A Brief Introduction: The Endocannabinoid System

The Endocannabinoid System (“ECS”) is an essential regulator of bodily function, responsible for maintaining homeostasis among all organ systems. There are few physiological processes that are not affected by it to some degree – so it is quite surprising to realize that the ECS was virtually unknown up until the turn of the century[1]. Despite […]

The 2020 Election: Implications for Cannabis Legalization

The upcoming US election on November 3rd could have a far-reaching impact on the speed and direction at which federal cannabis legalization occurs. The two key outcomes driving which path the industry moves are (i) whether Donald Trump or Joe Biden wins the presidential election and (ii) whether the Democrats win or the Republicans retain control of the Senate. We’ve laid out expectations for how each of four scenarios are expected to impact the pace of cannabis legalization, in ascending order of favorability. For simplicity and based on current polling data, we assume the Democrats retain control of the House of Representatives in all four scenarios.

The Rise of Psychedelic Therapies in Treating the Mental Health Crisis

The social, economic and political fallout from COVID-19 has the potential to exacerbate the global mental health crisis, which could increase cases of suicide and depression over the coming quarters. Historically, mental health practitioners have prescribed antidepressants to help afflicted patients, but the long-term efficacy of these drugs is questionable and varies widely based on the severity of the patients’ depression[2]. However, a resurgence in the field of psychedelic research for mental health has shown promising early signs for treating a wide variety of mental health disorders and this leads to many questions: What exactly are psychedelic drugs? Where is the research today, and what are the dangers associated with these drugs? We explore these topics and more in the blog below.

Coronavirus & Cannabis – Chaos Breeds Opportunity

Our lives have dramatically changed over the past few weeks as we come to terms with the reality of the situation in which COVID-19 has placed us. For most Americans, the economy has come to a complete standstill as social distancing and increased ‘stay-at-home’ measures have become the new normal. Only certain ‘essential’ businesses remain open across the country as the nation works together to flatten the curve of this pandemic. In this blog post we will explore the impact of COVID-19 on the cannabis industry, how private equity has performed historically in distressed periods and why cannabis investors should look at the current state of the economy opportunistically.

COVID-19 & Cannabis

Today we find ourselves in a nerve-racking environment as COVID-19 spreads across the globe. The pandemic has sent the global economy into a recessionary-like environment as investors remain uncertain as to how things will play out. I’m sure all of you have read quite a lot about the virus; however, we wanted to share our thoughts on the matter, what we expect to see in the private cannabis markets in the near future and why we believe recent events could uncover opportunities for savvy investors.

The Iron Law of Prohibition

The “Iron Law of Prohibition” states that as the enforcement of prohibited drugs increases, the potency of those drugs increases as well. Basic economic principles support this theory:

1.      Where there is demand, there will be supply. Outlawing a drug has never curtailed the demand for said drug. Unfortunately, forcing the product onto the illicit market ensures the suppliers will generally be gangs, organized crime syndicates, cartels, terrorist groups and others who utilize their profits for nefarious activities.

2.      The greatest cost for drug smugglers is avoidance of detection. As such, black market drug manufacturers are incentivized to produce drugs in more concentrated and powerful forms.

Be Radically Open-minded and Radically Transparent

Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change. Learning is the product of a continuous real-time feedback loop in which we make decisions, see their outcomes, and improve our understanding of reality as a result.

Be Fearful When Others Are Greedy

Warren Buffet once said that the wise investor should be, “Fearful when others are greedy and greedy when others are fearful.” We’ve all heard the saying, but how many of us abide by it?

The Racist Roots of Cannabis Prohibition and the Argument for Social Justice Reform

The rising tide of cannabis reform has led to an explosion of industry. Legal cannabis sales have grown from c. $3.4bn in 2014 to c. 10.9bn in 2018[1], creating tremendous wealth for entrepreneurs and investors. Legal cannabis now accounts for about 120-150 thousand jobs[2], and that only considers plant-touching businesses. While we in the industry tend to wear optimist hats and focus on the positive changes, not enough discussion has focused on an area of legislative reform that continues to lag woefully behind: social justice.

Cannabis Reform: Momentum & Roadblocks

Cannabis Reform Today              

Cannabis legislative reform continues to show great traction. Within the last year:

  • Oklahoma legalized medical cannabis (Jun-2018);

  • Epidolex became the first cannabis-derived medicine to be approved by the FDA and subsequently rescheduled by the DEA (Sep-2018);

  • Canada became the first G7 nation to legalize adult-use cannabis federally (Oct-2018);

  • Michigan legalized adult-use cannabis, and Utah & Missouri legalized medical cannabis (Nov-2018);