Cannabis Weekly Round-Up: The Grinch That Stole Banking Reform
Cannabis stocks took a beating this week as the year's last attempt at US banking reform was swept away.
Cannabis investors were hopeful, but this Christmas there won’t be anything special under the tree for them.
US banking is looking like a bust, although market participants did get another significant acquisition just before the end of the year, when MediPharm Labs (TSX:LABS,OTCQX:MEDIF) announced a strategy to buy VIVO Cannabis (TSX:VIVO,OTCQB:VVCIF).
Keep reading to find out more cannabis highlights from the past five days.
US banking reform unlikely to go forward in 2022
It appears all the last-minute attempts in to pass cannabis banking reform in the US have ultimately failed.
Earlier in the week, it was confirmed that cannabis legislation will not be included in a year-end broad spending bill.
Senate Democrat leader Chuck Schumer placed the blame squarely on Senate Republicans who blocked attempts to include the Secure and Fair Enforcement (SAFE) Banking Act.
“We had very good bipartisan support. We had hoped to get it done,” Schumer said, according to a report from Marijuana Moment.
While the lawmaker lamented the setback, he said the Democrats hope to go back at it again next year.
In an opinion piece, Erik Altieri, executive director of the National Organization for the Reform of Marijuana Laws, expressed his disappointment that Democratic leaders didn't uphold the promises they made surrounding meaningful cannabis reform.
Looking ahead, Altieri does not sound encouraged by the near-term situation for cannabis legislation in US Congress due to the upcoming leadership split between the lower and upper houses.
“These conditions are certainly less favorable to marijuana reform legislation than we had for the last two years,” he wrote.
Over this past five day trading period, the AdvisorShares Pure US Cannabis ETF (ARCA:MSOS), which encompasses US operators, declined in value by over 20 percent. Meanwhile, the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) had lost nearly 10 percent in value as of Friday (December 23) morning.
The political path of cannabis in 2023 will be a critical trend for investors to watch.
Consolidation trend continues in Canadian cannabis market
On Thursday (December 22), MediPharm Labs announced a plan to acquire VIVO Cannabis in an all-share agreement.
Once the new corporate entity is finalized, current MediPharm shareholders will own between 65 and 79 percent of the resulting firm, while VIVO holders will get between 21 and 35 percent.
VIVO shareholders will receive between 0.2110 and 0.4267 common shares of MediPharm based on each share they own.
David Pidduck, CEO and director of MediPharm, said the company has been looking for M&A opportunities in 2022.
“When we first met with the management of VIVO, it was immediately apparent that this was a natural fit from a strategy, values, approach and financial perspective,” Pidduck said.
For his part, Ray Laflamme, CEO and chairman of VIVO's board, said he was attracted to “MediPharm as a partner” due to its nearly C$20 million cash position as of Q3.
“As a Combined Company we can service the small outstanding amount of VIVO debt, continue international operations and invest in the future to grow the Combined Company and achieve profitability sooner than by going at it alone,” he said.
Cannabis company news
- Cronos Group (NASDAQ:CRON,TSX:CRON)informed investors it received a notice from Altria Group dated December 16 indicating that the firm's subsidiary Altria Summit has “relinquished” a warrant for approximately 85 million shares of the cannabis firm at a price of C$19 each.
- Tetra Bio-Pharma (TSX:TBP,OTCQB:TBPMF)issued a regulatory update on its new drug submission for REDUVO, a soft-gel capsule with THC for chemotherapy patients. The firm has received a second clarification request for the drug’s risk-management plan from the Canadian regulator.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.