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Illinois Governor Signs Law Legalizing Recreational Use Of Marijuana

Illinois has become the 11th state in the country to legalize the recreational use and purchase of marijuana.

Democratic Gov. J.B. Pritzker, who was elected last year, signed the bill into law on Tuesday, fulfilling a key campaign promise. The state joins 10 others and the District of Columbia in allowing recreational use. The legislation takes effect on Jan. 1, 2020.

The new law allows Illinois residents who are 21 and older to possess up to 30 grams of cannabis flower, 5 grams of concentrate and 500 milligrams of THC in products such as edibles.

It also will expunge the records of 800,000 people with criminal records as a result of purchasing or possessing 30 grams or less of marijuana. It earmarks a quarter of the tax revenue from the sale of cannabis to redevelop impoverished communities in the state and gives vendor preference to minority owners.


“Legalizing adult-use cannabis brings an important and overdue change to our state, and it’s the right thing to do,” Pritzker said in a statement. “This legislation will clear the cannabis-related records of nonviolent offenders through an efficient combination of automatic expungement, gubernatorial pardon and individual court action.”

Although 10 other states have approved the recreational use of marijuana — Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington — several others have decriminalized and/or approved cannabis for medical use.

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5 Things to Watch With Aurora Cannabis for the Remainder of 2019

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Within the fast-growing cannabis space, there isn’t a pot stock that draws more attention from investors than Aurora Cannabis (NYSE:ACB). A quick look at the company’s production profile and international reach lends clues as to why.

In terms of annual output, Aurora projects to lead all cannabis growers. Currently producing at an annual run rate of 150,000 kilos per year, the company anticipates increasing its annual run rate to at least 625,000 kilos by the midpoint of next year. This, of course, assumes that three of its largest grow projects — Aurora Sun, Aurora Nordic 2, and Exeter — all receive cultivation licenses.

This is also a company with massive geographic breadth. Whether it’s production, distribution, research, or exports, Aurora Cannabis has a presence in 24 countries worldwide, including Canada. These external sales(Buy Cannabis Online) channels should come in particularly handy if and when Canada’s dried flower becomes oversupplied in the years to come and domestic producers need alternative means to offload their products.

But the most popular pot stock in the world has a number of lingering question marks for the remainder of 2019. Here’s what current shareholders and prospective investors should be eyeing in the second half of the year.


1. Will we hear about entry into the U.S. market?

One of the bigger questions on the minds of Wall Street and investors is when Aurora Cannabis will detail its entrance into the U.S. market. We’ve already seen close to half of Aurora’s major competitors enter the U.S. hemp industry, thereby laying the processing and distribution infrastructure that would be needed if and when the U.S. federal government changes its tune on marijuana at the federal level. But as of now, Aurora hasn’t outlined its plans for the U.S. market.

Back in mid-January, Aurora’s chief corporate officer, Cam Battley, told Business Insider in an interview that “We’ll be unveiling our hemp-derived CBD [cannabidiol] strategy to enter the U.S. market over the next few months.” However, that time frame has come and gone with little mention of what Aurora’s next steps are. As a company that prides itself on geographic expansion, it’s almost a certainty that we’ll hear about Aurora’s U.S. CBD-market plans in the second half of 2019.


 

2. Will a brand-name partner emerge?

Another 800-pound gorilla in the room is Aurora’s mid-March hiring of billionaire activist investor Nelson Peltz as a strategic advisor. Peltz, the founder of Trian Fund Management, has particular expertise in the food and beverage industries, which makes him a logical choice to broker discussions between Aurora and brand-name food or beverage companies. To boot, Aurora’s management has previously suggested its interest in entering the cannabis-infused beverage space.

But here we are three months after the hiring was announced, and Aurora Cannabis has yet to announce any major partnerships beyond that of vape giant PAX Labs. As Canada’s leading producer, Aurora has a pedigree that should attract brand-name food and beverage companies. Perhaps, though, Aurora’s asking price or share-based dilution has chased them off to this point. Either way, it would be a major surprise if Aurora ended 2019 without announcing a significant partnership, joint venture, or equity investment from a brand-name company.


3. Does positive recurring EBITDA mean a substantially smaller net loss?

Since February, Aurora Cannabis’ management team has stood firm on its belief that the company would be generating positive recurring EBITDA (earnings before interest, taxes, depreciation, and amortization) beginning in the fiscal fourth quarter (April 1, 2019, to June 30, 2019). Pushing into positive recurring EBITDA is viewed by many investors as validation of the company’s long-term potential.

The bigger question is, will this push into positive EBITDA actually lead to smaller net losses? Remember, there are a lot of expenses, one-time benefits, and costs that pot stocks contend with. In Aurora’s most recent quarter, it wound up losing close to 94 million Canadian dollars on an operating basis, even with a bunch of one-time negatives removed from the equation. Put plainly, Wall Street is going to want to see a significant reduction in Aurora’s operating losses for the remainder of 2019, but it remains to be seen if that proves the case.


4. Does Aurora lean on its shelf offering?

In early April, Aurora Cannabis filed a shelf offering that allows it to offer up to $750 million (that’s U.S. dollars) in stock and convertible notes over the next 25 months should it choose to do so. Executive chairman Michael Singer suggested that the shelf offering was needed to cover the company’s “global expansion plans and partnering strategy,” according to Yahoo! Finance Canada. However, Singer did note that there were no immediate plans to tap this shelf offering.

What investors and prospective buyers will want to monitor is whether Aurora decides to lean on this shelf offering in the months that lie ahead. Aurora has made an almost insane 15 acquisitions since August 2016, and nearly every one of these deals was financed entirely by issuing its common stock, thereby diluting existing shareholders. It’s really not a question of whether Aurora will make another acquisition at this point — inorganic growth is a big component to the company’s long-term game plan. It’s whether we see additional dilution via a shelf offering over the next six months and change.


5. How much movement will we see in the recreational-to-medical weed sales ratio?

Last but not least, pay close attention to Aurora’s quarterly income statements and just how much revenue it’s deriving from recreational marijuana relative to medical cannabis. In the third quarter, Aurora reported a nearly 50-50 split in cannabis revenue between the recreational and medical markets, down from a 55% medical to 45% adult-use split in the sequential second quarter.

The company has been very clear that it would prefer to focus on higher-margin medical pot, which is in stark contrast to many of its peers. Then again, Aurora may not see a big boost from medical sales until its international revenue soars — and that may not occur until Canada resolves its supply issues. For the time being, this recreational-to-medical weed sales ratio will go a long way to determining Aurora’s margins and is therefore worth closely monitoring for the remainder of 2019.

 

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5 facts about Marijuana

Here are the five facts about marijuana. Illinois this month became the latest U.S. state to legalize recreational marijuana. The legislation signed by Gov. J.B. Pritzker permits recreational use of the drug for adults 21 and older and allows for the expungement of minor marijuana-related convictions. Illinois had previously legalized marijuana for medical purposes.

Nationwide, public support for cannabis legalization has steadily grown in recent years. As support has risen, a growing number of states have legalized or decriminalized the drug. Here are five facts about Americans and marijuana:


  1. A majority of Americans support marijuana legalization. About six-in-ten Americans (62%) say the use of marijuana should be legalized, according to a fall 2018 survey. Public opinion on marijuana legalization was essentially the opposite nearly two decades ago: In 2000, a similar majority (63%) said the use of marijuana should be illegal.
  2. Views of marijuana legalization differ by generation and political party, though support has increased across demographic groups over time.one of the five facts about marijuana.Majorities of Millennials (74%), Gen Xers (63%) and Baby Boomers (54%) say the use of marijuana should be legal, up sharply from earlier years. And while a smaller share of the Silent Generation (39%) currently favors legalization, support among these Americans has also increased.
    Democrats are more likely than Republicans to support the legalization of marijuana (69% vs. 45%). Around two-thirds of independents (68%) also favor legalization. Support has increased among all three groups over the last decade.
  3. Supporters and opponents of marijuana legalization cite different reasons for their views. Americans who favor legalization are most likely to point to the drug’s perceived medical benefits or to say it would free up law enforcement to focus on other types of crime; 86% and 70%, respectively, say these are very important reasons for their support, according to a Gallup survey conducted in spring 2019.
    Among Americans who oppose marijuana legalization, 79% say a very important reason is that it would increase the number of car accidents involving drivers who use marijuana. Around seven-in-ten (69%) say a very important reason is that legalization would lead to more people using stronger and more addictive drugs.
  4. Nearly half (48%) of American adults say they have ever used marijuana, according to the 2017 National Survey on Drug Use and Health. That is lower than the share who say they have ever consumed alcohol (86%) or ever used tobacco products (68%).While many Americans say they have ever used cannabis, far fewer are current users, according to the same 2017 survey: 15% of U.S. adults say they have used marijuana over the past year, while 10% say they have used the drug over the past month.
  5. Eleven states and the District of Columbia have legalized small amounts of marijuana for adult recreational use,according to the National Conference of State LegislaturesCombined, these jurisdictions are home to 29% of adults in the country. (The Northern Mariana Islands, a U.S. commonwealth, also legalized recreational marijuana in 2018.)Nearly three dozen states (34), as well as D.C., Guam, Puerto Rico and the Virgin Islands, have approved some form of a medical marijuana program. Numerous states have also enacted laws reducing criminal penalties for certain marijuana-related convictions or allowing past convictions to be expunged.
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Banks Accepted Significantly More Marijuana Businesses In 2019, Federal Data Shows

Banks and credit unions have been accepting significantly more marijuana businesses in 2019, according to new federal data.

At the end of the last quarter of 2018, there were 438 banks and 113 credit unions actively servicing cannabis businesses. By March 2019, those numbers grew to 493 and 140, respectively.

That data comes from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which tracks financial services for the marijuana industry by analyzing suspicious activity reports, or SARs, that institutions file in accordance with cannabis banking guidance issued by the Obama administration in 2014.

 

While banks run the risk of being penalized by financial regulators by accepting cannabis business accounts because their products are still federally controlled substances, an increasing number of them are willing to take that chance. The latest update of quarterly numbers, posted late last month, comes as bipartisan legislation that would protect banks that service state-legal markets advances toward the House floor for a vote.

“As of 31 March 2019, FinCEN has received a total of 81,725 SARs using the key phrases associated with [marijuana related businesses],” the federal agency wrote.

FinCEN also breaks down the types of SARs the banks and credit unions reported for marijuana businesses.

The vast majority (61,036) were considered “marijuana limited,” a term that refers to cannabis businesses that appear to be operating in compliance with state law and meet the agency’s standard for being serviceable under existing federal guidelines.


About 6,000 were defined as “marijuana priority,” which means they “may raise one or more of the red flags” under federal guidelines or they “may not be fully compliant with the appropriate state’s regulations” and are thus under investigation while the banks continue to service the businesses.

Finally, about 20,000 were marked as “marijuana termination.” That means has the cannabis business has violated at least one federal enforcement priority or state regulation and so “the financial institution has decided to terminate its relationship with” the business.

The Secure and Fair Enforcement (SAFE) Banking Act would do a lot to resolve uncertainty in the banking sector as it concerns marijuana. The bill cleared the House Financial Services Committee in March and is expected to get a full House floor vote next month.

Advocates argue that providing for the lawful banking of cannabis businesses would increase financial transparency, mitigate public safety risks associated with operating on a largely cash basis and simplify the tax process.

The legislation enjoys broad support outside of Congress as well. Twenty U.S. governors recently signed a letter encouraging its passage, as did banking associations representing all 50 states, a coalition of state attorneys general and another comprised of state treasurers.

Meanwhile, an annual spending bill that covers the Treasury Department and includes temporary language protecting banks from being punished for working with cannabis businesses is on the House floor this week.

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Illinois becomes 11th state to allow recreational marijuana

Legalization in Illinois also means that nearly 800,000 people with criminal records for purchasing or possessing 30 grams of marijuana or less may have those records expunged.


SPRINGFIELD, Ill. — Illinois’ new governor delivered on a top campaign promise Tuesday by signing legislation legalizing small amounts of marijuana for recreational use, making the state the 11th to do so and the first to implement a statewide cannabis marketplace designed by legislators.

Legalization in Illinois also means that nearly 800,000 people with criminal records for purchasing or possessing 30 grams of marijuana or less may have those records expunged, a provision minority lawmakers and interest groups demanded. It also gives cannabis-vendor preference to minority owners and promises 25 percent of tax revenue from marijuana sales to redevelop impoverished communities.

Gov. J.B. Pritzker, whose election last year gave Democrats complete control over state government again after four years under GOP predecessor Bruce Rauner, signed the bill in Chicago amid a bevy of lawmakers and pot proponents.


Under the measure, residents can purchase and possess up to 1 ounce (30 grams) of marijuana at a time. Nonresidents could have up to 15 grams. The law provides for cannabis purchases by adults 21 and older at approved dispensaries, which, after they’re licensed and established, may start selling Jan. 1, 2020. That means possession remains a crime until Jan. 1, a spokesman for Senate Democrats said.

“In the past 50 years, the war on cannabis has destroyed families, filled prisons with nonviolent offenders, and disproportionately disrupted black and brown communities,” Pritzker said. “Each year, law enforcement across the nation has spent billions of dollars to enforce the criminalization of cannabis. … Yet its consumption remains widespread.”

On the campaign trail, Pritzker claimed that, once established, taxation of marijuana could generate $800 million to $1 billion a year in taxes. He initially estimated that in the budget year that begins July 1, dispensary licensing would bring in $170 million. But the lawmakers who sponsored the plan, Sen. Heather Steans and Rep. Kelly Cassidy, both Chicago Democrats, have dampened that prediction, lowering estimates to $58 million in the first year and $500 million annually within five years.

The marketplace portion of the Illinois law also addresses what critics have complained is the decades-long war on drugs’ disproportionate impact on minority communities. Pritzker said that while blacks comprise 15 percent of Illinois’ population, they count for 60 percent of cannabis-possession arrests.

 

In addition to providing criminal-record scrubbing for past low-level offenders, the law gives preference to would-be marijuana vendors in areas of high poverty and records of large numbers of convictions. And portions of tax proceeds must be reinvested in impoverished communities.

Police organizations are wary, concerned about enforcing driving under the influence laws and arguing technology for testing marijuana impairment needs more development. Law enforcement organizations were successful in killing an earlier provision that would have allowed anyone to grow up to five marijuana plants at home for personal use. Police said they’d have difficulty enforcing that, so the bill was amended to allow five plants to be maintained only by authorized patients under the state’s medical marijuana law. They previously could not grow their own.

Ten other states and the District of Columbia have legalized smoking or eating marijuana for recreational use since 2012, when voters in Colorado and Washington state approved ballot initiatives. Vermont and Michigan last year were the latest states to legalize marijuana. Vermont did so through the Legislature, the first time it wasn’t done through a ballot initiative, but didn’t establish a statewide marketplace as Illinois did.

Other initiatives have failed. Promising proposals in New York and New Jersey fizzled late this spring. Despite a statewide listening tour on the issue by Pennsylvania’s lieutenant governor last winter, the idea never took flight.