Cannabis News Week: SAFE Banking Passes House (Again); New York Cracks Down

The SAFE Banking Act passed the House of Representatives for the seventh time this week. It now heads to the Senate where it will likely be defeated.

The U.S. House of Representatives passed the Secure and Fair Enforcement Banking Act this week as a rider on the 2023 National Defense Authorization Act.

Before you light your joints in celebration, know that this would be the seventh time the legislation meant to ease banking access for businesses in the cannabis industry has passed in the House.

“The need to establish a more rational approach to federal cannabis policy has never been greater,” read a statement from Congressional Cannabis Caucus, according to Financial Regulation News

Despite the victory, there is little chance that the SAFE Banking Act survives as part of the $840 billion defense bill that is passed annually without much debate. 

“Wrapping cannabis-related reforms into a large omnibus bill… will likely be difficult. Because it would touch every committee in the Senate, looking to all-encompassing cannabis legislation will likely be as or more difficult,” Trent Woloveck, chief commercial director for high-end cannabis retailer Jushi Holdings said. 

New York Cease-and-Desist 

New Yorkers tend to be short on patience. 

New York may have legalized cannabis, months ago, but the  infrastructure is still being built for the recreational market. 

The state hasn’t given a firm date for when legal cannabis sales can begin, but there are expectations that the market will be open by the end of the year. 

In the meantime, dozens of New Yorkers went forward with setting up their own cannabis businesses anyway. 

Last week, the state’s Office of Cannabis Management released the unredacted letters it sent to 66 storefronts across the state after months of pressure from Gothamist

Entrepreneurs have resorted to using two business models that the OCM says engage in “unlicensed cannabis sales.”

Business owners have resorted to “gifting” cannabis to customers who buy something else from the shop. 

The other method is a membership model where clients pay for a membership to a club that provides the cannabis for free. 

“You are hereby directed to cease any, and all, illegal activity immediately,” the unredacted cease-and-desist letters said. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk.”

The letter says that unlicensed sales undermine the legal market that the state is building and that the landlords hosting illegal retail locations could be jeopardizing their ability to house licensed retail dispensaries. 

Tilray Closes Hexo Investment 

Tilray  (TLRY) – Get Tilray Brands Inc. Report closed its previously announced strategic partnership with Hexo Corp.  (HEXO) – Get HEXO Corp. Report.

Tilray made a $155 million investment in Hexo in April in what the two companies say is a partnership between two of the players in the Canadian cannabis space. 

“This is a unique opportunity to realize our vision of building Canada’s leading cannabis alliance,” said Tilray CEO Irwin Simon. “The partnership will create substantial synergies and commercial benefits, as well as allowing us to capitalize on our respective strengths in product innovation, accelerating growth across global markets.”

Meanwhile, Hexo gets an infusion of cash that it needs as the cannabis industry navigates a recent downturn

Cannabis companies in the U.S. and Canada are turning to discounting their products to reduce inventories as the burgeoning marijuana market starts to get crowded with new players.

 A growing number of adult-use brands and products are available to retailers, leading to aging inventories, Krista Raymer of cannabis consulting firm Vetrina Group told MJBizDaily.

“Refinancing our balance sheet and funding future growth has been a top priority. Finalizing this agreement accomplishes both objectives, placing Hexo on solid financial footing and increasing shareholder value,” said Hexo CFO Julius Ivancsits said. 

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