May 18, 2021
Cannabis Industry Big Picture from Associations to M&A
- BRT S02 EP20 (67) 5-16-2021
What We Learned This Week
- National Cannabis Industry Association was founded (in 2010 in CO)on the principle of power in numbers, thousands of businesses involved in the state-legal cannabis industry
- Legalization in states, current, and future – 2013 WA & CO first to legalize, AZ legalize in 2020
- Moore Act - to de-schedule Cannabis as a controlled substance, FDA to regulate cannabis
- Safe Banking Act – Allows for big banks to work in Cannabis industry and FDIC rules / Claims Act – like Safe Banking Act for Insurance
- M&A Deal - Trulieve just bought Harvest Health in an all stock deal for $2.1 Bil
Guest: Morgan Fox Media Relations Director, Committee Manager of the National Cannabis Industry Assoc.
https://thecannabisindustry.org/
https://www.linkedin.com/in/morgan-fox-a3b25a11/
The National Cannabis Industry Association was founded (in 2010 in CO) on the principle of power in numbers. The thousands of businesses involved in the state-legal cannabis industry represent a tremendous economic force in this country and as the industry’s national trade association, NCIA proudly works every day to ensure our growing business sector has a seat at the table on the national stage. To promote the growth of a responsible and legitimate cannabis industry and work for a favorable social, economic, and legal environment for that industry in the United States thru advocacy and lobbying.
Morgan discusses all thing Cannabis:
Legalization in states, current,
and future – 2013 WA & CO first to legalize, AZ legalize in
2020
Economics – taxes and regulations,
and the changing of the 280E tax code
Fed regulations –
decriminalization
Moore Act - to de-schedule Cannabis
as a controlled substance, FDA to regulate cannabis
Safe Banking Act – Allows for big banks to work in Cannabis industry and FDIC rules
Claims Act – like Safe Banking Act for Insurance
Notes:
Ogden Memo RE: Cannabis and medical use (co)
“On October 19, 2009, Deputy Attorney General David Ogden issued a memorandum (the “Ogden Memorandum”), that gave U.S. Attorneys 'guidance and clarification' on how to enforce the Controlled Substances Act in states where medical marijuana had been legalized.
2009 Fed drops actions
2013 WA & CO legalize, 2020 NJ, 2021 NY pass adult use, 2021 NM & VA
Active summer – 2021 & stores open 2023 or 2024
Talking with members of Congress
2/3 Americans support
AZ had regulations set up with state bills
Help underserved communities
Politics – Advocacy & Lobbying, trade organizations
Networking, training
Trade shows – 2 dozen nationwide – 1 national, and 23-3 regional
Detroit 9/20
SF 12/21
AZ – virtual events MITA – AZ org.
Denver, CO & DC
Membership – 1500, Staff 20
Banks charge $10K / month to use banks in cannabis industry. FDIC – rules
Safe Banking Act – Safe Harbor for banks to work with cannabis businesses
Cash biz à debit cards and trade lending
**Moore Act – deschedule cannabis – lesser drug, criminal enforcement
Move to FDA or Alcohol, Tobacco to regulate
Claims Act – insurance, like Safe Bank Act
Tax – No write offs – tax rate as high as 70%, b/c of IRS – 280 E tax code
**Moore Act can help solve banking & tax issue.
Guests: Melissa Diaz w/ Rebel Rock
- customized accounting solutions, HR, and M&A for the Cannabis industry in AZ.
https://rebelrock.co/melissa-diaz/
https://www.linkedin.com/in/melissa-k-diaz-cpa-10215623
Melissa’s accounting experience as a CPA spans numerous industries, both domestically & internationally, including healthcare, hospitality and, of course, Cannabis. In addition to co-founding and serving as CFO to Rebel Rock, Melissa is CFO and Shareholder for High Rock Accounting, which places an emphasis on utilizing technology to strategically make day-to-day and long-term financial decisions, while pursuing company goals and compliancy.
At High Rock and Rebel Rock, Melissa helps companies remain competitive and efficient in increasingly high-pressure and high-stakes environments. Starting in 2016 she started branching out into the Cannabis industry.
Melissa discusses M&A deals in
the Cannabis industry, from SPACs, to VC, and how money is flowing
in. She give breakdowns on specific deals (Verano Holdings) and the
typical breakdown case study. Melissa explains the Hockey Graph
rise in deals, and how growth by acquisition is necessary because
of limited licenses in states, or land zoning laws.
Notes:
Revenue increase, stocks increase, deals increase
Raising money for Holistic Industries
**Flora Growth IPO at $5 / share
Curaleaf, Aerofarsm
M&A Deal - Trulieve just bought Harvest Health in an all stock deal for $2.1 Bil
Hockey Stick graph – growth in Cannabis industry on upward trajectory
Verano Holdings - $100 million financing deal
MSO – multi state operator
Land zoning – limited land, limited licenser
Politics – More states legalizing and 3-6 times multiplier and tax code lessened
Safe Banking Act – to get institutional capital and pool of money increase
SPACS – work around to bring Cannabis companies vs traditional IPO
Guest: Steve White, Founder / CEO of Harvest Health
https://www.linkedin.com/in/steve-white-40bb098
*Replay Clip - interview excerpt from the 3/21/2021 BRT Podcast
FULL SHOW: HERE
Harvest Health is a public co. (since 2018) traded Cannabis company (in Canada) that operates in 5 states with 15+ locations in AZ alone. Steve talks about the history of Harvest from 2012 to present, and how the industry has changed in the last 5 years, ad what he expects in the next 5. Also how Steve sees the Cannabis industry – is it mature? – or - Issues with the image of industry. Steve believes it has moved into the mainstream.
Cannabis Topic: https://brt-show.libsyn.com/category/Cannabis-Hemp-Marijuana
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
Thanks for Listening.
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