The big news this week is Canopy Growth Corp.’s announcement that it plans to acquire Acreage Holdings, Inc., a leading US multistate cannabis operator, in a deal that could be valued at $3.4 billion. The deal provides a clear entry strategy into the US for Canada-based Canopy Growth. Certainly, Canopy Growth has made a big bet on the future of cannabis legalization in the US. In another significant milestone, Greenlane Holdings, Inc., launched its IPO on the NASDAQ stock exchange, the first purely cannabis-focused business to do so.

Momentum continues to build for the Secure and Fair Enforcement (SAFE) Banking Act, with five new co-sponsors in the House and a ringing endorsement from the largest US banking trade organization.

Georgia state legislators passed a new medical cannabis bill to permit for limited cultivation, buying and selling of cannabis with less than 5 percent THC. Previously one of the most restrictive programs in the country, this move was lauded by patients and passed with little drama. Texas is also considering several bills aimed at expanding medical access, further decriminalizing cannabis and legalizing hemp.

California is facing many challenges to its cannabis program, including temporary licenses expiring before regulators can replace them and lawsuits from anti-cannabis groups powered by the strict requirements of the California Environmental Quality Act. Vermont legislation permitting cannabis sales may face insurmountable hurdles, with Republican Governor Phil Scott stating he will only support the bill if it includes roadside saliva testing.

Michigan formally launched its 2019 hemp pilot program. The Oklahoma legislature sent Governor Kevin Stitt a hemp bill permitting cultivation consistent with the 2018 Farm Bill. It is expected that the Governor, a Republican, will sign the bill. CBD continues to gain mainstream acceptance with national retailers, with The Vitamin Shoppe the latest major chain to enter the space.

US corporations are embracing “420” as cannabis legalization becomes more and more acceptable. Major companies who had 420-specific advertising include Lyft and Carl’s Jr.

Read more about these stories and cannabis related news below.

Federal

The House version of the Secure and Fair Enforcement (SAFE) Banking Act got five new co-sponsors, for a total of 165. This far surpasses the level of sponsorship for other cannabis bills in Congress.

Further adding to the momentum, the American Bankers Association, the largest US banking trade organization has backed the SAFE Banking Act, saying in a letter to the US Senate that it would help reduce crime, boost tax revenue and improve transparency.

US Citizenship and Immigration Services (USCIS) released policy guidance regarding “Controlled Substance-Related Activity and Good Moral Character Determinations.” It states that “violation[s] of federal controlled substance law, including for marijuana, remains a conditional bar to establishing good moral character.” While not phrased in the absolute, this guidance is likely to be of concern to non-citizens considering using cannabis or working in a cannabis related industry.

The US Attorney for the Western District of Washington, who has been one of the most vocal opponents of cannabis and cannabis legalization, said that “even if I wanted to [crack down on cannabis businesses], I just couldn’t,” adding that if safe consumption sites for illegal drugs open up, “action will be swift, sure and decisive.”

A district court in Colorado denied a request for summary judgment where defendant argued that liquid cannabinoid formulations are not eligible for a patent.  The case addresses cannabis extraction methods the well accepted rule that “[l]aws of nature, natural phenomena, and abstract ideas are not patentable.”  The “911 Patent” made claims about “a [liquid] extract comprising a mixture of at least 95% total cannabinoids, and at least one terpene/flavonoid” and “[specific] formulations containing the extracts according to the invention.”  The court ruled that “the 911 Patent is not ‘directed to’ an unpatentable law of nature, a natural phenomenon, or an abstract idea. It is instead ‘directed to’ a non-naturally occurring delivery method of naturally occurring chemicals in (as far as the record reveals) non-naturally occurring proportions and concentrations.”

States

In California, more than 6,000 temporary cultivation licenses are expected to expire by the end of April before they can be replaced with annual permits. Licensing delays could cost cannabis growers thousands of dollars in lost revenue, and possible shutdowns.

Adding to Cali growers’ woes, industry observers are warning about the impact the California Environmental Quality Act (CEQA) may have on the legal cannabis market, calling it the “silent killer.” CEQA says that any project which has the potential to change the physical environment is subject to discretionary review by a government body and may have to submit assessments of potential environmental impacts requiring mitigation. The law is often used as a weapon to delay or stop disfavored projects, and has already sparked a number of lawsuits from anti-cannabis groups.

Florida Gov. Ron DeSantis (R) signed off on a settlement deal approving eight new medical cannabis operators. The settlement ends a lawsuit filed by Nature’s Way Nursery of Miami, Inc., challenging how the state originally determined who was awarded licenses. The 8 companies will bring to 22 the total number of operators doing business inside Florida.

Georgia Gov. Brian Kemp (R) signed a bill allowing in-state cultivation and sales of low-THC medical cannabis products. Although Georgia has allowed patients to possess cannabis oil since 2015, there was no mechanism to sell, buy or transport the oil.

Maryland regulators told medical cannabis businesses that they will lose their temporary licenses if they don’t begin operations by September 30. It is reported that 26 companies are in danger of losing their license approvals if they cannot comply with the deadline. Joy Strand, executive director of the Maryland Medical Cannabis Commission, said the commission does not plan to re-award any licenses that are surrendered by companies that lose their preliminary approvals.

In Texas, three major cannabis reform bills—to decriminalize marijuana, legalize hemp and expand medical cannabis—have cleared committees and are on their way to the House floor. Regarding these and other bills under consideration, Heather Fazio, director of Texans for Responsible Marijuana Policy, told Marijuana Moment, “[l]egislators are taking this issue more seriously now than ever before, and they’re responding to their constituents who want to see these laws changed.”

The future of legal cannabis sales in Vermont is uncertain after Gov. Phil Scott (R) said that a cannabis sales legalization bill would need to allow roadside saliva testing to win his support. Proponents of saliva testing say it is necessary to keep drug-impaired drivers off the road. Opponents say it is overly invasive as well as inaccurate

Hemp and CBD

Michigan Gov. Gretchen Whitmer (D) and regulators announced the launch of a hemp pilot program for the 2019 planting season. Interested parties can now download the applications for growers and processor-handlers online. Notably, the application cost for growers is only $100 compared to a whopping $1,350 for processor-handlers.

Oklahoma lawmakers sent Gov. Kevin Stitt (R) a hemp bill. The bill would allow the state Department of Agriculture to develop and manage a hemp production program under the 2018 federal farm bill. The Governor is expected to sign the bill

The Associated Press examined mainstream retailers embracing CBD. Aside from CVS, Walgreens and Rite-Aid, the article also notes that Martha Stewart, Nine West and Simon Property Group (“the nation’s largest mall owner”) have entered or plan to enter the space. Companies still waiting in the wings include Walmart and Amazon.

The Vitamin Shoppe began selling oral CBD soft gels this week and will start selling CBD drops by the end of the month. Some see this as a bolder step than other mainstream companies, who have steered clear of ingestible products.

Also relating to food, Carl’s Jr. announced that it is “testing“ a burger that features a sauce infused with CBD. The “Rocky Mountain High: CheeseBurger Delight” burger was on the menu at one location (in Denver, CO) for just one day (4/20). Although the company has said this is more than a stunt, industry observers are skeptical.

Elavon, a US bank subsidiary, notified its hemp and CBD clients that it re-categorized hemp and cannabidiol-based merchants as a prohibited business type and that accounts for such merchants would be closed within 45 days. Such a move is perplexing considering the passage of the hemp-friendly federal farm bill and the general movement of the industry

Business

Canada-based Canopy Growth Corp. announced its plan to acquire a leading US multistate cannabis operator, Acreage Holdings, Inc., “at such time as cannabis production and sale becomes federally legal in the United States.” The company states that the proposed deal “complements Canopy Growth’s US CBD strategy with an accelerated pathway into US cannabis markets” and that the “deal structure [is] expected to provide improved access to capital for Acreage, paving way for accelerated expansion.” Pending approval from shareholders and the Supreme Court of British Columbia, Acreage will receive an immediate payment of $300 million. In addition, if exercised, holders of Acreage’s subordinate voting shares will receive 0.5818 per Canopy common share—valuing the deal at $3.4 billion.

Greenlane Holdings, Inc., the leading distributor of premium ancillary products to head shops, smoke shops and dispensaries in North America, launched an initial public offering on the Nasdaq stock exchange on Friday, April 19. We expect NASDAQ will continue to move forward in listing other cannabis ancillary companies this year.

US corporations are embracing the “420” holiday as cannabis legalization becomes more and more acceptable. Major companies who had 420-specific advertising include Lyft, Carl’s Jr and long-time participant Ben & Jerry’s.

Bank of America has begun covering cannabis stocks. Industry observers touted this as noteworthy because very few Wall Street firms have publicly weighed in on the sector.

Some California and national businesses are reportedly dropping zero-tolerance cannabis policies. Policies varied from stopping screening all together, only screening “safety-sensitive positions”, or screening generally and ignoring failures cause by cannabis