That’s according to Pierce Crosby, who follows stock market trends closely as general manager at investor social network TradingView.

This year’s rise of the retailer trader market, and the volatility that comes with it, is a new factor to consider when investing in cannabis. But because popular broker apps like Robinhood don’t offer trading of American multi-state operators, Crosby says the top U.S. pot stocks remain undervalued and are a less-risky bet related to potential federal legalization in the country this year.

After retail investors on r/WallStreetBets sent GameStop stock “to the moon” last month, the subreddit’s millions of users had a new target this week: weed stocks.

Most notably, shares of Tilray Inc. (Nasdaq: TLRY) fell 49.7 per cent Thursday and continued to slide Friday, after rallying 112 per cent during the first three days of the week.

Stocks for other Canadian licensed producers went on similar swings this week.

Aphria Inc. (TSX: APHA) (Nasdaq: APHA) is down 6.5 per cent on the week, after surging 34 per cent to an all-time-high of $39 Wednesday on the Toronto Stock Exchange.

Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB) stock rose 21 per cent Wednesday, fell 23.5 per cent Thursday, and is down about 1 per cent overall this week.

Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) shares are down about 4 per cent on the week after climbing as high as 22 per cent on Wednesday.

The pot stock movement is related to high short-interest ratios, which measure how many of a company’s traded shares are being used in bets against that company.

GameStop shares surged from just below US$20 to over US$483 over a two-week stretch in January. The stock currently trades just above US$51.

An army of Reddit traders essentially pushed each other to buy its shares and squeeze hedge funds that put major bets on the price to fall. Traders who bet on stock prices to decline are called short sellers.

“Broadly speaking, what you have is a very large audience who wants the next GameStop,” Crosby says.

Read more: US pot stocks have room to run even after Geogia runoff surge, analyst says

When Sundial Growers Inc. launched its IPO in August 2019 on the Nasdaq, it garnered unicorn status with a US$1 billion market valuation. The company’s market capitalization fell to US$50 million by August 2020. Press photo

Reddit-fueled short squeeze favours Canadian pot stocks

Cannabis stocks are attractive to Reddit traders because of their smaller market caps, so the traders can actually make a major impact on the price. Reddit can’t move Apple or other billion-dollar companies because their market cap is too large.

According to a website that tracks stock ticker mentions on r/WallStreetBets, Calgary-based Sundial Growers Inc. (Nasdaq: SNDL) was the most popular stock Wednesday, overtaking GameStop.

That’s likely because of major short interest in Sundial, as well as its smaller market cap of less than US$1 billion at the start of the month, Crosby explains.

Short interest in the stock was equal to 17 per cent of the shares available for trading, according to Fintel.

Sundial shares surged 246 per cent in the first three days of the week up to US$3.95 from US$ 1.14 on the Nasdaq, but have since come crashing down to US$1.98.

When looking at Sundial’s earning potential, Crosby says the crash makes sense.

In its third-quarter financial results, the firm posted revenues of $12.9 million, a 36.3 per cent decline from the $20.2 million in revenues reported in the second quarter. The company posted a net loss of $71.4 million during the quarter.

“That’s the thing for a long-term play, you have to actually look deeper into the fundamentals of business,” Crosby says.

But because Canadian cannabis companies have largely been underperforming over the last two years, they have more short bets placed against them compared to U.S. operators. That’s partly why pot stocks north of the border have been bigger targets by Reddit traders.

Also, because weed is legal federally in Canada, pot stocks there can list on major U.S. exchanges and trade on most online brokers like Robinhood or Questrade.

Aphria and Tilray were the third and fourth most-mentioned tickers on r/WallStreetBets this week.

Part of the discussion on Reddit has centered around the pending merger between the two firms and their compelling surge in international deals.

“From a retail investor standpoint, they think: ‘Holy shit, this company is going to be the provider of the world for cannabis,'” Crosby says.

But he warns that Reddit-fueled stock surges are more like flashes in the pan. So, by the time a new investor tries to catch the trend, it’ll probably be over.

Fearless Girl statue located by Wall Street, New York City. Photo by Kristen Visbal via Flickr Commons

Poking establishment in the eye

The analyst expects retailer trader flash mobs to continue fueling more volatility in the sector. And because short interest data is publicly disclosed, shorted pot stocks will continue to be listed and targeted by Reddit users.

“It’s kind of taking the fight to the institutional guy’s playground,” Crosby says. “People are realizing that if they really want to poke a finger in the eye of the establishment, basically, doing these kind of targeted attacks are an easy way to do it.”

In terms of legality, the Reddit retail trading frenzy is completely legal even with big financiers on Wall Street calling for restrictions to end to the phenomenon, Crosby continues.

This week the Wall Street Journal reported that the U.S. Justice Department’s fraud section has subpoenaed information from Robinhood and other online brokers to investigate possible manipulation.

Proving market manipulation requires generally showing that traders colluded to create an artificial price and took action to accomplish it.

However, the only way to slow the frenzy is for online brokers to limit trading, Crosby explains. In a move that triggered widespread scrutiny, Robinhood limited trading on Jan. 28 for several speculative names, including GameStop and AMC Entertainment.

“Really the question around this volatility will basically be about limiting trading. That will likely be the core focus of regulators,” he says.

Crosby’s go-to pot stock choice over the past year has been Aphria. And while the firm’s strong logistics focus and international potential continues to surge with merger-partner Tilray, Crosby thinks the story has played itself out lately.

Green Thumb Industries reported US$157.1 million in net revenues and US$9.6 million in net income in its most recent quarter. Press photo

US pot stocks remain undervalued

For many on social media, possible decriminalization of the plant under the Biden administration has been commented on as a major positive catalyst.

The irony, though, is that U.S. firms have benefited less from the Reddit trading frenzy. Even though they already operate in the largest cannabis market in the world, they can’t trade on the big U.S. exchanges because weed is federally illegal.

Read more: US cannabis banking likely to come ahead of Senate legalization bill

And because of that, U.S. multi-state operators — which don’t trade at most online brokers — have a much larger long-term upside for investors, Crosby notes.

Piper Sandler analysts recently said cannabis could become a US$115 billion global market by 2030, if recreational use is legalized at the federal level. Even if that doesn’t happen, the industry potential is still big, reaching US$50 billion by 2030, the investment bank added. Adult-use has been legalized in 15 U.S. states.

Crosby’s go-to U.S. pot stock is Illinois-based Green Thumb Industries (CSE: GTII), which operates 13 grow facilities and 97 retail stores across 12 U.S. markets.

“As investors, you’re looking at narratives,” he says. “Basically, the shift in narratives and the longer-term stories.”

Because it is all about the consumer, I believe cannabis is the next great American growth story. It's wonderful that so many people still don't see it. That's what makes a market and what creates such a great opportunity. Buyer beware… #MSOgang https://t.co/8ExtdQx5qb

— Ben Kovler (@Bkov9) February 12, 2021

Top image via Deposit Photos

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On Wednesday, Washington State-based CaaMTech said its patent application for “compositions and methods comprising a psilocybin derivative” has been granted allowance by the U.S. Patent and Trademark Office.

The patent covers a whole range of cannabinoids including THC and CBD, mixed with a wide array of chemicals linked to psilocybin found in certain species of mushrooms.

CaaMTech applied for its first patent in 2017 for engineering novel cannabinoid and psychedelic compounds, and has since filed a hundred more patents related to similar lab work.

At the U.S. patent office, allowance is the final hurdle of examination before a patent is issued.

“The allowance of our first patent application has given a shot of energy to the team that has worked diligently over these past four years to bring it to the finish line,” CaaMTech CEO Andrew Chadeayne said in a statement.

CaaMTech’s first of over one hundred patent applications is nearing the finish line! #psychedelics #cannabis #patents #entourageeffect #science #pharmacology https://t.co/NtnREvO4pf

— CaaMTech (@CaaMTechInc) February 10, 2021

The drug discovery firm says its research has shown that cannabinoids work in synergy with psychedelics to activate serotonin receptors, which is a key aspect in treating various conditions including depression, anxiety and PTSD.

“This is essentially the idea of the entourage effect in cannabis applied to psychedelics,” CaaMTech spokesperson Davis Wuolle says. “It’s a really big idea, and the implications are huge.”

Patent protection on the engineering methods and various drug combinations lays the foundation to proceed with clinical trials to develop and produce FDA-approved treatments with larger pharmaceutical companies, CaaMTech says.

A big challenge in clinical trials is getting a high enough dose for the drug to be efficacious, but not so high as to introduce unwanted side effects.

The company says its research shows that far less psychedelic compounds may be needed in combination of cannabinoids to get the same level of medicinal effects. In turn, that could reduce some of the undesired side effects of the psychedelics such as hallucinations and paranoia.

CaaMTech says it’s still working on screening all of the cannabanoid and psilocybin derivatives in its lab to identify which combos have the most potential. The firm has already gathered preliminary data proving the concept for several combinations.

Read more: MagicMed attracts investors to advance its novel psychedelic derivatives library

Interest in the use of psychedelic medicines to mental health conditions has grown considerably in the last year. CaaMTech is putting most of its focus on developing novel drugs using both psilocybin and cannabinoids. Species of mushrooms that produce psilocybin have been used traditionally as medicine for thousands of years.

CaaMTech points out the irony that the U.S. patent office is close to issuing the company its first patent involving two Schedule 1 drugs in the U.S. — that classification denotes substances with no medical use.

The company’s philosophy is to use rigorous science to prove psychedelic drugs can be used safely while meeting modern medicine standards.

Before Chadeayne became CEO of CaaMTech, he helped build up intellectual property for ebbu, a Colorado-based hemp research firm. The startup company’s successful THC-rich cannabis genetic breeding program was a key reason why it was acquired by pot giant Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) for $429 million in 2018.

Top image via CaaMTech

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Tilray stock climbed over 40 per cent to US$42.35 when the Nasdaq closed on Tuesday.

The British Columbia-based operator says it will import product to U.K. medical cannabis distributor Grow Pharma to authorized patients in England, Scotland, Wales and Northern Ireland.

It’s the fourth international supply deal Tilray’s reported since the firm said it was combining operations with its rival Aphria Inc. (TSX: APHA) on Dec. 16.

Read more: Tilray first to gain cannabis market approval in Portugal

I feel very proud of this agreement that will enable patients in the UK to have access to a consistent supply of Tilray medical cannabis.

Progress throughout Europe is happening quickly. https://t.co/CVHUkqzLks

— Brendan Kennedy (@BrendanTKennedy) February 9, 2021

Since the $5 billion merger agreement was unveiled, shares in Tilray have surged 438 per cent. The new company will keep Tilray’s name and trade under TLRY on the Nasdaq.

The companies say the deal will create a new leader in the global pot sector after it closes in the second quarter of 2021.

On Feb. 4, Tilray said its medical cannabis products were available in 17 countries around the world after inking a supply deal with Worldpharma Biotech to import product into Spain.

Tilray said last week it’s the first company allowed to sell medical cannabis products in Portugal.

The firm says the Portuguese government awarded it the first national supply contract to sell pharmaceutical-grade weed from its GMP-certified facility based in the country.

Gaining market approval from the Portuguese national authority Infarmed was a big win, Tilray said, because it means more supply deals inside the European Union.

In January, the firm was selected by the French government to supply medical cannabis from its Portuguese facility as part of an 18–24 month experiment in France.

Aphria is also eyeing the growing European medical market. The firm owns a major pharmaceutical distribution business inside Germany, CC Pharma, which signed a contract last month to start selling Aphria’s medical cannabis brand there.

Aphria said Monday it promoted its chief strategy officer and consumer packaged goods veteran, Denise Faltischek, to lead its German operations. The company remains on track to be the first licensed medical cannabis producer in Germany, according to a statement.

Top image via Tilray

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On Tuesday, the Canadian pot giant said improved operational execution drove record net revenue to $153 million in its fiscal third quarter ended Dec. 31.

Reflecting upon his first year as CEO, David Klein said he’s extremely proud despite the company’s difficult decisions to right size its production footprint and terminate employees. The top boss says Canopy is more agile to grapple with the Canadian recreational market that’s grown at a slower rate than first anticipated.

“We’re at the end of that transition year and our team has made great progress,” Klein said in a conference call with analysts. “We are firmly on a path to profitability.”

Canopy stock rose nearly 12 per cent Tuesday to $62.35 on the Toronto Stock Exchange. The company’s share price has nearly doubled since the start of the year.

But the Ontario-based company booked a net loss of $829.3 million in the third quarter, which it said was largely driven by a number of impairment and restructuring charges related to late-year cuts. Last December, Canopy shut down five of its Canadian facilities and laid off 220 workers in order to save up to $200 million a year.

Klein said the trend of reporting massive losses will eventually come to end as the firm executes its new strategy across core markets.

Canopy’s sales climbed 13 per cent quarter-over-quarter, driven by revenue increases in Canadian recreational and international medical markets, as well as its BioSteel beverage business and U.S. CBD unit.

Canopy hinges profit hopes on US legalization

Canopy sells Martha Stewart CBD product in 580 U.S. Vitamin Shoppe locations. Press photo

Accelerating its U.S. growth strategy is key to reaching profitability in the second half of its fiscal 2022, Canopy says.

Cowen analyst Vivien Azer asked Klein if he’s confident that Canopy will reach its stated financial targets considering the volatility of the cannabis sector compared to alcohol.

The chief executive pointed to continued growth in the German medical and Canadian recreational markets. But he emphasized how Canopy is already making ground in the U.S. CBD market and is in a unique position to capitalize on THC sales if and when they’re federally legalized.

“So a lot of moving parts, Vivien,” Klein said. “But we feel that we’ve got our arms around enough of the detail to have a high degree of comfort in being able to put these numbers out.”

With Democrats holding power in the White House and Congress, the firm expects significant cannabis reform in America this year. To ensure progress, Canopy and a new coalition of top North American operators, advocacy groups and trade organizations formed the U.S. Cannabis Council to work with federal lawmakers on Captiol Hill.

Read more: Canopy, Curaleaf, advocacy groups join forces to advance US cannabis reform

Hopes are high. Shares in Canopy and the broader cannabis sector have rallied since three top Democratic lawmakers said last week they plan to remove weed from America’s list of Schedule 1 drugs this year.

Senators Cory Booker, Ron Wyden and Majority Leader Chuck Schumer stated a plan to introduce a draft legalization bill early this year with a focus on restorative justice and public health, as well as responsible taxes and regulations.

Canopy is the only Canadian firm with an immediate stateside opportunity when federal legalization arrives. The firm would be able to close its deal to buy Acreage Holdings (CSE: ACRG.A.U) and possibly buy a bigger stake in TerrAscend (CSE: TER), which are both sizable multi-state operators.

“We believe that this legislative package or a combination of reform measures could allow Canopy to enter the U.S. THC market during calendar 2021,” Klein said.

Canopy is already focused on building its U.S. cannabidiol brands, which it expanded in the third quarter with celebrity chef Martha Stewart.

The company released Stewart-branded CBD gummies and tinctures last September, which are sold online and in hundreds of U.S. nutrition stores.

“In just four months since launch, Martha Stewart CBD products have already exceeded the annual sales of over 94 per cent of all CBD brands sold in the U.S,” Klein noted. “And based upon the current run rate, Martha would rank among the top 3 per cent of all CBD brand.”

Canopy expanded the Stewart product line to include pet CBD products this month, which its says has already received record press coverage earning over 1 billion media impressions.

Read more: Martha Stewart and Canopy Growth release CBD dog treats — but are they safe?

Canopy’s Houseplant Grapefruit THC-infused beverage is sold across Canada. Press photo

Steady, not significant, growth expected in Canadian adult-use market

North of the border, Canopy’s third-quarter Canadian recreational market share ticked up to 15.7 per cent, compared to 15.5 per cent in the previous quarter.

The firm’s beverages reportedly captured 34 per cent market share, even as new beverage brands have entered the marketplace.

Canopy CFO Mike Lee said beverage sales will remain muted in the country until larger quantity purchases and consumption lounges are permitted.

He added that Canopy’s 80 per cent of sales will continue to be driven by dried flower and pre-rolled joints over the next 12–18 months.

The company expects the Canadian adult-use market to grow 40 per cent this year, relative to a projected $2.6 billion in 2020. In 2023 and 2024, the firm estimates growth of 25–30 per cent.

Canopy booked an adjusted earnings before interest, taxes, depreciation, and amortization loss of $68 million in the third quarter, compared to an EBITDA loss of $85.7 million in the second quarter. The firm expects to hit positive adjusted EBITDA during the second half of 2022.

Cash and short-term investments were a reported $1.59 billion as of Dec. 31, down from $1.72 billion Sept. 30.

Top image via Canopy

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On Monday, the U.S. Cannabis Council (USCC) was launched with founding members including major industry players like Canada’s Canopy Growth Corp. (TSX: WEED) and Massachusetts-based Curaleaf Holdings, Inc. (CSE: CURA).

The non-profit organization says it will work with Washington D.C. lawmakers to advance weed laws, and create fair regulations that promote social equity and racial justice.

“USCC is a unified voice advocating for the descheduling and legalization of cannabis,” said USCC Interim CEO Steven Hawkins in a statement. “Legalization at both the state and federal level must include provisions ensuring social equity and redress for harms caused to communities impacted by cannabis prohibition,” added Hawkins, who’s also executive director of the Marijuana Policy Project.

I'm thrilled to be serving as the Interim CEO of the US Cannabis Council! Only through unity can we accomplish the end of federal prohibition and ensure there is social equity. https://t.co/Dvm5lfF5qd

— Steven W Hawkins (@StevenWHawkins) February 8, 2021

Last week, three top Democratic lawmakers said they would release a unified discussion draft on major weed reform early this year.

Read more: US cannabis banking likely to come ahead of Senate legalization bill

Senators Cory Booker, Ron Wyden and Majority Leader Chuck Schumer stated that their goal is to decriminalize weed this year to “ensure restorative justice, protect public health and implement responsible taxes and regulations.”

The Marijuana Policy Project told Mugglehead that unity has never been so strong in the last several weeks between federal lawmakers and other long-serving legalization advocacy groups, industry lobbyists, national groups and umbrella organizations.

In a recent tweet, Schumer said the Senators held a meeting Friday with major advocacy groups, including the USCC, to discuss ending federal cannabis prohibition.

Thank you to @NORML, @DrugPolicyOrg, @CivilRightsOrg, @ACLU, @MinCannBusAssoc, and so many more for your work to end the federal prohibition on marijuana, make criminal justice reforms, and ensure equity for communities—especially those of color—impacted by the War on Drugs!

— Chuck Schumer (@SenSchumer) February 6, 2021

But long-time advocacy organizations including NORML and Drug Policy Alliance are noticeably absent from the list of USCC’s founding members.

NORML has a history of calling out industry influence in the legalization movement, citing rampant greed in the emerging multi-billion dollar weed sector.

However, the USCC says for every five board appointments, it will reserve one additional board seat for members representing diversity, equity and environmental concerns.

Democrat Rep. Earl Blumenauer, who founded and co-chairs the Congressional Cannabis Caucus, says it takes teamwork to secure the biggest wins on reform.

“That’s why I am glad to see this first-of-its-kind alliance,” he said in the statement. “We have a unique opportunity in the 117th Congress to advance cannabis reform, but we must remain united to create the change we know is possible.”

Founding members of the U.S. Cannabis Council include:

• Acreage Holdings
• Akerna Corp.
• American Trade Association of Cannabis and Hemp
• Association for Cannabis Health Equity and Medicine
• BellRock Brands
• Buckeye Relief
• Cannabis Trade Federation
• Canopy Growth Corporation
• Columbia Care Inc.
• Cresco Labs Inc.
• Cronos Group
• Culta
• Curaleaf
• DNA Genetics
• Eaze
• Flowhub
• Global Alliance for Cannabis Commerce
• Good Chemistry
• The Grove Cannabis Dispensary
• Headcount’s Cannabis Voter Project
• Husch Blackwell
• iAnthus Capital Holdings, Inc.
• Jushi
• Keef Brands
• Lightshade
• LivWell Enlightened Health
• Marijuana Policy Project
• Medicine Man
• MedMen
• Native Roots Cannabis Co.
• 1906 New Highs
• PAX Labs
• PharmaCann
• ProKure
• Raw Garden
• Schwazze
• Scotts Miracle-Gro Company
• Urbn Leaf
• Veterans Cannabis Project
• Vicente Sederberg LLP
• Vireo
• Wana

Top image of U.S. Capitol Building by Anthony Quintano via Flickr Commons

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On Feb. 1, Health Canada said that proposed amendments to federal Cannabis Regulations “would align with proposed restrictions on flavors in vaping products under the Tobacco and Vaping Products Act.”

“The purpose of the proposed amendments would be to protect public health and safety, in particular by preventing young persons and others from inducements to use cannabis,” the update reads.

The proposed rule changes would have an impact on licensed processors, retailers and medical sellers as they would set restrictions on flavours in cannabis extracts for inhalation, including vaping products.

Canadians will be given 30 days to offer feedback on the regulatory proposal during a public comment period that’s expected to take place this spring.

While the proposed rule changes for vapes could create new hurdles for the industry, Health Canada is also looking at easing or rolling back other burdensome regulations.

In January, Health Canada launched a 30-day public consultation on amending a wide range of strict cannabis regulations, including for non-therapeutic research.

Read more: Health Canada requests public feedback on amending various strict pot rules

The agency said last week that it’s continuing to look at removing requirements under Canada’s Food and Drug Regulations to reduce barriers to cannabis research.

Under current regulations, researchers have to comply with rigorous clinical trial requirements that slow non-therapeutic studies. The science community says the strict rules slow important research on topics such as time-to-onset or duration of effects of a weed product, or the impact of use on driving.

Canadians will also be given 30 days to provide comment on amending research rules in a separate public comment period this spring.

The federal agency also updated proposed rule changes for cannabis health products to be sold over the counter without practitioner oversight.

If cannabis health product rules are amended, companies like 48North could sell their topical products via traditional retail channels rather than licensed cannabis stores only. Image via 48North

In 2019, Health Canada gathered public comments from citizens and industry on the kinds of non-prescription weed products companies would be interested in purchasing, manufacturing or selling, if it was legal to do so.

The department set up a scientific committee last year to gather external advice on regulating cannabis health products.

Read more: Non-diverse cannabis health product committee ‘aligned’ with selection policy

A key objective for any new regulatory approach is for public health and safety requirements of the Food and Drugs Act and the Cannabis Act to be met.

“Any decision regarding access to non-prescription health products containing cannabis will be based on evidence,” Health Canada writes.

Any new draft regulations on cannabis health products, vapes or research are expected to be published online in the Canada Gazette, Part I.

Top image via Deposit Photos

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That’s according to Marijuana Policy Project director of government relations Chris Lindsey, who’s more bullish on federal legalization this year than in his nearly two decades of advocacy.

With Democrats clinching a Senate majority last month, the party now has control of both Congress and the White House. And there’s been a fantastic amount of unity the last few weeks among lawmakers, lobbyists and advocates in Washington D.C. to move forward on cannabis legalization, Lindsey says.

On Monday, Democratic Senators Cory Booker, Ron Wyden and Majority Leader Chuck Schumer said this year they’ll push to pass sweeping legislation that would end the federal prohibition of weed.

“In the early part of this year, we will release a unified discussion draft on comprehensive reform to ensure restorative justice, protect public health and implement responsible taxes and regulations,” they wrote.

Read more: US pot stocks have room to run even after Georgia runoff surge, analyst says

Federal cannabis reform still requires bipartisan support

Although the news has injected excitement into the industry, it’s just the beginning of what will likely be a long process of passing major cannabis legislation.

Issues open for debate include record expungement, social justice, descheduling, state-level powers, taxes and legalizing medical cannabis.

“The devil’s in the details,” Lindsey said in a phone interview. “And while it’s exciting to hear about these prospects, we don’t yet know what measures they’re going to include, or exclude.”

And if Democrats come up with a form of legalization without bipartisan support, it could create near- and long-term roadblocks.

Major bills typically require support that’s filibuster proof, meaning 60 votes out of 100 to pass the Senate, Lindsey explains. Meanwhile, Democrats only control 50 seats with the tiebreaker held by Vice President Kamala Harris.

If Republicans gain control of either the U.S. House of Representatives or the Senate next year, they could potentially start winding back reforms they didn’t support.

Former Senate majority leader McConnell shut down all attempts at cannabis reform, even those proposed by fellow Republicans, except research legislation. Photo by Gage Skidmore via Wikimedia Commons

Lindsey predicts Democrats will likely borrow certain provisions from the STATES and MORE acts.

Last December, the House passed the Marijuana Opportunity, Reinvestment, and Expungement Act, which would remove weed from the list of federally controlled substances.

The bill, however, got shot down by former Senate majority leader Mitch McConnell.

But because the MORE Act has a heavy focus on restorative justice, it will likely serve as a template for the three Democratic senators.  Measures include expunging convictions and setting up funding for communities hit hardest by the war on drugs.

“The War on Drugs has been a war on people — particularly people of color,” Schumer, Booker and Wyden said in their joint statement.

“Ending the federal marijuana prohibition is necessary to right the wrongs of this failed war and end decades of harm inflicted on communities of color across the country,” they said.

Social equity is one issue that could benefit from a stronger overlap in thinking among both Democrats and Republicans, Lindsey says.

Other aspects like allocation of tax dollars will require more information and debate to be hammered out.

State-legal cannabis operators, which have primarily been working on a cash-only basis, may finally have access to banking services this year. Photo via Curaleaf

Cannabis banking reforms have bigger chance of passing first

Because a major bill could take months to put forward and advance, Lindsey predicts smaller banking provisions will pass first.

Currently, advocates are lobbying to have elements of the SAFE Banking Act included in a major Covid-19 relief package that’s currently being debated on in Congress.

The amendments would create stopgap protections for financial institutions to legally service state-licensed operators without federal interference until cannabis is descheduled. It would also open up credit card and electronic transactions for weed businesses who currently operate on a cash-only basis, which makes them more susceptible to theft.

If cannabis banking isn’t including in the Covid relief bill, Lindsey sees the reforms coming via a standalone piece of legislation, or potentially part of some other bigger package.

Democratic Rep. Ed Perlmutter said this week he is confident SAFE Banking will pass this year, after introducing the measure during every Congress since 2013.

And because banking lobbyists are behind the initiative that’s gained support from Republicans, Lindsey sees it passing in the next few months.

I look forward to seeing progress on cannabis issues this Congress whether it's #SAFEBanking, research or maybe even the rescheduling of cannabis.

We need to do better for these businesses and their employees, to help them stay safe and boost the economy. https://t.co/8TtFkSHs6E

— Rep. Ed Perlmutter (@RepPerlmutter) February 4, 2021

Promises of major reform come as public support continues to grow, transcending bipartisan politics. A Gallup poll in November showed that a record 68 per cent of Americans favoured legalization.

Lindsey and the MPP were behind red states Montana and South Dakota passing legalization ballots last November. The fact that 15 states have legalized recreational cannabis puts more pressure on Republicans in Congress to join the national movement.

Read more: Bi-partisan cannabis ballot sweep could trigger green wave in neighbour states

On Friday, the Virginia Legislature voted to advance legislation that would legalize adult-use sales. A final bill still needs to be ratified, but Lindsey thinks it has a good chance to pass as Gov. Ralph Northam has signaled strong support.

As for a federal legalization bill emerging out of the Senate, Lindsey says it’s a matter of when, not if.

“You watch when that bill comes out, people are gonna freak out because it’ll suddenly start to get real. It’s pretty exciting.”

Top image: U.S. Senate Majority Leader Chuck Schumer promises to legalize weed in 2021. Photo by Dan Nguyen/ProPublica via Flickr Commons

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This week, Seattle-based data firm Headset released its 2020 cannabis consumer behaviour report, which focused on answering one of the most critical questions any business can ask: Who is my customer?

Despite the year’s chaotic events, or perhaps because of them, the weed industry continued to grow at a record pace. And as the world underwent massive changes, consumer behavior changed as well.

All of the data was gathered in recreational markets in California, Colorado, Nevada and Washington, which all are projected to break annual sales records.

Headset reported that year-over-year sales growth for Gen Zers, defined as anyone born after 1996, grew the most of any generation at 127 per cent.

The trend indicates that Gen Z is a increasingly important demographic for the industry. New consumers in the group are aging into the market every day as they turn 21.

“We expect this growth trend to continue and Gen Z will become a more important customer segment over time,” Headset notes.

Read more: Boomers, millennials cite relaxation as top reason to use weed

Gen Z, millennials drove weed sales growth in 2020. Graphic via Headset

Millennials saw the second largest sales growth in 2020 at 46 per cent. However, this age group recorded the lion’s share of sales among all generations at US$4.3 billion in the four markets. And in terms of dollars, while Gen Zers spent US$479 million more than in 2019, millennials spending increased by US$1.38 billion.

All demographics had positive year-over-year growth, except for an 18 per cent decline recorded with the oldest silent generation.

Sales growth for baby boomers climbed a modest 5 per cent.

The decreasing growth trend among older demographics might suggest cannabis is seen as a luxury or occasional purchase for older consumers, Headset explains.

“Covid-19 has also certainly played a role in this trend as well, since older customers may have been more fearful about exposure to the virus and therefore were less inclined to make a trip to the store,” the data firm wrote.

2020 sales growth was also higher among women. While males make up slightly more than two thirds of total recreational cannabis sales, sales to females increased 43 per cent year-over-year over males at 37 per cent.

As for product choice, Gen Zers consistently spend more on vape pens than boomers.

Edibles went the opposite way. Edible share increased to 15.4 per cent among baby boomers, while it decreased to 7 per cent among Gen Zers.

Top image by Cannabis Culture via Flickr Commons

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The proposed deal is set to be the largest acquisition in the cannabis industry to date and demonstrates how pharma companies are recognizing the long-term potential of cannabinoid-based medicines.

United Kingdom-based GW sells Epidiolex, a medication made for children with severe epilepsy that was the first cannabis-based drug approved by the U.S. Food and Drug Administration in June 2018. The drug sells for US$1,235 per 100-millilitre bottle and the company said last month that it expects to report roughly US$510 million in 2020 sales of Epidiolex.

“What we’ve been able to demonstrate at GW over the last 20 years is that the cannabinoid platform is a real and compelling science,” GW CEO Justin Gover said during a conference call with analysts. “There is very significant growth potential within the approved indications.”

When GW started most global pharma companies were hesitant to work with cannabis, ignoring centuries of evidence of the plant’s health benefits, says Nawan Butt, portfolio manager of The Medical Cannabis and Wellness ETF UCITS.

But as times and attitudes are adjusting, more larger companies are getting involved in the sector.

“Today could be a notable turning point as a more traditional pharma company, JAZZ pharma, has agreed to purchase GW Pharma,” Butt said in an email statement. “We don’t think this is the last deal we will see in the sector.”

Dublin-based Jazz sells a variety of medications for cancer and other conditions, and is best known for its expensive sleep disorder drug Xyrem, which the company said generated sales of US$1.64 billion in 2019.

On Wednesday, the drugmaker said GW’s rigorous approach to producing its products decreases regulatory risk, and will allow the companies better access to European markets.

GW Pharmaceuticals leases three cultivation facilities in the United Kingdom that combine for 2.1 million square feet in size. The company breeds and grows cannabis plants low in THC and high in CBD. Press photo

Jazz is bullish on GW’s future pipeline of cannabinoid drug candidates, which includes Phase 3 trials for multiple-sclerosis and spinal-cord-injury treatments on the path toward approval from the U.S. Food and Drug Administration. GW is also in earlier-stage development of drug candidates for autism and schizophrenia.

“We are excited to add GW’s industry-leading cannabinoid platform, innovative pipeline and products, which will strengthen and broaden our neuroscience portfolio, further diversify our revenue and drive sustainable, long-term value creation opportunities,” Jazz CEO Bruce Cozadd said in a statement.

Under the terms of the proposed deal, the companies say Jazz will pay US$220 per GW American depositary receipt, in the form of US$200 in cash and US$20 in Jazz common stock.

GW’s intellectual-property portfolio includes 767 issued patents outside the U.S. and 57 issued patents in America, according to the firm’s regulatory filings.

In December, Canadian cannabis giant Canopy Growth (TSX: WEED) filed a lawsuit against GW in U.S. federal court, alleging the U.K.-based company infringed on its patented cannabis extraction method.

Shares of GW climbed to US$213.98 Thursday on the Nasdaq.

Read more: Canopy’s GW Pharma lawsuit could be trouble for extractors

Top image via GW Pharmaceuticals

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Since launching in 1993, Desert Harvest Inc. has funded research around the world with the goal of finding new and effective plant-based pain treatments. The private firm’s patented aloe vera extract products continue to be studied by scientists in a number of global medical sectors including urology, women’s health, radiation oncology and dermatology.

Image via Desert Harvest

And as the opioid crisis intensifies during the pandemic, the U.S. firm is now teaming up with McGill’s Research Centre for Cannabis in Montreal to study CBD as an alternative treatment for pain.

A growing body of evidence suggests cannabinoids are beneficial for a range of clinical conditions, including chronic pain and inflammation. Relatedly, the development of novel cannabinoid treatments is progressing rapidly. One new formulation, produced by Desert Harvest, combines cannabidiol with aloe vera to increase its bioavailability.

The company hopes funding new CBD research will help the U.S. Food and Drug Administration finally come up with regulations for cannabidiol products after a two-year wait.  The goal is to make the CBD-aloe vera formula available to a wider population, especially veterans who suffer from chronic pain, at an affordable price.

Read more: Global CBD report underscores need for low-dose trials

In the new McGill pre-clinical study, the company’s product is currently being tested to see if it can help people suffering from interstitial cystitis, a chronic bladder condition still affects nearly 12 million Americans. Later this year, the researchers aim to launch a Phase 2 trial using human donor tissue from the spine to test how pain receptors respond to the CBD-aloe formula.

“This project is extremely important,” lead researcher Reza Sharif-Naeini says. “We are now witnessing the ravages of the opioid epidemic. Pain scientists have advocated for years that we cannot solely rely on opioid therapies, and that we need more funding for research into novel therapeutics.”

‘Here’s your Percocet, have a nice life’

Desert Harvest CEO Heather Folio

For Desert Harvest CEO Heather Florio, finding new and effective pain treatments is personal.

In 2003, her husband suffered severe spine damage while serving in the U.S. military, leaving him unable to walk.

The couple felt left behind by the federal government after the injury, so they started searching for alternative treatments instead of relying on opioids to handle the crippling pain.

“When my husband got injured, the government offered no treatment options — we had to find our own,” Florio said in a phone interview. “It was like: ‘Here’s your wheelchair, here’s your pain drugs, your Percocet, whatever. Have a nice life.'”

Florio said they wanted to come up with something new to target his pain, and he effectively became her guinea pig.

After undergoing an experimental spinal surgery, she gave him Desert Harvest’s aloe extract.

In 1995, a study out of the Urology Wellness Center in Rockville, Maryland showed the aloe vera supplements helped relieve pain symptoms in 87.5 per cent of patients suffering interstitial cystitis, with no side effects.

While the aloe vera product hasn’t been tested specifically on treating spinal injuries, Florio said it helped control the pain after the surgery, and he was able to walk.

But her husband continues to suffer from pain today, so Florio has been wanting to see if adding cannabinoids to his health routine can help.

Last year, Desert Harvest launched its new CBD-aloe vera product, a combination that the firm owns patents for in the U.S., Canada and Europe.

Aloe vera has been proven to increase the body’s absorption of vitamins and nutrients. So, the company funded a recent University of Colorado study that found their CBD capsules facilitated a 25-per-cent-higher level of absorption into the bloodstream than other CBD products on the market.

And early research at McGill has shown that CBD may target the pathway of pain receptors found in the body. When pain signals are triggered by neurons in the bladder, they send signals to spinal cord neurons that process the information, and then neurons in the brain interpret the signal as being painful.

Reza Sharif-Naeini, a professor in McGill University’s Department of Physiology & Cell Information Systems Group

“We believe all three sites can be targeted by the CBD compound,” says researcher Sharif-Naeini. “This can form a synergistic action to relieve pain.”

To examine pain that begins in the bladder, his team has already been working with doctors at Montreal hospitals, as well as Transplant Quebec, for over two years. The McGill scientists received international praise last year as being the first to find the membrane in human sensory neurons that are involved in our capacity to feel mechanical pain.

The goal now is to determine whether patients’ pain sensitivity can be reduced by exposure to the CBD formulation. The researchers are awaiting final approval from Health Canada to begin testing Desert Harvest’s CBD, Sharif-Naeini said.

Florio says Desert Harvest received special permission from the Canadian government to bring its across the border. The company is currently working on finding hemp farmers north of the boarder to develop and manufacture the same CBD-aloe formulation to sell in Canada.

Canadian research may propel U.S. CBD regulations

Florio says Desert Harvest will submit its CBD research to the U.S. FDA, which has been seeking evidence to regulate the touted wellness extract since early 2019.

Currently, the agency has approved only one CBD product called Epidiolex, a prescription drug used to treat two rare forms of epilepsy. While it remains illegal to market cannabidiol in food, drinks and supplements in America, there are over 3,000 CBD brands sold in the country.

Desert Harvest wants to see the agency regulate CBD as a supplement so it could be sold at substantially lower prices than other pharmaceuticals.

While the FDA said it would be speeding up CBD drug research approvals last July, Florio says the department has been very slow in issuing licences during the pandemic. Human trials are still not allowed in America.

Even if Desert Harvest could get a research licence, it could cost millions of dollars for the small firm to get their CBD product registered as a drug in the U.S.

“For us, the ability to be able to still help people and not have to raise prices to a crazy amount is super important,” Florio says.

Read more: FDA issues cannabis research guidelines as CBD industry still hangs in limbo

With Democrats in control of the White House and Congress, she believes federal lawmakers may veto the FDA and issue rules for CBD as a natural health supplement.

But for now, Florio is grateful to get research moving forward in Canada, a country that’s helping open new doors to cannabinoid research.

Desert Harvest plans to work on other studies in the future with McGill to see if CBD could help treat PTSD in veterans.

“McGill has been amazing, and so if we are able to go further into a double-blind placebo type controlled study, we’ll definitely stick with McGill on that.”

Top image via Deposit Photos

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