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Distressed Cannabis Business Takeaways – Canna Law Blog™

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On February 28th, I moderated our firm’s “Distressed Cannabis Businesses” webinar. In that webinar, Griffen, Ethan, Vince, and I discussed the current financial and economic pressure the entire cannabis industry is facing today. We covered reorganization, litigation, dissolution, M&A, receivership, secured interests, and liquidation. And we of course discussed how state-by-state cannabis regulations impacts all of the foregoing. If you missed distressed cannabis buinsses webinar, here are the highlights:

Bankruptcy

Because cannabis remains federally illegal, filing for bankruptcy in U.S. federal court isn’t really an option for a distressed or insolvent cannabis business. However, as Ethan explained in the webinar, the case is less clear when the debtor is just an ancillary cannabis business. This is a nuanced, fact-specific area of law, with courts coming to seemingly inconsistent conclusions across jurisdictions.

Bankruptcy is a distressed business tool for re-organization in order to survive. Without it, the cannabis industry is left with a few (often inadequate) alternatives to deal with financial fall out.

Receivership

Court-appointed receivers are neutral, third-parties that will take over a distressed cannabis business’s operations. A receiver’s sole purpose is to preserve and protect the business during a problematic period – and, if you take care to ensure that your receiver is well-versed in the cannabis industry, he, she or it can typically handle everything from sales to personnel to accounting (their powers can be very broad).

Keep in mind that the point of the receiver is not to run the business for the benefit of creditors or even to re-structure–it’s to run the business until the underlying legal proceedings are concluded. The appointment of receivers and their treatment by cannabis regulators is also going to change from state to state (see here for Oregon, for example) with things like disclosures, changes to the license, and continued reporting.

Assignment for the benefit of creditors

An assignment for the benefit of creditors (“ABC”) is controlled by state statutes. An ABC is a contract by which an economically troubled entity (“Assignor”) transfers legal and equitable title, as well as custody and control, of its assets and property to an independent third party (“Assignee”) in trust, who is required to apply the proceeds of sale of the property to the assignor’s creditors in accord with priorities established by law. ABCs really only make sense if there are significant assets to liquidate.

ABCs are most successful when the Assignor, Assignee and creditors cooperate but can be imposed even if the creditors are not supportive. Further, like a receivership action, ABCs do not result in a reorganization of a company. While ABCs may technically be available to the cannabis industry, they don’t make a ton of practical sense. This is mainly because of all of the regulatory reporting and regulatory prohibitions around the sale of licenses, inventory, and/or cannabis cash. Still, they’re on the table for distressed cannabis businesses.

The Uniform Commercial Code (UCC)

Many cannabis companies offered up security interests to lenders in order to score some cash. And now, in this financial climate, no loan is going out to a cannabis company without some kind of collateral. To have a valid security interest, you need to follow the UCC, and pay attention to any state variances under state UCC laws.

Article 9 of the UCC covers secured transactions. In a secured transaction, the parties are typically the debtor and the creditor. The creditor’s goal with a cannabis company security interest is to attach and then perfect its interest in the collateral so that the creditor can later take possession of that collateral in the event of a default (without having to go to court). The creditor then liquidates the collateral and takes from the proceeds the remainder of whatever it lent in order to make itself whole. The rest then goes to junior creditors, if any, and then back to the debtor (which seldom happens). For more on the structure of UCC-1s in cannabis, see here.

M&A

Lots of cannabis companies are looking to sell now before they lose everything they’ve put into the business. This presents a unique opportunity for certain buyers who may be looking at deeply discounted cannabis business purchases. For a distressed cannabis business, like any other business, buyers need to run serious M&A due diligence. Particularly though for distressed cannabis businesses, due diligence is crucial when it comes to things like litigation, contract breaches (non-performance, insolvency, and/or breaches of operating covenants), and encumbrances on various assets.

It’s not pretty out there right now in the cannabis economy, and we sincerely hope that this phase of distressed cannabis businesses can pass quickly without too much blood in the water.



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The Cannabis Industry Now Supports More Than 440,000 Full-Time Jobs

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As the 2024 elections draw near, the economic impact of cannabis legalization will likely become a prominent topic in political discourse. With billions in total sales, and millions in tax revenue, the economic benefits of legal cannabis are clear. Beyond the monetary gains, there is a crucial aspect of the cannabis industry that should not be overlooked: job creation.

The 2024 Cannabis Jobs Report by Vangst reveals that over 440,000 jobs have been generated in states with legal cannabis, marking a 5.4% increase in the past year alone. This growth not only signifies economic stability, but it also highlights the industry’s resilience in recovering from past job losses. As new markets like Missouri contribute to this job surge, the report underscores the varying dynamics of job creation across different states.

The economic benefits of legal cannabis

When discussing the economic benefits of fully legalizing cannabis, total retail sales and related tax revenue are usually discussed, and rightfully so. Forbes estimates that the regulated U.S. cannabis industry will be worth $46 billion in 2028, and will surpass alcohol sales in some counties. Even in more remote and less populous states, cannabis has brought in millions in retail sales and tax revenue. In Maine for instance, cannabis sales reached $217 million in 2023. Missouri, despite a population of roughly six million, was the sixth largest market of all the states with legal cannabis in 2023. Missouri topped $1 billion during its first year of recreational sales.

Recovery and growth

One partial reason identified by the Vangst Report for the dramatic increase in 2023 cannabis jobs, is that the cannabis industry experienced a loss of around 10,500 jobs from 2022 to 2023. Not only were industry businesses actively creating new roles for prospective employees by the thousands in 2023, they were recovery from job loses in previous years.

State-by-state analysis

Per the Vangst Report, of the top nine states for cannabis job growth, three saw increases of over 100 percent; and none of those states had legal cannabis before 2018. One of those states, Utah, experienced job growth of around 16 percent, even though it is still a strictly regulated medical-only market. Even more surprisingly, Utah is the only state that could even be considered “West Coast” among the top nine.

Interestingly and worryingly, the eight states to experience the most staggering job losses all legalized cannabis at least a decade ago. On top of the mountain of issues that the California cannabis industry is facing, the Golden State experienced the highest number of job losses in the past year. Neighboring state, Nevada, despite attracting more than 40 million tourists a year, experienced a seven percent drop in its cannabis job numbers. Colorado and Washington — the first two states to legalize recreational cannabis in 2012 — experienced the highest percentage of job loss by far, at 16 and 15 percent respectively.

Future projections

Vangst estimates that anywhere from 7,500 to 45,000 cannabis industry jobs could be created in Ohio in the next few years. Out East, with Maryland recently awarding 75 more retail cannabis licenses, the number of jobs created in that state will almost certainly increase. Overall, the Vangst Report hypothesizes another wildly successful year for cannabis sales:

“In 2023 our legal revenue forecast of $29.2 billion came in at $28.8 billion (98.3% accuracy). This year we’re looking for 9.1% growth, with sales increasing to $31.4 billion. By 2030, we predict this will grow to $67.2 billion as more states legalize and more consumers participate. That growth will create more jobs, more wages, more taxes, and more ancillary support. Despite the challenges, this seems like a good problem to have as an industry.”

Conclusion

As the cannabis industry continues to evolve and expand, its economic contributions are becoming increasingly significant– particularly in terms of job creation and tax revenue. Job growth underscores the industry’s resilience and potential to create economic opportunities, even as older markets face challenges.

As the 2024 elections approach, policymakers and politicians need to recognize the multifaceted economic benefits of cannabis legalization, including job creation.



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Exploring CBD Vape Oil as a Solution

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cbd vape oil solutions

Before we explore what we mean by the strongest CBD vape oil in the UK, let us explore the complex nature of pain. People would generally use CBD for long-lasting, difficult-to-treat, chronic pain. Although medications may help in such issues, they fail to provide complete relief and cause many side effects. Hence, chronic pain is best managed by combining lifestyle interventions and natural remedies with the treatment of the underlying cause.

However, chronic pain is very complex. In many cases, even the underlying cause remains unclear. Just take the example of fibromyalgia, which causes body aches, but science does not know exactly what causes the condition. Such generalized body aches and pains may benefit from CBD vape oil use.

Similarly, consider low back pain one of the most common types of chronic pain. It is challenging to treat since it occurs not just due to some spine injury or changes. Such pain may occur due to depression, poor sleep quality, or spasms of local muscles. Again, CBD vape oil may be of great value in such complex pain syndromes.

What is CBD Vape Oil?

Regular CBD vape oil, as one may guess, would have cannabidiol (CBD) mixed into propylene glycol (PG) or, vegetable glycerin (VG), or even both of them. PG and VG produce clouds and play an important role in vape oils. Some CBD vape oils may contain other minor cannabinoids, but not essentially.

Such vapes are quite good for regular use. However, they are not essentially the best CBD vape oils for pain management. Managing pain requires something more potent. Of course, vapes containing CBD isolate are also good, but those with some additional bioactive compounds are even better.

What are Stronger Vape Oils?

If you want the strongest CBD vape oil in the UK, consider a full-spectrum vape pen or vape oil. These vape oils differ from regular vapes in a few ways.

Firstly, stronger vape oils contain THC, the substance known to cause high in large amounts. However, in smaller amounts, it contributes to the pain-killing action of CBD. That is why most clinically approved CBD-based medications contain THC.

Of course, vapes for regular use are quite safe, and they do not cause harm. All legally produced vapes in the UK do not contain THC more than 0.2%. Not only that, a single vape pen or, vape oil pack or cartridge cannot contain more than 1 mg of THC. This amount is sufficient to experience “the entourage effect” but insufficient to cause euphoria or severe side effects.

So, yes, despite THC’s content, these full spectrum cannabis extracts-based vape oils are pretty safe for regular use and managing pain.

A higher CBD concentration is another thing that makes the strongest CBD vape oil in the UK different from the regular one. Quite often, such vapes also have a high amount of CBG. Using CBD and CBG together results in a better vaping experience and pain control without sedation. CBG can counter some of the side effects that might occur due to high CBD doses or THC content in such vapes. Vape oils with THC are known as a THC vape juice, the legal value for THC depends on your location. In UK for example the THC value is 1mg per container for it to be legal and in Germany this value is 3mg per container. 

The next thing that makes these vapes different is their content of terpenes. These incredible natural aromatic compounds are found in many plants, including hemp plants. Plants use these compounds to defend themselves from pests and infections. However, new studies show that terpenes have many health benefits, such as potent anti-inflammatory and anti-infective agents. Moreover, terpenes work in synergy with other cannabinoids.

Finally, remember that some of the strongest CBD vape oils in the UK also contain multiple minor cannabinoids like CBG, CBN, CBC, THCV, CBDV, CBL, CBGV, CBCV, CBLV, CBV, Delta-8-THC, THCP, CBDP, CBT, THCA, CBDA, CBGA, and CBCA. All these minor cannabinoids are in tiny amounts in those CBD vape oils, but they can make a huge difference together.

And, one more thing, many good and strongest CBD vape oils in the UK might not have any PG or VG to produce vapours. Instead, they have good amounts of terpenes. This makes those products more potent, aromatic, and beneficial.

So, as it is said, the devil is in the details. Hence, those looking for good, strong and safe CBD vape oil products in the UK or other countries should pay attention to these minute details. These seemingly minor bioactive compounds play an important role in the overall vaping experience and health benefits of CBD vape oils.

The Science Behind CBD’s Pain-Relieving Properties

What is good about CBD vape oil is that it works in multiple ways. It may start working slowly but may help significantly in the long run. Here are a few ways in which CBD vape oil may help overcome pain:

Interaction with the Endocannabinoid System (ECS)

The ECS is involved in regulating a wide range of physiological processes, including pain perception and immune response. CBD’s interaction with ECS receptors helps to balance these processes, promoting a state of homeostasis. By modulating the activity of the ECS, CBD can help reduce the intensity and duration of pain signals. Additionally, CBD also promotes the production of the bliss molecule anandamide (1).

Reduction of Inflammation

Chronic inflammation is a common underlying cause of pain. CBD has been shown to have anti-inflammatory properties, which can help alleviate pain associated with conditions such as arthritis, multiple sclerosis, and other inflammatory diseases. By reducing inflammation, CBD can help overcome pain and improve overall comfort (2).

Analgesic Effects

CBD has been found to have direct analgesic effects, which can help reduce pain intensity. Studies suggest that CBD may affect pain pathways in the brain and spinal cord, altering pain perception and providing relief from both acute and chronic pain (3).

Getting Started with CBD Vape Oil for Pain Management

Firstly, one should choose CBD vape oil wisely, which is a product of a high-quality and reputable brand. So, check for the content of THC, CBD, minor cannabinoids, and terpenes in the vape oil. It is always a good idea to go for the strongest CBD vape oil in the UK.

When getting started, always start with the lowest dose. It may mean a few puffs a day. Be patient and remember that CBD vape oil’s effectiveness will increase daily. This is because CBD has a long half-life and stays in the system for a long time. So, it reaches its peak effect after a few days. So, never overdose on CBD vape oil, and be consistent with its use.

Of course, CBD vape oil works best when combined with other pain management strategies like regular exercise and practising mindfulness.

Generally, CBD mixes well with other natural remedies and does not cause harm. Nonetheless, when using CBD vape oil with other natural remedies and medications, one should closely monitor for side effects.

The Bottom Line

CBD is now among the most popular natural pain management remedies. There are many ways of using CBD. Some prefer CBD sublingual oil, others gummies, while some love vaping CBD. How one uses CBD is less important. More important is to use strong and high-quality products with proven safety records. Finally, remember that consistent CBD use is highly important in the long run when using it to manage chronic pain.

References

  1. Kesner AJ, Lovinger DM. Cannabinoids, Endocannabinoids and Sleep. Front Mol Neurosci. 2020 Jul 22;13:125.

  2. Henshaw FR, Dewsbury LS, Lim CK, Steiner GZ. The Effects of Cannabinoids on Pro- and Anti-Inflammatory Cytokines: A Systematic Review of In Vivo Studies. Cannabis Cannabinoid Res. 2021 Jun;6(3):177–95.

  3. Kulesza B, Mazurek M, Kurzepa J. Can cannabidiol have an analgesic effect? Fundam Clin Pharmacol. 2024 Feb;38(1):33–41.

 

MORE ON CBD VAPE OIL, READ THIS…

BENEFITS OF CBD VAPE OIL

WHAT ARE THE 3 BIG BENEFITS OF CBD VAPE OIL? CLICK HERE!



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Scientists Got Fish High on Psychedelics to Explain How They Work

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Psychedelics are all the rage – not just in North America, but all over the world. Over the past few years, there has been a spotlight on psychedelics in general because of its proven as well as promising therapeutic applications.


Psychedelics have been shown to be effective in treating so many common ailments that we just can’t seem to treat as well with pharmaceutical drugs. These include PTSD, OCD, depression, anxiety, and addiction to name a few. That said, there’s still so little we know about psychedelics and how they work in the human body; there are many different psychedelics out there to study, too.

 

So researchers decided to get fish high on psychedelics to help us understand a little more.

 

In a recent study, whose results were published in Molecular Psychiatry, Dr. Takashi Kawashima led a team of researchers at the Weizmann Institute of Science to understand the behavior of psychedelics in the human body by exposing larval zebrafish to it, and how they influence different cells in the brain to provide its therapeutic benefits. The researchers utilized various scientific tools such as image analysis, optical microscopy, and even artificial intelligence.

 

Dr. Kawashima, who is a neuroscience researcher as well as a medical doctor, was particularly interested in understanding how psychedelics affect psychiatric or mental health conditions. It’s afflictions of the mind, after all, that psychedelics has been shown to be extremely effective in treating – and where conventional pharmaceutical drugs have failed. In particular, would psychedelics be able to replace selective serotonin reuptake inhibitors (SSRI’s) or even work better than them, but without the side effects?

 

With the findings, he hopes to contribute to treatments of mood-related disorders.


He adds that it isn’t ideal to experiment with psychedelics on humans because of the drug’s hallucinogenic properties. In addition, he acknowledges the challenges of doing so; it may be futile since psychedelics work with such deep-seated circuits in the brain, making it hard to analyze. “Zebrafish larvae, on the other hand, are transparent, making it possible to monitor drugs’ impact on specific brain cells and to correlate this with behavior,” Dr. Kawashima said. Zebrafish are also excellent test subjects since they share approximately 70% of their DNA with humans, and because of their social nature.


For the trials, the zebrafish were soaked in a psilocybin solution for four hours. Afterwards, they were made to participate in a series of behavioral experiment designed by Kawashima, which started off with the fish diving into a pool of water with vibrant patterns on the glass bottom. The fish were then exposed to a sudden decrease in water temperature, meant to incite stress on purpose so that the scientists could compare the behaviors to fish who weren’t exposed to psychedelics. “We wanted to see how psychedelics affect the fish’s stress response,” said Kawashima. “We found that, similar to what can be true to humans, when you’re heading into a stressful situation, taking a long bath can help.”

 

They found that the fish soaked in psilocybin were more likely to venture into the water tank’s darker areas even after being exposed to stress, compared to the fish who weren’t exposed to psilocybin. They even swam around faster than the sober fish, suggesting that psilocybin may act as a stimulant. Furthermore, they found that the psilocybin reduced anxiety after exposure to stress.

 

“SSRIs elevate serotonin levels throughout the brain,” explains Dr. Dotan Braun, a scientist and psychiatrist who worked with Dr. Kawashima’s laboratory. “Psychedelics, in contrast, affect serotonin receptors via a different, much faster mechanism and they appear to act on brain areas in a more targeted manner. A better understanding of their mechanism of action and a mapping of their influence on the brain may lead to more efficient drugs, with fewer side effects.”

 

Kawashima also explained that through optical imaging, they were able to observe neural activity in the drugged fish which were similar to the activity seen in other laboratories when studying mammalian brains that have been exposed to psychedelic drugs. “This indicates that psilocybin exerts its influence on behavior through neural mechanisms in deep areas of the brain that have been conserved in evolution and are also found in mammals, including humans,” Kawashima said.

 

Other Fish Studies

 

Back in 2022, researchers also exposed zebrafish to psychedelics for a study; this time, it was used to understand how microdosing benefits humans.

 

The study’s author, Trevor James Hamilton of MacEwan University, writes about the study and shares that while it’s common to expose zebrafish to chronic administration of drugs, which entails putting them in a drug solution for long periods of time, they attempted to do things differently for this study by dosing the fish accurately on a regular basis to mimic exact exposure times. They accomplished this by adding a tool into the tank which moved fish from their housing into the dosing tank, enabling them more accurate dosing.

 

The zebrafish were either given moderate doses of ethanol daily or binge doses for 3 weeks. They followed it up with another experiment of lower doses, then again used the same testing model and nicotine. They found that acute dosing reduced anxiety-like behavior, while repeated dosing resulted in more anxiety-like behaviors especially during withdrawals. According to Hamilton, this can also be observed in humans, such as those who use a cigarette or one alcoholic drink to address anxiety. Meanwhile, taking excessive amounts of either results in behavior that is exhibited during withdrawals.

Afterwards, they repeated the study using LSD on the zebrafish then utilized behavioral neuroscience tests to study behavior. They found that there was no change on behavior after 10 days of repeated exposure, which suggests the lack of addictive potential. This validates the lack of addictive qualities of psychedelics especially LSD, which means that there is no reason for them to be restricted by the government.

 

Conclusion

 

While we need more information and studies on the impact of psychedelics on humans, fish studies provide terrific insight on how psychedelics can affect or physiology. These studies are fantastic tools that can help us have a deeper understanding of how hallucinogenic drugs help us.

 

ANIMALS GETTING STONED? READ ON…

DOPHINS GET HIGH ON BLOW FISH

DOLPHINS GET HIGH CHEWING ON BLOWFISH? READ THIS!



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