A new Cole Memo?

Plus, Sundial takes a page out of Canopy’s playbook

Good morning.

Whew, what a week! 

After news that cannabis would be rescheduled hit, the Cultivated team has been all hands on deck, reporting, writing, and live streaming. 

Jeremy also went on RTVI to explain what rescheduling means in the US for Russian audiences.

Better to be busy than bored, we like to say. 

Take a deep breath this weekend. 

And if you’ll be at the Cannabis Parade in New York City on Saturday, Jeremy willl see you there. If you’re at NECANN Maryland today and tomorrow, stop by booth 420 and say hi to Jay!

-JB & JR

This newsletter is 865 words or about a four minute read. 

💡What’s the big deal?

A new Cole Memo?

Driving the news: The federal government’s hands-off approach to the state legalized medical and cannabis industries was long dictated by a memo that James Cole, a former top Department of Justice official, issued in 2013. 

The memo clarified that the DOJ couldn’t marshal its resources to crack down on state-legal recreational or medical cannabis. But that memo was rescinded under President Donald Trump’s first attorney general, Jeff Sessions, in early 2018. 

Even without the memo, the federal government, under both Republican and Democratic administrations, has let states continue to dictate how they want to regulate cannabis without much interference.

What happened: Without clarity from the DOJ, some industry insiders fear that every dispensary could, in theory, be forced to become a pharmacy that can only sell prescription products under the proposed Schedule III change.

While that’s unlikely, it’s imperative that the federal government provides guidance as to how it’s going to treat state-legal cannabis, both for businesses and consumers alike. 

Experts, including Cole himself, told Marijuana Moment that “almost anything is possible,” in terms of a new version of the Cole Memo — call it the Garland Memo for our purposes, after Attorney General Merrick Garland — that could even open up interstate commerce. (Cannabis isn’t allowed to cross state lines given federal illegality).

At the very least, the memo could clarify how the government will treat state legal cannabis and the companies that sell to those markets. 

What they’re saying: “Knowing a lot of people at the Justice Department—these are very smart and very able administrators, and people who run the department really know what they’re doing. I think it’s probably likely they will consider the issue and determine whether or not any further guidance is necessary once the rule has taken effect,” Cole told Marijuana Moment. 

And: Oregon Democrat Rep. Earl Blumenauer agrees. He’s been one of Congress’s chief cannabis champions. 

During a Thursday press conference with California Democrat Rep. Barbara Lee, he told reporters he’s “confident” that the DOJ will “reissue and expand,” the Cole Memo. 

The final word: Though Schedule III is a far cry from full legalization, it could be the first step to normalizing how cannabis is treated in the eyes of the federal government.


🗨️ Quote of the day

“At the current run rate, it’s a $50 million a year impact for us, when 280E is eliminated,” Ayr Wellness CEO David Goubert said on our Wednesday Cultivated Live livestream. “So it’s a huge game changer for the company.”

The 280E tax prevents cannabis companies from deducting regular business expenses, hurting their bottom-line. But the tax only applies to companies or individuals selling Schedule I or II drugs — meaning, once cannabis is rescheduled, the tax goes away. 

Quick hits

Anti-legalization advocacy group Smart Approaches to Marijuana is fundraising to mount a long-shot legal challenge to rescheduling cannabis. 

White House Press Secretary Karine Jean-Pierre said during a Wednesday press briefing that the rescheduling of cannabis fulfills a long-held campaign promise that Biden made in 2020. Biden’s campaign pushed cannabis reform in 2020 as a way to bring out the youth vote — he likely hopes his record can bring them back to the polls in November.

The Department of Justice confirmed that they transmitted the proposed rescheduling rule to the White House Office of Management and Budget, which has 90 days to review the proposal.

🚀 Deals, launches, partnerships

Canadian cannabis firm Sundial will acquire US cannabis assets through a joint venture with Sunstream Bancorp. The acquired companies, in which Sundial will have an equity position, will be called Sunstream USA. Sundial is listed on the Nasdaq. It’s a similar structure that competitor Canopy Growth used to get exposure to the US with Canopy USA. 

Canadian cannabis company Tilray is launching a new line of beverages called XMG Zero, with THC-infused flavors like cream soda and black cherry

📰 What we’re reading

The false promise of rescheduling | Social Science Research Network

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