Could a hemp ban hold up re-opening the government?

Good morning.

The Fed cut rates by 25 basis points, or 0.25%, on Wednesday. For the cannabis industry — which is mostly cut out of the traditional nuts-and-bolts of finance — the cuts don’t change much, as most firms still face double digit borrowing costs. Still, rates coming down is good news for many.

Let’s get to it.

-JB, JR, ZH, NM

This newsletter is exactly 1,300 words or about a 7-minute read.

💡What’s the big deal?

HEMP
Could a potential hemp ban keep the federal government shut?

Photo by Tim Mossholder on Unsplash

Driving the news: A federal hemp ban is still at play in the legislature.

But Kentucky Sen. Rand Paul said he’s willing to block a spending bill that could reopen the government as long as it includes a hemp ban.

As more states attempt to reign in or even outright ban intoxicating hemp, federal lawmakers have also considered tightening the rules that have allowed hemp products proliferate in gas stations and liquor stores across the country.

Paul, who represents Kentucky and the state’s vibrant hemp industry, has consistently opposed limiting access to the plant and its products.

What they’re saying: "I'm amenable to trying to get the bills through to get government back open. But I've also told them and I think they believe me that we can do this the easy way or the hard way,” Paul said during a Zoom call with hemp industry leaders, including Nothing But Hemp, who posted the call online.

“The easy way is I give my consent and the hard way is I don't.”

Zoom out: Most forms of intoxicating hemp were legalized by the 2018 Farm Bill, which rescheduled cannabis that contained less than 0.3% THC by dry weight. This allowed for the production and sale of most hemp flower, which largely contains THCA, which can then be converted to the bioavailable form, delta-9 THC. It also allowed for edibles and beverages due to the relatively low raw weight of THC.

New hemp rules, which Paul says are part of a proposed spending bill to reopen the government, would ban any hemp products with more than 0.2 mg of THC, including THCA. This would effectively eliminate most of the intoxicating hemp industry.

Research instead of restrict: Paul is alternatively proposing that the legislature commission the USDA to conduct an 18-month study on hemp and how states have regulated it, before proposing any new federal restrictions.

Earlier this year, before the government shut down on October 1, proposals to close the hemp loophole were part of the Senate and House's appropriations bills for Agriculture, Rural Development, Food and Drug Administration and Relations Agencies.

The House never passed its version of the bill before the shutdown, while the Senate removed the hemp ban at Paul's urging, in favor of waiting another year to consider the new regulations so that the legislature could better study the issue.

Paul has said that he intends to withhold consent on any spending bill that includes the new hemp rules. He also conceded that this would not entirely block the efforts to close the hemp loophole, but it would make it more complicated for a legislature that is eager to re-open the government.

Paul’s final word: "Since the House never passed their bill, technically they shouldn't be allowed to put hemp language in at all. But if you know anything about Washington, breaking the rules or making up the rules as we go is what often happens."

-ZH

⏩ Quotable

“PA isn’t just missing out on revenue to its neighboring states, it’s missing a chance to make legal, regulated, age-restricted access the standard,” heavyweight champion and cannabis industry executive Mike Tyson said, following a visit to Pennsylvania’s legislature to advocate for cannabis legalization.

“Saying “no” leaves the door open for cartels and illicit players to fill the gap with zero safety or age protections. Let’s prioritize health and public safety and give Pennsylvanians the freedom to make their own choices.”

While Pennsylvania Gov. Josh Shapiro previously said he wants lawmakers to deliver a legalization bill to his desk before the end of the year, the clock’s ticking, despite various bills being introduced. It’ll likely get pushed to next year.

⏩ Quick hits

Stiizy pulls products from Catalyst stores as spat continues 💢

Cannabis brand Stiizy is pulling products from Catalyst store shelves as a spat between the two executive teams continues, WeedWeek reports. Stiizy and Catalyst were formerly partners, now turned bitter rivals.

Recent survey shows most Canadians support cannabis 📈

A recent survey by Abacus Data found that 32% of participants had consumed cannabis in the past week, and 59% believe that it is an important part of the Canadian economy, and that same quantity of people said that Prime Minister Mark Carney and the government should support and help grow the industry. The positive sentiment is almost equally high among conservative and liberal voters.

NBA player arrested for 1.3 oz of cannabis in Texas

Dallas Mavericks guard Brandon Williams was arrested at the Dallas/Fort Worth International Airport on Saturday and charged with attempting to bring 1.3 ounces of cannabis through security. The NBA does not test players for cannabis during the season. Despite having THC beverages all over store shelves in the state, Texas still treats cannabis harshly.

Missouri report says 96% of ‘hemp’ products are just THC 🌿

Ninety-six of 96% of sampled "hemp" products in Missouri were actually either straight up cannabis or synthetic THC, according to the Missouri Hemp Hoax Report. Twenty-nine percent say they contained harmful contaminants including pesticides and heavy metals. Download the full report.

🤝 Deals, launches, partnerships

In a sign of the times, MainStreet Bank is ditching its cannabis banking strategy, which it announced in February, Washington Business Journal reports.

📺 In case you missed it

On Wednesday’s Cultivated Live, Jay was joined by White Ash Group cofounder and Managing Director Jerome Hoyte. White Ash is a leading cannabis recruiting firm and Cultivated’s partner for the Thirty Thirties.

Watch it here:

💰 Earnings round up

It’s earnings season. We’ll get a clearer picture of the financials of the biggest cannabis firms, and how they’re faring under Trump, dealing with cannibalization from the hemp-derived THC market, and more.

Verano reported a $43.8 million loss on $202.8 million in revenue for the third quarter. Revenue was down from $217 million in the same quarter last year, but up $1 million from last quarter. The company also refinanced $50 million of debt during the quarter and opened a new dispensary in Florida. The company plans to redomicile from British Columbia to Nevada. And in other Verano news, the company settled its longstanding litigation with Vireo Health for $1 million in cash and a real estate transaction totaling about $10 million — a far cry from the $860 million Vireo initially asked for.

Ayurcann reported a $3.5 million loss on $55.4 million in revenue. Despite the overall loss, the company saw a 21% year-over-year increase in gross revenue. The company also reported that it will voluntarily delist from the OTC Market Group as of Oct. 30. The company will continue to be traded on the Canadian Stock Exchange.