Week in Review: L.A. doubles cannabis retail licenses, another Schwazze deal dead, Biden talks MJ rescheduling & more

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Los Angeles cannabis licensing, Week in Review: L.A. doubles cannabis retail licenses, another Schwazze deal dead, Biden talks MJ rescheduling & more

The Los Angeles City Council doubled the number of social equity retail marijuana licenses from 100 to 200 in response to a courtroom settlement.

MJBizDaily takeaway: The greater Los Angeles area boasts more than 13 million people, but there are only 188 licensed cannabis storefronts.

The original plan last fall for the social equity licensing round was to add another 100. This lawsuit forced the city to double that.

Industry analysts, however, say that the city should probably have far more licensed shops to fulfill demand.

Schwazze scraps another deal

Denver-based Schwazze, formerly Medicine Man Technologies, said it terminated deals to acquire two Colorado marijuana businesses – cultivator Los Sueños Farms and concentrates company Dabble Extracts.

MJBizDaily takeaway: With several acquisition deals in the works last year, Schwazze looked to be leading one of the largest cannabis consolidation efforts in Colorado, if not the entire country.

But with the two recent deals scuttled – on top of the collapse of acquisitions involving Colorado-based Strawberry Fields and Colorado Harvest Co. – that consolidation has not gone forward as planned.

The deals’ collapse no doubt comes as welcome relief for the Colorado cannabis companies that were never part of the transactions.

Had Schwazze acquired Los Sueños, the Denver business would have owned a cultivation company that bills itself as the largest marijuana grower in North America.

In other words, Schwazze would have had a firm grip on the supply of cannabis in the state, particularly for extraction-grade flower.

Biden, Bernie come out in favor of rescheduling

A joint Joe Biden-Bernie Sanders task force recommended rescheduling marijuana on a federal basis, legalizing medical cannabis nationwide and allowing states to decide about recreational MJ.

MJBizDaily takeaway: It’s too early to tell if this is political grandstanding and whether any concrete action will be taken. Much will depend on the November election.

That said, the recommendation does elevate cannabis into the national debate, even momentarily, at a time when much of the country’s attention is on the coronavirus pandemic, protests and a struggling economy.

Biden might even mention marijuana rescheduling, at least briefly, at the Democratic National Convention in August.

Glut in the north

Federally licensed producers in Canada are stockpiling increasing amounts of cannabis, indicating that some cultivators are in store for more financial pain as the market deals with a glut.

MJBizDaily takeaway: Overproduction was bound to happen after Canada’s large producers spent billions of dollars building unneeded greenhouse space in the years before and after legalization.

Deeper industrywide pullbacks might still be needed.

One upshot: Some U.S. markets that experienced a similar glut of product and corresponding price drops – Colorado, Oregon and Washington state – have reported rebounding prices for wholesale flower.

Canadian cannabis growers might be suffering for the time being, but this situation should force businesses to learn to operate as lean and as efficiently as possible.

Meanwhile, small producers growing their businesses responsibly might be winners. Retailers could also benefit from lower prices.

Nebraska puts MMJ up to a vote

Nebraska medical marijuana advocates gathered more than 182,000 signatures for an initiative campaign, 60,000 more than needed to place MMJ legalization on the November ballot.

MJBizDaily takeaway: Though the measure is expected to pass when voters take to the polls, Nebraska’s medical marijuana market will likely find resistance from conservative lawmakers and might fail to offer big business opportunities.

The bigger picture, however, is that medical marijuana will be voted on.

A vote would represent a victory, no matter how small, for cannabis legalization.

Ontario, Canada, to end delivery, curbside pickup

A temporary emergency order that allows Ontario’s approximately 100 private-sector cannabis stores to engage in curbside pickup and e-commerce will be allowed to expire, even though the COVID-19 pandemic is far from over.

MJBizDaily takeaway: Stripping stores of their ability to offer those services will have three immediate impacts:

  1. The government-owned Ontario Cannabis Store will regain its monopoly over online sales.
  2. Regulated storefronts will become less competitive with illicit sellers, which don’t follow the same rules as legal retailers.
  3. The economics of running a legal cannabis store will become less appealing, especially during the pandemic, because customers have sought options for delivery and pickup outside the store.

Bart Schaneman can be reached at barts@mjbizdaily.com

International Editor Matt Lamers and Senior Reporter John Schroyer contributed to this report.