The CEO of Uber said on Monday that the ride share company will “absolutely” explore adding marijuana deliveries to its services when federal prohibition ends.
Dara Khosrowshahi was asked about the prospect of expanding his business to include cannabis deliveries during an interview with CNBC. He said while the company remains focused on grocery and alcohol deliveries, in addition to its core ridesharing service, that’s certainly in the cards if marijuana is federally legalized.
Uber is interested in “the types of deliveries that a high percentage of consumers are going to want delivered fast into their home and are quite frequent,” he said. “We think, obviously, food, grocery, pharmacy and alcohol are part of that category,” but cannabis also holds potential.
“When the road is clear for cannabis when federal laws come into play, we’re absolutely going to take a look at it,” Khosrowshahi said. “But right now with grocery, with food, with alcohol, et cetera, we see so much opportunity out there and we’re going to focus on the opportunity at hand.”
Could you get your weed delivered through Uber? CEO Dara Khosrowshahi discusses the potential business strategy: "When the road is clear for cannabis and federal laws come into play, we're absolutely going to look at it." (via @CNBCTechCheck) https://t.co/6VM454ugka pic.twitter.com/bRjpv7vvhU
— CNBC (@CNBC) April 12, 2021
The tech executive was specially asked about the possible expansion into the cannabis market in light of legalization recently being enacted in New York. And if polling from that state is any indication, Uber would see the demand for deliveries that it’s looking for, as 53 percent of New Yorkers said in a survey that they would favor having that option available to consumers.
But for now, the CEO said the business is keeping its eyes on current expansions, which includes its recent acquisition of the alcohol delivery service Drizly. That company did launch an ancillary cannabis delivery service called Lantern—but following the Uber deal, it announced that the two entities would be separated, with Lantern operating independently as a private company.
Of course, as a national corporation, Uber is also making a risk assessment given the ongoing ban on cannabis at the federal level. But a policy change to that end could come sooner than later.
Senate Majority Leader Chuck Schumer (D-NY) has said that a bill to legalize marijuana that he’s been working on with Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) will be released “shortly.”
On the House side, Judiciary Chairman Jerrold Nadler (D-NY) has similarly signaled that his cannabis descheduling bill—the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act—will be reintroduced this session. That proposal passed the House last year but did not advance in the Senate.
With Democrats in control of both chambers and the White House this session, there’s renewed hope among advocates that the days of prohibition are soon to be over. Still, questions remain about President Joe Biden’s role in the reform, as he opposes adult-use legalization and his press secretary said last month that his position “has not changed” to that end.
In any case, Uber’s apparent interest in participating in the market once those federal barriers are lifted is another sign of the industry’s potential. That said, many advocates have expressed that small businesses—particularly those operated by people most impacted by cannabis criminalization—should be prioritized in any legalization legislation over large companies.
Banking Activity Increases In States That Legalize Marijuana, Study Finds
While marijuana businesses often struggle to find banks that are willing to take them on as clients due to risks caused by the ongoing federal prohibition of cannabis, a new study found that banking activity actually increases in states that legalize marijuana.
The research doesn’t make a direct connection between state-level marijuana reform and the increased activity, but it does strongly imply that there’s a relationship—even if the factors behind the trend aren’t exactly clear.
Researchers set out to investigate banking trends in states that have legalized cannabis, looking at bank regulatory filings with the Federal Deposit Insurance Corporation (FDIC) from 2011 to 2016. They found evidence that “banking activity (deposits and subsequent loans) increase considerably in legalizing states relative to non-legalizing states.”
That’s in spite of the fact that banks and credit unions run the risk of being penalized by federal regulators for working with businesses that deal with a federally controlled substance.
“While uncertainty can result in overly cautious behavior and hinder economic activity, we do not find evidence of this with cannabis laws and the banking industry,” the authors wrote in the new paper—titled, “THC and the FDIC: Implications of Cannabis Legalization for the Banking System.”
The study analyzed data from “150,566 bank-quarter observations from 6,932 unique banks located in 46 different states.” It found that deposits increased by an average range of 3.14-4.33 percent—and bank lending increased by 6.54-8.62 percent—post-legalization.
“Our results indicate that deposits and loans increased for banks after recreational cannabis legalization.”
Of course, it makes sense that legal states would see increased financial activity in the banking sector after opening a new market, even if only some banks choose to take the risk of working directly with cannabis businesses. The emerging marijuana industry also supports an array of ancillary firms and traditional companies that provide services to dispensaries and grow operations.
As of June 30, there were 706 financial institutions that had filed requisite reports saying they were actively serving cannabis clients. Thats up from 689 in the previous quarter but still down from a peak of 747 in late 2019.
But the question remains: why are some banks deciding to take on marijuana clients while others remain wary of federal repercussions?
The study authors—from the University of Arizona, Drexel University, San Diego State University and Scripps College—put forward two possibilities about why “the risk from regulatory uncertainty did not decrease banks’ willingness to accept deposits or make loans.”
The increase “may suggest that banks were either unconcerned about the potential risk associated with accepting cannabis related deposits or optimistic about the chances that regulations will adapt to the needs of legalizing states,” the paper reasons.
Confidence about working with a federally illegal industry may well have been bolstered in 2014 when the Financial Crimes Enforcement Network (FinCEN) under the Obama administration issued guidance to financial institutions on reporting requirements for cannabis-related businesses.
The second option, optimism about federal reform, also seems possible. It was around the time that the bipartisan Secure and Fair Enforcement (SAFE) Banking Act was first introduced that there was a notable spike in financial institutions reporting that they have marijuana business clients.
In the years since, that legislation has been approved in some form five times in the U.S. House of Representatives, but it’s continued to stall in the Senate. In general, banks reporting marijuana accounts has remained relatively stable since 2019.
“Although many have speculated about the increased legal risks to banks, there is a lack of evidence for instances where banks are criminally prosecuted or lose their federally insured status,” the study states. “If these negative repercussions rarely happen, it makes sense that banks would not respond to the legislative uncertainty.”
“As more state regulators issue statements in support of banks and credit unions serving the cannabis industry, the financial institutions can become more optimistic about the chances that regulations will adapt in their favor with time,” the authors wrote.
Despite optimism for future reform that certain lawmakers have expressed, it doesn’t necessarily take the sting out of the latest failed attempt to secure protections for banks that choose to work with state-legal cannabis businesses as part of a large-scale defense bill.
A pro-reform Republican senator recently slammed Democrats for failing to advance marijuana banking reform despite having a congressional majority and control of the presidency.
For what it’s worth, the secretary of the U.S. Treasury Department recently said that freeing up banks to work with state-legal marijuana businesses would “of course” make the Internal Revenue Service’s (IRS) job of collecting taxes easier.
With respect to the SAFE Banking Act, a bipartisan coalition of two dozen governors recently implored congressional leaders to finally enact marijuana banking reform through the large-scale defense legislation.
A group of small marijuana business owners also recently made the case that the incremental banking policy change could actually help support social equity efforts.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a recent Marijuana Moment op-ed that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications now.
Colorado Earned $423 Million In Marijuana Tax Revenue Last Year
More than $12 billion in marijuana has been sold since legalization in 2014, with the state collecting over $2 billion in taxes.
By Robert Davis, The Center Square
Colorado brought in a record $423 million in tax revenue from marijuana sales last year, according to the latest market report from the state’s Department of Revenue (DOR).
In all, Colorado has sold more than $2 billion in marijuana through November 2021, making it the second consecutive year that the state has eclipsed that mark. In 2020, the state collected $387 million in taxes from the sales.
Colorado’s tax revenue total also implies that the state beat its previous record of $2.1 billion in sales, though DOR said it will release the final numbers next month.
More than $12 billion in marijuana has been sold since legalization in 2014, with the state collecting over $2 billion in taxes.
🚨New record alert!🚨 In 2021, Colorado collected over $423 million in revenue from marijuana sales (compared to the previous record of over $387 million in 2020). Colorado also surpassed $2B in tax and fee revenue and $12B in marijuana sales to date. https://t.co/M5zrEiSNYR pic.twitter.com/XxpZzyV1XQ
— CO Dept. of Revenue (@CO_Revenue) January 12, 2022
Colorado collects its marijuana taxes from a 2.9 percent state sales tax on marijuana sold in stores, a 15percent state retail marijuana sales tax and a 15 percent retail marijuana excise tax on wholesale sales and transfers of marijuana. The state also collects fee revenue from marijuana license and application fees.
In December, Colorado collected more than $30 million in taxes, capping off a five-month streak of declining tax revenue.
The state also recorded more than $158 million in sales in November, with both medical and recreational marijuana showing significant declines in sales.
Colorado sold $131 million in recreational marijuana in November, an 11 percent drop when compared to October.
Similarly, November’s medical marijuana sales totaled $26 million, representing a drop of more than 10 percent on a month-over-month basis.
Arizona Hits Recreational Marijuana Sales Record, With New Program Catching Up To Medical
Medical cannabis sales eclipsed recreational from February through October—adult-use sales began on January 22—but in November, those numbers were almost identical.
By David Abbott, Arizona Mirror
Arizona cannabis sales continued on an upward trajectory in 2021, with the Arizona Department of Revenue reporting more than $1.23 billion in combined cannabis sales through the first 11 months of the year.
In November, adult-use recreational cannabis sales hit a new peak and crossed $60 million for the first time. Medical sales have fluctuated throughout the year, topping out at about $73 million in March and April.
Medical sales eclipsed recreational from February through October—adult-use sales began on January 22—but in November, those numbers were almost identical, with the medical program bringing in an estimated $60,365,545, while recreational sales reached $60,299,191.
In October, estimated cannabis sales for both programs were within $7 million of each other, the first time recreational sales came within $10 million of medical sales. But the adult-use market is in its infancy and is expected to match the medical program’s economic heft within a few years.
Cannabis sales also provided a solid tax contribution in 2021.
|PERIOD COVERED||ADULT USE‐420||MEDICAL‐ 203||EXCISE TAX|
The state collects 16 percent excise tax on recreational sales in addition to the standard sales tax; medical patients pay a 6 percent excise tax. Local jurisdictions charge an additional 2 percent or so for all marijuana sales.
Taxes collected in November for recreational cannabis sales were $5,055,950, with medical slightly less at $5,026,317. The excise tax reached $10,110,032 for a total of $20,192,299 in tax revenue from November marijuana sales.
Proposition 207, which voters approved in 2020 to legalize adult use of cannabis, included specific uses for taxes collected on the recreational side. One-third is dedicated to community college and provisional community college districts; 31 percent to public safety—police, fire departments, fire districts, first responders—25 percent to the Arizona Highway User Revenue Fund and 10 percent to the justice reinvestment fund, dedicated to providing public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by marijuana arrests and criminalization.
The state collected a total of $196,447,570 in tax revenue the first 11 months of 2021 from cannabis sales, with $44,533,436 from recreational, $58,916,172 from medical and $92,997,962 from the excise tax.