Cannabis hit its ultimate high this week as California opened up shop to the world’s most massive adult-use recreational market, before crashing down Thursday on news that U.S. Attorney General Jeff Sessions rescinded federal protections for legal marijuana from the Obama-era. Marijuana markets peaked earlier in the week, hitting record highs to welcome in the new year, but a brief panic set in Thursday on word of the Sessions announcement. CEO’s and industry insiders did their best to allay investor fears, helping the market to recover by week’s end quickly. Meanwhile, Aurora Cannabis and CanniMed Therapeutics brought their battle to new heights this week, as CanniMed shareholders prepare to vote on the acquisition of Newstrike Resources Ltd. on January 19. Struggling cannabis companies caught a bit of “blockchain fever,” hoping that the new technology, coupled with the cryptocurrency craze may turn around their struggling fortunes.
Here is everything to know in the world of cannabis heading into the weekend:
The West Coast Has The Sunshine
As the New Year’s festivities came to a close, a new celebration began on the West Coast as California became the preeminent legal recreational marijuana market in the world. It was not all bells and whistles, however, as confusion marked the occasion. Some counties and municipalities in the state were more prepared than others for the first day of legalization, as politicians kept many businesses in the dark over new regulations concerning prohibition repeal. In Los Angeles, residents spent more time waiting for brunch reservations than they did for marijuana, a signal that the black market still has a grip on the cannabis economy.
Other cities fared a bit better on day one of legalization. San Diego, the Palm Springs area, and Santa Cruz all had their opening day plans go off without a hitch. In Berkeley, the mayor came out to join a ribbon-cutting ceremony at a local dispensary. Commenting on the occasion, Berkeley mayor Jesse Arreguin took a big picture view, noting that prohibition repeal was a step forward in the war on drugs. Proposition 64, the initiative that legalized marijuana in California calls for a review of past sentences for marijuana-related offenses.
Marijuana markets skyrocketed before and after legalization went into effect, however, local business owners worried that the new economy would tilt in favor of powerful corporations.
Good People Don't Smoke Marijuana
On Thursday U.S. Attorney General Jeff Sessions killed everyone’s buzz when he announced that the Justice Department would no longer adhere to the “Cole memo,” an Obama-era policy that allowed states with legalized marijuana to proceed without interference from the federal government. "It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission," wrote the Attorney General in his memo. The announcement had many in Congress furious, with anger coming from both sides of the aisle. Colorado Senator Cory Gardner threatened to hold up all Justice Department nominees until the issue resolved itself.
The news sent marijuana markets spiraling out of control. All of the top indices took significant hits, with many of them canceling out weeks of gains made in the run-up to California legalization. Both the Horizon Life Sciences ETF and the Alternative Harvest ETF, marijuana’s most significant funds, lost as well on Thursday. Almost immediately CEO’s and industry insider from cannabis’ top companies took to the press to assure shareholders that everything would be okay. Some took a defiant tone, such as Marc Lustig, CEO of CannaRoyalty (CNSX:CRZ) who said that the industry was too big to be dismantled now. Still, others saw it as a turning point, a moment that could force Congress into legislative action.
By Friday the markets began to rally, as US companies settled in to make a stand and Canadian enterprises hoped to reap the benefits of a US market in chaos.
Let’s Get Ready To Rumble
The daily soap opera that is the battle between Aurora Cannabis (TSX:ACB) and CanniMed Therapeutics (TSX:CMED) intensified following last week’s split decision by securities regulators that saw each company claiming victory over the other. CanniMed began the week on a high note, announcing a supply deal with Newstrike subsidiary Up Cannabis for varying strains of medical-grade cannabis. Almost immediately Aurora went on the offensive, first buying up 566,000 shares of CanniMed stock on the open market, then following that up with a song and dance of their own to show off to CanniMed shareholders.
Wednesday brought the fracas to its lowest point when CanniMed board members put out a lengthy statement arguing against the Aurora bid to shareholders. The company took a no holds barred approach, calling Aurora a failed business with an inflated stock price. Dragging things into the mud, Aurora Executive Vice President Cam Battley proceeded to call CanniMed’s deal with Up Cannabis “bizarre.”
CanniMed is set to vote on the Newstrike deal on January 19. Regardless of the outcome, some believe that the verbal battle may already be the end of Aurora’s bid for their Canadian rivals.
Blockchain Will Save Us
Earlier this week struggling social media company MassRoots (OTCQB:MSRT) announced they would be taking a new direction with their wholly-owned subsidiary MassRoots Blockchain Technologies, Inc. The new venture will look at blockchain solutions for cannabis-related businesses. Two more cannabis companies, Cannabis Science, Inc. (OTC PINK: CBIS) and Belgravia Capital International (CSE:BLGV) (OTCQB:BLGVF) announced on Wednesday that they would be following a similar path.
It begs the question, is blockchain a sustainable business model or the last ditch effort by struggling companies looking to stay afloat? MassRoots, most notably, has tried to weather a storm of bad business moves, including not being able to pay rent on their downtown Colorado offices. Both Belgravia and Cannabis Science are trading under $1 per share with little movement in prices over the past 52 weeks.
Tauriga Sciences, Inc. (OTC PINK:TAUG) and Glance Technologies Inc. (CSE:GET:CN) joined the blockchain club on Thursday, in what is already overcrowded space. Watch out for more to come in this area.