Week in Review: MMJ stare down, miracle wager in cannabis & Colorado’s industry unites

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By John Schroyer and Omar Sacirbey

Two medical marijuana campaigns slug it out in Arkansas, Scotts Miracle-Gro wagers big on a different kind of grass, and Colorado cannabis business leaders unite to fight a potency cap.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

MAD in Arkansas?

Come November, Arkansas voters may confront two competing – and vastly different – ballot measures to legalize medical cannabis. Both could fail as a result, thanks to a Cold War doctrine: mutually assured destruction, or MAD.

That scenario could be a first for the marijuana industry … if it plays out.

On Thursday, one of the two MMJ campaigns – Arkansans for Compassionate Care – announced the secretary of state had given it the green light to place its initiative before voters this fall. The second campaign, spearheaded by an Arkansas attorney, declared it will file its signatures today.

The two take different approaches to legalization. Arkansans for Compassionate Care, for example, would permit home cultivation but would require all dispensaries to be nonprofit. The second initiative would ban home grows but permit for-profit dispensaries.

If both reach the ballot – and the odds suggest they might – voters may well split their votes, which could deep-six each of them.

That’s not lost on Melissa Fults, campaign director of Arkansans for Compassionate Care, the group that already secured a ballot spot.

“Either one would pass,” Fults said. “But if both are on the ballot, it would critically decrease the chances. Every political analyst in the state – everybody – says that if both are on the ballot, both will fail.”

But Little Rock attorney David Couch, who leads the competing campaign, is moving ahead. And he’s confident.

“At the last count, we had well over 70,000 valid (signatures) that I know of, and over 100,000 that we’ve collected,” Couch said, noting that he needs 84,859 to make the ballot. With 70,000 valid signatures, the state would automatically grant him a 30-day extension to gather more if his campaign falls short. “We’ll have enough,” he predicts.

Fults, for her part, is turning to a higher authority. “My prayer and my hope is that it will only be us.”

It’s unclear what would happen if both win in November.

Scotts Miracle investment

Tech giants including Microsoft and Arrow Electronics have generated excitement in the cannabis industry lately by getting involved, albeit gingerly, with ancillary marijuana companies. Google, meanwhile, appears to be kicking the tires.

But a more traditional corporation – think grass seed, fertilizer and dirt – with roots dating back almost 150 years is taking a very visible and financially significant plunge into the cannabis industry. And its CEO is not shy about his involvement in the marijuana business.

“It’s the biggest thing I’ve seen in lawn and garden,” Scotts Miracle-Gro CEO Jim Hagedorn told Forbes while piloting his private jet. His plan: “Invest, like, half a billion dollars.”

Last year, Hagedorn invested $135 million in two California businesses that sell fertilizer, soil and other gardening accessories to cannabis cultivators. More recently he spent $120 million on a lighting and hydroponics equipment company in Amsterdam. Hagedorn said he planned to invest another $150 million before the end of the year.

Could that prompt other traditional companies to jettison fears about cannabis and get into the industry?

“Absolutely, that will create competition among other major companies who are thinking about getting in when they realize that there already big companies getting involved,” said Kayvan Khalatbari, a founding partner of Denver Relief Consulting, a cannabis advisory firm. “The number of companies looking to get into the industry will most definitely grow and expand.”

Khalatbari noted that it’s not just competition that’s pushing traditional and technological companies into the cannabis space. “I’m sure that every Fortune 500 company has a former employee who is now in the marijuana industry, and they talk to their old colleagues, so they know the opportunities that exist,” he said.

While Khalatbari said having an iconic company like Scotts Miracle-Gro would “lend legitimacy to the industry,” the deal is not all upside.

“As an advocate, the only downside I see is the corporatization of the industry,” he said.

All for one, one for all

Colorado’s marijuana industry has found a common goal: survival.

Chalk it up to a proposed THC potency cap ballot measure that’s in the works. And it’s why many Colorado cannabis companies have begun bankrolling an organization dedicated to fighting the cap.

The cap would ban any marijuana product with more than 16% THC. According to one analysis, that would prohibit marijuana products that generate more than 80% of industry revenue in the state.

The bottom line: Colorado’s MJ industry, both medical and recreational, would be dead if the cap is approved by voters.

“I think that’s an appropriate way to interpret it,” Taylor West, deputy director of the National Cannabis Industry Association, said. “This is a backdoor attempt by people who are pushing a failed prohibitionist agenda, and they’re trying to circumvent the clear will of the voters who passed (recreational marijuana in 2012).”

And while there’s a decent chance the potency cap won’t make the ballot, given a looming August 8 deadline for proponents to gather enough signatures, West said: “We have to plan as if it’s a foregone conclusion, because we can’t afford to not be ready.”

Already, at least 20 of Colorado’s cannabis businesses have ponied up for the Colorado Health Research Council to combat the cap, known as Amendment 139. One wild card: Many businesses aren’t rolling in cash, said West.

“Most companies are struggling to keep their heads above water,” she noted, “due to the costs associated with being a startup.”

John Schroyer can be reached at johns@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com