Cannabis Musings - August 27, 2025
Please don't lie. Also, hemp.
Friends, as I mentioned last week, don’t miss the most recent episode of Bourcard Nesin’s Liquid Assets Podcast, wherein I chatted alongside alcohol and cannabis beverage lawyer, and my co-professor and friend, Rebecca Stamey-White, about hemp drinks.
Long-time readers know that our inspiration for these Cannabis Musings is Matt Levine, author of Bloomberg’s Money Stuff newsletter. He went to law school, practiced M&A, moved into investment banking, and then started writing his newsletter, which analyzes impactful stories in finance and business with a critical, funny eye. The clarity of his prose, and his ability to break down and explain complex concepts, are unmatched in business writing. I had a somewhat similar path – law school, M&A and finance law, worked as in-house counsel at an active family office getting deals done alongside a slew of ex-investment bankers, and later started writing. When I first started these Cannabis Musings, Matt Levine’s prose was my clear benchmark.
Imagine, then, my naches when Money Stuff offered up two stores on consecutive days that shed some light on our cannabis industry. Monday’s newsletter presented a story about Matthew Brown, who submitted a fake offer in March 2023 to acquire Virgin Orbit Holdings, Inc., a public space company affiliated with Virgin Group. The SEC sued Matthew Brown for securities fraud, and won, “finding that (1) there is no dispute about the relevant facts in the case and (2) it’s obviously fraud.” In short, you can’t lie to the public about something that could move the stock price. (Not legal advice, and somewhat reductive.). What makes the story funny is that, as Matt Levine points out, “here is a very pro-Brown blog post explaining that no no no no no no the check was in the mail,” that the offer was made in good faith because, apparently, Matthew Brown “testified that he had arranged a ‘funding facility,’ a standard practice in venture capital and strategic transactions.” Clearly, the SEC and a Federal judge in Texas didn’t buy that explanation.
Turn back a few weeks. If you’re not as online as we are, you may have missed a social media post at the beginning of August from Drippy, a hemp drinks brand, claiming that airline Virgin Atlantic (!!!) was partnering with Drippy to offer their THC drinks on U.S. flights. As Marijuana Moment explained:
Drippy, which sells drinks with 10mg of THC and 10mg of CBN, launched a video ad about the claim and shared seemingly forged screenshots of a letter it said was from Virgin Atlantic’s CEO, as well as an email that appeared to come from another executive at the airline.
The company insisted in a social media post that ‘this is not satire.’
Of course they did. If you’re going to post a fake partnership with a large, multinational corporation, you may as well commit to the bit. Major beverage industry outlet BevNet ran with the story, but Marijuana Moment actually reached out to Virgin Atlantic, which spoiled the fun:
But while the claims made their way into articles that reported the partnership as legitimate in outlets such as BevNet and The Marijuana Herald, a Virgin Atlantic representative told Marijuana Moment on Friday ‘this story is entirely inaccurate’ and the airline has ‘no partnership with this brand.’
Drippy deleted the post, but effectively placed the blame on the poor schnooks who actually dared to believe their “spoof”:
Our goal with Drippy has always been to spark curiosity and entertain. This stunt was designed for consumers, not industry insiders,” Lindquist said. “I can only assume some in the industry ignored the obvious red flags because they wanted it to be true so badly. The one-two punch of realizing it wasn’t real and feeling a bit duped might have left a few grumpy faces.
Right? I mean, why should Virgin Atlantic, a federally-regulated air carrier that is owned by the multinational Virgin Group and public company, Delta Airlines, be angry or concerned about a publicly-released statement, on fake Virgin letterhead with a fake CEO signature, about a fake partnership with an upstart weed company? They’re just a bunch of gullible squares who can’t take a joke.
To its very great credit, Virgin Atlantic was remarkably amicable about it and just made Drippy take down the post. But, if the cannabis industry wants to be taken seriously as a business – whether we’re talking about state-licensed cannabis, hemp, or whatever – it needs to play by the rules. One of those rules, as Matt Levine’s story about Matthew Brown highlights, is that lying to the public could get you in trouble and expose you to securities fraud claims (again, Delta is a public company) (not legal advice). It doesn’t cut it to claim it’s all a lighthearted goof, or that the funding is totally secure.
Maybe I’m just an alte kaker, but, if the hemp drinks industry wants to gain and maintain credibility with the broader beverage industry, and the Congress that’s currently determining its ultimate fate, “stunts” don’t help the messaging.
That was Monday. On Tuesday, Matt Levine wrote about a complex situation developing where online stock and commodities futures trading companies are starting to offer ‘contracts’ on the outcome of sports. Sounds like gambling because it is, except that it’s not? I won’t try to recap the entire state of affairs, and suggest you read the column if you’re interested (the link above should be unlocked), but, remarkably, lowly regulated (by the federal government) sports ‘futures contracts’ traded through online brokers like Kalshi are getting around strong the states’ sports gambling rules that govern sites like Draft Kings through sheer force of will:
And because Kalshi is a CFTC-regulated commodity futures exchange, that means that — however accidentally and unintuitively — its contracts are federally regulated commodities trades, and federal commodities regulation preempts state gaming regulation. (In the olden days, people thought that trading corn futures was gambling, and states tried to ban it, so federal commodities law preempted those efforts.) And so Kalshi started offering sports bets nationwide, and various state regulators sent it letters saying “hey you are doing sports gambling without complying with regulation,” and Kalshi told them “buzz off.” And Kalshi went to court, saying that it is illegal for the states to regulate its sports gambling offerings. And courts mostly agreed! …
Sports betting is now a form of commodities futures trading, futures exchanges offer sports bets, and states can’t stop them.
If that doesn’t sound to you sort of like what’s happened with hemp relative to state-licensed cannabis, then you haven’t been reading these Cannabis Musings for very long. Someone figures out a way to work within the letter of the law to circumvent restrictive regulations, regardless of the clear intent of that law, gets the courts to bless it, federal agencies don’t use their powers to to stop it, and carefully-crafted state regulations and infrastructure are rendered pointless (okay, that last part isn’t exactly the same, but it’s close). Sports betting is hemp.
Es iz nisht geshtoygn un nisht gefloygn! (“It didn’t climb up and it didn’t fly!” or “It doesn’t make sense!”).
And, thanks, Matt.
Be seeing you.
© 2025 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín, B&Y Ventures, or anyone else who employs/hires me.