Sessions' role as U.S. attorney general unsettles legalized pot industry
09/02/2017 12:00
(Repeats with no change in text)
By Sharon Bernstein
SACRAMENTO, Calif., Feb 8 (Reuters) - The prospect of
Senator Jeff Sessions as U.S. attorney general has cast
uncertainty over the country's nascent legalized marijuana
industry, souring deals and disrupting share prices since the
longtime critic of the drug was nominated.
The U.S. Senate on Wednesday confirmed President Donald
Trump's nomination of Sessions by a vote of 52-47 after strong
opposition from Democrats. urn:newsml:reuters.com:*:nL1N1FT18A. The Republican senator
from Alabama has opposed attempts to legalize marijuana and
reduce drug sentences and once urged the death penalty for drug
traffickers.
Trump named Sessions as his choice to lead the Justice
Department on Nov. 18, shaking the exuberance of an industry
that last year reached $7 billion in legal sales and generated
half a billion dollars in sales taxes.
The choice of Sessions drove some businesses back
underground and scared away investors, industry experts said.
Growers are seeking advice on how to protect themselves from a
crackdown, while other cannabis companies are seeking ways to
shield their records from investigators.
"Everyone's back into wait-and-see mode," said Sasha Kadey,
chief marketing officer for Greenlane, which distributes
cannabis accessories such as vapor smoking devices. "Because one
doesn't want to paint a target on one's back."
More than two dozen U.S. states have legalized some form of
marijuana for medical or recreational use, but the drug remains
illegal at the federal level.
The administration of former Democratic President Barack
Obama mostly tolerated the state legalizations, focusing on big
cases or transactions that involved other crimes, such as
selling pot to children.
Trump has said in the past he would defer to states on
marijuana legalization, and has not addressed the issue since he
was elected last November.
But Sessions, asked about marijuana policy at a Senate
confirmation hearing last month, said that if Congress no longer
wanted to criminalize marijuana, it "should pass a law that
changes the rules."
"It's not so much the attorney general's job to decide what
laws to enforce. We should do our job and enforce laws
effectively as we are able," Sessions said.
Neither the administration nor Sessions responded to
requests for comment.
'DEALS LOST'
Massroots MSRT.PK , which makes a mobile app that allows
people to review and discuss cannabis strains, lost 14 percent
of its share price in the three trading days after Sessions'
nomination, and it was promptly removed from the Google Play app
store, said Chief Executive Isaac Dietrich.
The share price has since recovered and is up 24 percent
since Nov. 18.
At Greenlane, Kadey changed the company's plans for a new
line of premium, child-resistant packaging, deciding to market
it without using the words marijuana or cannabis.
"There was a sharp drop in the stocks post-election," said
analyst Tom Adams, editor-in-chief of Arcview Market Research.
"There were deals lost and second thoughts had by many people."
An index of 33 publicly traded legal cannabis companies
followed by Arcview dropped to a low of 284 points after the
election from a high of 418 in October, analyst Michael
Arrington said. The index has since regained much but not all of
that value, hitting 379 on Jan. 6, the most recent date for
which the company has data.
An effort to ramp up prosecution of federal marijuana
offenses would reinvigorate the black market in cannabis and
limit the states' ability to regulate both legal and illegal
sales, said Andrew Freedman, who last month left a job as
Colorado's top marijuana regulator to become a consultant in the
industry.
Tighter enforcement could also threaten $140 million in
taxes from marijuana sales that Colorado has used for education
and other purposes, Freedman said.
Since the election, volatile valuations have complicated
potential deals for companies that are up for sale, said Steve
Gormley, CEO of the cannabis private equity firm Seventh Point,
LLC.
Khurshid Khoja, a San Francisco Bay-area attorney who
specializes in cannabis issues, said the climate was stalling
deals as companies grow nervous about opening their books.
"It's that they just don't know," Khoja said
(Reporting by Sharon Bernstein; Editing by Daniel Trotta and
Peter Cooney)
((sharon.bernstein@thomsonreuters.com;))
Keywords: USA TRUMP/SESSIONS MARIJUANA