ISSUE 30: More Drama at Curaleaf

Just when I thought I could go one issue without talking about MSOs, they pulled me back in. Plus, I share my thoughts on the idea of lowering weed taxes in MA.

Jan 27, 2023

Welcome to the 30th edition of Burn After Reading! This is my newsletter on cannabis (and other things). You can check out last week’s issue here, and if you haven’t subscribed yet, please do.

I basically have a catchphrase now.

“There’s never a dull moment in the cannabis industry.”

I find myself blurting this out whenever I’m in a conversation where I feel a bit overwhelmed by everything happening in this space. It’s happening more and more as of late.

In this issue, I share my thoughts on an editorial calling for lower cannabis taxes in Massachusetts, and then get into some updates on the on-going Trulieve/Curaleaf drama.

There’s been a lot of MSO talk here as of late, so I’ll try to find something that’s both new and positive to talk about next week (no promises though!).

LOWERING TAXES CAN’T SOLVE EVERYTHING

Worcester Business Journal put out an editorial calling for the lowering of cannabis taxes in Massachusetts.

The editorial makes a pretty simple argument: Regulations have created a big burden on cannabis businesses, so we should slash the additional taxes that the state has added for weed purchases.

It’s fair to argue the cannabis businesses have faced strict regulations that have hampered their ability to make profits. It’s also fair to argue that we shouldn’t tax cannabis more than we do products like alcohol.

But what would this move actually accomplish at this point?

A tax reduction would do very little to actually fix the key issues in the cannabis space. It won’t even the playing field. It certainly won’t help stop cannabis prices from tumbling lower, nor will it convince consumers who still grow their own or buy from a friend to suddenly start shopping at dispensaries.

While it won’t really do much to help the economic situation in the cannabis space, lowering taxes at this moment could undermine the rollout of the new Social Equity Trust Fund and the Commission’s ability to regulate the industry.

I’m not really taking a firm position against lowering cannabis taxes in Massachusetts to some degree in the future. In fact, if there was some evidence that there’s any appetite on Beacon Hill for lower weed taxes, I’d be all for it. It would just be more prudent to spend that political capital on other cannabis-related issues of more importance.

UPDATES ON TRULIEVE/CURALEAF

TRULIEVE

OSHA gave me a statement regarding their settlement with Trulieve, and released a full copy of the stipulated agreement.

As we get closer to the next CCC meeting (2/9), I’ll keep an eye out for the agenda to see if we’ll be getting a resolution to their investigation.

CURALEAF

Curaleaf CEO Boris Jordan once famously declared that cannabis drinks will be 50% of the market within the next 5-10 years. Now the question is: Will Curaleaf be around to see this?

The company announced this week that they are making a number of cuts, including:

Shuttering their cultivation/production operations in California, Colorado, and Oregon.
Closing their Amesbury, MA cultivation/production facility.
Laying off 4% of their workforce (a 10% payroll reduction).

Many employees found out about the layoffs via the press release, and the company is refusing to commit to keeping its retail operations in CA, CO, and OR open either — leaving workers at those shops in limbo.

While Curaleaf Founder Boris Jordan vented his feelings on an unhinged twitter space rant where he decried the company’s critics as being “racist” against Russian people, CEO Matt Darin decided to scapegoat the legacy market for his failures.

From MJBiz:

Responding to criticism that Curaleaf is focusing on states with less competition and limited licensing, Darin said the move is more about operating in markets where there’s not a huge oversupply of product and an unrestrained illicit market.
“That creates an unlevel playing field for the companies that are operating in the regulated market and following the rules,” he added. “Those are tough markets as a regulated business and as a public company.”

There’s just three problems with this statement:

Despite a number of issues in markets like CA, CO, and OR, there’s still a number of companies — big and small, public and private — that are doing just fine for themselves in those places.
Curaleaf has an established track record of seeking to operate in markets that have regulations that limit the participation of small businesses. Can anyone argue with a straight face that markets like Connecticut have a “level” playing field?
Curaleaf actually has a serious track record of not “following the rules.” Just ask regulators in Massachusetts…or Oregon…or New Jersey…or New York…or Maryland…or Massachusetts (again).

Or better yet, just ask OSHA. Details are sparse at the moment, but Curaleaf is under investigation (again) for violating federal labor regulations in New Jersey. It’s hardly the first time the company has found itself in this situation.

In total, the company has been fined at least $734,503 by various state and federal regulators since 2019.

Curaleaf complains that it’s hard to make a profit when you “follow the rules,” but do they actually do that? (Graphic by Eric Casey)

While Curaleaf can’t seem to stop violating various state and federal regulations, don’t you worry about CEO Matt Darin. The company’s press statement made no mention of any cuts to executive salaries or bonuses, and Matt managed to dump some company stock a few weeks before all this news broke.

HEADLINES

New England

National / Rest of U.S.

International

WELCOME DISTRACTION

For the first time in a very long time, the Women’s basketball team at my alma mater (the University of Rhode Island) is good. In fact, they are really good; they currently have a 17-3 record and are undefeated in conference play. You can catch their next game against St Joseph’s at 6pm on 2/1 (ESPN+). Go Rams!

CAT OF THE WEEK

This cat, featured in a 1647 painting by Dutch artist Jacob Gerritszoon Cuyp.

I’m going to jump in a time machine so I give that cat a piece of that fish.

That’s a wrap on this issue. Thanks for reading! If you have any suggestions or feedback, email me here. Be sure to subscribe if you haven’t already, and if you would like to support my work, please consider a paid subscription.