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Cannabis Briefs for March 7, 2023

March 7, 2023

•Missouri’s recreational cannabis market launched in February and pulled in impressive opening numbers. In its first month of operations, consumers purchased $71.7 million of recreational cannabis and an additional $31.2 million of medical marijuana. The strong start was enabled by Missouri’s high number of existing medical dispensaries, as the state had placed no cap on the number of licenses it could approve. One retail owner told local media his foot traffic increased from around 150 people a day to 550 once he was allowed to serve the general public.

•Cannabis sales sagged in Illinois last month, continuing a February tradition dating back to the market’s launch in 2020. Sales were down $7.5 million from January, landing at $120.5 million for the month, split between $89.7 million from state residents and $30.8 million from visitors. The total number of cannabis items sold in February dipped below 3 million for the first time since February 2022. The year’s second month has consistently been the worst performing, with sales dipping $4 million to $8 million each year before rebounding in March.

•Cannabis distributor Humble & Fume announced that it has received an additional $2 million in investment from Green Acre Capital. The money goes toward the joint venture between the companies, called HC Solutions Holdings, which was established with an $8 million investment from Green Acre in November 2021. Green Acre in turn funded its investment by entering into an option agreement with alcohol distributor Johnson Brothers, effectively giving Johnson Brothers a stake in the cannabis distribution business. The latest investment brings Green Acre’s stake in the JV equal to Humble’s at 50% each. “We are proud to partner with Johnson Brothers, who are recognized for their operational proficiency in the distribution of alcoholic beverages throughout the United States,” said Humble CEO Jakob Ripshtein.

•The Las Vegas, Nevada City Council approved a set of regulations for cannabis consumption lounges. The rules set the stage for venues to begin opening in the near future since 20 applicants have already received provisional licenses. Specifics of the regulations include a 1,000-foot distance between locations, which industry stakeholders decried as onerous; however, the rule can be bypassed by applying for a waiver. Lounges also must maintain 1,500 feet of distance from gambling establishments and cannot operate in Las Vegas’ casino, resort, or medical districts. The spaces will be able to set up outdoor areas, as smoking is allowed outside.

•New Jersey lawmakers approved a bill that would allow cannabis businesses to deduct some expenses on state tax returns. If signed by the governor, the law would function as a partial workaround to one of the most pernicious financial problems in the cannabis industry, the dreaded IRS code 280E, which prohibits the industry from claiming standard expense deductions on federal tax filings. While the legislation would not be able to provide relief for federal 280E rules, it would at least not enforce the same standard on state-level filings.

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