Although COVID-19 is causing much of the world to slow down, business deals in many industries continue, including from China. Companies continue to seek strategic acquisitions, partnerships, and investments as they enter new international markets or seek to relocate a portion of their business or supply chain from higher-risk markets, such as China, to lower-risk markets in Southeast Asia and Africa, or even reshoring back to the U.S. In this global upheaval and opportunity seeking, cannabis is no exception.
Recently we have had many conversations with clients and prospective clients in Asia, Europe, and Africa regarding entering the U.S. cannabis marketplace. Many of these companies and their financial partners are sophisticated and understand the complexities of international business. They are successful in their home countries, experienced, and well-capitalized. They know their home markets, laws, and regulations well but need insight into the attractive but fractured U.S. market. Some understand some of the nuances of the U.S., while others are stymied by:
- the federal vs. state struggle between regulation and application of those regulations;
- cannabis as a scheduled drug but hemp as distinct from marijuana;
- the patchwork of state-by-state regulations in consumable, smokable, and cosmetic-based products in the medical, recreational, and hemp consumer cannabis markets;
- the interplay between and often slow rollout of regulations and guidance from the FDA, DEA, and U.S. Department of Agriculture;
- the patchwork of enforcement actions at both federal and state levels; and
- the current and future treatment of emerging cannabinoids beyond CBD such as CBG, CBN, and synthetic CBD.