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Happy Friday Pre Rollers! Welcome to another edition of The Pre Roll, the cannabis newsletter that keeps you up-to-date on the industry happenings you need to know.

Here’s what we’re rolling up this week:

• Biden makes rescheduling official

• New York’s market shakeup

• Q1 financial results

…and more. Let’s get to it.

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🚨 Roll Call

Policy

Biden backed. After news broke last month that the Biden administration is poised to reschedule cannabis under federal law, the President himself made it official yesterday. Cannabis will go from Schedule I to Schedule III, marking the most significant policy shift in the more than half-century since the Controlled Substances Act came into effect.

The move will have some major ramifications for the cannabis industry at large, particularly:

• It will eliminate restrictive tax burdens presented by IRS Code Section 280E, which prohibits legal cannabis companies from deducting ordinary business expenses

• It will remove barriers for conducting research, making it easier to study cannabis and its impact

Per the Drug Enforcement Administration (DEA) website, the difference is as follows:

Schedule I: Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse. Some examples of Schedule I drugs are: heroin, LSD, marijuana (cannabis), and ecstasy.

Schedule III: Schedule III drugs, substances, or chemicals are defined as drugs with a moderate to low potential for physical and psychological dependence. Schedule III drugs abuse potential is less than Schedule I and Schedule II drugs but more than Schedule IV. Some examples of Schedule III drugs are: products containing less than 90 milligrams of codeine per dosage unit (Tylenol with codeine), ketamine, anabolic steroids, and testosterone.

Policy

Substantial shakeup. Plagued by an ever-growing list of problems, Governor Kathy Hochul ordered a review of New York’s fledgling legal cannabis market in March. The ensuing report outlined a number of obstacles faced by the Office of Cannabis Management (OCM). Specifically, it found discovered the OCM had:

• Limited depth in administration

• Failed to centralize licensing operations

• Created complex and obscure licensing requirements

• Provided sparse customer service

• A lack of data and key performance indicators (KPI)

• Utilized multiple disparate IT systems

The turmoil was topped by an announcement that agency’s executive director will be out at the end of his term in September.

The state — New York City, in particular — has also been hampered by the proliferation of illegal and unlicensed cannabis stores. Earlier this month, NYC Mayor Eric Adams initiated an operation to shut down unlicensed cannabis shops across the five boroughs. That has already led to 75 businesses being closed in the first week.

Business

Results roundup. Both plant-touching and ancillary cannabis companies have begun reporting financial results for the first quarter of 2024. Outcomes have been mixed to start the year. Click on any business below for further detailed information.

🇺🇸 State of the Industry

Alaska: The House voted to change the state’s $50 per ounce cannabis tax to a 7% sales tax; it now heads to the Senate.

Colorado: Lawmakers approved a bill allowing cannabis retailers to sell food, as long as it doesn’t exceed 20% of annual gross revenues.

Minnesota: Nearly 58,000 misdemeanor cannabis records have been expunged ahead of schedule.

South Dakota: Advocates submitted close to 29,000 signatures for an initiative to get recreational cannabis on the November ballot; only 17,508 were needed meaning the issue will likely go before voters.

💨 Quick Hitters

• A new report by the Marijuana Policy Project on tax revenue generated from state-legal, adult-use cannabis sales found that through the first quarter of 2024, states have collected a combined total of more than $20 billion in taxes.

• Several teens in Los Angeles became sick after ingesting cannabis edibles during a field trip to the La Brea Tar Pits.

• Aurora Cannabis announced a new member to its Board of Directors.

📚 What We’re Reading

• Opinion | What a sane approach to marijuana regulation might look like (The Washington Post)

• DEA's historic move to reschedule cannabis is no panacea (Reuters)

• Marijuana is already legal for a majority of Americans (The Economist)

• Thailand’s Cannabis Re-Criminalization Risks Street Protests and Industry Lawsuits (TIME)

• Dear Alcohol, I’m Dumping You For a Cannabis Drink (The Inertia)

📼 Video of the Week

🔎 Job Board

• Head of Brand Strategy and Communications

  • Weedmaps

  • $198,000—$218,000

• Executive Assistant

  • Nabis

  • $65,000—$75,000

• Associate Marketing Manager

  • Wherehouse Beverage Co.

📨 Puff, Puff, Pass Reeferal Program

Stay tuned for more cannabis industry news next week!

💚,

The Pre Roll Team

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