Business Insider's top cannabis stories of 2020
Crystal Cox/Business Insider
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Happy New Year's Eve everyone,
We're finally here - the end of 2020. Congratulations, and here's to hoping we'll all be vaccinated and the economy will come roaring back before the end of 2021.
For our cannabis industry team here at BI, it was a year of whiplash. We left BI's headquarters in Manhattan's Financial District in early March, and haven't been back since. Luckily our newsroom, distributed across small apartments in Brooklyn, Philadelphia, San Francisco, and further afield, didn't skip a beat.
In mid-March, I left the cannabis beat for a few months to backstop our team covering the pandemic at the height of things here in New York City. It was quite head-spinning to switch gears so suddenly, and the reporting - at least for the early period when there were more unknowns than concrete knowledge about the virus - was pretty scary at times. But it was much better than doing nothing.
For the cannabis industry, it was a year of whiplash as well. If you follow the industry and our reporting, you know the story: the exuberance of 2017 and 2018, when it seemed like marijuana legalization was a snowball rolling downhill, to the reality of mid-to-late 2019, when the legalization movement sputtered and some publicly traded Canadian cannabis companies - exposed for preparing for consumer demand that never materialized - lost over 90% of their market value.
Investors were burned, employees laid off, greenhouses shuttered, and the smart money moved out of the industry by the start of 2020. Cannabis companies that once didn't know what to do with all the money they had suddenly found themselves in a cash crunch.
But still, some investors (those with a particularly long view) stuck around. Marijuana was declared an essential business in states like California at the start of the pandemic, and people started buying lots and lots of weed, preparing to spend months cooped up at home with nothing but Tiger King and sourdough starter. Marijuana legalization became a focal point in the national conversation around racial justice when protests erupted after police were seen on camera with a knee on George Floyd's neck, killing him in the street. Four states voted to legalize recreational marijuana, and the House, for the first time in history, passed a federal decriminalization bill.
The industry's downturn and the pandemic culled the herd of cannabis companies that piled into the market. While that process is still ongoing, in recent weeks we've seen a huge uptick in valuations, mega-deals, and investors pouring back into the industry as the snowball of marijuana legalization again picks up momentum. Things are looking up in 2021, and we'll be there to cover it.
We'll be back to our regularly scheduled programming the week of January 4th. Until then, here's a selection of our favorite cannabis stories from 2020 for your perusal.
-Jeremy (@jfberke)
Here's a roundup of our top stories from 2020:
The inside story of the downfall of Civilized, a cannabis media startup that raised $7 million, then had to shut down after a takeover offer fell through
Civilized Worldwide raised $7 million to create the "premium lifestyle and media brand" for cannabis consumers around the globe.
With investments from high-profile backers like the comedian and author Chelsea Handler and Canopy Rivers, the venture arm of Canopy Growth, Civilized and its husband-and-wife founders were soaring as cannabis legalization looked poised to sweep the US a few years ago. But after a series of layoffs and business pivots, as well as a failed takeover attempt, Civilized has let go of all of its staff and suspended operations.
Civilized's management team told us they were in negotiations to restructure their debt and bring on new investors for a relaunch. That has yet to happen.
An inside look at Eaze's latest pitch deck reveals vastly scaled back ambitions from the once-soaring cannabis startup
We took a deep dive into cannabis startup Eaze's financial projections from 2017 to the present. Internal documents and interviews reveal the once-brash startup's vastly scaled-back ambitions.
In 2017, Eaze - then a cannabis delivery service - projected that it would sell $1 billion worth of marijuana on the platform and aggressively expand to new states. In 2020, under the guidance of a new executive team and after a round of layoffs, Eaze has pared back that expectation to $190 million in sales.
Cannabis companies are facing an uptick in audits related to an obscure Reagan-era tax rule, piling up costs and headaches for the growing industry
Five cannabis industry lawyers and accountants told us they're bracing their clients for an uptick in audits and investigations.
The audits stem from a section of the tax code called 280E, which prohibits companies that sell illegal drugs - like marijuana - from deducting regular business expenses, like office supplies or health insurance premiums.
Investors are pouring millions into startups that are developing magic mushrooms as medications for conditions like depression and PTSD
There is a "psychedelics renaissance" in motion, according to insiders in the industry, as shown by a rush of investor dollars and a number of public market debuts.
Some of the investors and banks working in psychedelics are the same ones who were involved with the cannabis boom and subsequent bust. Despite the similarities, psychedelics insiders say that there are stark differences between cannabis and psychedelics.
Investors have poured almost $3 billion into cannabis SPACs, but experts say their cash could be stuck in limbo as deadlines loom
Investors have poured nearly $3 billion into blank-check companies, or SPACs, designed to take advantage of deals in the cannabis industry since the start of 2019.
SPACs provide an alternative pathway for companies to go public. It's a method that's attractive in cannabis as many investors got burned when the industry underwent a sharp correction in the middle of last year.
SPACs have a limited timeframe to close deals, and there's lots of competition to capture a small pool of suitable targets. The clock is ticking on many of these SPACs, according to data BI obtained, meaning that they need to either find targets quickly - or fold. After we wrote this story, a few SPACs closed major deals, incl
Venture investors are piling into red-hot cannabis tech startups, despite the industry's struggles. Here's why mainstream funds are betting on software over pre-rolls.
Cannabis tech has become the lone bright spot in an industry that has stumbled in the first half of 2020. In August alone, three cannabis tech startup closed 8-figure funding rounds. VCs have invested $57 million in cannabis tech since July 1.
Cannabis activists say legalization is the first step in reforming the police. But creating an equitable industry for Black entrepreneurs has been an uphill battle.
As protests over police violence continue to erupt around the US after George Floyd's killing, cannabis activists say legalization is the first step to reducing police violence. Black people are 3.6 times more likely to be arrested for marijuana, a substance that's legal in many US states.
Despite activist's efforts, creating an equitable cannabis industry has proven to be an uphill battle due to the conflict between state and federal law. Many Black and other minority entrepreneurs are denied the same access to capital to start their businesses as their white counterparts, activists say.
The House voted to decriminalize cannabis just a month after 5 states passed cannabis reform measures. Here's the ultimate guide to marijuana legalization: the key dates to know, and which stocks could benefit the most.
We put together this comprehensive tracker to break down a monumental year for cannabis reform, including the MORE Act, various state legalization ballot measures, the timelines we should expect for rollout, and which companies are best positioned for the new markets.
Pot stockpiles, supply chain disruptions, and CBD hand sanitizer: How the cannabis industry is preparing for - and reeling from - the coronavirus pandemic
At the beginning of the pandemic lockdowns, people started stockpiling pot as many cities ordered non-essential retail stores to close.
Despite strong sales numbers, cannabis industry investors, experts, and analysts told us that the fallout from the coronavirus pandemic will be dire. They said that it will disrupt supply chains, hurt startups, and accelerate a shakeout period for cannabis companies.
Some investors say the companies that are best prepared to weather the chaos will emerge as the industry's leaders when the pandemic subsides - that, according to our most recent reporting, has seemed to bear out.
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