Good morning.
Here’s something: Jeremy, our Editor-in-Chief here at Cultivated, got a shoutout in SF Gate earlier this week.
And, join us at 10 AM Eastern this morning when we’ll be joined by Michael Barenboym of Weedgets to talk about his company’s new partnership with Rohan Marley: LinkedIn» and YouTube»
Let’s get to it.
-JB, JR
Today’s newsletter is 1,025 words or about an 8.5-minute read.
💡 What’s the big deal?
VIRGINIA
🙅Virginia Governor vetoes cannabis sales bill
Driving the news: A legislature-passed bill that would legalize long awaited commercial cannabis sales has become a political football for newly-elected Gov. Abigail Spanberger.
On Tuesday, she vetoed the legislation.
What they’re saying: “I share the General Assembly’s goal of establishing a safe, legal, and well-regulated cannabis retail marketplace in the commonwealth,” Spanberger said.
“Virginians deserve a system that replaces the illicit cannabis market with one that prioritizes our children’s health and safety, public safety, product integrity, and accountability.”
Back up: Virginia first legalized cannabis in 2021 but has yet to authorize retail sales.
Possession of up to one ounce is legal though Virginians must either grow or purchase cannabis illegally or drive to neighboring Maryland.
Former Gov. Glenn Youngkin twice-vetoed legislation that would legalize cannabis. Now, that he’s out of office, the industry and advocates alike hoped Virginia would quickly open a new, multibillion-dollar cannabis market.
Spanberger, a Democrat, campaigned on legalization, so Virginia’s legislature delivered her a bill after months of negotiations. She then turned around with a proposal of her own. The legislators that worked on the original bill, as well as advocates, thought much of her proposal was a nonstarter.
Her proposal included pushing the start date back to July 1, 2027, increasing criminal penalties — severely in some cases — for illicit sales, and raising taxes from 6% to 8%. Lawmakers worked on a compromise, delivering her a new bill which she then vetoed.
Zoom in: Local journalists say Spanberger’s veto was less about cannabis and more about politicking between her office and the legislature.
It’s a new governor exercising control rather than the death knell for legalization. And lawmakers in her own party are unhappy.
“Five years ago, Virginia legalized cannabis in recognition that the War on Drugs has caused disproportionate harm to Black families and communities,” Del. Paul Krizek, a Democrat who carried the legislation said.
“The question now is whether Virginia will continue allowing an unregulated illegal market to thrive, or finally establish a safe, transparent system that protects consumers, keeps products away from children, and keeps our commitment to ending racially discriminatory marijuana policing in Virginia.”
Why it matters: A new cannabis bill likely won’t get negotiated until next year’s legislative session. That means the start date for sales would likely be 2028, or even beyond, over seven years after the state first legalized cannabis.
Like we’ve written before, cannabis isn’t generated via immaculate conception. Virginia’s status quo just pushes criminality a little further up the supply chain. Tax dollars are flowing out of state, jobs aren’t being created, and Virginians likely aren’t consuming safe, tested supply.
And on the industry front, it’s hoping for a big market, with millions of consumers to finally open, as Pennsylvania continues to dither. But we’ll have to keep waiting.
-JB
📣 Quotable
“An infusion of products coming from outside of New York undermines our industry and we have an anti-inversion bill to make sure products from places like Oklahoma, Ohio, and Michigan are not showing up here,” said New York Assemblymember Landon Dais at an event in Albany alongside cannabis trade industry organizations and the Office of Cannabis Management.
“This legislation will help ensure that these products, which often fail testing in those states, are not making their way into our market and putting New Yorkers in harm's way.”
⏩ Quick hits
California proposes emergency rules to help cannabis operators access 280E relief
California's Department of Cannabis Control proposed emergency rules letting operators split their adult-use and medical licenses into two separate entities at the same premises — a workaround to help businesses access 280E tax deductions under federal rescheduling, which applies only to medical cannabis.
Minnesota legalizes party-size hemp beverages, creates new cannabis macrobusiness license
Minnesota's cannabis omnibus bill, headed to Gov. Tim Walz's desk, authorizes large-format hemp beverages containing 17 or more servings starting Aug. 1, and legalizes ratio THC/CBD products for recreational use starting Jan. 1. The bill also creates a macrobusiness license — replacing the medical cannabis combination license held by Green Thumb Industries and Vireo Health — allowing holders to cultivate up to 38,000 square feet of flowering plants and operate up to eight stores. $GTBIF ( ▲ 2.96% ) $VREO.CSE ( ▲ 3.77% )
Bipartisan transportation bill would require federal cannabis impairment standards
A new bipartisan House transportation bill would require the Transportation Department to study cannabis impairment and develop evidence-based driving standards — a long-sought policy goal that has no federal benchmark today.
💸 Earnings roundup
Auxly posted Q1 net revenue of $39.8 million, up 22% year-over-year, and $12.3 million in adjusted EBITDA, up 65%, while announcing plans to seek shareholder approval for a share consolidation of up to 20:1 to broaden institutional eligibility. CEO Hugo Alves was direct: "We are buyers of our shares, not issuers." $XLY ( ▲ 0.79% )
🤝 Deals, launches, partnerships
FundCanna secured a $60 million senior credit facility from a global institutional investor, bringing its total capital base to roughly $75 million.
Delta Beverages contributed $50,000 to the Beverage Alcohol Merchants Coalition, a federal lobbying effort that has raised more than $1 million to push for hemp beverage regulation over prohibition
🧳 In case you missed it
Jay sat down with Gail Rand, founder of Grand Consulting and one of the cannabis industry's sharpest financial minds, for a deep dive into her Gross Margin Index: a five-year tracking project benchmarking gross margins across the top publicly traded cannabis companies.
📰 What we’re reading