November 2020

Now is the Time to Change the Downward FinCEN Cannabis Banking Trend

Despite the “green wave” America experienced on Election Day, and the increased success the legalized U.S. cannabis industry has experienced in 2020, the number of financial institutions providing banking services to cannabis-related business (“CRBs”) appears to be decreasing. In fact, this was the third quarter in a row that FinCEN’s quarterly report has shown that fewer banks and credit unions filed requisite suspicious activity reports (“SAR”s) indicating that they service cannabis clients.

While one of the reasons for the steady decline may be attributable to FinCEN’s June guidance that removed mandatory SAR filing for hemp-related businesses and therefore those financial institutions that only serve hemp customers are no longer reflected in the report, another factor may be that cannabis-related SARs are being filed late due to staffing constraints brought on by the COVID-19 pandemic. Regardless, the troubling downward trend supports the contention that not enough financial institutions are entering into the cannabis banking space to meaningfully change the landscape for cannabis business operators.

With new states legalizing medicinal cannabis and more states legalizing cannabis for adult-use, the need for cannabis banking that provides robust service offerings and competitive pricing is only going to grow.  The expanding market will provide … Keep reading

In Case You Missed It: Election Day’s Green Wave

If the 2020 elections taught us anything about the burgeoning cannabis industry, it is that more Americans believe cannabis should be legalized now than ever before. A recent Gallup poll, released on November 9th, found that 68% of Americans believe cannabis should be legalized, which is the highest percentage in more than 50 years of polling. This is extraordinary growth since the Gallup polls first began tracking the American consensus on marijuana legalization back in 1969. At the time, only 12% of respondents were in the legalization camp.

Instead of a Red wave or Blue wave, America experienced a Green wave this November, which transcended party lines. Six states passed varying degrees of cannabis legalization and many by a larger margin than the presidential election. Additionally, two other jurisdictions had psychedelics mushrooms on the ballot. So which states were the big winners this year?

  • Arizona – Approved adult-use legalization
  • Mississippi – Approved medical use
  • Montana – Approved adult-use legalization
  • New Jersey – Approved adult-use legalization
  • Oregon- Approved legalization of psilocybin for therapeutic uses and Approved decriminalization of non-commercial possession of controlled substances
  • South Dakota – Approved both medical use and adult-use legalization
  • Montana – Approved adult-use
Keep reading
Part 4: Fourth Annual State of the Cannabis Industry Conference – Smoking Hot Topics: M&A, Investing, and Capital Raising

Click here to watch the full panel.

As in past years, the Fourth Annual State of the Cannabis Industry Conference brought some of the industry’s top leaders and regulators to discuss and reminisce on the industry’s growth, the current state of the industry, and the future of the industry. With topics ranging from restructuring and workouts to hemp and CBD, the Conference concluded with its final panel, discussing the current status of the industry’s capital markets and M&A transactions with a panel of the industry’s top investors and funds. The panel’s discussions centered on the current state of capital in the industry, the recent valuation reset of the industry, methodologies, and determinations of deploying capital, and new trends and key developments in the past 2-3 years.

As many in the industry are well aware, raising capital in the cannabis space has never been easy. This year alone, capital raising has declined by 67% since last year, with $2.6 billion raised in the first half of 2020 compared to the $5.5 billion raised in the first half of 2019. However, the panelists noted that, while capital raises are down, the opportunity and leverage for investors has never been stronger. … Keep reading

Part 3: Fourth Annual State of the Cannabis Industry Conference – Demystifying Hemp & CBD

Click here to watch the full panel.

Burns & Levinson’s Fourth Annual State of the Cannabis Industry Conference featured a panel of various hemp & CBD industry participants discussing the current climate of the market, legal developments and pitfalls, and projections on making improvements in 2021.

The panel was moderated by Burns & Levinson’s own Katrina Skinner, recently named a “Cannabis Trailblazer” by the National Law Journal.

So what is the state of the Hemp and CBD Industry?

The discussion was kicked-off by an overview from Julie Lerner on the pricing of the hemp and CBD industry over the past year. Julie is the founder and CEO of PanXchange, a web-based negotiation and trading platform for physical commodities.  She revealed that prices dropped significantly from July 2019 to May 2020, with the pricing of hemp biomass falling roughly 84%. Julie noted that the market is facing oversupply down the supply chain and provided notable insight from her experience in commodities compared to hemp. According to Julie, the industry will likely continue to see CBD develop in pockets servicing its respective regions, but with many bankruptcies and M&A ventures occurring in the space, its too early to … Keep reading

Part 2: Fourth Annual State of the Cannabis Industry Conference – Roadmap to Restructuring and Workouts in the Cannabis Industry

Click here to watch the full panel.

Cannabis businesses face unique challenges when confronted with economic difficulties and financial challenges in an industry suffering from a lack of institutionalized capital. While cannabis remains federally illegal, bankruptcy court protection is denied to plant-touching and, in some circumstances, ancillary companies. Scott Moskol, co-chair of Burns & Levinson’s Cannabis Business Advisory Group, moderated the first panel at the firm’s Fourth Annual State of the Cannabis Industry Conference, exploring both the judicial and non-judicial options for operators, secured creditors, investors, and other stakeholders in the context of distressed transactions as well as other financial issues affecting the industry.

The panel opened with a brief discussion on the apparent financial strength of the cannabis industry, even despite the economic repercussions of the pandemic. Vicente Sederberg’s Charles Alovisetti noted that at the start of the COVID-19 crises there was widespread concern over the financial health of the industry but, the anticipated volume of distress did not materialize. Nonetheless, Mr. Alovisetti cautioned that some cannabis companies will experience distress and, therefore, it is vital that we consider the important questions that will arise in those circumstances – namely, what will happen to a distressed … Keep reading

Part 1: Fourth Annual State of the Cannabis Industry Conference – Interview with Steven Hoffman

Click here to watch the full interview.

Burns & Levinson’s Fourth Annual State of the Cannabis Industry Conference featured a highly anticipated “Fireside Chat,” with Commissioner Steven Hoffman, Chairman of the Massachusetts Cannabis Control Commission, in an exclusive one-on-one Q&A with Frank A. Segall, co-chair of the Cannabis Business & Law Advisory Group at Burns & Levinson. After a rousing interview at last year’s conference, Segall and Hoffman followed up this year with a lively and wide-ranging interview that touched upon several hot-button issues regarding the cannabis industry in Massachusetts.

Despite the pandemic serving as a backdrop, the interview opened with the Commissioner offering positive news to potential cannabis license applicants and applications currently in process. Despite relegated to working remotely since early March, the Commissioner noted that the CCC has seen an uptick in productivity of license processing during this time.  Since March, the Commission is averaging approximately 50 provisional licenses per month, increasing pre-pandemic numbers. Anecdotally, the Commissioner noted that the CCC had received fewer complaints regarding delays in the licensing process.

One source of frustration in the cannabis licensure process, according to the Commissioner, is the absence of a streamed process between cities/towns … Keep reading