Celebration at a Cannabis Control Board Meeting in NY

Celebration at the Cannabis Control Board meeting today was so great to see.

"New York Needs You To Run Successful Cannabis Businesses"
- Chris Alexander

Plenty of work to do but it's safe to say the market is working out the kinks and heating up.

1. Expansion of CAURD retail licenses bringing the total to 463 licenses.
2. Grower Showcase is happening! This has been quite the 3 month rollercoaster but it's back on. Details needing to be ironed out, however this is a very exciting development.
3. Universal application process to be presented in September
4. Research and medical Cannabis Program advancements
5. Addressing and adjustments to the Cannabinoid Hemp Regulations.

Maryland Launching Legalized Cannabis Sales

Maryland joins the 21st century tomorrow and legalizing adult use cannabis for adults 21+. We celebrate each new state that legalizes medical and adult use cannabis, but especially those located on the East Coast.

Maryland represents a significant opportunity given it's shared border with Pennsylvania and Virginia. And while most think of the opportunity of cross-state business, we think of the opportunity being the pressure these border states will feel once Maryland's cannabis industry begins to grow.

A hearty "welcome to the party" Maryland. We've been waiting for you.

Crabcakes, Football ... and cannabis. That's what Maryland does starting July 1.

Pennsylvania and Virginia, you're on the clock.

Go Terps! (both Terrapins and Terpenes in this context).

Buyer’s Club 2 in Hudson, NY

Buyer's Club by On The Revel in Hudson, NY last week was so good. I wish I had more clever words but that's it. The feeling I've had so many times over the past 5 years of "I can't wait until events like this happen in New York" came full circle. The only thing I have to wait for now is the next one.

With so much negative noise right now in cannabis (especially New York) my biggest take away from this event is that we have a strong group here in New York that is going to make this market happen. I am meeting people in the New York market I admire almost every week at this point.

Very important work that Lulu Tsui and Jacobi Holland are doing here in New York for years now. Really exciting to see how their platform is developing as we enter the next phase of our market.

Let's open some doors and then blow them off.

Do You Have Your Eye on the 2023 Farm Bill? You Should.

SAFE banking is getting all of the federal reform headlines but the 2023 Farm Bill presents an equally impactful opportunity for the 50 state markets in the US.

The leading hemp organizations, including the Hemp Industries Association, National Industrial Hemp Council of America and U.S. Hemp Roundtable, created a “priority policy document” that outlines the most important items to consider for enactment in the 2023 Farm Bill. Since this document was released, 30+ state, regional and national nonprofit organizations have signed on in support. The document lists nine priority policies:

1. Regulate CBD Now
2. Hemp As a Specialty Crop
3. Promote Hemp Research at HBCUs, Tribal Colleges and Hispanic Serving Institutions
4. Bolster The USDA Hemp Program
5. Repeal The Hemp Felon Ban
6. Remove the Requirement for DEA Registration of Hemp Testing Labs
7. Permit Hemp Grain for Animal Feed
8. Addressing THC Levels for Hemp
9. Ease Regulatory Burdens on Hemp Farmers

I was pleased to see this coordinated effort and it made we wonder two questions:

1. Can we do this at the national level on the high THC cannabis side of advocacy and lobbying?
2. Do we really need 30-40+ separate organizations at various geographic levels? Or could many of these regional, state and local organizations be committees, sub-committees, chapters, etc. so we could act in coordination more often?

MJ Unpacked 2023 Week in New York

It was a great week of meeting entrepreneurs, operators, investors and advocates in the New York cannabis and East Coast cannabis community. The feeling at the events in and around MJ Unpacked was telling.

EVERYONE has their gripe (or multiple gripes). Examples include...

1. Some are frustrated by the slow moving (and sometimes strange moving) progress in New York and New Jersey.
2. Some are frustrated with more Federal failure.
3. Some are frustrated with the absence and poor quality of options to raise capital.

But NO ONE is talking about throwing in the towel.
WELCOME TO NEW YORK.

Speaking of, the highlight of the week was the Welcome to New York Event hosted by the Cannabis Collective where members of the New York cannabis community convened to celebrate the opportunity we have ahead of us. As an executive member, it was a pleasure to see the focus and efforts pay off for Jeffrey Schultz, Andrew Lowitz, Kristina Adduci, Shahbaaz Kara-Virani, Sloane B. and Jes Feuer

If you're interested in joining as a community or executive member, click the link below.

Incremental Change in Insurance Reimbursement for Medical Cannabis

We in the cannabis industry are used to small, incremental steps towards normalization. We believe it’s these small steps that eventually compound and result in lasting changes in mindset. Insurance reimbursement for medical cannabis is one area where we are seeing this incremental change.

While adult use gets the headlines, the medical use case almost always comes first and builds the pathway for adult use. Once a market graduates to adult use, medical use usually drops off as medical patients no longer bother with certifying, seeing a doctor for recommendations and other key elements to a successful medical cannabis program. Why? Because they don’t see the benefit. They can go to an adult use dispensary, get a recommendation from a budtender and buy the same medicine. So even if I am medical patient, why bother? I would argue that adhering to the medical program and working with a physician is a good reason. But fair point, that’s a little weak for the everyday medical user. When a market legalizes adult use, we’ve seen a few ways that medical patients can and should receive priority in order to receive uninterrupted, frictionless access. Such as medical patient only store hours or priority access to specific pain focused products. But what if your medical cannabis was treated like other medicines and all of a sudden you could possibly get reimbursed for that medicine?

Many states are not waiting on federal action and are passing state-level statutes that require or enable insurance carriers to reimburse patients for medical cannabis expenses. Now before everyone with a medical card and “chronic pain” gets excited, most of these state level bills come with caveats to make sure the casual adult use weed smoker is not being reimbursed for medicine. For example, here on the east coast:

1. New York lawmakers approved a bill that would require public health insurance providers in the state to include medical marijuana as a covered prescription drug and authorize private insurers to do the same (so no guarantee for private insurers).

2. A Pennsylvania appeals court ruled that the state’s medical marijuana law does not prohibit insurers from reimbursing injured workers for medical marijuana in cases where the drug is used to treat accepted work injuries.

As we’ve seen medical cannabis can be a viable option for patients with various conditions, we believe as the New York bill states, “Access to medical marijuana should not be limited to those who can pay out of pocket.”

Cannabis Banking Myths from Cannabis Banking Expert Peter Su

Cannabis will be everywhere. All industries will touch cannabis. If you work in cannabis in any capacity, you need to surround yourself with experts within specific industries. This allows you to operate and make strategic business decisions based on factual information and accurate data, as opposed to hear-say and myths.

One industry that is most frequently in the limelight as it relates to cannabis is the banking industry. And for banking we turn to Peter Su, who has solidified himself as a cannabis banking expert over years of hustle both in and out of the cannabis industry. Check out the article he penned dispelling the 5 most common myths in cannabis banking via Marijuana Moment.

Myth 1: Cannabis companies can’t get a bank account
Myth 2: Cannabis companies can only bank with credit unions
Myth 3: Cannabis businesses transact in cash only
Myth 4: Cannabis businesses can’t get a loan from a traditional bank or credit union
Myth 5: Banks are making bank off banking bud

Keeping An Eye On The Carolinas

The Receptive Capital Syndicate is one of only a few investment groups that is focused exclusively on the East Coast cannabis markets. We seek to invest in entrepreneurs with enough grit to launch and grow in these early-stage markets.

Here is what everyone is talking about:
- Massachusetts just surpassed $4B in total sales since adult-use began.
- The tri-state crown jewel of New Jersey, New York and Connecticut are all coming online right now.
- Florida, Pennsylvania and Maryland have working medical markets and are moving towards adult use (Maryland is currently in first place for this race).

But we’re also keeping our eyes on the states that no one is talking about, like North Carolina and South Carolina. North Carolina and South Carolina? Yes, you read that correctly. The Carolinas are getting closer to the right side of history.

Participating in the Regulatory Process in New York’s Cannabis Industry

Yesterday we submitted our first comments to proposed adult use cannabis regulations as an investment firm. Admittedly, being acutely focused on finding outsized investment opportunities in cannabis on the east coast, we have not spent much time in the regulatory framework process. After speaking with trusted advisors who helped us recognize the magnitude of the moment here in our home state of New York, we decided to submit comments to the OCM with respect to proposed adult use regulations. The regulations, as proposed today, create substantial roadblocks to those of us who wish to deploy growth capital for the New York adult use cannabis market. This was the right time for us to participate however there were a few byproducts of the process that we wanted to share.

1. Connecting with others in the space who were reviewing the proposed regulations and opining in parallel sharpened our pencil and gave us a more well rounded understanding of how regulations effect different stakeholders in the industry.

2. As we worked through our recommendations, it was surprising how often it was difficult to come up with a sound recommendation. For example, we could come up with a solution that would fit our investment model, however in working through the ramifications of the solution we would find that it would create a block for different investment models. Creating useful comments that thread the various needles in this industry is not easy.

3. We were under the impression that there were better parties than Receptive Capital to submit comments. So we initially decided to offer our support to others who were organizing comments to be submitted through an organization or group. We thought that this was a sound strategy to make our voices heard as these groups are better connected to the regulators than we are. Almost every group we connected with were happy to have us, but also strongly encouraged us to submit comments independently. “The more the regulators hear from us on the same points, the better.” This was a good learning moment for us as a firm.

A big thank you to Jeffrey Schultz and Bruce Sterman for encouraging, informing and leading.

If you are reading this and you have an opportunity to participate in the regulatory process, we highly recommend it.

The “I’m High Right Now” Campaign Is Smart

Why do we think the “I’m High Right Now” campaign is so smart? Attacking both institutional and individual cannabis stigmas head on in one campaign.

The Cannabis Media Council’s first move should get your attention merely from the fact that they convinced a powerhouse traditional publisher like Hearst to partner on this messaging. Instead of simply taking the money and running the campaign. Partnering and being part of the trade announcements shows that an institution like Hearst is ready to step out of the institutional cannabis stigma that has hindered the industry and our broader cultural norms for decades. Publishers of all sizes are watching this move as they endlessly consider the question “when should we get into cannabis?” (The answer is “5 years ago” by the way.)

Individual cannabis stigma still exists today but it’s shrinking. We often see pitches from entrepreneurs who are looking to “break the stigma” and their target audience is young people. News flash, most young people don’t have a stigma towards cannabis. They are growing up watching the legalization movement, choosing it over alcohol and are well informed on health and wellness products. You know who isn’t over the cannabis stigma? Grandma and Grandpa. And they might have the most to gain from cannabis when you take into account the probability of finding a cannabis-based product that helps with pain, sleep, loss of appetite and the list goes on.

And as a bonus for the entire cannabis industry, the Cannabis Media Council just ran a campaign for us all to gain the attention of the age group with the most buying power in history. “We want it to be category-growing kind of work and a tide that lifts all boats on a national level.” Just saying… mission accomplished in our view.

We’re thrilled to see this effort get the attention it deserves and we look forward to future campaigns from Cannabis Media Council. We’re also fortunate to call Cannabis Media Council founding board member Annie Davis an Advisor to Receptive Capital.

Confusing the Customer in New York

A legal adult use cannabis market is not possible in New York if the illicit retailers can operate in plain sight and confuse the consumer without consequences. Identifying over 1,300 shops suspected of selling cannabis illegally is a clear warning signal to the regulators and law enforcement that if this is not addressed, the legal market will not have a chance to grow to a size that could convince some of these operators to leave the illicit market and join the legal market.

This is important work and another example of an East Coast market with a "clear as day" lesson to learn from cannabis markets out west.

While we strongly believe this issue needs to be addressed, we don't see the upside in punishing those who are operating a non-compliant retail location. A simple order and warning mechanism to cease operations for the time being. We need more legal retail locations before any strong action is warranted. We need to solve the product availability and consumer confusion problem first.