By Bart Schaneman and John Schroyer
Investors get an inside look at the cannabis industry, Denver marijuana advocates bemoan a decision on public use, and a Republican congressman is hopeful a federal protection for the MJ industry will remain.
Here’s a closer look at some notable developments in the marijuana industry over the past week.
Lowdown for investors
To get an idea of how attractive the marijuana industry has become to mainstream investors, look to Bloomberg.
The respected media and business data company held a panel discussion on the marijuana sectors on Monday at its midtown Manhattan offices. The inaugural Bloomberg Intelligence Cannabis Trends & Legalization Implications event attracted 110 individual and institutional investors, buyside and sellside stock analysts, data vendors and media representatives.
Most in attendance are Bloomberg clients who pay about $1,800 a month to lease the company’s data terminals. That means they “are serious investors searching for investment opportunities,” said Kenneth Shea, a senior analyst for Bloomberg Intelligence who spearheaded the panel discussion.
“My colleagues and I felt that the positive momentum of state legalization and rising revenues tied to cannabis is now such that professional investors have taken notice,” Shea said. “That, in turn, is creating opportunities for data providers and structured financial product providers to serve these needs.”
Shea, who follows the global packaged food, beverages and tobacco industries, said interest levels were much higher for the cannabis event compared with other gatherings Bloomberg has held focused on more mainstream industries such as packaged foods and beverages.
The cannabis panel covered the business potential for states that legalized marijuana during the elections earlier this month, challenges that cannabis businesses face and insight for investors looking to enter the space.
The panel featured Chris Walsh, editorial director of Marijuana Business Daily; Gary Kaminsky, managing director and head of regulatory compliance at BDO; Asher Troppe, cofounder and CEO of Tress Capital; Eric Balchunas, senior ETF and strategy analyst at Bloomberg Intelligence, and Jeff Gray, CEO of SC Laboratories.
Marijuana advocates in Denver watched in chagrin as Colorado licensing officials ruled that bars and most restaurants would not be able to secure marijuana public-use permits allowing marijuana users to imbibe on their premises.
The decision – which could set a precedent for other states and localities weighing public MJ use – came after Denver voters approved Initiative 300 earlier this month. It permits businesses and other establishments – such as coffee shops and yoga studios – to secure a public-use permit allowing patrons to consume cannabis, provided that a neighborhood organization signs off on the bid.
When the initiative goes into effect Jan. 1, any business with a liquor license will not be authorized for a permit, thus removing a significant portion of would-be applicants. This means the Denver and state marijuana markets could lose out on potential business, including MJ tourism dollars.
But for some restaurant and bar owners, this comes with a measure of relief.
Businesses that allow on-site consumption of alcohol are held liable under state law for harm that patrons might cause after they leave the establishment, particularly if they have been over-served. Adding cannabis to the mix would only increase their potential liability.
“I don’t believe we’re at a point yet in our society or in our state where the general public is willing to accept the consumption of both alcohol and cannabis together,” said Tyler Henson, president of the Colorado Cannabis Chamber of Commerce.
Still, marijuana business owners shouldn’t expect this to change their operations.
“It’s not going to have any impact on marijuana businesses just because this wasn’t a privilege that was granted and then taken away,” Henson said.
However, Henson believes Initiative 300 could set a precedent for other states and localities to follow.
Congressional cannabis questions
Many questions remain about how the federal government under President-elect Donald Trump will approach the burgeoning marijuana trade nationwide. But at least one prominent cannabis ally in Congress is confident a major legal protection for businesses will remain in place.
U.S. Rep. Dana Rohrabacher, a California Republican who has long been a marijuana proponent, told Marijuana Business Daily he expects Congress to again approve an amendment that protects state medical cannabis programs and businesses from interference by the Department of Justice.
The measure, called the Rohrabacher-Farr Amendment, prohibits the DOJ from spending federal funds to interfere with the implementation of state MMJ laws. While, to date, it has needed to be renewed annually as part of a large federal spending bill, Rohrabacher said he’s confident it will be passed again, either in December or sometime next year.
“There’s a continuing resolution that has apparently been agreed upon, so at least (the Rohrabacher-Farr Amendment will be) in place until March, and when it runs out … it’ll be depending on if we can get that back into the next omnibus bill or next appropriations bill,” Rohrabacher said. “I think it will be voted on again and will pass again, but I think the real important one would be a vote on respecting state marijuana laws.”
The amendment has already been used as legal precedent in one ruling by the 9th Circuit Court of Appeals and so far is the only legally binding protection from federal prosecution for those in the cannabis trade. The rest of the industry has relied solely on a handful of nonbinding memos from the DOJ under the Obama administration: the Cole and Ogden memos.
That’s a key distinction. While the memos could be ripped up by a Trump-run DOJ, the Rohrabacher-Farr Amendment was approved by Congress and is therefore the law of the land. Unless, that is, Congress allows it to expire.
Bart Schaneman can be reached at [email protected]
John Schroyer can be reached at [email protected]