Business

By Warren Bobrow

Cannabis sales in Colorado set a new monthly record in May, reaching their highest level since broad legalization in 2014.

Dispensaries sold over $192 million worth of cannabis products that month, according to data from the state Department of Revenue’s Marijuana Enforcement Division compiled by The Denver Post. That figure is up about 29% from April and 32% from May 2019.

The past year has been a tough one for publicly traded cannabis companies, particularly multi-state operators in the United States, many of whom have seen their valuations drop to a quarter of their early 2019 highs. This decline in value coupled with the current Covid-19 virus-fueled economic downturn has many investors sitting on the sidelines. But a host of factors are brewing that could cause a powerful tailwind for the U.S. cannabis industry.

During the last year, we have noticed increased interest in the Israeli cannabis market and this is a market that we have been favorable on since inception. The climate in Israel is ideal for cultivating cannabis and we are bullish on the industry due to the economics that are associated with it.

Cannabis legalization will likely be an important issue for the U.S. presidential election of 2020.

That's according to a research report by Bank of America Securities analysts Bryan Spillane and Lisa Lewandowski.

However, the COVID-19 pandemic could put the debate on hold, they said.

The analysts break down the hypothesis into four elements, which include congressional activity, the Unity task force formed by Democratic candidate Joe Biden and Vermont Senator Bernie Sanders, cannabis taxation and legalization measures at the state level. 

As any marijuana stock investor can tell you, the past 15 months haven't been pretty for pot stocks. Since April 2019, the vast majority of cannabis stocks have lost 50% or more of their value as growing pains have taken shape. In Canada, supply issues have led to everything from shortages to bottlenecks. Meanwhile, high tax rates on legal product in the U.S. have ensured that black market demand remains robust.

The state of Illinois set another new record for tax collections on cannabis sales in the month of June, raking in nearly $12 million, according to state officials.

The $11,954,246 that Illinois collected in taxes on legalized cannabis in the month of June set a new record for the state, breaking the previous record by nearly half-a-million dollars, according to Gov. J.B. Pritzker’s administration.

Over the first six months that cannabis has been legal in the state of Illinois, tax revenues have totaled up to nearly $52.8 million.

As governments respond to the evolving coronavirus pandemic, the global cannabis industry is navigating a constantly changing landscape. Many businesses must adjust operations or update policies, typically on short notice, to comply with changing regulations. More often than not, these changes can be executed with the help of advanced technology solutions that cater specifically to the complex needs of a cannabis business. The legal cannabis industry is coming of age in the middle of a technology revolution. 

COVID-19 case numbers in the US are at record levels and many market commentators are talking about the potential for a second shutdown to control the outbreak. Although we do not expect to see the country shutdown like it did the first time, we expect to see some states take action (i.e. closing bars and limiting the amount of indoor dining) to try and curb the spread of the outbreak.

Carving your own path to success will take time. However, bootstrapping instead of raising capital from investors has massive advantages in today's cannabis marketplace.

One of the many ongoing dilemmas that young entrepreneurs with a new business face is acquiring the startup capital to make an impact in their respective industries.

Cannabis is no different.