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Will Federal Legislation Open Cannabis Acquisition Floodgate?

Client Alert

Are potential buyers quietly lobbying at federal and state levels to kick open the door to launch a new round of strategic acquisitions? Will presently pending federal legislation, the SAFE and MORE Acts, providing safe harbor for banks and re- or de-scheduling marijuana, be sufficient to mobilize into action major non-cannabis companies that previously shunned the cannabis industry due to the unknown implications of owning businesses whose activities are illegal under federal law?

When tobacco giant Altria invested $1.8 billion in Cronos, and beverage behemoth Constellation Brands invested in Canopy, the investments did not require the assumption of a smorgasbord of unknown risks that come with investing in federally illegal enterprises since neither Cronos nor Canopy had any “illegal” US operations. These include key business issues and concerns, such as banking relationships (almost certainly mitigated by the SAFE Act), stock exchange listings and liquor licensing.

It was recently disclosed that Altria, which has been acquiring ancillary cannabis businesses and intellectual property since its Cronos deal, has engaged lobbyists to promote its cannabis interests. It wouldn’t be much of a leap to speculate that they, and other potential strategic tobacco, beverage and pharma company investors, are both carefully analyzing the pending legislation in the US and actively working to firmly place their feet in the open door and widen the porthole, facilitating a new wave of acquisition activity.

Right now, as the financial performance of cannabis businesses is beginning to pop, the shelves of the acquisition market are fully stocked with potential acquisitions candidates of all sizes, shapes and flavors. If the door is opened, competition and pricing could be eye popping. Think “first mover advantage.”

Stay tuned.

For questions, please contact Business and Corporate Law Member and Managing Partner of BMD's Phoenix/Scottsdale location Stephen Lenn at salenn@bmdllc.com, or 480.687.9747.


The Current State of Assignment of Benefits Litigation in Florida

On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney’s fees, with respect to assignment of benefits (“AOB”) property insurance litigation. One-way attorney’s fees are a longstanding problem in Florida and the reforms come at a time when AOB litigation increasingly affects homeowners in a negative way.

Proposed Community Revitalization Grants for Ohio Projects

Jason A. Butterworth client alert ohio tax credits historic preservation tax credits community revitalization grants

Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic Districts

Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.

Ohio Board of Pharmacy COVID-19 Waiver Update

The State of Ohio Board of Pharmacy has issued waivers throughout the COVID-19 pandemic to aid licensed practitioners in their day-to-day operations. As the pandemic has continued over the years, the State of Ohio Board of Pharmacy has intermittently reviewed the various waivers. Effective August 10, 2022, some of those waivers that were once granted have been rescinded.

Ohio Chiropractors Can Now Provide Evaluation and Management Services to Medicaid Patients

The Department of Medicaid released a statement that Medicaid will cover low-and moderate level E&M services represented by CPT codes 99202, 99203, 99212, and 99213 when performed by a chiropractor. The Department of Medicaid will cover up to three E&M services per benefit year. The Department of Medicaid plans to make these changes effective by October 1, 2022.