Business

Could 2024 be the year cannabis fails at the ballot box?

Published

2 months ago

November 5, 2024

For well over a decade now, cannabis legalization efforts via state ballots – whether medical or recreational – have seen great success. But starting on Tuesday, that track record may be in danger. There’s a decent chance that most – if not all – of the legalization questions this year will fail, potentially stalling political momentum for the cannabis industry.

The reasons are multifold, but a primary one is that there are few states remaining that have petition systems under which independent campaigns can put forth ballot questions to voters. Only 26 states have such mechanisms. In the other 24 – including Illinois, New York and several others that have already legalized recreational cannabis – the only way to change state laws is by lobbying the legislature.

That’s also a reason why many red states have not yet legalized; they have to wait for state lawmakers to act.

This year, it’s a handful of conservative states that reliably lean Republican that will have cannabis on the ballot. Florida, North Dakota and South Dakota will vote on recreational marijuana legalization, with Nebraska voting on medical. (A ballot question to expand Arkansas’ medical marijuana program was invalidated by the state Supreme Court.)

Both polling and history may be working against the cannabis questions.

Florida

In Florida – the most expensive and high-profile of the campaigns – marijuana also has the highest threshold to pass: 60% of voters because the measure amends the state constitution. Polls in recent months have shown support as high as 67% and as low as 49%, with the most recent two pegging support right at 60%. That means Election Night could be a nail-biter for supporters.

The measure also has a high-profile opponent. Gov. Ron DeSantis has gone to war against the amendment, although former President Donald Trump has expressed his support for it, meaning it’s even harder to tell where most voters will come down on the issue.

The first time that medical marijuana was on the Florida ballot, in 2014, it failed to pass, despite winning almost 58% of the vote. Two years later, cannabis activists succeeded and won with more than 71% support.

The Dakotas

In the Dakotas, history and politics are arguably even more stacked against marijuana supporters, with both states hoping third time’s the charm for adult-use legalization.

In North Dakota, the recreational cannabis question, Measure 5, polled at just 45% support as of September, with 40% of participants opposed and another 15% undecided, a survey by North Dakota News Service Cooperative found. The question only needs a simple majority to pass, but the campaign follows on the heels of back-to-back defeats in 2022 and 2018, when 55% and 59% of voters respectively rejected adult-use legalization.

North Dakota was, however, part of a green wave in 2016 (along with Florida) in which voters approved medical marijuana.

In South Dakota, state voters made political history in 2020 with the approval of two cannabis ballot questions at once – one to legalize medical and the other to legalize recreational, a victory that had never before been achieved by marijuana activists.

But while the medical initiative was implemented, the recreational one was overturned by a lawsuit brought by marijuana opponents, with the support of GOP Gov. Kristi Noem. A second attempt at the ballot box in 2022 lost with just 47% support from voters.

This time around, recreational cannabis supporters still have their work cut out for them, according to several polls. An Emerson College survey last month found 45% of voters supporting the question, while 50% are opposed and just 4% are undecided. An earlier poll conducted in May found 42% support, 52% opposed and 7% undecided.

Nebraska

Nebraska may be a bright spot this year, if the polls are to be believed. Voters there have a pair of cannabis questions to weigh: Initiative 437, which would legalize marijuana possession and consumption for medical purposes, and Initiative 438, which would establish a regulatory system for cannabis businesses. An Emerson College poll in September and October found solid 59% support for Initiative 437.

But like Arkansas, Nebraska’s campaign could lose on a legal technicality. As of Friday, a trial is underway in the state to determine whether the marijuana campaign used “fraudulent” means to qualify for the ballot, putting the fate of the initiatives in question.

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Author: mscannabiz.com

MScannaBIZ for all you Mississippi Cannabis News and Information.

Business

Cannabis companies, big and small, collapsed in 2024

Published

24 hours ago

December 23, 2024

mscannabiz.com

As 2024 winds to a close, the year may well be remembered as one in which the U.S. marijuana industry got a serious wakeup call, with several big-name companies flaming out in spectacular fashion, while plenty of smaller operators also quietly closed up shop.

Even as more state marijuana markets continued their new rollouts – from New York to Ohio to Missouri – the sun set for the last time on several big marijuana names, including MedMen Enterprises, High Times, StateHouse Holdings and Slang Worldwide, all of which just a few years ago seemed poised to become national cannabis brands with impressive portfolios.

Instead, this year the bill came due for a lot of the industry. A few big-name cannabis failures kicked off the reckoning in 2023, such as the major distributor Herbl in California, which had such a web of connections and so much outstanding debt that its ripple effects went on for months. And when those bills arrived, a number of cannabis companies found they were unable to pay.

However, the big players were far from the only casualties this past year; there were also plenty of smaller businesses that went bankrupt or into court-appointed receiverships for various reasons, including Unrivaled Brands, Irwin Naturals, Delta 9 Cannabis and Revolutionary Clinics.

But it wasn’t all bad news for the industry. It’s also worth highlighting the high-profile turnaround of California-based cannabis delivery operator Eaze, which took a wealthy patron to save the business from its troubles.

Eaze even told shareholders in the fall that it was prepping to lay off all employees and close down by the end of the year, before its new owner, billionaire James Henry Clark, resuscitated the company with $10 million of his own money in November after buying the business at auction in August.

Here’s a rundown of some of the high-profile cannabis collapses of 2024 and how they went bust.

MedMen Enterprises

MedMen was by far the highest-profile washout of the year. Originally a darling of the California medical marijuana boom prior to going public in 2018 (CSE: MMEN), the former unicorn formally filed for bankruptcy in Canada and a court-appointed receiver in the U.S. in April, after the company ran up nearly $600 million in debts during a multiyear expansion push that ultimately proved fatal.

Warning signs existed for years before MedMen’s collapse. Founding CEO Adam Bierman suddenly relinquished control of the struggling business in 2020, amid mass layoffs at the multistate operator and ongoing sale of assets in a desperate attempt to right the financial ship. Co-founder Andrew Modlin also resigned at the time.

Even so, four years of a revolving C-suite and new corporate strategies came to naught, and MedMen’s former national empire – which spanned seven states and more than two dozen retail dispensaries – has been resigned to the auction block.

High Times

High Times’ foray into the actual marijuana plant-touching business came to a ruinous conclusion this year when its assets went up for auction after it couldn’t repay a $29 million loan.

The original stoner magazine, which dates back to 1974, pivoted from cannabis media directly into selling marijuana in 2020 with the purchase of 10 California dispensaries from Harvest Health and Recreation for $80 million in a combination cash-and-stock deal.

The parent company, Hightimes Holding Corp., never truly found its footing in the tough California market and endured critical press for years as it struggled. Hightimes Holding Corp. tried to go public in 2023 via a complex intellectual property deal with Lucy Scientific (Nasdaq: LSDI), but that fell apart after a lawsuit from U.S. securities regulators alleged fraud and illegal stock promotion by CEO Adam Levin, which resulted in a settlement of more than $500,000.

High Times was ultimately forced to begin selling off dispensaries and assets this year to settle a $29 million debt to ExWorks, under the management of a court-appointed receiver.

StateHouse Holdings

Originally known as Harborside – a major part of cannabis activism in Northern California during the height of dispensary raids in the Bush and Obama years – StateHouse earlier this year was relegated to bankruptcy in Canada and a court-appointed receiver in the U.S., driven by a lawsuit over $116 million in debt owed to one of its creditors.

Harborside was rebranded as StateHouse in 2022, three years after it was taken public in 2019 by brothers Steve and Andrew DeAngelo, who said later they were forced out by what they described as a hostile takeover. After the DeAngelos were removed, new company leadership went on an acquisition spree, purchasing three companies in the span of a year and rebranding in a bid to become a more powerful overall California brand.

But the move backfired, and it proved too much too quick. StateHouse found itself unable to repay loans from creditor Pelorus Fund, and Pelorus filed suit in September to force StateHouse’s hand.

StateHouse has since been put up for sale, and the receiver in charge is taking bids for assets until Jan. 15, 2025.

Slang Worldwide

At its height, Toronto-based Slang Worldwide distributed cannabis goods to 2,600 dispensaries in 15 states. But in November, the company declared bankruptcy in Canada and entered a receivership in the U.S., after seven years in the marijuana trade, and reported pared-down operations in only Colorado and Vermont.

Slang drew far less media attention than MedMen and High Times, and its quiet path to insolvency arguably more reflects the broader troubles of the U.S. and Canadian cannabis industries in general. After ambitious expansion for several years, Slang was forced to pull out of several key markets, including California, Oklahoma and Oregon, in 2023 as conditions worsened for it and other operators.

More trouble appeared on the horizon as recently as fall 2023, when Slang essentially put itself up for sale when it retained PGP Capital Advisors to evaluate its options.

The bottom line was the company didn’t have $17 million with which to repay creditors when at least one loan comes due in 2025. Slang formally entered bankruptcy in Canada on Nov. 26, according to receiver B. Riley Farber’s website, and a meeting of creditors was scheduled for Monday this week.

In a trustee report, Farber wrote that Slang had just $107,325 in total assets, including $52,529 in cash, against $27.2 million in debts to various creditors.

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