By Omar Sacirbey
A judge dashes hopes for banking relief, Illinois medical cannabis sales near $2 million, and a 20-something marijuana executive gets recognition from a big-name business magazine.
Here’s a closer look at several notable developments in the marijuana industry over the past week.
Fourth Corner Still Fighting
Federal Judge R. Jackson Brooke delivered what some might interpret to be a knockout punch against the Fourth Corner Credit Union when he rejected its request for an injunction that would let it open a master account with the Federal Reserve Bank of Kansas City.
Lending institutions need a master account to have access to the nation’s banking system.
But the feisty Colorado credit union is anything but out.
“We’re not going away,” said Mark Goldfogel, Fourth Corner’s executive vice president for industry relations. “We’re in this to the end.”
Credit union officials haven’t decided whether to appeal the ruling. But Goldfogel said Fourth Corner would find other avenues to change cannabis business banking laws, and that sooner or later it will be in business.
He acknowledged, however, that the solution to the cannabis industry’s banking problems may not lie in a court room.
“What we really need is for Congress to come forward and say that states with legal marijuana can do this without violating the Schedule 1 law,” Goldfogel said. “Only Congress can make the laws, and we need a law that validates the social experiment happening in 23 states.”
That means the credit union and other cannabis companies need to make lobbying Congress a bigger part of their agendas, he added.
Still, Goldfogel would like the court to clarify who has the authority to approve or deny a request for a master account.
“The judge avoided some things that needed clarification,” Goldfogel said, most notably whether or not the Federal Reserve Bank of Kansas City has the authority to deny the credit union’s request. “That wasn’t answered in his response and that needs to be resolved.”
Room to Improve in Illinois
Illinois dispensaries generated $1.7 million in sales from the time the industry launched in early November through the end of 2015, while cultivators generated $1.5 million in revenue, according to the latest data released this week.
Business owners are generally happy with the initial tally, but they assert that improvements can be made.
“We’re happy with it. Illinois did a good job of making sure that the program is a controlled program,” said Charles Bachtell, CEO of Cresco Labs, which has three cultivation sites in Illinois.
But, he added: “There are a couple things about the rules that are a bit onerous. In Illinois, our patients have to get fingerprinted and get a background check done on them. People in a medical program shouldn’t have to go through that.”
Bachtell was also critical of how Illinois has handled its fairly limited qualifying conditions list.
A committee is now accepting petitions for new conditions to be added to the list. The only problem is that the health department, which makes the final decision, has yet to act on the committee’s recommendations from last summer that eight new conditions be added.
“We’re still waiting for the department to weigh in on the last eight that were approved by their committee in July, so it’s weird to talk about adding conditions when we haven’t gotten the results from the other round yet,” Bachtell said.
Despite the problems, Bachtell believes that the medical marijuana program has proven itself safe and successful enough that health department officials are open to improving guidelines. He noted that most of the roughly 3,600 registered patients are women and people older than 40.
“I think they feel better about what the demographic looks like. So hopefully they like what they’ve seen so far and will be open to adding conditions that were approved by the committee,” Bachtell said.
Young Gun in Spotlight
The cannabis industry moved a little closer to the mainstream this week when the venerable Forbes magazine named Ryan Smith, CEO of marijuana software company LeafLink, to its “30 Under 30” list.
“It’s quite a sign for the industry and how far it’s come to be included on a list of the best entrepreneurs,” said Smith, 25, who is listed in the enterprise tech category of the Forbes list.
LeafLink has developed software that lets cannabis companies manage wholesale transactions online.
In December, LeafLink closed a $1 million seed round. It has mainly spent the money on hiring engineers, a marketing specialist and other new employees, Smith said. When the hiring spree is done, LeafLink will have five people staffing its Manhattan headquarters and two in its Denver office.
“It’s important to have feet on the ground in an active market,” Smith said of the Denver office, which will be tasked with building a customer base. “We’re supremely focused on deep market penetration in Colorado.”
Eventually LeafLink hopes to set up offices in other markets like California and Washington State.
But first thing’s first.
LeafLink’s website is currently in operating in beta phase, collecting information about how visitors use the site. Smith hopes the site will be fully operational soon, but even when it does go live, it will be invitation-only for at least the first quarter of operation.
“We want to be protective about the caliber of the businesses who will be allowed to subscribe,” Smith said, adding that “applicants will be thoroughly vetted.”
Omar Sacirbey can be reached at [email protected]