This week's cannabis business news | The Bengal Bite 🐯
Marijuana MSO debt costs fall, but capital issues linger for smaller firms (MJ Biz Daily) | The lower rates have boosted the investment muscle of these MSOs as they expand their presence in fast-growing state markets. Debt financing for large players is abundantly available but in a world where equity capital is tough to come by this only expands the divide between the haves and the have nots. Large MSOs recently have been raising capital and paying annual interest rates of about 9%-10% – several percentage points below rates a year ago. Granted, the marijuana industry is still paying far higher interest rates versus mainstream corporations in other industries. The average cost of corporate debt has hovered around 3%, according to data compiled in early 2021 by New York University’s Stern School of Business.

Cannabis sector is not banking on help from Congress before 2022 (MarketWatch) | While Congress is expected to lift the federal prohibition on cannabis someday, Capitol Hill remains too occupied with other matters in the current fall session to take up the issue, marijuana business watchers said this week. Questions around coming catalysts for the cannabis sector from Washington, D.C., have been frequent in recent conversations with investors, but with other items such as infrastructure, healthcare, and potential tax hike under debate, it’s unlikely lawmakers will act on any federal measures in the near future.
Michigan Cannabis Sales Increase 52% to $165.6 Million in August (New Cannabis Ventures) | Stabilization in flower prices and strong adult-use demand boosted Michigan cannabis revenue in August by 52% compared to a year ago to $165.6M, down 3.2% from July. The Michigan Marijuana Regulatory Agency breaks out sales by medical and adult-use, with medical sales falling 119.2% from a year ago to $40.1 million, down 6% sequentially, and adult-use sales increasing 112% to $125.5 million, down 2% sequentially. Michigan generated $985 million in cannabis sales in 2020, and the program should continue to expand this year as supply becomes more available and as distribution expands. So far in 2021, year-to-date combined sales are up 97% to $1.15B.
Santa Barbara Cannabis: Pot Price Drop and Market Glut? (Santa Barbara Independent) | A major glut in cannabis production and a corresponding plunge in pot prices resulted in Santa Barbara County collecting 43% less in cannabis revenues in the fourth quarter of 2021 than the same period last year. That’s a drop from $5.5 million to $3.8 million. Even so, county cannabis revenues increased by $3.5 million for the year, growing from $12.2 million last year to $15.7 million. Brittany Heaton, the county’s de facto cannabis czar, told the supervisors at Tuesday’s board meeting that overproduction may have driven the price per pound down. While this might be bad news for some cultivators, this has been welcome news for processors and brands who have long awaited cheaper input costs for their finished goods.