Posts

Nothing Is Immune to Disruption – Including Breakfast

Breakfast With Milk

Milk and orange juice. They’ve been breakfast staples of the Fix (and America) for a long time. And now both industries are facing an existential crisis.

America’s largest milk producer, Dean Foods, filed for bankruptcy this week (CNBC). Dean Foods will remain in operation while it reorganizes and addresses its debt. So don’t worry about milk disappearing from the shelves of your grocery store. There’s plenty to go around.

Dean Foods hopes the Dairy Farmers of America will buy it out. The two parties are in “advanced” discussions about that possibility.

But even if Dean Foods is acquired, that doesn’t change the fact that the milk industry in the United States is in trouble.

Chart - Declining U.S. Milk Consumption

Per capita consumption of milk has dropped about 26% in the U.S. in the last 20 years. Combine that with falling milk prices, trade concerns and labor shortages and you get an industry in turmoil.

So why are people drinking less milk? It’s mostly health-related. People are switching to nondairy alternatives. And that’s disrupting – and reshaping – the industry.

America’s orange industry is dealing with a different type of disruption. Actually it’s dealing with two different types of disruption – one short term and one long term.

When Hurricane Irma hit in 2017, it uprooted citrus trees throughout Florida. Juice processors didn’t expect Florida’s citrus industry to get back on its feet quickly. So they signed three- and five-year contracts with foreign growers.

But Florida citrus growers bounced back faster than anyone expected. And now they have lots of oranges and grapefruits (among other things) to sell. But there’s nobody to buy their products (TCPalm).

Florida’s citrus industry will survive its short-term oversupply problems. But there’s a far more dangerous threat that could kill it for good.

A pathogen (originally from China) called huanglongbing (HLB) has infected 90% of the state’s citrus groves. The pathogen prevents fruit from ripening. Scientists have no idea how to kill HLB. And unless a cure for HLB is found, Florida’s $9 billion citrus industry could be dead within 10 years (The Washington Post).

Just thinking about Florida’s citrus trees going away is depressing. But that’s not the point of this story.

There’s a reason we focus on disruption in the startup space. When an industry is disrupted, there are billions of dollars on the line. That’s why startups that disrupt the status quo are so valuable. The markets they’re addressing are immense.

But it takes a savvy investor to understand disruption can come from anywhere. No industry is safe. No product is safe. No sector is safe. You need to keep your eyes and mind open to the possibilities. Disruption is everywhere – if you’re willing to see it. And so are the good investment opportunities that disruption creates.

The post Nothing Is Immune to Disruption – Including Breakfast appeared first on Early Investing.

Source: Early Investing

Two Ways to Resolve the Opioid Crisis

Opioid Pills

I always thought that the Vietnam War would be the worst mass killer of Americans I’d see in my lifetime. More than 58,000 American soldiers died.

But the opioid epidemic’s appalling toll amounts to nearly seven Vietnam Wars.

Opioid addiction is a national tragedy. Opioids have caused more than 400,000 deaths in America alone. And when counting the friends, family and loved ones of those victims, millions more have suffered.

It’s also a deeply personal tragedy shared by millions of Americans. I’ve written about addiction in my own family.

Enough is enough. I’m for anything that fights or reduces opioid addiction. And I mean anything.

If it’s exercising more, that’s great. If it means fining doctors who abuse their authority to prescribe opioids and jailing the executives of the companies that make them, that works for me. If it means giving addicts pills that are less addictive and less likely to kill them, let’s do it.

The best solution is to swap out these poisonous pills for something that is nonaddictive but still effective at managing pain.

I see two versions of this solution. One involves a nonaddictive opioid that reduces pain just as effectively as the addictive ones.

You see, opioids don’t have to be addictive. In our extensive research into this issue, the Early Investing team discovered that pharmaceutical companies engineered the pain-reducing properties of opioids to wear off quickly, which amplifies the addiction of users.

Researchers are now testing opioids that were engineered to never become addictive. Unlike the current crop of opioids, they don’t overstimulate the mu opioid receptors in the brain. The overstimulation is what creates the euphoric “high” that’s so addictive. These new opioid pain relievers only slightly stimulate the mu receptors. They stimulate the kappa and delta regions of the brain at higher levels. So these opioids provide pain relief without the side effects of addictive opioids.

So far, in animal trials, one of these drugs shows no indication of leading to addiction – even at 350 times the normal dose. This drug is so promising, we recommended the company that developed it to our First Stage Investor members. And when we recommended the company in January, shares were just $0.81 each.

The second version of this opioid crisis solution is cannabis.

Cannabis is still banned at the federal level. But 33 states have approved it for medical use. And 11 states (plus Washington, D.C.) have legalized it for recreational use.

Cannabis has well-known pain-relieving properties. More research is being done to fully discover its capabilities. But already, researchers have discovered a strong correlation between marijuana use and opioid mortality rates. In a recent study, they found that legalization of recreational marijuana reduced opioid mortality by 20% to 35%. The study corroborates prior findings that focused on only medical marijuana.

And these two solutions aren’t mutually exclusive. Which is why we’re putting our money behind both. We already sent our nonaddictive opioid recommendation to First Stage Investor members.

And we just released our recommendation of the best five cannabis companies to invest in! We believe these companies will make a big contribution to the cannabis solution.

The post Two Ways to Resolve the Opioid Crisis appeared first on Early Investing.

Source: Early Investing

On AngelList, Keep It Confidential

Locked Door

The post On AngelList, Keep It Confidential appeared first on Early Investing.

Source: Early Investing

Veterans Are Ready for Medical Marijuana

Chart - Veterans Respond to Cannabis Questions

Chart - Veterans Respond to Cannabis Questions

We’ve been writing about cannabis a lot lately here at Early Investing. And not just because we feel strongly that it’s going to be an insanely profitable industry for investors. (Though it definitely will.)

It’s also because we believe it has the power to improve – and save – millions of lives.

We have some personal experience with the trauma that prescription painkillers can bring. We’ve also heard stories from people with serious health problems who have suffered from opioid use but benefited immensely from medical marijuana. And we feel strongly that cannabis is a safer and more effective alternative to these drugs.

And we’re not the only ones advocating for medical marijuana. There’s another group of people who have all too much experience with health problems and psychological trauma: veterans.

The data in today’s chart comes from the Iraq and Afghanistan Veterans of America (IAVA) 2019 Member Survey. IAVA is a nonprofit that advocates for America’s veterans. The organization says its annual survey is the most comprehensive look at views of the post-9/11 veteran generation. And survey responses show overwhelming support for medical marijuana.

A full 72% of respondents strongly agree that cannabis should be researched for medical uses. And 68% strongly agree that the Department of Veterans Affairs (VA) should allow for research into cannabis as a treatment option. And while only 20% said they had ever used cannabis or CBD for medical purposes, a staggering 75% said they would be very interested in trying cannabis treatment if it were available to them.

The report outlines how veterans have become a strong voice for cannabis:

Veterans consistently and passionately have communicated that cannabis offers effective help in tackling some of the most pressing injuries they face when returning from war. Our nation is rapidly moving toward legalizing cannabis, and 33 states now permit medical cannabis. Across party lines, medical cannabis is largely unopposed. Yet our national policies are outdated, research is lacking and stigma persists.

They’re absolutely right. The government still classifies cannabis as a Schedule I drug, which makes it very difficult to research. And since marijuana is still illegal at the federal level, VA doctors can’t recommend it for treatment.

This makes for a very confusing marijuana policy. Here’s the VA’s current policy (emphasis mine):

The U.S. Department of Veterans Affairs is required to follow all federal laws including those regarding marijuana. As long as the Food and Drug Administration classifies marijuana as Schedule I, VA health care providers may not recommend it or assist Veterans to obtain it.

Veteran participation in state marijuana programs does not affect eligibility for VA care and services. VA providers can and do discuss marijuana use with Veterans as part of comprehensive care planning, and adjust treatment plans as necessary.

So veterans are allowed to discuss marijuana use with their VA doctors, but VA doctors can’t recommend it as a treatment option or even help veterans get it. VA health care officials are also prohibited from completing paperwork that’s required to allow veterans to participate in state-approved marijuana programs.

That’s a problem. And veterans want that to change. The Senate just recently started discussing the possibility of opening up marijuana research, which is a promising sign. But we’re not there yet.

The Veterans Health Administration, the healthcare branch of the VA, serves more than 9 million veterans across the country. Imagine if just a small percentage of those patients had access to a safe and effective cannabis treatment.

What a difference that would make.

The post Veterans Are Ready for Medical Marijuana appeared first on Early Investing.

Source: Early Investing

Mailbag: Understanding Startup Investing Rounds, Avoiding Uber and Lyft

Getting Mail on Multiple Devices

Q: How many funding rounds do startups typically go through? And is there any way to predict how many there will be?

A: No, there’s no good way of knowing. It’s subject to many factors – how fast a company goes through its funding… how much it raises per round… when it becomes self-sustaining… how willing the founders are to dilute their equity stake… and whether the founders are open to a buyout or are determined to take their company public via an IPO.

A company is twice as likely to get bought out than to IPO. And buyouts can happen at any time during a startup’s journey. Depending on these and other factors, a startup can have anywhere from two to 12 funding rounds. And it can take anywhere from two to 12 years to go through those rounds.

I’ve found one half-decent way to cut through all these factors and get a better idea of how many raises a startup wants to do. I ask the founder. Specifically, I ask…

  • How many more fundraising rounds do you project if you don’t get bought out?
  • When do you aim to become self-sustaining?
  • For your liquidity event, do you prefer a buyout or an IPO?
  • If a buyout, are you getting interest now? And when do you expect bigger companies to start sniffing around/expressing interest?
  • If an IPO, when might it happen?

Most founders will try to give you honest answers. But honesty isn’t the same as accuracy. They’re telling you their preferences and best guesses. They can be wildly wrong. I understand that there’s a certain amount of speculation built into their answers.

What I don’t understand, and won’t accept, is if they won’t share their thoughts with me on the endgame. The usual dodge is claiming they don’t think about it.

“I’m only focusing on growing the company; the endgame will take care of itself” is a lame response. And I reject it out of hand. They better start thinking about the endgame – it’s why their investors write them big checks! So, in these cases, I ask, “What day next week can you get back to me on these issues?”

Venture capital (VC) firms typically hold startups in their funds for 10 years before closing out the fund. Assuming a startup raises roughly once every two years, some quick back-of-the-envelope math shows VC funds allow their holdings to raise about five times.

Some of the more highly valuated startups have raised much more than that. Palantir ($20 billion valuation) has gone through 12 fundraises. Stripe ($35 billion) has tapped into VC capital 11 times. Didi Chuxing ($56 billion) has raised 10 times. Airbnb ($31 billion) nine times. At the lower end of the unicorn valuation spectrum, Evernote and DraftKings (both valuated at $1 billion) raised five times. Udacity, valuated at $1 billion, raised four times.

Many of these unicorns will be raising at least one or two more times.

So are a lot of rounds a good thing or a bad thing?

Many rounds usually mean a company has strong revenue growth and is seeing its valuation jump from round to round. The more rounds… the higher the valuation… and the higher the share price. Sure, investors have to wait to cash out. But their returns (paper or “unrealized” returns) are climbing. That’s a good thing.

Fewer rounds can be great news too. They could lead to an early buyout at a big premium. Or they could mean the startup reached profitability early, obviating the need to raise more funds. On the flip side, fewer rounds could mean the startup flamed out after a couple of rounds.

More often than not, many rounds are a good thing for early investors. The wait can be frustrating, but their patience is handsomely rewarded.

+ Andy Gordon, Co-Founder, Early Investing

Q: Are Uber and Lyft good buys at current prices?

A: Uber has fallen 42% since its IPO back in May, and Lyft has fallen 46% since its IPO in March.

Despite the dramatic drops from their IPO prices, I’m still not buying either of these companies. Both are still losing gobs of money. And I don’t see a near-term path to profitability.

Back in March I said that the only interesting investing angle here is the possibility that these companies could own the first fleets of self-driving taxis:

Both of these companies see driverless taxis as the future of their businesses. Imagine a fleet of millions of self-driving cars making money all day. The companies that win the self-driving market are set to reap huge rewards from automation…

In my view, self-driving is the only really interesting angle for either of these companies.

But this whole self-driving thing is taking longer to materialize than people thought. Back in 2016, Uber projected that it’d have 75,000 self-driving cars on the road in 2019.

I suspect the shift to driverless cars will take longer than Uber and Lyft would like. The wheels of government turn slowly, and the technology still has a ways to go. Roads in the real world are complex, tricky and ever-changing.

Automation isn’t coming for the transportation industry quite yet, but it’s not too far off. Estimates vary, but some say driverless cars could prevent 85% of crashes and deaths. And driverless tech could virtually eliminate traffic once widely adopted.

I certainly think it will be adopted eventually. Driverless vehicles make so much sense economically that it’s bound to happen.

I continue to believe Uber and Lyft are betting on self-driving technology to fix their business models. However, there’s no guarantee that these guys will win the race once it does happen.

And until self-driving taxis are a reality, it seems likely that Uber and Lyft will continue to lose money.

I also believe we’re heading into a recession sometime in the next year or two, and I don’t think either company is well-positioned for one. So personally, I’m steering clear of these stocks.

+ Adam Sharp, Co-Founder, Early Investing

The post Mailbag: Understanding Startup Investing Rounds, Avoiding Uber and Lyft appeared first on Early Investing.

Source: Early Investing

News Fix: CBD Products Could Still Make You Fail a Drug Test

Drinking Coffee and Reading Tablet

This week, a lot of people received text messages. That’s not unusual. Billions of messages are sent in the U.S. on a daily basis according to a wireless industry trade association (SMSEagle). What is unusual is many of these messages were sent on Valentine’s Day.

A glitch in the text messaging system prevented the delivery of lots (we’re still not sure of the exact number) of messages sent on Valentine’s Day. The senders didn’t know about the delay. The recipients didn’t know. And apparently, neither did the phone companies.

Then, this week, the messages were delivered. Some people received messages from people they used to date. Others received messages from people who had passed away (The Verge).

For better or worse, we now rely on text messaging to communicate. The fact that something like this could happen without anyone knowing is a bit disconcerting.

Hopefully, a combination of new network technology (5G) and new software will prevent this from happening again. But the next time someone swears they didn’t get your text message, you might want to give them the benefit of the doubt. It’s entirely possible they’re telling the truth.

Now on to the News Fix!

Cannabis

New York hemp farmers get a boost: The hemp industry looks like it has friends in Albany, New York. New rules in the state will allow medical marijuana companies to buy hemp and hemp-based CBD extracts directly from hemp farmers. Previously, the medical marijuana firms had to grow their own stock, which raised costs (Democrat & Chronicle).

Straight Hemp CBD line picks up new distributor: Earth Fare, which has 57 stores across 10 states, will sell Straight Hemp’s CBD oil and balm products (Progressive Grocer). Straight Hemp is based in Colorado.

CBD can lead to positive marijuana tests: If you have to regularly pass drug tests, you might want to think twice before consuming CBD (even if it’s legal in your state). That’s because, depending on the CBD product you consume, you might test positive for marijuana. Researchers at Johns Hopkins ran a test on six patients (yes, that’s a ridiculously small sample size, but still…). And they found that when they administered pure CBD with no THC in it, none of the patients tested positive for marijuana. But when THC was present (0.39% concentration), two out of the six patients tested positive (Forbes). CBD products with 0.39% THC are fairly common in the market, according to the researchers.

Startups

Google creates accelerator program for environmental startups: Google employees petitioned the company to become more environmentally friendly. And the search engine giant has responded by creating an accelerator program for startups that are trying to help the environment. The program will, among other things, provide technical support and training to help environmental startups scale (MarketWatch).

AstraZeneca launches $1 billion fund targeting China: Big Pharma clearly has its eyes set on China. AstraZeneca has launched a $1 billion investment fund that’s looking to pour money into Chinese startups in the healthcare sector (Reuters).

Saudi Arabia’s sovereign wealth fund backs Kalanick again: When Travis Kalanick started Uber, Saudi Arabia invested in the ride-hailing startup. And now the Saudis are betting on Kalanick again. They’ve invested $400 million in CloudKitchens. It’s a startup that sets up kitchens for food delivery only. And it’s competing with Uber Eats (Business Insider).

Crypto

Marcus says bitcoin isn’t a currency: The head of Facebook’s Libra crypto project, David Marcus, told The New York Times DealBook Conference that he thinks of bitcoin as an investment like gold instead of as a currency (CNBC).

“I don’t think of bitcoin as a currency. It’s actually not a great medium of exchange because of its volatility,” Marcus said. “I see it as digital gold.”

Now, it’s a bit convenient for Marcus to make this point. After all, he is creating a crypto that is focused exclusively on payments. But he does have a point.

Right now, bitcoin is in a weird undefined state. It currently functions better as an asset to invest in. But it’s designed to be a currency, and it’s making strides on a daily basis to become that. So how are we supposed to think about bitcoin?

Okay. Marcus didn’t say all of that. The Fix did. But the point remains. Bitcoin is evolving. And what it is today isn’t necessarily what it will be tomorrow.

And finally…

I’m not sure why we have to keep explaining why it’s NOT OKAY to spoil certain plot points, but here we go again: If you’re talking about a horror movie, thriller or popular TV show, do NOT reveal plot twists and things that might spoil it for others (IndieWire). That’s just rude.

And that’s your News Fix.

Have a great weekend!

The post News Fix: CBD Products Could Still Make You Fail a Drug Test appeared first on Early Investing.

Source: Early Investing

Cannabis Isn’t Going Anywhere

Sun Behind Cannabis Plant

Pot stocks are having a rough time. Many are down 50% or more from recent highs.

But the industry is doing great. Legal cannabis sales are booming. Retail sales are set to grow 35% in the U.S. this year, according to Marijuana Business Daily.

And this industry is changing millions of lives for the better.

Lucy Stafford’s is one of them. Lucy is a 19-year-old with a rare genetic condition that affects her joints. Lucy wrote about her condition for Sky News:

As part of my condition, I dislocate my joints very easily without trauma. So I can dislocate my shoulder by brushing my hair, or dislocate my hip by rolling over in bed – causing a huge amount of pain.

Since I was around 10 years old I’ve had a range of different surgeries, injections and treatments to try and manage the different aspects of my condition, because it affects so much of my body.

From the age of 13 I was prescribed opiates, and I basically took opiates every single day because my pain was so debilitating.

Predictably, she became hooked on painkillers, even though she says they didn’t work well at all. She had to drop out of high school and use a feeding tube for three years due to severe stomach problems.

Eventually, her doctor tried to prescribe her cannabis, but the National Health Service (the U.K.’s healthcare service) denied her funding. Desperate, Lucy turned to the black market and finally found relief for her condition with cannabis (emphasis mine)…

I was at such a point of desperation I medicated with illegal cannabis and it made such a massive difference to my quality of life.

I pretty much straight away realised that all the medication I had been taking for years and years had been doing basically nothing – and I came off all of them as soon as I could.

Once I came off those medications I felt like I had my brain back again.

I felt like I could think and didn’t feel absolutely exhausted and drained from all of these drugs I was having to take to manage the pain.

I had finally found something that was a muscle relaxant and a pain relief, and also helped my digestive system, bladder spasms and every aspect of my condition unlike anything else.

I came off all medications and had my feeding tube removed earlier this year.

It has literally been the most incredible, unbelievable and unexpected year of my life.

I take cannabis oils throughout the day as a baseline and then I take it in a vaporiser for acute pain relief. So when I dislocate something or in extreme pain, I will vaporise.

There are millions of people with stories like Lucy’s out there. I personally know a bunch of people with similar stories. Eventually, government healthcare systems will recognize the extreme value cannabis can offer these patients. And the insurers will pay for it too.

We’re still very early in the growth of medical marijuana. Cannabis isn’t even covered by insurance yet! And it’s probably the most effective and least harmful treatment around.

Cannabis and Autism?

Cannabis has shown promise in treating an amazing number of conditions. One of the most fascinating studies I’ve seen yet was conducted in Israel. It studied the effect of cannabis extract on children with autism spectrum disorder (ASD).

Researchers gave patients a cannabis extract daily for six months. It contained a small amount of THC and a larger amount of CBD. At the end of the study, the responses of 93 patients were assessed. And the results were remarkable. As The Times of Israelreported:

The study found that after six months of regular consumption, 30% of patients reported significant improvement, 53.7% reported moderate improvement and only 15% had slight or no change.

… Following the treatment, 66.8% of patients reported having a good quality of life, more than double the 31.3% who reported so beforehand, while 63.5% said they had a positive mood after the six months, up from 42%.

Twenty-five percent of patients reported a side effect, with the most common being restlessness. Other side effects included sleepiness, hunger, digestion problems and lack of appetite. The study noted the medication was well tolerated, safe and seemingly effective.

It’s clear to me that we are just beginning to understand the cannabis plant. We’ve just started studying it. And there are now thousands of professional growers selectively breeding cannabis plants for specific traits and cannabinoids. Hundreds of different compounds within the cannabis plant are being studied and explored for medical potential.

We’re going to see incredible progress and innovation in this industry over the coming years. I’ll be staying long and buying the big dips as opportunities present themselves.

The post Cannabis Isn’t Going Anywhere appeared first on Early Investing.

Source: Early Investing

The Deep, Dark Hole of Drug Addiction

Pill Container Shaped Like United States

By the time my dad retired, he had accumulated an impressive resumé… decorated World War II Marine, entrepreneur, founder, successful real estate developer, and loving husband and father.

But here’s the one thing he was that you couldn’t find on his resumé: addict.

One day, some 30 years before he passed away, he went to the doctor’s office seeking help for mild depression. He left with a bottle of pills. The next visit, he was given more powerful pills. The visit after, his dosage was increased again.

This pattern continued. In less than two years, he was hooked on some of the most powerful and addictive mood-elevating drugs of the time. I was in high school. I saw him descend into his own personal hell. He was a barely functioning addict, no longer able to work or do much of anything.

He was stuck in a very dark, deep hole, and there was nothing anybody could do about it. The years went by. I graduated from college. My dad wasn’t any better. Driving him to yet another visit to the doctor, I didn’t have much hope.

When the doctor ushered me into his office, I expected to hear the same old thing… “We can change his medication, see if it does any good.”

Instead, he said something completely unexpected. “I think you should let your father take a series of electroconvulsive therapy treatments.”

Ever since I read One Flew Over the Cuckoo’s Nest (a 1962 novel by Ken Kesey), I considered electric shock a barbaric and crude form of treatment. It fried your brain and made you dumb and docile. No way was I putting my dad through that.

But then I did the research. And I found out that the treatment was far more advanced and refined than it was in Kesey’s day. As a family, and with a great deal of mixed emotions, we decided to go ahead with it. And it worked! Sort of. Short-term memory loss was minimal. Dad got better.

But it took five years to significantly ratchet down his drug dosages. He never fully got off them. But we’re incredibly grateful that for the majority of his last couple of decades he was happy and resembled his old self.

My dad’s addiction roiled our family. For years, nothing felt right. I’m telling you this because my memory of those years came flooding back to me as I researched the opioid crisis. I have nothing but the deepest sympathy for the hundreds of thousands of victims who became hooked on the opioid meds their doctors prescribed… and nothing but antipathy for the perpetrators of this deadly epidemic. 

Next week, the Early Investing team is publishing probably the most important report we’ve ever done. It’s an exposé on the opioid crisis. In it, we reveal how the crisis unfolded and offer some hopeful ideas for a post-opioid future.

The opioid crisis has taken 400,000 lives, and the epidemic isn’t over. The appalling toll will grow even bigger. Our research shows that Purdue Pharma, more than any other company, was responsible for launching this deadly epidemic.

While it sold “only” 2.28 billion pills, a paltry 3% of the 76 billion opioid pills doctors have prescribed, Purdue played a critical role in instigating the opioid crisis.

Purdue built its marketing campaign around a big lie: that addiction rates in patients were extremely low and that physicians who denied patients opioids were simply allowing their patients to suffer.

Brandeis University’s professor Andrew Kolodny, who was an expert witness in the recent Johnson & Johnson court trial, describes Purdue’s campaign of spreading disinformation this way…

We were hearing it from pain specialists who were getting paid by Purdue Pharma and other drug companies. We were hearing it from addiction specialists who were getting paid by the drug companies. We were hearing it from our professional societies. We were hearing it from our hospitals, which were regulated by the joint commission which was taking money from Purdue Pharma.

To bolster sales, Purdue engineered its highly addictive drugs to wear off quickly. And it worked. OxyContin became a blockbuster drug, generating $2.8 billion in revenue between 1995 and 2001. Cumulatively, it brought in $35 billion by 2017… but at a repugnantly high cost. In just the last five years, oxycodone and its cousin hydrocodone have killed an estimated 65,000 Americans (or more).

The Sackler family owns Purdue. Our research reveals a family that willingly and knowingly supported Purdue’s campaign of lies. In 2007, the company pleaded guilty to criminal charges of misleading doctors and the public about the safety and effectiveness of its drugs. It paid a $635 million fine, but no one served jail time. Then, between 2008 and 2016, the family paid itself more than $4.3 billion (according to a recent lawsuit). That estimate is probably too low. Oregon’s attorney general says the family took $11 billion out of the company.

Purdue now faces more than 2,600 federal and state lawsuits. Under a recent settlement agreement, the company agreed to file for Chapter 11 bankruptcy protection, turn itself into a public benefit trust and provide plaintiffs with $3 billion.

That’s not nearly enough. This deeply flawed agreement should be thrown into the garbage.

In the meantime, the Sacklers were hoping to buy goodwill through their philanthropic contributions… much of it going to universities and museums. Kolodny argues that the Yales and Oxfords of the world should give the money back.

I have a better idea. Give the money to local groups working with opioid addicts. Or use it to research nonaddictive pain medication. Or fund the research and development of probably the most promising and proven nonaddictive painkiller available right now: cannabidiol, or CBD.

CBD is already helping us make the transition from addictive opioids to something far healthier and effective. As more states approve its use, its beneficial properties will become better researched and known. And demand will mushroom.

In addition to our exposé, we’re publishing a report on the five cannabis companies most likely to grow into dominant CBD players and drive the Sacklers (and other opioid manufacturers) out of business. So keep an eye on your inbox. We’ll send you a note about the report early next week.

The post The Deep, Dark Hole of Drug Addiction appeared first on Early Investing.

Source: Early Investing

Investing Outside of the Bay Area

Golden Gate Bridge

The post Investing Outside of the Bay Area appeared first on Early Investing.

Source: Early Investing

Cannabis Companies Spend Record Amount on Lobbying

Chart - Lobbying for Weed

Chart - Lobbying for Weed

The cannabis industry is lobbying Washington officials more than ever. Marijuana companies have spent a record $3.77 million on lobbying in Washington so far this year. That’s almost 40% higher than last year and 133% higher than 2017.

So what’s going on here? Here’s the big picture. Cannabis is a brand-new, rapidly growing industry. And cannabis companies are trying to set themselves up to conquer the market. But because cannabis is still illegal at the federal level, those companies are grappling with conflicting state and federal laws, the lack of interstate commerce, little access to banking, and monumental amounts of red tape. So they’re pushing the government to make changes so that the industry can grow unhindered.

On a micro level, this spike in spending is coming from companies fighting for the SAFE (Secure and Fair Enforcement) Banking Act. The bill would protect banks and other financial institutions that do business with the cannabis industry.

As it stands now, financial institutions that serve cannabis companies face legal problems because the federal government still hasn’t legalized marijuana. Lobbyists argue that this is a huge problem, because it forces cannabis businesses to operate without any banking services. Without banking services, those businesses are conducting sales largely in cash. That makes them a target for theft and other crimes. And it makes it difficult to raise the capital needed to expand and grow.

Though the SAFE Banking Act passed in the House, it has an uncertain future in the Senate. Senate Majority Leader Mitch McConnell is very protective of Kentucky’s burgeoning hemp market. And since cannabis is a threat to that market, he’s unlikely to allow the bill to get through.

Cannabis is also a threat to the pharmaceutical industry. And no one spends more on lobbying than pharma companies. The global pharmaceutical market was worth around $1.2 trillion in 2018. And pharma companies have spent $4.3 billion on lobbying since 1998 – more than any other industry during that time frame.

Cannabis will eventually catch up. The cannabis industry is currently worth $10.4 billion, according to New Frontier Data. Some estimate it could grow to $66 billion by 2025. And as the industry grows, so does its lobbying power.

The post Cannabis Companies Spend Record Amount on Lobbying appeared first on Early Investing.

Source: Early Investing