The cannabis industry is in the limelight again! On August 15, a Forbes article discussed that the FBI announced corruption in the cannabis industry. The FBI actively seeks tips on public corruption related to the marijuana industry. Notably, the FBI discussed the situation on its podcast.
FBI tightens the screws on the cannabis industry
FBI Public Affairs Specialist Mollie Halpern said that since states require licenses to grow and sell the drug, there could be corruption. Public officials might be inclined to accept bribes in exchange for the licenses.
Supervisory Special Agent Regino Chavez said during the podcast that “We’ve seen in some states the prices go as high as $500,000 for a license to sell marijuana. So, we see people willing to pay large amounts of money to get into the industry.” Regulations play a vital role in the booming cannabis industry. Will the FBI’s investigations threaten the US cannabis industry?
FDA issued warning letters
As we discussed in Investing in the Cannabis Industry, cannabis has two components that impact humans differently. The first component is CBD (cannabidiol). The other component is THC (tetrahydrocannabinol). If CBD is mixed in a higher proportion, it reduces the effects of THC. In contrast, THC has more psychoactive effects if it’s consumed in high quantities. The FDA issues warning letters to firms every year. The FDA sends letters to firms that market unapproved new drugs that contain CBD. The organization sent warning letters to Curaleaf, Advanced Spine and Pain, Nutra Pure, and PotNetwork Holdings in 2019.
The FDA tested the chemical content of CBD compounds in some of the companies’ products. Notably, the tests showed that the CBD levels were lower than claimed. Regulation violations impact companies’ reputations. Violations take a toll on their revenues, earnings, and stock performance. Read Why Is the US CBD Market So Attractive? to learn more about the CBD market.
Curaleaf (CURLF) received a warning from the FDA about its promotion practices. To learn more, read Curaleaf Stock: Latest Updates for Investors. HEXO (HEXO) got caught up in the scandal news. As a result, most cannabis players suffered in July. Curaleaf rose 11% in July, while CannTrust fell 53.1%. Likewise, HEXO fell 21% in July.
US cannabis industry
Currently, the US cannabis industry is in the limelight. The 2020 presidential election is heating up. The candidates took initiatives to help the cannabis industry boom. Many of the 2020 election candidates want to push for marijuana legalization.
Recently, Joe Biden discussed his opinion about passing the SAFE Justice Act immediately and decriminalizing cannabis. Biden also wants to change the criminal justice system. Read Joe Biden Wants to Reform Cannabis Laws to learn more.
President Trump’s stance
According to a CNBC article, a Gallup Poll said that two-thirds of Americans support legalizing marijuana. The article also discussed how more states are legalizing marijuana. Recreational marijuana is already legal in ten states and Washington, DC. Meanwhile, 14 states decriminalized marijuana. Currently, 33 states allow medicinal marijuana use.
Will President Trump legalize marijuana? He hasn’t expressed his views on marijuana legalization yet. Last month, a Growth Op article discussed the topic. Piper Jaffray analysts think that President Trump might make marijuana legalization one of his key issues in the 2020 election. The platform could help him gain support from younger voters.
Cannabis players bounced back on Friday
After a disastrous performance on August 15, cannabis stocks bounced back on August 16. The performance on August 15 was led by Canopy Growth’s unimpressive results for the first quarter of 2020. Tilray fell 10.0%, while CannTrust fell 6.6%. Aurora Cannabis (ACB), Cronos Group (CRON), HEXO, and Aphria (APHA) fell 5.7%, 8.8%, 6.5%, and 7.6%, respectively. Read Canopy Growth Earnings Impacted the Cannabis Sector and Canopy Growth: Analysts’ Views after Its Earnings to learn more.
Canopy Growth (CGC) rose 2.3% on August 15. Aurora Cannabis, HEXO, and Aphria rose 3.9%, 3.8%, and 3.8%, respectively. Meanwhile, Tilray and Cronos Group fell 10.8% and 0.06%.
Read Which Are the Best Cannabis Stocks in August? for more industry updates in August.
Nearly half of Canadian cannabis consumers purchase their weed illegally, reveals Statistics Canada’s National Cannabis Survey released Thursday (Aug. 15). Ten months after the country legalized recreational marijuana, 42% of those who partake admitted to buying at least some of their pot from an illegal source, such as a drug dealer.
Legalizing the drug has not yet eliminated the black market, in part because the number of legal shops is rising slowly. The federal government imposes onerous registration procedures on these shops; only recently has the government reassessed them in an attempt to ease the “licensing bottleneck.” Other would-be shop owners point out that it’s difficult to enter the legal market via what they say is an ‘unfair’ lottery system. The legal shops that do exist consistently fail to meet consumer demand.
In the last quarter of 2018, 79% of transactions were done on the black market, according to Statistics Canada.
The black market persists in part because the legal market offers little variety. Cannabis-infused food and drink are not yet legal. This leaves a significant gap in the market; edibles account for 43% of the total cannabis market in Colorado, California, and Oregon, for example.
Illegal cannabis is also, simply, cheaper. In July, the gap between legal and illegal weed was almost $5 a gram on average. Statistics Canada noted that 42% of users considered lowest price as a main factor when deciding to purchase cannabis. Still, most users (76%) considered quality and safety first.
One thing that legalization hasn’t altered: the number of Canadians smoking weed. According to the report, 16% of Canadians aged 15 and older reported using cannabis in the previous three months. This is unchanged from one year ago, before legalization.
The leaders have become the laggards. Canopy Growth Corp. and Tilray Inc., trailblazers for the global cannabis industry, last week reported disappointing …
The Canadian government is scrambling to respond to a glut of license applications for cannabis research prompted by the drug’s legalization in October 2018. The queue of applicants—there were 251 in line as of late July—and the attendant monthslong waiting times are frustrating scientists interested in the basic
biology and therapeutic possibilities of cannabis. The delays are also prompting criticism of Health Canada, the agency charged with issuing the permits.
“Everybody is growing, consuming, and buying it, but the labs are still: ‘How do we get these projects going?’” says Jonathan Page, chief science officer for Aurora Cannabis in Edmonton, one of Canada’s licensed producers of the psychoactive plant. “The [licensing] system is swamped, and research is not exactly, I think, a priority.”
Health Canada says it is committed to the research and is trying to speed the process. But for now, “It’s incredibly slow—much slower than it used to be,” adds Igor Kovalchuk, a plant geneticist at the University of Lethbridge, who began to study cannabis under regulations governing it as a narcotic, before it was legalized for recreational use in Canada. “October 17, 2018, is when things slowed down tremendously.”
That date marked the enactment of the Cannabis Act, which made Canada the second nation, after Uruguay, to legalize recreational marijuana. Some Canadian researchers previously studied cannabis under stringent restrictions, but the act’s accompanying regulations gave the scientific community more freedom to grow the plant, ship it, tweak its chemical and physical properties, and administer it to research subjects—provided an investigator wins a license.
In October 2018, at a stroke, Health Canada was confronted with a massive task: processing scores of new research license applications, not to mention hundreds of others from would-be growers, processors, and others not involved with research. Although cannabis is now legal for recreational purposes, it is not available without constraints: Regulations implementing the Cannabis Act dictate a strict system controlling its production, distribution, and sale—and its use in research labs. New research applicants must document the quantities of cannabis they plan to receive or grow, submit floor plans illustrating required security features, and explain how they will destroy any leftover cannabis at the end of a project—with two witnesses standing by to attest to the destruction.
As it copes with a flood of new applications—and applicants’ learning curves—Health Canada has also had to migrate into its new online licensing system scores of preexisting research permissions. “I feel for Health Canada. They have been handed an almost impossible chore,” says Michael Dixon of the University of Guelph, who studies how factors such as light and nutrients affect the growth of cannabis and other plants.
The agency is processing applications “as quickly as possible,” a Health Canada spokesperson said in a statement, which noted it had boosted to 140 the number of employees now working with cannabis license applications of all kinds. And it has begun risk-based triaging of research applications, so that, for instance, a researcher conducting a single project with a small amount of cannabis would likely go through expedited review.
Last month, after an article from the Canadian news organization CTV revealed the long waits for research licenses, the agency began to make weekly announcements of the new research permits it has granted: Fifteen were issued in the week that ended on 16 August, bringing the total to 113 since October 2018—45 of them since 12 July.
“We expect the weekly number to grow in coming weeks,” the Health Canada spokesperson says. Its goal: a 42-day turnaround time for research licenses for single projects, and a 180-day response time for licenses to conduct multiple research protocols.
But the irony of waiting months for permission to study even microgram quantities of a substance that their 19-year-old students can smoke in abundance—the legal limit for recreational purposes is 30 dry grams—isn’t lost on aggravated would-be researchers. “I understand the need for control over what happens to this product. … But there has got to be a difference between, ‘Are you going to produce 600 kilograms a year or are you going to produce a couple of grams in a research project?’” complains Bertrand Sager, a graduate student at Simon Fraser University in Burnaby, who in June applied for a license to study the effects of cannabis on driving behavior, using simulators. His initial study would involve 90 participants and use a total of 22.5 grams of cannabis.
Some scientists counter that Health Canada is performing well, given the demands. Kari Kramp, a natural product chemist at Loyalist College in Belleville, has worked with cannabis since early 2018 and recently applied to amend her license to allow her to grow the plant in beakers in her campus lab. Last month, she says, she and colleagues peppered three Health Canada officials on the phone for 1 hour with questions about how to get their application right. “I was pleased,” Kramp says. “The manager reinforced that they want to support research.”
Born in Arizona Safford, moved to Tucson when I just a little guy, CDO high school we moved up where I met Dorothy and went to school. I made all city as a high school football player, had a pro try out of the Canadian Football League decided by about age 21 I was about as broken as you can imagine. I mean physically I was a wreck. I started with the sheriff’s department in 1978 work the streets was with the undercover narcotics team, worked my way from the streets all the way up to Assistant Chief and in 1984 I was in a really bad car wreck on duty, back was hurt really bad but nobody diagnosed it for 20 years. So I went into my doctor I said doc I can’t do this anymore and he said, “you’re retired.” And that was the first time I got a prescription. This is what I took every day of my life just for pain. We came up with a nickname for the guy that took that pie. We called him morphine Bill and morphine Bill was a jerk. I’d be in bed 12 to 14 hours a day and then sit on the couch for the rest of the day eating pills. My boys came down from Washington and they said, “Dad this this has got to stop.” I said “What do I do.” They held up a newspaper and said medical marijuana. We dare you to research it. And I laughed at him. Do you really picture your dad an ex-cop, a Mormon boy. I don’t drink I don’t smoke, I don’t do anything. You really picture me smoking a doobie?