The marijuana industry is one of the very few sectors of the economy that have continued growing amid the pandemic, and an alleged investigation for bribery into a leading U.S. cannabis firm has done little to harm sentiment
The marijuana industry is one of the very few sectors of the economy that have continued growing amid the pandemic; and indeed, the majority of U.S. cannabis operators have benefited greatly. And even reports of an alleged investigation into a cannabis company for bribery has failed to hurt the sector for more than a day.
Earlier this week, the Chicago Tribune quoted unnamed sources as saying that federal investigators were looking into Illinois-based Green Thumb Industries, one of the largest marijuana operators in the country.
Shares of the company closed down nearly 12% on Tuesday, while few others fell 5% each as the fear contagion spread.
But the plunge was short-lived, with stocks jumping back Wednesday, and Green Thumb closing more than 16% higher when New York legalized marijuana, becoming the 15th state to do so.
The Chicago Tribune report alleges that Green Thumb, which operates in 12 state markets and had $556 million in revenue last year, may have illegally paid off powerful politicians in its quest to win cannabis licenses in Illinois and other states.
“[I]nvestigators have been scrutinizing campaign donations and other steps Green Thumb Industries took as it sought to secure growing and distribution licenses in Illinois and several other states,” the outlet wrote.
Over the years, Green Thumb has hired numerous lobbyists and consultants, but it is common for large cannabis firms to contribute to political campaigns. Last year, cannabis companies spent $5 million in total on legalization lobbyists.
Still, it was way less than how much alcohol and tobacco industries spent on lobbying, $27 and $30 million, respectively.
However, Chicago Tribune noted that the company had once hired Michael McClain, a longtime associate of former Illinois House Speaker Michael Madigan and a figure recently charged with bribery.
Last December, McClain was indicted with three others in a bribery scandal linked to Illinois electric utility ComEd.
As for Green Thumb, its founder and CEO Ben Kovler said they are unaware of any ongoing investigation.
“These are unfounded allegations that completely undermine the lengths Green Thumb has taken since day one to compliantly grow our business…We have not been subpoenaed or had assets seized, and we are actively reaching out to the authorities to engage on these allegations,” Kovler wrote.
Fifteen states and Washington, D.C. have now legalized marijuana for recreational use for adults over 21. Thirty-four states currently allow medical marijuana use, while 15 states do not have any laws that allow marijuana.
A few other states were also preparing legalization for last year; however, the pandemic drew attention away from these efforts and made ballot drives impossible.
Ever since the start of the pandemic, due to various lockdowns and stay-at-home orders, sales of cannabis products have surged as the industry was deemed an “essential service.”
In the U.S., 68% of Americans currently favor legalizing marijuana, a record high, while the legal cannabis industry market topped $13.5 billion in 2019 and reached $19.7 billion last year.
In its new study, New Frontier Data projects that cannabis sales in the U.S. are projected to reach $35 billion by 2025.
In the biggest boost yet, top Senate Democrats announced last month a push to pass sweeping legislation this year that would end the federal prohibition on marijuana.
By Michael Kern for Safehaven.com