against the Biden administration over the rule, though the governor did not get involved.

Prior to dropping out, DeSantis also said that if elected president, he would “respect the decisions that states make” on marijuana legalization despite his personal view that the reform has a “negative impact.”

While DeSantis doubts the cannabis initiative will receive the requisite 60 percent of the vote at the upcoming election, the Smart & Safe Florida campaign behind the measure is optimistic. And they announced last week that they’ve raised an additional $15 million from a variety of major cannabis companies as it gears up for an effort to raise awareness about the measure among voters.

New Hampshire House Passes Bill To Legalize Marijuana Through ‘Agency Store’ Model That Senators Oppose

Photo courtesy of Mike Latimer.

The change to LB 388’s hemp tax rate was approved by the legislature as part of a broader amendment offered by the same lawmaker who first included the 100 percent provision, Sen. Lou Ann Linehan (R). It was adopted on a 28–6 vote.

The underlying tax bill as amended did not receive a vote this week, with a final reading and vote expected next Thursday.

Sen. Anna Wishart (D), who’s backed past efforts to end marijuana prohibition in the state, told Marijuana Moment in an email that the rate change was the result of negotiations between lawmakers and representatives of Nebraska’s CBD industry.

“The 100% tax was unworkable for CBD companies in our state. They were concerned it would drive them out of business,” Wishart said. “In talking with representatives from a group of CBD companies in the state, I worked with them and other senators to negotiate the tax down to 25%.”

Linehan’s office did not immediately respond on Thursday to Marijuana Moment’s request for comment about the change, although last month she had similarly told local media that the 100 percent hemp tax proposal was just a starting point for negotiations.

“Are we going to keep it 100 percent? No, we’re not,” the senator said at the time. “I’ve already had one of our members tell me that, you know, elderly people like lotions and creams, and it helps with pain. So like I said, we just have to look with it.”

Some lawmakers had said in n earlier debate on the proposal that the tax was out of step with rates set on CBD and hemp products in other states and that, if the goal of the bill was to raise revenue, Nebraska should consider legalizing and regulating marijuana.

“I looked around. I saw some statistics on other states—neighboring states—and it’s a lot lower. Definitely not 100 percent,” Sen. Terrell McKinney (D) said. “So we’re not going to be comparable to our neighboring states if we tax it at 100 percent.”

“Honestly speaking, what we really need to have a conversation about in our state, in the state of Nebraska, is our refusal to open ourselves up to other revenue streams,” he continued. “One revenue stream that we should open ourselves up to is the legalization of marijuana.”

Neither medical nor adult-use cannabis are legal in Nebraska, though activists are working to change that this year.

“We have a brain-drain issue,” said Sen. Jen Day (D), “and we refused to recognize that and address it from the other policy perspectives that caused the issues with brain drain—one of those being the fact that we have chosen year after year after year not to legalize even medical cannabis in the state.”

“Through the end of 2022, states have reported a combined total of more than $15 billion in tax revenue from legal adult-use cannabis sales,” she noted.

Adam Morfeld, a former Nebraska state senator who now co-chairs the advocacy group Nebraskans for Medical Marijuana, posted to social media ahead of this week’s amendment that the situation showed that the state’s “policies dealing with hemp, CBD and marijuana are so backwards.”

Shocker. Our policies dealing with hemp, CBD and marijuana are so backwards. https://t.co/VDQUIpNIUC

— Adam Morfeld (@Adam_Morfeld) April 10, 2024

The underlying sales tax bill is part of a broader debate on how lawmakers wanted to balance sources of state revenue. Residents, many lawmakers have argued, have complained that property taxes are too high, and proponents of the bill have said raising sales taxes would prevent further state reliance on property taxes to fund schools. Opponents, however, criticized the bill’s overall increase in taxes, with some Democrats noting that sales taxes in particular would hit poorer Nebraskans hardest.

Some lawmakers have lamented that the complex measure’s many provisions seemed to come out of nowhere, although sponsor Linehan and others said on the floor last month that the details were taken from other bills that lawmakers had introduced and debated. The hemp and CBD tax, for instance, ostensibly came out of LB 1341, introduced in January by Sen. Justin Wayne (D) and apparently never acted on by lawmakers.

That bill as introduced indeed would have increased taxes on consumable hemp, but only to 7.5 percent.

The proposal comes as the state, like many others across the country, witnesses an explosion of hemp-derived products, including intoxicating cannabinoids such as delta-8 THC. Late last year, the state’s attorney general, Mike Hilgers (R), filed suit against retailers in the state over their sale of delta-8 products.

Meanwhile, activists are hoping to qualify two medical cannabis initiatives for November’s ballot.

A recent poll by the campaign found 70 percent support in the state for legalizing medical marijuana.

Organizers at Nebraskans for Medical Marijuana (NMM) have been petitioning for the change since July, about two months after turning in a pair of complementary ballot proposals to the secretary of state’s office.

The governor has already voiced opposition to the reform effort, saying in September that legalization “poses demonstrated harms to our children,” and that medical cannabis should only be accessible if its approved by FDA.

Late last year, NMM told Marijuana Moment that the governor’s argument was a “cop out,” and she says the campaign will let voters decide for themselves.

One of NMM’s earlier campaigns gathered enough signatures for ballot placement in 2020, but the measure was invalidated by the state Supreme Court following a single-subject challenge. Supporters then came up short on signatures for revised petitions in 2022 due in large part to the loss of funding after one of their key donors died in a plane crash.

Nebraska lawmakers, including campaign co-chair Sen. Anna Wishart (D), have also attempted to enact the reform legislatively, but cannabis bills have consistently stalled out in the conservative legislature.

Wishart’s medical cannabis bill received a hearing in the unicameral Judiciary Committee in February, but it did not advance. She attributed the inaction to changes in committee membership. An earlier version of the measure ultimately stalled out in the GOP-controlled legislature amid a filibuster that supporters could not overcome.

FDA Head Says There’s ‘No Reason For DEA To Delay’ Rescheduling Marijuana

Photo courtesy of Kimzy Nanney.

Amid heightened expectations about a possible federal marijuana scheduling action following the president’s 2022 directive, the president and vice president are again highlighting the administration’s moves to offer cannabis clemency.

This latest round of comments and social media posts comes in the middle of a month that the administration has used two years in a row to promote its broader criminal justice reform efforts. Biden previously mentioned his cannabis pardons and scheduling directive in the proclamation that designated April as “Second Chance Month.”

The president said during a National Action Network Convention speech on Friday that he’s “keeping my promise that no one should be in federal prison for merely possessing marijuana,” while fulfilling other criminal justice reform commitments.

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Biden has increasingly touted the clemency action in recent months, including historically during his State of the Union address last month.

Harris, for her part, shared a video clip on social media from her White House roundtable with marijuana pardon recipients, where she urged the Drug Enforcement Administration (DEA) to finish its review into rescheduling cannabis “as quickly as possible” and, behind closed doors, said “we need to legalize marijuana.”

“Nobody should go to jail for smoking weed,” Harris said. “During Second Chance Month, I am uplifting the inspiring stories of pardon recipients… Their journeys are proof of the importance of pardons and second chances.”

Nobody should go to jail for smoking weed. During Second Chance Month, I am uplifting the inspiring stories of pardon recipients like Michelle, Chris, and Dexter. Their journeys are proof of the importance of pardons and second chances. pic.twitter.com/6fIuFgPT16

— Vice President Kamala Harris (@VP) April 12, 2024

Also on Friday, the Justice Department hosted an event commemorating Second Chance Month that included a handful of mentions of Biden’s marijuana pardon proclamations.

“In December, the president issued his second categorical pardon for certain marijuana offenses by expanding it to people who use marijuana or violated certain federal regulations,” Deputy Attorney General Lisa Monaco told the crowd, adding that “this is part of the larger effort for second chances and effort being led really by all of you—past and present colleagues here at the department devoted to this issue.”

Pardon Attorney Elizabeth Oyer also noted at the event that Biden has “pardoned thousands of people convicted of possessing marijuana.”

“Each one of the president’s commutation grants has transformed the life of a deserving recipient,” she said.

A DEA official recently said it sometimes takes up to six months for DEA to complete its analysis of health officials’ scheduling recommendations—which is just about how long it has now been since the agency began its current cannabis assessment.

Meanwhile, last month, U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra defended his agency’s rescheduling recommendation during a Senate committee hearing and also told cannabis lobbyist Don Murphy that he should pay DEA a visit and “knock on their door” for answers about the timing of their decision.

Certain DEA officials are reportedly resisting the Biden administration’s rescheduling push, disputing the HHS findings on marijuana’s safety profile and medical potential, according to unnamed sources who spoke with The Wall Street Journal.

The Biden administration was also recently pressed to reschedule marijuana by two coalitions representing military veterans and law enforcement—including a group that counts DEA’s Milgram among its members.

Based on a recent poll, President Joe Biden’s cannabis moves stand to benefit him in the election. The survey found the president’s favorability spiked after people were made aware of the possibility that marijuana could be rescheduled under the Biden-initiated review.

Justice Department Is Investigating Marijuana-Related Businesses Over COVID Relief Loans, Industry Sources Say

The comments from the governor’s office came in response to the House’s 239–136 approval of HB 1633, sponsored by Rep. Erica Layon (R). The measure would legalize and regulate marijuana through state-licensed “agency stores,” but Sununu has said he wants to see a state-run or state-franchised model that would give the government control over the look and feel of each store as well as product prices.

“Governor Sununu has been crystal clear about the framework needed for a legalization bill to earn his support, focusing on harm reduction and keeping it out of kids’ hands,” his office said in a statement to local news outlet WMUR after Thursday’s vote. “The legislation passed today doesn’t get us there but the Governor looks forward to working with the Senate to see if we can get it done.”

Layon, the bill’s sponsor, said she’s repeatedly reached out to the Sununu’s office in recent months to discuss provisions of the proposal. But so far she’s been snubbed by the governor, even as his office communicates with other lawmakers about the bill.

“The bill that passed the House reflects the Governor’s guidelines as I understood them, until his last minute embrace of a franchise model,” she told Marijuana Moment on Friday. “I made dozens of attempts to meet with the Governor and his staff to get into the policy details, but the best meeting I achieved was a walk-and-talk with him through the halls of the Capitol.”

The situation has pitted Republicans against Republicans, with Layon and supporters at odds with Sununu and his allies in the Senate. Failure to reach agreement could threaten the legalization bill entirely despite what appears to be majority support for the policy change.

Statement from the office of @GovChrisSununu indicating he wants to see @TheNHSenate go to work on the cannabis legalization bill the @NHHouseofReps approved today rather than simply declare it DOA #NHPolitics #WMUR pic.twitter.com/SdBkWOKbq0

— Adam Sexton (@AdamSextonWMUR) April 11, 2024

In a choice between the two competing models, a House subcommittee earlier this month rejected a sweeping amendment that would have replaced Layon’s plan with a franchise model. That amendment was offered by subcommittee vice chair Rep. Dan McGuire (R) despite him telling the panel he didn’t entirely agree with the proposed changes.

“We are told from the governor and from our contacts in the Senate that this is what they want: the franchise model,” he said at the time. “We are also told they will not vote for the version the House passed, and we are told that they are either unwilling or incapable of making significant changes in the Senate.”

Sununu’s latest comments suggest he believes the Senate can in fact make those changes.

But Layon now says adjustments backed by Senate Republicans like Sen. Daryl Abbas—who chaired a failed state commission on legalization late last year—may not find support in the House if an amended version of her bill makes it back to the chamber.

“Dozens of House members will not accept the language rejected by the House Finance committee,” she said.

“There is a real danger that the House may not accept what comes back from the Senate,” Layon added, “so I look forward to talking with my colleagues to ensure that anything we receive can pass without a Committee of Conference.”

Layon has spent months workshopping and building support for the plan despite warnings from some in the Senate—most notably Abbas—that her proposal will be dead on arrival unless it includes a state-run franchise system under which the government would control the look, feel and general operations of retail stores.

But House lawmakers have decided to stick with Layon’s approach.

Rep. Chuck Grassie (D) applauded Layon at an earlier subcommittee hearing for what what he called “a Herculean effort…to get the governor and the Senate on board.”

“If the Senate has problems with passing a bill, I don’t see why we have to do their hard work here for them,” Grassie said at the time. “I think they need to debate this. They need to make up their mind on a bill, and they need to send something back to us if we want to see cannabis legalization in the state of New Hampshire.”

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Marijuana Moment is tracking more than 1,400 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
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Layon has previously told Marijuana Moment that she never expected her proposal to be the only bill introduced this session to legalize marijuana.

“I initially intended that this bill sort of be a counterpoint to what the special committee was going to deliver and what Sen. Abbas was going to introduce,” she said. “The fact that he didn’t introduce it and this is the only shot at legalization this year, I just really wanted to work hard in a good faith effort to get to something that I was comfortable with and that match the requirements of the governor as best I understood them.”

The governor said at a recent event, meanwhile, that he thinks legalization is “inevitable” in New Hampshire, adding that policymakers have “seen the mistakes other states have made so as not to walk down that path.”

“People just want the accessibility for adults, keeping it away from kids,” Sununu said. “If they can meet those rough stipulations, I would sign it, because I think that’s one of the safest systems you’re going to get.”

He added that as a legalization skeptic, he’s better positioned to consider a thoughtful bill.

“There’s no better person to help design a system that could be fraught with problems and risk specifically to kids than the guy that’s most scared of it,” he said.

Last year Sununu said he supported a system of state-run retail stores, but lawmakers on a state study commission last year instead pivoted to the idea of a franchise system, which the governor has said he’s willing to entertain. Officials at the Liquor Commission have said it would be far less costly for private franchisees to build out a system of retail stores than to ask the Liquor Commission to take on that task itself.

Lawmakers worked extensively on marijuana reform issues last session and attempted to reach a compromise to enact legalization through a multi-tiered system that would include state-controlled shops, dual licensing for existing medical cannabis dispensaries and businesses privately licensed to individuals by state agencies. The legislature ultimately hit an impasse on the complex legislation.

Bicameral lawmakers also convened the state commission tasked with studying legalization and proposing a path forward last year, though the group ultimately failed to arrive at a consensus or propose final legislation.

The Senate defeated a more conventional House-passed legalization bill last year, HB 639, despite its bipartisan support.

Last May, the House defeated marijuana legalization language that was included in a Medicaid expansion bill. The Senate also moved to table another piece of legislation that month that would have allowed patients and designated caregivers to cultivate up to three mature plants, three immature plants and 12 seedlings for personal therapeutic use.

After the Senate rejected the reform bills in 2022, the House included legalization language as an amendment to separate criminal justice-related legislation—but that was also struck down in the opposite chamber.

These Marijuana Companies Are Funding Florida’s Legalization Ballot Campaign, New Records Show

Photo courtesy of Philip Steffan.

Multiple sources in the cannabis legal space confirmed the trend with Marijuana Moment this week, though they declined to identify active clients involved in the litigation. This evidently involves both direct cannabis businesses that are involved in the production or sale of marijuana as well as ancillary companies that are not plant-touching.

One public case that DOJ disclosed last month involved a holding company of the Bob Marley namesake cannabis company Marley Natural.

A company that specializes in facilitating whistleblower complaints for alleged Paycheck Protection Program (PPP) violations, Sidesolve, successfully reported the cannabis business Docklight Brands to DOJ for receiving the funds in contravention of a federal Small Business Administration (SBA) policy prohibiting companies from taking the loans if they work with cannabis or indirectly service the industry.

“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity,” SBA said in 2020. “Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.”

Sources who requested anonymity say there are up to 100 active cases, with the Justice Department sending letters notifying businesses that are directly or indirectly associated with the state-legal marijuana industry that they are being reviewed for possible violations under the False Claims Act (FCA).

Under DOJ policy, individuals who report on PPP loan violations under FCA may be entitled to 15 percent of the proceeds from any settlement agreement. In the Sidesolve-Docklight case that was submitted to the U.S. Attorney’s Office for the Western District of Washington, that meant Sidesolve will receive $148,416 of the settlement funds, DOJ said in a press release last month.

“Those seeking vital assistance from SBA’s pandemic response programs must comply with the requirements,” SBA OIG’s Western Region Special Agent in Charge Weston King said, adding that the “settlement sends a strong message of accountability.”

But the situation is more widespread, industry insiders and legal experts familiar with the trend say. And notably, it is affecting companies that are not specifically involved in the production or distribution of cannabis itself; any business that took the PPP loans that works with the state-legal marijuana market (e.g. accountants and consultants) could be impacted.

To be clear, it doesn’t seem the DOJ is proactively investigating these cases. A source in one federal prosecutor’s office told Marijuana Moment that they are aware that marijuana-related businesses seem to be uniquely targeted by third-party “relators” who could be using public databases to identify loan recipients who are adjacently involved in the cannabis sectors in order to receive the 15 percent payout.

The Docklight case is a rare example of a FCA settlement related to marijuana that’s been made public. Sources say this trend is relatively new, and legal documents are generally sealed until the cases are finalized, which could take months to years.

But as the Justice Department ramps up its efforts to reclaim fraudulent PPP loan distributions, the cannabis industry is apparently in the sights of companies hoping to cash in on possible settlement agreements they initiate.

“We looked at a number of different theories” about how to litigate under the SBA rules, Jason Marcus, a partner at Bracker & Marcus LLC that represented Sidesolve, told Marijuana Moment. “And one of the theories that came pretty early was marijuana companies. So Docklight was really kind of our test case.”

“We did our research,” he said. “We found where the SBA said, ‘This is not allowed. Whether you’re a direct or indirect marijuana related business, you’re not supposed to be receiving PPP funds.’”

Marcus said that his sense of the scope of potential liability among ancillary cannabis businesses is “pretty huge, frankly.” There are some more obvious examples of federal violations—such as cannabis dispensaries receiving the funds—but the SBA policy itself is broad enough to cover virtually anyone who received the loans and who derived some income from cannabis businesses.

He advised that any direct or indirect cannabis businesses that might be impacted self-report to DOJ to potentially avoid multiplied penalties. But the blood is in the water, and Marcus suspects his firm’s successful litigation and DOJ’s public disclosure of the case could be influencing other PPP data-miners to follow suit.

It’s “unusual” to have outside parties report businesses over alleged FCA violations, he said. “Not unheard of, but it’s unusual.”

The difference here is that there are public databases of PPP loans recipients available to potential litigants interested in assisting DOJ and possibly winning a 15 percent settlement cut. And cannabis-adjacent businesses are relatively low-hanging fruit.

The exact number of cannabis businesses that DOJ is investigating or prosecuting is unclear. But numerous sources confirmed at least one detail: There is a recent surge in letters from federal prosecutors to cannabis-related businesses about active investigations related to the PPP loans.

Aaron Smith, executive director of the National Cannabis Industry Association (NCIA), told Marijuana Moment that he’s “heard from a handful of our ancillary business members that have been contacted by the DOJ about their PPP loan.”

“These businesses do not handle cannabis directly nor violate any state or federal laws and should absolutely have access to the Paycheck Protection Program, just as any other legal business,” he said.

Hilary Bricken, a partner at the firm Husch Blackwell, told Marijuana Moment that this “could set off a domino effect of reporting ancillary companies to the feds where the majority or all of the revenue is derived from the cannabis industry.

She added that this is “another technical nightmare” caused by the Schedule I status of cannabis under the Controlled Substances Act (CSA).

The Justice Department and offices of individual U.S. attorneys did not respond to multiple requests for comment.

As Bricken noted, the issue at hand underscores yet another policy complication resulting from the federal-state marijuana disconnect. At the same time that the Drug Enforcement Administration (DEA) under DOJ is exploring whether to reschedule cannabis based on a U.S. Department of Health and Human Services (HHS) recommendation, federal prosecutors in certain cases are evidently willing to prosecute the industry over alleged FCA PPP loan violations that, theoretically, might not apply if the recommended Schedule III reclassification is ultimately accepted.

FDA Head Says There’s ‘No Reason For DEA To Delay’ Rescheduling Marijuana

You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We post this and all of the newsletters on our website here.

Friends,

Canada legalized cannabis for adult-use in 2018, and a lot of investors thought they saw the future for the United States. It wasn’t so easy for the country to get the job done. Recall that Canada already had a federally legal medical cannabis program and that Justin Trudeau, the prime minister since 2015, had included adult-use legalization on his platform when he had run. The process was moving forward, but it almost failed on its “second reading” in the Senate in March 2018. The Cannabis Act passed in June 2018, and the industry has grown dramatically since the first legal adult-use sales in October 2018.

Legalization in the U.S. will be more challenging than it was in Canada. Unlike Canada, America has no federally legal medicinal program. Instead, it is legal under state law in the majority of states. Many of these programs are very different from one another. Of course, about half of the states have legal cannabis for adult-use, though these programs are not similar either. To legalize in the U.S. will create the challenge of coming up with a federal program, which will likely take a lot of time.

The federal illegality of cannabis in the U.S. has created a burden on the state-legal operators. After voters approved the first programs in the 2012 elections (Colorado and Washington), it took almost a year for the Obama Administration to react with the Cole Memorandum. Issued by the Deputy Attorney General, it conveyed that the companies that did not violate 8 specific rules would not be prosecuted by the federal government. That move in August 2013 encouraged me to open 420 Investor, and it excited investors.

Here we are, more than 10 years later, and our situation has improved a lot. Many Americans have access to state-regulated cannabis, which is a good thing! Still, though, the laws have not changed at the federal level, and this has left the industry at risk of the federal government moving away from its being okay with cannabis legalized on a state-by-state basis. When former Attorney General Jeff Sessions rescinded the Cole Memorandum in early 2018, cannabis investors and operators panicked. We have a presidential election this year, and this creates some uncertainty.

For cannabis to become legal in the U.S., Congress will need to legalize it. It has been very quiet on cannabis issues so far, though there are efforts on several fronts. One area of activity has been the SAFER Banking Act, which is in both the House of Representatives and the Senate. If this passes, it would be great for the consumers, as cash use would likely decrease. It could make things easier for cannabis operators, but it may not pass. Even if it were to become law, the largest publicly-traded companies would not benefit greatly, as they already have banking.

In addition to no federal medical cannabis program yet that could provide a basis for a full legalization, the political support is very mixed. Sure, several politicians in both Houses support legalization, but there aren’t any signs yet that this will happen. For cannabis to be legalized, 60 Senators would need to approve it as well as the majority of the House of Representatives. Unlike Canada’s election in 2015, the upcoming presidential election does not have any candidates making cannabis legalization a top issue.

For the cannabis industry to do better, full federal legalization is not necessary. As we pointed out more than a year ago, getting rid of the onerous 280E taxation for cannabis operators would be a very positive move. In late August, the Department of Health & Human Services recommended that the Drug Enforcement Agency move cannabis from Schedule 1 to Schedule 3, which would wipe out 280E. There is no timetable, and it’s not yet clear that the DEA will make this move.

The New Cannabis Ventures Global Cannabis Stock Index reflects the optimism of investors, and we think that they are being too aggressive. It is up 25.4% to 10.17 so far in 2024. Here is the past year, which includes the all-time low of 6.91 set in late October:

If 280E goes away, it will help the financially challenged industry. If it doesn’t, though, the American cannabis companies have cash flow and debt problems. The very largest MSO, Curaleaf, has $496 million in net debt and a tangible book value of -$748 million.

We discussed two weeks ago that the cannabis sector is not in a new bull market yet. The index has declined 0.5% since then. The chart now looks like a double-top, and we warn our readers again to not get overly excited by cannabis stocks. They are cheap, but things may not work out as well as investors hope or as quickly.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most important content from this week:

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Sincerely,

Alan

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

A new decision of an appeal in a trademark dispute, initiated by the RAW Rolling Papers manufacturer, has widespread implications for the rolling paper industry that dismiss the claim that rolling papers are “drug paraphernalia.” It’s also good news for non-cannabis-touching companies that want to protect trademarks.

BBK, manufacturer of RAW rolling papers, announced on April 9 that it won an appeal in its trademark dispute with Delaware-based Central Coast Agriculture, Inc. (CCA) as the Court sided with the popular rolling paper brand on its counterclaim.

According to the lawsuit, CCA’s employment of the “RAW GARDEN” name for its cannabis products, was an infringement of BBK’s “RAW”  trademark. In the past, several other brands have allegedly attempted to rip off the likeness of the RAW trademark in one way or another. RAW GARDEN applied for a trademark at the United States Patent and Trademark Office (USPTO), beginning in 2017 with subsequent applications.

The U.S. Ninth Circuit Court of Appeals issued rulings in two decisions on April 1 that could reshape the landscape of trademark law within the cannabis industry: The district court dismissed BBK’s false advertising claim and ruled in favor of CCA on BBK’s trademark claims. But the district court also ruled in favor of BBK on its counterclaim to invalidate several of CCA’s trademark applications and on CCA’s counterclaim to cancel BBK’s trademark applications for unlawful use.

“BBK is very pleased with the outcome of this appeal. Setting a precedent for the rolling paper industry, the appeals court rejected the suggestion that rolling papers are ‘drug paraphernalia’ and reaffirmed the trial court’s decision that BBK’s RAW^® rolling papers and other RAW^® smoking products are not prohibited by the Controlled Substances Act,” a spokesman for BBK said in an April 9 press release.

“It is equally important that the appeals court confirmed the trial court correctly invalidated the trademark applications improperly filed by CCA,” the spokesman continued. “After years of pursuing efforts in and out of court to protect consumers from being confused and misled by CCA’s unauthorized use of the RAW^® name for CCA’s cannabis products, BBK looks forward to a final resolution after a trial to a jury.”

RAW Black rolling papers were voted the best by the Daily High Club, as well as upvoted to the top in the comments on a Reddit thread, “What papers do y’all generally consider the best?”

Benzinga reports that the rulings could “reshape the landscape of trademark law within the cannabis industry.” Read the appeal ruling in its full text here.

The appellate court’s rulings sent BBK’s trademark infringement claim against CCA back to the district court for a full trial.

BBK representatives say the ruling protects consumers from confusion and misleading practices associated with the unauthorized use of the “RAW” name on rolling paper and other cannabis-adjacent products.

BBK’s team is preparing to present its case to a jury for a final resolution, however this ruling has widespread implications on how lawsuits in the industry will play out.

Not RAW Rolling Paper’s First Rodeo

There are other legal precedents for alleged trademark infringements regarding RAW Rolling Papers. RAW also won a game-changing lawsuit in 2023 when a rolling paper brand Republic Tobacco appeared to rip off RAW’s signature logo design with similarities in color, shape, and so forth.

RAW (BBK/HBI) issued a statement about the final resolution of the seven-year court battle with Republic Tobacco which had brought a series of lawsuits against HBI International, the company that owns the RAW brand.

The ruling on June 5, 2023 finalizes that jury’s decisions after a weeks-long trial, ruling that Republic Tobacco willfully infringed on RAW’s copyright and trade dress, and awarded to HBI damages of more than $1 million. 

When it includes a prejudgment interest award, the Court ordered Republic to pay RAW nearly $1.5 million in total compensation. Today’s conclusion came after both sides agreed on legal fees that RAW will pay to Republic based on only one of Republic’s multitude of claims.

In that case, the judge ruled that “Republic requests the disgorgement of every cent of profit from HBI’s RAW brand during that time period… This extraordinary request, however, is not supported by adequate evidence, nor is it appropriate considering the other factors of the case.”

RAW has also been involved in advocacy efforts. For instance in August 2023, the brand  announced a donation of $100,000 to The JUSTÜS Foundation, a 501c3 non-profit organization that is dedicated to facilitating the entry of legacy cannabis operators to the legal cannabis market. The RAW Seeds Fellowships aim to provide opportunities to legacy cannabis operators to navigate the legal cannabis market.

The new ruling adds another dimension to the protections that RAW Rolling Papers and BBK are entitled to, pending the appeal’s final ruling.

The ritzy, upscale Los Angeles neighborhood Bel Air will welcome a new arrival: a cannabis store, run by rapper Xzibit, who proudly represents the West Coast. It’s the rapper’s latest foray into the cannabis sector after launching a cannabis-themed podcast and a cannabis brand Napalm.

Xzibit’s West Coast Cannabis (XWCC) opened its doors last month but operators want to kick off with a bang and some opening ceremonies. The store is located off the 405 freeway on Sepulveda Blvd., on the second floor of a building. The store will celebrate the launch on April 28 with a grand opening and a 4:20 p.m. ribbon-cutting ceremony, followed by a block party.

The store opening gives Xzibit the distinction of being the sole adult-use cannabis retail licensee in Bel Air, Benzinga reports.

“The West Coast is more than just a term that describes where we live, it stands for the culture of everything that represents us. From entertainment to our beloved sports teams, our car culture, our neighborhoods, and beaches, we are proud citizens of this community and XWCC is a celebration of all of the above,” Xzibit stated. ‘We are honored to be able to open our doors in such a special location and invite everyone to come celebrate the West Coast along with us.”

The University of California, Los Angeles (UCLA) is not far from Bel Air, and Xzibit’s new store has a unique approach. In a press release, XWCC announced that UCLA students are invited to try out the new cannabis store, with the promise of a 60% discount on premium cannabis products, which demonstrates XWCC’s commitment to directly helping the local community.

If anyone needs a discount, it’s students with the burden of tuition and living expenses—especially students in California.

“Nestled in the iconic neighborhood of Bel Air, Los Angeles, XWCC is more than a premium cannabis dispensary—it’s a culmination of a journey marked by passion, commitment, and excellence,” the website reads. “Founded by renowned artist and entrepreneur, Xzibit, XWCC is a reflection of his life’s story—from his humble beginnings to his rise as a West Coast legend in music, entertainment, and cannabis. Xzibit’s career, marked by groundbreaking music and creative ventures, has always been driven by a deep commitment to authenticity and innovation. His journey is infused into the ethos of XWCC.”

XWCC represents the best of the West when it comes to quality herb.

Recently the rapper also launched Lasagna Ganja, a weekly podcast about the cannabis sector. He co-hosts the podcast, supported by DCP Entertainment, with cannabis advocate and influencer Tammy The Cannabis Cutie.

Last year, Flora Arbor LLC, a licensed craft grow based in Elgin, Illinois, announced an exclusive licensing and distribution agreement with Napalm, a premium cannabis brand founded by hip-hop artist, actor, and entertainer Xzibit. (Some people didn’t like the name because it was named after a weapon of war with a dark past.)

Xzibit and Cannabis

In the most recent High Times interview with Xzibit, he explained how cannabis can help replace things like liquor. It’s a testament that the rapper’s wilder, earlier days are now balanced with a healthier substitute like cannabis.

“I don’t get as shit-faced as I used to,” Xzibit told High Times in 2019. “I don’t bounce back like I used to, so I had to slow that shit down. It gets in the way of your productivity.” The rapper grew up in New Mexico before moving on to the coast in Los Angeles, where he blew up. He was proud to announce the store opening on 

“Get ready to elevate your experience! XWCC is opening its doors on March 17th!” Xzibit posted on Instagram last month. “Whether you’re a seasoned connoisseur or new to the scene, we’ve got something special just for you. Swing by and discover a curated selection of premium products. Mention @935kday and receive a special treat!”

As a rapper, Xzibit joined Dr. Dre and others on the “Up in Smoke Tour” and he hosted MTV’s popular Pimp My Ride. It was more or less an all-star lineup of mostly West Coast icons.

“It was the first time that my music had been broadcast and pushed on a national or on a global level, alongside iconic acts such as Dr. Dre, Ice Cube, Eminem and Snoop Dogg, and you know, all of us coming up under that 2001 [Dr. Dre’s 1999 solo album] umbrella,” Xzibit said. “I was exposed to millions and millions of people, and now you have the opportunity to showcase your talent at the highest point of the pendulum.”

Xzibit’s new foray with his cannabis store in Bel Air shows that he’s not going anywhere and will remain a fixture in the cannabis market.