KEY Newsletter – Holidays 2025
As we close out the year, our team at KEY Investment Partners would like to extend our sincere gratitude for your continued trust, partnership, and interest in our work. This year has been one of meaningful progress across the cannabis and wellness ecosystem, marked by renewed regulatory momentum, operational improvements across our portfolio, and thoughtful capital deployment in a still-underserved market.
Federal Cannabis Policy Enters a New Era
December 18th, 2025, President Trump has signed an executive order directing the federal government to reschedule cannabis under the Controlled Substances Act, marking a significant shift in longstanding federal drug policy. The order reflects growing recognition that cannabis has legitimate medical uses supported by scientific evidence and widespread patient adoption across the United States. Federal health agencies have found credible support for the use of marijuana in treating chronic pain, nausea and vomiting, and appetite loss related to medical conditions, particularly among seniors and patients with serious illnesses. Despite these findings, cannabis has remained classified as a Schedule I substance, a designation reserved for drugs with no accepted medical use, which has constrained research and limited clinical guidance for physicians and patients.
The executive order builds on a 2023 recommendation from the Department of Health and Human Services to move marijuana to Schedule III, acknowledging its accepted medical use and lower abuse potential relative to Schedule I substances. That recommendation was informed by the existence of regulated medical marijuana programs in most states, tens of thousands of licensed healthcare providers authorized to recommend cannabis, and millions of registered patients nationwide. The Food and Drug Administration and the National Institute on Drug Abuse concurred with this assessment, and the Department of Justice subsequently proposed a rule to formalize the rescheduling. However, delays in finalizing the process have continued to impede research and regulatory clarity.
The Administration emphasizes that this lack of federal alignment has real consequences for patients, particularly those managing chronic pain or seeking alternatives to opioids. Evidence suggests that veterans and seniors have used medical marijuana to reduce opioid use and improve quality of life, yet many patients do not discuss cannabis use with their healthcare providers due to limited guidance and regulatory uncertainty. The order also addresses the growing use of cannabidiol (CBD) and hemp-derived cannabinoid products, which are widely consumed but inconsistently regulated. Concerns around product labeling, THC content, and consumer safety underscore the need for clearer federal standards.
As part of the executive order, the Administration directs the Attorney General to complete the cannabis rescheduling process as quickly as permitted by law and calls on Congress and federal agencies to modernize rules governing hemp-derived cannabinoids. The broader policy goal is to expand research, improve patient safety, establish evidence-based standards of care, and ensure federal law reflects the medical realities already present across much of the country.
KEY’s Latest Investment: MM Brands
KEY Investment Partners and Joe Bayern (CEO) won the BellRock (BR) Brands assets out of receivership on November 3rd, 2025. The core assets of BellRock Brands are Mary’s Brands and Dixie Brands. KEY is investing $5mn to acquire the assets and to provide the company with $3mn working capital.
Mary’s Medicinals is a science-driven cannabis wellness brand best known for its transdermal patches, topicals, and tinctures that deliver precise, consistent dosing. Dixie Brands (founded in 2010) is a pioneering cannabis CPG company specializing in edibles, beverages, and tinctures that combine flavor, consistency, and reliable dosing.
Previously, BellRock Brands owned operations in 4 states, and was sold through licensing agreements in 7 other states and Canada. Going forward, MM Brands will look to transition into a fully asset-light model with licensing discussions taking place.
Additionally, Lynn Honderd the original founder of Mary’s Brands, and Chuck Smith the original founder of Dixie Brands, who sold their companies to BR Brands, both intend to join the go-forward business as Strategic Advisors.
Recent KEY Investment: Garden Club PA
In the second half of 2025, KEY invested into Garden Club. Garden Club represents a rare opportunity to invest alongside a seasoned team with a track record of success in highly regulated cannabis markets. The founders previously built and exited PurePenn in a sale to Trulieve for over $100 million, demonstrating both deep operational expertise and the ability to scale and monetize a cannabis platform. Today, they are leveraging that experience to develop a fully vertically integrated operation in Pennsylvania, where they have already secured a cultivation and processing license for a brand-new 80,000 sq. ft. facility and are actively evaluating retail dispensary locations statewide.
With Pennsylvania widely expected to transition to adult-use cannabis, the timing is especially compelling for early investors positioning ahead of market expansion. Our investment terms further strengthen the opportunity, featuring a 1.25x liquidation preference and a company with zero debt—providing both meaningful upside and strong downside protection.
KEY Fund II Investment Update: Wyld x Botanica
Botanica has established itself as a market-leading platform built around two highly successful niche brands: Mr. Moxey’s Mints and JourneyMan Beverage. Together, these products serve both low-dose and high-dose consumers in categories that continue to gain momentum as cannabis attracts new users seeking familiar, discreet, and approachable form factors. Mr. Moxey’s has become one of the most recognizable mint brands in cannabis, consistently ranking among the top three in its category across multiple states. With six distinct “experiences” and a low-dose formulation, the mints appeal to first-time consumers and seasoned users alike – positioning the brand at the forefront of an expanding segment.
Much of Botanica’s success is driven by the strength and sophistication of its management team, whose operational discipline and brand-building capabilities have enabled the company to scale into a multi-state leader. Their demonstrated ability to attract a top-tier licensing partner under an advantageous structure further validates the team’s executional talent and Botanica’s long-term growth potential.
In the second half of 2025, Wyld began producing and selling Botanica products. The partnership is starting in Colorado and plans to expand the partnership in 2026 further into Wyld’s footprint!
KEY is thrilled that Wyld, one of the nation’s leading cannabis gummy brand, chose to partner with Botanica – a clear validation of the strength of Botanica’s platform and the caliber of its execution. Wyld is widely regarded as the gold standard in edibles, known for its superior product consistency, brand loyalty, and best-in-class market penetration across the U.S. Their decision to align with Botanica underscores the industry’s confidence in Botanica’s operational excellence and multi-state scalability, and we view this partnership as a powerful catalyst for future growth.
If you’re looking for some additional reading to do over the holiday, we have the perfect piece for you. Our newest white paper was recently released and ready for download!
KEY’s Latest White Paper
“Focus on the Controllables”
The U.S. cannabis industry is a study in contrasts. Mature Western markets have navigated a classic down-cycle marked by price compression, inventory imbalances, and uneven enforcement, while newer adult-use states continue to deliver strong first-year ramps and rising per-store productivity. This divergence has accelerated a necessary reset in operating models. The operators gaining share are tightening pricing, simplifying portfolios, and prioritizing cash conversion and return on invested capital over vanity growth metrics. Meanwhile, federal momentum is reshaping the broader THC landscape. The emerging hemp-derived THC ban removes a structurally advantaged competitor and signals that Washington is moving toward a unified, “one-plant” regulatory framework as rescheduling advances. KEY’s latest white paper highlights where fundamentals, governance, and disciplined capital allocation are creating real value across the next wave of cannabis investing.
KEY Investment Partners provides an overview of current conditions in the industry as well as insights on potential regulatory changes that would affect the industry, “Cannabis Investing: Focus on the Controllables.”
DISCLAIMERS: This site is not intended to provide any investment, financial, legal, regulatory, accounting, tax or similar advice, and nothing on this site should be construed as a recommendation by Key Investment Partners LLC, its affiliates, or any third party, to acquire or dispose of any investment or security, or to engage in any investment strategy or transaction. An investment in any strategy involves a high degree of risk and there is always the possibility of loss, including the loss of principal. Nothing in this site may be considered as an offer or solicitation to purchase or sell securities or other services.
