The Mexican Supreme Court declares Prohibition Illegal
This week, Mexico’s Supreme Court ruled that prohibition of adult-use (recreational) cannabis was against the people’s constitutional rights. Medicinal Marijuana has also been prohibited by Mexican Law, although in certain cases, an Amparo (federal injunction) can be awarded.
The first to receive an Amparo was little Graciela Elizalde who has an aggressive form of childhood epilepsy. Mexican law states that after five successful Amparos, there can be a law change, which essentially creates a superimposition on all courts, called jurisprudence.
This ruling was essentially the 5th Amparo and now the laws governing the prohibition of marijuana can be changed. New legislation has been proposed to allow for the legalisation of cannabis at the federal level for both medicinal and recreational adult-use. Doing so would make Mexico the 3rd country in the world, behind Uruguay and Canada.
A tale of two Sessions
Breaking news this week was the “resignation” of Attorney General, Jeff Sessions. I say resignation, but in effect, he was fired, with his resignation letter stating “at your request, I tender my resignation”.
Jeff Sessions has been a very strong opponent to the marijuana industry. He has long been strongly opposed to any sort of legislation, including medicinal marijuana. So much so, that in January 2018 he tore up the Obama-era’s Cole Memo.
The Cole Memo essentially prohibited the Feds from using any of their budgets to prosecute cannabis companies operating under legal State legislation. The market reacted favourably, but with caution, as we wait to see who will replace him.
A better exit was that of Pete Sessions (no, they are not related, except on their ridiculously-outdated, and uneducated views on cannabis). He has been the most prolific in blocking any sort of marijuana legislation getting to the House Floor. He was, without doubt, the single greatest impediment to any sort of progressive cannabis legalisation passing at the Federal Level.
What can we say? Bye-bye…and don’t let the door hit you on the way out.
This week saw the outcome of the Mid-Term elections being extremely favourable to the cannabis industry. Not only did the House of Representatives switch to a Democratic majority, but 3 new States approved some sort of cannabis legalisation.
Michigan became the 10th US State to legalise Marijuana for recreational use. In doing so, they become the 2nd largest State to have adult-use (behind California) and the 5th largest State to have some sort of legalisation (recreational or medicinal).
Proposal 1, allows for adults to have up to 10 ounces of cannabis in their private residence, and the ability to home grow up to 12 plants. This is the first Mid-West State to legalise and the State will impose a 10% tax on all sales.
However, don’t get too excited, as you probably won’t see a retail store opening for at least 24 months. The State and Local Governments now have to decide on how distribution and sales should take place. You only need to look to Massachusetts, which only this week opened its first retail store, after legalising adult-use in 2016!
Missouri’s Amendment 2 passed allowing for the legalisation of medicinal marijuana. It came with a broad range of conditions that would qualify patients to gain access to medicinal marijuana, and the prescription is at the sole discretion of the doctors. The state will impose a 4% tax and patients will be allowed to grow 2 plants at home.
And finally, Utah – an extremely conservative Republican State – approved Proposition 2, allowing for the legalisation of medicinal marijuana. Under this proposition, patients will be able to have up to 6 homegrown plants, but the actual legislation will only come into effect on the 1st of January 2019.
This brings the total number of States with pro-marijuana legislation to 33 and will allow for additional market share expansion for some of the Multi-state producers. In addition, New Frontier Data suggests that cannabis-related jobs could increase from its current 259,000 to over 640,000 by 2025 (that’s an increase of 148% in 6 years!)
The only negative in what was an overwhelmingly positive electoral outcome was North Dakota’s rejection to legalise cannabis for full recreational use.
First off this is one of the most conservative States in the US, and in fairness, the proposed bill would have been the most progressive of any US State.
It would allow for unlimited ounces to be carried by adults and an unlimited amount of home grows, both with no fear of any sort of criminal prosecution. For a very conservative State, this was simply too much and a 60% majority voted against the bill.
Still, this was only the second loss at the polls for a pro-cannabis poll in the last 6 years.
And in Company News
Aphria acquired German-based CC Pharma for CAD$37 million in cash and an additional CAD$35 million, should hurdles and KPI’s be met in the coming years. CC Pharma is one of Germany’s largest pharmaceutical distributors servicing over 13,000 pharmacies.
CC Pharma also comes with over 200 million Euros of annual revenue (all non-cannabis). Aphria already had a 1,200kg per annum supply agreement with CC Pharma and will now create a wholly-owned subsidiary in Germany.
And finally, this week, Terra Tech announced that was acquiring Golden Leaf in an all-stock deal. Nothing exciting here. It brings together the 2 weakest companies operating in the US market, and the combination does not create any synergistic benefits to the quality and competence of management.
Golden Leaf has its primary assets in Colorado (which is a very undesirable State given its maturity and levels of oversupply). In addition, the deal is subject to a number of conditions, including Terra Tech’s successful listing on the CSE.
This is the only positive I can see from this deal, in that listing on the CSE would give Terra Tech access to capital and a more diversified investor base. However, the success of this remains to be seen.
And that’s it from the wide world of cannabis.
And they told you money doesn’t grow on trees.