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Cash Is King, Use Your Data, and Go Sell Legal Cocaine in Canada

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Out of Money, Out of Time, and Debt Piling Up – The Benzinga Cannabis Conference Miami 2023

 

I wanted to not be a curmudgeon.

 

I wanted to talk about the key phrases the speakers kept brining up like “cash is king”, “data is so key to your future”, “AI is here and coming for cannabis”.  But alas, none of that will matter if everyone closes due to expenses being greater than revenue.

 

I wanted to go to Benzinga and find out there is a light at the end of the tunnel, and cannabis industry in North America has a bright and vibrate future. 


Well, as Roadrunner taught us, the light at the end of this tunnel is actually another train about to run you over called Federal Legalization and international legalization.

 

The toils of the cannabis industry are well written about now, high taxation, high regulation costs, no access to capital, a fierce black market emerging in all legal states, 280E tax code issues, etc, etc.  But after 72 hours in Miami checking under the hood of the cannabis and psychedelics industry, it is much, much worse than you thought.

 

The best way to go over how bad it is right now is to pull out a rap battle, Comedy Central Roast, or old Henny Youngman or Rodney Dangerfield type of narrative.  Do you remember, the “your wife is so fat, she could put on high heels and hit oil!”, and the next comedy would jump I and say, “Well, your wife is so fat, she can XYZ..”

 

No respect, as Rodney would say, but let me get to my point about, “the cannabis industry is so bad” comedy routine…

 

To be clear, the Benzinga group and cannabis conference is 1st class, and the most important cannabis show to hit all year due to it’s access to VIP people, great networking events, fund raising options there, etc.  They show is fantastic each year on South Beach and you NEED to attend it if you want to know what is really going on with the movers and shakers in weed.  That being said, even that group of fabulous people can only polish a turd so much.  This is a review of the cannabis industries problems, not a reflection of the Benzinga show or people, that is top notch, first rate, invest in them if you can.

 

Let’s get to the main event…

 

The cannabis industry is so bad…. The show opener on the “deal and finance” stage was a rousing, high-five-ing talk about how “lucky we are this year because we only paid 8% on debt, and everyone else is double digits!  Woooohoooo! Give me some love!.”  I paraphrase but you get the point, that was the opener of the show!  Not “Jumping Jack Flash” or “Start Me Up”, we got the “my debt payments are only half as bad as I thought and way better then the other guy drowning in debt!”

 

And that talk opened the show, on the “let’s make a deal” stage!

 

The cannabis industry is so bad…we were told if you paid all your bills and paid all your taxes including your 280 taxes, and had 0 left after that, you are winner this year!  If you ended the year and were able to pay your debt and taxes, and had nothing left after that, guess what, you killed it!  You are a cannabis 1% er! Congrats on that take-home pay.

 

The cannabis industry is so bad…. Deal makers talked on stage about how if it weren’t for debt financing, there would be no marijuana industry anymore.  All cash has completely dried up, equity deals are dead as no one wants crappy stock and buyers don’t want to dilute their shares and ruin the cap-x tables.  No cash deals, no equity deals, only thing left is debt.  Debt costs have obviously risen greatly in the last 6 months as interest rates climb in the US.  The industry is living off credit card debt basically, turning over debt frantically and trying to find where the next dollar is coming from regardless of payback terms and rates.  The future be damned, if we don’t do it, we are done anyway, was a common realization for people in the last 72 hours.

 

The cannabis industry is so bad…. Sellers can’t even sell.  There is no more cash payout and go to your own island and retire.  The M&A experts said sellers may be lucky to get 10 to 20% in cash.  There are no more sales, only getting acquired.  Whoever buys you is going to give you a modicum of cash, and stock in the company or project you are being acquired for.  If it is Walmart, you are getting some small cash payment and Walmart stock, if it is Jungle Gym Vapes buying you, are getting $50 and a whole lot of “what could be” with JGVapes stock.  Buyers are taking much longer to close deals and doing more due diligence.  Cash, and cash flow is king right now, preserve it, protect it, because you have no idea if someone or company will ever hand you cash again.

 

The cannabis industry is so bad….that certain attorney presentations talked about clients wanting to “use the IRS as their banks, don’t pay the IRS but keep paying your lender, the fees and penalties are worse from your lender than the IRS, so let them finance you.”

I fell on the floor after that one.  The OG cannabis legend I got to spend the show with just looked at me like he didn’t believe what he just heard.  I would be 32% richer too if I didn’t pay my taxes, too, but that doesn’t mean you can do it.  The problem is the IRS will throw you in real jail if you skip out on your taxes long enough, Citibank can’t and won’t.  This is one of the worst ideas in the history of bad cannabis ideas. Stiff the IRS and let them finance you?  No way.  While there is one tax strategy out there used by some MSOs on 280E called deferment, or, as we call it, kicking the can down the road. 

 

That basically means they are deferring this massive tax sums to future quarters hoping that federal legalization will happen and they can take the IRS to court to say these taxes are actually not invalid, as weed is now a federally legal drug and subject to regular IRS regulation and not draconian 280E.

 

How long can companies keep rolling the amount forward?  Does the IRS allow unlimited deferment? I can defer paying my taxes for 10 years? 50? 100? There is a limit to how long you can “kick the can down the road praying for regulations to change”, the IRS is not stupid, and the one thing to remember is that they will never run out of people, time, or money, and you will.  This may work for now but the massive bills coming due, whether we see federal legalization or not, are going hurt some bottoms lines of your favorite cannabis investments in the future.

 

The IRS should never be your bank or finance option.  They are a taxation collection agency, they can put you in jail if cheat enough or brazenly enough like this industry is thinking of doing, take the L and pay, the future is much worse if you don’t.  The interest and penalties on those taxes numbers are going to be much worse than your 9% credit line.

 

The cannabis industry is so bad – two lawyers on stage talked about doing deals out of receivership or bankruptcy, if the cannabis companies could even declare it.  Yes, some people are moving on distressed debt and buying companies from the owner of the loan, but is $0.55 on the dollar a good deal if you can pay $0.20 in 90 days?  It is a small and bold crew calling a bottom in April of 2023.

 

The cannabis industry is so bad…even the data people I talked to, who are right by the way, think using your data to improve your margins is nice, but can only do so much.  So I asked, “The black market is beating you 85 to 0 and by improving your margins and getting tighter on what you offer and knowing what you clients want will make it 85  to 10?”  They all nodded and said, “yeah, kind of”.  I applaud the use of data, but data can only boost your efficiency so much to improve your bottom line, 6% here, 12% there, it can’t overcome a 93% price difference in legal to illicit edible pricing.

 

The cannabis industry is so bad…. venders are now setting up “buy now and pay over time” for their industry.  Why?  Because no one has cash to pay their bills.  Remember, Weedmaps now has hundreds of vendors in errs for over 90 days.  That means they are nonpaying clients, unable to pay the monthly tab for being on their map and selling weed.  The famous vape brands setting up the “buy now and we will finance you” model said they listened to their customers biggest problems and they all need help paying their invoices. 

So now brands and suppliers are financing the retail guys, the guys on the front lines, sharing their pain of a very restricted cash flow.  If brands and suppliers don’t do it, their customers won’t be able to pay the invoice anyway, so might as well work with them on financing the deal.  A little of something is worth more than nothing as they say.

 

Yes, you knew the cannabis industry was a disaster right now, but, no, you probably don’t know how bad. The biggest problem is that there is no good news coming down the tracks like a train at the end of a tunnel.  I few speakers and investors talked about how we are at the bottom, and it may be a great time to buy.  Says who?  One deal maker said he got a company that raised over $10 million for only a $1 million this week.  That’s great, but what if you could have got that company for free next month since they can’t pay their debt?  You just overpaid by $1 million dollars.  You could then go to their lenders and say I will pay you $0.02 on every $1 of debt, take it or leave it, $0.02 is better than the 0 you are going to get.  The lender will likely want to get anything they can for the investment and say yes.

 

The cannabis industry is a falling knife right now and some people are thinking of trying to catch it.  Warren Buffet will tell you that is one of the hardest things to do in life, catch a falling market at the right moment.

 

If the cannabis industry was worth a $1, but is now worth $0.35 in your mind, that doesn’t mean it is a good time to buy, it may find a bottom at $0.05.

 

The next two events coming to save the day are also strong negative influences for an already punished market.  The light at the end of the tunnel to save the day is an oncoming locomotive called Federal Legalization.  If you think we are within 36 months of Federal legalization (I am not of that thought), interstate commerce will decimate the industry margins as legal and illegal markets begin selling and shipping massive amounts of cannabis by taking orders online and shipping through major channels.

Price compression, round 64.

 

The second catalyst to save the idea is international legalization, changing the UN drug treaties and allowing every low-cost provider country to ship and sell cannabis.  That is the end for the US legal market and will also take a good chunk out of illegal market sales.  As we covered with Colombia producing at $0.04 a gram and shipping all over the world already, look for Latin and South American countries to win this war long term.

 

There is no way at the current cost structures that currently run the cannabis industry. 

 

 

What happens to all that debt when ounces when there are $50 ounces online, free shipping and 48-hour delivery? If that is the new legal price with interstate commerce smoothing out the industry, as we look at here on the black market, if ratios hold, you are looking at $25 to $30 ounces on the illicit markets being shipping all over the country too.  Does the price and revenue model of your company work at those numbers?

 

There will never be enough cash or refinancing to take on all this debt, even with legalization.  We will see a major MSO bankrupt, if not more, as funding may dry up even for them.  There will be many losers and life savings lost on this cycle.  It will have to crumble to be rebuilt with the correct prices for the commodity known as cannabis.

 

The current industry is bleak, and the future doesn’t look much better, unfortunately.

 

The cannabis industry is so bad…. the best idea I heard was to sell legal cocaine in British Columbia.  BC recently decriminalized aggressive drug use and there are so many people dying of fentanyl, they are supposedly issuing licenses for clinics to sell medically pure cocaine as a gateway drug off fentanyl.  Groups were pitching their licenses and the potential of being a legal coke dealer in Canada.

 

The best idea in cannabis is to be a legal coke dealer in Canada.

 

That about sums it up.

 

MORE ON BENZINGA SHOWS, READ ON…

BENZINGA CANNABIS CONFERENCE

NANCY MACE DROPS AT BENZINGA CANNABIS CAPITAL CONFERENCE!



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Latest Trump Weed Rumor – Trump Will Federally Deschedule and Decriminalize Cannabis, but Not Legalize It

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In a recent interview, former New Jersey Governor Chris Christie made headlines by asserting that President-elect Donald Trump will pursue significant reforms in federal policies regarding marijuana and cryptocurrency. As the nation grapples with evolving attitudes toward cannabis and the burgeoning digital currency market, Christie’s predictions have ignited discussions about the potential implications of such changes on both industries. This article delves into Christie’s insights, the current state of marijuana and cryptocurrency regulations, and the broader implications of these anticipated reforms.

 

The Current Landscape of Marijuana Legislation

 

Federal vs. State Laws

Marijuana remains classified as a Schedule I substance under the Controlled Substances Act (CSA), which places it in the same category as heroin and LSD. This classification has created a complex legal landscape where states have moved to legalize cannabis for medical and recreational use, while federal law continues to impose strict prohibitions. As of now, over 30 states have legalized marijuana in some form, leading to a burgeoning industry that generates billions in revenue.

 

Challenges Faced by the Cannabis Industry

 

Despite its legality in many states, the cannabis industry faces significant hurdles due to federal restrictions. These challenges include:

  • Banking Access: Many banks are hesitant to work with cannabis businesses due to fear of federal repercussions, forcing these businesses to operate largely in cash.

  • Taxation Issues: The IRS enforces Section 280E of the tax code, which prohibits businesses engaged in illegal activities from deducting normal business expenses, leading to disproportionately high tax burdens for cannabis companies.

  • Interstate Commerce: The lack of federal legalization prevents cannabis businesses from operating across state lines, limiting their growth potential.

 

Chris Christie’s Perspective on Marijuana Reform

 

Christie, a former presidential candidate known for his tough stance on drugs during his tenure as governor, has evolved his views on marijuana over the years. In his recent statements, he emphasized that Trump is likely to pursue descheduling cannabis, which would remove it from the Schedule I classification. This move would not only provide clarity for businesses operating in legal markets but also open avenues for banking and investment.

 

Christie highlighted that descheduling would allow for a more regulated market where safety standards could be established, thus protecting consumers. He believes that this approach aligns with a growing consensus among Americans who support legalization and recognize the potential benefits of cannabis use for both medical and recreational purposes.

 

The Future of Cryptocurrency Regulation = The Rise of Cryptocurrencies

 

Cryptocurrencies have surged in popularity over the past decade, with Bitcoin leading the charge as the first decentralized digital currency. The market has expanded to include thousands of alternative coins (altcoins), each with unique features and use cases. As cryptocurrencies gain traction among investors and consumers alike, regulatory scrutiny has intensified.

 

Current Regulatory Challenges

 

The cryptocurrency market faces several regulatory challenges that hinder its growth and adoption:

 

  • Lack of Clarity: Regulatory frameworks vary significantly across states and countries, creating confusion for investors and businesses.

  • Fraud and Scams: The rapid growth of cryptocurrencies has led to an increase in fraudulent schemes targeting unsuspecting investors.

  • Consumer Protection: Without clear regulations, consumers are often left vulnerable to risks associated with volatile markets.

 

Christie’s Vision for Crypto Regulation

 

Christie believes that under Trump’s leadership, there will be an effort to find a “sweet spot” for cryptocurrency regulation balancing innovation with consumer protection. He argues that overly stringent regulations could stifle growth in this emerging sector while too little oversight could expose consumers to significant risks.

 

In his view, a balanced regulatory framework would include:

 

1. Clear Definitions: Establishing clear definitions for different types of cryptocurrencies and tokens to differentiate between securities and utility tokens.

2. Consumer Protections: Implementing measures to protect investors from fraud while promoting transparency within the market.

3. Encouraging Innovation: Creating an environment conducive to innovation by allowing startups to thrive without excessive regulatory burdens.

 

Christie’s insights reflect a growing recognition among policymakers that cryptocurrencies are here to stay and that appropriate regulations are necessary to foster growth while safeguarding consumers.

 

Implications of Proposed Reforms

 

Economic Impact

 

The potential reforms proposed by Christie could have far-reaching economic implications:

 

  • Job Creation: Legalizing marijuana at the federal level could lead to significant job creation within the cannabis industry—from cultivation and production to retail sales.

  • Investment Opportunities: Descheduling cannabis would open up investment opportunities for institutional investors who have been hesitant due to federal restrictions.

  • Boosting Local Economies: Legal cannabis markets have proven beneficial for local economies through increased tax revenues and job creation.

 

Similarly, clear regulations around cryptocurrencies could stimulate investment in blockchain technology and related industries, fostering innovation and economic growth.

 

Social Justice Considerations

 

Both marijuana legalization and sensible cryptocurrency regulations have social justice implications:

 

  • Addressing Past Injustices: Legalizing marijuana could help rectify past injustices related to drug enforcement policies that disproportionately affected marginalized communities.

  • Financial Inclusion: Cryptocurrencies offer opportunities for financial inclusion for those underserved by traditional banking systems, particularly in low-income communities.

 

Political Landscape

 

The political landscape surrounding these issues is complex. While there is bipartisan support for marijuana reform among certain lawmakers, challenges remain in overcoming entrenched opposition. Similarly, cryptocurrency regulation has garnered attention from both sides of the aisle but requires collaboration to establish effective frameworks.

 

Conclusion

 

Chris Christie’s predictions about President-elect Donald Trump’s approach to federal marijuana descheduling and cryptocurrency regulation suggest a potential shift in U.S. policy that could significantly reshape both industries. As public opinion evolves on these issues, lawmakers have an opportunity to enact meaningful reforms that promote economic growth while ensuring consumer protection. The anticipated changes could foster a more robust cannabis industry that contributes positively to the economy and addresses social justice concerns, while clear regulatory frameworks for cryptocurrencies could encourage innovation and protect consumers in the digital economy. Stakeholders in both sectors are closely watching these developments, eager to see how potential reforms might impact their futures. While the realization of Christie’s predictions remains uncertain, it’s clear that the conversation around marijuana and cryptocurrency regulation is ongoing and far from settled.

 

TRUMP 2.0 ON CANNABIS REFORM, READ ON…

TRUMP ON MARIJUANA REFORM

TRUMP 2.0 ON FEDERAL CANNABIS REFORM – WHAT DO WE KNOW?

 



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Webinar Replay: Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em

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On Thursday, November 7th, Vince Sliwoski, Aaron Pelley and Fred Rocafort held a post election discussion “Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em”. Watch the replay!

Key Takeaways from the “Smoke ’em if You’ve Got ’em – 2024 Post Election Cannabis Wrap” Webinar:

  1. Panelists:
    • Vince Sliwoski: Oregon Business lawyer specializing in cannabis and commercial real estate.
    • Aaron Pelley: Experienced in cannabis law since Washington’s legalization in 2012.
    • Fred Rocafort: Trademark attorney working closely with the cannabis team.
  2. Election Results Overview:
    • Most 2024 cannabis ballot measures did not pass.
    • Florida, South Dakota, and North Dakota saw failures.
    • Nebraska became the 39th state to legalize cannabis for medical use when it passed two cannabis initiatives, Initiatives 437 and 438.
  3. Federal and State-Level Developments:
    • Medical use is currently legal in 38 states, and 24 states allow recreational use.
    • Republican support for marijuana legalization is growing.
  4. Federal Policy Implications:
    • Schedule III Rescheduling: The process to move cannabis to Schedule III is ongoing, which could significantly impact the industry.
    • Importance of Federal Appointments: The future of cannabis policy depends heavily on who is appointed to key positions in the administration.
  5. International and Domestic Trade:
    • Schedule III status could ease import/export restrictions on cannabis.
    • Unified control of House, Senate, and presidency might expedite legislative progress.
  6. Economic and Industry Impact:
    • Cannabis stocks experienced volatility post-election, reflecting investor uncertainty.
    • Federal legalization and banking reforms are crucial for industry stability and growth.
  7. Future Outlook:
    • The potential for federal rescheduling remains strong, with hearings scheduled for early 2025.
    • State-level initiatives and regulatory developments will continue to shape the industry.

Watch the replay!



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I Had Just One Puff

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“How Long Does One Puff of Weed Stay in Your System?”… This topic can be difficult to answer since it is dependent on elements such as the size of the hit and what constitutes a “one hit.” If you take a large bong pull then cough, it might linger in your system for 5-7 days. A moderate dose from a joint can last 3-5 days, whereas a few hits from a vaporizer may last 1-3 days.

 

The length of time that marijuana stays in the body varies based on a number of factors, including metabolism, THC levels, frequency of use, and hydration.

 

Delta-9-tetrahydrocannabinol, or THC, is the primary psychoactive component of cannabis. THC and its metabolites, which remain in your body long after the effects have subsided, are detected by drug tests.

 

Since these metabolites are fat-soluble, they cling to bodily fat molecules. They could thus take a while to fully pass through your system, particularly if your body fat percentage is higher.

 

THC is absorbed by tissues and organs (including the brain, heart, and fat) and converted by the liver into chemicals such as 11-hydroxy-THC and carboxy-THC. Cannabis is eliminated in feces at a rate of around 65%, while urine accounts for 20%. The leftover amount might be kept within the body.

 

THC deposited in bodily tissues ultimately re-enters the circulation and is processed by the liver. For frequent users, THC accumulates in fatty tissues quicker than it can be removed, thus it may be detectable in drug tests for days or weeks following consumption.

 

The detection time varies according to the amount and frequency of cannabis usage. Higher dosages and regular usage result in longer detection times.

 

The type of drug test also affects detection windows. Blood and saliva tests typically detect cannabis metabolites for shorter periods, while urine and hair samples can reveal use for weeks or even months. In some cases, hair tests have detected cannabis use over 90 days after consumption.

 

Detection Windows for Various Cannabis Drug Tests

 

Urine Tests

Among all drug tests, urine testing is the most commonly used method for screening for drug use in an individual.

 

Detection times vary, but a 2017 review suggests the following windows for cannabis in urine after last use:

 

– Single-use (e.g., one joint): up to 3 days

– Moderate use (around 4 times a week): 5–7 days

– Chronic use (daily): 10–15 days

– Chronic heavy use (multiple times daily): over 30 days

 

Blood Tests

Blood tests generally detect recent cannabis use, typically within 2–12 hours after consumption. However, in cases of heavy use, cannabis has been detected up to 30 days later. Chronic heavy use can extend the detection period in the bloodstream.

 

Saliva Tests

THC can enter saliva through secondhand cannabis smoke, but THC metabolites are only present if you’ve personally smoked or ingested cannabis.

 

Saliva testing has a short detection window and can sometimes identify cannabis use on the same day. A 2020 review found that THC was detectable in the saliva of frequent users for up to 72 hours after use, and it may remain in saliva longer than in blood following recent use.

 

In areas where cannabis is illegal, saliva testing is often used for roadside screenings.

 

Hair Tests

Hair follicle tests can detect cannabis use for up to 90 days. After use, cannabinoids reach the hair follicles through small blood vessels and from sebum and sweat surrounding the hair.

 

Hair grows at approximately 0.5 inches per month, so a 1.5-inch segment of hair close to the scalp can reveal cannabis use over the past three months.

 

Factors Affecting THC and Metabolite Retention

 

The length of time THC and its metabolites stay in your system depends on various factors. Some, like body mass index (BMI) and metabolic rate, relate to individual body processing, not the drug itself.

 

Other factors are specific to cannabis use, including:

 

– Dosage: How much you consume

– Frequency: How often you use cannabis

– Method of consumption: Smoking, dabbing, edibles, or sublingual

– THC potency: Higher potency can extend detection time

 

Higher doses and more frequent use generally extend THC retention. Cannabis consumed orally may remain in the system slightly longer than smoked cannabis, and stronger cannabis strains, higher in THC, may also stay detectable for a longer period.

 

How Quickly Do the Effects of Cannabis Set In?

 

When smoking cannabis, effects appear almost immediately, while ingested cannabis may take 1–3 hours to peak.

 

The psychoactive component THC produces a “high” with common effects such as:

 

– Altered senses, including perception of time

– Mood changes

– Difficulty with thinking and problem-solving

– Impaired memory

 

Other short-term effects can include:

– Anxiety and confusion

– Decreased coordination

– Dry mouth and eyes

– Nausea or lightheadedness

– Trouble focusing

– Increased appetite

– Rapid heart rate

– Restlessness and sleepiness

 

In rare cases, high doses may lead to hallucinations, delusions, or acute psychosis.

 

Regular cannabis use may have additional mental and physical effects. While research is ongoing, cannabis use may increase the risk of:

 

– Cognitive issues like memory loss

– Cardiovascular problems including heart disease and stroke

– Respiratory illnesses such as bronchitis or lung infections

– Mood disorders like depression and anxiety

 

Cannabis use during pregnancy can negatively impact fetal growth and development.

 

Duration of Effects

Short-term effects generally taper off within 1–3 hours, but for chronic users, some long-term effects may last days, weeks, or even months. Certain effects may even be permanent.

 

Bottom Line

The amount of time that cannabis remains in your system following a single use varies greatly depending on individual characteristics such as body fat, metabolism, frequency of use, and mode of intake. Frequent users may maintain traces of THC for weeks, whereas infrequent users may test positive for as little as a few days. Hair tests can disclose usage for up to 90 days, while blood and saliva tests identify more recent use. Urine tests are the most popular and have varying detection durations. The duration that THC and its metabolites are detectable will ultimately depend on a number of factors, including dose, strength, and individual body chemistry.

 

PEE IN A CUP COMING UP, READ ON..

how long does weed stay in your urine

HOW LONG DOES WEED STAY IN YOUR URINE FOR A DRUG TEST?



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