Cannabis Industry: FBI Investigation Poses Challenges

As the cannabis industry has been in the spotlight this year, the FBI is also investigating allegations of corruption in this nascent industry. How could such an investigation affect this growth-oriented industry? Let’s take a look.

Cannabis Industry: FBI Investigation Poses Challenges

FBI investigation of the cannabis industry

In its August 15 podcast, FBI officials mentioned that the law enforcement agency is seeking tips on public corruption related to the marijuana industry. This investigation is mainly focused on Western markets. In the podcast, FBI spokesperson Mollie Halpern said, “As an increasing number of states change their marijuana legislation, the FBI is seeing a public corruption threat emerge in the expanding cannabis industry.”

Halpern urged listeners to contact local FBI field offices if they became aware of any hints of illegal activities. FBI intelligence analyst David Kirschner noted that this issue wouldn’t be disappearing soon. Can we expect this investigation to cause problems with marijuana legalization at the federal level? Read Cannabis Industry: FBI and FDA Tighten the Screws to learn more.

Legalization

Although marijuana is currently legal for recreational use in ten states and medical use in 33 states, it is still a Schedule 1 drug under the Controlled Substance Act in the US. We can expect some easing of regulations, as multiple presidential candidates are taking a stance on marijuana legalization. For one perspective, please read Bernie Sanders Tweets on Marijuana Legalization.

Plus, we feel President Trump could use marijuana legalization as a key topic for his reelection in the 2020 election. For additional insight, please read President Trump: Is Marijuana Legalization a Key Weapon?

Other news that could affect the industry

A newsletter published by Word on the Tree yesterday said that Facebook (FB) has suspended its medical marijuana forums. The newsletter added that the Ohio Medical Cannabis Review page was deleted last week. The forum discussed products and dispensaries for the state’s medical marijuana patients.

FDA regulations also pose a challenge for the cannabis industry, as we detailed in Cannabis Industry: FBI and FDA Tighten the Screws. Multiple cannabis players have become involved in the regulation scandal in July. Corporate governance is a vital issue for cannabis companies.

July was a rough month for cannabis stocks. CannTrust (CTST) was involved in a violation of Health Canada regulations, and it lost the case in July. Curaleaf (CURLF) faced similar allegations of FDA violations in July.

Plus, Hexo (HEXO) became ensnared in a scandal, and its stock lost almost 20.7%. In July, Aphria (APHA) dropped 22.3%, Canopy Growth (CGC) (WEED) fell 18.3%, and Cronos (CRON) fell 13%.

Cannabis players’ performance

August hasn’t been much better for the cannabis industry. Several marijuana stocks suffered this month, dragged down by unimpressive earnings.

However, today’s performance was mixed. At 2:03 PM EDT, Canopy Growth was up 1.6%. Aphria and Innovative Industrial Properties (IIPR) rose 0.02% and 3.3%, respectively, today. Cronos, Hexo, Curaleaf, and CannTrust fell 0.74%,2.7%, 0.67%, and 3.4%, respectively, today.

Although recession fears have engulfed the markets, we believe the cannabis industry could be recession-proof. For more information, read Is the Cannabis Industry Recession-Proof? Also, read Which Are the Best Cannabis Stocks in August? for this month’s industry updates.