Ten Ways Cannabis Can Revive a Depressed Economy

An economic winter is coming, but don’t worry; we’ve compiled ten ways cannabis can revive a depressed economy. When many people hear “cannabis,” they may think of it as a recreational activity or a medical necessity. And it is. But it’s more than that. So while politicians will inevitably announce “stimulus” and bailouts, the real solution will come from entrepreneurs in a free market. And since Canada has already legalized cannabis, that’s one hurdle out of the way. Next, cut […]

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Cannabis Recession 2023

Is a 2023 cannabis recession inevitable? While an economic downturn is inevitable, how the cannabis industry weathers the storm remains to be seen.  For sure, saturated retail markets will feel the hit as consumers cut back or make more discerning purchases. And large-scale industrial grows that have been more about selling equity than weed will feel the impact.  But why? Why has the value of cannabis stocks been removed from fundamentals? Why are small cannabis business owners – through no […]

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The Vibes Are Off

I struggled for a minute, thinking about what this end-of-year digest should say. Typically, year-end missives consider what has happened while offering a forward-looking view, one that’s hopefully positive. I hate to kick a horse while it’s down, which, in this case, is the wider cannabis industry and culture, but the truth is: shit sucks right now. It would be putting lipstick on a pig to pretend otherwise. So, basically, I’m here to commiserate with everyone. 

Even the Wall Street guys are pissed, so you know it’s bad. Usually, when the culture is upset, it’s because of dynamics that have big business grinning while the little guys get crushed. In this current climate, everyone is hurting. Jesse Redmond, a former hedge fund manager who writes the Green Giants newsletter, which details retail cannabis stocks investing, tweeted yesterday, “New all-time low on $MSOS. The ETF has dropped 88% over the past 686 days and is down 46% MTD. It will take an 830% return to get back to the all-time high.” MSOS is a fund that includes some of the most recognizable publicly traded multi-state operators, like Curaleaf, Trulieve, Green Thumb, and Verano.

The main reason they’re so pissed (this time) is because of repeated stalling on legislative action at the federal level, the most recent of which was SAFE banking’s demise. The Republican blocking of that legislation, while harmful to some actors in the cannabis space, is indicative of a much larger problem, one that affects everyone who touches cannabis in any way: weed is still politically radioactive for some factions of power, despite remaining overwhelmingly popular with voters. Because of this, a common refrain among advocates of all stripes is that federal legalization won’t come anytime soon unless Biden decides to truly go “Dank Brandon” beyond his half-assed pardon of federal marijuana prisoners incarcerated for possession (of which, there are not many).

That’s bad news for everyone. But things are infinitely worse for those on the ground, especially growers. California is, once again, experiencing oversupply, now with a bumper crop to boot, worsening the already severe problem exacerbated by high taxes. “Growers in states such as California, Colorado, Michigan and Washington [are] already seeing rock-bottom wholesale prices, a flood of cheaper, outdoor-grown flower hitting the market in the coming months could push prices even lower,” reported MJBizDaily’s Bart Schaneman in November. Also in California, a debt bubble exists in its supply chain, which finds retailers, distributors, and growers unable to pay taxes and bills. Currently, the state reports around $500 million are owed in taxes.

In New York, which just began legal adult-use sales, operators have been scrambling to keep up with ever-shifting legislation to get to that recreationally legal moment. A thriving grey market — arguably New York’s golden era of weed, for which I’m sure many will be one day nostalgic — threatens the health of said legalization, but the truth is there’s never been a better time for the average New Yorker to get killer buds. It remains to be seen how the above-board landscape will fare. So far, it hasn’t been great: a lawsuit threatens to overturn residency requirements for operators, holding up some would-be licensees from selling. The first 36 approved licenses in the state, which would benefit from a $200 million state social equity fund, have not received funding nor notification of how they might, stalling their openings. As of Dec 29, the first day of legal sales in the state, only one licensee can open.

Workers aren’t doing much better. Layoffs at companies like Dutchie, Weedmaps, Leafly, Curaleaf, Trulieve, The Parent Company, Leaflink, and many more abound. One worker died at a Trulieve processing facility in Massachusetts. Who knows how many other casualties there were in the greyer segments of the market.

As for the culture, it’s hard to argue that the mood is anything but down. Attendance at big events that attract more than just suits, like Hall of Flowers or the Emerald Cup Harvest Ball, was lighter this season — folks just don’t have the cash or are busy putting out literal and proverbial fires. A mold scandal infected a new grower-focused cannabis competition in Oklahoma, and so on. Many players are dropping out of the legal market, some unable to survive while others lost their taste for the rat race. Others in the traditional market gave up on the legal one years ago, and some never even tried to join up, sensing that things would likely go sideways. 

Now other long-time pot advocates are abandoning support for certain aspects of legalization based on well-founded fears that the market is headed toward an inevitable monopoly. Reporter (and High Times alum) Mary Jane Gibson asks, “is legal weed doomed to be run by big business?” In her Vox piece, she reports that activists and advocates, including some from NORML, find that certain laws will just be twisted to suit the needs of corporations, like the aforementioned SAFE banking measure, or efforts to reschedule cannabis at the federal level. She details the efforts by organizations like the nonprofit Coalition for Cannabis Policy, Education, and Regulation (CPEAR), whose goal is to “advance a comprehensive federal regulatory framework for cannabis.” She mentions the group is funded by tobacco and alcohol brands, like, “Altria, the parent company of Philip Morris USA; the Molson Coors Beverage Company; Constellation Brands, the conglomerate behind Corona and Modelo; and the National Association of Convenience Stores, among others.”

But the die-hards persist, as they always have. Grassroots events, like Transbay Challenge, The New York Growers Cup, and Ego Clash, are still well-attended, representing an OG culture segment that won’t fold, regardless of whatever legalization hurls its way. The people are still imbibing, as they always have, I found while reporting for the New York Times earlier this fall, making the most of time-honored practices, accessibility and market challenges be damned. There’s hope there, for sure, however niche it may be.

If there are silver linings, it’s the same as there always will be in the age of legal cannabis: a few more states legalized this year, and fewer people are going to jail for the plant than ever. Brittney Griner came home. Consumers who lacked solid access to the traditional market now have other avenues to obtain weed. That it comes at a much higher price, especially for medical patients, and with degrees of varying quality (not to mention questionable testing results) puts some dull on that shine, however. 

Dominic Corva, Assistant Professor of Sociology and Cannabis Studies Program Director at Cal Poly Humboldt, said he agreed with me that it’s a bad time in the history of cannabis culture. He especially feels for those in the legacy world: those who stayed, and those who made a run for legality based on the state’s promises that heading out of the shadows would benefit them.

“Because alternative livelihoods are disappearing at a time when they are desperately needed. How do you ride out the global polycrisis without a resilient informal economy?” he asks, referring to the variety of social and economic ills our society faces — not just in the cannabis universe. “The cannabis countercultural economy flourished because it was a refuge from the ‘Rat Race to the Bottom’ ruining everything since the 1980s, including the dissolution of previously significant formal social safety nets. Now we have neither. ‘Get racing, rats’ could be the slogan of actually existing cannabis legalization.”

There’s not much more to say than that. I bid adieu to 2022 and welcome 2023 with open arms. To better days ahead — I’m not sure when those will be or what they’ll look like, but I hope for them all the same.

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Former Congressmember, NBA Athlete Create Alternate Cannabis Banking Solution

Former Rep. Dan Donovan, who held his position as a New York House representative between 2015-2019, and former Indiana Pacers NBA athlete David Harrison, recently announced their partnership to create a new banking solution called Token HiFi. Donovan is taking on the mantle of Chairman, while Harrison is the company co- CEO and founder, in addition to Chief Strategy Officer and founder Chris Yim.

The company’s goal is to offer a safe and reliable solution for cannabis banking. “Token HiFi is a new cannabis business membership that offers a digital asset and exchange platform to facilitate secure, valid, and trusted financial deposits and transactions for industries locked out of traditional banking services,” the company explains on its website. “Token HiFi’s patented B2B closed-loop digital asset transfer technology, known as DAVOS (Digital Authorization & Verification Operating System) is a convenient, safe, secure, and reliable encrypted utility token that acts as a value store and medium of exchange.”

Potential business owners, once they receive a compliance ID from Token Hifi, can purchase coins for this system. The coins can be used to “pay, transfer, and exchange funds with suppliers and affiliated businesses,” using armored trucks and physical cash pick-up. Finally, customers will be able to receive the value of their coins “whenever they choose and at any time,” the website states.

Although Token Hifi was founded in February 2022, the company has not yet officially launched.

The former Pacer is no stranger to cannabis. In 2015, he spoke about his off-season cannabis consumption during his first three seasons with the Indiana Pacers (between 2004-2007), due to stress caused by working with then-coach Jim O’Brien. “It wasn’t in his game plan for me to succeed. Being around him was probably the worst time I’ve had in my life,” Harrison said. In the 2007-2008 season, he smoked cannabis daily, which eventually led to being suspended for five games after he was found in violation of the league’s anti-drug policy.

“It wasn’t healthy,” Harrison said. “I literally had to smoke pot every day so I would not hurt him. I would avoid him. I’d come in early and stay late. It wasn’t like he hit me; he verbally abused me. But what coach doesn’t?”

According to the Token Hifi website, Harrison went on to start five cannabis grow facilities.

Banking still continues to be an issue for legal cannabis businesses across the country. Although there was some hope that the Secure and Fair Enforcement (SAFE) Banking Act would be passed in the recently proposed defense spending bill, it was removed earlier this month. If passed, it would have prevented federal banking regulators from penalizing banks that sought to serve cannabis-related businesses. 

Senate Majority Leader Chuck Schumer expressed his desire to continue pushing the bill this year. “It’s a priority for me,” Schumer said. “I’d like to get it done. We’ll try and discuss the best way to get it done.”

Schumer was also hopeful about getting the bill passed earlier this November. “I am working in a bipartisan way with Democrats and Republicans to take the SAFE Banking Act, which allows financial institutions to involve themselves in cannabis companies and lend money to them—but it also does some things for justice, such as expunging a record,” Schumer said. Politico reported that Schumer spent the past weekend pushing to include the cannabis banking bill before the congressional session ends.

The SAFE Banking Act has passed through the House numerous times in the past, with a historic approval back in September 2021 as it was included in the Military Spending Bill.

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SAFE Banking Act Left Out of Defense Spending Bill

A bid to include the SAFE Banking Act in a must-pass defense spending bill has failed, leaving advocates searching for a way to pass the legislation that would grant the legal cannabis industry access to banking services. Proponents of the measure had hoped to include provisions of the banking bill, known as the Secure and Fair Enforcement (SAFE) Banking Act, in the National Defense Appropriations Act (NDAA), an annual spending bill that funds the military. But the latest version of the NDAA released on Tuesday did not include the cannabis banking language.

Under the SAFE Banking Act, federal banking regulators would be prohibited from penalizing banks that choose to serve cannabis firms doing business in accordance with state law. Under current regulations, banks are subject to penalties under federal money laundering and other laws for servicing such companies, leaving the cannabis industry to operate in a risky environment heavy in cash. 

The legislation was initially introduced in the House in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the bill each subsequent congressional cycle. The bill has been passed seven times since 2019 by the House of Representatives, but each time the Senate has failed to bring the legislation to the floor for a vote.

Another amendment supported by cannabis policy reform advocates that would have given the states assistance with expunging past marijuana-related convictions also failed to make it to the final version of the defense spending bill. Before the latest text of the NDAA was released on Tuesday, Senate Majority Leader Chuck Schumer of New York told reporters that he was still working on getting the cannabis banking measure passed.

“It’s a priority for me,” Schumer said. “I’d like to get it done. We’ll try and discuss the best way to get it done.”

Republicans Balk At Adding SAFE To Defense Bill

But later in the day, Senate Minority Leader Mitch McConnell of Kentucky admonished Democrats for attempting to attach amendments not related to defense, including the SAFE Banking Act, to the spending bill.

“Even now, House and Senate Democrats are still obstructing efforts to close out the NDAA by trying to jam in unrelated items with no relationship to defense,” McConnell said on the Senate floor on Tuesday. “We’re talking about a grab bag of miscellaneous pet priorities — like making our financial system more sympathetic to illegal drugs, or the phony, partisan permitting-‘reform’-in-name-only language that already failed to pass the Senate this year.”

“If Democrats wanted these controversial items so badly, they had two years to move them across the floor. Heck, they could have scheduled those matters for votes this week. But no — we’re doing more mid-level nominations, while Democrats keep half-threatening to take our Armed Forces hostage over these extraneous matters,” said McConnell, adding “The Democrats’ failure to plan ahead for unrelated liberal pet priorities should not be creating uncertainty and confusion for the brave servicemembers who keep us safe. My colleagues across the aisle need to cut the unrelated hostage-taking and put a bipartisan NDAA on the floor.”

What’s Next?

The failure to include the SAFE Banking Act in the NDAA leaves the prospect of passing the cannabis banking legislation before the current Congress adjourns in two weeks unsettled. Morgan Fox, the political director for the cannabis policy reform group the National Organization for the Reform of Marijuana Laws, said that SAFE could be attached to a pending omnibus appropriations bill or perhaps be approved as standalone legislation.

“I’m glad that we still have other options,” Fox said Wednesday. “It’s pretty disappointing.”

“While there has been momentum and optimism around getting SAFE included in the National Defense Authorization Act, it has been known for some time that getting this through would be a challenge,” Sahar Ayinehsazian, partner at the cannabis law firm Vicente Sederberg LLP, wrote in an email to High Times. “The focus now is on the omnibus appropriations bill, which congress is currently negotiating. SAFE has growing support on both sides of the aisle and I, and many others in the industry close to this issue, think that there is a still a chance that movement can be made on SAFE via the omnibus bill during this session of Congress.”

The SAFE Banking Act is supported by a bipartisan coalition of lawmakers made up primarily of representatives and senators from states that have legalized medical marijuana or adult-use cannabis. The bill passed with overwhelming bipartisan support by a vote of 321-110 in the House last year, and senators from both parties are also in favor of passing the measure.

“The Senator is continuing to work every day to build consensus so we can pass “SAFE Banking” into law this year,” a spokesperson for Montana Republican Senator Steve Daines said in an email on Wednesday.

The senior senator from Montana, Senator Jon Tester, a Democrat, also said he “would like to see it pass this Congress.”

The banking bill is also supported by nearly two dozen governors in states that have liberalized marijuana policy. In a written statement, Conor Cahill, a spokesman for Democratic Colorado Governor Jared Polis, praised the work of Perlmutter and said he expects the legislation to pass this year.

“Governor Polis has long advocated for the passage of the SAFE Banking Act, and has repeatedly called upon Congress to pass this important legislation to protect cannabis-related businesses, support minority, women, and veteran-owned small businesses owners, create jobs, and strengthen public safety in Colorado communities and in the states,” Cahill wrote in a Tuesday email. “We hope and expect to see the final passage of his decade-long effort by the end of the lame-duck session.”

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Dispensaries’ Cashless ATM Transactions Get The Ax

Cannabis dispensaries in several states were left scrambling to find ways to process transactions without cash when a popular workaround to federal banking regulations known as cashless ATMs stopped working for many retailers beginning last week. Cashless ATMs, also known as “point of banking” systems, allow customers to use bank cards instead of cash at cannabis dispensaries, giving retailers and their patrons alike more flexibility when processing transactions for marijuana purchases.

But beginning last week, some of the biggest ATM transaction processors including NCR Corp.’s Columbus Data Services have shut down the ability of cashless ATM transaction processors to use their service, according to unidentified sources cited by Bloomberg. NCR declined to comment on the situation, according to the report.

“This is a pivotal point in cannabis banking,” Ryan Hamlin, chief executive officer of payment technology provider Posabit Systems Corp., told Bloomberg about the cashless ATM shutdowns.

Notice Given Last Year

Late last year, international payment processing giant Visa announced in a memo to retailers that it “was aware of a scheme where POS devices marketed as ‘Cashless ATMs’ are being deployed at merchant outlets.” 

The system worked by rounding up purchases, often to multiples of $20, to make the transaction appear to be cash disbursements. Instead, only the change from the transaction would be returned to the customer, and the dispensary would keep the rest to cover the payment for the purchase.

“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs. However, no cash disbursements are made to cardholders,” the December 2021 memo continues. “Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement.

In April, Bloomberg reported that cashless ATM transactions were able to be processed because they were disguised by listing an address of a nearby business such as a fast food restaurant instead of the actual dispensary address. An estimate put the portion of cannabis sales processed through cashless ATM transactions at 25% of the $25 billion in projected annual dispensary sales.

“Those sales could generate more than $500 million in fees for payment processors, based on average purchase sizes,” Bloomberg reported.

Banking Laws Hinder Legitimate Cannabis Businesses

The popularity of cashless ATM transactions is indicative of the difficulty federal regulations pose for cannabis businesses, even those operating legally under state law. Federal banking and money laundering laws put restrictions on the banking industry, making it difficult for financial institutions to provide traditional services such as credit card processing, loans, and deposit and payroll accounts. But cashless ATMs fail to pass muster with the federal regulations.

“The cashless ATM trend is damaging to investors, dispensaries, and consumers, as when it comes down to it, it’s blatant money laundering,” CannaTrac CEO Tom Gavin told High Times. “Instead of creating loopholes and using a cashless ATM, dispensaries should take advantage of other solutions currently on the market that are safe, legal, and transparent. A proper financial solution should be registered with FinCEN and have a money transmitter license, or be the agent of a sponsor or bank with a money transmitter license in their state.”

Hamlin of Posabit said that signs of the cashless ATM shutdown began to appear in November and increased last week. He estimated that by the end of the weekend, only about 20% of the cannabis industry was still able to use cashless ATM payments.

Cannabis dispensaries in Arizona, California, and Massachusetts have reportedly been affected by the shutdown of cashless ATM transactions, with employees at those shops recommending that they pay for their purchases with cash instead. Curaleaf Holdings, one of the largest cannabis retailers in the United States, reported in April that approximately one-third of the company’s dispensary transactions were processed through cashless ATMs.

“It’s left merchants in the lurch because it happened overnight, but the writing has been on the wall for a while now,” said Peter Su, a senior vice president at Green Check Verified, a consulting and software company that specializes in cannabis and banking.

Sahar Ayinehsazian, a partner at Vicente Sederberg LLP and co-chair of the law firm’s Banking and Financial Services Access Group, said that the shutdown of the cashless ATM system illustrates the need for the passage of legislation now pending before Congress that would allow legal cannabis businesses access to banking services.

“This shutdown further underscores the ongoing need for banking and financial reform for cannabis businesses and the passage of the SAFE Act,” Ayinehsazian wrote in an email to High Times. “While there can be no guarantee that the Act will open up payment processing for cannabis operators, the industry is very optimistic that its passage will facilitate access to legal and legitimate cashless payment options for cannabis operators.”

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Cannabis Banking Left out of NDAA

United States Congress has declined to include cannabis banking in the NDAA (National Defense Authorization Act). The NDAA is an annual congressional bill guiding policies and funding of federal military agencies. Often, the NDAA is used to undermine the principles the United States was founded on. For example, the NDAA grants the president the power to kidnap Americans and indefinitely hold them without trial. The NDAA not only spits in the face of the Bill of Rights, it completely undermines […]

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Canada’s Cannabis Credit Union

When you’ve got a cannabis credit union in your corner, nothing seems impossible. Despite Canadian cannabis legalization, banking for cannabis producers and operators is still a struggle. That’s where Community Savings Credit Union has stepped up. With seven branches in British Columbia, they’ve won two awards from the Canadian Marketing Association for cannabis advocacy. Specifically, they won awards for their “Roll with us” marketing campaign and “Does your bank deliver,” which compared choosing their services with choosing toppings for your […]

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Legal Cannabis Banking in the US

Legal cannabis banking in the United States is still an open question, even after the midterms. Cannabis legalization became a reality in two more states last week, with Maryland and Missouri joining the ranks as the newly legal states. Nearly half of Americans now live in a legal cannabis jurisdiction. This a significant step from fifteen years ago, when no state had legal cannabis. (And only a handful permitted medical exemptions.) But what about the push for federal legalization? And […]

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New Poll Shows Overwhelming Support for Cannabis Banking Legislation

Nearly two-thirds of U.S. voters support legislation to allow the banking industry to provide financial services to legal cannabis businesses, according to the results of a recent poll. The survey commissioned by the Independent Community Bankers of America (ICBA) also found that a strong majority believe that allowing cannabis companies to access financial services would reduce the risk of robbery and other crimes at marijuana businesses.

The survey, which was conducted by the polling firm Morning Consult on behalf of the ICBA, found that 65% of U.S. voters support allowing cannabis businesses to access banking services in states that have legalized marijuana. The ICBA said the results of the poll indicate broad bipartisan support for the Secure and Fair Enforcement (SAFE) Banking Act, a federal bill that would allow such access to financial services for cannabis companies. The legislation has been passed by the U.S. House of Representatives seven times but has failed to gain the approval of the Senate.

“U.S. voters have made clear that current law inhibiting access to the banking system for cannabis-related businesses has a negative impact on local communities,” ICBA president and CEO Rebeca Romero Rainey said in a statement from the industry group. “With a supermajority of U.S. voters voicing support for allowing cannabis-related businesses access to the banking system, the Senate should act now on bipartisan cannabis banking legislation that the House has passed seven times.”

The SAFE Banking Act would permit banks and other financial institutions to provide traditional business banking services to the legal cannabis industry. Under current regulations, providing such banking services including loans and payroll, checking and deposit accounts is tightly regulated by the federal government, resulting in few financial institutions agreeing to work with marijuana businesses. Critics note that the current policy forces cannabis companies to operate primarily in cash, leaving businesses vulnerable to robbery and other crime.

The SAFE Banking Act was first introduced in Congress in 2013 by Democratic Representative Ed Perlmutter of Colorado. Since then, the House of Representatives has passed the bill seven times as either a standalone bill or attached to other legislation, most recently as an add-on to a China competition bill that was later dropped from the legislation. Each time the cannabis banking bill or its provisions have been approved by the House, however, the legislation has failed to gain the approval of the Senate.

Voters Believe Cannabis Banking Bill Will Reduce Crime Risk

The ICBA poll also found that 71% of voters believe that allowing legal marijuana companies to access the banking system would help reduce the risk of robbery and assault at cannabis-related businesses, which the industry group said is an indication of the importance of cannabis banking access to public safety. A majority (55%) said that with some cannabis-related businesses owned and led by people of color, women, and the LGBTQ community, providing financial services to the weed companies could help foster equity in the cannabis industry.

Sahar Ayinehsazian, a partner in the cannabis law firm Vicente Sederberg’s Los Angeles office and the co-chair of the practice’s Banking and Financial Services Access Group, agreed that public support for cannabis banking legislation suggests the issue is an important public safety issue for the electorate.

“It’s encouraging to see that 71% of voters support giving banking access to cannabis businesses – this is not only a business issue, but also a serious public safety matter. We are approaching a decade since the passage of Amendment 64, which ushered in the current model of the national cannabis industry,” Ayinehsazian wrote in an email to High Times. “During this decade, cannabis businesses have proven themselves to be beacons of compliance and safe and material cornerstones of their communities and economies.”

“Continuing to provide hurdles to banking access is, therefore, a harm to the community at large,” she added. “Such broad bipartisan public support is reflective of the positive impacts the cannabis industry has had nationally and should motivate the Senate to get cannabis banking done.”

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