Alabama officials publish draft rules for doctors to recommend medicinal cannabis to patients

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22

In the third quarter of 2021, major US cannabis multi-state operators (MSO) and several leading Canadian license producers (LP) had healthy revenues and continued expansion.

The Cannabis Business Times and Cannabis Dispensary reviewed the quarterly profit statements and spoke to industry executives to analyze how things went in the penultimate quarter of 2021 as they prepared for another landmark year in 2022.

Growth rates set in

While overall cannabis sales are still growing at a healthy pace, signs of a maturing market are emerging, with many U.S. companies seeing a decline in sales growth compared to previous quarters. Illinois-based Green Thumb Industries (GTI) grossed $ 233.7 million for the quarter, up 5.3% from the second quarter – slightly less than its 14.1% increase from first to second Quarter. Another major American MSO headquartered in Massachusetts, Curaleaf, grew sequentially 10 times in the third quarter compared to the second quarter. Cresco Labs, a leading American cannabis wholesaler, posted growth of 2.6% quarter-over-quarter from nearly 18% in the second quarter.

In Canada’s smaller and more mature market, the problem appeared to be even worse. Ontario giant Canopy Growth reported a 3.5% decrease in net sales compared to the first quarter of 2022 (the Canadian equivalent of the US in the second quarter of 2021). Aurora, another major Canadian cannabis player, posted an 11% year-over-year revenue decline for the quarter.

It is true that some of these slowdowns are simply the result of seasonal shifts. It’s also possible that last year’s sales were bloated by widespread lockdowns due to the COVID-19 pandemic, a trend that has slowed since then.

“We saw some growth in the second quarter due to seasonality, economic spending and the lifting of COVID restrictions,” Charlie Bachtell, CEO and co-founder of Cresco Labs, said via email. “But if you look at the longer trend line, you see more than 40% year-over-year growth across the industry.”

Long-term industry growth in the US remains strong – earlier this year, an updated forecast from New Frontier Data forecast that the market would have total sales of 43 billion by 2025. Smaller businesses in particular still find plenty of room for growth.

“For the past two quarters, we’ve seen year-over-year growth of 220% in the second quarter and 117% growth in the third quarter,” said Michael Perlman, EVP of Investor Relations and Treasury at Jushi, who spoke to Cannabis Business Times and Cannabis Dispensary in a telephone interview. Jushi, a Florida-based retail-focused cannabis company that has grown rapidly in recent years, had sales of $ 54 million in the third quarter of 2021 – an increase of 1500% over the same period two years ago.

Legislation on the horizon

Large states like Virginia and New York continue to legislate expanding the country’s medical sector and adult use. However, many believe that federal reform is necessary in order for the cannabis market to reach its potential.

Since the Democrats took control of the House, Senate and White House in 2020, many in the industry have been optimistic about law reform. So far, that optimism has gone unrewarded, but there are still two major ways in which effective cannabis laws can be passed.

The first is the States Reform Act (SRA), an unexpected proposal in the House of Representatives from an even more unexpected source: Nancy Mace, Republican from South Carolina, a freshman congressman who represents her state’s east coast. The SRA, which would allow states to set up their own systems to regulate cannabis and levy a federal tax of 3%, has received mixed feedback from the industry.

The other is the National Defense Authorization Act (NDAA), which sets the annual budget for the US military. The House of Representatives passed a version of the NDAA with cannabis banking protection similar to the Secure and Fair Enforcement (SAFE) Banking Act. The bill has yet to be approved by the Senate – which is unlikely until December – where the provisions could be removed. The banking reform alone would be an important step for the industry if passed and signed.

“More affordable access to capital, the ability to use credit cards, normalized banking … these are essential steps for an equitable industry,” added Bachtell.

Perlman agreed, saying he believes banking protection will benefit the industry as a whole by giving businesses of all sizes access to traditional services like corporate loans.

“SAFE Banking will not only have a positive impact on the larger companies in the industry,” he said. “We [larger cannabis corporations] Have access to capital – it is the smaller people, the social justice operators, who will not have access to capital. … [Without banking access] They will ultimately sell these licenses and give them to the more financially strong people. “

Yet advocates of change in the industry know that legislative potential doesn’t mean much until it’s recognized. Including the recent passage of the NDAA, the House of Representatives has passed the SAFE Banking Act five times since 2019.

Looking to 2022

Regardless of the state movement, 2022 will be another big year for cannabis. Large states like Connecticut and New Jersey are expected to start adult sales. New York should also start sales in 2022, but recently announced a delay in licensing until 2023. These three states alone represent a potential cannabis market of over $ 5 billion.

Several other prominent states could pass legalization next year, including Maryland, Pennsylvania, Florida, and Ohio. With the intermediate deadlines in November, an economy still regaining a foothold after the pandemic, and reform laws now coming from both sides of the aisle, the next few quarters could be a pivotal chapter in the history of North American cannabis.