Welcome to this week’s issue of Senior Cannabis Digest. Inside you’ll find challenges cannabis investors need to be aware of, a significant change in policy for Major League Baseball, words of wisdom from David Crosby—yes, that David Crosby—and more. Enjoy.
Investing in Cannabis
Those looking for investment opportunities in the cannabis sector may want to spend some time with a recent assessment of the legal challenges presented by the conflict between state and federal laws and how that conflict can affect investment strategies.
Sean Williams, in an article for Motley Fool, points out that over the next decade few industries are expected to grow as quickly as the cannabis industry and that Wall Street is predicting between $50 billion and $200 billion in worldwide annual sales by 2030.
However, Williams points out that the fact marijuana remains a Schedule 1 drug at the federal level presents some interesting challenges when it comes to corporate taxes.
Specifically, companies that sell a Schedule I substance are subject to Section 280E of the U.S. tax code. This section of the code was originally designed to prevent individuals selling illegal drugs from writing off their “business expenses” on their federal income-tax returns.
However, since it is still in place, this provision keeps cannabis businesses in legalized states from taking any normal corporate income-tax deductions, except for costs associated with the goods they sell. Williams contends that this results in very high effective tax rates for profitable pot companies relative to “normal” businesses—something investors need to take into account when looking for profitable targets.
You can learn more by reading Sean Williams’ insightful article in the March 1, 2020 issue of The Motley Fool.
www.fool.com/investing/2020/03/01/11-words-that-should-terrify-the-us-marijuana-indu.aspx
Put Me In Coach, Cannabis Style
As spring training begins for “America’s pastime,” it’s worth noting that Major League Baseball has made a significant change to its policies concerning players and cannabis.
According to Ben Adlin, reporting for Marijuana Moment, players can now use cannabis products without the risk of being disciplined by their team or the Commissioner’s Office. However, players are prohibited from showing up to work under the influence and are barred from endorsing any cannabis products or investing in cannabis companies.
A memo from MLB Deputy Commissioner Daniel R. Halem states natural cannabinoids will no longer be considered Prohibited Substances under MLB’s Drug Programs. However, the memo also notes, “If players or Club personnel appear under the influence of marijuana or any other cannabinoid during any of the Club’s game’s practices, workouts, meetings or otherwise during the course and within the scope of their employment, they will be referred to a mandatory evaluation under the applicable cannabinoid and alcohol treatment program.”
Also, because clubs are required to comply with all DEA regulations that apply to controlled substances, team doctors are forbidden from recommending medical cannabis or providing any cannabinoid products to players, and teams may not store such products on club premises.
Adlin speculates that restriction could eventually change, at least when it comes to CBD. He points out that MLB and its players union are working with NSF International, a product-testing organization to develop an independent testing and certification process for these products. This is aimed at ensuring such products will be legally compliant and free of contaminants.
You can learn more by reading Ben Adlin’s insightful and detailed coverage in the March 3, 2020 edition of Marijuana Moment.
Quote of the Week
“If you are experiencing sudden joint pain, you’re probably holding the lit end.” David Crosby
Crosby, like many other senior celebrities, has entered the cannabis business and maintains an entertaining presence on Twitter. He recently judged a joint rolling competition on his Twitter account. You can follow him at @David Crosby.
CBD Spotlight
The Food and Drug Administration (FDA) has finally sent its long-awaited report to Congress on how it intends to regulate CBD. According to the report, some things will stay the same and some will be significantly different.
Nushin Rashidian, writing for Cannabis Wire, reports that when it comes to CBD as an ingredient in food, the agency remains cautious. The report states, “Based on the lack of scientific information supporting the safety of CBD in food, the FDA is also indicating today that it cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food.” However, when it comes to supplements, Rashidian holds that the report may signal a change in direction.
The FDA report states: “Given the significant public interest in the potential for CBD dietary supplements, as well as the extent to which many such products are available on the market, FDA has been taking a highly proactive approach to analyzing relevant safety questions. Rather than waiting for data to be submitted, we have been actively working to identify and review all available data to understand the risk profile of CBD and the potential for CBD to be safely included in dietary supplements, under certain conditions of use.”
According to the report, the agency is also creating a process so companies can securely share “proprietary information regarding specific products.” Rashidian holds the opinion this can be helpful moving forward since “much of the data FDA currently has pertains to CBD itself, not supplements containing CBD.”
To learn more we suggest you read Nushin Rashidian’s excellent reporting in the March 6, 2020 edition of Cannabis Wire. Rashidian is also a co-founder of the publication.
cannabiswire.com/2020/03/06/whats-in-the-us-food-and-drug-administrations-cbd-report-to-congress/
CBD New and Notes
When it comes to assessing the effectiveness of CBD for treating various maladies, it appears it’s important to take into account where it was made and for what purpose.
For example, Brendan Bures, writing for Benzinga, tells of research that found children and teenagers using pharmaceutical-grade CBD to control seizures experienced higher levels of control than those using what the report characterized as “artisanal CBD goods.”
Bures also reports that the research found that artisanal CBD—often marketed for easing stress and aches and pains—can mistakenly contain THC, the psychoactive cannabinoid in marijuana, even when labels declare the product “THC-free.” According to researchers, pharmaceutical-grade CBD does not have any THC.
More information can be found in Brendan Bures’s detailed article in the March 5, 2020 edition of Benzinga.
Senior Cannabis Digest is compiled and edited by Joe Kohut and John Kohut. You can reach them at joe.kohut@gmail.com or at 347-528-8753.
