No Immunity For The Massachusetts Marijuana Industry

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Includes: ACAN, ITHUF, MPXEF, MRMD
by: The Daily Marijuana Observer
Summary

U.S. Attorney General Jeff Sessions decided to rescind federal protections for those operating within state-sanctioned cannabis industries.

Massachusetts U.S. Attorney Andrew Lelling released additional guidance saying there's no immunity for participants.

Here are five cannabis companies that have invested heavily in the state which could be at risk of prosecution.

On January 4th, it was reported that Attorney General Jeff Sessions would be rescinding the federal protections that allow states to establish their own marijuana legislation. In the memorandum, Attorney General Jeff Sessions directs all U.S. attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities.

This news has had some industry participants rattled in the eight states (Colorado, California, Oregon, Washington, Alaska, Massachusetts, Maine, and Nevada) - as well as in Washington D.C. - where marijuana has been legalized for recreational use. That's not to mention the other states that make up a total of 29 states that have legalized cannabis for medicinal use.

In Massachusetts, the cannabis industry is especially worried.

No Immunity in Massachusetts

Following Jeff Sessions' decision, Massachusetts U.S. Attorney Andrew Lelling released additional guidance in a statement. The portion that has people especially worried is this:

This is a straightforward rule of law issue. Congress has unambiguously made it a federal crime to cultivate, distribute and/or possess marijuana. As a law enforcement officer in the Executive Branch, it is my sworn responsibility to enforce that law, guided by the Principles of Federal Prosecution.

The slightly redeeming portion of the statement mentions that he "must proceed on a case-by-case basis, assessing each matter according to those principles and deciding whether to use limited federal resources to pursue it."

With recreational cannabis still in its infancy, it's the medical marijuana patients who are worried the most. As of November 30, 2017 there were 43,672 active patients enrolled in the program.

If the patients don't matter, maybe the money does. The state's Medical Marijuana Trust Fund Annual Report estimated $13,138,512 in revenues for fiscal year 2017.

What About the Companies?

As our main focus is cannabis investments, we are worried less about the previously mentioned revenues for the Massachusetts Medical Marijuana Trust Fund, and more about the companies that have invested heavily in the state.

When 54% of voters approved Question 4 on the November 8, 2016, ballot in Massachusetts, it opened up new cannabis-related business opportunities in the state. Question 4 set the date for licensing cannabis shops to begin on January 1, 2018, however, legislators voted to move the date to July 1, 2018.

In preparation for this, handfuls of companies invested heavily.

In a March 2, 2017 press release, iAnthus Capital Holdings, Inc. (CSE:IAN) (OTCQB:ITHUF) disclosed that the company had invested $3.0 million USD to support Mayflower Medicinals' operations "and an incremental US$7.5 million is expected to be invested to complete the entire build out of the cultivation and processing facility and three dispensaries."

Then, in a June 15, 2017 press release, The Canadian Bioceutical Corporation (now known as MPX Bioceutical Corporation (CSE:BCC) (OTCQB:MPXEF)) announced that it completed the multi-million dollar acquisition of a 51% interest in IMT, LLC and Fall River Developments, LLC. These companies (while not cultivating or selling cannabis products themselves) provide "material support" to a state-licensed cultivator.

In a September 7, 2017 press release, AmeriCann, Inc. (OTCQB:ACAN) announced that it secured a $10,000,000 equity investment commitment from Mountain States Capital, LLC to develop the first phase of AmeriCann's flagship project, the Massachusetts Medical Cannabis Center.

Shortly thereafter, in a November 28, 2017 press release, MariMed Inc. (OTCQB:MRMD) announced that it had purchased a 137,500 sq. ft. industrial building on 17 acres of land in New Bedford, MA for a purchase price of $6,895,000.

While these may be more, these are just a handful of instances that we were aware of.

There's Hope

Hopefully for the state's cannabis industry, Massachusetts will not use their limited resources to pursue those working in full compliance within the state's framework.

Massachusetts Governor Charlie Baker commented to reporters, "...if you have limited resources, let's focus on the thing that's killing people here every day in the Commonwealth - which is street drugs and fentanyl."

Gov. Baker is right about Massachusetts' opioid epidemic. The state of Massachusetts already took a $500,000 settlement from Insys Therapeutics Inc. (INSY) over allegations of a "fraudulent scheme to boost sales of a fentanyl-based cancer pain drug," but there's still more to be done.

In a the state's opioid-related death report, there were 932 confirmed fatal opioid-related overdoses in 2017, and that was just as of September. That's multiple deaths per day due to opioid overdoses compared to 0 death due to cannabis overdose (if that's even a thing).

Conclusion

If Andrew Lelling uses the state's resources to fight the opioid epidemic rather than the cannabis industry, then all will be better off. As the dust settles, we'll be sure to keep you updated. Be sure to subscribe for updates!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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