19 May 2022 |

Cannabis laws are bottlenecking the supply chain

By Kaitlin Domangue

Cannabis is (apparently) bottlenecking the supply chain 

You probably know there have been some gaps in the U.S. supply chain since COVID hit in 2020. You’d think it’s because of the lockdowns, economic downturn, and blocking imports to reduce the risk of transmission. 

And all of this is true. But what’s also true is that cannabis consumption has taken more than 10,000 drivers off the road since April, up from about 7,000 during the same time last year. 

More and more states are legalizing cannabis for recreational use, so more and more truck drivers are testing positive for it. But, there is currently no leeway for cannabis consumption of any kind for commercial truckers – even hemp-derived CBD, a federally-permissible substance. 

Oregon Rep. Earl Blumenauer (D) says the federal government’s zero-tolerance policy is to blame for the supply chain crisis in the United States. Rep. Blumenauer wrote a letter to Transportation Secretary, Pete Buttigieg, about revising federal policy for truckers. Here’s a bit of what the letter says: 

To date, 48 states have enacted laws that, to varying degrees, relax their prohibitions against the use of marijuana. Nevertheless, your department’s zero-tolerance policy sweeps up drivers who were unimpaired, drivers who have not used cannabis for weeks or even months, and drivers who have used federally-legal CBD oils. Blanket disqualifications are unjust, unfair, and cause widespread economic and social damage. Thousands of driving positions are unfilled, compounding our supply chain woes. Penalizing safe drivers who comply with state cannabis laws harms both the drivers and the supply chains they support. 

Commercial truck drivers in the United States are not allowed to consume cannabis at any time, even in legal states on their off time. THC can remain in your system for up to 30 days, even though you’re unlikely to be impaired for even a full 24 hours. So if a commercial trucker takes a two-week vacation to visit Colorado and has an edible only on day one, they might fail a drug test two weeks later and be fired. For one edible, two weeks prior. 

In 2020, the Department of Transportation (DOT) said they wouldn’t test employees for CBD, which almost no drug test does. They look for THC. The DOT said workers should still be cautious about consuming CBD products because they aren’t regulated by the federal government. Taking it a bit further, the DOT said “CBD use is not a legitimate medical explanation for a laboratory-confirmed marijuana positive result”, as CBD products can trigger a positive test for THC on very rare occasions. 

What I’m thinking 🧠

I think it’s insane that the United States is suffering from a supply chain crisis, and has been, yet the federal government isn’t taking simple steps like modifying commercial trucking policy to help fix the problem. Baby formula is in short supply, and I don’t think I need to get into what might happen if babies don’t have food.

We can’t (completely) stop the spread of COVID-19 to support the supply chain, but we can amend draconian federal policies such as this and alleviate some of the burdens. It seems like a no-brainer, but then again so does most federal cannabis policy, and look where we’re at – no SAFE Banking, no MORE Act – no nothing. 

We get why the DOT doesn’t want impaired drivers on the road. Truckers should be tested upon employment and upon any incidents. 

Even testing upon incidents is a gray area because of how long THC stays in our system, but it’s better than immediately removing thousands of truckers off the job for a positive test result. And, it’s baby-stepping our way towards our real goal: which is cannabis being treated like any other commodity in the U.S. 

American cultivator lists on the NASDAQ

This should be exciting, but instead, it’s defeating and yet another reminder that different rules apply to those in power. 

Meet Bright Green, a cannabis company with no revenue and just two employees, but just started trading on the NASDAQ. There are several reasons why this is tomfoolery at its finest, but the major two are:

1. It appears this company doesn’t meet the standard requirements to list on the NASDAQ – which requires a certain amount of revenue/assets to list publicly. As of December 2021, the company only had $1.2 million cash on hand according to the filing.

2. U.S. plant-touching cannabis companies CAN’T TRADE on the American stock market. Hello. It’s why companies like Green Thumb and dozens more are incorporated in Canada, so they can legally list on the American stock market. 

So at first, I thought Bright Green must be a Canadian company. Nope. Wrong. They’re an American company and endorsed by the Drug Enforcement Agency

There it is. The federal government benefits from this. It’s all making sense. 

Bright Green is producing cannabis for research purposes, obviously with the DEA’s blessing. 

“We plan to sell cannabis to research institutions pursuant to our conditional approval from the DEA. Sales of THC cannabis products will be made only via bona fide supply agreements from existing DEA registrants, and not directly to consumers. Following final approval from the DEA, Bright Green will receive a Controlled Substances Bulk Manufacturing License to cultivate and manufacture cannabis for sale to federally funded research institutions and other purposes. There is no guarantee that we will receive final approval from the DEA”, the company said. 

The company plans to spend $297 million on greenhouses from now until 2024, and shares are currently listed at $16.62 at the time of writing this, dropping from yesterday’s high at $52.48. Bright Green has already been sued twice, while barely up and running.

What I’m thinking 🧠

I’m thinking that, once again, the federal government is screwing over American cannabis businesses. The executives at this company don’t have cannabis experience. There’s no revenue being generated. And, they’re a plant-touching company – literally focusing on growing cannabis for scientific research. 

There are so many different roundabout solutions to cannabis research and banking being implemented – when the federal government could simply change its policy as a whole. 

Cresco Labs granted a tax break for NY facility 

Cresco Labs was granted a $27.99 million property tax reduction over 15 years and $10 million in sales tax exemptions, for a cannabis facility expected to start construction in July. The Ulster Country Industrial Development Agency board voted 7-0 on the issue. 

This facility will create hundreds of jobs, which is the reason why the tax break was approved

“The sun is finally going to shine on Ellenville after a long, long cloudy spell,” board Chairman James Malcolm said. “When you promise 375 jobs … it’s going to be a tremendous amount of ripple effect for this community. “It’s a super project.”

What I’m thinking 🧠

I’m thinking money, baby! I hope this trend continues and cannabis companies can receive tax breaks on an individual level. 

If you’ve read my work for more than 3 seconds, you’ll see I’m like a broken record when it comes to amending 280e. It’s, in my opinion, the most effective action we can take right now – aside from removing cannabis from the controlled substances list. 

Where a traditional retailer might bring home $150,000 in taxes, a cannabis retailer comes home with $75,000. This is after generating the same amount of revenue and paying the same amount in rent, utilities, insurance, and maintenance. 280E often leaves cannabis businesses paying 80-90% in federal tax rates. 

This tax break is huge for Cresco Labs and will ensure they have more capital to pay their employees and debts, which cannabis businesses oftentimes have trouble doing.