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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.

Before we get started, we wanted to share some exciting news. We’ve officially launched our referral program that lets you earn rewards for sharing The Pre Roll with colleagues, family, and friends interested in the cannabis industry! You can find more info at the bottom of today’s newsletter.

This week we cover New Frontier Data predicting the future of the cannabis industry, the Securities and Exchange Commission charging American Patriot Brands, SAFE banking being in the spotlight again, and more.

Let’s get to it.

🚨 Roll Call

Business

New Frontier Data forecasts the future. Cannabis data and analytics firm New Frontier Data projects U.S. cannabis sales could hit as high as $71 billion by 2030 even without federal policy reform if the pace of state-level legalization continues. Even the low end predictions reach $58 billion should the cannabis market stagnate. They also estimate close to 70 million American adults will be cannabis consumers by the same point in time. A deeper look into the crystal ball can be found in their 2023 U.S. Cannabis Report: Market Updates & Projections, which can be downloaded here.

News

The SEC and a siphoning scheme. Cannabis cultivation and distribution company American Patriot Brands was charged by the U.S. Securities and Exchange Commission for making false and misleading claims to investors. The complaint, which was filed in the United States District Court for the District of Puerto Rico, also included the company’s CEO and five other entities and individuals. It alleges that those involved took millions of dollars for themselves from the more than $30 million the company raised from over 100 investors.

Policy

The SAFE banking battle continues. In a letter to members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, a group of cannabis industry trade organizations pleaded for prioritization of cannabis banking and the passage of the SAFE Banking Act. In a separate unrelated appearance, the chairman of that committee, Sherrod Brown (D-OH), said lawmakers need to pass it this year and he is hopeful it can get done. This all comes as the banking sector is making headlines on the heels of trouble at institutions such as Silicon Valley Bank and Signature Bank. Some fear cannabis companies may be at risk as well amidst the turmoil in the banking world.

🇺🇸 State of the Industry

Illinois: Recreational sales to out-of-state shoppers — who make up nearly one-third of all cannabis revenue in the state — have dropped by 15% since neighboring state Missouri began legal recreational sales in February. That number reaches as high as 30% in stores around the Missouri border.

Michigan: Almost four and a half years after Detroiters voted to approve recreational sales, the first ‘Detroit Legacy’ dispensary Nuggets Cannabis Company opened. The program gives preference to applicants that have lived in the city for at least 15 of the last 30 years, with lower thresholds for low-income residents and individuals with prior cannabis convictions.

Missouri: Since recreational legalization went into effect, over 15,000 cannabis convictions have been expunged.

New York: A coalition of medical cannabis companies sued state regulators in an effort to get licensing opened up to all hopeful recreational dispensary applicants. They claim regulators were beyond their legal authority when they initially accepted only applications from those with prior cannabis convictions and relatives. In other news, Governor Kathy Hochul proposed legislation to crack down on unlicensed cannabis shops in hopes of boosting the state’s new adult-use market.

Washington: The Liquor and Cannabis Board (LCB) introduced a bill aiming to expand and improve the social equity in cannabis program. They indicated about 92% of the state’s current licensees are white.

Wisconsin: Residents spent $121 million on cannabis at Illinois dispensaries — leading to $36 million in tax revenue — claims a new state report. This has led lawmakers, including Governor Tony Evers, to speak out in support of legalization.

🌏 Around the World

Switzerland: The country has approved plans to launch a trial involving the legal recreational consumption and sale of cannabis. The study called "Züri Can - Cannabis with Responsibility" is being conducted jointly between the City of Zurich and the University of Zurich. The sale of medical cannabis with less than 1% THC has been permitted since 2011 and recreational cannabis possession was decriminalized in 2013.

📊 Business

In case you missed it last week, a number of cannabis operators and ancillary companies reported fourth quarter and full year financial results for 2022. Find the full list below:

• Ascend Wellness Holdings, Inc.

• Ayr Wellness Inc.

• Cresco Labs Inc.

• Glass House Brands Inc.

• Green Thumb Industries Inc.

• Leafly Holdings, Inc.

• MariMed Inc.

• SpringBig Holdings, Inc.

• TerrAscend Corp.

• TILT Holdings Inc.

• Trulieve Cannabis Corp.

• WM Technology, Inc.

4Front Ventures: The vertically integrated cannabis company revealed that it has appointed cannabis industry veteran Kris Krane to its board of directors.

Avextra: The German medical cannabis supplier closed a EU 17 million raise.

Columbia Care: The MSO announced the transition of Co-founder Michael Abbott from Executive Chairman to Chairman of the Board of Directors.

Flora Craft Brands: The Illinois-based craft grow reached an exclusive licensing agreement with athlete led brand Revenant, founded by retired NFL players Kyle Turley, Eben Briton, and Jim McMahon.

Mitten Extracts: The Michigan-based concentrates producer launched a new wholesale brand called Mitten Distro.

Red White & Bloom: The multi-state cannabis operator appointed Edoardo Mattei as Chief Financial Officer.

🤝 Deals

Irwin Naturals: The nutraceutical company acquired Ketamine Media, an advertising company dedicated to raising awareness about the clinical use of ketamine.

💻 Tech

POSaBIT: The point-of-sale and payments provider is expecting $60 to $63 million in revenue and $15 to $17 million in gross profit for 2023.

Weedmaps: The cannabis marketplace and eCommerce company is pausing its CEO search as it looks to drive profitable growth.

💨 Quick Hitters

• Former NBA star Al Harrington discussed getting into the cannabis business.

• Cannabis sales were up on St. Patrick’s Day this year according to Fyllo.

• A New York City dispensary began adding disclaimers about the potency of its cannabis products.

📚 What We’re Reading

• Why Can’t Legal Cannabis Sellers Open Shops? Sometimes NY State Is Their Adversary (THE CITY)

• The growing Chinese investment in illegal American weed (POLITICO)

• California Cannabis Operators in Peril as American Dream Turns to Nightmare (Cannabis Business Times)

• Retail marijuana a slow burn in Fresno after nearly a year. ‘Some of them will never open’ (The Fresno Bee)

• What is the Marihuana Regulation and Taxation Act? (NY Cannabis Insider)

Stay tuned for more cannabis industry news next week!

💚,

The Pre Roll Team

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