St. Anthony: Minnesota, Federal Policies Have Made State’s Flagship Cannabis Company a Candidate for Takeover

Patricia Gates has Ramsay Hunt syndrome, a shingles-related condition that causes partial facial paralysis, nerve damage and hearing loss.

She was diagnosed in 2017. And she’s been feeling much better since 2019, when she started treating her with cannabis creams and oils that she buys from the Green Goods dispensary in downtown Minneapolis, instead of a myriad of other pharmaceuticals. Pain, stomach problems, depression and other illnesses have decreased markedly.

“I feel so much better physically and psychologically,” Gates said. “I was afraid, before cannabis, that ‘this would be the day’ when the pain was just too much. Cannabis has been a Hail Mary for me and my medical team at Noran Neurological.”

But cannabis treatments are expensive — $800 a month for Gates. A law that had bipartisan support and was signed into law last spring by Governor Tim Walz expands medical marijuana treatments to cannabis flowers for the first time.

On February 28, Gates became the first customer to buy, and she estimates that it will reduce her monthly costs by 40%.

“It’s about my health and proper use,” said Gates, a mental health professional.

About 35,000 are enrolled in the state’s medical cannabis program. Minnesota still prohibits recreational cannabis for adults.

Dr. Kyle Kingsley, chief executive of cannabis company Goodness Growth Holdings, expects the natural flower product to boost sales among patients who previously could not afford cannabis, who is approved to treat approximately 20 conditions.

“Allowing the sale of cannabis flowers will greatly benefit existing patients, attract new patients to the program, and ensure the continued viability of Minnesota’s medical cannabis program,” Kingsley said last week.

However, despite the promising product, Minnesota is losing its two local medical cannabis companies to acquisitions.

This includes Goodness Growth, which has 18 dispensaries, including Green Goods, and a greenhouse cultivation facility. It employs 500 staff and serves five states, including New York, which will soon have legal recreational use for adults.

Verano, a major Chicago-based cannabis industry consolidator, is buying Goodness Growth in a $413 million stock deal.

Verano’s CEO said the key to the deal was Goodness Growth’s New York operation.

Goodness Growth’s board, with a lagging share price, decided the deal would be best for shareholders.

“We believe it is in the interests of Goodness Growth’s stakeholders to partner with a larger, scaled-up operator with access to lower-cost capital to optimize long-term results for our business,” Kingsley said in February.

Federal rules don’t treat the cannabis industry the same as pharmaceuticals, and Minnesota’s slow move toward legal recreational use has slowed growth and profitability enough to make Goodness Growth an acquisition target.

Goodness Growth posted an operating loss on revenue that rose 11% to $40.8 million in the first nine months of 2021. It had predicted profitable growth for 2022.

According to the National Law Review, legislation passed by the U.S. House but stalled in the Senate would have extended banking rights and eased punitive tax treatment of licensed cannabis transactions and the companies that carried them out. In other words, it would have legitimized the industry.

In an interview last week, Kingsley said federal restrictions have forced Goodness Growth to fund its growth with expensive non-bank borrowing, including $30 million last fall at 13% interest.

“We couldn’t continue to take in capital at these rates,” Kingsley said. “The largest operators can access capital for less than 10%.

Cannabis is considered a controlled substance [like heroin or LSD], and the IRS will not allow us to deduct standard business expenses, such as pharmacist salaries,” Kingsley said. ” This is madness. I have a pharmacist who sometimes gives life-saving drugs to children with terrible seizure disorders, and we are not allowed to deduct that medical professional’s salary. And the salary of all dispensary staff is not deductible.”

Minnesota tax laws have been changed to treat cannabis as a legitimate business. And more than 30 states allow at least some cannabis use.

Kingsley, who was an emergency room physician and Minnesota National Guard medic before starting Goodness Growth, avoided cannabis until he realized that most of his overnight patients were affected by alcohol or drugs. opioids that contributed to car accidents, domestic violence, PTSD and their other medical calamities that he helped treat.

His research on cannabis, introduced into Western medical practices in the 19th century, revealed that it could often replace alcohol and pharmaceuticals with minimal side effects.

There is archaeological evidence that cannabis has been around in one form or another for centuries. Criminal regulation in the United States began in the 1930s, led by FBI Director J. Edgar Hoover, who also linked marijuana to insanity, subversion, and communism.

Kingsley, 46, hopes to stay with Verano in Minnesota.

“I will advocate for patients in Minnesota and bring the products to them,” he said.

About Michael Bill

Check Also

Small-molecule drug could offer breakthrough treatment for cancerous brain tumors

A new type of small-molecule drug, the first to target circadian clock proteins as a …