State Legalization Gets Boost From Connecticut: Cannabis Weekly

Bookmark

With a new bill signed by Connecticut’s governor, the push to legalize cannabis at the state level is picking up speed.

Connecticut last week became the 19th state to legalize recreational cannabis and the fourth to adopt legislation this year alone. The move is likely to spur more legalization in the densely populated region and encourage further consolidation in the industry, with marijuana now having widespread acceptance in more than half the U.S. population.

Under the new law, the state will let adults 21 and over possess up to 1.5 ounces of cannabis as of July 1, and legalized sales are expected to start in May 2022. Connecticut could generate $500 million to $600 million in combined recreational and medical sales by the end of 2023, Cantor Fitzgerald analyst Pablo Zuanic predicted in a June 23 research note.

The move will also be a boon to multistate operators that already have medical licenses there.

Green Thumb Industries Inc. and Curaleaf Holdings Inc. are expected to be the biggest beneficiaries since they’re “vertically integrated” in the state, having both growing and processing capabilities there, according to Zuanic. Acreage Holdings Inc. and Trulieve Cannabis Corp. also have medical dispensaries in the state. Additionally, there are a number of private dispensary owners.

Of four cultivation licenses in the state, Curaleaf and Green Thumb hold one each, and two others have sold through recent deals, Zuanic noted.

Connecticut’s legalization shows the domino effect of state legalization and could further pressure cannabis commissions in nearby New York and New Jersey to speed up the regulatory process and start sales. It could also sway Pennsylvania, where Democrats have shown support, but the Republican state legislature remains a big obstacle.

In Rhode Island, meanwhile, the state’s Senate Judiciary Committee just approved a marijuana legalization bill earlier this month. Further action is unlikely before the fall, lawmakers have said.

Connecticut’s legalization also sets a strong example on social-justice reform. Legalization advocate the Marijuana Policy Project praised the state’s plan to expunge lower-level cannabis records and dedicate excise taxes to a fund to promote diversity in the cannabis industry. Connecticut’s bill calls for half of new business licenses to go to social-equity applicants -- those meeting a low-income threshold or located in areas hurt by the war on drugs -- along with technical assistance, startup funding and assistance from an accelerator program.

DeVaughn Ward, senior legislative counsel for the Marijuana Policy Project, said in an emailed statement that his group played a key part in the multiyear effort at reform. He called the final legislation “one of the most comprehensive cannabis bills on equity and criminal-justice reform in the nation.”

NUMBER OF THE WEEK

  • 42%: The proportion of countries that saw a rise in cannabis use during the pandemic, according to a survey of health professionals from 77 nations cited in a United Nations report.

QUOTE OF THE WEEK

“At the end of the day, it’s all about consistency for the end user. You want Coca-Cola to taste the same, anywhere. The world is getting closer to a breakdown of all the compounds in the cannabis plant, so companies can provide a consistent compound to the consumer.”

--Precision Extraction Corp. Chief Executive Officer Marc Beginin, in an interview about the challenges of extracting cannabinoids from plants

WHAT YOU NEED TO KNOW

  • Two men were convicted of defrauding banks including Citigroup and Bank of America into processing more than $150 million in marijuana purchases and were ordered to spend more than a year in federal prison.
  • The U.N. called for a global ban on cannabis advertising after finding that people perceive it to be low-risk despite a rise in potency over the last 20 years.
  • Precision Extraction and Cascade Sciences, two private companies that make equipment to extract cannabis ingredients, will merge amid surging demand.
  • Cannovum, Germany’s first listed medical cannabis company, has a supply pact with Canada’s Aurora.
  • AFC Gamma, which plans to lend into the cannabis industry, made a stock offering.
  • Connecticut’s law was signed June 22, and includes a 3% municipal sales tax.
  • CannTrust Holdings Inc.’s former executives were charged with fraud and other offenses related to breaches of cannabis growing rules in Canada.
  • NOTE: The next edition of Cannabis Weekly will be published Tuesday, July 6, following the public holiday on July 5 in the U.S.

EVENTS

MONDAY 6/28

  • Cannabis Education Convention in West Orange, New Jersey.

WEDNESDAY 6/30

  • Cantor Fitzgerald’s Wednesday Series Fireside Chat with Curaleaf Executive Chairman Boris Jordan.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.