February 19, 2020
 

Exclusive Interview with Jushi Holdings Founder, Chairman, and CEO Jim Cacioppo

Multi-state operator Jushi(CSE: JUSH) (OTC: JUSHF) has $65 million in cash on its balance sheet, as of Dec. 31, 2019. Founder, Chairman, and CEO Jim Cacioppo spoke with New Cannabis Ventures about his companys management team, plans to go deep in its existing states and its approach to funding. The audio of the entire conversation is available at the end of this written summary.

Focusing on Strong Management

Cacioppo started analyzing and investing in the cannabis industry about five years ago. He didnt find many companies with management teams he wanted to invest in, so he decided to create an MSO: Jushi.

As the company was built, Cacioppo took a management first approach. He brings his experience from the hedge fund world, and a number of other team members who he previously worked with him in the financial space are a part of the Jushi team.

Additionally, Jushi acquired The Clinic, an operator out of Colorado. The acquisition was not about hard assets, but rather intellectual property and a strong management team, according to Cacioppo. EVP of Operations Ryan Cook runs the Denver office, which the company views as its HQ2. This office houses Jushis cannabis expertise, with team members like Vice President of Manufacturing Kim Eastman.

The companys HQ1 is in Florida, where Cacioppo is based. Here, Co-President and Founder Jon Barack (who worked with Cacioppo at One East Partners) also brings his financial acumen to the table.

Max Cohen, the founder of The Clinic, stepped away from his role as COO, remaining as an independent director. This move was always planned, according to Cacioppo.

Other important members of the Jushi leadership team include CFO Kim Bambach, VP of Human Resources Nichole Upshaw, and EVPs and CO-Heads of Legal Affairs Matt Leeth and Tobi Lebowitz.

Jushi Team Members

The company currently has 240 team members, but its focus on adding retail locations will increase that number significantly. Each new store opening adds about 20 people to the team, and Cacioppo expects Jushi to have 350 to 450 employees by the end of the year.

Jushis Multi-State Presence

Jushi has 25 retail locations, two cultivation locations, and three extraction and processing locations across multiple states, including:

  • Pennsylvania:The company has 15 retail locations in Pennsylvania, six of which are open.
  • Illinois:In Illinois, Jushi has four retail locations, two of which are open.
  • Virginia:Jushi is one of five vertically integrated license holders in Virginia. Cacioppo expects the company could gain 25 to 30 percent market share in the state.
  • California: The company has four retail locations under contract and expects to add more in California.
  • Nevada:Jushis footprint includes cultivation, extraction, and processing in Nevada.
  • Ohio:The company has extraction and processing, expected to open this summer, in Ohio.
  • New York:Jushi has a hemp license in New York, but it does not plan to open that facility this year due to volatility in the hemp market, according to Cacioppo.

Vetting Growth Opportunities

Jushi focuses on defendable markets with the opportunity to build a significant market share. For example, the company operates 15 of the 150 dispensaries allowed under the Pennsylvania program, equating to 10 percent market share, according to Cacioppo. Markets that allow companies to operate only a small number of dispensaries, such as Massachusetts, are not of interest to the company. The company also likes limited license markets, like California. Jushi has one of 17 operational licenses in San Diego.

When it comes to acquisitions, the company has a rigorous process for vetting opportunities. Its originations team, a part of its business development group, is responsible for getting to know the markets and the people operating in them. They then bring potential deals to the company for due diligence. Jushis in-house legal team, supplemented with external counsel, negotiates contract terms. The company does the work upfront to understand any potential liabilities and to avoid any potentially bad investments.

Jushi is focused on growth in its current markets, with California, Illinois, and Pennsylvania as its top priorities. Retail is the companys main focus in California, while cultivation and processing are top-of-mind in Illinois and Pennsylvania.

Cacioppo has a background in distressed assets, and the current market presents opportunities to take advantage of that experience. With a strong balance sheet, Jushi is keeping an eye open for other potential assets to pick up.

Jushis Brands

The companys owned brands include The Lab, Beyond/Hello, and Nira. The Lab, which came out of The Clinic, is a concentrates brand that Jushi plans to roll out across the country.

Beyond/Hello is the companys acquired retail brand. It is currently focused on Pennsylvania, but the company plans to expand its presence.

Inside the Scranton, PA Beyond/Hello Store

Nira, developed by Dr. Laszlo Mechtler, is a CBD brand. Jushi plans to roll out a THC formulation of the product, Nira Plus, in Virginia.

In addition to its owned brands, Jushi is planning to carry third-party brands, such as those developed in California, on its platform.

Approach to Funding and Capital Allocation

In January, Jushi closed $47 million in debt financing. Cacioppo pointed out that Jushi is the only small-cap MSO in the industry to have completed a debt deal. It has raised $185 million to-date, $40 million of which comes from founders and employees.

Jushi is looking at other ways of raising capital, including a sale-leaseback transaction on one if its California retail locations. The company will also consider hybrid instruments and returning to the equity markets as it grows and needs more capital for acquisitions.

The company has also managed market volatility by selling assets. For example, it sold a minority interest in a New York license to Cresco Labs (CSE: CL) (OTC: CRLBF), making three to four times on its investment.

When it comes to allocating capital, the company takes a disciplined approach. Jushi does a significant amount of analysis to understand the cash flow of anything it is opening or buying. The company also focuses on controlling operating costs.

2020 Guidance

Jushi has given guidance fore exiting 2020 with a run-rate of $150 to $180 million. That growth, according toCacioppo, will be driven by store openings in Pennsylvania, the closing of a San Diego acquisition, the opening of a Santa Barbara store, the transition of medical stores to recreational in Illinois, and opening new recreational stores in Illinois. Though there is some uncertainty due to regulatory timing, Cacioppo is confident in the companys track record of opening stores. He expects to see organic growth on top of store openings as activity increases in states like Pennsylvania and Illinois.

In 2020, Cacioppo recommends investors watch Jushis quarterly revenue run rate. Moving into 2021, the company is expected to reach cash flow and its breakeven point, and investors can begin to watch the companys margins, as well as continued revenue growth.

Jushi, like the rest of the industry, is challenged by regulatory uncertainty and rapidly scaling operations, but Cacioppo is confident in the strength of his companys management team and its balance sheet.

To learn more, visit the Jushi website. Listen to the entire interview:

February 19, 2020
 

In October,Gibraltar Industries (NASDAQ: ROCK) purchased CO2 extraction company Apeks Supercritical, paying $12.55 million for the Ohio-based company that reported trailing annual revenue through June 2019 of $17.7 million. This move extended the company’s involvement in the cannabis industry, where it has also worked on green house facilities.

On February 14th, the company revealed an even larger acquisition of California-based Delta Separations, paying $50 million cash for the privately-held manufacturer of ethanol-based extraction systems. Gibraltar disclsoed that the acquired company generated 2019 revenue of $46 million.

As Gibraltars second acquisition in the processing market, Delta Separations leadership position in ethanol-based extraction technology combined with Apeks leadership position in CO2extraction technology expands our offering as we work with customers to shape the future of this market. The combination of Apeks and Delta will support our customers regardless of their technology and systems preference.

Gibraltar Chief Executive Officer Bill Bosway

Delta has a strong management team, is a true leader in this market with an incredible passion for its business, and our future together. We will continue to build our presence and relevance with our customers accordingly.

In addition to Delta, Gibraltar acquired Teaching Tech, which is a separate company that provides training to Delta customers. According to the company’s website, Delta was founded in 2015 and has been headed by CEO Roger Cockroft and Founder/CTO Ben Stephens. Gibraltar plans to retain substantially all employees and to change the name of Teaching Tech, according to the asset purchase agreement.

Delta Separations CUP-30 Closed-Loop Alcohol Extraction System

According to the company’s website, it sells agitation, chilling, extraction, evaporation and distillation equipment as well as modular processing labs.

February 19, 2020
 

On February 11, Greenrose Acquisition Corp. (NASDAQ: GNRSU) priced a $150 million initial public offering, becoming the latest in a series of cannabis-focused blank check companies to go public. Based in Woodbury, New York, Greenrose sold 15 million units priced at $10 each. Imperial Capital LLC and I-Bankers Securities Inc. underwrote the offering.

Blank check, or special purpose acquisition corporations (SPACs), are publicly traded companies that raise money from investors to acquire an existing company, generally one that is privately held. The money is held in a trust until a merger or acquisition is identified. Because investors dont know upfront just where their money will be used, SPACs are often referred to as blank checks.

SPACs offer privately held companies an alternative to the traditional IPO through a merger or other business combination, thus saving them from having to go through the paperwork-intensive and lengthy process. If the SPAC fails to complete a merger or acquisition within the required time frame, all of the public shares are redeemed for a pro rata portion of the cash held in the trust account.

Last year, 59 blank check companies went public, raising $13.6 billion, according to SPAC Research. So far this year, eight SPACs have gone public raising $2.5 billion.

Despite some not so positive returns for several publicly traded companies, the nascent cannabis industry has been ripe for SPACs as investor excitement continues to grow. In this review, we take a look those cannabis-focused SPACs that have popped up in recent years, how much they have raised and who is behind them.

Greenrose Acquisition Corp.

Greenrose Acquisition Corp. noted in its filing with the Securities and Exchange Commission that the cannabis market is growing, but highly fragmented and undercapitalized and companies operating across multiple verticals consistently have trouble accessing capital from traditional sources.

The companys management team consists of experienced deal makers, operators, and investors who have worked in the agricultural and investment services industries, according to the SEC Filing.

They are CEO and Director William F. Harley III, who has more than 30 years of experience in the agriculture, real estate and finance industries, and Brendan Sheehan, executive vice president, corporate strategy and investor relations and director. He has more than 25 years of experience in business development, sales and operations in the finance, technology and healthcare industries.

Stable Road Acquisition Corp.

On November 13, 2019, Stable Road Acquisition Corp. (NASDAQ: SRAC) announced it closed on an IPO of $172.5 million. The New York-based company sold 17,250,000 units, including 2,250,000 units issued pursuant to the exercise by the underwriter of its over-allotment option priced at $10 per unit. Cantor Fitzgerald & Co. acted as the sole book running manager for the offering.

The company noted that its strategy is to pursue one or more business combinations with companies servicing and operating adjacent or ancillary to, the cannabis sector, but which are not directly involved in the production, distribution and sale of cannabis (i.e. businesses that touch the plant), according to its SEC filing. They include vaporization products and cannabis accessories; software, such as seed-to-sale tracking; labs; distribution; real estate; brands; and packaging.

The companys management team includes Brian Kabot, chief investment officer of Stable Road Capital, LLC, James Norris, CFO of Stable Road Capital and Juan Manuel Quiroga, chief investment officer of NALA Investments, LLC. Combined, they have more than 60 years of investment management experience. Stable Road Capital is known for being an investor in the real estate of MedMen (CSE: MMEN) (OTC: MMNFF) through its Treehouse collaboration and has made investments in the sector in companies that includeGrenco Science and Plus Products(CSE: PLUS) (OTC: PLPRF).

Brian Kabot, CIO, Stable Road Capital

Merida Merger Corp. I

On November 7, 2019, New York-based Merida Merger Corp. I (NASDAQ: MCMJ) (NEO: MMK) announced it had raised $120 million via a dual listing on the Nasdaq and Canadas NEO Exchange. It was the first SPAC to be backed by a dedicated private equity firm (Merida Capital Partners III LP) focused on investing in the cannabis industry.

Merida Capital Partners management team has worked with legal cannabis companies since 2009 and has been investing in cannabis-related companies since 2013, according to the SEC filing. Unlike some of the other cannabis SPAC leadership that have popped up in recent years, Meridas principals have helped to build and operate sophisticated cannabis cultivation facilities and have directed significant investments into a broad spectrum of cannabis-related companies ranging from data analytics companies to hydroponic suppliers.

The company is led by Peter Lee, president, CFO and director and Richard Sellers, executive vice president of mergers and acquisitions. Mitchell Baruchowitz, who is the managing member of Merida Capital Partners, is the non-executive chairman of the board of this SPAC.

Silver Spike Acquisition Corp.

Last August, New York-based Silver Spike Acquisition Corp. (NASDAQ: SSPK), announced it priced a $250 million cannabis-focused SPAC. It was incorporated as a Cayman Islands exempted company and is backed by Silver Spike Capital, an asset management fund formed in 2019 and focused on the cannabis industry.

The companys founder, Scott Gordon, also is the founder and CEO of Silver Spike Capital, which began investing in the cannabis industry in 2014. In 2016, Gordon co-founded and became chairman of Egg Rock Holdings, a holding company that invests in and operates companies in the cannabis market and is the parent company of the Papa & Barkley family of cannabis products. Other members of the team include President William Healy, CFO Gregory M. Gentile, and COO Mohammed Grimeh.

Papa & Barkley is a cannabis wellness company.

As the industry continues to transition to a new legislative and regulatory framework, we believe that many companies will need a partner that can assist in providing a level of operational and financial expertise to support their growth. Our team includes a variety of investment, operational and healthcare professionals who will provide operating, technical, regulatory and legal expertise to assist a target business access the public markets, the company stated in its SEC filing.

Ceres Acquisition Corp.

On February 5, Los Angeles, Calif.-based Ceres Acquisition Corp. filed a preliminary prospectus with Canadian regulatory authorities for a proposed public offering to raise $120 million. The company plans to trade on the NEO Exchange.

The management team includes CEO Joe Crouthers, who started a cannabis distribution and transportation company brokering sales of input materials to cannabis product manufacturers; President, CFO and Corporate Secretary Jordan Cohen, who has experience in the technology and wellness industries; and, COO Michael Vukmanovich, who got his start in the legal cannabis industry investing, advising and networking with some of the industrys top founders, according to the prospectus.

The sponsor, Ceres Group Holdings, has been investing in the industry since 2016, with stakes in Fotmer Life Sciences, a licensed cultivation company in Uruguay, vaporizer manufacturer Pax, Palms, a multi-state pre-roll brand, and Silverpeak, a Colorado operator.

We believe that our understanding of the dynamics, competitors, trends, risks, unique nature, and opportunities of the cannabis segment will enable us to efficiently pursue the industrys best opportunities and potential transactions, the company stated. It is targeting investments in the US$200-600 million range.

There are numerous other SPACs who entered the market earlier on. They include:

  • Ayr Strategies Inc. (CSE: AYR, OTC: AYRSF), formerly Cannabis Acquisition Strategies Corp., which raised C$125 million and then closed a merger with five cannabis companies across the nation.
  • Akerna Corp. (NASDAQ: KERN) , formerly MTech Acquisition Corp, which completeda merger with cannabis software maker MJ Freeway last June, initially raised US$50 million. MTech was the first US-listed SPAC focused on acquiring a business ancillary to the cannabis industry.
  • Canaccord Genuity Growth Corp. (NEO: CGGC.UN) now Columbia Care Inc., (NEO: CCHW) (OTC: CCHWF) raised C$46 million. Canaccord Genuity Growth II Corp. (NEO: CGGZ) raised C$100 million.
  • In March 2019, New York-based Tuscan Holdings (NASDAQ: THCB) raised US$240 million. Then in June of the same year, it filed for another SPAC, Tuscan Holdings II (NASDAQ: THCA), raising $172 million.
  • In May 2019, Mercer Park Brand Acquisition (NEO: BRND) announced the closing of its $402.5 million public offering. The company said it will focus on acquiring one or more cannabis companies with an estimated aggregate enterprise value of $300 million to $800 million. The sponsor, Mercer Park, had previously sponsored the SPAC that became AYR Strategies.
  • Subversive Capital (NEO: SVC) closed on a US$575 million IPO in July 2019. The following month, Bespoke Capital Acquisition Corp. (TSX: BC)closed on a US$350 million IPO.

Because so many cannabis companies are privately held, going public via a SPAC is one way to inject lots of capital into a proven company without having to start from the ground up. With these SPACs having been successfully completed, the question now becomes what will they purchase and will they be able to do it within the required deadlines.

February 18, 2020
 

LONDON, Ontario, Feb. 18, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that further to its press release dated December 11, 2019, the Company has entered into a licensing and manufacturing agreement (the “Agreement”) with Dycar Pharmaceuticals Ltd. (“Dycar”). Pursuant to the Agreement, Dycar will immediately provide Indiva with non-dilutive financing of $3.6 million, $500,000 of which has been previously advanced, and an additional $4.5 million of non-dilutive financing over two instalments. Such amounts will be used to finance the production and distribution, by Indiva, of certain Dycar-branded cannabis products (the “Dycar Products”). Sale proceeds from Dycar Products will be used to repay the financing. The Company and Dycar will also share additional sale proceeds of Dycar Products pursuant to the terms of the Agreement.

We are pleased to finalize our partnership with Dycar and begin developing premium products on their behalf.

Niel Marotta, Indivas President and Chief Executive Officer

OPTION GRANT

The Company also announces that its Board of Directors has approved the grant of 2,977,333 stock options to directors, officers, employees and consultants of the Company. The options granted are exercisable into common shares of the Company at a price of $0.40 per common share in accordance with TSX Policy 4.4, subject to the rules of the TSX Venture Exchange and the Company’s Stock Option Plan. The options have a term of five years and will expire on February 18, 2025. One-third of all options will vest on the first anniversary of the grant, one-third of all options will vest on the second anniversary of the grant and the final one-third of all options will vest on the third anniversary of the grant.

ABOUT INDIVA

Indiva sets the standard for quality and innovation. Indiva aims to bring its exceptional portfolio of products to Canadians and cannabis enthusiasts around the world as laws permit. Based in London, Ontario, Indiva creates premium pre-rolls, capsules and edible products. In Canada, Indiva produces and distributes the award-winning Bhang Chocolate, Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and other Powered by INDIVA products through license agreements and joint ventures. Click here to connect with Indiva on social media and here to find more information on the Company and its products. Click here to connect with Indiva on social media and here to find more information on the Company and its products.

Original press release

February 18, 2020
 
Michael King (Left) and Charlie Kieley (Right)

Exclusive Interview with Kings Garden Co-Founders Michael King and Charlie Kieley

Kings Garden started five years ago in the Coachella Valley region of California. Since then, it has grown into a profitable cultivation company backed by the funding of friends and family. Founders CEO Michael King and COO Charlie Kieley spoke with New Cannabis Ventures about their companys California presence, their approach to distribution and their thoughts on the commoditization of cultivation.

The Team

King comes from a background in finance, beginning his career on Wall Street and then moving into real estate. He moved into the cannabis space approximately seven years ago. Kieley has spent the past 15 years in cannabis, owning and operating retail dispensaries and facilities. He was working in northern California but had roots in the Palm Springs and Coachella Valley area. As soon as Palm Springs began licensing commercial cannabis facilities, he came home.

King, with his financial background, and Kieley, with his operations experience, have complementary skill sets. They lead the company along with other key players including CFO Lauri Kibby, Vice President of Operations Gary LaSalle, Head of Cultivation Tyler Geld, Vice President of Distribution Jeffrey Fellbaum, Vice President of Processing/Packaging Cameron Maggalens, Chief Marketing Officer Tommy Kieley, and Vice President of Marketing Ivan Talan.

The leadership team oversees the approximately 200 employees at Kings Garden. Over the past five years, the company has been continuously building, but construction is now complete. The company may increase its personnel by 10 percent to accommodate increased production, but the team likely wont need to grow much more, according to King.

Cultivation at the Core

At its heart, Kings Garden is a cultivation company. It produces premium, indoor flower meant for consumption in its raw form, according to Kieley. In July 2018, the company launched its first SKU: a packaged eighth jar. Now, Kings Garden has 16 SKUs, all produced in-house.

Kings Garden Team Members at Work

The company owns and operates approximately 215,000 square feet of licensed space in the Coachella Valley. The location is ideal for Kings Garden not only because of Kieleys connection to the region but also because of the lower cost of operation compared to areas like Los Angeles and San Francisco. The company has more than 3000 cultivation lights and did more than 20,000 pounds last year.

The Kings Garden leadership team never had any intention of launching its own distribution operations. Instead, the team vetted the distribution players capable of handling the volume and scale their company was targeting. The list was relatively small, and Origin House was an easy selection to make, according to Kieley. He and the team see Origin Houses longstanding history of supporting brands and getting products to market, a major factor in its leading position as a distribution platform and as a strong acquisition for Cresco Labs.

Origin House handles all accounting, placing a link of separation between Kings Garden and its retailers. King and Kieley have heard about retailers struggling to pay, but they havent experienced it themselves.

Ramping Up

Kings Garden is increasing its production by approximately 30 percent, which will result in a small increase in expenses and a significant increase in revenue, according to King. Additionally, the company is increasing its manufacturing by 400 to 500 percent.

Kings Garden Manufactures Different SKUs, Including Concentrates.

Previously, the company has done significant wholesale business, but now it is shifting its resources to focus on its own branded products.

Last year, the company did $45 million with significant EBITDA, according to King. Kings Garden is targeting $70 to $80 million with an even stronger EBITDA this year. By 2021, the company is expected to be doing approximately $100 million. Those projections are rooted in the companys now-completed infrastructure. Additional lights have increased cultivation capacity, and the significant increase in manufacturing is being driven by upgraded SOPs and equipment.

The Potential for Expansion

Kings Garden is taking a cautious approach to expansion. Over the past year and a half, the team has vetted opportunities in different states but none have been the right fit yet. If the company does pursue multi-state expansion, it likely will not take the form of building operations from the ground up. Instead, management contracts or licensing may be an option. At this point, King and Kieley want to enjoy the infrastructure theyve built in California.

The company considered going public in the past, going so far as to travel to Canada and begin discussions. Ultimately, Kings Garden halted the go-public process, deciding it was the wrong decision. The company has no plans to list on a Canadian exchange, but it will consider the possibility of listing on the NYSE or NASDAQ when the time comes. For now, the company is happy to remain private, according to King.

Funding and Capital Allocation

In the beginning, King and Kieley put their own money into the companyfive years ago, a 10,000-square-foot facility. They wanted to prove to themselves that they had a working model. Once they did, the pair began to make calls to friends and family and pick up more space. Kings Garden has raised a total of $55 million from friends and family. One of the companys largest investors has put in approximately $13 million, while one of the smallest has put in about $20,000, according to King. Today, the company is profitable with debt and has begun paying dividends to its investors, according to King.

Kings Garden carefully tracks its monthly expenses (the largest being rent, electricity, and payroll) and ensures it has enough to cover those. Over the last few years, the company has also been able to invest money it has made back into its infrastructure.

The Commoditization Question

The commoditization of cannabis is a big topic of discussion in the industry, but not one that worries the Kings Garden team. Outdoor and greenhouse products grown as biomass that will ultimately be used for manufactured goods likely will become commoditized, according to Kieley. But, that is not the kind of cannabis Kings Garden grows. It produces premium, indoor cannabis for consumption by connoisseurs, and Kieley does not anticipate commoditization affecting that kind of product.

Kings Garden Focuses on Producing High-Quality Products.

Of course, the company faces other challenges common across the industry, from strict regulation to the burden of taxes. But, there is also an upside. With profitability becoming increasingly vital and capital funds drying up, bad operators will begin to failleaving behind a legitimate industry. At the end of this, we are going to have the industry we always wanted, said Kieley.

To learn more, visit the Kings Garden website. Listen to the entire interview:

February 18, 2020
 

Australis Capital Announces Termination of Merger Agreement with Folium Biosciences

LAS VEGAS, Feb. 18, 2020 /PRNewswire/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) previously announced on, December 11, 2019, a proposed merger by and among AUSA, Folium Equity Holding LLC (“Folium”) and Folium Merger Sub, LLC by which Folium would become a wholly owned subsidiary of AUSA, and AUSA would be rebranded as and carry on the business of Folium. AUSA recently discovered new relevant information with regard to Folium and, on that basis, AUSA has decided to not proceed with the merger.

AUSA continues to lean heavily on corporate governance and our vision to navigate through an incredibly unpredictable market over the past 12 months. With over $38.2 million in cash, liquid assets, and other assets that can easily be converted into cash within a short amount of time and $5.2 million annual burn excluding charges from capital projects and one-time occurrence, AUSA has a very strong financial position.

Scott Dowty, CEO of AUSA

With 18 months of operating experience behind us, we are excited about the future and eager to execute on our strategy starting with our corporate update on February 26, 2020.

A trading halt on AUSA stock was issued in accordance with the policies of the Canadian Stock Exchange (“CSE”) at the time of the announcement of the proposed merger agreement. As the transaction will not proceed, trading is expected to resume on the CSE and OTC shortly.

AUSA is hosting a corporate update call at 1:00 PM EST on Wednesday, February 26, 2020. The conference call may be accessed by dialing 1.888.396.8094 (Toll-Free North America) or 1.416.764.8649 (Canada).

About Australis Capital Inc.

AUSA operates and builds transformative, differentiated cannabis companies predominantly in the United States, a highly-regulated, fragmented, and rapidly expanding industry. AUSA adheres to stringent evaluation and operating criteria focusing on high-quality opportunities while maintaining a steadfast commitment to governance and community. AUSA’s Board and management team have material experience with, and knowledge of, the cannabis space in the U.S., extensive backgrounds in highly-regulated industries and regulatory compliance. AUSA operating and portfolio assets include Rthm Technologies Inc., Body and Mind Inc., Quality Green Inc., Mr. Natural Inc., Green Therapeutics, LLC., and Cocoon Technology LLC.

The Company’s Common shares trade on the CSE under the symbol “AUSA” and on the OTCQX under the symbol “AUSAF”.

For further information about AUSA, please visit the website at ausa-corp.com or contact the Company by e-mail at ir@ausa-corp.com.

Original press release

February 17, 2020
 
In a setback for Iowas small and limited medical cannabis program, state regulators rejected recommendations to add two more qualifying conditions for those who could be treated with MMJ
February 17, 2020
 
Marijuana companies are now the single largest sponsors of Colorado highway clean-ups
February 17, 2020
 
As a growing number of Canadian cultivation license holders retreat from costly greenhouse expansions, more applicants than ever are readying lower cost outdoor cannabis projects
February 16, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

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Friends,

With three reports from some of the largest Canadian LPs over the past few days, we have now had six so far in 2020, including Aphria, Aurora Cannabis,Canopy Growth, Hexo, Organigram and Supreme Cannabis. One of the first things investors look at is the top-line number, revenue, and recent financial reports suggest to us that there are several reasons to examine the sources of revenue more closely. Simply said, not all revenue is the same, and we think there are at least three issues with which investors should be familiar.

Non-Cannabis Revenue

Several LPs have acquired businesses that are outside of cannabis cultivation, processing or sale or even related ancillary services and products. Aphria, for example, derives the majority of its revenue from distribution of European pharmaceuticals. Tilray acquired Manitoba Harvest, which is a hemp food provider. Canopy Growth’s fiscal Q3 report included revenue from the recent acquisition of This Works, a skincare company it acquired for $74 million last May as a platform for CBD cosmetics. The company didn’t break out the amount of revenue, but it grew 42% from the prior quarter. Additionally, it included an undisclosed amount of revenue from its recent acquisition of BioSteel Sports Nutrition, which is also non-cannabis. Finally, revenue is substantial from its C3 unit that it acquired for C$343 million last April, with Q3 sales up 3% from Q2 to $14.8 million. The company doesn’t break it out, but the sales include both extracted cannabis and synthetic cannabinoids, and we estimate that the vast majority of revenue is from synthetic THC. We would suggest that investors value the synthetics, which are essentially a generic drug, at substantially less than how they value natural cannabis.

We propose that rather than using a simple price to sales or projected sales metric that investors break up the businesses and apply an appropriate metric to eachsegment. For example, Aphria paid just18.92 million upfront with an additional 23.5 millionwhen performance milestones were met for CC Pharma in early 2019, which it said had generated revenue ofof approximately 262 million, with EBITDA of approximately 10.5 million in 2018. This worked out to be just 0.16X trailing revenue, and investors should treat it very differently than they do the cannabis business, which presumably has much higher margins.For the benefit of our readers, we include only cannabis-related revenue, when it can be clearly broken out, in thePublic Cannabis Company Revenue & Income Tracker.

Wholesale Revenue

LPs generate cannabis revenue in a variety of ways, including selling into the provinces for adult-use, Canadian medical cannabis, international medical cannabis, retail sales through stores and also wholesale sales to other LPs.Canopy Growth, for example, broke out its fiscal Q3, revealing overall direct cannabis gross revenue to be 52% adult-use, 15% retail stores, 14% Canadian medical and 18% international medical. On the call, management said almost no revenue was attributed to wholesale.

Two companies that saw big swings in their revenue from changes in wholesale were Aurora Cannabis and Organigram. Aurora Cannabis was negatively impacted by lower wholesale revenue in its fiscal Q2, with a decline from $10.3 million to just $2.4 million. Organigram was positively impacted, as it saw a jump in its fiscal Q1 to $9.2 million from less than $600K during its fiscal Q4. Its gross margin and pricing were quite high in this part of their business, but it can be difficult to sustain wholesale activity absent long-term supply agreements, which means that investors should expect potential volatility in this part of the business.

Returns

One of the pitfalls of the provincial distribution model for adult-use is that suppliers are at the mercy of their single customer, the province, unlike in medical cannabis, where the customer is the individual. For the past few quarters, returns and provisions for returns have had a major impact on reported revenue for most LPs. Canopy Growth reported net revenue of $123.4 million for its fiscal Q3, which represented sequential growth of 62%. The reason for the big gain from Q2 was that the company took a $32.7 million revenue adjustment for returns and pricing adjustments in the prior quarter,as the company clearly detailed in its press release and financials. In Q3, the adjustments were just $5.3 million. The company’s sequential growth, without those adjustments, would have been a still healthy 13%.

Pricing adjustments and returns hit the P&L of the LPs in a single quarter, but they correct for revenue that was recognized in prior quarters. In our view, investors should be careful to understand this point. For example, Aurora Cannabis reported revenue looked even weaker than it was due to pricing adjustments and returns that hit the P&L in its fiscal Q2 that amounted to 16% of the $66.6 million it would have reported absent that factor. The company reported a sequential decline in cannabis net revenue of 26%. Had it taken the hit in Q1 rather than Q2, then it would have reported 5% positive growth in cannabis net revenue.

Bottom Line

We have seen several analysts apply valuation metrics to overall revenue, without taking into account some of the issues we have highlighted, in particular the non-cannabis revenue aspect. We suggest that investors should be cautious to avoid overvaluing companies that have substantial non-cannabis revenue or that are overly reliant upon the volatile wholesale channel. At the same time, we advocate being mindful with how one looks at growth when there are returns and pricing adjustments during the quarter or in prior quarters.


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Sincerely,

Alan & Joel

February 15, 2020
 
A New Mexico Senate panel scraps legislation to legalize recreational marijuana, Aurora Cannabis reports a steep loss for its second quarter, President Trumps 2021 budget proposal seeks additional money for the federal government to regulate hemp and CBD - and more of the weeks top cannabis business news
February 14, 2020
 
Marijuana Business Dailyis seeking input from cannabis industry executives and investors that will help shape the marijuana industry
February 14, 2020
 
A Nevada marijuana testing lab inflated THC levels on cannabis products by as much as 10%, according to a settlement agreement approved by state regulators
February 14, 2020
 
Canadian marijuana giant Canopy Growth reportedfiscal third-quarter net revenuethat soared 62% from the second quarter, jumped 49% from its third quarter in 2019 and drove up its stock by double-digit figures
February 14, 2020
 
Viroj Sumyai, a former head of the United Nations body responsible for international drug treaty compliance, has been hired as president of Thailand's leading medical cannabis company
February 14, 2020
 

Independent registration from the global public health organization underlies commitment to dietary supplement quality and compliance with U.S. GMP requirements

BOULDER, CO, Feb. 14, 2020 /PRNewswire/ – Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) (TSX: CWEB,OTCQX: CWBHF), the market leader in hemp extract products with naturally occurring cannabidiol (CBD), is pleased to announce that its manufacturing facility in Boulder, Colorado was recently added to NSF International’s dietary supplements Good Manufacturing Practice (GMP) registration. Earning GMP registration from NSF International verifies that a manufacturing facility has the proper methods, equipment, facilities, and controls in place to produce dietary supplement products.

Our commitment to attaining industry recognized certifications underlies the trust we have earned from our consumer, retail and regulatory partners.

Deanie Elsner, CEO of Charlotte’s Web Inc.

The registration is important for supporting certain potential new business partnerships. As industry leaders, attaining NSF GMP certification marks another important milestone for Charlotte’s Web and we look forward to prominently displaying our new NSF certificate at our manufacturing facility in Boulder.

The NSF GMPs were developed in accordance with the U.S. Food and Drug Administration’s (FDA) 21 CFR part 111 regulation on dietary supplement manufacturing, packaging, and distribution.

With scientific expertise and decades of experience in testing and certification in the relevant product categories, NSF International is uniquely qualified to serve the fast-growing hemp industry in the United States and help protect consumers who use these products.

“We’re very pleased to grant NSF GMP registration to this Charlotte’s Web manufacturing facility,” said David Trosin, Managing Director and Global Business Development Director, Health Sciences at NSF International.

About NSF

NSF International is a global public health organization that facilitates new language standards, and tests and certifies products for the water, food, health sciences and consumer goods industries to minimize adverse health effects and protect the environment. Founded in 1944, NSF is committed to protecting human health and safety worldwide. With operations in more than 175 countries, NSF International is a Pan American Health Organization/World Health Organization (WHO) Collaborating Center on Food Safety, Water Quality and Indoor Environment.

About Charlotte’s Web Holdings, Inc.

Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website at www.CharlottesWeb.com. The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging good farming practices, and supporting U.S. farming communities. Charlotte’s Web products are certified by the U.S. Hemp Authority.

Charlotte’s Web is a socially conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration for how its efforts affect its employees, customers, the environment, and the communities where its employees live and where it does business, while maximizing profits and strengthening its brands. The Company’s management believes that socially oriented actions have a positive impact on the Company, its employees and its shareholders. Charlotte’s Web donates a portion of its pre-tax earnings to charitable organizations.

Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol “CWEB” and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol “CWBHF”. As of January 1, 2020, Charlotte’s Web had 67,418,174 Common Shares outstanding and 95,342.49 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 105,555,170 Common Shares outstanding.

Original press release

February 14, 2020
 

Visit the Canopy Growth Corp Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Canopy Growth Reports Third Quarter Fiscal 2020 Financial Results
  • Generated $124 million Net Revenue, up from $76 million in Q2 2020
  • Excluding portfolio restructuring charges in Q2 2020, Net Revenue up 13%
  • Achieved Gross Margin of 34%
  • Total Operating Expenses down 14% versus the prior quarter
  • Adjusted EBITDA loss decreases to $92 million

SMITHS FALLS, ON, Feb. 14, 2020 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NYSE: CGC) today announced its financial results for the third quarter ended December 31, 2019. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.

Third Quarter Fiscal 2020 Corporate Financial Highlights

  • Revenues: Reported Net Revenues increased 62% over Q2 2020, or 13% excluding the impact of portfolio restructuring charges. Gross Recreational B2B revenue increased 8% over prior quarter due, in part, to over 140 stores becoming active in the quarter and higher sales of premium dried flower and pre-roll joints. Our acquired businesses including Storz & Bickel and This Works also performed well, contributing to organic growth this quarter.
  • Gross margin: Gross margin before fair value impacts was 34%. Gross margin performance in quarter benefited from lower period costs due to higher facility utilization
  • Operating expenses: Total operating expenses decreased 14% versus Q2 2020 primarily due to a $20 million reduction in G&A expenses and over $31 million lower stock-based compensation versus the prior quarter
  • Adjusted EBITDA: Adjusted EBITDA loss of $92 million, a $64 million narrower loss versus Q2 2020 driven by higher sales, improved gross margins and lower operating expenses
  • Cash Position: Gross cash balance was $2.3 billion, down from $2.7 billion in Q2 2020, reflecting the EBITDA loss, capital investments and M&A

Third Quarter Fiscal 2020 Business & Operational Highlights

  • Maintained leading market share in retail, at an estimated 22%, of the Canadian recreation market as we saw a strong demand for both premium and value priced dried flower and pre-rolled joints
  • Continued market share gains and increase in the number of patients, to over 76,700, in the Canadian medical cannabis market
  • Named David Klein as new Chief Executive Officer
  • Completed first shipments of cannabis-infused edible chocolates and JUJU Power 510 batteries in December 2019
  • Storz & Bickel expanded product line with launch of Crafty+ vaporizer in November 2019
  • Announced initial line of First & Free Hemp-derived CBD products and began sales online through www.firstandfree.com, one quarter ahead of Q4 2020 target

In Q3 we executed across Canada, in our international markets and in our strategic acquisitions to drive revenue growth. We have a lot of work to do. We are eager to capitalize on the opportunity to create an unassailable position through a tight focus on the consumer and on critical markets.

David Klein, CEO

“We delivered significant gross improvement in the third quarter driven by stronger revenues and higher capacity utilization. Actions taken earlier this year are expected to meaningfully reduce stock-based compensation in FY21, and we have started to implement tighter cost controls across the organization,” said Mike Lee, EVP & CFO. “We plan to take further steps to reduce our costs and right-size our business to ensure that we can generate a healthy margin profile and cash generation in the coming years.”

Canadian Cannabis

  • Recreational B2B sales increased 8% over Q2 2020, due to over 140 stores becoming active in the quarter and higher sales of premium dried flower and pre-roll joints
  • Recreational B2C sales increased 16% over prior quarter, due in part to an 11% increase in same store sales
  • Medical sales increased 5% over the prior quarter primarily attributable to the broadening of our brand and product offerings, including the availability of products from additional CraftGrow partners, as well as an increase in number of customers to over 76,700.

International Cannabis

  • C3 revenue increased 5% over Q2 2020
  • Germany cannabis sales higher than expected due to opportunistic sales into the German market to fill a supply gap that resulted from a regulatory enforced sales halt of cannabis products offered by another vendor

Strategic Acquisitions

  • Storz & Bickel vaporizer revenue increased 46% over Q2 2020 due to solid organic growth and seasonal sales
  • This Works revenue increased 42% over prior quarter due to strong organic growth

Non-IFRS Measures

Gross margin percentage, before fair value impacts in cost of sales, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. This measure is calculated as net revenue less inventory production costs expensed to cost of sales, divided by net revenue, and may be computed from the consolidated statements of operations presented within this news release.

Adjusted EBITDA, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items, and further adjusted to remove acquisition-related costs. The Company attributes Adjusted EBITDA to its operations and corporate overhead, strategic investments and business developments, and non-operating or under-utilized facilities. The Adjusted EBITDA reconciliation is presented within this news release and explained in Management’s Discussion & Analysis under “Adjusted EBITDA (Non-IFRS Measure)”, a copy of which will be filed on SEDAR.

Free Cash Flow, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases and deposits of property, plant and equipment.

Transition to U.S. GAAP Reporting

As part of our U.S. financial reporting requirements, Canopy Growth confirmed that, as of September 30, 2019, it no longer met the criteria for qualification as a foreign private issuer because (1) more than 50% of the outstanding voting securities are held by residents of the United States, and (2) the majority of Canopy Growth’s directors are United States citizens.

Therefore, as of April 1, 2020 Canopy Growth will be considered a United States domestic issuer and a large accelerated filer. As a result of this change, as of April 1, 2020, Canopy Growth will be required to prepare its consolidated financial statements, including the Company’s March 31, 2020 audited annual consolidated financial statements, in conformity with United States generally accounting principles, with such change being applied retrospectively. The extent of the impact of this change in accounting framework has not yet been quantified. Canopy Growth will also be required to provide an auditor attestation report under Section 404(b) of the Sarbanes-Oxley Act.

This press release is intended to be read in conjunction with the Company’s Unaudited Condensed Interim Consolidated Financial Statements (“Financial Statements) and Management Discussion & Analysis (“MD&A) for the three and nine months ended December 31, 2019, which will be filed on SEDAR (www.sedar.com) and will be available at www.canopygrowth.com. The basis of financial reporting in the Financial Statements and MD&A is in thousands of Canadian dollars, unless otherwise indicated.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on February 14, 2020.

Webcast Information

A live audio webcast will be available at:
https://event.on24.com/wcc/r/2171215/8311836AC24F7988B042B4BB0FA5622A

Replay Information

A replay of the call will be accessible by webcast, until 11:59 PM ET on May 14, 2020, at
https://event.on24.com/wcc/r/2171215/8311836AC24F7988B042B4BB0FA5622A

About Canopy Growth Corporation

Canopy Growth (TSX:WEED,NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company’s subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company’s medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our historic public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates eleven licensed cannabis production sites with over 5.2 million square feet of production capacity, including over one million square feet of GMP certified production space. For more information visit www.canopygrowth.com

Original press release

February 14, 2020
 
Several states could expand their medical cannabis programs this year through new laws or regulatory policies, opening the door to additional business licenses, more sales for existing cannabis operators and fresh business for ancillary companies
February 13, 2020
 

cbdMD Reports Record First Quarter Fiscal 2020 Net Sales of $10.14 Million

CHARLOTTE, N.C., February 13, 2020–(BUSINESS WIRE)–cbdMD, Inc. (NYSE American: YCBD, YCBD PR A) (the Company), a leading cannabidiol (CBD) consumer brands company, reported today its first fiscal 2020 quarter ended December 31, 2019 results, the highlights of which were:

  • The Company reported record net sales of $10,148,236, a year-over-year quarterly increase of approximately 285% (which is based upon the pre-acquisition and post-acquisition net sales of the brand which the Company acquired in late December 2018).
  • The Company reported its net sales for the quarter were approximately 67% through its e-commerce channel and 33% through its retail brick and mortar channel.
  • The Company reported its gross profit margin as a percent of net sales were 63.5% as compared to 64.4% in prior year same period and an improvement from our last quarter ending September 30, 2019, which was 56.7%.
  • The Company reported a quarterly loss from operations of $6,112,598, of which approximately $965,000 was non-cash items. Total operating expenses related to marketing, advertising, sponsorship and affiliate commissions were approximately $5 million for the quarter, of which $1.2 million was an accelerated license fee for the Life Time Fitness Agreement.
  • The Company reported a $16,898,006 decrease in the Companys non-cash contingent liability and net income before provision for income tax of $10,730,665.
  • The Company reported net income for the first quarter of fiscal 2020 of $12,863,029 or $0.45 cents per diluted share.
  • The Company reported $3,661,210 in cash at December 31, 2019, which gave no effect to the subsequent follow-on firm commitment common stock offering which resulted in approximately $16.9 million of net proceeds on January 14, 2020.

cbdMD is reporting another record quarter of revenue growth, we are fully financed and expect to achieve cash flow breakeven by the end of this fiscal year. In calendar 2019, our first full year of CBD sales, we generated over $33 million in total net sales, which was well ahead of our initial expectations of $20 million.

Martin Sumichrast, Chairman and co-CEO of the Company

We believe that we have built two of the leading CBD brands in America, cbdMD and Paw CBD. While our common share price has been negatively impacted by the current investor sentiment in the cannabis sector, we believe we are a bright spot in the overall industry.

We continue to drive online sales through the use of various digital marketing tactics, athlete and major league partnerships, and high traffic affiliate programs. Currently we have over 222,000 active e-commerce subscribers, an increase of over 10% since last quarter. On the brick and mortar side of our business, we are growing the amount of retail stores who currently carry our brands. Our retail reach is now over 5,300 retail doors, an increase of over 1,000 doors since last quarter and we have also increased our international presence and are now currently selling to wholesale customers in 16 international markets, up from 10 last quarter, continued Mr. Sumichrast.

During calendar 2019, we invested heavily in brand development and acquiring brand building assets as well as our physical infrastructure with full scale manufacturing, distribution and warehousing facilities. During calendar 2020, our focus is on deploying and activating these assets while containing our overall advertising and marketing costs. We continue to invest in R&D and testing to ensure the safety and quality of our products. Every batch of finished goods are tested with a full panel by an ISO certified testing laboratory to ensure the quality and purity, as well as to ensure we meet our label claims for potency, continued Mr. Sumichrast.

Our brands have also received leading brand recognition in the CBD industry. In July, 2019, the Brightfield Group, one of the leading predictive analytics and market research firms for the legal CBD industry, named cbdMD a Top 10 domestic brand in two booming categories, Topicals and Skincare/Beauty. In November 2019, in a newly released survey conducted by Brightfield of more than 3,500 CBD users, cbdMD ranked the highest in terms of overall consumer satisfaction as well as the highest in unaided consumer awareness of any of the top 20 CBD brands. In the animal health side of our business, Paw CBD was recently ranked by the Brightfield Group as one of the top five brands in the animal CBD market. Most recently, we announced a plan to start a joint venture with holistic pet foods leader Halo, Purely for Pets (Halo), a premium, natural pet food brand with a rich 30-year operating history, added Mr. Sumichrast.

CONFERENCE CALL DETAILS

Thursday, February 13, 2020, 4:15 p.m. Eastern Time

Domestic: 1-844-602-0380

International: 1-862-298-0970

Replay dial in Available through January 18, 2020

Domestic: 1-877-481-4010

International: 1-919-882-2331

Replay ID: 56986

Webcast Replay link available through March 18, 2020: https://www.investornetwork.com/event/presentation/56986

About cbdMD, Inc.

cbdMD, Inc. (NYSE American: YCBD and NYSE American: YCBD PR A) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cdbMD, whose current products include CBD gummies, CBD tinctures, CBD topical, CBD bath bombs, CBD oils and CBD pet products. cbdMD, Inc. is a nationally recognized consumer cannabidiol (CBD) brand whose current products include CBD tinctures, CBD gummies, CBD topicals, CBD bath bombs, and CBD pet products. cbdMD is also the proud partner with the Big 3 Basketball League, Barstool Sports, Bellator MMA, (a subsidiary of Viacom: NASDAQ:VIA), Life Time Fitness and Nitro Circus. To learn more about cbdMD, Inc. and our comprehensive line of over 100 SKUs of U.S. produced, THC-free CBD products, please visit: www.cbdmd.com or follow cbdMD on Instagram and Facebook or visit one of the over 4,000 retail outlets that carry cbdMD products.

Original press release

February 13, 2020
 

TORONTO, Feb 13, 2020 /PRNewswire/ – Humble & Fume Inc. (“humble+fume” or the “Company”), one of North America’s leading distributors of cannabis accessories, is pleased to announce that it has entered into a landmark sales agency agreement with The Supreme Cannabis Company, Inc. (“Supreme Cannabis”) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) whereby humble+fume will act as the exclusive sales agent for Supreme Cannabis’ recreational products across Canada, creating the only sales force in Canada able to offer a complete solution of cannabis brands and accessories to retailers.

With the acceleration of retail store openings across Canada and more consumers making their purchases and purchasing decisions in store, cannabis companies are increasingly recognizing the importance of having a presence at the retail level to help drive cost-effective revenues and ensure cannabis customers have informed purchasing experiences. This partnership with Supreme Cannabis firmly positions humble+fume as the only sales agency in Canada with a complete offering of cannabis brands and accessories sold coast-to-coast.

Through this partnership, humble+fume will build Supreme Cannabis’ brands at a store level, with an initial team of 14 sales professionals driving distribution, brand advocacy and budtender education. Supreme Cannabis’ brand portfolio includes Blissco, Sugarleaf and its premium, award-winning, 7ACRES brand as well as brand partnerships with Pax Labs and KKE. Under these brands, Supreme Cannabis has launched and will continue to introduce a diverse range of products, including cannabis flower, pre-rolls, vaporizer products, concentrates and THC and CBD oils. Supreme Cannabis’ brands and products are complementary to humble+fume’s existing product portfolio, which includes FUME LABS’ high quality line up of cannabis concentrate and solventless products as well as a deep list of leading brands in the accessory category, including RYOT, GRAV, PULSAR, and Canadian Lumber.

humble+fume is excited to have been chosen by Supreme Cannabis to be their coast-to-coast sales solution partner. With the rapid expansion of retail outlets in Canada, this well-timed sales agent agreement enables us to accelerate our retailer market coverage and build on our existing distribution to 85 percent of cannabis retailers across Canada.

Bob Ritchot, humble+fume’s CEO

Our team’s successful relationships with both government and private retailers is the result of a strong customer orientation and ability to use our portfolio to maximize returns for retailers. Through the execution of this partnership, humble+fume has become an industry-leading sales agency, which will enable us to support retailer’s needs in high growth cannabis categories.

humble+fume and Supreme Cannabis will look for opportunities to enhance this sales offering with the addition of other complementary cannabis brands. Expanding the sales agreement to additional partners allows for further cost synergies and establishes a more compelling and complete solution for cannabis retailers.

About humble+fume

humble+fume is the leading distributor of cannabis accessories in Canada. The Company offers a turnkey solution allowing the end-to-end production and distribution of cannabis concentrate products. humble+fume’s customers include 85 percent of cannabis retailers in Canada, multiple Licensed Producers, and key government partners. The Company distributes accessories across all 10 Provinces and is a category leading supplier with the OCS, SQDC, NSLC, BCLDB, NBLC, PEIC. Humble & Fume Inc. also has a rapidly expanding presence in the United States, where it operates multiple distribution facilities which provide national sales capabilities. humble+fume offers the largest selection of grinders, papers, pipes, and vaporizers, as well as storage, cleaning and other accessories. Through Humble & Fume Inc’s comprehensive North American sales and distribution network and over 20 years of operational experience and expertise, the Company has aspirations to become the preeminent distributor of cannabis-related products in North America.

To learn more about humble+fume and its industry-leading product portfolio, please visit the Company’s website at http://www.humbleandfume.com/.

About Supreme Cannabis.

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

SOURCE humble+fume

Original press release

February 13, 2020
 

Visit The Supreme Cannabis Company Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Supreme Cannabis Announces Q2 2020 Financial Results and Updated Plan for Accelerated Revenue Growth
  • Focuses business on accelerated, near-term revenue growth with enhanced, coast-to-coast sales partnership with humble+fume
  • Enhanced cost structure and near-term revenue generating opportunities expected to drive profitable growth
  • Reports 17% year-over-year net revenue growth and maintains a strong liquidity position with total cash and restricted cash balance of $55 million with $35 million of undrawn capacity on the Companys Credit Facility

TORONTO, February 13, 2020 The Supreme Cannabis Company, Inc. (Supreme Cannabis or the Company) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) today announced its financial and operating results for the three and six months ended December 31, 2019, as well as an update on its strategy and outlook.

As announced on February 11, 2020, Supreme Cannabis has implemented a new operating structure, including staff reductions, to drive efficiencies and support long-term, profitable growth. With an optimized cost structure in place, the Company is moving forward with its strategy to transition to a premium cannabis CPG company, driving near-term revenue with new high-quality brands and products at every price segment. This expanded, consumer-facing brand portfolio is being supported by an innovative sales model that achieves comprehensive distribution across Canada.

As we realign our structure and expectations with the current state of the industry, I maintain my strong belief in Supreme Cannabis ability to drive near-term revenue growth, profitability and long-term value with new high-quality brands and products at every key price segment, said Colin Moore, Director and Interim President and CEO. Im proud of the teams progress and difficult work rightsizing the Companys cost structure and focusing the business on near-term revenue drivers. As one of the few licensed producers with completed cultivation infrastructure and in-house value-added processing capabilities, as well as proven premium brands in the recreational market, we are well positioned to accelerate our CPG-focused transition. Our strong liquidity position, including the Credit Facility arranged by a tier one bank, further ensures we have the capital necessary to execute going forward.

In the quarter, Supreme Cannabis built on the success of its premium 7ACRES brand with the launch of the Companys first pre-rolls under Sugarleaf by 7AC (Sugarleaf). The Sugarleaf brand will addresses a mid-tier price point and continue to introduce products that offer more convenient and accessible consumption experiences. In the remainder of fiscal 2020, Supreme Cannabis will further expand its brand portfolio to capture additional market share and drive revenue growth with recreational brands that address the ultra-premium and value segments. Products launched under these brands will drive incremental sales volumes by growing and sourcing additional cannabis inputs not intended for 7ACRES premium products.

Supreme Cannabis also expanded distribution of its 7ACRES brand to all 10 Canadian provinces last quarter. The Company is addressing this national revenue opportunity through an enhanced retail sales strategy and partnership with Humble & Fume Inc. (humble+fume), a leading distributor of cannabis accessories in Canada. Under a comprehensive sales representation and cost-sharing agreement, humble+fume will act as a sales agent for Supreme Cannabis recreational products across Canada, creating the only sales force in Canada able to offer a complete solution of cannabis brands and accessories to retailers. Supreme Cannabis will efficiently and effectively achieve coast-to-coast sales coverage and build brands at a store level, with an initial team of 14 sales professionals driving distribution, brand advocacy and budtender education.

With the number of retail stores in Canada quickly growing and cannabis consumers making their purchase decisions in store, having representation at the individual store level provides an essential opportunity for our business to drive near-term revenue growth and support our transition to a cannabis CPG company.

Colin Moore, Director and Interim President and CEO

Our partnership with humble+fume allows us to realize industry-leading sales coverage and focus our sales and marketing efforts at the most impactful stage of the cannabis consumers journey. We enter the second half of 2020 focused on the opportunity to address the Canadian market with competitive consumer brands supported by an unmatched sales force.

Select Financial and Operational Results

Net Revenue

Net revenue increased year-over-year by 17% from $7.7 million in Q2 2019 to $9.1 million in Q2 2020 and decreased quarter-over-quarter by 21% from $11.4 million in Q1 2020. The quarter-over-quarter decrease in net revenue is primarily attributable to the Companys planned transition from a focus on wholesale to recreational sales. In the quarter, lower wholesale sales were partially offset by the increase in recreational sales. Net revenue was also impacted by actual and anticipated price adjustments of $0.5 million.

In Q2 2020, wholesale sales accounted for 38% of net revenue compared to 54% in Q1 2020. Supreme Cannabis remaining wholesale flower supply agreements came to an end, which contributed to lower quarter-over-quarter wholesale selling prices and sales volumes. Despite this factor and market-wide wholesale price compression, Supreme Cannabis continued to achieve favourable wholesale pricing, with an average wholesale flower price of $3.26 per gram. As the Company advances its transition to a CPG focus, it will continue to opportunistically supplement recreational sales with attractive wholesale transactions.

Recreational sales in Q2 2020 reached $5.7 million and, as a percentage of net revenue, increased from 46% in Q1 2020 to 62% in Q2 2020. In the quarter, recreational sales were impacted by market conditions, including slower than expected store roll-outs in key Canadian provinces. Recreational net revenue was also impacted by a lower than expected contribution from the Companys other businesses. Recreational net revenue for Q2 2020 was comprised of $5.0 million from 7ACRES products and $0.7 million from Blissco products. Supreme Cannabis continued to achieve strong recreational pricing with a net average selling price of $5.39 per gram.

Adjusted EBITDA

Adjusted EBITDA was down year-over-year from $(3.3) million in Q2 2019 to $(10.4) million in Q2 2020 and quarter-over-quarter from $(4.9 million) in Q1 2020. Lower average selling prices and higher impairment charges related to inventory write-downs resulted in decreased margins. Adjusted EBITDA was also impacted by a quarter-over-quarter increase in operating expenses.

Capital Expenditure

Capital expenditures in the quarter were $11.9 million, primarily reflecting the completion of construction at the 7ACRES Facility, the addition of an ethanol extraction lab at the Blissco Facility and phase 1 retrofitting to the Kitchener Facility. With the completion of these construction projects, capital expenditure for the remainder of fiscal 2020 is expected to be minimal, consisting of additional CPG equipment and minor retrofitting to the 7ACRES Facility where supported by near-term cash flow returns.

Balance Sheet and Liquidity

In the quarter, Supreme Cannabis entered into a credit agreement with Bank of Montreal as Lead Arranger and Agent on behalf of a group of lenders for $90.0 million of senior secured credit facilities (the Credit Facility), consisting of a term loan of $70.0 million and a revolving credit facility of $20.0 million. The Company initially drew $55.0 million of the term loan under the Credit Facility, ending the quarter with a total cash and restricted cash balance of $55.0 million and $35.0 million of undrawn capacity.

During Q2 2020, the Company completed its standard evaluation of investments which resulted in a reduction in the carrying value of MG Health Lesotho. This reduction is reflective of general cannabis market conditions and recognized as a loss in Other Comprehensive Income.

Operations

Prior to calendar year end, on December 21, 2019, all major construction on the Company’s 440,000 square foot premium cultivation facility (the “7ACRES Facility”) was completed. Since completing construction and optimizing new equipment, Supreme Cannabis has realized greater operational efficiencies, improving its throughput trimming rate by 400% and increasing its packaging capacity by 200%. Subsequent to quarter end, 7ACRES brought a second automated bottling line into production, increasing total packaging capacity to a maximum of 24,000 containers per day. The Company expects that 7ACRES will bring a third automated bottling line into production prior to fiscal year-end.

The 7ACRES Facility has approximately 250,000 square feet of licensed cultivation space, comprised of 21 flowering rooms and four rooms dedicated to vegetation and propagation. With major construction complete, the Company has put in submissions for licenses to Health Canada and expects to bring an additional 20,000 square feet of flowering space and 10,000 square feet of vegetation and propagation space online in Q3 2020. An additional room that previously operated as a storage and support space is currently undergoing minor retrofits to be converted back into a flowering room. The remaining 25th flowering room is operating as 7ACRES’ processing and packaging space. Once necessary processing and packaging capacity is brought online at the Company’s facility in Kitchener, Ontario, the company intends to convert this room back into a cultivation space.

As previously announced, Supreme Cannabis leased an 107,000 square foot building in Kitchener, Ontario to serve as a central manufacturing, processing and packaging centre for Supreme Cannabis brands (the “Kitchener Facility”). The Company has completed the first phase of construction on the Kitchener Facility, which includes a retrofitted multi-purpose processing clean room. The Company has submitted its application to Health Canada for a cannabis processing license. This license will allow Supreme Cannabis to conduct product packaging and value-added processing at the Kitchener Facility. In Q4 FY2020, the Company expects to begin whole flower packaging and pre-roll manufacturing for Supreme Cannabis brands at the Kitchener Facility.

In Q2 2020, Supreme Cannabis completed construction on Blissco’s 12,000 square foot extraction facility inLangley, British Columbia(the “Blissco Facility”), adding a large-scale ethanol-based extraction lab that expands on Blissco’s existing CO2-based extraction capability. In the quarter, Blissco received itsCannabis Oil Sales Licensefrom Health Canada as well as a license amendment that allows for the sale of cannabis 2.0 products. Aspreviously announced, with this license amendment and the capacity to produce over 7,000,000 tincture bottles annually, Blissco’s state-of-the-art extraction facility will process product for 7ACRES’ vaporizerpartnershipwithPax Labs, Inc.(“PAX”).

Products and Brands

At the end of Q2 2020, Supreme Cannabis launched Sugarleaf pre-rolls, the Company’s first offering priced below the premium category. Sugarleaf is currently available in Alberta, Ontario and Quebec, and will increase distribution in fiscal 2020. Sugarleaf will launch an additional pre-roll strain in Q3 2020 and enter more product categories prior to fiscal year end. The company will use Blissco’s oil extraction and formulation expertise to introduce an additional oil under the mainstream Sugarleaf brand. This builds on Supreme Cannabis’ position in the CBD oil category, with Blissco’s full spectrum CBD oil, Pr Dew, addressing the premium end of the category.

Through the Sugarleaf brand, the Company has seen strong demand for pre-roll products and intends to bring whole flower pre-rolls to market under the 7ACRES brand in Q3 2020. By the end of Q3 2020, 7ACRES will also introduce its first 2.0 cannabis product in the form of PAX pods for the PAX Era vaporizer. 7ACRES inputs will be extracted at the Blissco facility and Blissco’s experienced team will formulate premium oils for the 7ACRES PAX Era pods. Prior to fiscal year end, the Company expects to introduce additional 2.0 products under the 7ACRES brand in the form of concentrates.

Supreme Cannabis continues to achieve capital light international exposure in the EU and UK through its Truverra branded CBD products. Truverra’s e-commerce model, includes distribution on Amazon UK and on truverra.com. Supreme Cannabis is gathering valuable market insights through Truverra’s consumer website. Subsequent to quarter end Supreme Cannabis launched a new Truverra website, improving the consumer journey and shopping experience. Supreme Cannabis will continue to address international medical opportunities under this international brand.

Outlook

Due to current market conditions, including a slower than anticipated retail rollout nationally, Supreme Cannabis is withdrawing its previously issued financial outlook for fiscal 2020, which was originally announced on September 17, 2019 and subsequently confirmed on November 14, 2019. This decision is discussed in further detail under the heading “Outlook” in the Company’s MD&A for the second quarter ended December 31, 2019.

The Company is confident in its ability to grow near-term revenue and reach profitability based on its accelerated transition to a premium Cannabis CPG company, its improved operating structure and its expected offering of new high-quality brands and products at every price segment. The Company provides the following updated outlook for the remainder of the fiscal year:

  • Efficient and effective coast-to-coast sales coverage with the humble+fume sales partnership. The partnership will allow for brand building at a store level, thereby enhancing distribution, brand advocacy and budtender education.
  • Launch of 2.0 products including PAX era vaporizer pods and cannabis concentrate products.
  • Expanded brand portfolio with the launch of recreational brands that address the ultra-premium and value segments.
  • 7ACRES to complete its transition from a wholesale business to premium consumer brand by Q3 2020, with completed in-house packaging capabilities for all flower products under the 7ACRES’ brand. Supreme Cannabis will continue to opportunistically supplement recreational sales with attractive wholesale transactions.
  • Engaged an internationally recognized search firm that is identifying and evaluating candidates for the position of CEO.
  • Fully funded to execute on all planned initiatives.

Supreme Cannabis’ MD&A and consolidated financial statements for the second quarter ended December 31, 2019, along with all previous public filings of The Supreme Cannabis Company, Inc., may be found on SEDAR at www.SEDAR.com.

All figures are in Canadian dollars.

About Supreme Cannabis

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

Original press release

February 12, 2020
 

A Detailed Look at Cannabis Sales in California, Oregon, Arizona, Colorado, Nevada and Maryland

We are pleased to share with our readers overviews on five important Western cannabis markets as well as Maryland compiled by BDS Analytics for the month of December. BDS Analytics offers a full understanding of the evolving cannabis market though several offerings, including its GreenEdge Retail Sales Tracking, Consumer Insights, Industry Intelligence and CBD Market Monitor divisions. For those not familiar with the Colorado-based company, which was founded in 2015 and is run by co-founders CEO Roy Bingham and President Liz Stahura, we have been covering their progress since almost day 1.

During December, the fourth month following the onset of the vaping crisis, sales across the six markets totaled $607.6 million, up 3.2% from November due to recovery in the vaping category. Overall sales growth from a year ago among the five Western markets ranged from 5% in California to as high as 38% in Arizona. Concentrates, which represented 23-33% of sales by market (compared to 23-32% in November, 22-32% in October, 23-33% in September and 26-38% in August), grew more rapidly compared to November within each market than overall sales grew due to increased sales of vape pens. Growth in concentrates from a month ago ranged from 4-13% in all of the markets, while flower sales were essentially flat in December. The most rapid growth among the Western markets was 9% in Oregon, where flower expanded by 5%. Colorado and Nevada experienced 4% sequential growth in concentrates despite flower sales declining in those markets from the prior month. In Maryland, the difference was even more stark, with concentrates expanding 13% while flower grew 3% from the prior month.

Here is a closer look at each market, as detailed by BDS Analytics:

Arizona

Sales for Arizonas medical dispensaries were $70.3 million this past December, a four percent increase from November. Compared to December 2018, sales increased nearly 38 percent. Total sales for calendar year 2019 were $721.4 million, a $132.8 million increase from 2018.

In December, Flower sales reached $35.6 million, accounting for nearly 51 percent of overall revenues for the month. Flower sales increased by two percent from the trailing month and 57 percent from the year prior. The year-end tally for flower sales was $349.3 million, a 28 percent increase from 2018.

Pre-Rolled Joints remain a small category in Arizonas medical-only market. Sales of Pre-Rolled Joints were $2.5 million in December and reached $24.4 million for all 2019. Compared to 2018, sales in December increased 27 percent. The 2019 year-end tally was a 13 percent increase for 2018.

The Concentrates product category accounted for 32 percent towards overall revenues in December. The $22.8 million in Concentrates sales represented 23 percent growth compared to December 2018. In 2019, Concentrates sales increased 18 percent, totaling $248.7 million for the full year. Concentrates sales are segmented into Dabbable and Vape products. Compared to December 2018, sales increased 25 and 22 percent for the two categories, respectively.

Sales of Ingestibles generated $8.1 million in sales in December 2019 and contributed 11 percent towards total revenues for the month. Compared to December 2018, sales increased 24 percent. For the calendar year 2019, the $84 million sold in Ingestibles was 24 percent greater than 2018. The Ingestibles category includes both Edibles and Sublinguals. Edibles sales contributed 90 percent towards Ingestibles revenues in December and sales increased over 29 percent compared to December 2018. Sales of Sublinguals in December 2019 have decreased by eight percent compared to December 2018.

California

This past December, sales for Californias licensed dispensaries and delivery services reached a combined $251.7 million, increasing four percent from November. Year-over-year sales for the month of December show an increase of five percent, and the total 2019 sales of nearly $3 billion indicate 18 percent growth compared to 2018.

In December, Flower contributed over 35 percent towards overall revenues with $88.2 million in sales. Compared to November, sales in the category increased by one percent; compared to December 2018, sales increased 10 percent. in all of 2019, sales of Flower totaled over $1 billion, a 10 percent increase compared to 2018 yearly revenue. Contributing almost 11 percent towards overall revenue in California, Pre-Rolled Joints sales generated $27.6 million this past December, a 48 percent increase compared to December of 2018.

Sales of Concentrates contributed about 33 percent of revenues for the month. The $82.2 million in Concentrates sales represented an increase of five percent from the trailing month and a six percent decrease compared to December 2018. In 2019, Concentrates dollar sales increased by more than 22 percent compared to 2018, totaling more than $1 billion for the year.

Despite a health and safety scare earlier in the year, vape sales continue to dominate the Concentrates category each month and December of 2019 was no exception. Vape products made up over 80 percent of dollar sales within the Concentrates category and more than 26 percent of overall sales revenue across the entire market. In 2019, Vape sales in California alone have totaled $851.2 million, increasing 28 percent compared to 2018 revenue.

Sales of Ingestibles reached $44.4 million this past December, contributing 18 percent towards overall revenues. Compared to December 2018, sales in the category increased by seven percent. The $506.6 million in ingestibles sales for calendar year 2019 represented 24 percent growth from 2018. The Ingestibles category includes both Edibles and Sublinguals, while also distinguishing the two subcategories. Compared to December of 2018, revenues from Edibles increased by 13 percent while Sublinguals decreased by 15 percent.

Colorado

Sales from Colorados adult-use and medical dispensaries reached a combined $146.8 million this past December, a three percent increase from November. Compared to December 2018, sales increased by more than seven percent.In the calendar year 2019, sales in the Centennial state totaled at an impressive $1.8 billion in 2019, a 13 percent increase from 2018.

In December, Flower contributed 42 percent towards all revenues with $61.7 million in sales. The category experienced a 14 percent increase in sales compared to December 2018, and a three percent decrease compared to the trailing month.In 2019,sales of Flowerincreased by nearly 10 percent from 2018.In December, Pre-Rolled Joints sales generated over $10 million,a 31 percent increase compared to December of 2018. At the end of 2019, sales in the pre-rolled joint category reached $106.9 million, a 22 percent increase from 2018.

Concentrates remain the second largest category by revenue. In December, sales of Concentrates contributed over 31 percent towards overall revenues with $46.1 million in sales.For the calendar year 2019, sales of Concentrates have grown by more than 16 percent, totaling $581.9 million.Despite the vape scare that negatively impacted vape sales starting in late August, the category managed to finish the year with a 34 percent increase over 2018.

Ingestibles reside as the third largest product category. In December, sales of Ingestibles were $24.7 million, a seven percent increase compared to December 2018. The $281.6 million generated in total 2019 sales represents a 15 percent increase compared to 2018. The Ingestibles category includes the subcategories of Edibles and Sublinguals. Yearly total sales revenue from Edibles grew by 14 percent compared to 2018, while the smaller Sublinguals segment grew by 19 percent compared to the year prior.

Maryland

In December 2019, cannabis sales in Marylands medical dispensaries reached $27.5 million, a seven percent increase from November. The 2019 calendar year ended with total sales of $252.2 million. Maryland remains a medical only market for now, but sales are growing as new dispensaries open and more patients are registered.

In December, Flower sales reached $13.7 million, accounting for nearly 50 percent of overall revenues for the month. Flower sales increased by three percent from the trailing month. Sales of flower reached $126.4 million in total revenue for the calendar year 2019.

Pre-Rolled Joints remain a small category in Marylands medical-only market. Sales of Pre-Rolled Joints were $2.3 million in December and reached $17.3 million in total revenue for 2019. Compared to November 2019, sales for the month increased by nine percent. In the most recent reporting period, the category contributed more than eight percent towards overall revenues for the month.

Concentrate sales accounted for more than 28 percent of overall December revenues, totaling $7.8 million. Compared to the trailing month, sales of concentrates grew by 13 percent, and category sales totaled $77.4 million in 2019. Concentrates sales are segmented into Dabbable and Vape products. Compared to November 2019, sales increased six and 16 percent for the two categories, respectively.

The Ingestibles category continues to grow as a result of favorable regulation enacted earlier in the year. Sales of Ingestibles generated $3.1 million in sales in December 2019 and contributed over 11 percent towards total revenues for the month. The ingestibles category totaled $23.8 million in 2019. The Ingestibles category includes both Edibles and Sublinguals. Edibles sales contributed 88 percent towards Ingestibles revenues in December and sales increased by 13 percent compared to the trailing month. Sales of Sublinguals in December 2019 have increased 14 percent compared to November 2019.

Nevada

Combined sales for Nevadas medical and recreational dispensaries totaled at $58 million this past December, a one percent increase from November. Compared to December 2018, sales increased by 12 percent overall. Total revenues for calendar year 2019 were $691.5 million, a 19 percent increase from 2018.

Flower sales reached $25.2 million in December 2019, contributing 43 percent towards overall sales revenue. Flower sales decreased about one percent from the trailing month and have increased by 17 percent compared to December 2018. For calendar year 2019, the $291.9 million in flower sales were a 20 percent increase from the prior year.

The $8.9 million generated from Pre-Rolled Joints in December 2019 contributed 15 percent towards overall revenues for the month. Nevada is the leading state for the proportion of sales derived from pre-rolls. Compared to December 2018, sales increased by 23 percent. In 2019, pre-rolled joints generated $99.4 million.

Concentrates contributed more than 23 percent towards total revenues in December. The $13.5 million in sales represented a four percent increase from the trailing month. In 2019, Concentrates sales increased 28 percent compared to 2018, totaling $173.6 million for the year.

Sales of Ingestibles generated $8.6 million in sales for the month of December and contributed 15 percent towards monthly revenues. Year-over-year sales in December increased 11 percent. In calendar year 2019, the $102.5 million in Ingestibles sales was 12 percent greater than 2018 sales. The Ingestibles category includes both the Edibles and Sublinguals subcategories. Edibles contributed 87 percent towards Ingestibles revenues in December, while Sublinguals contributed the remaining 13 percent. In 2019, sales of Edibles increased 11 percent; Sublinguals sales increased by 22 percent over 2018.

Oregon

Oregon dispensary sales reached $72.8 million this past December, a seven percent increase from November. Compared to December 2018, overall sales increased by 27 percent. The end of year results for all 2019, sales increased by 21 percent compared to 2018, reaching more than $810 million in total annual sales.

Flower sales reached $32.3 million in December 2019, accounting for 44 percent of overall revenues. Flower sales increased by five percent compared to from the trailing month; but jumped by 49 percent compared to December 2018. In 2019, Flower sales increased 24 percent compared to 2018, totaling $341.3 million in 2019. The $6.5 million generated from Pre-Rolled Joints in December 2019 contributed nine percent towards overall revenues for the month. Compared to December 2018, sales increased by 57 percent.

Sales within the Concentrates category contributed nearly 27 percent towards revenues in December. The $19.3 million in Concentrates sales represent seven percent growth from December 2018. In 2019, Concentrates sales have increased 22 percent over the same period in 2018, totaling $235.3 million for the year. Compared to December 2018, sales increased 49 percent and decreased by almost 12 percent for the two subcategories, respectively.

Sales of Ingestibles generated $11.8 million in December and contributed over 16 percent towards revenues for the month. Year-over-year sales in December increased by 15 percent. In 2019, the $131 million in Ingestibles sales represented 20 percent growth compared to 2018.

For readers looking for a deeper look at cannabis markets across these five states and more, including segmentation by additional product categories, brand and item detail, longer history, and segmentation by product attributes, learn how the BDS AnalyticsGreenEdge Platformcan provide you with unlimited access to the most accurate and actionable data and analysis.

February 12, 2020
 
Big marijuana companies in the United States increasingly are turning to debt as a funding tool, spurred by falling cannabis stock prices and terms that are more attractive than those for real estate sale-leaseback deals
February 11, 2020
 
Medical cannabis dispensaries in Louisiana could have a new MMJ product source as soon as March or April with Southern University poised to begin harvesting its first crop next week
February 11, 2020
 

Visit The Supreme Cannabis Company Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Supreme Cannabis Focuses Organization and Reduces Cost Structure to Accelerate Profitable Growth
  • Corporate positions decreased by approximately 33% and operational positions decreased by approximately 13%
  • Total number of positions decreased by approximately 15% across the Company
  • New structure focuses the business on accelerating revenue growth in the Canadian market

TORONTO, Feb. 11, 2020 /PRNewswire/ – The Supreme Cannabis Company, Inc. (“Supreme Cannabis” or the “Company”) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) today announced the implementation of a new operating structure, including staff reductions, to drive efficiencies and support long-term, profitable growth.

As previously announced on January 6, 2020, Supreme Cannabis’ board and management team are focused on achieving greater efficiencies and speed to market by rightsizing production, overhead and capital expenditures. At a corporate, operational and international level, the Company’s management team is focusing its businesses and implementing new operating models that prioritize near-term revenue growth in the Canadian market.

As Interim President and CEO, I committed to take immediate steps to position Supreme Cannabis for long-term success, including rightsizing the Company’s cost structure and focusing our efforts on near-term revenue-generating opportunities. Recent staff reductions were an extremely difficult decision for myself and the Board, but I believe them to be necessary to create a more agile, focused and profitable organization for the long-term benefit of all of Supreme Cannabis’ stakeholders.

Colin Moore, Director and Interim President and CEO

The changes we are implementing will empower our people, drive value for our shareholders and ensure that we continue to deliver a consistent and premium product to our consumers.

Under the new optimized organization, reporting structures at the corporate level are being streamlined and vendor contracts and support services have been rationalized. Focusing the Company on near-term revenue generating opportunities and creating a more nimble and effective corporate structure resulted in a 33% reduction in employee headcount at a corporate level. In addition to ongoing improvements to the Company’s operational efficiencies, Supreme Cannabis has begun implementing a flatter organizational structure and cost-saving measures across its operating assets, including a reduction in the number of positions at the operational level of approximately 13%. Across the Company, the total number of positions have decreased by approximately 15%.

As part of management’s enhanced focus on domestic operations and prioritizing near-term profitability, the Company exited its investment in Supreme Heights, its UK and European cannabis investment platform, by exercising its retractable rights to return all investments back to the Company. Supreme Cannabis will continue to achieve capital-light, international exposure to the global wellness and medical markets through its Truverra business and MG Health Lesotho investment.

As previously announced, the Company will provide its second quarter financial results for the three and six months ended December 31, 2019, as well as an update on its plan for accelerated revenue growth and strategy to support its transition into a premium cannabis CPG company, after markets close on February 13, 2020.

About Supreme Cannabis.

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

Original press release

February 11, 2020
 

Collaboration to Include Bespoke Vape Products and Partnership on Vaporization Regulatory and Compliance Legislation

CAMBRIDGE, Mass., Feb. 11, 2020 (GLOBE NEWSWIRE) — TILT Holdings Inc. (TILT or the Company) (CSE: TILT) (OTCQB: TLLTF), a foundational technology cannabis platform comprised of assets to support brands worldwide, announced today that its subsidiary Jupiter Research, LLC (Jupiter), has partnered with The Blinc Group, LLC (“Blinc”) to offer bespoke vaporization devices to its clients as well as collaborate on industry innovations, cannabis vaping regulatory and compliance issues.

Jupiter has always taken pride in being at the forefront of innovation.As the market continues to grow we are excited to announce our partnership with The Blinc Group, enabling bespoke solutions for our clients and leveraging their expertise when it comes to vaporization regulatory and legal compliance legislation.

Mark Scatterday, interim CEO at TILT and Founder/CEO of Jupiter

Blincs Co-Founder and CEO Arnaud Dumas de Rauly is the Chairman of the International ISO committee on Vaping Standards, Chairman of the European CEN Committee on Vapor Products, former President of FIVAPE in the EU, and a renowned expert in inhalation technology, regulations, manufacturing and distribution.

We look forward to working closely with Jupiter and bringing additional value and expertise to their extensive network of clients.I am excited to see what the future of cannabis vaping landscape holds when two companies like Jupiter and Blinc work closely together to help shape the new standards and set an example for regulatory compliance as a whole.

Arnaud Dumas de Rauly,Blincs Co-Founder and CEO

In addition to working on bespoke products together for key clients, Jupiter plans to leverage Blinc’s extensive quality control, regulatory and compliance expertise to remain at the forefront of vaporization legislation, ensuring safe and compliant consumption across the United States and internationally.

In January, the Centers for Disease Control and Prevention ended its ‘state of emergency’ general public advisory against vaping, due to the sharp decline in e-cigarette, or vaping, product use-associated lung injury cases being reported. The focus and scope of efforts to address the unregulated businesses and unlicensed storefronts is still an important factor in maintaining safety in the industry. The Blinc and Jupiter partnership represents an opportunity to accelerate and foster industry innovation and collaboration beyond vaporization.

About TILT

TILT Holdings serves cannabis brands worldwide through a strong network of portfolio companies committed to technological innovations that support long-term success. TILT services more than 2,000 brands and cannabis retailers across 33 states in the U.S., as well as in Canada, Israel, Mexico, South America and the European Union. As a market leader in cannabis technology and related products and services, the Companys core assets include wholly-owned subsidiaries Jupiter, a company that focuses on the vast potential of inhalation through innovative design, development and manufacturing; Blackbird Holdings Corp., a company that provides operations and software solutions for wholesale and retail distribution; and Baker Technologies Inc., a CRM platform helping dispensaries grow their business. The Company also owns cannabis operations in states including Massachusetts, led by Commonwealth Alternative Care, Inc.; and in Pennsylvania, led by Standard Farms, LLC. Headquartered in Cambridge, Massachusetts, with offices throughout the U.S., and London, TILT has over 400 employees and has sales in the U.S., Canada and Europe. For more information, visit www.tiltholdings.com.

About Blinc

The Blinc Group provides best-in-class proprietary cannabis vaping solutions for leading MSOs and LPs in the United States, Canada and Europe. With quality, safety, and innovation serving as Blincs foundational pillars, the companys key value proposition offers the most comprehensive suite of services for full-stack product development and deployment. As product quality, safety and brand differentiation become more critical than ever, Blinc focuses on control of the entire value chain from R&D to product design, to compliance and manufacturing at ISO and cGMP certified facilities with oversight by Blincs China based QA/QC team. The Blinc Group raises the bar on cannabis vaping standards, ensuring a future-proof growth path for its clients and absolute safety for their consumers. For more information, visit www.theblincgroup.com

Contact Information:
Joel Milton
SVP of Business Development
Phone: (303) 872-7255

Original Press Release

February 11, 2020
 

EDMONTON,Feb. 11, 2020/CNW/ – Fire & Flower Holdings Corp. (“Fire & Flower” or the “Company”), today announced amendments to its 8.0% unsecured convertible debentures due onJuly 31, 2020(the “Debentures”).

Fire & Flower has forced the conversion of debentures to eliminate the interest payments associated with such debentures and the removal of these liabilities from the Company’s balance sheet further strengthens Fire & Flower’s financial position.

With the consent of the two holders of the Debentures, the provisions of the amended and restated debenture indenture datedFebruary 13, 2019, as supplemented, have been amended to provide for the forced conversion of the principal amount of Debentures by the Company at its sole discretion in the event the common shares of the Company (the “Common Shares”) have a closing trading price of not less than$0.70.

Concurrently with the amendments, the Company has delivered a notice to force the conversion of all remaining principal amount of Debentures and accrued and unpaid interest thereon. In connection with the conversion of the principal amount of Debentures, the Company expects to issue an aggregate of approximately 12,173,912 Common Shares, subject to adjustment to reflect the number of Common Shares issued in respect of the accrued and unpaid interest on the Debentures.

Fire & Flower is laser focused on its goals for 2020, including a strong balance sheet that positions the Company for growth in a challenging capital market for cannabis companies. The forced conversion of the Debentures removes this debt from the Company’s balance sheet and limits the ongoing interest payments associated with the Debentures.

Trevor Fencott, Fire & Flower’s Chief Executive Officer

About Fire & Flower

Fire & Flower is a leading purpose-built, independent adult-usecannabis retailer poised to capture significant Canadian market share. The Company guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the Hifyre digital platform connects consumers with cannabis products. The Company’s leadership team combines extensive experience in the cannabis industry with strong capabilities in retail operations.

Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc., a licensed cannabis retailer that owns or has interest in cannabis retail store licences in the provinces ofAlberta,Saskatchewan,ManitobaandOntarioand theYukonterritory.

Through its strategic investment with Alimentation Couche-Tard Inc. (ATD.A, ATD.B), the Company has set its sights on the global expansion as new cannabis markets emerge.

Original press release

February 10, 2020
 
Troy Dayton of Arcview joins CNBC's "Power Lunch" team to talk about cannabis stocks and what investors should know.
February 10, 2020
 

Although Ohio legalized medical use of cannabis four years ago, the state has been slow to grow its program. Myriad regulations, along with delays in awarding licenses, kept the program from becoming fully functional until January 2019, when the states first licensed medical cannabis dispensary opened.

Although adult-use of cannabis is legal in nearby states such as Michigan and Illinois, Ohio Gov. Mike DeWine has made it clear that he is not interested in taking the next step toward legalization. Ohio lawmakers have yet to file legislation, and no steps have been taken toward putting legalization on the ballot for 2020. That may be, in part, due to the fact that those who want to purchase it need only cross state lines to do so. In this review, we take a look at the history of Ohios cannabis program, the existing marketplace and potential for future growth.

History

On Sept. 8, 2016, then-Gov. John Kasich signed House Bill 523 into law, legalizing medical marijuana in Ohio. The law mandated that a medical marijuana program be established within two years, but red tape delayed sales of medical cannabis until the beginning of last year. Pent up demand led to thousands waiting in long lines on the first day of sales, according to published news reports.

The law allows use for 21 conditions from AIDS to Ulcerative Colitis. The states medical board, which is responsible for adding qualifying conditions, last year rejected petitions to add anxiety and autism spectrum disorders to the list.

Although Ohio law prohibits patients from smoking cannabis, flower can be sold for use in a vaporizer. The law does not allow patients to grow their own cannabis. It allows patients to purchase a 90-day supply at a time in the following amounts:

  • Up to 8 ounces of Tier 1 medical cannabis, which contains up to a maximum 23% concentration of THC
  • Up to 5.3 ounces of Tier 2 medical cannabis, which refers to anything with a THC concentration of 23%, but not more than 35%
  • Patches, lotions, creams and other topical forms of medical cannabis with no more than 26.55 grams of THC
  • Up to 9.9 grams of THC from cannabis oil, tinctures, capsules and other edible forms
  • Up to 53.1 grams of THC in oil for vaporization

A small percentage of Ohios 11.7 million residents (0.7%) are medical cannabis users. As of Dec. 31, 2019, 83,857 patients had recommendations for use by a physician, with 78,376 patients registered. Another 8,259 caregivers also were registered. There are 590 physicians who are certified to recommend medical cannabis. The latest figures can be found here.

As of the end of January 2020, an estimated 7,869 pounds of plant material was sold along with 372,071 units of manufactured product. There has been an estimated $65.6 million in product sales cumulatively. Historical sales data can be found here.

There are two types of cultivator licenses based on the size of the grow operation. Level I cultivators can operate an area up to 25,000 square feet; Level II cultivators can grow in an area of up to 3,000 square feet.

Seventeen cultivators have received Level I provisional licenses, of which 10 have received certificates of operation. Thirteen received Level II provisional licenses, of which 10 have received certificates of operation. You can view thecomplete list of Ohio’s licensed cannabis cultivators.

Level I cultivators with certificates to operate include some large multi-state cannabis companies such as Columbia Care, (NEO: CCHW) (OTC: CCHWF) (FSE: 3LP) and Cresco Labs (CSE: CL) (OTC: CRLBF) Another big player, PharmaCanns license is pending.

Terradiol Ohio LLC, another Level I cultivator with a pending license, has ties to TILT Holdings (CSE: TILT) (OTCQB: TLLTF). The state tried to revoke its large-scale cultivation license because of a dispute, but the company was able to overcome its issues and was given until the end of this year to obtain a certificate of operation, according to news reports. Ohio Grown Therapies (OGT), which has a pending license, is in the process of being acquired by Curaleaf Holdings Inc. (CSE: CURA) (OTC: CURLF).

Dispensaries

The law calls for no more than 60 dispensary licenses to be awarded, and they may not be any less than 500 feet from a school, church, public library, public playground or public park. So far there are 49 active licenses. The state offersan interactive mapfor all licensed Ohio dispensary locations, depicted below, and it also offers a spreadsheet, accessible from that page, with data that includes the name, address, phone number, license number, designated representative and date of licensing.

Several large multi-state cannabis companies have licenses to open dispensaries. Among them are:

  • Green Thumb Industries (CSE: GTII) (OTC: GTBIF), a leading national cannabis consumer packaged goods company and owner of Rise which has four locations in Ohio.
  • Verilife, whose parent company is PharmaCann, has one location in Cincinnati.
  • Greenleaf Apothecaries, LLC has five The Botanist dispensaries. Greenleaf licenses The Botanist brand from Acreage Holdings (CSE: ACRG) (OTC: ACRGF). Greenleaf had planned to sell its Ohio operations to Acreage, but Ohios pharmacy board opened an investigation into the arrangement and determined that the arrangement violated state regulations. Greenleaf settled and was barred from selling any of its dispensaries there for 18 months.
  • Cresco Labshas a single location, CY+ Dispensary.
  • Have A Heart, a privately-held operator based in Washington, has a single location.

Other operators with more than one dispensary include Bloom Medicinals (5), Pure Ohio Wellness (2), Strawberry Fields (4) and Verdant Creations (5).

Bloom Medicinals dispensary located in Columbus

Processors and Testing

Ohio issued 43 provisional licenses to processors, 16 of which have received certificates of operation. The complete list of Ohio medical cannabis processorscan be found here. Included among them is Ohio Medical Solutions, an affiliate of Vireo Health International Inc. (CNSX: VREO, OTC: VREOF).

Five provisional licenses were issued for testing, three of which have received certificates of operation. They can be found here.

On a side note, Innovative Industrial Properties Inc. (NYSE: IIPR), a cannabis REIT, has been cutting leaseback deals with some cannabis companies doing business in Ohio. On Feb. 3, IIP announced it closed on a sale-leaseback deal with Green Thumb Industries for its pending processing facility in Toledo. This was its second deal with GTI, which also sold it a processing facility in Pennsylvania. On Jan. 29, Innovative announced it had purchased a facility in Ohio from Cresco Labs for around $10.5 million, with an additional investment of up to $1.9 million, to lease it back to the grower.

Future Growth

Unlike other states, where its been full steam ahead for the cannabis industry, Ohio has taken a slow-and-steady approach. Its bumpy start in getting the program off the ground, limits on medical use and high prices caused by a lack of product availability at the onset of the program add up to a market that saw about $60 million in sales, about half of which came in the last quarter of 2019.

As more cultivators come online, more dispensaries open and more medical conditions are approved for cannabis use, Ohio’s medical cannabis program should grow. Meantime, while surrounding states Michigan and Illinois have legalized adult-use cannabis, Ohio is not expected to follow suit right away. The governor has indicated he is not in favor of it and there are no immediate plans for legislation this year. Talk of putting the question to voters on a ballot likely would not come in 2020 either.

February 10, 2020
 

TORONTO, Feb. 10, 2020 (GLOBE NEWSWIRE) —MPX International Corporation(MPX International,”MPXI or the Company) (CSE:MPXI;OTC:MPXOF) announced the opening of its inaugural Holyweed CBD retail flagship store in the heart of Genevas tourist district. The store is strategically located on one of Genevas busiest streets, Rue des Eaux-Vives, near the famed water fountain Jet dEau, Genevas largest tourist attraction.

The location carries all Holyweed Swiss Certified Organic branded products as well as products from several other premium CBD brands curated by Holyweed. Holyweed products include: 100% Swiss grown cannabis light/high CBD dry flowers, pre-rolls, oil tinctures, Cannabricot a Swiss-made apricot cannabis liquor and eau-de-vie, a cannabis tea. Holyweed is currently the only Swiss CBD brand that has been awarded the official Swiss Certified Organic label, a distinction that aligns the Holyweed brand with Switzerlands impeccable reputation for high quality consumer products.

Photos of Holyweed accompanying this announcement are available at

https://www.globenewswire.com/NewsRoom/AttachmentNg/0c1c63e1-cf72-4dce-9cce-a9a057f46fe6

https://www.globenewswire.com/NewsRoom/AttachmentNg/6cc3ede2-6fc2-4c7e-af6c-1d5590da53f7

This first Holyweed store in Geneva is another step in our European retail strategy to cement MPXI as trailblazers providing access to premium quality CBD products in Europe and beyond. Importantly, it also further underpins our assertion that Switzerland is our most immediate opportunity for revenue generation, second only to our already revenue generating Canadian operations.

W. Scott Boyes, Chairman, President and CEO of MPXI

The opening of this first retail location is on the heels of our very successful harvest of approximately 90,000 kilograms of Swiss-organic, high CBD biomass in the fall and continues to build on the strong momentum we are experiencing in this jurisdiction.

Again, we are creating first mover advantages that positions MPXI for success as a global leader and will enable us to capture market share as the European CBD market continues to experience massive growth, Mr. Boyes added. Our growing traction in Switzerland strongly supports this.

This new retail location builds on the Companys burgeoning European retail presence. In November 2019, MPXI opened its first retail beleaf branded CBD retail location in Londons Soho district.

Enhancing the cultural zeitgeist, Holyweed has collaborated with famed photographer Henrik Purienne to create an exclusive art book calledWandering And Learning, distributed through exclusive concept stores and trend setting retail partners globally in order to further build Holyweed brand awareness, not only in Switzerland but globally.

A photo ofWandering And Learningaccompanying this announcement is available athttps://www.globenewswire.com/NewsRoom/AttachmentNg/d8c26f68-968f-43bf-9a4c-4912e68b3f0a

In January 2020, Holyweed sponsored a major cultural event in Switzerland with its official sponsorship of Art Geneve, one of Europes most successful contemporary art fairs.

Select forays such as these demonstrates Holyweed leading management expertise to build a global cannabis brand in order to further elevate and extend our brand recognition with discerning consumers, said Daniel Fryer, Managing Director, Europe. Those actions cement Holyweeds position as the premium Swiss brand of organic certified CBD products within the immediate region and throughout Europe.

Later in 2020, MPXI expects to open a second Holyweed retail location in Zurich, which is Switzerlands largest city.

About Holyweed:

18 Rue des Eaux-Vives
Geneva

Hours of operation:

Mon-Fri 9:00 a.m. 7:00 p.m.

Sat 9:00 a.m. 6:00 p.m.

Sun Closed

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.About MPX International Corporation

Original Press Release

February 09, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

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Friends,

This week’s news in Canada highlights the near-term operating challenges licensed producers face, with both Aurora Cannabis and Tilray revealing reductions in their workforce, continuing a trend across the country. While the operating environment is likely to improve as more stores open and the new products roll out, capital to fund operating losses has dried up. Consequently, companies like Aurora and Tilray, as well as many others, are moving to cut costs in order to achieve profitability.

The Aurora news, of course, was much more extensive, and it revealed a massive write-down ahead totaling as much as C$1 billion, including up to C$775 million in goodwill and up to C$225 million in intangibles and property, plant and equipment. This latter part is related to the ICC Labs acquisition in South America and the Denmark development project.

Goodwill, for those readers not familiar with the term, is the difference between the purchase price and the value of the assets purchased during an acquisition. While many tend to disregard goodwill when evaluating the asset value of a company, a write-down of this type of asset can impact a company with debt. In the case of Aurora, it renegotiated its covenants, so it’s not an issue at this time. Heavy M&A activity followed by a stock decline is a precursor to the write-down of goodwill as assumptions are revisited. In our view, it’s a sign of a failed acquisition strategy. In the case of Aurora, to its credit, the acquisitions were paid with stock rather than cash.

Investors should expect more asset impairments in Canada, in our view, perhaps as early as this week when Canopy Growth reports. The company had goodwill and intangibles on the balance sheet in excess of C$2.4 billion at 9/30. The company also has over C$1.6 billion in property, plant and equipment, some of which could be written down as well. We note that Aurora Cannabis had over C$3.8 billion in intangibles and goodwill, and it’s likely that any potential write-downs at Canopy would be less than the write-downs at Aurora Cannabis.

While some of the other global LPs could also face write-downs of assets, we think the large American operators have much less risk, though many have substantial goodwill. The reason for a more optimistic view is that the large MSOs are at or close to profitability, which suggests less likelihood of goodwill impairment or the impairment of any property, plant and equipment.

The asset impairments by Aurora Cannabis and potentially other LPs may weigh on sentiment in the near-term, but they are a lagging indicator of the financial condition rather than being predictive.


Join NRGene for a Free Webinar on Feb 12th 1pm ET
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New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


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Sincerely,

Alan & Joel

February 08, 2020
 
Auroras Terry Booth exits the company, a big-name celebrity leaves the namesake medical marijuana retailer she co-founded, a New Mexico court allows MMJ business tax deductions -and more of the weeks top cannabis business news
February 07, 2020
 
Arkansas medical marijuana dispensaries sold $10 million in the first six weeks of the year, a faster-sales pace than anticipated, shows state data released on Friday
February 07, 2020
 
The coronavirus outbreak in China is expected to impact marijuana vaporizer companies that depend on Chinese suppliers by interfering with the flow of hardware and other products
February 07, 2020
 
The Marijuana Industry Group, Colorados oldest cannabis trade association, appointed a former owner of MJ stores in Denver as its new executive director
February 07, 2020
 
Acreage Announces Comprehensive Financing Transactions

NEW YORK, Feb. 07, 2020 (GLOBE NEWSWIRE) — Acreage Holdings, Inc. (Acreage or Company) (CSE: ACRG.U) (OTCQX: ACRGF) (FSE: 0VZ), one of the largest vertically integrated cannabis operators in the U.S., today announced it entered into agreements in respect of the following financing transactions (collectively, the Financing Transactions):

  • US$100,000,000 credit facility (the Credit Facility) with an institutional lender (the Institutional Lender), with US$49,000,000 available to be drawn down at First Closing (as defined below)
  • US$50,000,000 private loan transaction to provide cash collateral for the Credit Facility (the Loan Transaction)
  • US$30,000,000 private placement of special warrants (the Private Placement) and an option to acquire a further US$20,000,000 of special warrants (the Option)

Benefits of the Financing Transactions:

  • Capital Needs – Satisfies the near-term capital requirements of Acreage and its subsidiaries and creates a path for further borrowings pursuant to the Credit Facility up to $100 million in aggregate
    • Closing of the Private Placement and the first tranche of the Credit Facility will provide access to gross proceeds of approximately $79 million
    • Availability of further $50 million under Credit Facility (and total additional availability of $70 million if the Option is exercised)
  • Non-Dilutive to Canopy Transaction – the consideration per share to be received by Acreage shareholders upon completion of the previously approved plan of arrangement with Canopy Growth is not impacted by the Financing Transactions
  • Financial Position – the Financing Transactions significantly improve Acreages financial position to continue to execute on its vision while establishing paths for further additional non-dilutive and shareholder-friendly financing transactions

In a time of limited capital availability for our industry, I am excited to announce these proposed transactions to strengthen our balance sheet, further enabling us to execute our plan to be a leading consumer cannabis company in the U.S.

Kevin Murphy, Chairman and CEO of Acreage

In the course of these transactions, we have cemented a relationship with a well-capitalized institutional lender that has the capacity to provide additional credit facilities as necessary.

ADDITIONAL TRANSACTION DETAILS

Credit Facility

A subsidiary of Acreage (the Borrower) may draw down up to US$100,000,000 from the Institutional Lender under the Credit Facility in three tranches, with the first advance, of US$49,000,000, expected to be received in February 2020, subject to satisfaction of the closing conditions including closing of the Loan Transaction (First Closing).

Interest under the Credit Facility advances will be payable monthly as follows: (a) for the first year, 2.55% per annum on the first advance, 1.25% per annum on the second advance, and a rate to be negotiated for the third advance; and (b) for the second year, a rate to be negotiated. Advances made pursuant to the Credit Facility will be secured by a guarantee from the IP Borrower (as defined below) and security over the US$50,000,000 of the proceeds from the Loan Transaction (the Cash Collateral). The Borrower may drawdown on the remaining US$51,000,000 of the Credit Facility if such additional advances are secured by cash collateral equal to the additional amounts borrowed plus US$1,000,000. The Institutional Lender will not have security in any of Acreages or its subsidiaries other property or assets. The Credit Facility has a two-year term and matures, subject to acceleration in certain limited instances, on the date that is two years from First Closing.

Acreage expects to use the advances for working capital and general corporate purposes.

Loan Transaction

In order to fund the Cash Collateral, an Acreage subsidiary (the IP Borrower) will borrow US$50,000,000 in the aggregate (the Borrowed Amount) from IP Investment Company, LLC (the Lender). Kevin Murphy, Acreages Chief Executive Officer, is lending US$21,0000,000 of the Borrowed Amount to the Lender in connection with the completion of the Lenders loan to the IP Borrower. Acreage has been advised that Mr. Murphy will not be a member, an officer nor a director of the Lender and that Mr. Murphy will be entitled to receive, assuming full repayment of the Borrowed Amount at maturity, US$23,100,000 along with up to 304,001 Interest Shares (as defined below). The maturity date for borrowings under the Loan Transaction, subject to acceleration in certain instances, will be 366 days from the closing date of the Loan Transaction.

Monthly interest under the Loan Transaction will be satisfied by the IP Borrower delivering to the Lender 83,333 Acreage Class A subordinate voting shares (Subordinate Voting Shares) per month, or 1,000,000 Subordinate Voting Shares in the aggregate (the Interest Shares). Acreage is required to use commercially reasonable efforts to ensure that the Interest Shares are not subject to resale restrictions.

The Lender will be granted a security interest in the non-U.S. intellectual property owned by Acreage and its affiliates (the IP Security). If the IP Borrower has not repaid the principal amount outstanding at maturity along with an additional repayment amount, being an aggregate of US$55,000,000, the Lender shall have the right to enforce its IP Security and sell such collateral to a third party in satisfaction of the IP Borrowers obligations to the Lender. In the event that the sale of the IP Security does not take place, the Lender may require Acreage to issue up to 20,000,000 Subordinate Voting Shares, with all net proceeds of the offering payable to the Lender in satisfaction of the repayment amount owing to it. If the Lender does not receive at least US$55,000,000 from the net proceeds of such offering and Acreage does not make a cash payment in respect of any shortfall, certain subsidiaries of Acreage will be required to dispose of assets (Secured Assets) in transactions to make up the difference between US$55,000,000 and the net proceeds from such offering.

If, prior to the date that is four months from the closing of the Credit Facility, Acreage or its affiliates has not (a) borrowed or otherwise raised debt or equity capital from any person of at least an additional US$65,000,000, or (b) repaid US$20,000,000 of the principal amount of the Borrowed Amount by (i) paying US$22,000,000 to the Lender and concurrently delivering to the Lender that number of Interest Shares equal to 48% of the Interest Shares that have yet to be delivered to the Lender, the Lender shall have the right to accelerate the maturity of US$20,000,000 of the principal amount of the Borrowed Amount. If this acceleration occurs, (a) certain Secured Assets will be transferred to the Lender in satisfaction of the maturing amount, and (b) a number of Interest Shares equal to 48% of the Interest Shares that have yet to be delivered to the Lender shall be immediately delivered by the IP Borrower. If the Secured Assets cannot be transferred for regulatory reasons, Acreage and/or its applicable subsidiaries will make arrangements to provide the economic benefits thereof to the Lender.

The Lender shall have the right to put any Interest Shares that it still owns upon maturity of the Loan Transaction to the IP Borrower at a put price of US$4.50 per Interest Share for a period of 10 business days following the maturity date.

Closing of the Loan Transaction is expected to occur in February, 2020 and is subject to execution of definitive transaction documents, required consent and approval, closing of the Private Placement, approval of the Canadian Securities Exchange (CSE) and customary closing conditions.

The participation of Kevin Murphy in the Loan Transaction constitutes a related party transaction within the meaning of Multilateral Instrument 61101 Protection of Minority Security Holders in Special Transactions (MI 61101). The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61101 in respect of related party participation in the placement as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involved the related parties (being Mr. Murphy), exceeded 25% of the Companys market capitalization (as determined under MI 61-101). Further details will be included in a material change report to be filed by the Company. The material change report will not be filed more than 21 days prior to closing of the Loan Transaction due to the timing of the announcement of the Loan Transaction and the anticipated closing thereof occurring in less than 21 days.

Private Placement

Acreage also announced today the Private Placement of US$30,000,000 of special warrants (“Special Warrants”) at a price of US$4.93 (the Issue Price) per Special Warrant. The Special Warrants shall be automatically exercised (without payment of any further consideration) into units of the Company (the Units) on the earliest to occur of: (i) the date that is three business days following the date on which the Company files a prospectus supplement (the Qualification Prospectus Supplement) to the Companys base shelf prospectus dated August 8, 2019 (the Base Shelf Prospectus) with the applicable securities regulatory authorities in the Province of Ontario and each of the jurisdictions in Canada in which the Special Warrants are sold (collectively, the Securities Commissions) qualifying the distribution of the Units issuable upon exercise of the Special Warrants, and (ii) the date that is four months and one day after the Closing Date (as hereinafter defined) (the Automatic Conversion Date), subject to adjustment in certain events.

Each Unit will consist of one Subordinate Voting Share and one Subordinate Voting Share purchase warrant of the Company (a Warrant). Each Warrant will be exercisable to acquire one subordinate voting share of the Company (a Warrant Share) for a period of five years following the Closing Date (as hereinafter defined) of the Private Placement at an exercise price of US$5.80 per Warrant Share, subject to adjustment in certain events.

At the closing of the Private Placement, the lead subscriber will be granted the Option to purchase, at the Issue Price per Special Warrant, up to US$20,000,000 of additional Special Warrants or, if the Qualification Prospectus Supplement has been filed prior to the time of exercise, Units, exercisable at the lead subscribers option at any time up until 8:00 a.m. (Eastern time) on March 16, 2020. The Qualification Prospectus Supplement shall also qualify the distribution of the Units issuable upon exercise of such additional Special Warrants (if the Option is exercised prior to filing the Qualification Prospectus Supplement) or issuable upon exercise of the Option (if the Option has not been exercised prior to the filing of the Qualification Prospectus Supplement).

The net proceeds from the Private Placement will be used for working capital and general corporate purposes.

Canaccord Genuity Corp. is acting as bookrunner and lead agent (the Agent) on a fully marketed, best efforts private placement basis.

The Special Warrants shall be offered and sold by private placement to accredited investors within the meaning of National Instrument 45-106 – Prospectus Exemptions and other exempt purchasers only in those provinces of Canada in which a receipt (or deemed receipt) has been issued for the Base Shelf Prospectus by the applicable securities regulatory authority.

The Special Warrants and the Warrants will not be listed on any stock exchange. The Company intends to apply to list the Subordinate Voting Shares and the Warrant Shares on the CSE.

The Special Warrants issued pursuant to the Private Placement will be subject to a statutory four month and one day hold period following the Closing Date subject to the earlier clearing of the Qualification Prospectus Supplement qualifying the distribution of the Units issuable upon exercise of the Special Warrants.

Closing of the Private Placement is expected to occur on or about February 7, 2020 (the Closing Date). Closing of the Private Placement is subject to customary closing conditions, including, without limitation, receipt of all regulatory approvals.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States. The Special Warrants being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act) or the securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any state of the United States in which such offer, solicitation or sale would be unlawful.

ABOUT ACREAGE

Headquartered in New York City, Acreage is one of the largest vertically integrated, multi-state operators of cannabis licenses and assets in the U.S., according to publicly available information. Acreage owns licenses to operate or has management or consulting services or other agreements in place with license holders to assist in operations in 20 states (including pending acquisitions) with a population of approximately 180 million Americans, and an estimated 2022 total addressable market of US$16.7 billion in legal cannabis sales, according to Arcview Market Research. Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience. Acreage debuted its national retail store brand, The Botanist, in 2018 and its award-winning consumer brands, The Botanist and Live Resin Project in 2019.

On June 27, 2019 Acreage implemented an arrangement under section 288 of the Business Corporations Act (British Columbia) (the Arrangement) with Canopy Growth. Pursuant to the Arrangement, the Acreage articles were amended to provide Canopy Growth with an option to acquire all of the issued and outstanding shares in the capital of Acreage, with a requirement to do so, upon a change in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the Triggering Event), subject to the satisfaction of the conditions set out in the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 (the Arrangement Agreement). Acreage will continue to operate as a stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement Agreement. Upon the occurrence or waiver of the Triggering Event, Canopy Growth will exercise the option and, subject to the satisfaction or waiver of certain conditions to closing set out in the Arrangement Agreement, acquire (the Acquisition) each of the Subordinate Voting Shares (following the automatic conversion of the Class B proportionate voting shares and Class C multiple voting shares of Acreage into Subordinate Voting Shares) in exchange for the payment of 0.5818 of a common share of Canopy Growth per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement). If the Acquisition is completed, Canopy Growth will acquire all of the Acreage Shares, Acreage will become a wholly owned subsidiary of Canopy Growth and Canopy Growth will continue the operations of Canopy Growth and Acreage on a combined basis. For more information about the Arrangement and the Acquisition please see the respective information circulars of each of Acreage and Canopy Growth dated May 17, 2019, which are available on Canopy Growths and Acreages respective profiles on SEDAR at www.sedar.com. For additional information regarding Canopy Growth, please see Canopy Growths profile on SEDAR at www.sedar.com.

Original press release

February 07, 2020
 

CHICAGO, February 7, 2020–(BUSINESS WIRE)–Cresco Labs(CSE:CL) (OTCQX:CRLBF) (Cresco Labs or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, today announced that it has closed thepreviously announcedacquisition of Hope Heal Health, Inc. (HHH) after receiving regulatory approval for change in ownership granted by the Massachusetts Cannabis Control Commission (CCC). HHH holds licenses for cultivation, product manufacturing, and retail operations in Massachusetts, with the ability to obtain up to two more retail licenses in the state. HHH currently operates a cultivation and manufacturing facility in Fall River, Massachusetts, adjacent to its Fall River Dispensary.

The close of Crescos acquisition coincides with the launch of recreational cannabis sales at the HHH dispensary. The license enables the Company to continue serving its existing medical-use customer base and begin serving the fast-growing adult-use market through the retail and wholesale distribution of Crescos house of brands. Massachusetts recorded nearly $450 million in the first year of cannabis sales, according to the CCC.

Cresco Labs CEO and Co-founder Charlie Bachtell, commented, In our pursuit of achieving the most strategic geographic footprint in the U.S., we are thrilled to begin serving adult-use customers and continue serving medical patients in Massachusetts. Since we originally entered an agreement to acquire HHH in late 2018, weve worked with HHH to build a reputation of quality and consistency in what is now the largest adult-use market in the Northeast.

Now that weve officially closed the acquisition, were stepping into a fully operational, vertically integrated business that is immediately accretive with both positive EBITDA and cash flow.

Charlie Bachtell, Cresco Labs CEO and Co-founder

We look forward to building out our retail presence under the Sunnyside* brand (pending approval), as well as our wholesale channel and growing our market share as weve done successfully in other states.

There are more than 40 adult-use dispensaries in the Massachusetts market that the Company may now begin distributing its full suite of products to, including Cresco, Remedi, and Mindys Edibles. The Fall River dispensary is located less than 20 miles from downtown Providence, RI directly off an Interstate exit and the Company expects adult-use sales to reflect a strong customer base both in the local community and with the Massachusetts tourism market.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 06, 2020
 

Friedmann and Detlefsen Bring Significant Experience in Consumer Products and Marketing

EDMONTON, Feb. 6, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, today appointed two new independent directors, Lance Friedmann and Michael Detlefsen (together the “New Directors”). The New Directors term begins immediately.

We are pleased to welcome Lance Friedmann and Michael Detlefsen as independent members to the board at this critical time in our transformation.

Executive Chairman and Interim CEO Michael Singer

We expect to see cannabinoids grow as a category in consumer products and believe their depth of experience and strong track records of successful brand development and operational business transformation will provide helpful insights to our executive team. With the addition of Messrs. Friedmann and Detlefsen, Aurora has expanded its Board, independent directors.

About Lance Friedmann

Over Mr. Friedmann’s 25 year experience with Kraft Foods and Mondelz International, Inc. he held a number of roles of progressing scope and responsibility focused on marketing, strategy, and customer insights across the U.S., Latin America, and Asia. His experience includes senior management of Kraft Foods’ marketing-related and corporate marketing programs, for Canada, Mexico and Puerto Rico, and Health & Wellness. Notably, he played a critical role in the launch of the “Sensible Solutions” product line, and subsequently led Mondelez’s $12 billion global biscuits category, including Oreo, the world’s #1 biscuit brand.

About Michael Detlefsen

Mr. Detlefsen is currently the Managing Director of Pomegranate Capital Advisors, an active investor advisory firm with holdings in the branded consumer and B2B food sectors, agribusiness and financial services. He brings over 30 years as a senior executive and investor in the global consumer products, agri-food, logistics and transportation, and telecom sectors. He has a strong track record of developing and executing strategies to accelerate growth, transform operations, improve capital allocation and substantially enhance corporate performance. Mr. Detlefsen currently serves on the boards of SunOpta (NASDAQ: STKL) and Phoenix Canada Oil Company (TSX:PCO), and is the Executive Chair of Elevation Brands, a privately-held consumer products company focused on gluten-free and allergen-friendly foods. He is also a Governor of the Royal Ontario Museum, Canada’s largest museum of natural history and world cultures. Mr. Detlefsen previously served on the boards of State Street and Multi-Marques in Canada and CWC Communications PLC in the UK.

CEO Retirement and Succession & Business Transformation Plan

Aurora also announced today in a separate announcement a CEO Retirement and Succession & Business Transformation Plan to better align fixed costs and capital expenditures with current market conditions. These combined changes will significantly accelerate Aurora’s path to cash flow break even while still maintaining the Company’s ability to capitalize on the long-term, global cannabinoids market opportunity. Aurora will host a conference call today at 5:00 p.m. Eastern Time to discuss these business updates.

CEO Succession & Business Transformation Plan Conference Call

DATE: Today,Thursday, February 6, 2020

TIME:5:00 p.m. Eastern Time|3:00 p.m. Mountain Time

WEBCAST:http://public.viavid.com/index.php?id=138052

REPLAY: (844)-512-2921 or (412)-317-6671

PIN NUMBER: 13698974

Available until11:59 p.m. Eastern Time Thursday, February 20, 2020

About Aurora

Headquartered in Edmonton, Alberta, Canada with sales and operations in 25 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Designed to be replicable and scalable globally, our production facilities are designed to produce cannabis at significant scale, with high quality, industry-leading yields, and low-per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard.

In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), Evio Beauty Group (private), and Wagner Dimas (private).

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

February 06, 2020
 

Visit the Aurora Cannabis Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Aurora Cannabis Announces CEO Retirement and Succession, Board of Directors Expansion, and Business Transformation Plan

Releases Preliminary Results for the Second Fiscal Quarter Ended December 31, 2019

  • Aurora Cannabis Founder & CEO, Terry Booth, announces retirement and succession plan and expansion of the Board of Directors
  • Executive Chairman Michael Singer has been appointed Interim CEO, effective immediately; search for permanent successor underway
  • Two new Independent Directors to join the Board for a total of 10 directors, including 7 Independents
  • Announces comprehensive transformation plan to significantly reduce the Company’s expense base, rationalize capital expenditures, and better align its balance sheet with current market conditions
  • Secures credit facility amendments that remove EBITDA ratio covenants and provide additional financial flexibility as Aurora executes transformation plan
  • Company provides select unaudited preliminary fiscal Q2 2020 financial results and updated outlook
  • Aurora to host Conference Call at 5:00 p.m. Eastern Time

EDMONTON, Feb. 6, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, today announced a CEO succession and Board expansion; the latter of which is detailed in a separate announcement released this afternoon. The Company also announced a business transformation plan that better aligns selling, general & administrative expenses, and capital expenditures with current market conditions.

These combined changes are consistent with, and evidence of Aurora’s commitment to, achieving positive EBITDA and cash flow as rapidly as possible, while still maintaining the ability to capitalize on longer-term Canadian and global cannabis market opportunities.

CEO Succession

Aurora CEO Terry Booth stated, “Over the last seven years, Aurora has built an incredible platform and a leading position in the global Cannabis industry. I am proud and humbled to have led that journey with a deeply talented and passionate team of employees. While there is still much work to be done, the timing is right to announce my retirement with a thoughtful succession plan in place and the immediate expansion of the Board of Directors. These changes, along with the financial transformation which we are undertaking, should clearly demonstrate to investors that Aurora has the continuity, strategic direction and leadership it needs to transition from its entrepreneurial roots to an established organization well positioned to capitalize on a global growth opportunity. In that spirit, and with my full support, the Board of Directors has appointed Michael Singer as Interim CEO effective immediately.”

As part of the succession plan, I will become a Senior Strategic Advisor to the Board and remain a Director. Additionally, we’re welcoming new independent members; Lance Friedmann and Michael Detlefsen who bring a wealth of strategic and hands-on consumer products industry experience to the organization.

Aurora CEO Terry Booth

Michael Singer, Aurora’s Executive Chairman and Interim CEO stated, “I look forward to serving as Interim CEO and executing on our short-term plans, which include a rationalization of our cost structure, reduced capital spending, and a more conservative and targeted approach to capital deployment. These are necessary steps that reflect a fundamental change in how we will operate the business going forward.” Singer continued, “On behalf of the Board of Directors, I want to thank Terry for his leadership over the years. He’s made an indelible mark on the industry and left an enviable legacy in the form of Aurora Cannabis and the potential that exists for the Company over the coming decades.”

As one of the original cannabis visionaries, Terry is an invaluable resource with deep industry knowledge that we can leverage strategically. I look forward to having him continue on as a Senior Strategic Advisor to our Board of Directors.

Michael Singer, Aurora’s Executive Chairman and Interim CEO

Financial Transformation & Capital Position

Management today announced sweeping changes intended to rationalize the cost structure and balance sheet going forward. The Company believes this will better align the business financially with the current realities of the cannabis market in Canada while maintaining a sustainable platform for long-term growth.

These actions are expected to include significant and immediate decreases in selling, general & administrative (“SG&A”) expenses and capital investment plans.

Selling, General & Administrative Expenses

It is the Company’s intention to manage the business to an SG&A range of $40 million to $45 million per quarter by the end of the fiscal fourth quarter of 2020, a significant decrease from the preliminary fiscal second quarter 2020 range announced today. To do this, management plans to focus the business on its core areas: 1) Canadian consumer market; 2) Canadian medical market; 3) established international medical markets; and 4) U.S. market initiatives. Severance and other one-time charges related to SG&A reductions are expected to range from $2 million to $4 million and will be largely incurred in the Company’s fiscal second and third quarters ending December 31, 2019 and March 31, 2020 respectively.

As part of the changes to operations, the Company has eliminated close to 500 full-time equivalent staff across the company, including approximately 25% of corporate positions. Additionally, management is restructuring spending plans on information technology projects, sales and marketing initiatives, travel & entertainment, professional services, and other non-revenue generating third-party costs which do not provide an immediate impact on revenue.

Capital Expenditures

Aurora announced its intention to reduce capital expenditures for the second half of fiscal 2020 to bring capital expenditures below $100 million in total. Over the past several weeks, Aurora management has undertaken a detailed evaluation of all capital projects underway and made decisions with respect to continuing or terminating further investment in each. Future capital allocation decisions will be scrutinized first and foremost through a lens of optimizing near-term investor returns.

Balance Sheet & Liquidity

Aurora has also announced a number of amendments to its secured credit facilities which are designed to better align the Company’s balance sheet and cash flow expectations with current market conditions and to provide financial flexibility over the near term. These amendments include:

  • Complete removal of all EBITDA ratio covenants, originally set to commence in the period ending September 30, 2020
  • Complete removal of fixed charge coverage ratio covenant
  • Adjustment of the total funded debt-to-equity covenant to 0.20:1 commencing in fiscal third quarter 2020, from 0.25:1 currently
  • Reduction of the total facility size available by $141.5 million
  • Introduction of a new minimum liquidity covenant of $35 million
  • The introduction of a covenant requiring Aurora to achieve positive EBITDA thresholds beginning in fiscal Q1 2021 that The Company believes are consistent with today’s announced changes

We are pleased to have reached an agreement with our syndicate of banks to provide Aurora with additional financial flexibility aligned with our focus on achieving near-term profitability and providing the Company with options to refinance the facility at maturity. I would like to thank our banking partners for their continued support of Aurora.

Glen Ibbott, Aurora’s CFO

Aurora announced that, given market current cannabis market conditions and the slower than expected near-term industry growth, it has undertaken a thorough review of all business operations and concluded that certain assets and goodwill values as at December 31, 2019 exceed current fair-market valuations. As such, when Aurora formally reports its fiscal second quarter 2020 results, it expects to report asset impairment charges on certain intangible and property, plant and equipment in a range of $190 million to $225 million and write-downs of goodwill in the range of $740 million to $775 million. Following these non-cash charges, Aurora expects to remain compliant with its revised total debt-to-equity covenant going forward.

Glen Ibbott continued, “The assets being impaired are predominantly associated with our operations in South America and Denmark, as our estimate of the timeline for substantial growth extends in those markets. Our core Canadian cannabis assets are not impacted by these non-cash asset impairment charges.” Ibbott concluded, “We believe that the long-term opportunity for Aurora remains very compelling, despite a slower than anticipated rate of industry growth in the near-term. We also believe our approach to rationalizing the business and conservatively improving our balance sheet positions Aurora in a more stable position for sustainable growth going forward.”

Aurora announced that its consolidated cash position was $156 million, excluding $45 million of restricted cash as at December 31, 2019. This includes gross proceeds raised under its US$400 million At-the-Market (“ATM”) financing program of approximately US$245 million (or approximately $325 million) to date in fiscal 2020. As of today, the Company has remaining capacity under its current ATM program of approximately $200 million. With the cost reduction and business transformation initiatives announced today, the Company expects that utilization of the ATM capacity will be sufficient to fund operations and remaining required capital expenditures, to the points where positive EBITDA and free cash flow are achieved.

Unaudited Preliminary Fiscal 2020 Second Quarter Financial Results

Aurora today provided unaudited preliminary second quarter fiscal 2020 financial results. The Company expects cannabis revenues for the second quarter of fiscal 2020 of $62 million to $66 million, net of excise taxes. Aurora expects to record provisions for returns, price reductions and future provisions of approximately $12 million, almost all of which relates to product sold in previous quarters. Therefore, net cannabis revenues, after giving effect to these offsets, are expected to be $50 million to $54 million. These revenue expectations reflect consistent quarter-over-quarter medical revenues, a decrease in international revenues due to short-term German supply interruptions, and much lower bulk sales. For the second quarter, Aurora expects to report modest quarter-over-quarter growth in consumer cannabis revenues prior to applying these offsetting return and price reduction allowances.

Cash cost to produce per gram of dried cannabis sold() is expected to remain below $1.00, sales and marketing expenses are expected to be between $28 million to $32 million and general and administrative expenses are expected to be between $70 million to $75 million.

The outlook for cannabis revenue for Aurora’s fiscal third quarter is expected to be impacted by the general industry headwinds mentioned above, and as such will likely show little to no growth relative to fiscal Q2’s cannabis revenue of $62 million to $66 million, prior to the provisions for returns and price reductions.

Aurora will announce its full second quarter fiscal 2020 financial results on February 13, 2020.

Aurora will host a conference call today at 5:00pm Eastern Time to discuss these updates.

CEO Succession & Business Transformation Plan Conference Call

DATE: Today, Thursday, February 6, 2020

TIME: 5:00 p.m. Eastern Time | 3:00 p.m. Mountain Time

WEBCAST: http://public.viavid.com/index.php?id=138052

REPLAY: (844)-512-2921 or (412)-317-6671

PIN NUMBER: 13698974

Available until 11:59 p.m. Eastern Time Thursday, February 20, 2020

(1)Cash cost to produce per gram of dried cannabis sold is a non-GAAP financial measure and is not recognized, defined, or subject to standardized measurement under IFRS. Aurora defines and reconciles the calculation to IFRS in the Company’s interim MD&A. Cash cost to produce per gram of dried cannabis sold is calculated by taking the IFRS cost of sales, excluding the effect of changes in the FV of biological assets and inventory, and deducting depreciation, cannabis extract conversion costs, cost of accessories, cost of products purchased from other Licensed Producers that were sold, cost of sales from non-cannabis producing subsidiaries, and post-production costs. Cash cost to produce per gram of dried cannabis sold is calculated by taking cash cost to produce of dried cannabis sold divided by total grams of dried cannabis sold in the period that were produced by Aurora. Management believes these measures provide useful information about the efficiency of production and fulfillment for our core cannabis operations

About Aurora

Headquartered in Edmonton, Alberta, Canada with sales and operations in 25 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Designed to be replicable and scalable globally, our production facilities are designed to produce cannabis at significant scale, with high quality, industry-leading yields, and low-per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard.

In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), and Evio Beauty Group (private).

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

February 06, 2020
 

Visit the KushCo Holdings Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

KushCo Holdings, Inc. Prices $16 Million Registered Direct Offering

CYPRESS, CA / ACCESSWIRE / February 6, 2020 / KushCo Holdings, Inc. (OTCQX:KSHB) (“KushCo” or the “Company”), today announced it has entered into definitive agreements with investors for the purchase and sale of 10,000,000 units, with each unit consisting of one share of common stock, par value $0.001 per share, and a warrant to purchase half a share of common stock, at an offering price of $1.60 per unit, pursuant to a registered direct offering. The warrants will have an exercise price of $2.00 per share, will be immediately exercisable and will expire five years from the date of issuance. The gross proceeds of the offering will be approximately $16 million before deducting placement agent fees and other estimated offering expenses. The Company intends to use the net proceeds for working capital and for other general corporate purposes. The closing of the registered direct offering is expected to take place on or about February 10, 2020, subject to the satisfaction of customary closing conditions.

A.G.P./Alliance Global Partners is acting as sole placement agent for the offering.

This offering is being made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-231019) previously filed with the U.S. Securities and Exchange Commission (the “SEC”). A prospectus supplement describing the terms of the proposed offering will be filed with the SEC and will be available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplement may be obtained, when available, from A.G.P./Alliance Global Partners, 590 Madison Avenue, 36th Floor, New York, NY 10022, or by telephone at (212) 624-2060, or by email at prospectus@allianceg.com. Before investing in this offering, interested parties should read in their entirety the prospectus supplement and the accompanying prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such prospectus supplement and the accompanying prospectus, which provide more information about the Company and such offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About KushCo Holdings

KushCo Holdings, Inc. (OTCQX: KSHB) (www.kushco.com) is the premier producer of ancillary products and services to the legal cannabis and CBD industries. KushCo Holdings’ subsidiaries and brands provide product quality, exceptional customer service, compliance knowledge and a local presence in serving its diverse customer base.

Founded in 2010, KushCo Holdings has now sold more than 1 billion units to growers, processors and producers across North America, South America, and Europe.

The Company has been featured in media nationwide, including CNBC, Fox News, Yahoo Finance, Cheddar, Los Angeles Times, TheStreet.com, and Entrepreneur, Inc Magazine. While KushCo Holdings provides products and solutions to customers in the cannabis and CBD industries, it has no direct involvement with the cannabis plant or any products that contain THC.

For more information, visit www.kushco.com or call (888) 920-5874.

Original Press Release

February 05, 2020
 

TORONTO,Feb. 5, 2020/CNW/ – TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) (“TerrAscend” or the “Company”), the first global cannabis company licensed for sales in the U.S.,Canada, and the EU, announced today that the terms of its previously announcedUS$10 millionloan (the “Loan”) from Canopy Rivers Corporation (“Canopy Rivers”), a wholly-owned subsidiary of Canopy Rivers Inc. (TSX:RIV, OTC: CNPOF), to TerrAscend Canada Inc. (“TerrAscend Canada”), a wholly-owned subsidiary of TerrAscend, have been amended.

The original terms of the Loan were announced onOctober 2, 2019and included the purchase of 13,243 units, with each unit consisting of (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount ofC$1,000(the “Debentures”), and (ii) 25.2 common share purchase warrants of TerrAscend (the “Original Warrants”) with an exercise price ofC$6.49.

After theOctober 2, 2019announcement of the Loan and subsequent discussions with the Toronto Stock Exchange (the “TSX”), TerrAscend, TerrAscend Canada, and Canopy Rivers mutually agreed to amend certain terms of the Loan.

Pursuant to the amended terms, the Debentures have been converted into aC$13,243,000loan agreement (the “Loan Agreement”) entered into between Canopy Rivers and TerrAscend Canada. Pursuant to the Loan Agreement, interest on the principal amount outstanding will accrue at a rate of 6% per annum, and all interest payments are payable in cash by TerrAscend Canada. The principal amount under the Loan Agreement matures onOctober 2, 2024or such earlier date in accordance with the terms of the Loan Agreement.

TerrAscend has also issued Canopy Rivers 2,225,714 common share purchase warrants of TerrAscend (the “Warrants”), exercisable upon the occurrence of certain events (each such event, a “Triggering Event”), including (i) the federal laws inthe United Statesare amended to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws ofthe United States, and (ii) the stock exchange(s) on which securities of Canopy Rivers or its affiliates are listed permit the investment by Canopy Rivers in an entity that participates in the cultivation, distribution and possession of marijuana inthe United States. The exercise price for the Warrants isC$5.95per share and the Warrants expire onOctober 2, 2024. The Warrants are subject to certain forced exercise rights that may be exercised by TerrAscend if the five-day VWAP of TerrAscend’s common shares equals or exceeds$10.82, subject to the occurrence of certain other conditions, all as more particularly set out in the certificate evidencing the Warrants. The Original Warrants remain issued and outstanding.

TerrAscend Canada intends to use the proceeds for general corporate purposes and the proceeds will not be used, directly or indirectly, in connection with any cannabis or cannabis-related operations inthe United States, unless and until such operations comply with all applicable laws ofthe United States.

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in bothCanadaand the US, the Company participates in the medical and legal adult use market acrossCanadaand in several US states where cannabis has been legalized for therapeutic or adult use. TerrAscend is the first and only cannabis company with sales in the US,Canada, andEurope. TerrAscend operates a number of synergistic businesses, including The Apothecarium, an award-winning cannabis dispensary with several retail locations inCalifornia; Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products; Ilera Healthcare,Pennsylvania’spremier medical marijuana cultivator, processor and dispenser; Ascendant Laboratories Inc., a biotechnology and licensing company committed to the continuous improvement of cannabinoid expressing plants; Solace RX Inc., a proposed Drug Preparation Premises (DPP) focused on the development of novel formulations and delivery forms; and Valhalla Confections, a manufacturer of premium cannabis-infused edibles.TerrAscend holds a cultivation permit in theState of New Jerseyand is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to 3 Alternative Treatment Centers. Additionally, TerrAscend holds a Medical Cannabis Processor License in theState of Utah. For more information, visitwww.terrascend.com.

Original press release

February 04, 2020
 
New Jerseyawarded permits to grow medical marijuana to three more companies,Columbia Care NJ, MPX NJ and Verano
February 04, 2020
 

Minnesota legalized medical cannabis nearly six years ago. Over the years, there have been several unsuccessful efforts to do the same for adult-use cannabis, and it appears that this year will be no different.

In January 2020, the leader of the Democratic-Farmer-Labor Party (DFL) announced they were drafting a bill that would add Minnesota to the list of states that have legalized, taxed and regulated the recreational use of cannabis. Although Gov. Tim Walz has said he supports the move, he faces an uphill battle with opposition from the Republican party. In this review, we take a look at the history of Minnesotas cannabis program, the existing marketplace and potential for future growth.

History

In May 2014, then-Gov. Mark Dayton signed the Minnesota Medical Marijuana Act (SF 2470), a bill legalizing medical cannabis for the treatment of nine severe health conditions. The state began distributing medical cannabis to registered patients on July 1, 2015.

Unlike Oklahoma, which has one of the most liberal cannabis laws in the country, Minnesotas is considered to be among the most restrictive, due to the limited number of health conditions cannabis can be used to treat, the forms that are legal and the costs associated with its use, including a $200 license fee for patients. However, there is a reduced fee of $50 for those who qualify.

The first set of only nine medical conditions that qualified a patient were:

  • Cancer or its treatment (must be accompanied by severe or chronic pain, nausea, or severe wasting);
  • Glaucoma
  • HIV/AIDS
  • Tourette Syndrome
  • Amyotrophic Lateral Sclerosis (ALS or Lou Gehrigs Disease)
  • Seizures, including those characteristic of epilepsy
  • Severe and persistent muscle spasms, including those characteristic of multiple sclerosis
  • Terminal Illness with life-expectancy of less than 1 year (must be accompanied by severe or chronic pain, nausea, or severe wasting)
  • Crohns Disease was extended to Inflammatory Bowel Disease (including Crohns Disease)

Other conditions were later added:

  • Intractable Pain (2016)
  • Post-Traumatic Stress Disorder (2017)
  • Autism Spectrum Disorder and Obstructive Sleep Apnea (2018)
  • Alzheimers Disease (2019)

Chronic pain, the most common qualifying condition in other states, and age-related macular degeneration were added as qualifying conditions, effective August 1, 2020.

As of December 31, 2019, only 18,289 patients had registered for medical cannabis use (0.3% of the state’s population). By comparison, nearly 236,000 patients qualified as of Jan. 2020 in Oklahoma (6.0% of the state’s population). The majority of Minnesotas cannabis patients (11, 807, or 65 percent) are using it for intractable pain. When this qualifying condition was added, participation in the program spiked considerably.

The average age of registered patients is 48.7 years, according to the Minnesota Department of Health. Patients must be certified by a healthcare practitioner and re-evaluated and re-certified annually.

Practitioners include: licensed physicians, physician assistants and advanced practice registered nurses (APRNs). As of Dec. 31, 2019, there were 1,681 healthcare practitioners registered, the majority of which (1,226) are physicians. Unlike in many other states, those certified are not listed by the state, so those who want to obtain a prescription have to do their own research.

Form factors are limited and include: pill, vapor oil, topical or liquid forms. However, starting this summer, cannabis powders, lozenges, gums, mints and tablets will be available. The program does not allow patients to access and use the actual plant or flower.

Existing Market

Only two medical cannabis manufacturers,Minnesota Medical Solutions, LLC, a Vireo Health Company (CSE: VREO) (OTC: VREOF) and privately heldLeafLine Labs, LLC, were registered by the Minnesota Department of Health (MDH) on December 1, 2014. They are responsible for the cultivation, production, and distribution of medical cannabis in the state. They serve Minnesotas 87 counties.

Minnesota Medical Solutions (MinnMed) operates distribution facilities, or Cannabis Patient Centers (CPCs), in four Minnesota cities: Minneapolis, Rochester, Moorhead, and Bloomington. The company recently announced substantial price cuts on many of its products, as well as a new line of oral spray products, in an effort to attract new patients.

MinnMed Oils, Vaporizers and Capsules

LeafLine Labs operates Cannabis Patient Centers in four cities: Eagan, St. Cloud, Hibbing, and St. Paul.

Leafline Labs Oral Suspensions

Each manufacturer will be required to have eight distribution facilities by August along with one production facility (the production facility may be at the same location as a distribution facility). The requirement to operate eight distribution facilities became effective in July 2019. Prior to that, each manufacturer was required to operate four distribution facilities.

Minnesota’s 8 Current Dispensary Locations

Future Growth

Although some modifications to the law have taken place since Minnesota legalized medical cannabis, the program remains rife with limitations. They include a limited number of allowable conditions and the fact that use of the plant continues to be prohibited, which keeps costs high. Still,the additional qualifying conditions, the expansion of form factors and the doubling of the number of dispensaries should drive growth in 2020 following an expansion in 2019 of 27%.

The Marijuana Policy Group projected that Minnesota’s cannabis industry would result in sales of $426 million in the first year if adult-use cannabis was legalized, and that figure would grow to $1.2 billion by year five. It predicted $112 million in tax revenues for the first year, growing to $300 million by the fifth year.

Minnesota Democratic lawmakers have indicated they will continue to push for legalization this year. House Majority Leader Ryan Winkler announced a statewide Be Heard on Cannabis tour to to hear from people in every corner of the state. Rep. Winkler said he will introduce new legislation to legalize adult-use cannabis in 2020, though he has stopped short of predicting whether the legislation will actually make it to the House floor. Meantime, Senate Majority Leader Paul Gazelka has already indicated his opposition to legalization.

February 04, 2020
 

WeedMD Announces Leadership Change and Appoints New CEO as Company Accelerates Growth Initiatives

Angelo Tsebelis, currently President of WeedMD, is appointed Chief Executive Officer

TORONTO, Feb. 04, 2020 (GLOBE NEWSWIRE) — WeedMD Inc. (TSX-V:WMD) (OTCQX:WDDMF) (FSE:4WE) (WeedMD or the Company), a federally-licensed producer and distributor of medical-grade cannabis, announced today that it has appointed Angelo Tsebelis as Chief Executive Officer replacing Keith Merker, who has elected to step down from the CEO and board director roles effective immediately.

WeedMD has gone through a tremendous transformation over the past few years under Keiths leadership and we want to thank him for establishing the building blocks of the company – particularly its successful cultivation platform that is widely recognized as a benchmark of excellence in the industry.

George Scorsis, Executive Chairman of WeedMD

In recognition of the Companys solid footing, we now look to accelerate growth with a renewed focus on expanding sales and distribution initiatives. With his strong business acumen in sales, marketing, and supply chain management, we welcome Angelo to the role of CEO who will look to execute high-margin, commercial transactions that will bring immediate shareholder value, continued Scorsis.

WeedMD is perfectly positioned to move into the next phase of growth and Im honoured to be taking the reins as we steer towards fully monetizing our distribution channels.

Angelo Tsebelis, CEO of WeedMD

Im looking forward to working closely with the integrated team, our partners, patients and stakeholders to accelerate our commercial growth and business development initiatives.

Mr. Tsebelis has close to 20 years of commercial experience in the pharmaceutical, healthcare and cannabis industries. Responsible for setting the strategic commercialization, and product development initiatives for both WeedMD and Starseed, Angelo previously held positions of increasing responsibility with Shoppers Drug Mart and Loblaw Corporation where he built strategic partnerships with pharmaceutical manufacturers, insurers, adjudicators and brokers in the Canadian market. Prior to this, Angelo held various commercial leadership roles at GlaxoSmithKline, Bell Canada and Harrison Associates.

Access WeedMDs investor presentation here.

About WeedMD Inc.

WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer of cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, Ontario. WeedMD also operates CX Industries Inc., a wholly-owned subsidiary of WeedMD Inc., from the Companys fully-licensed 26,000 sq. ft. Aylmer, Ontario production facility which specializes in cannabis extraction and processing. With the recent acquisition of Starseed Medicinal Inc., a medical-centric licensed holder with operations in Bowmanville, Ontario, WeedMD has expanded its multi-channeled distribution strategy. Starseeds industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with other employers and union groups complements WeedMDs direct sales to medical patients. The Company maintains strategic relationships across the seniors market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies where its adult-use brands Color Cannabis and Saturday are sold.

Follow WeedMD, Color Cannabis & Starseed:

Facebook:https://www.facebook.com/weedmd/
LinkedIn:https://www.linkedin.com/company/weedmd/?originalSubdomain=fr
Twitter:https://twitter.com/WeedMD
Instagram:https://www.instagram.com/weedmd/
https://www.instagram.com/callitcolor/&https://www.instagram.com/starseedca/

For further information, please contact:

Original press release

February 04, 2020
 

One of the industrys top-selling, best-tasting edible brands from Cresco Labs enters the Golden State with six new gummies flavors and a refreshed brand identity

CHICAGO, February 4, 2020–(BUSINESS WIRE)–Focused on elevating the edibles industry and bringing greater access to acclaimed chef-driven products that deliver an exceptionally delicious and consistent experience,Cresco Labs(CSE:CL)(OTC:CRLBF) (Cresco or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, announced today the expansion ofMindys Ediblesto California. As the industrys first culinary-backed, cannabis-infused edibles brand, Mindys is precisely dosed, combining distinctive, premium ingredients with iconic flavor combinations. To mark its California arrival, Mindys is introducing six new flavors of its top-selling gummies in addition to a new brand look and website.

Bringing Mindys to California, and to an audience that seeks and appreciates artisanal cannabis creations, was a natural progression for a brand thats thriving in multiple other markets, said Cresco Labs CEO and co-founder Charles Bachtell.

Mindys is well positioned for success in the California market because of Crescos multi-acre cultivation facility in Carpentaria, its state-of-the-art manufacturing facility in Mendota, and its access to the recently acquired Continuum distribution platform.

Charles Bachtell, Cresco Labs CEO and co-founder

Where Mindys dominates and differentiates is in its taste and quality, and we see a category opportunity in California to introduce a culinary creation that consumers can count on. We will leverage our unique array of flavors to appeal to our different audiences and mirror the brand success Mindys has seen in Nevada and Illinois.

Designed to delight the taste buds, the six new flavors of gummies are all vegetarian and non-GMO:

  • Lush Black Cherry: Rich and luscious, like jars of cherries soaked in cabernet and Luxardo, with hints of orange and vanilla. Available in: 100mg THC: 100mg CBD 20-pack tins; each piece = 5mg THC: 5mg CBD
  • Glazed Clementine Orange: Deep, rich, intense orange flavor, with notes of kumquat, clementine and candied orange rind. Available in: 100mg THC 20-pack tins; each piece = 5mg THC and 100mg THC 50-pack pouches; each piece = 2mg THC
  • Cool Key Lime Kiwi:Key lime pie meets creamy, tropical kiwi. Tart and bright with a balanced flavorsummer sorbet with a hint of banana. Available in: 100mg THC 20-pack tins; each piece = 5mg THC and 100mg THC 50-pack pouches; each piece = 2mg THC
  • Honey Sweet Melon:Bright, clean and refreshing yet earthy. Flavors of honeydew and cantaloupe with a touch of honey. Balanced with slight fruity-floral lychee notes. Available in: 40mg THC: 40mg CBD 20-pack tins; each piece = 2mg THC: 2mg CBD
  • Botanical White Grapefruit:Fresh and clean like a grapefruit cocktail. Sour and lip-smacking. Deliciously juicy with an essence of gin botanicals. Available in: 40mg THC 20-pack tins; each piece = 2mg THC
  • Freshly Picked Berries:Flavors of just-picked sweet strawberries and blueberries with mulberries and huckleberries from the Pacific Northwest. Jam-like with a touch of orange blossom. Available in: 40mg THC 20-pack tins; each piece = 2mg THC

Ive always been inspired by the abundant fresh produce in California. With this new gummy line, I really wanted to bring the feeling of walking through expansive farmers markets to cannabis consumers and craft something truly delicious for them to experience.

Chef Mindy Segal

Each new flavor features combinations that are both familiar and unexpected. The fact that they are precisely infused with cannabis is the best bonus.

Mindys gummies are now available in dispensaries across California and are competitively priced. For more details and locations, visitwww.mindysedibles.com.

About Cresco Labs:

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*,Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 03, 2020
 

After breaking an 8-month losing streak in December with a strong close on the last day of the year, theGlobal Cannabis Stock Indexbegan the year with a 5.2% decline, ending at 40.00:

The index, which had 41 qualifying members during the month following the quarterly rebalancing at the end of December, declined 34.1% in 2019:

The decline left the index at levels not seen in over three years, down almost 78% from its early 2018 closing high at 180.02 but up 3.6% from its closing low on December 18th at 38.62:

4 names gained more than 16% during December:

KushCo Holdings rallied after reporting a weak Q1 but maintaining its fiscal 2020 guidance for revenue to exceed $230 million. The company also saw an SEC investigation conclude with the agency taking no action against the company, a move that likely paves the way for it to list on the NASDAQ. Innovative Industrial Properties rebounded sharply after a very successful capital raise of $250 million for the REIT. Liberty Health Sciences posted sequential revenue growth of 52% as it posted sales in Florida during its fiscal Q3 of C$16.1 million with an operating profit margin of 15%. GrowGeneration, which recently listed on the NASDAQ after spending three years on the OTC, pre-announced strong Q4 revenue and provided guidance for 2020 of revenue of $130 million with an adjusted EBITDA margin of 11%.

4 names fell by more than 25% during December:

Sundial Growers, a Canadian LP which went public in August at $13, plunged to an all-time low near $1 following the departure of its CEO and its COO. Green Growth Brands, which has an extensive mall-based CBD business as well as cannabis operations in Nevada, Massachusetts and Florida, didn’t release any substantive news during January but continued to decline after terminating its pending acquisition of Moxie in mid-December. The stock declined 82% in 2019. Canadian LP MediPharm Labs, which is focused on extraction globally, fell after it filed a claim against previously unnamed client HEXO Corp (TSX: HEXO) (NYSE: HEXO) for not making contractual payments amounting to C$9.8 million. MediPharm Labs saw its stock gain 137% in 2019. Greenlane, a 2019 IPO at $17, ended the month at an all-time closing low of $2.44. The Florida-based company distributes accessories, CBD and liquid nicotine products, with substantial exposure to Juul.

We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:

We will summarize the index performance again in a month. You can learn more about the index members and the qualifications for inclusion by visiting theGlobal Cannabis Stock Index. A more complete analysis of the index is available at420Investor.com. Be sure to bookmark the page to stay current on cannabis stock price movements within the day or from day-to-day.

New Cannabis Ventures maintainssix proprietary indicesdesigned to help investors monitor the publicly-traded cannabis stocks, including the Global Cannabis Stock Index as well as theCanadian Cannabis LP Indexand its three sub-indices. The sixth index, theAmerican Cannabis Operator Index, was launched at the end of October last year and tracks the leading cultivators, processors and retailers of cannabis in the United States.

February 03, 2020
 

CHICAGO, February 3, 2020–(BUSINESS WIRE)–Cresco Labs (CSE:CL) (OTCQX:CRLBF) (Cresco Labs or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, today announced that it has closed therecently announcednon-brokered credit agreement (the Credit Agreement) for a senior secured term loan (the Senior Loan) in an initial aggregate principal amount of US$100 million, with a mutual option to increase the size of the facility to a maximum of US$200 million. The proceeds from the Senior Loan will be used to fund the expansion of operations in Illinois, closing and integration costs associated with pending acquisitions, and other strategic growth initiatives in key markets. A broad syndicate of lenders participated in the Senior Loan, including U.S. based institutional investors together with members of the Companys management and board of directors.

Charlie Bachtell, CEO and Co-founder of Cresco Labs, commented, “The closing of this financing is an important event and was driven by the incredible opportunities we at Cresco have before us.”

We have worked to create a credit facility that strengthens our balance sheet in a non-dilutive manner with no warrants nor convertibility to equity. This transaction demonstrates that capital is available to the top operators in this industry who demonstrate a disciplined strategic focus, a responsible allocation of capital, and a track record of operational execution.

Charlie Bachtell, CEO and Co-founder of Cresco Labs

We are especially pleased to have closed the transaction with such a high-quality group of investors who have displayed a dedicated commitment to the long-term success of Cresco as we continue to execute our vision to build the most important company in cannabis.

Terms

The Senior Loan is for either an 18-month or 24-month term, at the lender’s option. The Loans bear interest at a rate of approximately 12.7% per annum for 18-month loans and approximately 13.2% for 24-month loans, payable quarterly in arrears. The terms of the Senior Loan were negotiated at arms length with the agent and lead investor and include customary restrictive covenants.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 03, 2020
 

Curaleaf Completes Acquisition of Select

Company Enters Accelerated Growth Phase with Expanded Leadership Team

WAKEFIELD, Mass., Feb. 3, 2020 /PRNewswire/ — Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading vertically integrated cannabis operator in the United States, today announced that it closed the transformational acquisition of Select on February 1. With the completion of the acquisition, Curaleaf solidifies its stance as the largest cannabis operator in the U.S. in terms of operational and wholesale footprint, including 53 open dispensaries, and positions the Company well for its next phase of growth.

Curaleaf’s acquisition of Cura Partners, Inc. (“Cura”), owners of the Select brand, includes Select’s manufacturing, distribution, marketing and sales operations marketed under the Select brand name, including all intellectual property.

The close of the Select deal is a major milestone in Curaleaf’s history and marks an unprecedented phase of growth for our company.

Joseph Lusardi, CEO of Curaleaf.

As we’ve scaled, Curaleaf has pioneered the U.S. cannabis industry, and we’re incredibly excited about the future and our leadership role in it. Our entire organization is focused on accelerating our growth as a combined company with two of the fastest growing cannabis brands in the country.

The closing provides tremendous opportunities for synergies as it combines Curaleaf’s national retail locations, vertically integrated structure, wellness brand, product range and East Coast hub with Select’s wholesale model, established lifestyle brand and leading West Coast market presence.

The news comes on the heels of Curaleaf’s acquisition of the Acres Cannabis vertical operations in Nevada, and the awarding of preliminary retail and processing licenses in Utah.

Curaleaf Expands Leadership Team to Drive the Company Forward

With the closing, visionary entrepreneur Cameron Forni assumes the role of President of Select and will focus on driving growth of the Select brand through expansion into new markets. Mr. Forni, who founded Select in 2015, is recognized as a leading authority on vaporizer cartridges and has played an instrumental role in building Select’s award-winning brand, culture and operations across California, Oregon, Arizona and Nevada.

Renowned brand marketer Jason White joins Curaleaf from Select in the newly created role of Chief Marketing Officer, where he will drive the Company’s overall marketing and brand strategy. Mr. White brings 20 years of experience as an award-winning advertising and marketing professional and has built a highly acclaimed career creating culture-shaping ideas for Fortune 100 companies. Prior to Select, Mr. White was the Global Head of Marketing for Beats by Dr. Dre which was acquired by Apple in 2014. Prior to Beats, he was Managing Director at Wieden + Kennedy Shanghai for lead client Nike as they prepared for the 2008 Beijing Olympics. Mr. White also served as Global Account Director on Nike at Wieden + Kennedy in Portland, Oregon, developing campaigns for LeBron James, Kobe Bryant and Tiger Woods.

Curaleaf Chief Financial Officer Neil Davidson has been elevated to Chief Operating Officer effective immediately. Mr. Davidson will be responsible for managing the Company’s cultivation, processing and manufacturing capabilities with a focus on driving growth and operational efficiencies across the entire organization. Former Chief Operating Officer Stuart Wilcox will transition to a new role, leading business expansion efforts in emerging markets.

In addition, Michael Carlotti joined Curaleaf today as Chief Financial Officer, succeeding Mr. Davidson. Mr. Carlotti will be responsible for leading the Company’s finance, capital markets, M&A, treasury and investor relations functions. Prior to joining Curaleaf, Mr. Carlotti was the Chief Financial Officer for a Nevada-based cannabis company. Mr. Carlotti spent nearly a decade in the gaming industry including having served as Senior Vice President and Treasurer at MGM Resorts International, an S&P 500 global entertainment company. He began his career in investment banking with positions at Smith Barney and Wachovia Securities.

Mark Russ has been appointed Senior Vice President of Sales and will oversee national sales of all Curaleaf brands. Mr. Russ joins Curaleaf from a vertically integrated cannabis company, where he served as Vice President of Sales. Prior to that he served as Vice President & General Sales Manager at Constellation Brands, where he was responsible for overseeing the operations of multiple states. Mr. Russ also spent nearly 10 years with the West Business Unit at Red Bull North America as Vice President and General Manager and was responsible for all sales, marketing, distribution and operations for 10 western states.

“Curaleaf has always been a fast-paced, performance-driven company, and we continue to attract best-in-class talent to fill key management roles. We’re thrilled to be expanding our leadership bench to include individuals with unmatched expertise combined with a deep passion for this business,” said Lusardi.

Curaleaf Announces New Board Member

Dr. Jaswinder Grover, MD, an orthopedic and spine surgeon with 25 years of experience, joins the Curaleaf Board of Directors, replacing Dr. Steven Patierno, PhD. Dr. Patierno will remain in his role as the Chairman of the Company’s Medical Advisory Board. Dr. Grover is renowned in the medical community and is the founder and developer of the Allegiant Institute, a comprehensive referral center and clinic for the treatment of patients suffering from pain, spine, and musculoskeletal disorders and the Smoke Ranch Surgery Center and Center for Special Surgery, Joint Commission accredited centers for surgical and interventional care.

We are pleased to welcome Dr. Jaswinder Grover to the Curaleaf Board of Directors. His experience and leadership will provide an invaluable new perspective to our Board and management team.

Boris Jordan, Executive Chairman of Curaleaf

I’d like to thank Dr. Steven Patierno for his expertise and dedication to the Company over the past several years, helping Curaleaf grow from a small medical device company to one of the leading cannabis companies in the world.

About Curaleaf Holdings, Inc.

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf”) is a leading vertically integrated multi-state cannabis operator with a dominant presence on both the East and West coasts of the United States, the largest cannabis market in the world. As a high-growth cannabis company known for quality, expertise and reliability, the company and its brands, Curaleaf and Select, provide industry-leading service, product selection and accessibility across the medical and adult-use markets. Strategically positioned in highly populated, limited-license states, the company currently operates in 14 states with 53 dispensaries, 15 cultivation sites and 24 processing sites. Following the Select closing, Curaleaf will employ over 2,200 people across the United States.

For more information please visit www.curaleaf.com.

Original Press Release

February 02, 2020
 

TheAmerican Cannabis Operator Indexfell again for the tenth consecutive month, declining 9.4% to 39.22, it’s lowest close since inception:

During Q4, the index had fared better than the broader market with a 14.5% decline compared to the 20.8% loss in theGlobal Cannabis Stock Index. The index, which launched at the end of October 2018 with a value of 100, reached a closing high of 124.16 a week later before declining to 70.64 in late December. In 2019, it rallied as high as 119.53 in early April before selling off over the balance of the year. This past month, it marginally eclipsed the December 18th closing low of 39.35:

During January, the index included 19 companies, including 16 multi-state operators (MSOs) and 3 focused solely on CBD extracted from industrial hemp. Several MSOs are pursuing CBD strategies apart from their state-licensed cannabis businesses, giving the index additional exposure to that market beyond the pure-plays. Three companies managed double-digit gains, while seven posted double-digit losses, including three that lost more than 25% of their value:

The four best performing stocks were Liberty Health Sciences (CSE: LHS) (OTC: LHSIF), Curaleaf Holdings (CSE: CURA) (OTC: CURLF), TerrAscend (CSE: TER) (OTC: TRSSF) and Vireo Health (CSE: VREO) (OTC: VREOF).Liberty Health, up 18%, rallied into its earnings release near the end of the month and held those gains, with the stock having doubled off of its lows in the summers. The fiscal Q3 report showed strong revenue growth in its Florida operations with a 15% operating profit margin. Curaleaf, up 13%, closed the acquisition of Acres in Nevada, locked down a $300 million debt facility at 13% for four years, extended lock-ups on key shareholders and shared an updated time-line on pending acquisitions. TerrAscend, up 10%, named its Executive Chairman as CEO, walked away from a Nevada acquisition inked almost a year ago, won a processing license in Utah, began cultivation in New Jersey and closed an upsized $33.5 million private placement of equity and warrants. Vireo Health, up 10%, outperformed for the second consecutive month, perhaps bolstered by the prospects of legalization in New York.

The four worst performing stocks were cbdMD(NYSE American: YCBD),Green Growth Brands(CSE: GGB) (OTC: GGBXF), MariMed (OTC: MRMD) and Flower One (CSE: FONE) (OTC: FLOOF). Green Growth Brands and cbdMD were the two worst performers last month as well, with both leveraged to CBD. cbdMD, down 54%, was pressured by a capital raise that took place at $1.00 per share, a big discount to where it had been trading in advance. There were no significant news reports for Green Growth Brands, down 42%, which is due to report its financials later this month. Marimed, down 32%, is also heavily exposed to CBD through its large stake in GenCanna, which is facing potential bankruptcy. Marimed also has extensive commercial relations with GenCanna. Flower One, down 23%, gave up strong gains from December that followed completion of a capital raise.

For February, the number of names in the index will will increase to 20 with the return of CBD producerElixinol Global (ASX: EXL) (OTC: ELLXF), which qualified again after a pick up in its daily trading.

In the next monthly review, we will summarize the performance for February and discuss any additions or deletions. Be sure to bookmark the page to stay current on American cannabis operators stock price movements within the day or from day-to-day.

February 02, 2020
 

Canadian licensed producers experienced their tenth consecutive monthly decline during January, with theCanadian Cannabis LP Indexfalling 3.1% to 381.71:

The index remains substantially below theall-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. It closed the month near its new 52-week low set on January 10th at 371.07, a level not seen since September 2017, and ended the month in the red after declining 44.1% in 2019:

The index, which included 41 publicly-traded licensed producers that traded in Canada at the end of December, with equal weighting, is rebalanced monthly. Each of the members is also included in a sub-index, with 9 in the Canadian Cannabis LP Tier 1 Index, 6 in the Canadian Cannabis LP Tier 2 Index and 26 in the Canadian Cannabis LP Tier 3 Index during the month. Please note that at the end of 2019 we began excluding companies with a price below C$0.20 unless they generate quarterly industry revenue in excess of C$1 million.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$10 million per quarter (in 2018, we used C$4 million as the hurdle), showed relative weakness as they fell 8.8% to 585.67, which followed a 2019 decline of 38.5%, when it ended the year at 642.23. This group includedAphria(TSX: APHA) (NYSE: APHA),Aurora Cannabis(TSX: ACB) (NYSE: ACB),Canopy Growth(TSX: WEED) (NYSE: CGC),Cronos Group(TSX: CRON) (NASDAQ: CRON),HEXO Corp(TSX: HEXO) (NYSE American: HEXO),MediPharm Labs(TSX: LABS) (OTC: MEDIF),Organigram(TSXV: OGI) (NASDAQ: OGI),Supreme Cannabis(TSX: FIRE) (OTC: SPRWF) andValens Company(TSXV: VGW) (CSE: VGWCF). The performance was mixed within this group, with MediPharm Labs, Supreme Cannabis and HEXO Corp all declining more than 19%. Canopy Growth and Organigram were the only names to post gains.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$2.5 million and C$10 million, rose 1.7%, outperforming the broader market for the second consecutive month as it closed at 579.87. In 2019, it lost 44.3% in 2019 after closing at 569.54. This group includedDelta 9(TSXV: DN) (OTC: VNRDF),Emerald Health(TSXV: EMH) (OTC: EMHTF)TerrAscend(CSE: TER) (OTC: TRSSF),VIVO Cannabis(TSX: VIVO) (OTC: VVCIF),WeedMD(TSXV: WMD) (OTC: WDDMF) and Zenabis Global(TSX: ZENA) (OTC: ZBISF). VIVO Cannabis, which declined 71% in 2019, posted a gain of 61% to lead Tier 2. TerrAscend was the only other gainer. Zenabis declined 27%, while Delta 9 and WeedMD posted double-digit declines as well.

Tier 3

Tier 3, which included the 31 qualifying LPs that generate cannabis-related quarterly sales less than C$2.5 million, declined 2.2% as it closed at 94.63. It ended at 96.76 in 2019, declining 45.0%. Four Tier 3 companies produced returns in excess of 20%, while five dropped by more than 20%.

The returns for the overall sector varied greatly, with 5 names posting double-digit returns, while 8 declined by more than 20%, for a median return of -9.5%:

For February, the overall index will have 36 constituents, as we have removed 5 names that no longer qualify for inclusion due to their price being below C$0.20 and their quarterly industry revenue not meeting the minimum requirement of C$1 million for stocks that don’t meet the price minimum. The stocks removed included Eve & Co (TSXV: EVE) (OTC: EEVVF), Invictus (TSXV: GENE) (OTC: IVITF), MJardin (CSE: MJAR) (OTC: MJARF), RMMI Corp (CWE: RMMI) and Sproutly (CSE: SPR) (OTC:SRUTF). Note that the date for making changes to the index was 01/29.

In the next monthly review, we will summarize the performance for January and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

February 02, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up toreceive a copy in your inbox each Sunday morning.

Friends,

In mid-February, some of the largest Canadian LPs by market capitalization and/or revenue will report financials for the December quarter, including Aurora Cannabis, Canopy Growth, Cronos Group and Supreme Cannabis. We think this will be a critical quarter in some regards, as it will be important to show signs of better cost controls and at least stabilization of revenue after recent sequential declines. We expect the reports for the March quarter will look better than the December quarter from a revenue perspective, as the contribution from the new product formats that began shipping in December is likely to be immaterial but more substantial as this current quarter plays out.

The Canopy Growth call could set the tone for the overall market given its leadership position in revenue and market cap. This will be new CEO David Klein’s first time to address shareholders and analysts, and he could use the platform to announce major operational changes or to set expectations for the company’s next fiscal year, which begins on April 1st. Similarly, Aurora Cannabis was very quiet in January, releasing not a single press release. The company is likely to address recent management changes as well as its balance sheet liquidity.

Trying to predict the market reaction is challenging. Aphria, for example, reported its fiscal Q2 numbers (November quarter) in January and rallied despite missing projections and lowering its outlook. At the same time, Organigram beat expectations and rallied dramatically. From our perspective, investors are very cautious and are reacting favorably to even slightly disappointing news, as they have become accustomed to large disappointments over the recent quarters. When we look at the price action of the New Cannabis VenturesCanadian Cannabis LP Tier 1 Index, which includes the four companies reporting in February that have announced reporting dates and a total of the 9 companies generating in excess of C$10 million revenue per quarter, we see what looks like a bottoming market that seems to reflect that the worst is now behind us after a 71% decline from March to November’s low:


While we think the near-term reports could be mixed, we expect the tone to improve substantially when the MSOs begin to report in March and April. For companies with fiscal years ending in December, filings aren’t due until the end of March for TSX-listed companies or those who are regulated primarily by the SEC, which applies mainly to Canadian LPs. For companies with a primary listing on the TSX Venture or the CSE, which includes the MSOs, the filings aren’t due until the end of April, which makes for an elongated earnings season that will start up again just days after the end of the December reports, as March quarterly reports are due in May. As always, follow along the NCVCannabis Earnings Conference Call Calendarto stay on top of when companies are hosting calls.


Independent adult-use cannabis retailer Fire & Flower advanced revenue 24% during its fiscal Q3 compared to the prior quarter, with revenue exceeding expectations. The company has demonstrated discipline in achieving targets given to investorsby exceeding their goal of 45 retail stores (now 46) opened by February, 2020.Through a recent landmarkstrategic investment for the company with Canadian multinational operator Alimentation Couche-Tard Inc., Fire & Flowerhas set its sights on responsibility scaling retail stores as new cannabis markets emerge.

Get up to speed by visiting theFlower & Flower Holdings Investor Dashboardthat we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


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Sincerely,

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January 31, 2020
 
The first recreational marijuana store in Boston may open as early as next month, according to a newspaper report
January 31, 2020
 
Cannabis executives, professionals and financiers can expect expanding legal marijuana markets, for both medical and recreational sides, to have an impact
January 31, 2020
 

BOULDER, CO, Jan. 31, 2020 /PRNewswire/ – Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) (TSX:CWEB,OTCQX:CWBHF), the market leader in hemp CBD extract products, today announced management appointments reflecting the Company’s distinguished cultivation excellence, as well as its increased activities in public and regulatory affairs, sciences, data and sustainability.

Jared Stanley, Company Co-Founder and Vice President of Cultivation Operations, has been promoted to the newly created role of Chief Cultivation Officer, reporting directly to the Chief Executive Officer, Deanie Elsner. Over the past 6 years, Mr. Stanley has established cultivation excellence for the Company with industry leading expertise. The appointment reflects Mr. Stanley’s successful oversight in the execution of every step of the cultivation process. Cultivation is a critical component of the Charlotte’s Web supply chain that ensures consistency of high-quality products consumers have come to rely on.

I am very grateful for this recognition. Cultivation and genetics are the foundation of Charlotte’s Web and I am thrilled to be leading it for the organization I helped create. It is an area that we have learned to excel in, and our world-class agriculture division continues to cultivate new cannabinoid rich hemp and the higher quality CBD that consumers trust.

Jared Stanley, Chief Cultivation Officer

Kelly Shea has joined the Company in the newly created role of Senior Vice President of Government Affairs & Corporate Communications, overseeing Federal and State Government Relations, Corporate Social Responsibility, Communications, and Customer Education. Ms. Shea comes to the Company from Danone North America (formerly WhiteWave), where she employed her strong knowledge of agriculture and the legislative environment to advance policies for farmers and food manufacturers to transform the Organic dairy category.

Much of our growth is heavily influenced by legislative and regulatory decisions and Kelly brings tremendous experience in influencing external environments to embrace new categories.

Deanie Elsner, Chief Executive Officer of Charlotte’s Web

Kelly’s extensive leadership with organic production and compliance is also a great asset in our ambitions for organic certifications. We employ organic methods on all of our acres with over half our 2019 harvest achieving organic certification.

Paul Lanham, Chief Data, IT and ECommerce Officer, will now report into Deanie Elsner, Chief Executive Officer. Mr. Lanham, oversees the business analytics, digital strategy, and direct-to-the-consumer ecommerce business to bring visibility to operations, enabling better reach and customer service.

Chief Operating Officer, Stephen Lermer, is leaving the Company effective January 31, 2020, returning to his home in Central America to be with family where he will pursue regional opportunities. The Company’s vertically integrated supply chain teams assembled under Mr. Lermer will continue their work under the oversight of Chief Financial Officer, Russ Hammer until the new operations leader is announced. The Company extends its gratitude to Mr. Lermer for the competent teams he has built.

“We thank Stephen for his contributions and wish him the best in his future endeavors,” said Deanie Elsner, Chief Executive Officer of Charlotte’s Web.

About Charlotte’s Web Holdings, Inc.

Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website at www.CharlottesWeb.com. The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging good farming practices, and supporting U.S. farming communities.

Charlotte’s Web is a socially conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration for how its efforts affect its employees, customers, the environment, and the communities where its employees live and where it does business, while maximizing profits and strengthening its brands. The Company’s management believes that socially oriented actions have a positive impact on the Company, its employees and its shareholders. Charlotte’s Web donates a portion of its pre-tax earnings to charitable organizations.

Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol “CWEB” and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol “CWBHF”. As of January 1, 2020, Charlotte’s Web had 67,418,174 Common Shares outstanding and 95,342.49 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 105,555,170 Common Shares outstanding.

Original Press Release

January 31, 2020
 

KushCo Holdings to Offer Equipment Financing to Network of Thousands of Cannabis and CBD Operators by Acquiring Interest in Xtraction Services

Company’s Strategic Partnership Includes 19.9% Ownership Interest in Xtraction Services

CYPRESS, CA / ACCESSWIRE/January 31, 2020 /KushCo Holdings, Inc. (OTCQX:KSHB) (”KushCo” or the ”Company”), the premier producer of ancillary products and services to the legal cannabis and CBD industries, has partnered with Xtraction Services Holding Corp. (CSE:XS)(OTCQB:XSHLF) (“Xtraction Services” or “XS”), a rapidly growing specialty finance company that provides equipment leasing solutions to owners and operators of cannabis and hemp companies in the United States, to offer equipment financing to KushCo’s network of thousands of compliant cannabis and CBD operators.

Founded in 2017, Xtraction Services specializes in providing equipment financing solutions to cultivators, oil processors, manufacturers, and testing laboratories, among others. The company also provides a full range of consulting services, including equipment selection and procurement through its network of preferred vendor partnerships with original equipment manufacturers (OEMs) and equipment distributors. Along with a comprehensive suite of on-site support services, Xtraction Services is able to provide a complete end-to-end solution for the legal cannabis and hemp industries, which have lacked traditional sources of capital since inception.

For the past several months, we have been evaluating ways in which we can successfully enter the equipment financing arena, which we identified early on as being another growth driver and margin accretive business that can significantly complement our existing ecosystem of ancillary products and services.


Nick Kovacevich, KushCo’s Co-founder, Chief Executive Officer, and Chairman

After much due diligence and internal review, we realized that an investment in and partnership with Xtraction Services-who has already built a robust equipment financing platform, including relationships with more than 70 OEMs and distributors across the laboratory, testing, processing, and extraction space-is the best option for KushCo and our customers.

“We can now not only indirectly offer our customers the equipment financing solutions they have been requesting but also, in the case of CBD, directly facilitate the delivery of the hemp biomass that will be used in the extraction process as well as delivery of the offtake products to our network of brands whom we are helping place into mainstream retail. Altogether, this strategic move represents an excellent entry point to provide highly demanded equipment financing solutions to our customers, generate attractive recurring revenue streams and higher margins, and cross-sell our customer base even further to earn a bigger share of every transaction in the legal cannabis and CBD industries,” continued Mr. Kovacevich.

David Kivitz, Xtraction Services’ Chief Executive Officer, added: “Since 2017, we have been able to leverage our extensive experience in specialty finance, underwriting, and cannabis and hemp oil processing to provide our customers with much-needed equipment financing solutions that can reduce the need for excessive capital expenditures and start-up costs. Whether it’s for extraction, trimming, or testing machines, these customers have increasingly been turning to us to finance and, in some cases, to free up incremental cash to grow their businesses.KushCo represents an ideal partner for Xtraction Services largely due to its deep and robust customer network that is continually seeking products and services complementary to equipment financing, from securing compliant hemp biomass, hydrocarbons and solvents critical to the extraction process, to moving the finished products into a wide array of distribution channels, including to many of the brands KushCo regularly works with across the country.”

We are truly excited to combine our collective strengths in equipment financing and deep customer relationships to make a substantial impact in this underappreciated yet essential step in our industry’s value chain.

David Kivitz, Xtraction Services’ Chief Executive Officer

Under the terms of the agreement, KushCo will receive 19.9% of the basic outstanding equity interests of Xtraction Services, on an as-converted basis, in the form of Proportionate Voting Shares (the “XS Shares”). Upon the closing of the transaction, the Company will pay Xtraction Services shares of KushCo whose value shall be equivalent to 19.9% of Xtraction Services’ market capitalization, assuming conversion of the XS shares into subordinate voting shares.

In addition, KushCo and Xtraction Services will enter into a strategic partnership to facilitate long-term cooperation and development of business opportunities, including participation in joint marketing and promotional campaigns, as well as rights of first refusal to both parties for the delivery of each company’s products and services to their respective customers.

About KushCo Holdings

KushCo Holdings, Inc. (OTCQX:KSHB) (www.kushco.com) is the premier producer of ancillary products and services to the legal cannabis and CBD industries. KushCo Holdings’ subsidiaries and brands provide product quality, exceptional customer service, compliance knowledge and a local presence in serving its diverse customer base.

Founded in 2010, KushCo Holdings has now sold more than 1 billion units to growers, processors and producers across North America, South America, and Europe.

The Company has been featured in media nationwide, including CNBC, Fox News, Yahoo Finance, Cheddar, Los Angeles Times, TheStreet.com, and Entrepreneur, Inc Magazine. While KushCo Holdings provides products and solutions to customers in the cannabis and CBD industries, it has no direct involvement with the cannabis plant or any products that contain THC.

For more information, visitwww.kushco.comor call (888) 920-5874.

KushCo Holdings Contact

Investor Contact:

Najim Mostamand, CFA
Director of Investor Relations
714-539-7653
ir@kushco.com

Original press release

January 31, 2020
 

Jushi Holdings Inc. Announces Upsizing and Closing of US$47 Million Debt Financing

Total financing is upsized to approximately US$47 million as a result of participation by new investors, additional existing Jushi shareholders and exchanged debt

BOCA RATON, Fla., Jan. 31, 2020 /CNW/ — Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a globally-focused, multi-state cannabis and hemp operator, is pleased to announce the receipt of $35.65 million in proceeds and $9.56m of exchanged debt in connection with the Company’s previously announced debt financing.

We are pleased with the upsizing of our financing providing working capital that will allow Jushi to continue making progress on its growth objectives and expansion efforts into 2020 and beyond. This capital will support our continued investment in each territory we are currently operating in, positioning Jushi to achieve US$200 to $250 million in revenue in 2021.

Jim Cacioppo, Chairman and CEO of Jushi Holdings Inc.

Investors were given two financing structures. The first structure was a senior secured promissory notes (“Warrant Notes”) that will mature on January 15, 2023, will bear interest at 10.0% per annum, payable in cash quarterly, and are issued with warrants (“Warrants”) to acquire Class B Subordinate Voting Shares of the Company at 75% coverage. The Warrants have an expiration date of December 23, 2024, and an exercise price of ~US$1.58 (~CAD$2.08 as of December 23, 2019). The second structure was original issue discount senior secured promissory notes (“OID Notes”) maturing on January 15, 2023. The OID Notes will bear interest at 10.0% per annum, payable in cash quarterly. The combined annual yield on the OID Notes totals 17%. In addition to the maturity dates, both structures have the same key terms. The Company’s obligations under both the Warrant Notes and the OID Notes are secured by the assets of the Company and certain of its Subsidiaries (subject to certain exclusions) and are guaranteed by certain Subsidiaries.

To date, Jushi has received cash proceeds of US$35.65m for the debt financing. Additionally, US$9.56m of debt assumed in Jushi Inc’s acquisition of TGS Illinois Holdings, Inc. has been exchanged into the Warrant Notes with a slightly different redemption right (subject to an unrelated contingency). Including this exchanged debt, the total debt issued in Jushi’s debt financing is approximately US$47 million.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Jushi Holdings Inc.

We are a globally focused cannabis and hemp company led by an industry leading management team. In the United States Jushi is focused on building a multi-state portfolio of branded cannabis and hemp-derived assets through opportunistic acquisitions, distressed workouts and competitive applications. Jushi strives to maximize shareholder value while delivering high quality products across all levels of the cannabis and hemp ecosystem. For more information please visit www.jushico.com or our social media channels, Instagram, Facebook, Twitter and LinkedIn.

Original Press Release

January 30, 2020
 

New product line includes five oral spray options to best fit the needs of every patient

MINNEAPOLIS, Jan. 30, 2020 /PRNewswire/ — Minnesota Medical Solutions (“MinnMed” or “the Company”) today announced that the Company has introduced a new product line of flavored oral sprays. MinnMed Oral Sprays will be offered in the most diverse range currently available in Minnesota.

MinnMed’s new oral sprays are a direct result of patients calling for a variety of medical cannabis products that are convenient and simple to use. Many medical cannabis patients require a fast and leveled onset of relief that pure cannabis oils can provide. At MinnMed, we pride ourselves in providing our patients with a diverse range of cannabis options to best suit their specific needs.

MinnMed Founder, Kyle Kingsley, M.D.

MinnMed is the only licensed cannabis producer in the State of Minnesota to offer patients five different flavored oral spray options. Each of the oral sprays are made with the Company’s whole plant concentrated oil, which produces highly purified cannabis oils to ensure product safety. The new product line is available in the most popular colors of the Vireo Spectrum with ratios ranging from THC-dominant to CBD-dominant. With the help of a licensed MinnMed pharmacist, patients will determine which formulation and dosage strategy will most effectively help their qualifying medical condition.

“MinnMed is a physician-led, patient focused company that is committed to providing Minnesotans with the highest quality cannabis-based medicine through the state’s medical cannabis program,” said Gary Starr, M.D., MinnMed Deputy CEO. “In addition to the recent launch of a new line of distillate cannabis products, we are excited to offer our patients a full line of convenient oral spray products.”

The launch of oral spray cannabis products follows other recent announcements by MinnMed to make medical cannabis more accessible and affordable for Minnesotans. MinnMed recently announced substantial price cuts on many medical cannabis products, including a new line of distillate cannabis products, by as much as 30% for all patients. In addition, MinnMed is focused on attracting new patients to the medical cannabis program by providing a 50% discount for all first-time patients on purchases up to $200. For more information, please visit www.minnmed.com.

About Minnesota Medical Solutions

Minnesota Medical Solutions (“MinnMed”) is one of two licensed medical cannabis companies in Minnesota. MinnMed operates four Cannabis Patient Centers across the state and a greenhouse facility near Otsego, MN. MinnMed is a subsidiary of Vireo Health International, Inc. (“Vireo”). Vireo’s mission is to build the cannabis company of the future by bringing the best of medicine, engineering and science to the cannabis industry. Vireo’s physician-led team of more than 400 employees provides best-in-class cannabis products and customer experience. For more information about MinnMed, please visit www.minnmed.com.

Original press release

January 30, 2020
 

ThePublic Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5 million per quarter (C$9.9 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR to be considered for inclusion.Please note that we raised the minimum quarterly revenue in May from US$2.5 million and from US$5.0 million in October.

45 companies currently qualify for inclusion, with 29 filing in U.S dollars and 16 in the Canadian currency, which is the same as when we reported at the end of December.

In May, we began to include an additional metric, Adjusted Operating Income, as wedetailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials.

One trend we have observed is that many of the companies are now providingpro forma revenueas well, which is an attempt to more accurately portray the operations by taking into account the results of closed and pending acquisitions as the multi-state operator (MSO) space rapidly consolidates. Our rankings include only actual reported revenue.

For companies that report in U.S. dollars, only KushCo Holdings (OTC: KSHB) provided updated financials during January. The company saw the vaping crisis take a toll in the near-term, as revenue dipped 26% during its fiscal Q1 ending November 30th from the prior quarter, though sales still grew 38% organically from the prior year. The company reaffirmed the guidance it had previously provided in early November for FY20 revenue to be in the range of $230-250 million.

American Dollar Reporting Public Cannabis Company Revenue Tracker

During February, we expect reports from Acreage Holdings (CSE: ACRG) (OTC: ACRGF), AYR Strategies (CSE: AYR) (OTC: AYRSF), GW Pharma (NASDAQ: GWPH) and MedMen Enterprises (CSE: MMEN) (OTC: MMNFF). Acreage has scheduled a call for its Q4 financials on February 26th, while AYR Strategies will discuss its Q4 financials the following day. GW Pharma pre-announced its Q4 revenue earlier this month, with its preliminary estimate that it will be $108 million, which would represent growth of 19% sequentially. A year ago, during a quarter that marked the launch of Epidiolex late in the quarter, the company generated revenue of $6.65 million.The company will host a call, as yet unscheduled, on February 25th. MedMen will report its fiscal 2020 Q2 after the close on February 26th.

Of the companies that report in Canadian dollars, LPs Aphria (TSX: APHA) (NYSE: APHA) and Organigram (TSX: OGI) (NASDAQ: OGI), Florida operatorLiberty Health Sciences (CSE: LHS) (OTC: LHSIF)andNational Access Cannabis(TSXV: META) (OTC: NACNF) provided financial updates during January. Aphria fell short of expectations for revenue of C$130 million in its fiscal Q2, with the total of C$120.6 million including C$33.7 million of cannabis revenue and pharmaceutical distribution representing the balance at C$86.4 million. The company grew cannabis revenue sequentially by 9%. For the fiscal year ending in May, Aphria reduced revenue and EBITDA guidance to C$575-625 million and C$35-42 million, respectively. Previiously, the company had forecast revenue to be C$650-700 million, with EBITDA at C$88-95 million. Organigram’s Q1 revenue sharply exceeded expectations of C$21.3 million as the company resumed growth after a weak Q4. Wholesale revenue accounted for about 36% of its overall revenue. Liberty Health continued its strong growth, which was driven by an increase in the number of dispensaries. The company accelerated its profitability from the prior quarter, with adjusted operating earnings equaling about 15% of sales. National Access (dba Meta Growth) had experienced flat sequential revenue growth in its fiscal Q4 ending August 31st, and, despite having more stores open during its fiscal Q1 ending November 30th, the company saw revenue decline by 7% as its operating loss expanded.

Canadian Dollar Reporting Public Cannabis Company Revenue Tracker

During February, we expect financial updates from LPs Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth(TSX: WEED) (NYSE: CGC), Cronos Group (TSX: CRON) (NASDAQ: CRON) and Supreme Cannabis (TSX: FIRE) (OTC: SPRWF). Aurora Cannabis, according toSentieo, is expected to see revenue expand to C$81 million in its fiscal Q2 from the prior quarter, while Canopy Growth is expected to maintain the leadership among LPs with fiscal Q3 revenue reaching a record C$104 million. Neither company has scheduled their conference calls yet. Analysts project Q4 revenue for Cronos Group to have been $17.4 million, which would represent growth of 37% from the prior quarter. The company has scheduled a call for February 27th. Supreme Cannabis is expected to have generated revenue of $11 million in its fiscal Q2, similar to the results from its first quarter. The company will report on February 13th.

Visit thePublic Cannabis Company Revenue Trackerto track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library ofRevenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update theCannabis Investor Earnings Conference Call Calendar.

January 30, 2020
 

Sundial Announces Departure of CEO and other Leadership Changes and Optimization Initiatives

CALGARY,Jan. 30, 2020/CNW/ – Sundial Growers Inc. (Nasdaq: SNDL) (“Sundial” or “the Company”) announces certain changes to its executive team and board of directors (the “Board”) as described below.

Board of Directors and Executive Team Changes

  • Torsten Kuenzlen has resigned as the Company’s Chief Executive Officer (“CEO”) and will step down as a director, effective immediately, to pursue other interests;
  • Zach George, currently a member of Sundial’s Board, has been appointed as CEO and will continue as a director;
  • Ted Hellardhas stepped down from his role as Executive Chairman, but will continue to serve on the Board, and as Chair of the Mergers and Acquisitions Committee;
  • Brian Harriman, Sundial’s Chief Operating Officer (“COO”), will be leaving Sundial and his portfolio will be transitioned toAndrew Stordeur; and,
  • Andrew Stordeur, currently President of Sundial’s Canadian operations, will be appointed as President and COO in recognition of his expanded role.

Sundial is committed to continuing to implement strong corporate governance practices throughout the organization. In addition, the Board will continue to evaluate future opportunities to further strengthen the Company and position it for long-term growth and value creation. Sundial’s management team is committed to the long-term success of the Company and has the extensive operational, marketing and business experience needed to maintain its position as a leader in the industry.

Greg Mills, Chairman of the Board, said, “We are extremely fortunate to have Mr. George join us as CEO. His successful track record for effecting corporate change through increased efficiency and operational improvements, along with his capital markets experience, will help drive the next chapter for Sundial. We are also pleased to announce the promotion ofAndrew Stordeurto President and COO. His leadership and strong background in the consumer-packaged goods sector are critical to Sundial and his promotion furthers our efforts to streamline the organization.”

I look forward to working with the management team at Sundial. Sundial’s talent, state-of-the-art facilities and disciplined consumer product focus will be the drivers of its future success.

Zach George, Sundial’s incoming CEO

As the market evolves, these attributes, along with our flexible operating structure, position us for long-term growth and sustainable value creation for our shareholders.

Further details on Mr. George’s and Mr. Stordeur’s experience can be found below.

Optimization Initiatives

In response to slower than expected regulatory approvals of new stores and delays in some cannabis 2.0 products, Sundial has implemented several streamlining and efficiency initiatives to position the Company for long-term, sustainable growth. These initiatives include enhancement of facility workflows and processes, realignment of product lines and product formats to areas of stronger demand, workforce optimization and a heightened discipline in cost management. While industry delays adversely impact Sundial’s operations in the short term, the Company expects to see a resumption of strong growth across the industry when the regulatory bottlenecks are removed and approvals for new products are granted.

The efficiency improvements and cost-cutting initiatives are expected to result in an annualized cost savings of approximatelyCAD$10-15 million for fiscal 2020. A substantial portion of these initiatives have been implemented, with cost reductions expected to be realized beginning in the first quarter of 2020. As part of the leadership team’s focus on improved efficiency, cost management and long-term sustainability, the Company will continue to monitor operations to ensure it remains responsive in the current environment.

Sundial is committed to providing the highest quality products with processes and practices that meet or exceed the regulatory requirements. The Company does not expect its production levels to be affected by these changes.

Executive Biographies

Zachary George

Mr. George brings a wealth of experience to Sundial, having spent more than 15 years evaluating catalyst-based investment opportunities across the capital structure of North American companies with a focus on real assets. Mr. George has worked in a management capacity, including as a chief executive officer, with numerous corporate boards to turn around operations, affect corporate action and implement governance policies in order to maximize shareholder value.

Mr. George co-founded the alternative investment platform FrontFour Capital Group LLC and currently serves as a trustee and director on the boards of Cominar REIT and Trez Capital Junior MIC. He previously served as chairman of the boards of FAM REIT and Huntingdon Capital Corp., as the lead independent director of both Cornell Companies Inc. and PW Eagle Inc., and on the boards of Allied Defense Group Inc. and IAT Air Cargo Facilities Income Fund.

Andrew Stordeur

Mr. Stordeur joined the Company as Chief Commercial Officer inMarch 2018and became President,Canadain May 2019. Mr. Stordeur has over 15 years of experience working in the fast-moving consumer goods industry both domestically and internationally, contributing to the success of well-known brands like Molson Coors Beverage Company, Mars Canada Inc., and other international consumer packaged goods companies. Before joining Sundial, Mr. Stordeur was the Chief Sales and Customer Officer at the Molson Coors Beverage Company and also spent time in senior commercial roles at Mars Canada.

For more information about Sundial, visitwww.sndlgroup.comand follow us on Twitter@SundialCannabis, Instagram@SundialCannabis, LinkedIn@SundialCannabisand Facebook@SundialCommunity.

About Sundial Growers Inc.

Sundial proudly crafts pioneering cannabis brands to Heal, Help and Play:

  • Heal – cannabis products used as prescription medicine
  • Help – cannabis products that strive to promote health and wellness through CBD
  • Play – cannabis products to enhance social, spiritual and recreational occasions

Sundial has facilities inCanadaand theUnited Kingdomand provides quality and consistent products consumers can trust.

InCanada, we grow ‘craft-at-scale’ cannabis using purpose-built modular facilities and award-winning genetics. Sundial’s flagship production facility is located inOlds, Albertawith a second facility inRocky View,Alberta. We have commenced construction of our next purpose-built facility inMerritt, British Columbia.

In theUnited Kingdom, we grow high-quality traceable plants, including hemp, ornamental flowers and edible herbs, in over 1.5 million square feet of state-of-the-art environmentally friendly, indoor facilities. Bridge Farm has three facilities in Spalding with another currently under construction.

Original press release

January 29, 2020
 

Its been less than two years since Oklahoma legalized medical cannabis, but already the number of card-carrying medical cannabis patients has exceeded those in many states that have had programs much longer. That is due, in part, to the fact that Oklahoma has one of the most liberal medical cannabis laws in the country. Recognizing this, there are now efforts underway by some state lawmakers to reign in the burgeoning industry through legislation, while, at the same time, efforts are underway to expand legalization to adult-use cannabis. In this review, we take a look at the history of Oklahomas cannabis program, the existing marketplace and potential for future growth.

History

Passed by a vote of 57% to 43% in June 2018 via a ballot initiative (SQ 788), the Oklahoma Medical Marijuana and Patient Protection Act legalized the licensed use, sale and growth of marijuana for medicinal purposes. Unlike other states that created limits on what conditions qualified for use, Oklahomas law allows doctors to prescribe cannabis for any condition.

In addition, the amount and forms of cannabis that licensed patients can possess in Oklahoma is also considerably more liberal than most other states. The law allows patients with a license to legally possess up to three ounces on their person; up to six mature marijuana plants; six seedling plants; one ounce of concentrated marijuana; up to 72 ounces of edible marijuana; and up to 8 ounces in their residence. Possession of up to 1.5 ounces by those who can state a medical condition, but who do not have a state-issued license, are considered to have committed a misdemeanor offense and can be fined up to $400.

Existing Market

It is estimated that about 5 percent of Oklahomas nearly 4 million residents has a medical marijuana license, a rate of participation that far exceeds the experience in other states due to the ease of obtaining a medical card and the large number of dispensaries, as detailed below. Oklahomas Medical Marijuana Authority has approved an average of 3,500 patient applications since the program began accepting them in August 2018. As of Jan. 20, the Authority reported having approved the following licenses:

Oklahoma is No. 2 in the nation with 15.6 cannabis dispensaries per 100,000 residents, second only to Oregon, according to Verilife. There are few barriers to entry. Nearly anyone with $2,500 for a license can open a dispensary and every form of cannabis can be sold: from raw flower to topical creams, oils and gels to vaporization and patches.

Retail sales reached more than $345 million last year, and state tax revenue was $55 million, according to the Oklahoma Tax Commission. The state assesses a seven percent excise tax on medical marijuana, in addition to state and local sales taxes.

While many of the players who entered the Oklahoma cannabis market are small private companies with dispensary names ranging from Doobies Dispensary to simply Dragon, there are some public companies either already doing business there, or planning to enter the market. Among them are:

GrowGeneration (NASDAQ; GRWG), a chain of specialty retail hydroponic and organic garden centers has three, soon to be four, locations in Oklahoma. In the quarter ending September 30th, the company generated sales of $3.4 million in Oklahoma, representing 15% of its revenue for the quarter and accounting for 40% of its overall growth from a year ago, when it had no revenue from the state.

Growgeneration’s Oklahoma City Store

Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF), will, through the planned acquisition of GR Companies, (dba Grassroots Cannabis) get a foothold in the Oklahoma market. GR Companies Oklahoma has 12 locations in the state, with some of them operating under the “Herbology” banner. That deal is expected to close this spring.

Interior of Herbology dispensary (Grassroots Cannabis) in Oklahoma City

Acreage Holdings (CSE: ACRG) (OTC: ACRGF) is another public company looking for a presence in Oklahoma. It has described plans to open one retail location in Tulsa, for which it has a license. The company stated in SEC filings it also has been approved for one grower license and one processor license in Pocasset, Oklahoma.

Earlier this month, Dixie Brands (CSE: DIXI) (OTC: DXBRF) announced that it will enter the market with an unnamed manufacturer.

In June, SLANG Worldwide (CSE: SLNG) (OTC: SLGWF) announced plans to enter the market by licensing its branded products to Elite Cultivation, includingO.penVAPE, Pressies, District Edibles, Bakked, and Magic Buzz. Elite Cultivation is run by Richard Freeman of drag racing firm Elite Motorsports.

Redbird Bioscience, a cultivation and processing facility in Stilwell, Oklahoma is ramping up for cultivation, processing, distribution and warehousing there. In an interview with New Cannabis Ventures in January, Redbirds Chairman and CEO Bill Thurman said Oklahomas referendum model has allowed for a market with broad distribution opportunities.

Future Growth

The Oklahoma medical cannabis market began with a bang. Whether that will continue is contingent upon a number of factors. First, there are efforts underway to legalize adult-use cannabis via a proposed ballot which would, of course, build on an already robust market. At the same time, those who support medical cannabis fear it would cut into their market share.

In addition, some lawmakers are looking to reign in the existing law with so-called trailer bills. For example, SB 1257 would prohibit medical marijuana from being advertised on billboards, while HB 2779 would prohibit future medical marijuana dispensaries from being located within 1,000 feet of a church or other places of worship.

Overall, the Oklahoma cannabis market is still young and the landscape is changing rapidly. Competition from, and consolidation by, some of the larger players, along with additional changes in the law likely will impact future growth, but for now it continues to be full steam ahead in Oklahoma.

January 29, 2020
 

Earlier this month, Hightimes Holding Corp., parent of High Times, revealed that it has abandoned its efforts to list on the NASDAQ, a goal it had been pursuing for since mid-2017. The company launched an offering two years ago at $11 per share through the Reg A+ process, and it reported that it would extend its Reg A+ capital raise until 4.545 million shares had been sold or until March 31st. It disclosed in an SEC filing that it recently sold 363,636 shares at $5.50 in a private placement to Ontario-based Rayray Investments (Raymond Leach, an original investor in MedReleaf), a 50% discount to where it has been selling shares.

In a shareholder letter released yesterday, Executive Chairman Adam Levin suggested that the company will continue to raise capital through the Reg A+ offering while it awaits a listing on the OTCQX rather than the NASDAQ. He admitted that the path to public trading had fallen short of the company’s expectations:

Our largest misgiving is that High Times had hoped to be public by now. But given the markets volatility in the cannabis sector, we also believe this may have been a blessing in disguise for our company and shareholders alike. We are now more focused and realigned.

Adam Levin, Executive Chairman of Hightimes Holdings

We spent this past year building our new corporate strategy, which we are excited to share. Ultimately, we believe we have found the best way to leverage our global brand and content engine to power the next steps in High Timess evolution.

Indeed, the company has shifted its strategy to become more plant-touching. It had highly praised its new CEO, media veteran Kraig Fox, when he joined as CEO in early April, but Fox left the company on December 26th. Earlier this month, it named Stormy Simon, former President of Overstock.com, as CEO, “as the company prepares to develop its physical and virtual distribution businesses.” Traditionally, the company has focused on events and media. Simon had served on the Board of Directors of Hightimes Holding Corp. for the past two years. Simon will earn a base salary of $300K per year, though it will be reduced to $215K until the company raises an additional $10 million, with the difference accrued. Her target bonus in 2020 is $225K. She was also granted the right to buy 200 shares at $11.00 and 300K shares as a grant.

On January 16th, the company announced the addition of Paul Henderson, formerly CEO of Grupo Flor, as President. Henderson will also serve as interim CFO, as CFO David Newberg had resigned on January 7th. The company also announced binding letters of intent with holders of dispensary licenses in Las Vegas and Los Angeles that will allow the company to be a cannabis retailer. Henderson’s compensation includes a salary of $300K, an annual targeted bonus of $300K, a grant of 300K shares and an option to acquire 200K shares at $11.00.

While the shift in business strategy towards being a direct cannabis company certainly precludes the company from listing on the NASDAQ, the company wasn’t eligible in any event. Its corporate presentationreveals that the company has raised only $15 million, far short of its goal two years ago to raise $50 million.

We have written extensively about the weak financials of the company in the past, and there has been no improvement. As of mid-2019, the last time it published its financials publicly, six-month revenue was just $10.7 million, with its event business declining while its publishing business expanded following the acquisitions of Dope and Culture magazines. The operating loss in the first half of the year more than doubled to $11.3 million as it used $6.1 million to fund its operations. Capital raising, at $5.5 million, fell short of its use of cash to run its operations during the first half of 2019. The company saw its shareholders equity decrease from -$39.1 million at the end of 2018 to -$44.3 million at mid-year. Its cash balance was just $12K, and its current liabilities were almost 3X its current assets, painting a clear sign of liquidity issues ahead absent more aggressive efforts to raise capital.

As of December 31, the company had 24.85 million shares outstanding and 33.67 million potentially dilutive securities (before incorporating the recent equity sale and the grants to Simon and Henderson). At $11.00, where the company has been selling its stock, the market-cap on a fully-diluted basis, exceeds $650 million, a valuation that doesn’t seem defensible, especially in light of on-going capital raises ahead that will be necessary to fund the new growth initiatives of retail stores and delivery services.

January 29, 2020
 

TORONTO, ONTARIO / ACCESSWIRE / January 28, 2020 / MPX International Corporation (“MPX International”, “MPXI” or the “Company”) (CSE:MPXI; OTC PINK: MPXOF) today reports its financial results for the fourth quarter and fiscal year ended September 30, 2019. All figures are presented in Canadian dollars unless otherwise indicated.

2019 was a transformative year for MPXI. We are no longer a Canadian company with global aspirations. Today, we are a true international company with operations under development in six countries on four continents including Canada.

W. Scott Boyes, Chairman, President and CEO of MPX International

We have made tremendous progress since commencing operations in February 2019, achieving numerous milestones integral to our long-term growth strategy. We are now extremely well positioned to continue to execute on the plan we have outlined to investors and deliver results for our shareholders.

Fourth Quarter Highlights:

  • Canveda Inc. (“Canveda”), a wholly-owned subsidiary of the Company, achieved Gold Status in its bQb-GMP and Quality System Certification audit at its Peterborough, Ontario facility (the “Canveda Facility”) and received approval from Health Canada to sell fresh and dried cannabis in accordance with Sections 11(5), 17(5) and 27 of the Cannabis Regulations
  • MPXI acquired a 20% interest in 2702148 Ontario Inc. dba KAAJENGA Cannabis (“KAAJENGA Cannabis”) securing an exclusive, worldwide, perpetual, royalty free licence to the Medical Cannabis Learning Network (the “MCLN”), a turnkey video learning and engagement platform for the cannabis industry
  • Completed the acquisition of Alphafarma Operations Limited (“Alphafarma”) and leased an EU-GMP ready facility in Mehriel, just outside of the capital city of Valletta, Malta
  • MPXI acquired the remaining interest of MPX Australia Pty Ltd. (“MPX Australia”)
  • MPXI entered into an agreement with South African-based First Growth Holdings (Pty) Ltd. to commence cultivation of medical cannabis for both domestic and export, subject to the completion of a series of agreements and receipt of a license from the South Africa Health Products Regulatory Authority (“SAPHRA”)
  • Strengthened capabilities with senior management hires of Dr. Amer Cheema (VP, Cultivation) and Nicholas Varone (Director of Extraction and Processing) and the appointment of Dr. Charles Akle to MPXI’s Medical Advisory Board
  • Featured in a BBC Documentary entitled “Legalising Cannabis: Canada’s Story:
    https://www.bbc.co.uk/news/av/newsbeat-49132155/legalising-cannabis-canada-s-story

Subsequent events:

  • MPX Australia was awarded a Cannabis Manufacture Licence and Medicinal Cannabis Licence by Australian Office of Drug Control
  • MPXI accelerated the acquisition of the remaining 80% interest of KAAJENGA Cannabis and the MCLN
  • Launched “beleaf,” a premium CBD retail experience in London, UK.
  • Further strengthened senior management team adding Karl Bartolo (GM of Malta) and appointing former British American Tobacco Board Member, Jean-Marc Levy, to its Advisory team

Additional Fiscal 2019 Highlights:

  • MPXI acquired HolyWeed, the only CBD brand officially designated “Swiss Certified Organic,” giving MPXI a premiere brand presence in Europe
  • HolyWeed received authorization to commercialize CBD products with less than 0.2% THC in Belgium
  • MPXI closed an oversubscribed non-brokered private placement for gross proceeds of $26.9 million

“Each of these milestones is significant in their own right, but combined they reflect the building momentum we have been able to achieve and are the direct result of our teams’ knowledge, expertise and dedication to responsibly growing this company,” continued Mr. Boyes. “We are establishing and rapidly developing all of the elements – cultivation, manufacturing, and distribution – to become a vertically-integrated premier global cannabis company.”

“In Canada, Canveda received its bQb-GMP manufacturing status and is now fully licensed and selling cannabis directly into the market. One the greatest drivers of growth in the medical cannabis market in Canada is patient acquisition. Our acquisition and recent launch of the MCLN, as well as our wholly-owned subsidiary, Spartan Wellness, which is dedicated to helping veterans and first responders access medical cannabis, is expected to play a significant role in this process.”

“Our operations in Europe continue to advance. Acquiring HolyWeed in the second quarter brought one of the most well-known brands in Europe under our umbrella and provided us with instant credibility. HolyWeed’s products are now distributed in Switzerland and are now also available in the UK at our London “beleaf'” location.”

“The “beleaf” retail location, which opened in central London in November of 2019, has raised our brand awareness in the UK considerably along with our inclusion in a BBC documentary on Canada’s cannabis experience that has received over one million views.”

“Development of our GMP-ready facility in Malta is continuing on schedule. Our ability to retain certain highly qualified staff there is expected to speed our ability to attain EU-GMP status and to fully develop this facility into a production hub for our Salus BioPharma products for further distribution into Europe,” continued Mr. Boyes.

“Furthermore, our recent harvest in Switzerland provides us with our greatest source of near-term revenue, with over 90 tons of Swiss-grown, single-sourced high-CBD organic biomass collected and ready for processing,” said Mr. Boyes. “The development of our extraction and processing facility in Nyon continues with operations expected to commence in the second half of this year.”

“MPXI continues to advance its operations in Australia too, with the completion of the acquisition of the remaining interest in MPX Australia and the receipt of both a Cannabis Manufacture Licence and Medical Cannabis Licence subsequent to year end,” Mr. Boyes said.

“We have accomplished each of these milestones just months after commencing operations. We are determined to recreate the definable value we created in the United States; and as evidenced by the undeniably quick progress MPX International has achieved in this relatively new company, we are continuing to drive development and growth according to plan,” concluded Mr. Boyes.

Business Update:

Canveda: Canveda’s 12,000 sq. ft facility is currently in full production and expects to produce approximately 1,200,000 grams of high-quality cannabis flower per year under its current cultivation method. It is developing its medical patient and product strategy and has commenced selling its own products directly to registered patients for medical purposes as well as all of the provincial and territorial cannabis boards and holders of a licence for sale. In order to expand flower production within the existing structure, a specialized rotary garden system (“RGS”) is expected to be introduced in one of the larger grow rooms in the later part of calendar Q1 2020. Management expects that this RGS will significantly increase the yield of flower production per square foot. If the RGS experiment is successful, similar equipment will be subsequently installed in the remaining grow rooms and the additional freed up space is expected to be used for the addition of extraction, manufacturing and packaging of cannabinoid-based tinctures, topicals, oils, concentrates, transdermal patches, and suppositories.

Medical Cannabis Learning Network: The MCLN private social network connects patients with credible information on the use of medical cannabis, offers the ability to have a virtual consultation with a qualified medical practitioner and acts as an order-entry tool for the purchase of medical cannabis products from Canveda. The MCLN and its integration with the Spartan Wellness Corporation (“Spartan Wellness”) platform is expected to play a significant role in our Canadian growth strategy this coming year.

Spartan Wellness: Spartan Wellness, a wholly-owned subsidiary of MPXI, facilitates the acquisition of medicinal cannabis by Canadian military veterans and first responders. Following receipt of Canveda’s sales license on July 26, 2019, the Company is converting the Spartan Wellness patient base to patients of Canveda.

BioCannabis: BioCannabis Products Ltd. (“BioCannabis”), a wholly-owned subsidiary of the Company, submitted an application to Health Canada to become a licensed producer under Health Canada’s Marijuana for Medical Purposes Regulations in October 2014 out of a 72,342 square foot facility in Owen Sound, Ontario. BioCannabis received notice from Health Canada that its application had reached the Confirmation of Readiness stage. This stage requires the submission of an evidence package to Health Canada demonstrating that all of the rooms in the applicant’s facility are ready, fully secured and ready to function. Upon meeting these requirements, a licence will be issued.

Salus BioPharma: Salus BioPharma, a wholly-owned subsidiary of MPXI, is engaged in the development and production of pharma grade cannabidiol medicinal products, medicinal preparations and medicinal accessories. Salus BioPharma products will be produced at both the Canveda facility in Ontario and the facility in Malta.

HolyWeed: HolyWeed, a wholly-owned subsidiary of MPXI, is officially designated Swiss Certified Organic’ and produces 100% Swiss grown cannabis light/high CBD pre-rolls, dry flowers, sublingual oils and cosmetics, all compliant with Swiss regulations of <1% THC. HolyWeed products are also available for sale online and delivered by courier free-of-charge across Switzerland. HolyWeed had a successful harvest of approximately 90,000 kilograms of high-CBD, organic “cannabis-light” biomass in the fall of 2019.

MPXI is developing plans to develop an EU-GMP-grade manufacturing facility to broaden HolyWeed’s product lines of CBD extracts and isolates for both domestic sale and export and plans to open branded retail stores in Geneva and Zurich. HolyWeed was also one of the first companies to have received authorization from the government of Belgium to commercialise CBD products with THC below 0.2% throughout Belgium.

MPXI Malta: MPXI Malta Operations Ltd. (“MPXI Malta Operations”), a Maltese-company owned by MPXI (80%) and Malta-based Bortex Group (20%) was awarded a letter of intent from Malta Enterprise, the economic development agency for the Republic of Malta, to receive a license to import, extract, produce finished products and distribute cannabis and cannabis derivatives for medicinal use in Malta and export to certain international markets, in particular the EU. Upon receipt of the Licence, which is contingent on the completion and EU-GMP certification of a cannabis processing facility, MPXI will produce EU-GMP quality cannabis oils and cannabis derivative products and pursue regulated medical cannabis distribution opportunities in the European Union through its medical brand, Salus BioPharma. On August 6, 2019, MPXI Malta Property Ltd., a Maltese-company wholly-owned by MPXI Malta Operations, completed the acquisition of all outstanding shares of Alphafarma.

MPX Australia: Construction has commenced on a 47,000 square foot indoor facility leased by MPX Australia and located in Tasmania, Australia. The facility will include a high-tech plant tissue culture lab, cultivation, extraction and processing facilities. The Australian project will target the growing domestic market as well as the emerging markets in New Zealand, the rest of Oceania and Southeast Asia.

South Africa: In anticipation of the completion of definitive documentation, construction has commenced on a 53,000 sq. ft. high-tech greenhouse in the Stellenbosch region of South Africa and has applied to SAPHRA for a license to cultivate medical cannabis.

Financial Overview

The key financial measures indicated below were used by management in evaluating and assessing the performance of MPXI’s business for the fourth quarter and fiscal 2019. A more detailed discussion of these and other metrics, as well as operational events, can be found in the Company’s Financial Statements, and Management Discussion & Analysis (“MD&A”) filed on www.sedar.com.

Net Revenue

For the three months ended September 30, 2019, MPXI reported net revenue of $448,012 (three months ended September 30, 2018: $54,136). For the year ended September 30, 2019, MPXI reported revenue of $1,591,530 (year ended September 30, 2018: $64,451).

Gross Profit

Gross profit for the three months ended September 30, 2019, before adjustment for the unrealized gain in the fair value of biological assets was $449,863 which represents a gross margin of 100.4%. Gross profit after adjustment for the unrealized gain in the fair value of biological assets was $3,973,480, which represents a gross margin of 886.9% The unrealized gain in fair value of biological assets relates to cannabis plants at the Canveda facility and in Switzerland.

Gross profit for the year ended September 30, 2019, before adjustment for the unrealized gain in the fair value of biological assets was $1,299,995, which represents a gross margin of 81.7%. Gross profit after adjustment for the unrealized gain in the fair value of biological assets was $6,450,602 calculated at 405.3% of sales. The unrealized gain in fair value of biological assets relates to cannabis plants at the Canveda facility and in Switzerland.

Operating Expenses

General and administrative expenses were $3,571,378 for the three months ended September 30, 2019 as compared to $432,947 in the comparable period. General and administrative expenses increased to $8,656,714 for the year ended September 30, 2019 as compared to $958,818 in the comparable period.

The increase in general and administrative expenses for the three month and year ended September 30, 2019, as compared to the three months and year ended September 30, 2018, was primarily due to increases in salaries and benefits, consulting fees, office and general, and occupancy costs relating to the integration of Canveda, Spartan Wellness, and HolyWeed as well as costs associated with the Company’s continued growth

Professional fees increased to $1,099,369 for the three months ended September 30, 2019 as compared to $36,639 in the comparable period. Professional fees increased to $2,532,655 for the year ended September 30, 2019 as compared to $103,658 in the comparable period.

This increase in professional fees is due to the change in volume and complexity of accounting and legal services required by the Corporation driven by acquisitions and growth. These fees include expenses related to audit, advisory, legal work, government and investor relations, consulting and costs associated with the board of directors.

As part of the Company’s incentive stock option plan, the Company recognized $66,911 of share-based compensation for the three months ended September 30, 2019, as compared to $251,364 in the comparable period. The Company granted stock options to employees, directors, officers and consultants of the Company under the Stock Option Plan on February 26, 2019, May 29, 2019 and September 19, 2019. For the year ended September 30, 2019, the Company recognized $1,314,992 of share-based compensation, as compared to $466,296 in the comparable period.

Amortization and depreciation expenses increased to $2,115,099 for the three months ended September 30, 2019 as compared to $465,343 in the comparable period. Amortization and depreciation expenses increased to $2,839,984 for the year ended September 30, 2019 as compared to $597,318 in the comparable period. The increase in amortization and depreciation relates primarily to the intangible and capital assets associated with the Canveda facility.

Other income and expenses

Other expenses were $183,129 for the three months ended September 30, 2019 as compared to other expenses of $35,960 in the comparable period. Other expenses were $226,663 for the year ended September 30, 2019 as compared to other expenses of $20,348 in the comparable period.

Net (Loss) After Tax

Net loss after tax was $3,035,196 for the three months ended September 30, 2019 as compared to a loss of $1,188,516 in the comparable period. Net loss after tax was a loss of $9,378,406 for the year ended September 30, 2019 as compared to a loss of $2,105,197 in the comparable period.

Adjusted EBITDA

Adjusted EBITDA was a loss of $3,599,889 for the three months ended September 30, 2019 as compared to a loss of $490,756 in the comparable period. Adjusted EBITDA was a loss of $9,199,618 for the year ended September 30, 2019 as compared to a loss of $1,076,142 in the comparable period.

In this press release, reference is made to “EBITDA” and “Adjusted EBITDA”, which are not measures of financial performance under International Financial Reporting Standards (“IFRS”). Management defines “EBITDA” as the net loss adjusted by removing interest, tax, amortization and depreciation. Management believes “EBITDA” is a useful financial metric to assess its operating performance. Management defines “Adjusted EBITDA” as EBITDA adjusted by removing other non-recurring or non-cash items, including share-based compensation, transaction costs, non-cash consulting fees, accretion expenses, foreign exchange, the non-cash effects of accounting for biological assets, changes in the fair value of contingent consideration payable, write downs to inventory and losses on the disposal of property, plant and equipment. These metrics and measures are not recognized measures under IFRS, do not have meanings prescribed under IFRS and are as a result unlikely to be comparable to similar measures presented by other companies. Management believes adjusted EBITDA enhance an investor’s understanding of the Company’s financial and operating performance from period to period, because they exclude certain material non-cash items and certain other adjustments management believes are not reflective of the Company’s ongoing operations and performance. As such, these measures should not be considered in isolation or in lieu of review of our financial information reported under IFRS. See the Company’s September 30, 2019 MD&A for the period ended September 30, 2019 filed on SEDAR for additional information.

Cash

As of September 30, 2019, the Company had cash available of $16,356,889 up from $164,579 at September 30, 2018. The main driver for the increase was the private placement in March 2019 of $26.9 million and the $4 million USD cash as part transfer of non-US assets from MPX Bioceutical Corporation in Feb 2019.

Conference Call

The Company will host a conference call on Wednesday, January 29, 2020 at 8:30 AM EST to discuss the results.

Participant Dial-In Numbers:

Toll-Free: 1-855-327-6837
Toll / International: 1-631-891-4304
Confirmation code: 10008462.

Investors are invited to listen via webcast available on the MPXI investor section of the Company’s website at https://ir.mpxinternationalcorp.com/.

Please visit the website 15 minutes prior to the call to register, download, and install any necessary audio software. For interested individuals unable to join the conference call, a replay of the call will be available through February 12, 2020, at 1-844-512-2921 (U.S. Toll Free) or 1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 10008462. The online archive of the webcast will be available on the investor section of the Company’s website for 30 days following the call.

W. Scott Boyes, Chairman, President and Chief Executive Officer of MPXI, and David McLaren, Chief Financial Officer, will be answering shareholder questions at the conclusion of the call.

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.

For further information, please contact:

MPX International Corporation
W. Scott Boyes, Chairman, President and CEO
T: +1-416-840-3725
info@mpxinternationalcorp.com
www.mpxinternationalcorp.com

Original press release

January 28, 2020
 

EcoGen Laboratories Announces Closing of $40 Million Financing

GRAND JUNCTION, Colo., Jan. 28, 2020 /PRNewswire/ — EcoGen Laboratories (EcoGen), the leading vertically-integrated manufacturer and supplier of hemp-derived specialty ingredients, proprietary formulations, and private-label finished products in the United States, announced today the closing of a $40 million private placement.

We are very encouraged by the strong support we’ve received from the institutional marketplace. This investment is an important step forward that will allow us to further grow and expand our business.

Alexis Korybut, Co-Founder of EcoGen

Since inception in 2016, EcoGen has expanded rapidly, resulting in growth that exceeded $80 million in revenue for 2019. Poised to capitalize on a rapidly changing market, EcoGen has developed a growth strategy to support this recent raise which includes further developing facilities, focusing on research and development to increase product offerings, and expanding marketing and sales divisions to widen its global footprint.

“With engineering as a passion and also my background, the prospect of new innovation is what led me to this industry,” says Joseph Nunez, Co-Founder of EcoGen. “When we first started, we were on a mission to create a state-of-the-art process to produce exceptionally pure CBD that set the standard for the industry. We’re proud to say that goal was quickly achieved and this capital raise will allow us to expand that success into other verticals of the business.”

New technologies, advanced seeds and genetics, in addition to expanding private label finished goods, are also on the horizon for 2020.

To learn more about EcoGen Laboratories, visit https://ecogenlabs.com/.

About EcoGen Laboratories

EcoGen Laboratories (EcoGen) is the leading vertically-integrated manufacturer and supplier of hemp-derived specialty ingredients in North America. Using proprietary equipment, processes, and formulations, EcoGen has developed a broad range of the highest quality ingredients and customized formulations for a broad range of industries. Founded in 2016, EcoGen is the first seed-to-sale CBD manufacturer, known for manufacturing the purest CBD raw materials and finished products. The company is also a leader in international distribution with CBD isolate, water-soluble CBD (Nano), and THC-free CBD distillate. As the leader in hemp genetics, EcoGen promotes sustainable agriculture, using its proprietary processing and extraction technology to ensure the highest quality products at the lowest price making cannabinoids more accessible to the world.

Original press release

January 28, 2020
 

The science-focused, multi-state cannabis company partners with leading cannabis wholesale technology platform

MINNEAPOLIS, Jan. 28, 2020 /PRNewswire/ — Vireo Health International, Inc. (“Vireo” or the “Company”) (CNSX: VREO,OTCQX: VREOF), a leading physician-led, science-focused multi-state cannabis company, today announced the expansion of the Company’s partnership with Leaf Trade to provide a wholesale order and fulfillment management platform in four states where Vireo operates. Leaf Trade is an omni-channel sales platform that allows Vireo’s wholesale business to come online quickly and easily in new markets as the Company expands its operations nationally.

Vireo uses Leaf Trade to manage wholesale ordering and fulfillment in Pennsylvania, Maryland, Ohio and New York, and other states in which the Company is licensed to sell medical cannabis products to third-party dispensaries. The Leaf Trade platform provides a convenient way for dispensaries to review and purchase items from Vireo’s ever-growing line of products and brands.

Leaf Trade is a technology platform for cultivators and dispensaries who want to optimize their wholesale ordering and fulfillment process. It provides a single, standardized system to ensure operational consistency. This helps cultivators deliver for their customers, eliminate costly fulfillment errors, and stay compliant with State-based regulations.

As we continue to expand our wholesale operations, Leaf Trade’s innovative platform will enhance our sales capabilities and enable us to better serve the hundreds of dispensary customers we work with nationwide.

CEO and Founder Kyle Kingsley, M.D.

Leaf Trade has been an important partner for almost two years and we are excited to expand our partnership into new markets.

Vireo uses Leaf Trade to present their products in a one-to-one online storefront which allows dispensary operators to purchase from their mobile, tablet, or desktop computer. Lab testing results are available on each product listing, making it easy for dispensaries to understand exactly what they’re ordering and help protect patient safety.

By using Leaf Trade, Vireo no longer needs to accept orders from multiple entry points such as emails, calls, texts, website inquiries, etc. The omni-channel platform helps save time and effort for Vireo’s sales team and fulfillment departments. Leaf Trade also provides advanced sales data reporting, which enables a single, reliable source of sales figures to help develop accurate forecasts.

We are thrilled to work with a leading multi-state operator like Vireo Health. The expansion of our partnership from one state to four, and growing, is clear evidence that the Leaf Trade platform can help fuel growth for cannabis wholesalers. We look forward to continuing to grow our relationship with Vireo and helping them expand nationwide.

Leaf Trade President and Chief Revenue Officer, Michael Piermont

About Vireo Health International, Inc.

Vireo Health International, Inc.’s mission is to build the cannabis company of the future by bringing the best of medicine, engineering and science to the cannabis industry. Vireo’s physician-led team of over 400 employees provides best-in-class cannabis products and customer experience. Vireo cultivates cannabis in environmentally friendly greenhouses, manufactures pharmaceutical-grade cannabis extracts, and sells its products at both company-owned and third-party dispensaries. The Company currently is licensed in eleven markets including Arizona, Maryland, Massachusetts, Minnesota, New Mexico, New York, Nevada, Ohio, Pennsylvania, Puerto Rico, and Rhode Island. For more information about the Company, please visit www.vireohealth.com.

About Leaf Trade

Leaf Trade is the leading B2B wholesale ordering platform operating in 16 (and counting) highly-regulated cannabis markets. Leaf Trade helps licensed sellers of wholesale cannabis create an online storefront where verified dispensaries have access to all of the brands they are allowed to purchase in their respective markets. Dispensaries enjoy easily placing orders right from their mobile phones, and the sellers have all the built-in supply chain management tools that help their sales, fulfillment, and accounting teams work together to successfully process and deliver orders smoothly, all while dramatically reducing the amount of time it takes to do so. Leaf Trade specializes in custom product features and partner integrations such as seed-to-sale and accounting tools to streamline operations. To learn more about Leaf Trade, visit leaf.trade or follow us on LinkedIn, @leaftrade on Instagram, @leaf_trade on Twitter.

Original Press Release

January 28, 2020
 

Visit the TerrAscend Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

TerrAscend Announces Leadership Changes and Appoints Jason Ackerman Interim CEO
  • Michael Nashatto step down as CEO and remain on Board
  • Move solidifies Company’s emphasis on its rapidly scaling U.S. Retail, Manufacturing, and Distribution Operations

TORONTO,Jan. 28, 2020/CNW/ – TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) (“TerrAscend” or “the Company”), the first and only global cannabis company licensed for sales in the U.S.,Canada, and the EU, today announced changes to its leadership team.Jason Ackerman, Executive Chairman of the Company, has been named interim CEO, replacingMichael Nashat, who will continue to serve as a member of the Company’s Board of Directors and act as a strategic advisor to the Company. The changes are effective immediately.

As a Co-founder and leader of TerrAscend since its inception, Nashat is stepping down as the Company expands its U.S. footprint. Michael and the Company’s Board have agreed that a U.S.-based leadership and operations team is necessary to align the Company’s efforts and resources across the rapidly expanding U.S. market. Both Michael and the Board are confident thatJason Ackermanis ready to lead those efforts given his strength in operations and discipline in building businesses.

While it was a difficult decision, I believe given TerrAscend’s premier operating assets inthe United States, it is now time for me to step into an advisory role and let new U.S.-based management guide TerrAscend as they expand and scale.

Michael Nashat, Strategic Advisor

“Jason’s experience in omnichannel retail, distribution and operations are skills that TerrAscend will lean on as it enters this new growth phase.In my time working alongside Jason, it is clear that he is the right person to take on this role, and as a large shareholder, I believe this is what is best for securing TerrAscend’s future. I look forward to continuing to advise the Company in my board position and as a strategic advisor,” continued Mr. Nashat.

We are grateful for the hard work and perseverance thatMichael Nashathas demonstrated during his tenure as CEO and Co-Founder of TerrAscend. We will continue to value Michael’s technical expertise, commitment to research and pharmaceutical knowledge, as he shifts to a strategic advisory role.

Jason Ackerman, Interim CEO

We remain committed to driving shareholder value and focusing on the areas of our business that are generating rapid growth and greater margins, particularly in our valuableCalifornia,PennsylvaniaandNew Jerseymarkets. I look forward to building upon the foundation that Michael has laid, and leading the TerrAscend team forward in this next exciting phase.

Mr. Ackerman is an accomplished leader and business builder, who pioneered the development of the on-line grocery industry. In his eighteen years at the helm of FreshDirect, he built the business from the ground up, organically growing the Company to over$600 millionin annual sales operating in 7 states. He is well-versed in omnichannel retail strategy as well as business operations, logistics and digital transformation. He is a Senior Advisor for the Boston Consulting Group and on the advisory board of The Naked Market and Hart Dairy. Mr. Ackerman received a Bachelor of Business Administration fromBoston University.

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in bothCanadaand the US, the Company participates in the medical and legal adult use market acrossCanadaand in several US states where cannabis has been legalized for therapeutic or adult use. TerrAscend is the first and only cannabis company with sales in the US,Canada, andEurope. TerrAscend operates a number of synergistic businesses, including The Apothecarium, an award-winning cannabis dispensary with several retail locations inCalifornia; Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products; Ilera Healthcare,Pennsylvania’spremier medical marijuana cultivator, processor and dispenser; Ascendant Laboratories Inc., a biotechnology and licensing company committed to the continuous improvement of cannabinoid expressing plants; Solace RX Inc., a proposed Drug Preparation Premises (DPP) focused on the development of novel formulations and delivery forms; and Valhalla Confections, a manufacturer of premium cannabis-infused edibles.Additionally, TerrAscend holds a cultivation permit in theState of New Jerseyand is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to 3 Alternative Treatment Centers. For more information, visitwww.terrascend.com.

Original press release

January 27, 2020
 

TORONTO, ONTARIO / ACCESSWIRE / January 27, 2020 / MPX International Corporation (“MPX International”, “MPXI” or the “Company”) (CSE:MPXI; OTC PINK:MPXOF) announced that its wholly-owned subsidiary, MPX Australia Pty. Ltd. (“MPX Australia”), has been awarded a Medicinal Cannabis Licence from the Australian Office of Drug Control (“ODC”).

The licence authorizes MPX Australia to undertake certain activities at the company’s 70,000 sq. ft. site under construction in Launceston in Tasmania including:

  • The cultivation of cannabis plants for producing cannabis or cannabis resin for medical purposes.
  • The production of cannabis or cannabis resin for medical purposes.
  • Activities related to the cultivation or production of cannabis including, but not limited to, obtaining cannabis plants, packaging, transport, storage, testing, possession and control of all resulting cannabis products as well as the supply of all cannabis plants, cannabis or cannabis resin.

This regulatory approval is a significant milestone for our operations in Australia and is a testament to our dedication to operating in real-time and our ability to execute on our strategy.

W. Scott Boyes, Chairman, President and CEO of MPX International

Australia provides an important gateway for MPXI into both the Oceania and Asia-Pacific markets, and we are thrilled to receive this licence, signalling another step forward in our business there.

“MPX Australia provides the company with a strong foothold in a new and burgeoning market,” said Tibor Vertes, Executive Director of MPX Australia. “The number of medical cannabis patients is growing steadily in Australia and with MPX Australia’s focus on producing high quality products for the domestic market, we are positioning the company in a first-mover position, creating increased brand awareness amongst Australians and possibly building a future export gateway to the Asia-Pacific region.”

Upon receipt of the Medicinal Cannabis Licence, MPX Australia has achieved Milestone #1, being the granting of a medicinal cannabis license (cultivation and production) in Australia in accordance with the Narcotic Drugs Act 1967 (Cth).

In addition, further to the Company’s press release dated July 23, 2019, MPXI will issue 2,689,189 common shares ($1,250,000) at a price of $0.46 per share.

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.

Original press release

January 27, 2020
 

Evolve ETFs announced this morning that it will close its Evolve Marijuana Fund (TSX: SEED) next month. The firm, which is also closing the Evolve North American Gender Diversity Index Fund, has requested that the funds be delisted in March.

The Evolve Marijuana Fund listed in February, 2018 and has just C$6 million in assets. It had tried to differentiate itself by being actively managed and by having the ability to invest up to 10% of its portfolio in private companies. In 2019, the ETF returned -34.06%, which trailed the North American Marijuana Index, which returned -31.51%. Over the past month, it averaged just 2982 shares of trading per day. The fund had 31 holdings at year-end, and its top 10 holdings included nine Canadian LPs and a U.S. CBD company.

January 27, 2020
 

Visit the TerrAscend Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

TerrAscend Announces Termination of Gravitas Nevada Ltd. Acquisition

TORONTO, Jan. 27, 2020 /CNW/ – TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) (“TerrAscend” or “the Company”), the first and only global cannabis company licensed for sales in Canada, the U.S., and the EU, today announced the termination of the Securities Purchase Agreement (the “Agreement”), pursuant to which TerrAscend would have acquired all of the issued and outstanding equity interests of Gravitas Nevada Ltd. (“Gravitas”), a vertically-integrated business engaged in the cultivation, processing, packaging and dispensing of cannabis and cannabis related products in Nevada. Gravitas operates a retail cannabis dispensary in Las Vegas, Nevada under the trade name “The Apothecarium.” The transaction, for $33.5mm in cash and 625 proportionate voting shares in the equity of TerrAscend equivalent to 625,000 common shares of the Company, was originally announced on February 11, 2019.

Pursuant to the terms of the Agreement, TerrAscend has paid a $3mm reverse termination fee to the sellers, which had been placed in escrow in June of 2019. As part of the termination, the Company is no longer liable for the remaining $30.5mm and proportionate voting shares in the equity of TerrAscend equivalent to 625,000 common shares of the Company. TerrAscend has agreed to continue licensing The Apothecarium, State Flower and Valhalla names and related intellectual property to Gravitas and its related operations in Nevada, pursuant to such final terms as will be mutually agreed by the parties.

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in both Canada and the US, the Company participates in the medical and legal adult use market across Canada and in several US states where cannabis has been legalized for therapeutic or adult use. TerrAscend is the first and only cannabis company with sales in the US, Canada, and Europe. TerrAscend operates a number of synergistic businesses, including The Apothecarium, an award-winning cannabis dispensary with several retail locations in California; Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products; Ilera Healthcare, Pennsylvania’s premier medical marijuana cultivator, processor and dispenser; Ascendant Laboratories Inc., a biotechnology and licensing company committed to the continuous improvement of cannabinoid expressing plants; Solace RX Inc., a proposed Drug Preparation Premises (DPP) focused on the development of novel formulations and delivery forms; and Valhalla Confections, a manufacturer of premium cannabis-infused edibles. Additionally, TerrAscend holds a cultivation permit in the State of New Jersey and is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to 3 Alternative Treatment Centers. For more information, visit www.terrascend.com.

Original Press Release

January 26, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up toreceive a copy in your inbox each Sunday morning.

Friends,

We have laid out our reasons for optimism that better times are likely ahead for investors after enduring two years of losses in the cannabis sector. We continue to believe better distribution and a broader set of products permitted for sale will help improve the Canadian market, and we expect accelerated medical and adult-use legalization as well as the scaling of existing operations bode well for the American market. Look for big revenue growth and profitability from the leading MSOs as the year progresses. With that said, one negative trend from last year that we don’t expect to change is the supply of stock.

Stock coming into the float can arise from a number of sources. Early investors and founders can cash out a portion or all of their stakes, and this is something that we expect will continue to be an overhang. Another avenue for supply of stock is that underwater public market investors will likely sell into rallies as they recover some of their paper losses. The most important source of supply, though, is likely to be from the companies themselves raising capital to cover operational losses or fund expansion.

This month, we have already seen substantial equity sales activity, with HEXO Corp repeating its Boxing Day debacle and selling more stock just weeks later on the same terms as that December 26th offering. This week, we saw Aphria, which teased investors during its recent conference call with talks of future dividends, issue C$100 million of stock at a discount to the market with warrants as well. We also saw a successful raise for cannabis REIT Innovative Industrial Properties, which sold $217 million of stock in an upsized deal that was followed by the stock actually rallying. This followed large raises over the past couple of months through its at-the-money offering (ATM) as well.

One of the positive developments for MSOs has been the expanded access to non-equity capital, with debt and sale/leasebacks becoming an alternative. Of course, not all companies are able to access these alternatives, and we have seen MedMen, for example, sell stock via a private placement, recently. The largest U.S. operators, which have leaner operations than Canadian peers, perhaps due to not having the luxury of abundant capital historically, likely won’t be able to achieve growth goals relying solely upon debt issuance and sale/leasebacks, so we are expecting to see more equity issuance from these leaders as the year plays out. In fact, with capital as a strategic advantage, we look for those that can raise capital effectively to do so to expand their competitive positioning relative to those who aren’t able to do so.

Investors need to temper their optimism somewhat by incorporating an expectation of increased supply of stock. Some of the challenge is merely technical, but some of it is more troubling, especially when the raises aren’t for growth capital or balance sheet repair. Take HEXO Corp, for example, which has been selling stock right at tangible book value, perhaps a signal that it expects its large operating losses to persist. Most of the LPs, including the largest ones, have relied upon debt over the past few years, and investors are watching this closely. Companies are being proactive in addressing upcoming maturities, and we think this augurs for more equity raises in that sector of the market. In the U.S., we think that the largest MSOs have some flexibility given their access to debt and sale/leasebacks, but many operators aren’t generating positive operating cash flow and will struggle to raise capital except through equity sales.

We think a key to investing successfully in the cannabis sector this year will be staying out of the way of capital raises and then perhaps rotating into the name after sale of stock, especially if it is for growth capital.


Join Alan Brochstein, founder of 420 Investor and Managing Partner ofNew Cannabis Ventures, at theBenzinga Cannabis Capital Conferencein Miami next month. This is a great opportunity to learn about the industry and to meet with leading public and private companies.

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Use the suite of professionally managedNCV Cannabis Stock Indicesto monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View thePublic Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

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Sincerely,

Alan & Joel

January 25, 2020
 
Sponsors of the cannabis banking bill that passed the U.S. House appeal to the chair of a key U.S. Senate panel, lenders provide Cresco Labs $200 million in debt financing, police urge Denver marijuana store owners to take added security measures -and more of the weeks top MJ business news
January 24, 2020
 

Visit the MediPharm Labs Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

MediPharm Labs Files Statement of Claim

BARRIE, Ontario, Jan. 24, 2020 (GLOBE NEWSWIRE) — MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) (MediPharm Labs or the Company) today announced that its wholly owned subsidiary, MediPharm Labs Inc., has filed a statement of claim (the Claim) in the Ontario Superior Court of Justice against a licensed producer.

The Claim relates to, among other things, the payment of outstanding amounts of approximately $9.8 million pursuant to the private label cannabis oil sale agreement referenced in MediPharm Labs February 11, 2019 news release.

About MediPharm Labs

Founded in 2015, MediPharm Labs specializes in the production of purified, pharmaceutical quality cannabis oil and concentrates and advanced derivative products utilizing a Good Manufacturing Practices certified facility and ISO standard built clean rooms. MediPharm Labs has invested in an expert, research driven team, state-of-the-art technology, downstream purification methodologies and purpose-built facilities with five primary extraction lines for delivery of pure, trusted and precision-dosed cannabis products for its customers. Through its wholesale and white label platforms, MediPharm Labs formulates, sensory-tests, processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets. As a global leader, MediPharm Labs has completed commercial exports to Australia and is nearing commercialization of its Australian extraction facility. MediPharm Labs Australia was established in 2017.

For further information, please contact:
Laura Lepore, VP, Investor Relations
Telephone: 416-913-7425 ext. 1525
Email: investors@medipharmlabs.com
Website: www.medipharmlabs.com

Original press release

January 24, 2020
 
British Columbia accounted for almost all of Canadas latest month-over-month increase in adult-use marijuana sales as the nation's westernmost province improved access with a slate of new store openings
January 24, 2020
 
A Native American tribe in Oklahoma is exploring ways to become involved in the marijuana industry, while another tribe in South Dakota will vote on whether to legalize medical and adult-use MJ on its reservation
January 24, 2020
 
Missouri has begun awarding the first of 192 medical cannabis store licenses,and it can issue more down the road

January 24, 2020
 
Marijuana stores in Alaska will be among the first in the U.S. where state-sanctioned onsite consumption would be permitted
January 24, 2020
 

Guest post by Erik Ott, Partner at KO Acquisitions

The latest news on cannabis M&A transactions in the US might make one wonder if more deals are falling apart than are closing. In Q4 2019, over US$1 billion in M&A deals were terminated by Multi-State Operators (MSOs), including:

  • Cresco terminating the $120m acquisition of VidaCann
  • Green Growth Brands terminating the $310m acquisition of Moxie
  • Medmen terminating the $682m merger with PharmaCann
  • Harvest terminating a deal to acquire Falcon International as well as a massive downsizing of their planned acquisition of CannaPharmacy.

Countless other deals across the US involving private companies were also terminated, and, while it may be easy to blame these failed transactions on the capital market, the truth is more nuanced. The reasons for failed deals in the cannabis market are as complex as the industry itself. KO Acquisitions has identified five factors that cause deals to collapse and how buyers and sellers might plan for these situations to keep deals on track.

  1. Licensing/Regulatory Issues: M&A negotiations in most industries are between the buyer and the seller. Only in the cannabis industry do local and state regulatory agencies have the proverbial seat at the table. Many CA jurisdictions dont allow the buyer to own more than 49% of a company, necessitating complex deal structures and work-arounds. Further, changes to a local tax code can make a jurisdiction untenable overnight.
  2. Poor Corporate Hygiene: Can sellers produce accurate financial information? Are they auditable? Have they properly accounted for 280e? Can their corporate records withstand the scrutiny required of a public company? Often, the answer to these questions is no.
  3. Seller Risk Exposure: Cannabis is rife with disputes — perhaps it is part of the industrys DNA. What will buyer due diligence uncover about the decisions the seller made in the years leading up to the transaction? Perhaps the buyer will discover shareholder and partner disputes, messy cap tables, or other undisclosed liabilities. In addition, many operators lack trust in the folks wearing suits, which is certain to impact the ability to close.
  4. A Protracted M&A Process: It can take nine months or more from LOI to close, so it is not uncommon for deal fatigue to set in. Further, this period gives buyers time to look into the sellers business, and often the pro-forma returns that sellers promised to deliver do not materialize. This can lead to a valuation re-trade that can kill even a deal with strong mutual alignment and cultural benefit.
  5. Capital Markets Challenges: If a buyers access to cash has dried up and CSE valuations have shrunk, the buyer will be left with little structural wiggle room. Many sellers with strong operations want cash to be significant percentage of their compensation. The lack of a cash component in M&A transaction can make many deals harder to close, not to mention the difficulty in selling the buyers stock.

To see what matters most to buyers, KO surveyed the M&A teams at the large MSOs. Not surprisingly, the collapse of capital markets was the #1 reason given for deals falling through. One MSO rightly noted that valuations in the public sector came crashing down in the second half of 2019, yet private seller expectations have only very recently begun to reset.

The second and third reasons given were poor corporate hygiene and high seller risk exposure. Almost all of the MSOs bemoaned the due diligence process, noting how many skeletons in the closet were identified and lamenting the need to solve problem after problem. Other MSOs took some of the blame themselves, stating that more due diligence should occur prior to executing a Letter of Intent (LOI). They opined that LOIs were being treated as options to buy in the cannabis market, resulting in astonishing fail-to-close rates relative to other industries where LOIs seem to be taken more seriously.

Of course, the story is completely different when interviewing sellers who have been left at the altar by large conglomerates — the reason most often cited is they dont have cash and/or I cant sell their stock.

Closing M&A deals is difficult. There are many variables at play some that can be controlled, others that cannot. One thing sellers can do is to invest the time on the front end to get the house in order and be more conservative in your growth projections before you initiate buyer engagement. Once in the process the best advice is to focus on the areas that you can control, be transparent with your data (particularly the bad news), and pick a partner where the alignment and cultural fit runs deep.


About the author:

Erik Ott is a Partner at KO Acquisitions, Inc. a boutique investment bank specializing in cannabis mergers and acquisitions. KO provides sell-side and buy-side advisory to companies looking to scale up their business through transaction with strategic partners. Erik can be reached at O@KOAcq.com.

January 24, 2020
 

Aphria Inc. Enters Into Agreement to Receive $100 Million Strategic Investment from Institutional Investor

Further Strengthening Aphria’s Cash Balance Pro Forma to Nearly $600 million

Company Also Provides Corporate Updates

LEAMINGTON, ON, Jan. 24, 2020 /PRNewswire/ – Aphria Inc. (“Aphria” or the “Company”) (TSX: APHA and NYSE: APHA) today announced that it has entered into an agreement to accept a strategic investment from an institutional investor (the “Significant Investor”), pursuant to which the Significant Investor has agreed to purchase 14,044,944 units of the Company at a price of C$7.12 per unit (the “Offering Price”) for aggregate gross proceeds to the Company of C$100,000,001 (the “Offering”).

Each unit is comprised of one common share of Aphria and one-half of one common share purchase warrant of Aphria. Each warrant will entitle the Significant Investor to acquire one common share at a price of $9.26 for a period of 24 months from the closing date of the Offering.

The Company intends to use the net proceeds from the Offering to finance international expansion, working capital and general corporate purposes.

The units and the securities comprising the units are being offered pursuant to a shelf registration statement (including a prospectus) previously filed with and declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on November 26, 2019 and, in Canada, will be offered and sold in Ontario only by way of a prospectus supplement to be filed in each of the provinces and territories of Canada.

The Offering is expected to close on or about January 31, 2020 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the New York Stock Exchange.

Given the strength of our leadership team, the continued execution of our strategic plan and the robust opportunities we have for growth in the global cannabis industry, we were able to secure this additional capital from a single investor, a significant endorsement of Aphria in these market conditions.

Carl Merton, Chief Financial Officer

We expect this strategic investment to strengthen our balance sheet and propel Aphria forward as we continue to differentiate ourselves in the industry.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration and qualification under the securities law of such jurisdiction.

Copies of the prospectus supplement and shelf registration statement are available relating to a particular offering will be available, under Aphria’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov, respectively.

Corporate Updates

Product Availability
The Company is pleased to provide an update on product availability. Patients are now able to purchase Aphria’s THC Walker strain in a portable vaporizer concentrate. Additionally, Aphria’s adult-use brands Solei and RIFF vapes have been received by customers in all provinces where they are legally permissible.

Good Manufacturing Practices
Earlier this week, the Company announced receipt of two European Union Good Manufacturing Practices (“EU GMP”) certificates for its Aphria One and ARA Avanti Rx Analytics facilities. The certifications provide the Company with the ability to be a worldwide supplier of medicinal cannabis.

Subsequently, the Company’s Jamaican subsidiary Marigold Projects Jamaica Limited received a Good Manufacturing Practices certificate from Jamaica’s Ministry of Health and Wellness for manufacturing of cannabis extracts (active pharmaceutical ingredients), including CBD and THC oils.

Plant Positivity
The Company’s social purpose platform, Plant Positivity, was embraced by Toronto commuters looking for a brief reprieve from the gloomy winter weather. During the week of January 20, 2020 the public was invited to experience the Plant Positivity Winter Garden at Toronto’s Union Station to explore the benefits of plants. By all accounts, the 30-foot pop up winter garden tunnel was success in creating a public dialogue around the different ways in which plants can impact our well-being physically, emotionally and socially.

We Have a Good Thing Growing

About Aphria

Aphria Inc. is a leading global cannabis company driven by an unrelenting commitment to our people, the planet, product quality and innovation. Headquartered in Leamington, Ontario the greenhouse capital of Canada Aphria Inc. has been setting the standard for the low-cost production of high-quality cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria Inc. is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria Inc. drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion.

For more information, visit: aphriainc.com

______________________________
1 Cash and cash equivalent balance as disclosed in November 30, 2019 condensed unaudited financial statements plus receipt of more than $99 million of net proceeds as a result of this Offering

Original press release

January 23, 2020
 

Exclusive Interview with Cresco Labs CEO Charlie Bachtell

New Cannabis Ventures last spoke with Cresco Labs (CSE: CL) (OTCQX: CRLBF) CEO Charlie Bachtell in early 2018. Since then, Cresco has transitioned from a private company to a publicly traded one, significantly grown its team and executed in the M&A space. Bachtell spoke with New Cannabis Ventures again to share insight into Crescos market strategy and approach to funding. The audio of the entire conversation is available at the end of this written summary.

The Growing Cresco Team

The companys team has gone through a major growth spurt over the last two years. Entering 2018, Cresco had approximately 200 employees, according to Bachtell. Now, including the team from recently acquired Origin House, that team is 1,700 strong.

A Cresco Employee at Work

Illinois and Pennsylvania

Illinois and Pennsylvania are two important markets for Cresco. Illinois launched its adult-use program at the beginning of the year, and Pennsylvania has a strong medical market. Cresco has several of its Sunnyside dispensaries in Illinois, as well as the maximum three cultivation and processing facilities. Bachtell has been pleased with the program roll-out in the state. He is looking forward to developing more capacity to meet demand as the year continues.

The Exterior of a Sunnyside Dispensary

In Pennsylvania, the companys production, wholesale, and retail channels are strong, and there is room for the market to grow with potential adult-use legislation.

Acquisition Update

Earlier this month, Cresco Labs closed the acquisition of Origin House. Through Origin Houses entity Continuum, the company is now of one of the largest distribution platforms in California. Origin House has other business entities, including a premium cultivation arm, FloraCal.

In addition to strong operational value, the acquisition has brought valuable team members to the table. Marc Lustig, CEO of Origin House, has experience in the Canadian capital markets, and Bachtell views him as a strong addition to the Cresco executive team.

Cresco is also in the process of acquiring Trykethe company is currently waiting on approval from the state of Nevada. The approval process in Nevada is on the longer side, according to Bachtell. Once closed, the acquisition will also bring Cresco into its twelfth state: Utah.

Beginning last year, acquisitions became more difficult in the cannabis space, particularly with anti-trust regulations coming into play, according to Bachtell.

Market Strategy

Over the past three years, Cresco has been focused on creating the most strategic geographic footprint possible. The company has been expanding into states with strong regulatory structures and populations large enough to support a successful market. In 2020, Cresco will be focusing on creating a meaningful position in its current markets, rather than expanding to new markets. The company will consider both organic growth and acquisition opportunities within its current footprint.

Most of the companys markets have yet to hit the inflection point where they truly begin to scale, which means there is a tremendous amount of operational growth still ahead for Cresco, according to Bachtell. He expects 2020 to be a major growth year for the industry in which U.S. operators will have the chance to really set themselves apart.

House of Brands

The company has always recognized that the cannabis industry will mature into a CPG business. With that in mind, Cresco has built a house of brands strategy to connect with the wide variety of customer segments in the industry.

One of Cresco’s Brands: Mindy’s Edibles

Cresco has been building out its marketing team to help support that strategy. Greg Butler, a former VP with MillerCoors, joined the company as CMO. The company also added Cory Rothschild, formerly with Gatorade, as Senior Vice President of Brand Marketing and Chris Rivera, formerly with MillerCoors, as Senior Vice President of Retail Marketing and Store Development.

Funding: Sale/Leasebacks, ATM, and Debt

The traditional capital markets of 2019 presented the industry with a major challenge, and many companies had to look for alternative sources of funding. Real estate represented an opportunity as a viable and attractive source of non-dilutive capital for Cresco. The company executed a number of sale/leaseback transactions, extracting capital that was tied up in its real estate. That capital has helped the company to continue building out its operations.

Cresco has another tool in its pocket: a C$55 million at-the-market (ATM) offering. The ATM has a relatively low cost of capital, available when the company needs it, according to Bachtell. It serves as part of a well-rounded approach to ensure the company is sufficiently capitalized, he said.

The day after we conducted this interview, Cresco announced a $100 million credit agreement, which will be used to expand operations in Illinois, among other growth initiatives. Bachtell sees the debt market starting to develop for select U.S. cannabis operators, with more lenders willing to enter the space.

Social Equity

Bachtell has been vocal about the importance of social equity in the cannabis space. Cresco has an incubator for dispensary applicants in Illinois, a part of its Social Equity and Educational Development (SEED) program. He points to Illinois as a strong example of creating a win for all stakeholders at the table. The state was the first to pass adult-use via the legislative process, and it made social equity a priority, according to Bachtell. He sees this as a model for other states to follow in the future.

Growth with social responsibility is a big part of what I think it means to be successful in the cannabis space, said Bachtell. He wants investors to see that there is ROI in that social responsibility.

Balanced Growth

Traditional metrics (revenue, earnings, EBITDA, etc.) are coming into play in the cannabis industry. Bachtell is cognizant of the importance of profitability but wants to balance that with growth. Currently, the company is not laser-focused on profit, instead opting to establish the foundation it needs for scalable success. As Cresco grows, it will remain focused on thought leadership in the space and continued execution.

New Cannabis Ventures provides an Investor Dashboard for Cresco Labs, which is a client. Listen to the entire interview:

January 23, 2020
 

SAN DIEGO, January 23, 2020–(BUSINESS WIRE)–Innovative Industrial Properties, Inc. (the Company) (NYSE: IIPR) announced today that it has commenced a public offering of 2,000,000 shares of its common stock. The Company expects to grant the underwriters a 30-day option to purchase up to an additional 300,000 shares of its common stock. All of the shares are being sold by the Company.

The Company intends to use the net proceeds from this offering to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry that are consistent with its investment strategy, and for general corporate purposes.

BTIG, LLC is acting as sole book-running manager for the offering; Compass Point Research & Trading, LLC and Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS), are acting as co-lead managers for the offering; and Roth Capital Partners is acting as a co-manager for the offering.

The offering of the Companys common stock will be made only by means of a prospectus supplement and the accompanying prospectus. Copies of the preliminary prospectus supplement, final prospectus supplement (when available) and the accompanying prospectus may be obtained by contacting BTIG, LLC at 65 East 55th Street, New York, NY 10022, or by email at equitycapitalmarkets@btig.com; Compass Point Research & Trading, LLC at 1055 Thomas Jefferson Street, N.W., Suite 303,Washington, DC 20007, or by email at syndicate@compasspointllc.com; Ladenburg Thalmann & Co. Inc., 277 Park Avenue, 26th Floor, New York, NY 10172, or by email at prospectus@ladenburg.com; or Roth Capital Partners, LLC, 888 San Clemente, Suite 400, Newport Beach, CA 92660, or by email at rothecm@roth.com.

A registration statement relating to these securities has been declared effective by the Securities and Exchange Commission. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the offered securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is an internally-managed real estate investment trust (REIT) focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a REIT, commencing with the year ended December 31, 2017.

Original press release

 

January 23, 2020
 

Visit the Cresco Labs Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Cresco Labs Announces Signing of Senior Secured Credit Agreement

Initial Drawdown of up to US$100 million expected end of January; Agreement Includes Mutual Option to Increase to up to US$200 million

CHICAGO-January 23-(BUSINESS WIRE)–Cresco Labs (CSE:CL) (OTCQX:CRLBF) (Cresco or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, announced today that it has entered into a non-brokered credit agreement (the Credit Agreement) for a senior secured term loan (the Senior Loan) in an initial aggregate principal amount of up to US$100 million, with a mutual option to increase the size of the facility to a maximum of US$200 million. The Company expects to complete an initial drawdown of up to US$100 million on or about January 30, 2020, subject to the satisfaction of customary funding conditions.

The proceeds from the Senior Loan will be used to fund the expansion of operations in Illinois, closing and integration costs associated with pending acquisitions, and other strategic growth initiatives in key markets.

This agreement reflects the strength and growth potential of the national platform Cresco has built as well as our ongoing commitment to execute a superior capital agenda for the benefit of shareholders.Through this deal, we have diversified the Companys funding sources, improved our cost of capital in a non-dilutive manner and given ourselves flexibility in a dynamic capital environment.

Charlie Bachtell, CEO and Co-founder of Cresco Labs

As we enter 2020 and our business continues to increase its positive free cash flow, Cresco is well-positioned to continue growing its foothold in the most strategic cannabis markets in the U.S., while building the most important company in the industry.

Terms

Commitments under the Senior Loan are provided by a broad syndicate of lenders, including U.S. based institutional investors, demonstrating confidence in Crescos strategic position and reflecting the strong growth outlook for the US cannabis industry. Members of the Companys management and board of directors will also be participating as investors in the Senior Loan. Each commitment under the Senior Loan may be for an 18-month or 24-month term, at the lender’s option. Loans made on the initial closing date will bear interest at a rate of approximately 12.7% per annum for 18-month loans and approximately 13.2% for 24-month loans, payable quarterly in arrears. The terms of the Senior Loan were negotiated at arms length with the agent and lead investor and include customary restrictive covenants.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.

Original Press Release

January 22, 2020
 

Exclusive Interview with KushCo CEO Nick Kovacevich

Ancillary company KushCo Holdings (OTCQX: KSHB) is expanding its core business and focusing on new business divisions to drive its strong revenue projections for 2020. Co-Founder, CEO and Chairman Nick Kovacevich, who last spoke with New Cannabis Ventures in December 2018, checked in to talk about his companys growing platform, funding and KushCos long-term vision. The audio of the entire conversation is available at the end of this written summary.

Finding talent is a major focus in the cannabis industry, and KushCo has worked to find the right people to drive its growth. The companys management team is a blend of people with entrepreneurial experience and people with decades of corporate experience, according to Kovacevich.

A Company-Wide Meeting at KushCo

The Opportunity in the Vaping Crisis

Vape has been a significant segment of KushCos business, and the company did experience short-term effects from the vaping crisis. According to Kovacevich, the stock sold off due to uncertainty around how sales would be affected as consumer demand declined. Now, the health issues related to vaping have been tied to vitamin e acetate, an additive largely found in black market products.

Already, Kovacevich is seeing retailers regaining confidence and ordering more products as consumers become comfortable again. In the long-term, he sees the vaping crisis having a positive effect on the industry. More consumers will likely migrate from the illicit market to legal outlets. Meanwhile, operators in the space are going to turn toward premium products, like those that KushCo provides, to boost consumer confidence in their products, according to Kovacevich.

A KushCo Vape Capsule

KushCo also has a brand protection and anti-counterfeiting offering on its platform through an exclusive distribution agreement with De La Rue. De La Rues anti-counterfeiting sticker serves to authenticate products throughout the cannabis supply chain, helping to combat illicit operators and counterfeit products.

KushCo in the Hemp and CBD Ecosystem

KushCo is building a holistic approach to the CBD supply chain. Over the past decade, the company has built a network of cultivators, processors, and brands. Leveraging that network, KushCo’s hemp trading division can facilitate transactions within that network. The company is helping growers sell hemp biomass to processors, assisting processors sell their crude, distillate, and oil, enabling formulators to connect with brands and connecting brands with distribution channels. KushCo has designed a transparent model that spans seed to sale, according to Kovacevich. The hemp trading division is already gaining significant tractionthe company is projecting $25 million in sales in its first year of operation.

The companys recently launched retail services division is helping CBD brands enter mainstream outlets. In partnership with sales and marketing agency C.A. Fortune, KushCo is facilitating CBD brand entry into mainstream grocery channels. C.A. Fortune has access to 500,000 retail doors, according to Kovacevich. Sales and marketing agencies are a common strategy in traditional CPG, and KushCo is applying that strategy in the CBD space. KushCo has also launched an internal retail services team to target other channels such as beauty, pet, and convenience.

Downstream, this model will continue to drive growth for KushCo. Its brand partners will need more formulated products, and KushCo will be there to connect brands with formulators and those formulators with processors and farmers.

With so many opportunities in the CBD space, KushCo has also launched a new line of CBD packaging with approximately 500 SKUs.

More Growth

Hemp trading and retail services are big initiatives for KushCo in FY 2020, but the company is also eyeing equipment financing. The company will be able to help finance various types of equipment (such as extraction or drying equipment) through a capital partner so that operators will be able to allocate cash to initiatives like sales and marketing rather than a fixed cost, according to Kovacevich.

KushCo is also targeting growth in markets like Michigan and Illinois (recent entrants into the recreational space) and Canada, which is rolling out Cannabis 2.0 products. The company is keeping an eye on new states expected to allow adult-use.

KushCo’s Current U.S. Footprint

In the past, KushCo has entered new product and service categories (such as vape and energy) via acquisition. Now, the company is expecting to focus more on organic growth and partnerships with large companies like C.A. Fortune. It may vet EBITDA-accretive deals where the seller takes primarily stock, but the company has reached a large enough scale that it can likely enter new categories on its own rather than via acquisition, according to Kovacevich.

Compliance also plays a key role in the companys approach to potential acquisitions. Many companies that could be interested in being acquired arent operating at the level of compliance KushCo requires.

Monroe Capital Credit Facility

Over the summer, KushCo secured a $35 million credit facility with a $15 million accordion from Monroe Capital. The scalable credit facility is tied to the companys receivables and inventory, according to Kovacevich. The funding will help the company as it continues to scale up its operations.

2020 Revenue Projections

KushCo has doubled its business each year over the past several years, and it is projecting similar growth for FY2020. In Q4 of 2019, the company did $45 million in sales through its core businessan annual run-rate would take that number to close to $200 million. The company is planning to grow its core business to about $200 million in sales and add an additional $30 to $50 million in revenue from new businesses, such as hemp trading, retail services, and CBD packaging. In total, KushCo is expecting to go from $150 million to $230 to $250 million in FY 2020.

Achieving true valuations in the current market is difficult, but Kovacevich anticipates that will change following the expected market shakeout.

Long-Term Vision

Going forward, KushCo is keeping in mind risk management. As capital markets continue to be a challenge, many companies may struggle to sustain their business. If KushCo sells its branded products to a company that can no longer pay, it will experience a detrimental effect on its cash flow. The company is carefully considering who to do business with and extend credit to, according to Kovacevich.

Inside KushCo’s Garden Grove, California Warehouse

With this in mind, the company is aiming to align with long-term winners in the space, companies that drive consolidation in the space. Over the next few years, those large companies will likely spend more and more with KushCo to meet their needs, according to Kovacevich. Ultimately, the company is looking for ways to touch as many transactions in the space as possible: brokering raw biomass and crude oil deals, packaging, branding, retail services, and more. KushCo will continue to focus on effective cross-selling to help its customers achieve effective market penetration.

While it can be difficult to predict what the industry and its companies will look like in even just a few short years, Kovacevich is keeping in mind the opportunity that the eventual federal legality of THC represents. Federal illegality prevents KushCo from doing so now, but, when it can, it will have the chance to do with the THC supply-chain what it is doing in the CBD ecosystem.

New Cannabis Ventures provides an Investor Dashboard for KushCo, which is a client of New Cannabis Ventures. Listen to the entire interview:

January 22, 2020
 

Visit the Canopy Growth Corp Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Judy Schmeling Appointed as Chair of the Canopy Growth Board of Directors and Jim Sabia Appointed to the Board

SMITHS FALLS, ON, Jan. 22, 2020 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NYSE: CGC) is pleased to announce that Judy Schmeling has been appointed Chair of the Board of Directors and Jim Sabia has been appointed in principle as a member of the Company’s Board of Directors. Mr. Sabia will act as an observer to the Board as he and Canopy complete the standard Health Canada processes associated with the appointment.

It is my pleasure to welcome Judy Schmeling as our Chair of the Board of Directors and to welcome Jim to the Board.Judy’s leadership experience in highly competitive industries will be instrumental as we focus the business on its core priorities.

David Klein, CEO, Canopy Growth

Both Judy and Jim’s contributions will be extremely valuable as we continue the journey of building iconic brands.

Ms. Schmeling has been serving on the Canopy Growth Board of Directors since November 2018 and is chair of the Audit Committee. She currently serves on the Board of Directors of Constellation Brands, Inc. as well as Casey’s General Stores, both Fortune 500 companies. She is the former Chief Operating Officer of HSN Inc., an interactive multichannel retailer, and the former President of HSN’s Cornerstone Brands. Ms. Schmeling brings to her new role proven leadership acumen, valuable operations experience and extensive accounting and financial expertise.

I’m honored to be named the new Board Chair at Canopy Growth.During my time as a board member of Canopy Growth, I personally witnessed the unfolding of one of the most exciting market opportunities of our lifetime. I look forward to working with my fellow board members and the entire Canopy Growth leadership team to help guide the company to lead the global cannabis industry.


Judy Schmeling,Chair of the Board of Directors

Mr. Sabia is a world class marketer of iconic consumer brands, currently serving as Executive Vice President and Chief Marketing Officer, Constellation Brands, and a member of Constellation’s executive management committee. Mr. Sabia is responsible for leading the marketing strategy across Constellation’s diversified portfolio of wine, beer and spirit brands. As an industry veteran, Mr. Sabia brings a vast knowledge of building a portfolio of high-performing brands and developing a winning marketing strategy. Prior to joining Constellation in 2007, he served as Vice President of Marketing and Media at Molson Coors Brewing Company.

I’m excited to join Canopy’s Board.There is no company better positioned in the emerging global cannabis market and I look forward to working with Canopy Growth’s very talented leadership team to ensure that we continue achieving success and remain a global leader in the years ahead.

Jim Sabia

Judy’s full bio is available at www.canopygrowth.com

Here’s to Future Growth

About Canopy Growth Corporation

Canopy Growth (TSX:WEED,NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through Canopy Growth’s subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. Canopy Growth has operations in over a dozen countries across five continents.

Canopy Growth’s medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

Canopy Growth operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our historic public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates eleven licensed cannabis production sites with over 10.5 million square feet of production capacity, including over one million square feet of GMP certified production space. For more information visit www.canopygrowth.com

Original Press Release

January 22, 2020
 
Marijuana industry observers say that while its unlikely the Republican-controlled Senate will pass a major piece of marijuana reform this year, they expect continued momentum, building on a historic 2019
January 21, 2020
 

New Yorks medical cannabis program has developed substantially over the past several years and is now dominated by publicly traded companies. While it appeared that 2019 would be the year that the Big Apple would become the 12th state to legalize the recreational use of cannabis, the Marijuana Regulation and Taxation Act failed in the waning days of the legislative session. Despite this setback, many remain confident legalization of cannabis for recreational use is in the cards for New York. In this review, we take a look at the history of the medical cannabis program, the existing marketplace and the potential for future growth.

History and Program Rules

On September 11, 2014, New York Gov. Andrew Cuomo signed into law the Compassionate Care Act. It allowed doctors to prescribe marijuana in a non-smokable form to patients with serious ailments that are included on a predefined list of 14 conditions ranging from HIV/AIDS to Parkinsons disease and which must be accompanied by a complicating condition such as chronic pain, seizures or wasting syndrome. A complete list is available here.

Pursuant to the Compassionate Care Act, there is a $50 application fee. However, the Department of Health is currently waiving the $50 fee for all patients and their designated caregivers.

The Medical Marijuana Program, which operates under the states Department of Health, oversees the certification, purchase and dispensing of medical marijuana. The program also handles the certification of practitioners and dispensaries.

A patient would have to be certified by a practitioner to obtain medical marijuana and that practitioner would be a physician, trained by and registered with the Department of Health, licensed by the state, and qualified to treat the serious condition for which the patient is seeking treatment.

The excise tax on medical marijuana in New York is a seven percent tax on the gross receipts from medical marijuana sold or furnished by a registered organization. The sale of medical marijuana, as well as the sale of related products to administer medical marijuana, are exempt from sales tax.

Since its initial enactment, however, a number of improvements have been made to that law including:

  • The authorization of nurse practitioners and physician assistants to certify patients for medical marijuana, thus expanding the scope of who can prescribe.
  • Increasing the number of organizations registered to manufacture and dispense medical marijuana.
  • Expanding the list of qualifying conditions to include chronic pain, post-traumatic stress disorder and any condition for which an opioid may be prescribed.
  • Allowing registered organizations to wholesale to other registered organizations.
  • Allowing registered organizations to deliver medical marijuana products to the homes of patients or their caregivers.

As a result of this expansion, the number of certified patients skyrocketed by a whopping 1,124 percent to more than 112K, while the number of registered medical practitioners increased from 611 in 2016 to 2,638 as of January 2020.

Existing Market

The U.S. Census Bureau estimates that New York states population in 2017 was 19.85 million, of which 14.9 million (74.9 percent) are 21 or older. Using NYS-specific data on marijuana use as reported in the 2016 National Survey on Drug Use and Health, the New York State Department of Health estimated 8.5 percent, or approximately 1.27 million residents, currently use marijuana in one form or another.

The most common conditions among medical marijuana patients are: chronic pain (53.16%), neuropathies (14.59%), and cancer (12.8), according to New York Department of Health data. Patients between the age of 51 and 60 make up the greatest percentage of certifications (23.06%), followed by those between the ages of 61 and 70 (19.21%).

There currently are ten vertically integrated registered organizations in New York state, each with the ability to operate up to four dispensaries. At this time, 37 of the possible 40 dispensaries are open.

Ten Registered Organizations with Dispensaries by Address

The first five companies obtained their licenses in In July 2015. These original five were all private at the time, but three have commenced trading publicly subsequently:

In July 2017, five more providers were licensed. All of the second group of license holders trade publicly at this time, though they were private at the time they received the licenses:

  • New York Canna, DBA The Botanist, which was acquired by Acreage Holdings (CSE: ACRG) (OTC: ACRGF)
  • Fiorello Pharmaceuticals, which was acquired in August 2019 by Green Thumb Industries (CSE: GTII) (OTC: GTBIF)
  • Valley Agriceuticals, whose parent company Gloucester Street Capital LLC, merged with Cresco Labs (CSE: CL) (OTC: CRLBF) in October 2019;
  • Citiva Medical, which was purchased in February 2018 by publicly traded iAnthus Capital Holdings (CSE: IAN) (OTC: ITHUF)
  • PalliaTech NY, which in August 2018 changed its name to Curaleaf (CSE: CURA) (OTC: CURLF) before going public

These organizations can grow, manufacture, distribute and dispense medical marijuana to patients who have an approved medical condition.

Vireo Health Vaporization Cartridges

Increasing demand is expected to favor the entry of new players into the market.

Form factors include: vape cartridge/pen, capsule, tablets, oil, oral spray, oral powder. Smoking medical marijuana is not allowed, though pods for vaporization are permitted. Edibles also are prohibited. Patients need to contact each registered organization to learn which products are available. Pricing varies among registered organizations.

Curaleaf Pods for Vaporization

Legalization for Adult-Use

On July 13, 2018, the New York State Department of Health released its report on the assessment of the potential impact of regulated marijuana. It concluded that the positive effects of a regulated marijuana market in New York outweighed the potential negative impacts, thus giving rise to expectations that the market would greatly expand.

Based on population usage, and the assumption that marijuana sells on the illegal market at $270 to $340 an ounce, the New York Department of Health estimated potential total tax revenue in the first year with a price of $297 and illegal market consumption of 6.5 million ounces ranges from $248.1 million (with a 7% tax rate) to $340.6 million (with a 15% tax rate). The estimated potential total tax revenue, with a price of $374 and illegal market consumption of 10.2 million ounces, ranges from $493.7 million (with a 7% tax rate) to $677.7 million (with a 15% tax rate).

In 2019, New York decriminalized the possession of amounts up to 2 ounces, making it a violation instead of a crime. Fines range from $50 for amounts of less than one ounce, to $100 for quantities between one and two ounces.

In his 2020 State of the State address, Gov. Cuomo reiterated his commitment to legalization for adult-use. He has promised to introduce legislation once again this year and has proposed the creation of a new state agency to oversee recreational and medical marijuana, as well as hemp. His proposal also would limit recreational sales to those over 21 to possess up to one ounce of marijuana and up to five grams of concentrated cannabis.

New Yorks medical marijuana regime does not allow certified patients to cultivate or grow cannabis. Under the proposed adult-use regulations, consumers also would not be permitted to cultivate cannabis for personal use.

The legislation would also promote social equity in the cannabis industry through various programs. Cuomo said he hopes to work with Connecticut, New Jersey and Pennsylvania to coordinate policy reform efforts. He also has called for the State University of New York to create a cannabis and hemp research center.

Conclusion

While the medical cannabis program was slow to start in New York, several changes have helped it grow substantially. The market is served by a limited number of vertically integrated providers, with eight of the 10 licenses held by publicly traded companies. Looking ahead, New York state could become one of the largest state markets for adult-use should the state move forward with legalization.

January 21, 2020
 

CAMBRIDGE, Mass., Jan. 21, 2020 (GLOBE NEWSWIRE) — TILT Holdings Inc. (TILT or the Company) (CSE: TILT) (OTCQB: TLLTF), a foundational technology cannabis platform comprised of assets to support brands worldwide, released the following letter today from the Companys interim Chief Executive Officer Mark Scatterday.

Dear Shareholders:

As we progress in 2020, we are moving forward with a reinvigorated sense of purpose and energy. Our vision is clear: TILT supports cannabis businesses across the globe through our portfolio of innovative technology companies. From software solutions to inhalation technology and more, TILT helps over 2,000 brands and retailers achieve success in this ever-changing industry. While 2019 was a challenging year for public companies in our industry, l am encouraged and reassured knowing that we have such a strong and supportive group of people working together with us and toward the same goals.

The new year is off to a great start, following on the heels of a productive fourth quarter. A few recent updates include:

  • The successful migration of Baker Technologies Inc. (Baker) clients into the Blackbird Logistics Corporation (Blackbird) platform quadruples existing clients across its software platform – right in time for the recent expansion of our product offering. This is an impressive feat, and with all these clients on a single software platform we have one of the largest footprints in the industry;
  • Jupiter Research, LLC (Jupiter) releasing several new proprietary devices that we debuted in Las Vegas last month. We also have several new exciting opportunities on the horizon.

In support of our technology and innovation businesses, our plant touching assets continue to generate revenue and free cash flow which will help fund the expansion of Jupiter and Blackbird:

  • In Massachusetts, we are working closely with our operations and construction team in Taunton to finalize our Certificate of Occupancy. With this additional capacity online (50,000 square feet), we expect to double our cultivation footprint and increase our packaging space. We are expecting to see a significant increase in revenue from this effort once complete. We have also been working closely with our affiliate partners and the Cannabis Control Commission (CCC) to revise legacy supply and services agreements that are not in line with our refined business focus or our approach to social justice and advocacy. This resulted in our friend Elev8 Cannabis receiving its provisional licenses in Massachusetts, and while additional obstacles remain, brings us one step toward our own recreational licenses in the State.
  • In Ohio, our production facility is operational we have purchased cannabis biomass from local providers and successfully produced cannabis products. We are finalizing our go-to-market strategy and expect revenue to follow shortly.

We will continue to innovate and lead the industry in supporting brands and retailers through our focus on technology and services. This continued progress shows the underlying and inherent value of TILT: a portfolio of complementary businesses driving growth across the global cannabis industry.

 

Sincerely,

Mark Scatterday
Interim Chief Executive Officer

About TILT

TILT Holdings serves cannabis brands worldwide through a strong network of portfolio companies committed to technological innovations that support long-term success. TILT services more than 2,000 brands and cannabis retailers across 33 states in the U.S., as well as in Canada, Israel, Mexico, South America and the European Union. As a market leader in cannabis technology and related products and services, the Companys core assets include wholly-owned subsidiaries Jupiter, a company that focuses on the vast potential of inhalation through innovative design, development and manufacturing; Blackbird, a company that provides operations and software solutions for wholesale and retail distribution; and Baker, a CRM platform helping dispensaries grow their business. The Company also owns cannabis operations in states including Massachusetts, led by Commonwealth Alternative Care, Inc.; and in Pennsylvania, led by Standard Farms, LLC. Headquartered in Cambridge, Massachusetts, with offices throughout the U.S., and London, TILT has over 400 employees and has sales in the U.S., Canada and Europe. For more information, visitwww.tiltholdings.com.

Original press release

January 20, 2020
 

LONDON, Ontario, Jan. 20, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that further to its news release dated December 9, 2019, and December 23, 2019, it has closed the second and final tranche of its non-brokered private placement of unsecured convertible debentures (the Debentures) in the aggregate principal amount of $1,040,000 (the Final Tranche). This brings the total funds raised for this private placement to $3,155,000 (the Offering).

As previously announced in the Company’s December 9, 2019, news release, the Debentures will mature on the date that is 36 months from the date of issuance, bear interest at the rate of 10% per annum, computed on the basis of a 360-day year composed of twelve 30-day months, and payable semi-annually on the last day of June and December of each year, commencing on June 30, 2020. The Debentures will be issued at a price of $1,000 per Debenture with each Debenture being convertible, at the option of the holder, into 5,000 common shares in the capital of the Company (each, a Share) at a conversion price of $0.20 per Share, subject to adjustments. The Offering is subject to final approval from the TSX Venture Exchange.

The Company expects that the proceeds of the Offering will be used for capital expenditures, equipment purchases and working capital purposes.

The Company has paid a cash finder’s fee in connection with the Final Tranche to a finder in the aggregate amount of $3,500, which represents 7% of the gross proceeds received from the investor introduced to the Company by the finder. Insider participation in the Offering totalled $760,000.

MI 61-101 Disclosure

Three insiders of the Company participated in the Final Tranche and, as such, the issuance of the Debentures to such insiders is a related-party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (MI 61-101). However, the issuance is exempt from: (i) the valuation requirement of MI 61-101 by virtue of the exemption contained in Section 5.5(b), as the shares into which the Debentures are convertible are not listed on a market specified in MI 61-101, and (ii) from the minority shareholder approval requirement of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101, as the fair market value of the Debentures does not exceed 25% of the Companys market capitalization. A material change report was not filed by the Company 21 days before the closing of the Final Tranche as the level of insider participation was not known at that time and the Company moved to close the Final Tranche immediately upon satisfaction of all applicable closing conditions. In the view of the Company, this was reasonable in the circumstances because the Company wished to complete the Final Tranche as soon as possible.

The Offering will be conducted by the Company utilizing the “accredited investor” exemption of National Instrument 45-106 Prospectus and Registration Exemptions, and also other applicable exemptions available to the Company.

The Debentures issued in the Final Tranche, and the shares into which the Debentures issued in the Final Tranche may be converted (collectively, the Securities), are subject to restrictions on resale under applicable Canadian securities laws for a period of four months and one day from January 20, 2020, the issue date of the Debentures issued in the Final Tranche.

None of the Securities have been or will be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities, in any jurisdiction in which such offer, solicitation or sale would require registration or otherwise be unlawful.

ABOUT INDIVA

Indivas family of cannabis brands set the standard for quality and innovation. Indiva aims to bring its exceptional portfolio of products to Canadians and cannabis enthusiasts around the world as laws permit. Indivas production facility, based in London, Ontario, includes a craft grow operation and an extraction and manufacturing space, which can process 70 tonnes of biomass annually and produce safe, high-quality, cannabis-infused edibles. In Canada, Indiva will produce and distribute the award-winning Bhang Chocolate, Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and other derivative products through license agreements and joint ventures. Click here to connect with Indiva on social media and here to find more information on the Company and its products.

Original press release

January 20, 2020
 

Guest Post by Frank Colombo,Partner and Chief Risk Officer of Aspen Finance LLC

The cannabis debt wave is coming!

Despite solid efforts to reduce cash burn, cannabis companies will require significant amounts of financing in 2020 to complete their build-outs and strategic acquisitions but

The equity market is virtually closed to a large swath of cannabis companies. Even those with solid business positions and clear paths to profitability will find selling equity painful at the new price levels. Expect to see a marked increase in distressed asset sales from companies who probably could have sold equity in early 2019.

The cannabis crash of 2019 occurred because the growth and margin assumptions required to support earlier valuations were too extreme. Investor expectations regarding growth rates, time to cash positive, stabilized EBITDA margins, costs of capital, and the difficulty of eliminating the illegal market, have been adjusted, and cannabis equities are now more fairly priced. The market may recover a bit from here; however, barring a major catalyst like full federal legalization (which doesnt seem likely in the near term), those heady IPO/RTO prices are gone for good.

There is lots of room for debt in the cannabis capital structures. Debt, including equity-linked debt, like convertibles, accounts for only 12.9% of market capitalization for the top 25 U.S. public cannabis companies:

  • Most banks and financial institutions are unable to lend to cannabis companies, and this is unlikely to change in 2020. Private capital is increasingly stepping in to fill the void, driven by the extremely attractive returns.
  • Historically this nascent industry presented too high a risk for fixed rate investors. Accordingly
  • Most cannabis debt has been convertible with low conversion premiums – essentially representing delayed equity issuance. Many deals have paired convertible debt with detachable warrants for combined coverages of well over 100%. The stripped yields (yields with conversion features removed) on these converts are eye-popping and the few straight coupon deals have been equally attractive.

The credit quality of the industry is now at a tipping point. 18 out of 25 U.S. cannabis companies profiled are expected to be EBITDA positive in 2020 (versus 8/25 in 2019), supporting the inclusion of debt in their capital structures. Debt capacity (calculated at 3 times consensus estimates of 2020 EBITDA) is approximately $4 billion compared to outstanding debt of about $1.8 billion ($0.5 billion of which is MedMen alone!).

The trend towards straight debt issuance has begun with the recently announced $275 million 13% term loan from Curaleaf and the $73 million 15% senior secured notes from Harvest Health and Rec. But make no mistake – only the top tier of credits will be able to issue debt without warrants. Pricing for mid-tier credits will likely improve with lower warrant coverages and higher exercise premiums. Meanwhile, in the midst of this new debt issuance wave, 2020 will be the real kickoff for cannabis distressed debt trading, complicated by the unavailability of Chapter 11.

Dont look for any help from the rating agencies in your investment decision

Neither S&P nor Moodys has issued any credit rating in the cannabis market and neither seems to be in any rush to jump in. It will probably take a minimum of the SAFE Banking Act before the agencies get involved.

The accounting can be byzantine, trusted ratios may fail, and neither the companies nor most managements have much operating history.

Many U.S. investors, who are not familiar with IFRS accounting, will struggle with the dramatic and volatile impacts that IFRS mark-to-market adjustments can have on gross margins and inventory valuation. Tried-and-true credit ratios like EBITDA/Interest and Debt/EBITDA may be relatively meaningless when the companies have negative EBITDA and very little debt. In addition, few of these companies have more than 2 years of operating history.

Discerning relative credit quality through the smoke

A simple yet robust credit ranking model will be a prized tool for portfolio managers first dipping their toes in the cannabis debt market. I have developed an effective model that is customizable and incorporates data from financial statements and market pricing as well as optional user inputs on qualitative factors like management quality, regulatory environments, business sector risk, and competition.

The model produces the following ranking of the top 25 public U.S. cannabis companies utilizing Q3:2019 financials and 1/16/20 equity prices:


About the author:

Frank Colombo is Partner and Chief Risk Officer of Aspen Finance LLC, a fund established to lend to and invest in the cannabis industry. Frank is a seasoned executive with over 20 years of success in consulting, credit research, valuation, and financial planning and analysis. He was formerly Global Head of High Yield Research at UBS and Managing Director/Head of Research at Seaport Group LLC.

He holds a BA summa cum laude from University of Colorado, an MBA from Stanford University, and a CFA.

Frank is available for strategy, financial analysis and valuation consulting and can be reached by emailingfcolombocfa@gmail.com.

January 19, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up toreceive a copy in your inbox each Sunday morning.

Friends,

After a rough start to the year, cannabis stocks exploded higher this week, with the New Cannabis VenturesGlobal Cannabis Stock Indexrallying 16.3%. We checked the last fewyears, and this was the best performance since the week ending 1/5/18, when the market jumped 16.6%, and the week before, 12/29/17, when it soared 20.7% as the implementation of California legalization was about to begin.

Driving the index higher was the largest Canadian LPs, with the New Cannabis VenturesCanadian LP Tier 1 Indexsurging 22.5% during the week. These 9 stocks, along with Sundial and Tilray, represent 27% of the broader market index. The recent low nearly matched the prior multi-year low set in November, creating the potential of a “double-bottom” that would hopefully signal the end of the downturn that began in late March:

The rally in the beaten up large LPs and other names follows two years of sharply negative returns for the sector that followed two very strong years. We have been expecting the market to bottom, but the timing has been elusive. Tuesday began with disappointing results and a diminished outlook for Aphria that only marginally hurt its price while not really impacting the stocks of its peers. After the close on Tuesday, Organigram reported number that were much stronger than expected, though many analysts quickly pointed to a large portion of the revenue coming from an unexpected and potentially difficult to repeat source, wholesale. Nevertheless, the market took off. Capping off the week, Canopy Growth delayed the roll out of beverages, and the stock rallied despite this marginal setback.

The improved sentiment extended beyond the large Canadian LPs into the broader market, with volumes accelerating and many names moving substantially higher. While the capital crunch will persist and likely weigh on the market this year, it seems as though traders and investors may be realizing that the worst is probably behind for most companies. For example, the vaping crisis appears to have played out. We continue to point to improvements in the product set as well as distribution in Canada and what we expect to be very strong and profitable growth for some of the largest MSOs as positive factors in 2020. Additionally, we expect to see more states embrace adult-use and medical cannabis through the ballot box and, increasingly, legislative action, a theme that is already playing out in just the first few weeks of the year.


Genomic research from turn-key solutions provider, NRGene, the sponsor of today’s newsletter, shows that using genomics in cannabis & hemp breeding programs can accelerate time to market by 20%-40%.The company is inviting breeders and growers to take the first steps towards a more sophisticated breeding program using their cutting-edge AI technology, tailored to any traits of interest.To learn more or to apply for their merit-based grant program,visit their website here.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app forAndroidorAppledevices,like ourFacebookpage, or follow Alan onTwitter.Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group onLinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters,subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managedNCV Cannabis Stock Indicesto monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View thePublic Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcomingcannabis investor earnings conference calls.

Discover upcoming new listingswith the curatedCannabis Stock IPOs and New Issues Tracker.

Find your place in the cannabis industryby visiting ourCareers and JobsPage and learn which companies are hiring aggressively.

Sincerely,

Alan & Joel

January 17, 2020
 

Exclusive Interview with Legion of Bloom Co-Founder and Chief Procurement Officer Brandt Collings

California cannabis company Legion of Bloom uses a proprietary extraction process to develop its vape products. This year, the company is driving more revenue with cultivation and an expanding distribution platform. Co-Founder and Chief Procurement Officer Brandt Collings spoke with New Cannabis Ventures about the companys market presence, funding and expectations for growth. The audio of the entire conversation is available at the end of this written summary.

The Companys Founders

Collings, originally from Florida, was drawn to the cannabis market in California and moved to the state in 2009. He started his first farm in 2010 and developed an entrepreneurial sense for the industry. He and four other farmers (and friends) decided to pool their knowledge and assets to create Legion of Bloom as the recreational market began to take off in the state.

Together, the team is focused on creating a trusted brand. Russell Weisman serves as CEO; Matthew Woolley is the Vice President of Sales; Troy Meadows is the companys Chief Marketing Officer; and Marcos Morales is Extract Director. A few months after starting the company, James Doherty joined as COO, and, more recently, Adam Banke joined as Director of Sales.

The Legion of Bloom Team

California Market Presence

Legion of Bloom has a 44,000-square-foot indoor facility in Oakland, California, and the company does manufacturing and distribution out of Santa Rosa. The companys administrative offices are located at the latter site. Legion of Bloom distributes its products to approximately 200 dispensaries in the state.

Cultivation and Extraction

The Legion of Bloom team came from a background of outdoor and greenhouse growing, but the company had the opportunity to move inside in Oakland. Now, experimenting with a couple of different lighting technologies, it is focused on using grow methods to increase the plants cannabinoid and terpene content.

Legion of Bloom Uses a Proprietary Extraction Method to Develop Its Products

The companys proprietary extraction method is a version of steam distillation adapted for the cannabis plant. Traditional steam distillation results in a high level of THC-to-CBN conversion, but Legion of Blooms method eliminates that conversion, according to Collings.

Over time, the company has used this method to scale while maintaining quality and yield. Right now, the company is able to do 350 to 400 pounds a week with a single shift, but its new machine will allow for 600 to 700 pounds per day with one shift, according to Collings.

Product Portfolio

The Legion of Bloom product portfolio includes its flagship product The Monarch, its California Sauce live resins and Pax pods. The Monarch is a single-origin, solventless cartridge available in half a gram or one gram. The California Sauce live resins, just launched in Q4 of 2019, are gaining a lot of traction, according to Collings. Legion of Bloom has been a Pax brand partner since 2017, and the company offers a strain-specific product, a one-to-one THC and CBD product and a live resin Pax Pod. There are no immediate plans to launch new products.

Legion of Bloom Products

A Growing Distribution Platform

The company has always done self-distribution, but now, it is adding other brands in different product categories to its distribution platform. For example, the company took on Humboldt Trees as its first flower brand. The company is looking to add other companies, including an edible brand and a dabbable, solventless brand. The goal is to build a platform that supports a handful of brands with demos, sales and detailed reporting, according to Collings. Legion of Bloom is aiming to create a house of brands, one in each category, to round out its portfolio.

Looking Beyond California

Moving beyond California has always been of interest to Legion of Bloom. Rather than investing heavily in infrastructure, the company would expand its presence through licensing agreements. Recreational states are of the most interest. Collings notes Illinois as a market of interest, as well as Arizona and Nevada. He would also like to find a way into the Florida market but acknowledges the high barrier of entry.

Funding

The founders self-funded Legion of Bloom until November 2018, at which point the company took on $3 million in funding (a minority stake), according to Collings. Now, the company is in the process of raising $4 million to help support its operating expenses and expansion plans.

Going forward, Collings is interested in funding via an equity deal or a convertible note. He recognizes the possibility of fundraising via debt financing and remains open to any conversation around raising capital.

With the shrinking capital markets in mind, M&A will be a big topic of discussion this year, according to Collings. He foresees many companies merging, acquiring others, or being acquired. Becoming profitable, focusing more on metrics like EBITDA and profit margin, will be a key focus for the industry this year, he notes.

Ramping Up in 2020

Legion of Bloom is aiming to go from $6 million in brand sales to $12 to $15 million this year. The company will also add revenue with its cultivation operations, which is expected to generate an additional $20 to $30 million in revenue when completed. With a focus on ramping up this year, that number could be a little less, according to Collings. The distribution platform adds another revenue stream.

While tax implications and capital issues remain a challenge, the 44,000 square feet of cultivation represents a significant opportunity for Legion of Bloom in 2020, according to Collings.

To learn more, visit the Legion of Bloom website. Listen to the entire interview:

January 07, 2020
 

Expo New Mexico officials agreed to drop a pending appeal and pay $69,600 to medical marijuana company Ultra Health as part of a lawsuit settlement. The settlement comes almost a year after a judge ruled that event company Expo New Mexico had violated Ultra Healths First Amendment rights by restricting its free speech. The legal […]

New Mexico medical cannabis firm wins $69,000 in lawsuit settlement is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

January 07, 2020
 

Adult-use cannabis retailers in Illinoishave sold almost $11 million of recreational marijuana since sales began Jan. 1. According to state Department of Financial and Professional Regulation, the 37 licensed recreational marijuana stores registered more than 271,000 transactions since the launch of Illinois’ rec industry. On the first day alone, sales nearly reached$3.2 million. Sales were […]

Illinois’ recreational marijuana sales near $11 million is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

January 07, 2020
 

The number of Canadian cannabis producers with fewer than six months of cash on hand has increased over the past quarter, reflecting disappointing earnings and front-loaded capital expenditures, according to an analyst. Greg McLeish of the Toronto office of Mackie Research Capital found that 25 companies are down to half-a-year of cash when capital expenditures […]

Analyst warns of shelved expansion, restructuring as cannabis firms teeter on edge is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

January 07, 2020
 

Voters in South Dakota will decide this year whether to legalize recreational marijuana for adults 21 and older. Voters also will decide in November the fate of a measure to allow medical marijuana for patients with serious health conditions South Dakota will become the first state to vote on both medical marijuana and adult-use legalization […]

South Dakota to vote on adult use, medical cannabis is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

January 07, 2020
 
Harvest Files Suit Against Falcon International, Inc. PHOENIX, Jan. 7, 2020 /PRNewswire/ — Harvest Health & Recreation Inc. (CSE: HARV, OTCQX: HRVSF) (“Harvest”), a vertically integrated cannabis company with one of the largest and deepest footprints in the U.S., today announced that yesterday Harvest filed suit against Falcon International, Inc. (“Falcon”) requesting termination and rescission […]
January 07, 2020
 
TOWSON, Md.,Jan. 7, 2020/PRNewswire/ —United Food and Commercial Workers Local 27 (UFCW27) and Vireo Health International, Inc. (“Vireo” or “the Company”) (CNSX: VREO;OTCQX:VREOF), today announced that workers at its wholly-owned subsidiary, MaryMed, LLC (“MaryMed”), voted overwhelmingly to ratify a Collective Bargaining Agreement and officially join the ranks of UFCW Local 27. The three-year agreement marks […]
January 07, 2020
 

A few adult-use cannabis retailers around Illinois stopped selling over the weekend and plan to remain closed for at least part of this week as they deal with product shortages. Recreational marijuana sales began in the state on Jan. 1, and sales almost reached $3.2 million on the first day. Sales fell to just under […]

Some Illinois marijuana stores run out of product in first days of sales is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

January 07, 2020
 
Craft rolled Jack Haze is available online and in-store LONDON, Ontario, Jan. 07, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that it has shipped its first cases of Sugarleaf by 7AC (Sugarleaf). In October 2019, Indiva announced that it had signed a definitive agreement (the “Agreement”) […]
January 03, 2020
 

A staunch proponent of researching medicinal marijuana for the treatment of military veterans plans to retire from the U.S. House of Representatives. Rep. Phil Roe of Tennessee, a Republican who serves as the ranking member of the House Committee on Veterans’ Affairs, said Friday he will retire at the end of the year, according to CNN. He introduced

Medical marijuana proponent Roe says he’s retiring from US House is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more details, George Scorsis

January 03, 2020
 

A judge denied a request for a temporary restraining order against the state of Missouri that was sought by an applicant for a medical cannabis licensee. Paul Callicoat and his family sued the Missouri Department of Health and Senior Services after their application for a license was among hundreds denied by the agency. They planned

Missouri medical marijuana grower at odds with state over license denial is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

January 03, 2020
 

A medical marijuana dispensary in Michigan won a design award from the International Council of Shopping Centers (ICSC). Flint-based Common Citizen won a Gold Award for retail design from the ICSC, a worldwide trade group for the shopping center and retail real estate sector. The award is the first the ICSC has bestowed upon a cannabis retailer.

Michigan medical cannabis store wins mainstream design award is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

January 02, 2020
 

Thousands of marijuana enthusiasts - including Illinois' lieutenant governor - turned out on a cold New Year's Day to mark the historic start of adult-use cannabis sales in what could become one of the biggest U.S. recreational markets in the nation.

Long waits and some sticker shock, but Illinois recreational marijuana market launches with a roar, nearly $3.2M in sales is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

January 02, 2020
 

MJardin Group, a cannabis production company with offices in Denver and Toronto, on Thursday said it has agreed to sell its GreenMart of Nevada cultivation facility in Cheyenne to a division of Phoenix-based Harvest Health & Recreation. MJardin plans to use the proceeds to reduce its debt and for working capital. The company bought GreenMart in July. For

MJardin selling Nevada marijuana grow facility for $35 million is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

January 02, 2020
 

hemp cbd fda

2019 was, to put it lightly, an intense year for the hemp and hemp-derived cannabidiol (“Hemp CBD”) industries in the United States. We saw the implementation of the 2018 Farm Bill,  strongly worded statements by the Food and Drug Administration (“FDA”) that Hemp CBD was unlawful in many products followed (amazingly) by almost zero enforcement, the issuance of interim hemp production regulations by the United States Department of Agriculture (“USDA”),  and the development of hemp cultivation and Hemp CBD bans, regulations, and/or gray areas in nearly every state in the union (see the Canna Law Blog’s ongoing 50-state survey series that we post every Sunday).

Though 2019 was indeed busy, the U.S. hemp and Hemp CBD industries are far from normalized. The next few years will continue to be equally busy and we expect there to be dramatic changes across the board, both good and bad. Here are our top four predictions for 2020.

1. State Hemp Production Rollouts

For anyone who isn’t deeply familiar with the 2018 Farm Bill by now, it set up a system where states and tribes were required to come up with hemp production plans for approval by the USDA. Some states submitted plans to the USDA immediately, but it only began its substantive review after issuing its interim regulations. As of today, numerous states and tribes have submitted or are in the process of submitting plans (you can see the actively updated list here), but only a small handful have actually been approved. In 2020, we expect that the USDA will approve most of the plans, or force states or tribes to change their plans up to comply with the USDA’s rules. Either way, state-level production is expected to kick into full gear under the 2018 Farm Bill.

2. FDA Enforcement

To date, the FDA hasn’t really done much about Hemp CBD products it claims are unlawful. Until late November 2019, all the FDA did (sometimes in concert with the FTC) was issue a small handful of warning letters to companies it claimed made unlawful products or advertised products in an unlawful way. But on November 29, it sent 15 warning letters simultaneously. While, to date, the FDA has not initiated any kind of public enforcement proceeding or litigation, the fact that it went from just a small handful of letters over 11 months to 15 in one day signals that the FDA is shifting into enforcement mode. 2020 may be the year where we see actual enforcement or litigation.

3. Hemp CBD Importation

Over the last few months, our hemp attorneys have fielded numerous questions about importing raw hemp or Hemp CBD products, mostly from South America and Europe, but even from Asia or Africa. Importation can trigger the jurisdiction of a number of agencies, including Customs and Border Protection, the FDA, and/or the USDA. I say “and/or” because importing products usually involve multiple agencies. For example, in this ruling, CBP noted that some Hemp CBD products were also subject to federal laws that are administered by the FDA. To boot, importation also involves the consideration of laws in the country from which products are being imported and, in some cases, international treaties. Notwithstanding the extreme legal complexity of importing hemp and Hemp CBD, we expect to see a huge uptick in 2020.

4.  FDA Regulation of Hemp CBD

2020 may be the year that the FDA picks up the pace and does something clear with Hemp CBD. After all, Congress has been admonishing the FDA to speed things up for months now, and just recently an appropriations bill was signed that apparently directs $2 million to the FDA to finish its Hemp CBD regulations. Still though, at this point, FDA regulations on Hemp CBD are more of a hope or wish than an expectation. If they do come out in 2020, things we expect to see are testing requirements, packaging and labeling rules, advertising restrictions, Hemp CBD concentration limitations, etc. Hopefully, we will have more clarity in the next few months.


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george scorsis

January 02, 2020
 

A recent rash of break-ins at marijuana companies in Washington state has spurred regulators to remove an online map that detailed where cannabis producers and processors were located. “We had a request by some of our stakeholders feeling that having those addresses posted on the website was an easy way for them to be found

Washington state removes online map of cannabis businesses in response to recent burglaries is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


[Read More ...]

additional information, George Scorsis

December 31, 2019
 

Happy New Year! Before we cue up our favorite version of Auld Lang Syne, pop the CBD-infused champagne, and begin to celebrate the roaring 20s, we’d like to take a look back.

2019 was another big year for cannabis, and another busy year for the Canna Law Blog. We dove deep into our archives on Facebook, Twitter, and the nitty-gritty Google searches to see what you, the reader, were most interested in this year. These are the Canna Law Blog’s Biggest Hits of 2019, in alphabetical order:

  1. BREAKING NEWS: FDA Issues More Guidance on CBD Products
  2. Charlotte’s Web Faces Class Action Lawsuit for Improperly Marketing CBD Products
  3. FDA Enforcement Against Hemp-CBD Products Has Begun
  4. Going Postal: USPS Provides Guidance on Mailing Hemp-CBD
  5. Grading the Democratic Presidential Candidates on Marijuana: Elizabeth Warren
  6. Grading the Democratic Presidential Candidates on Marijuana: Bernie Sanders
  7. New Trademark Litigation Against “Stone Patch” Cannabis Products Calls Out an Industry Trend of Copycats
  8. The FDA Issues Hemp-CBD Warning Letters and a Consumer Update
  9. Utah MLM Essential Oils: doTERRA’s Copaiba Oil Challenges Young Living’s CBD Oil
  10. Young Living vs. doTERRA: Utah MLM Companies and the CBD Race

What’s the overarching theme of our top 2019 posts? Three letters: C-B-D. It turns out our readers were very interested in CBD, which should come as a surprise to absolutely no one. Our series on presidential candidates was also popular, with Elizabeth Warren and Bernie Sanders garnering the most interest. There is also a budding interest in Utah cannabis, especially when it comes to CBD.

In addition to the top ten list, which was based on a number of different metrics, we also noticed some trends specifically on social media.

Our followers on Facebook “liked” our posts on California and international:

On Twitter, our followers were especially interested in posts on federal issues:

With 2019 fading into the rearview mirror, we are looking forward to the future. We’ll keep writing about CBD, politics, litigation, and even Utah in 2020. We’ll also keep international cannabis posts coming as next year is going to be huge for the international cannabis market. Expect to also see our authors write about states that legalize marijuana in 2020, including Illinois and Michigan, who will ramp up their recreational markets in the new year. We are also open to your ideas as to what we should cover in 2020. Feel free to drop your suggestions in the comments below or reach out of Facebook or Twitter.


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george scorsis

December 31, 2019
 

The start of the new year will launch a flurry of activity for Illinois’ recreational cannabis industry, a sizable new market that will unleash stiff competition for business licenses and could eventually reach $2.5 billion in annual sales. On Jan. 1, recreational sales will begin through existing medical marijuana dispensaries in the state. The next

Chart: Illinois’ new adult-use marijuana market to attract fierce competition is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 30, 2019
 

Bermuda released the draft legislative blueprint to establish a domestic medical cannabis industry, which Attorney General Kathy Simmons said would create business opportunities for local enterprises and attract international investment. The government is inviting the public to submit feedback on the proposed Medicinal Cannabis Bill and corresponding Medicinal Cannabis Licensing Regulations. The proposed law and

Bermuda releases draft medical cannabis law and rules to ‘spark entrepreneurship’ is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 30, 2019
 

oregon cannabis marijuana hemp

Here we are at the end of 2019, which means it’s time for the fourth annual “State of the State” post on Oregon cannabis (see the 2018 post here; 2017 here; and 2016 here). This past year has been a reckoning of sorts for Oregon cannabis: things slowed down on the marijuana side but accelerated on the hemp side (albeit in fits and starts). Below is a high-level summary of what we are seeing in Oregon cannabis as we move into the new year.

Fewer new laws and regulations.

From 2015 to 2018, the Oregon legislature passed a large number of cannabis-related bills in every session, including omnibus legislation, and the state cannabis agencies (OLCC, OHA and ODA) engaged in seemingly non-stop rulemaking. In 2019, the full session was nothing like sessions past. No omnibus bills were enrolled, and only a few narrow laws eventually passed. We summarized those laws in July, but here is the shorthand:

  • Senate Bill 218 allows curtailment of production licenses.
  • Senate Bill 582 opens Oregon up for interstate trade once the federal environment relaxes.
  • Senate Bills 420 and 975 deal with criminal charges and expungement.
  • Senate Bill 364 protects cannabis production from “systems development charges.”

Of these bills, only Senate Bill 218 had an immediate, appreciable impact on the industry at large, especially as OLCC moved stalled applications out of its queue and tightened up license transfer policies. But agency rulemaking was mostly standard fare at each of OLCC, OHA and ODA, and the regulatory environment was less dynamic than ever – which is probably a good thing.

For 2020, expect Oregon to pass a hemp bill related to Oregon’s implementation of the 2018 Farm Bill, and perhaps work around the edges even less energetically with respect to marijuana. It will only be a five-week session.

Status quo in the marijuana industry.

Anecdotally, 2019 was nothing like years past in terms of M&A activity for Oregon cannabis. We helped buy and sell businesses and their assets, place investments, etc. throughout the year, but the fever pitch of Oregon cannabis M&A seems to have peaked and passed. Some of this may be due to the secondary markets maturing in other states, some may be due to the general malaise affecting Canadian cannabis stocks (a significant source of Oregon investment), some may be due to the brutal timelines associated with OLCC approvals, and some may be a general settling out and industry maturation.

For those staying the course, people have begun to figure out how to make money, or at least to survive notwithstanding oversupply and other market challenges. Perhaps for this reason, we also saw a corresponding decrease in litigation on the THC side, aside from a few marquee filings. From the regulatory perspective, we saw continued uptick in OLCC enforcement actions. We also saw regulators leave state jobs for industry jobs and a few of the larger THC companies draw in c-level talent from other industries. These are all further signs of program maturation.

With respect to licenses issued, last year at this time there were 1,110 active producers; this year, that number increased only slightly to 1,152. On the retail side, the increase was larger in both absolute numbers and by percentage, moving from 606 active licensees to 664. Look for licensee growth to essentially flatline in 2020, and for new market entrants to continue to come in via “side doors” like co-packing and branding agreements.

Big boom for hemp.

Farmers planted a record number of hemp acreage this year. According to ODA statistics, nearly 2,000 growers registered to plant over 63,000 acres in 2019. This was a profound increase from 2018, which saw 568 growers and 11,754 acres registered. Overall, Oregon grew more hemp than almost any state in the country this year, and continued to pioneer and promote hemp industry development.

Nearly all Oregon hemp planted in 2019 was grown for CBD, but not everything worked out as planned. First, prices for raw and refined products dropped dramatically. Second, much of the hemp that was planted went unharvested or unsold due to a combination of bad weather and inexperience. For these and other reasons, our office handled more hemp-related litigation than ever before. We expect that unfortunate trend to continue in 2020.

The regulatory environment for hemp continues to evolve both federally and in Oregon. By the time the 2020 planting season rolls around, USDA rules should finally be in place and Oregon will have made some adjustments to its statewide program, as mentioned above.

In 2020, expect Oregon cannabis growth to continue on the hemp-CBD side rather than the THC side. This will be true of everything from intellectual property development to new products and services. Should be fun.


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George Scorsis

December 30, 2019
 

Cannabis markets in Canada and elsewhere in the world went on a roller-coaster ride in 2019, as irrational expectations gave way to more realistic market assessments. Global medical marijuana markets, corporations and top executives experienced breakthroughs and setbacks this past year. That’s the gist of the 10 most widely read business stories carried by Marijuana Business Daily

Top 10 global cannabis stories of 2019: WHO backs rescheduling, Linton out at Canopy, Canadian firms eye US & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


[Read More ...]

George Scorsis

December 30, 2019
 

The U.S. cannabis industry experienced some momentous moves forward on the legalization front in 2019, but it also faced significant obstacles that reflected how the licensed marijuana sector is continuing to mature and why it cannot always expect boom times and unfettered growth. The top page views of the year at Marijuana Business Daily show

2019’s top US cannabis business stories: Vape crisis, California MJ industry challenges, landmark legalization moves & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 29, 2019
 

nevada hemp cannabis

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday, we summarize a new state in alphabetical order. Today, we cover Nevada.

Pursuant to the 2014 U.S. Farm Bill, the 2015 Nevada Senate Bill 305, the 2016 Nevada Senate Bill 396, and the 2019 Nevada Senate Bill 209, industrial hemp and Hemp-CBD products may be produced in Nevada under the supervision of the Nevada Department of Agriculture (“NDA”) so long as the crop and its finished products contain no more than 0.3% tetrahydrocannabinol (“THC”).

The sale of Hemp-CBD products is allowed under Nevada law. However, not every category of Hemp-CBD products may be lawfully sold in the state. The Nevada Department of Health and Human Services (“DHHS”), along with many county Departments of Health, have publicly adopted the Food and Drug Administration (“FDA“)’s position on the sale and marketing of CBD in foods and dietary supplements. Some, including the Washoe County Health District, have taken enforcement actions by seizing these products from local stores. In addition, the state’s Division of Public and Behavioral Health (“DPBH”) recently published guidelines that further reiterate that only hemp ingredients generally recognized as safe (“GRAS“) can be lawfully sold in the state.

Although the sale of CBD-infused foods and dietary supplements is strictly prohibited in the state, the sale of other categories of products, such as CBD-infused smokables and cosmetics, is neither expressly authorized nor prohibited.

Chapter 557 of the Nevada Revised Statutes (“NRS”) legalized the sale of Hemp-CBD products “intended for human consumption,” which means “intended for ingestion or inhalation by a human or for topical application to the skin or hair of a human”, so long as these products  meet specific testing requirements. See NRS 557(270)(4)(b). Both the NDA and the DHHS have been tasked with developing regulations on this issue; however, according to the Department of Agriculture’s Industrial Hemp FAQs, the agency does not regulate processed finished Hemp-CBD products for human consumption; the FDA and the DHHS do. It’s worth noting that while the DHHS regulates the sale of foods and dietary supplements, it does not oversee the sale of cosmetics, which are regulated by the DPBH. As of the date if this post, neither the DHHS nor the DPBH have adopted testing rules, which means the sale and marketing of these categories of products  remain uncertain, unregulated, and therefore, risky in Nevada.

For previous coverage in this series, check out the links below:


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George Scorsis

December 28, 2019
 

(This is an abridged version of a story that appears in the November-December issue of Marijuana Business Magazine.) An unthinkable collaboration not long ago, more and more marijuana businesses and mainstream companies are joining forces on products such as sleep-inducing CBD gummies, infused beverages and pharmaceutical-grade medications. This melding of unlikely bedfellows is a sign that

The stories behind cannabis companies and their partnerships with mainstream businesses is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 28, 2019
 

cbd fake news

When it comes to hemp-derived CBD (“Hemp CBD”), the best advice we can give is not to trust most of what’s out there on the Internet. No, I am not talking about the claims of medical benefits for Hemp CBD (which could be the subject of its own entire post), but rather about whether or not Hemp CBD is legal.

As I write this post, the 2018 Farm Bill is just over a year old. Generally, when such a significant law has been on the books for about a year, it’s easy to find reliable and accurate information about that law online. But for whatever reason, there is still so much inaccurate information about Hemp CBD online in the wake of the 2018 Farm Bill.

For example, anyone who does a Google search for “Is CBD legal in X state” will likely see numerous sources that claim that CBD is completely legal, or at least fail to address critical legal nuances that may clearly bar one class of products (such as Hemp CBD foods) while leaving others in a gray area (such as cosmetics). A person can even find websites making claims that Hemp CBD is lawful  in states like California that have made clear since months before the 2018 Farm Bill was passed that certain Hemp CBD products are not lawful.

Many dubious sources also ignore the FDA’s long-stated position that some Hemp CBD products are not lawful. I still even hear, on a semi-regular basis, people say that “I read online that the 2018 Farm Bill legalized all Hemp CBD products, right?” (If you couldn’t guess where I was going with this, the answer is no.) The persistence is remarkable.

I can’t comment on the reason why there is so much incorrect information about Hemp CBD online. But I can say that there can be some pretty severe consequences for Hemp CBD businesses who rely on what they read after a five-minute Google search to make big-picture business decisions. On numerous occasions, our Hemp CBD lawyers have spoken with business owners who have done just that, and in some cases have invested a lot of money into proposed ventures that need to be completely scrapped or at least heavily retooled.

The moral of the story is that businesses need to do their homework before jumping into the Hemp CBD game. It’s not always easy to do tons of up-front work in an industry that is so rapidly evolving and when getting in first can mean more success. But doing the leg work up front can often mean the difference between being on the FDA or some state agency’s short list for an enforcement action, or operating without avoidable problems.

While Google can be a valuable starting point in many industries, it should not be the only source that Hemp CBD businesses should look to when developing products or strategies.


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George Scorsis Liberty Health Sciences

December 27, 2019
 

Los Angeles-based MedMen Enterprises, one of the most high-profile cannabis retailers in the United States, said Friday it plans to raise a total of $74 million by selling noncore assets and initiating a stock offering,

Marijuana raise is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 27, 2019
 

Quebec’s largest federally licensed cannabis producer has moved its corporate head office from Gatineau, Quebec, to its existing office in Ottawa, Ontario. Hexo Vice President of Communications Isabelle Robillard wrote in an email to Marijuana Business Daily that the company tried to avoid the administrative change, but “this choice was imposed on us as we are

Cannabis firm Hexo moves head office from Quebec to Ontario is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 27, 2019
 

British Columbia-based Emerald Health Therapeutics has requested that Health Canada not continue with a cannabis processing license for one of its subsidiaries as part of a strategy to decrease unnecessary regulatory risk. Federal cannabis licenses were highly valued commodities in recent years, but their worth has waned as the number of permits has swelled to

Emerald pulls plug on affiliate’s federal cannabis license to decrease risk is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 27, 2019
 

Business threats against legal cannabis stores California are so severe that it may be necessary for voters to address some of the issues at the ballot box, according to the annual draft report of the Cannabis Advisory Committee.

Marijuana business threats is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 27, 2019
 

oregon hemp litigation due diligence

Although I am a litigator who loves to be in court, I often counsel clients on how to avoid litigation – even though it may mean less work for me in the future!  Front and center in these discussions are: 1) the importance of due diligence prior to entering a new business relationship and 2) the importance of a fulsome contract written by at attorney knowledgeable in the hemp industry that accounts for the likelihood that things may not go as planned. Two new Oregon lawsuits involving hemp reflect the continued importance of conducting due diligence on a potential business partner in this industry. (Please note that I do not represent any of the parties in the litigation and do not write about litigation matters involving my clients).

Hettervig v. Morell et al. – Hemp farmer alleges harvester did not perform, causing $1.2 million in damages

The plaintiff cultivated 240 acres of hemp around Madras, Oregon. By September 2019, the crop was near ready to harvest and the plaintiff began to reach out harvesters. According to the complaint, plaintiff contacted the defendant who told plaintiff he was capable of harvesting the crop and would come to the farms with two drapper heads to swather the crop, and with four-to-five combines to combine the crop. Defendant said he could swather and combine the crop in about 15 days at a cost of $1,500 per acre, or $360,000 overall. Defendant required 1/3 of the overall cost ($120,000) be paid up front. In October, plaintiff agreed to hire the defendant and his company and paid the deposit. The defendant began to swather the crop on October 10 but over the course of the next two weeks appeared at the farm sporadically, leaving the crop unbundled and decaying in the elements. By October 22, defendant had stopped work altogether leaving much of the 240-acre crop downed and decaying. The overall yield for the crop was diminished by half. It turned out, alleges the plaintiff, that defendant did not have the combines available to perform the work as promised.

These factual allegations form the basis of plaintiff’s $1.2 million lawsuit which alleges causes of action for breach of contract, unjust enrichment, negligence, and fraud.

The complaint says very little about what due diligence the plaintiff performed when deciding to hire the defendant (and the complaint need not have done so). But I am left wondering whether some or all of the plaintiff’s woes could have been avoided by taking steps to investigate the defendant – who is not from Oregon. Along with requesting and contacting a list of defendant’s references, the plaintiff could also have taken steps such as placing the deposit in escrow and investigated whether the defendant had sufficient resources (including any applicable insurance policies) to make the plaintiff whole in the event the crop was improperly harvested.

The lesson for farmers is that one needs to be very careful about selecting business partners, vendors, and other third parties. (That said – the allegations in the Complaint are for now just that, allegations).

Patel v. Horton et al. – Investors in hemp extraction alleges partners defrauded them out of $1 million

Plaintiffs are individuals and a New York company that came to Oregon to invest in the industrial hemp extraction sector. Defendants are Oregon individuals and an Oregon company that allegedly represented to plaintiffs that they owned an established industrial hemp extraction business complete with production equipment, existing revenue-generating contracts, warehousing space, and other infrastructure necessary to ply their trade.  Defendants allegedly represented they had equipment and contracts to process more than 2 million pounds of industrial hemp per month and promised significant returns on investor capital.

Based upon the representations of the defendants, plaintiffs invested more than $600,000 into a supposed partnership with the defendants only to later learn that none of the defendants’ representations were remotely true: they had no equipment, no contracts, no infrastructure of any kind. Defendants instead converted $600,000 worth of industrial hemp extraction equipment and investment capital provided by plaintiffs to their own uses.

The complaint contains numerous allegations constituting “red flags” from a due diligence standpoint. For example, one of the plaintiffs flew to Oregon in March 2019 and visited the defendants’ production facilities. The plaintiff did not see any of the hemp extraction equipment defendants purported to own; instead plaintiff was shown a video of the equipment that was supposedly at an off-premises secure storage facility. Not long after the plaintiffs agreed to go into business with defendants and loaned them $150,000.

A few months’ later, plaintiffs became suspicious when defendants failed to show any revenue or to produce any final products. At the same time, defendants threatened to stop production entirely unless plaintiffs paid money to them. In response plaintiffs sent defendants another $200,000. Yet just a few months’ before, defendants had sent the plaintiffs a “Hemp Extraction Business Proposal” in which defendants represented they had “executed” tolling contracts to process over 1 million pounds of biomass and which they projected net monthly income of $8.4 million.

During all of this, plaintiffs attempted to formalize a business arrangement which defendants refused. In October, another plaintiff visited Oregon to inspect the production facilities and allegedly learned that the defendants were operating an entirely different hemp extraction business. The complaint alleges fraud, unlawful trade practices, conversion and breach of contract. Plaintiffs seek damages in the amount of $1,000,000.

The possible forms of due diligence abound in this case. For example, the plaintiffs apparently did not demand access to the secure storage facility where the equipment was located and accepted a video. The plaintiffs did not get personal guarantees on the loans. It does not appear that plaintiffs asked to see the purported underlying tolling contracts or defendants’ financial statements, bank statements, corporate documents, letters of credit, leases, insurance policies, and other documentation. Nor does it appear that the plaintiffs had someone knowledgeable about hemp extraction examine defendants’ financial projections. Perhaps some combination of these inquiries could have saved plaintiffs’ $600,000 and the attorneys’ fees to try and recover their investment. But its too late for that now.


For more about the importance of due diligence and what kind of due diligence may be appropriate for your business or potential investment, see below:


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George Scorsis website

December 27, 2019
 

Aurora Cannabis loses two of its most important executives at a crucial time as the company continues to struggle, Curaleaf secures $275 million in debt from a group of lenders, Illinois recreational marijuana retailers get ready for large customer turnout and high demand for New Year’s Day launch – and more of the week’s top MJ business news.

Week in Review: Aurora Cannabis execs depart, Curaleaf raises $275M in debt, IL readies for adult-use MJ sales & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 26, 2019
 

Ohio’s State Medical Board set a Dec. 31 deadline for petitions for new conditions and illnesses that would qualify for treatment by medical cannabis.

medical marijuana conditions is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 26, 2019
 

eu trademark marijuana cannabis

On December 12, 2019, the EU General Court upheld an EU Intellectual Property Office ruling that blocked registration of a mark that “an average person would assume references marijuana use” because it was “contrary to public policy.” The mark in question was CANNABIS STORE AMSTERDAM with green cannabis leaves in the background, and the court held that the public would perceive this mark (reasonably, we think) as referencing narcotics.

The court’s decision does not ban all marks containing a reference to cannabis, which is, under certain circumstances, legal in many EU countries. However, the court’s decision effectively blocks registration of marks that an average person would assume reference narcotic marijuana use.

The trademark applicant in this case was Santa Conte, and the goods and services covered by the application were as follows:

  • Baked goods, confectionery, chocolate and desserts; salts, seasonings, flavourings and condiments; ice, ice creams, frozen yoghurts and sorbets, savoury pastries;
  • Soft drinks; beer and brewery products; preparations for making beverages;
  • Services for providing food and drink.

One of the applicant’s arguments against refusal was that the mark did not reference any narcotic because the psychoactive substance in marijuana comes from the flower of the plant, not the leaves, as pictured in the mark. The court reasonably rejected this argument, stating that “the particular shape of this leaf is often used as a media symbol for marijuana, understood as the psychoactive substance that is obtained from the dried inflorescences of female cannabis plants.” The court also reasoned that what mattered most in the analysis of whether the mark should be rejected for public policy reasons was public perception, and that it didn’t matter if that perception was based on inaccurate definitions from a scientific or technical point of view, and “irrespective of whether the consumer has all the information available.”

The court also determined that the applicant’s use of the word “Amsterdam” in its mark would “be understood by the relevant public as referring to the city in the Netherlands which tolerates the use of drugs and is known for its ‘coffee shops.’”

For applicants seeking to register hemp or marijuana-related trademarks in the EU it will be important to consult with a trademark attorney to determine whether the mark could be considered contrary to public policy or to accepted principles of morality as perceived in reference to the relevant public of the EU. The court noted that the relevant public in this case was not only the English-speaking public, “but more broadly, the public in the European Union,” and that the relevant public should not be limited only to potential customers within a certain age range or within a certain member state that has taken a less strict regulatory approach to regulation of cannabis. The court also pointed out that in many countries of the EU, including Bulgaria, Finland, France, Hungary, Ireland, Poland, Slovakia, Sweden and the United Kingdom, products derived from cannabis with a THC content exceeding 0.2% are regarded as illegal narcotics.

This decision will be important for trademark applicants in the EU seeking protection of cannabis-related trademarks, and business owners should be careful not to adopt brand names that could be deemed contrary to public policy.


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George Scorsis Aphria

December 26, 2019
 

Illinois cannabis retailers are thrilled at the prospect of large crowds of customers and high demand at 6 a.m. CT New Year’s Day, which is when state lawmakers said several stores can begin adult-use recreational sales. Anticipating long lines and cold temperatures, companies are going the extra mile to keep customers happy. One business, for

Illinois marijuana retailers in potential $2B market expect long lines, possible supply shortages as adult-use sales kick off Jan. 1 is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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additional info, George Scorsis

December 25, 2019
 

hannukah cannabis

Wishing all of our readers, along with friends and families, the very best this holiday season.

Whether you celebrate Hanukkah, Christmas, Kwanzaa, Winter Solstice, Festivus, or something else, we hope you can kick back and enjoy this wonderful time of the year.

Happy holidays!


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george scorsis

December 24, 2019
 

Former Maryland state lawmaker Cheryl Diane Glenn, a leading advocate for legalizing adult-use marijuana in the state, is facing several federal charges for fraud and bribery, including an allegation she voted to increase the number of medical cannabis grower and processing licenses available to an unnamed, out-of-state company.

Marijuana charges is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 24, 2019
 

Linx Card, which touts itself as a “primary provider” of debit merchant services to marijuana retail stores, has faced a flurry of lawsuits in recent months from cannabis businesses that allege the California firm owes them millions of dollars. Linx includes a platform where customers can load up Linx “gift” or debit cards at a

Cannabis payment provider allegedly owes millions to MJ retailers is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more details, George Scorsis

December 24, 2019
 

bank credit union hemp

Our firm represents a number of financial institutions and even a federal agency on banking state-legal cannabis. We have practiced in the space ever since the 2014 FinCEN guidelines were issued and it’s been slow going for the most part. The number one question we have received lately is: “do you know a bank or credit union that will bank my hemp-CBD business?” The answer to this question, in short, is probably not. And if a financial institution is indeed banking your hemp-CBD business, they’re certainly doing it at their own risk in the face of the Bank Secrecy Act and federal anti-money laundering laws. This is because the legal status of hemp-CBD federally is currently precarious at best.

Banking regulators recently clarified (including for credit unions) that financial institutions should have no issue banking lawful hemp businesses pursuant to the 2018 Farm Bill. Industrial hemp is now excluded from the definition of “marijuana” and off of the Controlled Substances Act (“CSA”) altogether, and we have now have U.S. Department of Agriculture (“USDA”) interim regulations for state and tribal hemp cultivation plans under the ’18 Farm Bill. However, no banking guidance exists for hemp-CBD businesses, which are very different from just hemp cultivators. And under the ’18 Farm Bill, lawful hemp businesses, federally speaking, mean only hemp cultivators/producers. Furthermore, the 2014 FinCEN guidelines have nothing to do with hemp or hemp-CBD businesses; they exist solely to guide financial institutions on how to provide financial services to state-licensed medicinal and adult-use cannabis businesses.

Banks and credit unions are in a weird legal area then when it comes to hemp-CBD. They have the green light on openly banking hemp cultivators like any other legal business and they have fairly robust guidance on how to (if they want to) bank state-licensed cannabis businesses via an elevated SAR filing system while following other invasive “know your customer” diligence protocol. But when it comes to hemp-CBD, there’s good reason though for banks and credit unions to be confused and/or conservative.

And here’s why.

While the 2018 Farm Bill removes hemp from the CSA and permits the cultivation of industrial hemp (which previously required a permit from the Drug Enforcement Administration) pursuant to state or tribal cultivation plan that must be approved by the USDA, that federal law is silent about the legality of hemp-CBD. Unless you’ve been living in a cave, you know that hemp-CBD is literally everywhere and in almost every consumer product you can think of (see here for a CBD-infused sports bra for example). Hemp-CBD is the main hemp consumer market, and businesses of all sizes are chomping at the bit in the food, beverage, and supplement world to get a handle on manufacturing, distributing, and selling hemp-CBD products as the newest wellness craze. At the same time, the Food and Drug Administration (“FDA”) and certain states (including California) are up in arms against hemp-CBD going into food and drinks, and the FDA  doesn’t consider hemp-CBD to be a supplement exempt from drug trials if you’re making curative or bodily health claims about hemp-CBD products. All told, the only legally “safe” hemp-CBD category is probably hemp-CBD topicals and makeup, but even that isn’t bulletproof given the FDA’s current position on hemp-CBD products generally.

Even though industrial hemp was legalized federally that doesn’t mean that all hemp-CBD products are legally kosher. It’s quite the opposite actually, and as a result financial institutions are pumping the brakes on banking hemp-CBD businesses, as they should. At the same time, financial institutions could certainly try to take cover within certain states that openly permit and regulate hemp-CBD products, including in food and drinks, pursuant to comprehensive state-based hemp-CBD laws. And financial institutions could also borrow diligence protocol from the FinCEN guidance to better verify the legality of a hemp-CBD operation under state law. Given the fact though that we don’t have any guidance from federal banking regulators specific to hemp-CBD companies, you’re unlikely to see financial institutions (which are already extremely conservative creatures) openly or knowingly serving hemp-CBD businesses. By extension, this is an area ripe for fraud and bad behavior around the provision of “alternative financial services” (similar to what we see occasionally in the state-legal cannabis world).

In the end, you’re more likely to get a bank account if you’re a hemp cultivator or a state-licensed cannabis business than if you’re a hemp-CBD business. If financial institutions consider servicing hemp-CBD businesses, they need to seriously study and understand the 2018 Farm Bill, the FDA’s position, and enforcement priorities around hemp-CBD businesses. They also need to be very familiar with the hemp-CBD laws in the states in which they operate so that they can perform sufficient diligence on their hemp-CBD customers and ensure they’re lawfully operating pursuant to state hemp-CBD laws.


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George Scorsis

December 24, 2019
 

‘Tis the season for increased holiday spending – and that includes outlays on recreational cannabis products, which saw average category sales increases of more than 50% in 2018 on items designated for both gift-giving and personal consumption. Data from Seattle-based cannabis analytics firm Headset shows that sales in the pre-Christmas week (Dec. 18-Dec. 24) in 2018

Chart: Pre-Christmas marijuana product sales increase up to 53% is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 23, 2019
 

The rollout of adult-use cannabis sales in Maine is being threatened by a lack of testing facilities

Marijuana Testing is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 23, 2019
 

The worst days of the vaping crisis are likely behind the state-legal marijuana industry, but many MJ firms are turning to technology to help further boost cannabis vape consumer confidence as well as deal with the dip in sales that followed the health scare. Examples of tech-based solutions available to cannabis companies include: Providing certificates of analysis (COA),

How cannabis vape companies are using technology to ensure consumer confidence and bolster sales is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 21, 2019
 

It’s no secret that California’s illicit cannabis market is alive and well; a recent audit showed that there are nearly 3,000 unlawful cannabis businesses in the Golden State. A few months ago, I wrote a post offering a few suggestions on how the state could combat the problem of illicit cannabis, and I am not the only one who has made these suggestions. Until very recently, it did not look like the state was taking serious action to do any of the things that I or others have suggested to combat the illicit market (in fact, the state recently announced tax hikes for cannabis which will just raise the price of legal cannabis and drive sales towards the illicit market). It seems now, however, that the state is following the traditional path of other states with regulated cannabis markets and stepping up enforcement.

Last week, for example, the Bureau of Cannabis Control (“BCC”) and Los Angeles officials raided 24 allegedly unlicensed businesses in Los Angeles. This follows on the heels of the BCC mailing hundreds of notice letters to landlords of allegedly unlawful cannabis businesses across the state informing them that they could be subject to criminal and civil liability. This kind of enforcement activity is a major uptick in comparison to what the BCC had previously done. Up until recently, the BCC had only sporadically raided and shut down allegedly unlawful operators.

The BCC is not the only agency that has begun ramping up enforcement. Just last week, the California Attorney General, on behalf of the California Department of Food and Agriculture (“CDFA”), sued a number of persons and entities, claiming that they had cultivated and processed cannabis without licenses. That lawsuit claims that the defendants are liable for civil penalties of up to three times the amount of the CDFA’s nearly $10,000 license fee per violation, which could be a massive penalty.

The penalties that the state can seek are no joke. Under state law, the California cannabis agencies are entitled to seek penalties of up to $30,000 per day/violation for unlicensed commercial cannabis activity. Anyone can do this math. Being in the illicit market is beyond a major risk, especially now that the government is doing something about it. Just consider how many days it takes to get from seed to harvest, and this fine could get into the millions very quickly. In fact, Stanislaus County recently made the news by implementing a $1,000 per plant, per day penalty, which according to one source could amount to $90 million for a 3,000 plant unlicensed grow over 30 days.

The enforcement trend is only going to increase. Just take a look at Washington, a state with a much more mature regulated recreational cannabis market. Any of our Washington cannabis lawyers will tell you that as the agencies became more sophisticated, they moved from compliance to enforcement (in fact, Washington went so full-in with enforcement that its legislators had to force the cannabis agency to focus its attention back on compliance by way of legislation).

In my opinion, enforcement is not the best way to combat the illicit market. No matter how high the penalties are, there will always be people who are willing to “risk it” and ignore the law. Prohibition never stopped many people from selling cannabis. The big difference between prohibition and enforcement, however, is that enforcement still leaves open the possibility that there is a regulated (yet very complicated and expensive) pathway to selling cannabis. But if the government really wants to eliminate the illicit market in California, lower taxes, lesser regulations, and expanded access to cannabis are a pretty good starting point.


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George Scorsis website

December 20, 2019
 
Cause of Pessimism in the Cannabis Sector
Alan Brochstein from 420Investor ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis Aphria

December 20, 2019
 
Ravenquest BioMed (CSE:RQB) Responds to Patent Infringement Claim
************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis

December 20, 2019
 
420Investor, Chart Guys, Greenlane, Ravenquest Biomed & Xortx Therapeutics - Midas Letter RAW 303
The Final Midas Letter Raw of 2019 with James West and Ed Milewski. The first show of the new year will air on January 10th at 3PM EST Episode 303 Features: Alan Brochstein - 420Investor Charting Man Dan McDermitt - https://chartguys.com Greenlane - CFO, Ethan Rudin Ravenquest Biomed - George Robinson Xortx Therapeutics - Dr. Allen W. Davidoff Midas Letter RAW highlights the stocks and stories to watch in the Canadian markets today. James West and Ed Milewski provide comprehensive fundamental & technical analysis on all trending business and investment news, while interviewing the top CEOs of all public companies and analysts with the highest reputations in the business. ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

additional information, George Scorsis

December 20, 2019
 

Canadian license holder Pure Global Cannabis has become the latest marijuana firm to shed part of its workforce to conserve cash amid the challenging capital market conditions facing the industry. “This is about cost containment,” CEO Mel Panchal said in an interview. “It’s just prudent fiscal measures to ensure that we’re not burning unnecessary cash.

Pure Global Cannabis ‘temporarily’ lays off staff to conserve cash is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more details, George Scorsis

December 20, 2019
 
Changing a Weekly Trend - An In-Depth Technical Analysis
See more from Dan at https://www.thechartguys.com ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis Aphria

December 20, 2019
 

Greece is one of a half-dozen European countries hoping to cash in on medical cannabis exports. The country is also developing rules for domestic patients to access medical marijuana. Because Greece was among the first countries to allow medical cannabis cultivation in Europe, it already has attracted more than 100 companies in the application process seeking

Greece’s new government committed to cannabis sector success: Q&A with Pelopidas Kalliris of Ministry of Development and Investment is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 20, 2019
 

Cannabis vapes will not be among the mix of new edible, extract and topical products available in Alberta’s retail stores in the coming weeks, the provincial regulator said. In early December, Marijuana Business Daily reported that the province was weighing legal changes involving vaping devices – including those containing cannabis – as part of a review of

Alberta pulls plug on cannabis vape sales amid smoking law review is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 20, 2019
 

What is an injunction?

An “injunction” is an order of the Court that a certain act be done or not be done. There are three types of injunctions:

  1. A temporary restraining order (“TRO”) (issued on a temporary, emergency basis);
  2. A preliminary injunction (issued on a basis that usually lasts through the end of trial); and
  3. A permanent injunction (issued after trial and as part of the judgment).

When do you need an injunction?

An injunction is appropriate when the legal remedy (i.e., monetary damages) is inadequate. In this industry, we most commonly see examples in the partnership dispute context:

  • Your business partner is “freezing you out” of the business;
  • Your business partner is making transactions that are harmful to your business;
  • Your business partner is pursuing a competing business venture; or
  • Your business partner is straight up embezzling or stealing from the business.

Of course, other examples outside this context can include things like infringement of intellectual property, theft of business, or other breaches of contract or fiduciary duty.

How do you get an injunction?

The primary statutory authority for injunctions pending trial is Code of Civil Procedure §§ 525-533.  Combined with the California Rules of Court §§ 3.1150-3.1152, these statutes provide the basic injunction-seeking procedure.

The important thing to note here, is that the Court has broad discretion in granting or denying an application for a TRO or preliminary injunction, and the burden on the application is very high. The Court will balance these two factors:

  1. Who will suffer the greater injury? Will the applicant suffer more if the application is denied or will the defendant suffer more if it’s granted?
  2. What is the probable outcome at trial? Is there a reasonable likelihood that the applicant/plaintiff will win on the merits?

Let’s frame this in a common scenario: your business partner is stealing from your business. If you know that this is happening, it’s important to take action right away to stop the bleeding. You can’t and shouldn’t wait to go through litigation (which can take years to complete) before you do something. That’s where a TRO and preliminary injunction comes in. You can ask the Court to freeze the business’ assets or remove your business partner’s access to the same right away, as long as you can show:

  1. You will suffer the greater injury if your request is denied (in that you will be unable to stop the stealing, which will impact your and your business’ financial status vs. your business partner will be unable to keep doing what he shouldn’t be doing anyway); and
  2. There is a reasonable likelihood that you will win in the litigation (in other words, you have good evidence).

In addition to the balancing of these two factors, Code of Civil Procedure § 526(a)(2) also lists the traditional consideration of “irreparable harm.” This factor obviously relates to factor 1 above, but in California, it’s also an entirely separate consideration. It will be really hard to get a TRO or preliminary injunction unless you can show that you will imminently be significantly damaged in a way that cannot be repaired later in time.

If you find yourself in a situation where an injunction might be appropriate, begin documenting EVERYTHING and reach out to our litigation team. We can help you create an effective strategy that outlines why injunctive relief is necessary and appropriate in your case, sets forth the irreparable harm you will suffer, and includes good admissible evidence to support your application.


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George Scorsis

December 19, 2019
 

U.S. Senate Banking Chair Michael Crapo, an Idaho Republican, laid the foundation for his own version of cannabis banking reform with a potentially onerous THC potency cap when he released a statement saying he doesn’t support the Secure and Fair Enforcement Banking (SAFE) Act as is. In September, the U.S. House of Representatives approved the SAFE Act, which would

Key US Senate leader signals major changes to cannabis banking bill, dimming prospects for significant reforms in 2020 is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 19, 2019
 

Canada’s federal health department and tax collection authority are teaming up to offer an information session for micro-class cannabis entrepreneurs in Vancouver, British Columbia. Health Canada and the Canada Revenue Agency (CRA) are hosting the seminar in Vancouver on Jan. 10. “This information session is targeted towards current and prospective applicants applying for a cultivation,

Health Canada, CRA to hold info session for micro-class cannabis businesses is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 19, 2019
 

According to recent reports, the hemp-derived cannabidiol (“Hemp-CBD”) market is expected to grow by 700 percent by 2020 and grow to $2.1 billion by 2020. Given this significant growth forecast, sensitive business information (also known as trade secrets) has become an incredibly valuable asset for Hemp-CBD stakeholders. Realizing value from those trade secrets requires sharing them with business partners and employees. Therefore, it isn’t surprising that in the past few months our firm has drafted numerous confidentiality agreements, also known as non-disclosure agreements (“NDA”), to protect our Hemp-CBD clients’ trade secrets. This post provides an brief overview of what an NDA is and which provisions makes it a well-drafted agreement.

WHAT IS AN NDA?

An NDA is a contract in which the person receiving the sensitive information (“Receiving Party”), usually a business partners, an employee, or a customer, agrees not to share that information with any other party without the prior written approval of the owner of this information (“Disclosing Party”).

Most states, including Oregon, have adopted a version of the Uniform Trade Secrets Act (“UTSA”). Under Oregon law, a trade secret is defined as

information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process that:
(a) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

This means that to be legally protected, business information must be valuable and its owner must take reasonable steps to keep it secret. For example, informing new employees that confidential information will be shared in the course of their employment, specifically when requiring them to execute an NDA, should prove that reasonable efforts were made.

In addition, NDAs are enforceable provided they are “fair,” meaning the NDA is not overly restrictive or unduly burdensome on the Receiving Party.

WHAT PROVISIONS SHOULD BE IN AN NDA?

Whether an NDA is needed for business or employment purposes, an effective NDA should include the following provisions:

  1. A clear definition of the confidential information that will be shared with the Receiving Party during the term of the agreement. Depending on the state law that governs the NDA, an overly broad definition could expose the Disclosing Party to legal actions and render the NDA unenforceable.
  2. The reasons for which the sensitive information is shared with the Receiving Party.
  3. Terms under which the sensitive information may be disclosed. Generally, confidential information may be disclosed to a third-party on a need-to-know basis, such as when required by law.
  4. The consequences for disclosing the confidential information, which usually include large monetary fines and a court order preventing the breaching party from continuing to disclose the protected confidential information.
  5. The length of time during which the Receiving Party must retain the information confidential. Ideally, the Receiving Party will be required to maintain the confidential information secret after their employment agreement terminates.

NDAs are a relatively inexpensive investment for companies given the protection they afford over valuable business information. Accordingly, any business, particularly those engaged in growing markets like Hemp-CBD, should consult with experienced business attorneys to help them prepare sound NDAs.

 


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George Scorsis Liberty Health Sciences

December 19, 2019
 

A judge cleared the path for Montana to enforce a temporary emergency ban on flavored vaping products, including those containing THC

Marijuana vaping ban is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 18, 2019
 

New Zealand completed the regulatory foundation for its medical cannabis sector this week, making a key concession by not requiring specialist approval for prescriptions. When the new rules take effect April 1, 2020, all general practitioners will be able to prescribe medical cannabis products without oversight from a specialist. Proposed medical cannabis regulations in July considered

New Zealand finalizes groundwork to launch medical cannabis industry in April is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 18, 2019
 

Insurance reimbursements for medical cannabis in Germany reached a new high during the July-September period, according to recently published data by the German National Association of Statutory Health Insurance Funds (GKV-Spitzenverband). However, the data also suggests that growth in medical marijuana sales is losing momentum as double-digit gains in MMJ reimbursements become harder to maintain. Statutory health insurance reimbursements

Analysis: Germany’s medical cannabis market loses momentum but on pace to surpass 100 million euros is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 18, 2019
 

This is the second in a three-part series explaining why companies making and sell hemp-derived CBD products ought to be concerned about state consumer protection laws. Last week we looked at Oregon and an article on California is in the works. It probably comes as no surprise that companies selling hemp-derived CBD in the State of Washington ought to be very careful in how they market and advertise their CBD products.

Overview of Washington’s Consumer Protection Act—Damages, Attorneys’ Fees, and Treble Damages

The principle consumer protection law in Washington is the Consumer Protection Act (CPA). Enacted in 1961, the CPA was modeled after Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and its purpose is to protect the public and foster fair and honest competition. The CPA prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.” “Unfair or deceptive acts or practices” is not defined and its meaning evolves via reasoned judicial decisionmaking.

Actions under the CPA may be brought by Washington’s Attorney General or by “any person” who is injured in her business or property. A private litigant may bring suit for injunctive relief, damages, attorneys’ fees and costs, and treble damages. Washington courts generally affirm awards of attorneys’ fees whenever there is an “injury” cognizable under the CPA and a trial court may award treble damages based on “actual” damages awarded by a jury up to a maximum of $25,000.

Washington does not require a consumer transaction between the parties, under the guise of a separate standing requirement. In other words, an actionable violation may occur without any consumer or business relationship between the plaintiff and the defendant. For hemp-CBD companies, this means an increase in the number of potential plaintiffs and a corresponding increase in the risk of being sued.

Elements of a Claim under Washington’s Consumer Protection Act—Intent to Deceive Not Required  

A claim under the CPA may be predicated upon (1) a per se violation of statute, (2) an act or practice that has the capacity to deceive substantial portions of the public, or (3) an unfair or deceptive act or practice not regulated by statute but in violation of public interest.

The plaintiff in a private CPA claim must prove (1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) affecting the public interest, (4) injury to a person’s business or property, and (5) causation. An act is “deceptive” if it is likely to mislead a reasonable consumer.

Notably, a plaintiff need not show that the act in question was intended to deceive the public, only that the alleged act “had the capacity to deceive a substantial portion of the public.” Hangman Ridge Training Stables, Inc. v. Safeco Title Insurance Company, 105 Wash.2d 778, 785, 719 P.2d 531 (1986). The means that a plaintiff suing your CBD company does not have to prove that your marketing and advertising was “intended” to deceive the public. Indeed, even a truthful statement may be found deceptive based on the “net impression” it conveys.

A case study establishes the importance of carefully crafting advertisements for CBD products

A recent decision by the Washington Court of Appeals, State v. Living Essentials, LLC, 8 Wash. App. 2d 1, 436 P.3d 857 (2019), highlights the risks to hemp-CBD companies in making advertising claims about their products. We have written quite a bit about these risks over the past year, including the rise in consumer class actions against hemp-CBD companies. Worth noting here is that the appellate court affirmed the trials court’s imposition of a $2,183,747 civil penalty on Living Essentials, who also was required to pay $1,886,866.71 in attorneys’ fees and $209,125.92 in costs.

The State of Washington sued Living Essentials under the CPA alleging Living Essentials made deceptive advertising claims about its product, 5-Hour ENERGY®. After an 11-day bench trial involving testimony from over witnesses and the admission of some 500 exhibits, the trial court agreed that Living Essentials’ advertising campaigns violated the CPA. (The costs of defending this lawsuit must have been enormous).

The trial involved three claims by Living Essentials, each found deceptive and in violation of the CPA:

  1. “the key vitamins and nutrients [in 5-Hour ENERGY®] work synergistically with caffeine to make the biochemical or physiological effects last longer than caffeine alone.”

The trial court found this deceptive because the studies presented by Living Essentials did not “clearly establish” that 5-Hour ENERGY®’s vitamins and nutrients would work synergistically with caffeine to make these benefits last longer than with caffeine alone. This claim was “plausible . . . but it remain[ed] a hypothesis, not an established scientific fact.”

  1. that the decaf variety of 5-Hour ENERGY® providing energy, alertness, and focus “for hours”;

The trial court found that Living Essentials lacked competent and reliable scientific evidence to make this claim.

  1. that 73% of doctors would recommend 5-Hour ENERGY® in a national television ad proclaiming:

We asked over 3,000 doctors to review 5-hour Energy®, and what they said is amazing. Over 73% who reviewed 5-hour Energy® said they would recommend a low calorie energy supplement to their healthy patients who use energy supplements. 73%. 5-hour Energy has 4 calories and is used over nine million times a week. Is 5-hour Energy right for you? Ask your doctor. We already asked 3,000.

The trial court found this advertisement deceptive because the “impression” left by the ad—that a majority of doctors would recommend 5-Hour ENERGY® to their patients—was not true.

For the sake of brevity, this post does not address every ground of reversal urged by Living Essentials. Instead this post focuses on the overlap between the CPA and the Federal Trade Commission Act (FTCA).

Court of Appeals does not adopt the FTCA’s “prior substantiation” doctrine wholesale, but permits its use in evaluating deceptive advertising claims under the CPA

On appeal, Living Essentials challenged the trial court’s use of the Federal Trade Commission’s “prior substantiation doctrine.” Under the “prior substantiation doctrine,” an advertiser must have a “reasonable basis” for any claim that the product successfully performs an advertised function or yields an advertised benefit. And the advertiser must have some recognizable substantiation for the representation prior to making it. Where the advertiser lacks adequate substantiation, the advertisement is deceptive as a matter of law under Section 5 of the FTCA.

The Court of Appeals held that the trial court did not err in considering this doctrine because it specifically declined to rely only on prior substantiation. Instead the trial court carefully reviewed Living Essentials’ claims of prior substantiation, post-claim studies, and expert testimony. In doing so the trial court reasonably concluded Living Essentials’ claims superior-to-coffee and decaf claims were materially misleading.

The court’s reasoning likely means CBD companies need competent and reliable accepted scientific evidence of the benefits of their products. Although there are numerous studies regarding the benefits of CBD, it is an altogether different question whether such studies would satisfy a court. (E.g. see this recent “what we know what we don’t” post on CBD by the Harvard Health Blog). Notably, Living Essentials challenged the use of a “competent and reliable” standard with respect to prior substantiation and was quickly rebutted by the Court of Appeals which reasoned that standard has been a “benchmark” since at least 1984.

The Court of Appeals distinguished between levels of substantiation required for claims that “relate to consumer health” and claims that do not

“Under the FTC’s prior substantiation doctrine, the court must determine the appropriate level of substantiation required for a claim to have a reasonable basis.” Living Essentials argued the trial court erred by using standard for claims that “relate to consumer health”— for which the FTCA requires a high level of substantiation. In such cases the representation must be non-misleading and be backed by backed by competent and reliable scientific evidence that is sufficient in quality and quantity to substantiate that the representation is true.

Although Living Essentials marketed 5-Hour ENERGY® as a dietary supplement, this did not necessarily mean Living Essentials’ representations were also health claims. And indeed they were not because Living Essentials did not make any claims that 5-Hour ENERGY® had “any direct impact on a disease or health related condition.” Accordingly, held the Court of Appeals, the trial court erred in using that standard for assessing substantiation.  (Note: the FDA does not allow marketing CBD products as dietary supplements).

Nonetheless, Living Essentials did not secure reversal. The CPA requires an advertiser have some “recognizable” substantiation for the representation prior to making it. Here, Living Essentials failed to present evidence that “anyone with any science training” had ever assessed the advertising claims and the science backing up those claims. (Asking an advertising director to conduct internet research was not adequate). Consequently, the trial court’s error in applying the higher standard did not require reversal.

Conclusion

The implications of this discussion for any company advertising CBD in Washington ought to be clear: be very very careful or you may find yourself defending an action that may subject you to injunctive relief, damages, attorneys’ fees and costs, and treble damages. We recommend that operators in Washington talk to their attorneys about labeling, marketing, and advertising practices before becoming a target.


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George Scorsis website

December 17, 2019
 

The Italian Ministry of Health plans to almost triple the quantity of medical marijuana to be produced domestically in the coming year. This signals the intention of the government to rely to a lesser degree on imports in 2020 amid a growing demand. As per the country’s psychotropic substances quota, which covers medical cannabis, the health ministry is allowing

Italy to nearly triple domestic medical cannabis production in 2020 is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 17, 2019
 

As a corporate and transactional attorney focused mostly on cannabis, I see my fair share of financing documents and transactions involving cannabis operators. It’s no secret many cannabis businesses can’t get bank accounts or loans or lines of credit from financial institutions because of the Bank Secrecy Act and federal anti-money laundering laws — despite current FinCEN guidance. It’s also no secret many cannabis businesses need significant start-up capital to even get to state licensure and  operation in a multitude of states because of significant barriers for licensing, like liquidity requirements, wildly competitive and exclusive licensing regimes, build out costs, local permitting and licensing, need for city and county approvals, leasing and other real property costs, staff, inventory, and the list goes on and on.

The concept of starting a cannabis business on a shoestring budget has never really existed. As a result of this, I often see loan agreements and promissory notes between individuals/companies and cannabis operators of all sizes on loans secured by collateral belonging to the cannabis operator or cannabis business. In these sorts of loan deals, as is true in any secured lending situation, the value of the collateral is what matters most, and with cannabis businesses, secured parties typically want a few prized items included in the collateral description, such as the cannabis business ownership interests, its license, its inventory, its equipment, and its accounts receivable. However, unlike in more traditional secured transactions, foreclosing on a cannabis business and its secured assets depends very much on state law and it is often a very complicated process.

My clients that lend to cannabis businesses routinely ask me whether their security agreements will be enforced in the event of a dispute. My usual answer is, “Yes, if the security agreement will be/should be upheld pursuant to the state laws in which the loan was made or where the cannabis business operates.” In other words, this only occurs in a state with laws that recognize commercial cannabis conduct as legal. These states usually enforce cannabis contracts despite federal illegality. In cannabis legal states like California (where I’m located), the state usually has laws making commercial cannabis contracts enforceable. Smart lenders ensure their security agreements are enforceable based on the cannabis laws in the state in which any disputes will be handled.

Once a lender gets past the enforceability hurdles, its next legal hurdle is usually state-required disclosures. Depending on the state, if you’re a secured party dealing with a cannabis business, you almost certainly will need to disclose your financial interest in the cannabis business to state regulators in a timely and transparent manner (as required under the specific state’s law) or the state will not allow your loan to go through at all. It is important to mention that the Uniform Commercial Code (“UCC”) adopted in the relevant state still applies, and this means your security agreement should be drafted and authenticated in accordance with state UCC requirements.

In almost all cannabis states, state licenses are not transferable, and they therefore should not be listed as individual collateral in a security agreement. If a lender wants a cannabis license in a security agreement, it almost always should get the cannabis business to pledge its ownership interests in a separate pledge agreement. And if a cannabis business signs away its license and then seeks to transfer that license in the event of default, most cannabis states will just cancel the license due to an illegal transfer. In addition, if a lender wants the cash belonging to the cannabis company or its customer accounts or its inventory, the lender usually will first have to become an “owner” of the cannabis business, which creates its own complex and lengthy regulatory process outside the confines of the UCC.

Of course, certain other collateral belonging to the cannabis business, like its equipment, won’t trigger these ownership issues because foreclosing on equipment usually does not impact control of the business or its license.

In certain states, merely holding a security interest from a cannabis business does not trigger any disclosure requirement. But in some of these same states, the loan to the cannabis business triggers minimal disclosure requirements because the state considers the originating loan a minor financial interest in the business. If your collateral list includes ownership interests in the cannabis business or its inventory, most states require you first go through mandatory personal and financial disclosures to foreclose on that collateral. This is another reason why cannabis security agreements are not your run-of-the-mill secured transactions and why it is so critical for cannabis security agreements to properly account for these particular regulatory issues.

Bottom Line: Lenders should proceed with caution with cannabis secured transactions and not just trot out their boilerplate security agreements/pledge agreements because those do not sufficiently address the unique issues presented by cannabis companies.


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George Scorsis

December 17, 2019
 

The cannabis industry is at a crossroads where companies will need to differentiate based on profitability, strong yet simple capital structures and investor communication.

Cannabis firms must focus on profitability, communication for long-term viability is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 17, 2019
 

California officials continued their crusade against the illicit cannabis market in December with 24 search warrants served on illegal cannabis shops in the Los Angeles area.

Illegal marijuana crackdown is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 16, 2019
 
Paul Bissonnette on CBD Use in Sports
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addiitional information, George Scorsis

December 16, 2019
 

Federally licensed cannabis producer Hexo recorded net revenue of 14.5 million Canadian dollars ($11 million) in its most recent quarter, down slightly from the previous quarter’s CA$15.4 million. The Gatineau, Quebec-based company’s net loss widened to CA$62.4 million in the period ending Oct. 31 from CA$56.7 million in the last quarter. About three-quarters of the

Canadian cannabis producer Hexo’s sales decline as net loss grows is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 16, 2019
 

USMCA cannabis unites states mexico canada marijuana

Last week, amid the impeachment turmoil, President Trump and Democratic leadership somehow agreed on a landmark international trade agreement. The package is generally referred to as USMCA (U.S-Mexico-Canada Agreement), or sometimes as NAFTA 2.0. Although the White House has not yet released a final copy of USMCA, its contents are widely known. As expected, USCMA will not include mention of cannabis. This does not mean that cannabis (specifically, non-hemp cannabis, aka marijuana) won’t make its way into North American trade. In fact, USMCA could become a promising forum for cannabis trade policy.

USMCA was first announced in September of 2018. Around that time, certain commenters argued that cannabis should be included in NAFTA 2.0, including former Mexican President Vicente Fox. At that time, Canada was rolling out its program of federal legalization; Mexico was seemingly close behind (Mexico will launch its program in 2020, as explained here). Under USMCA, the U.S. will be sandwiched between two trading partners that have begun to treat cannabis similarly to other produce commodities; and many states within the U.S. have legalized cannabis to boot. Because federal legalization in the U.S. is a “when” and not an “if”, USMCA could provide the platform for three-state cannabis trade. There are a couple of ways this could happen.

The first route is straightforward: cannabis will come in through a rutted pharmaceutical path. Democrats succeeded in paring back original USMCA text calling for “biologic drugs” to receive 10 years of intellectual property protection, but the new USMCA intellectual property chapter is said to include more stringent protections for patents and trademarks than NAFTA (including for biotech). Because cannabis patents are now prevalent and because FDA has begun to approve cannabis drugs, USMCA is primed for cannabis to some extent already.

The second route requires some legwork, but ultimately is more comprehensive. Like NAFTA, USMCA will include a Free Trade Commission (“FTC”) comprised of delegates from each party-country. Those delegates will be tasked with monitoring and implementing USMCA. Crucially for cannabis, the FTC may form “working groups” for particular topics. There will be no limitation as to what might be addressed in a working group: rather, the delegates can work on whatever seems relevant.

It is not uncommon for trade topics to get hammered out first inside of regional trade agreements, and cannabis would likely follow this path. These new “disciplines” are eventually then raised at the World Trade Organization or in other treaty contexts. With respect to USMCA, the initial focus for cannabis would be to identify principles or rules for a coherent policy to form a North American market for the cannabis trade. Given that the U.S. is also a party to the Central American Free Trade Agreement (CAFTA), that treaty could be folded into the process.

Do we think all of this is realistic? Absolutely, and it could happen in any number of ways. Here in Oregon, for example, pro-cannabis U.S. Senator Ron Wyden sits on the USMCA trade committee. The Pacific Northwest has a prominent role in trade policy—especially with Canada—so the required base of political support is already in place. Oregon has shown thought leadership on cannabis export generally, and state officials coordinate well with Mr. Wyden and other federal representatives. Industry should push here.

The FTC path would also require convincing each USMCA country to staff a working group. In the U.S., staffing for USMCA (as with CAFTA and similar treaties) would come through the Office of the U.S. Trade Representative and via congressional trade committees. Expect high interest from Mexico and especially from Canada to build out cannabis channels: each country will have a generational head start on the U.S. with respect to cannabis as a national, scaled commodity. In fact, Canada is a leader in cannabis export today.

No one is really talking about cannabis and the USMCA, but it is likely that cannabis will be traded in the USMCA framework. This will happen both inside and outside the pharmaceutical context, just as cannabis is traded domestically in the U.S. today.

For more on the international cannabis trade, check out the following:


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George Scorsis Aphria

December 16, 2019
 

Unionization is spreading through the cannabis industry, spurring some companies to sign labor agreements or "peace pacts" but causing other businesses to resist labor organizers.

Cannabis labor peace requirements expand, sometimes sparking conflict in legal marijuana markets is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 15, 2019
 

montana hemp cbd

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Each Sunday, we summarize a new state in alphabetical order. Today we turn to Montana.

When it comes to Hemp CBD, there’s not a ton of guidance in Montana. Like many other states, Montana has not adopted a regulatory framework for the sale of Hemp CBD . What we do know is that the Montana Department of Public Health and Human Services (“DPHHS“) has adopted the federal Food and Drug Administration’s position on the unlawful sale of CBD-infused food and dietary supplements. The DPHHS policy is also a bit vague when it comes to manufacturing hemp products in Montana, referring companies to the FDA. This does not offer much guidance for Montana Hemp CBD companies who wish to make non-ingestible products, such as Hemp CBD topicals.

That said, the DPHHS policy really only tracks the FDA’s policy and even notes that “CBD products marketed not as food and do not make any health or health-related claims, should not be considered a workload obligation for the local health authority for possible enforcement action”. In other words, the policy recommends that only items marketed as foods and/or that make health claims should be the subject of local scrutiny. It does not take off the table the possibility that other products (like cosmetics) could be barred, but it certainly makes clear that it’s not a priority.

The cultivation of hemp is lawful and regulated in Montana. Cultivation and processing are overseen by the Montana Department of Agriculture (“MDA”). Draft sampling and testing regulations were published in August 2019 and the MDA indicated that hemp sampling is now underway in Montana.

Interestingly, MDA publishes guidance for hemp processors, which says: ” The processor license allows licensees to produce derivatives that may be included in products for food, fiber, oils, supplements or drugs (excluding THC) for the wholesale or ingredient market.” It may seem like MDA didn’t get DPHHS’ memo, but MDA goes on to note: “Hemp processors must comply with city, county, and tribal ordinances and laws. The approval of manufactured hemp derived products at the retail level continue to be subject to the laws and regulations of the United States Food and Drug Association (FDA) and the Montana Department of Public Health and Human Services (DPHHS).”

At the end of the day, this means that hemp processors will still need to follow DPHHS’ (and by extension, the FDA’s) policies when processing hemp. But this isn’t terribly clear from the hemp processor application itself, which notes that hemp can be used to make foods. This may be a reference to hemp seed oils, which are allowed in Montana and under FDA policies, but that may not be known to many people who are applying to process hemp in Montana.


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George Scorsis Liberty Health Sciences

December 14, 2019
 

oregon china hemp

If you are an eccentric person like me and follow the Oregon Department of Agriculture (“ODA”) on Twitter and have a deep interest in international business (especially the trade war with China), you will have noticed that ODA recently (and proudly) posted something that I see as both positive and negative for the hemp industry:

ODA’s #Cannabis Policy Coordinator, Sunny Summers & @OSUAgSci meet with researchers from China’s Heilongjiang Academy of Agricultural Sciences Institute of Industrial Crops to talk about how Oregon can ship #hemp to #China! #WhatWeDo #AgIsCool #TuesdayThoughts #trade #agriculture

When I saw this, I cringed a bit, even though the benefits to Oregon and the U.S. are clear:

  1. Oregon marijuana farmers who recently produced a 2x surplus of marijuana can switch to growing hemp for export markets, as long as Oregon hemp farmers can grow hemp strains that fit the definition of hemp under the newly released USDA interim final rules;
  2. other U.S. states with hemp surpluses will be able to piggyback on Oregon’s engagement with international export markets because the coveted “grown in U.S.A.” brand strategy applies to Washington, California, and Kentucky hemp just as much as it applies to Oregon;
  3. disenfranchised farmers, especially those who have seen the demand for their tobacco crops diminish, can stay on the farm and keep the U.S. heartland throbbing with crops and cash (see here);
  4. exporting hemp means that the U.S. moves closer toward addressing our trade imbalance with the rest of the world, including China (the U.S. became a consistent net exporter of LNG (liquid natural gas) in 2018); and
  5. the U.S. can export its culture of quality and innovation in hemp to the rest of the world, which will continue to provide positive external benefits across many international industries and in our recently flagging international relations.

But there are potentially negative aspects of Oregon’s Department of Agriculture engaging with Chinese researchers. I raised my eyebrows at the ODA post because in addition to this blog, our firm publishes a sister blog, the China Law Blog, where we write on international business (especially China) and frequently warn our readers to protect their intellectual property all costs, whether you are at home or abroad.

If you follow our blog or keep up with international news, you know that researchers with Chinese ties who work in the U.S. are being scrutinized more closely. In the past, they have often been heavily involved in graduate programs where a lot of U.S. R&D occurs, and U.S. academic institutions are constantly wrestling with the dynamics of: potentially losing tuition dollars from fewer mainland Chinese students enrolling in the U.S.; losing grant dollars (both from the U.S. and Chinese governments, for very different reasons); losing prestige in the U.S. for engaging too much with China; losing prestige internationally for failing to hire capable researchers who publish influential scholarly works; monetizing R&D projects; and protecting intellectual property stemming from R&D projects.

Chinese academics’ largely unfettered, unmonitored, and unprecedented access to U.S. educational institutions has provided fertile ground for Chinese economic espionage. In short, whenever China is involved, you (I’m looking at you, ODA) need to keep your eyes open. China has a publicly acknowledged program of acquiring U.S. intellectual property any way it can (at least it is publicly acknowledged and documented by U.S. authorities – see here and here), and that includes by making relationship inroads with government contacts, trade groups, educational institutions, and directly with hemp farmers and businesses.

The geopolitical ramifications of engaging in international hemp business relationships are really inescapable, whether you are a hemp farmer who “only” sells to the local market, the ODA trying to promote Oregon hemp and hemp products, a hemp trade group, or a multinational corporation engaging in a sustained and well-planned M&A program to enhance your market share in the global hemp marketplace. China and the U.S. continue to be at loggerheads over many aspects of bilateral and international trade, but even with the trade war raging at the national level, U.S. and China subnational groups continue to engage with each other, working to establish and enhance relationships that can outlast or at least mitigate the effects of the trade war.

Ultimately, Oregon is simply doing what Utah did earlier this year when Utah welcomed over 85 Chinese government officials to discuss Utah-China business relations. With ODA, our advice remains unchanged: be on your guard where China is involved. Use whatever applicable cliché you have: trust but verify; speak softly and carry a big stick; keep your friends close and your enemies closer; or tread lightly on thin ice. And make sure that you clearly understand all of the potential angles your Chinese counterparts may be working. We will work to keep you in the know as U.S. businesses try to engage further with the international hemp community.


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George Scorsis Liberty Health Sciences

December 13, 2019
 

LAS VEGAS – Cannabis experts took to the MJBizCon stage this week to share marijuana business know-how and best practices, touching on everything from the vaping epidemic to corporate integration challenges surrounding M&As to the future of marijuana retail and more. Rebounding from the vaping epidemic What can legal marijuana vape manufacturers and retailers do

MJBizCon 2019: Marijuana professionals offer up business insights on vaping crisis, M&A, retail best practices & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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additional information, George Scorsis

December 13, 2019
 
Dan Mitre on New Wave Esport
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George Scorsis

December 13, 2019
 
StoneCastle Investment
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George Scorsis Liberty Health Sciences

December 13, 2019
 

The two most important cannabis markets in Canada experienced the worst sales of adult-use products per capita in the first year of legalization, reflecting struggles of officials in those provinces to get a handle on the policy tools at their disposal to regulate the industry. From October 2018 through September 2019, British Columbia’s marijuana stores

BC, Ontario see lowest cannabis sales per capita in first year of legalization is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 13, 2019
 

cbd social media

Last month, comedian Sacha Baron Cohen delivered a now widely shared keynote speech at an Anti Defamation League event in New York, in which he spared no harsh words for social media companies who he claims provide a platform for hate speech and the proliferation of fake news. In his speech, Cohen offered sharp criticisms for social media executives’ weak justifications for allowing this to occur, and offered suggestions on how to clean up the mess he claims they created. Cohen’s criticisms aren’t new: Facebook reportedly announced that it would not fact check political ads, and Twitter has reportedly not banned certain forms of hate speech because such bans would allegedly end up blocking some political accounts.

Given all of the misconduct that social media companies allegedly let fly under the radar (mostly on the excuse that doing anything about it would infringe free speech), it may shock many readers to learn where many social media companies actually draw a line in the sand: hemp-derived CBD advertisements.

For some reason, if you are a politician who wants to run attack ads on a competitor using completely fake information, you will probably be able to find some platform that allows you to do it, if you pay enough. But if you are a small business that sells a hemp CBD bath bomb, you run the risk of having your entire social media account deleted without any repercussion or remedy. This makes no sense.

Over the past few months, there have been many reports detailing how social media companies have banned user accounts for advertising CBD products (see here, for example). Many social media companies, like Facebook and Instagram (which is owned by Facebook), do not even have a public term and condition or policy that states that CBD advertisements are prohibited anywhere on their website. Apparently, Facebook’s bans have been justified by language on its website that says: “Ads must not promote the sale or use of unsafe supplements, as determined by Facebook in its sole discretion.” But right below that language, the policy lists a series of examples, and does not include CBD, which Facebook could easily include to promote transparency.  Nevertheless, according to many articles published this year, many small businesses have lost their accounts for advertising CBD products.

Despite that Facebook doesn’t publish any terms or conditions relative to CBD, according to the Verge, Facebook’s ban is really meant to target ingestible products. According to Digiday, Facebook apparently won’t ban advertisements regarding topical hemp products. When the Digiday post came out, I attempted to verify whether Facebook had published any information that would give CBD advertisers guidance on what they can and cannot publish, but from what I can tell, the Facebook terms have not changed. All that we have are a few statements from various third-party journalists who are not affiliated with Facebook or other social media companies, and whose statements are not binding on the social media companies. Nothing is stopping Facebook from continuing to ban people who advertise any kind of CBD products.

For any small business that sells CBD products, reliance on these posts can be dangerous. Any small business owner knows that getting social media followers takes time, and often, lots of money. With the potential to have an account shut down, and to lose all the good will associated with that account, social media advertising can be a serious gamble for many businesses. There is no clear appeal right for these denials and the idea of taking a social media giant to court (or forced arbitration) is just unfathomable for almost any small business.

Of course, there are some exceptions to this rule. Twitter, for example, has express (though overly restrictive) rules regarding CBD advertising in the United States, which I’ve copied below:

       We permit approved CBD topical advertisers to target the United States, subject to the following restrictions:

  • Advertisers must be licensed by the appropriate authorities and pre-authorized by Twitter
  • Advertisers may only promote non-ingestible, legally derived CBD topical products
  • Advertisers may only target jurisdictions in which they are licensed to promote these products or services online
  • Advertisers may not target Georgia, Idaho, Iowa, Mississippi, Missouri, Nebraska, Oklahoma, South Dakota, and Virginia
  • Advertisers are responsible for complying with all laws and regulations
  • Advertisers may not target users under the age of 21
  • Contact Twitter if you are interested in this option.

 

There is no clear appeal right for these denials and the idea of taking a social media giant to court (or forced arbitration) is just unfathomable for almost any small business.These are extremely restrictive and paternalistic regulations. Ironically, Twitter’s advertising policy places more restrictions on CBD advertisers than many states do on CBD companies. These terms are so broad that it is likely that many companies currently advertising CBD on Twitter are not in compliance with them, and are therefore risking their accounts.

All of this is compounded by the fact that many CBD companies may not use their own accounts for CBD advertisements and instead use brand ambassadors or influencers to advertise for them. Earlier this year, I wrote about many of the dangers that can come with using social media influencers to advertise cannabis products, but a lot of those risks are the same for hemp-derived CBD advertisements. There are strict Federal Trade Commission (“FTC”) guidelines covering what endorsers can and can’t say and requiring them to disclose the fact that they are paid for their endorsements in the advertisements, which raise three distinct problems for CBD companies.

First, brand ambassadors or influencers can’t do things that an actual CBD company can’t do. The FTC has played a fairly active role in sending warning letters with the Food and Drug Administration (“FDA”) to companies that the two agencies believe are engaged in unlawful advertising online. As the FTC recently told Vice, companies can be held accountable for any unsubstantiated claims made by influencers on the companies’ behalf (and obviously, so can the influencers). But when it comes to social media companies, it is irrelevant who is making a prohibited advertisement. Whoever violates a social media company’s policies (apparently even the undisclosed ones) risks being banned.

Second, if an influencer is banned after making claims paid for by a CBD company, this will likely lead to disputes. Like small businesses, influencers work very hard to build followers. If they lose accounts based on ads requested by companies, that is like losing business. They may sue the CBD companies for some kind of compensation. It is critical for CBD companies who are willing to risk advertising on social media to have actual contracts with their advertisers.

Finally, CBD companies cannot use influencers to hide the fact that they are advertising. I have heard many times that some social media companies won’t take action against people for just discussing CBD products (though I have never been able to verify that claim since social media companies generally do not publish anything in their terms and conditions on CBD). If that claim is true, it may seem advantageous to just pay an influencer to say things about a company’s CBD products that the company would be prohibited from advertising itself. This is flatly prohibited under FTC rules. Any paid relationship must be prominently disclosed. In fact, earlier this year, the FTC released guidelines for social media influencers to help them make the proper disclosures. This follows on the heels of earlier FTC guidance that is highly particularized, for example:

“When people view Instagram streams on most smartphones, longer descriptions (currently more than two lines) are truncated, with only the beginning lines displayed. To see the rest, you have to click ‘more.’ If an Instagram post makes an endorsement through the picture or the beginning lines of the description, any required disclosure should be presented without having to click ‘more.'”

The point is, there is no hiding the ball when it comes to influencer advertising. Companies have to be honest, and this can lead to trouble for them if they don’t follow the rules.

One area where there are actually clear rules is cannabis. Facebook and Instagram, for example, ban cannabis advertisements. These bans actually make sense given that federal law still prohibits cannabis, and because the bans are actually published on viewable terms and conditions for people to comply with.

Social media companies have largely remained outside the scope of federal regulations to date, though that may change in the future. From their standpoint, it makes sense to ban a product that is still classified as a Schedule I narcotic. But hemp-derived CBD is not a Schedule I narcotic. The only real federal policy on point is the policy of the FDA, which only claims that a few classes of CBD goods are prohibited.

Notwithstanding that the FDA has publicly acknowledged that there may be a regulatory pathway to marketing certain products containing Hemp CBD, such as cosmetics, some social media companies have apparently taken it upon themselves to step into the shoes of regulators and ban all kinds of hemp-derived CBD products. Though that has allegedly changed recently, as noted above, many social media companies have yet to publish formal guidance here, though they certainly can. One thing is clear, unfortunately: those whose accounts were banned may never get them back, even if social media companies do change their positions.

My advice to social media companies is to make a choice: step out of the shoes of the government and let people advertise products that are not unlawful, or ban whatever you decide to ban but make clear what the rules are.

The point of all of this is that when it comes to CBD advertising, things are very unclear. Social media companies are apparently dead set on allowing all kinds of posts and advertisements that many people find reprehensible. But when it comes to advertising CBD bath bombs, you better be prepared to bet your business’ account.


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George Scorsis Liberty Health Sciences

December 13, 2019
 

LAS VEGAS – Panelists at MJBizCon in Las Vegas this week took on various complicated issues swirling around the marijuana industry, including regulatory changes occurring in many states, best practices for indoor MJ cultivation, the vape health crisis and more. Assessing regulatory challenges in new markets According to a panel of marijuana industry experts at

Cannabis business experts at MJBizCon discuss shifting regulatory climates, cultivation practices, vape issues & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 13, 2019
 

Tennessee man filed a federal lawsuit seeking millions of dollars in damages against Trulieve, Florida’s largest medical marijuana operator, for allegedly sending illegal text messages to his cellphone.

Marijuana lawsuit is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 13, 2019
 

LAS VEGAS – From a Dutch cultivator of medical cannabis to one of the handful of retailers to open for Canadian Legalization Day, Marijuana Business Daily recognized leaders of the hemp and MJ industries Thursday night during the inaugural MJBizDaily Awards gala at The Cosmopolitan Hotel. Setting the stage for the new awards program, MJBizDaily

Stars of marijuana and hemp sectors honored at MJBizCon in Las Vegas is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 11, 2019
 

LAS VEGAS – Members of the cannabis industry’s brain trust used the first day of MJBizCon to share predictions for 2020 and describe how changing attitudes in the United States might affect future marijuana legalization efforts – plus more coverage from this week’s conference in Las Vegas. In his keynote presentation Wednesday, Chris Walsh, president and

MJBizCon 2019: Cannabis industry recognizes year’s challenges as it looks forward to longer-term growth is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 11, 2019
 

The cannabis stock meltdown that erased $49 billion in enterprise value this year should begin to shift in 2020 as the industry leaders separate themselves, one of Canada’s largest investment banks forecasts. A new CIBC World Markets report by John Zamparo, director of institutional equity research, called this year’s “rationalization” of marijuana stock prices inevitable. “Even

CIBC: ‘Indiscriminate’ cannabis selloff should start to shift in 2020 is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 11, 2019
 

Two Massachusetts agencies agreed to share information with each other to determine if six probable cases of vaping-related lung illnesses are linked to state-licensed marijuana retailers.

Vaping regulations is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 11, 2019
 

Pueblo, Colorado-based Los Sueños Farms – the state’s largest cannabis grower – now estimates it lost about $7 million in an early October freeze, but the owner said the outdoor harvest was still better than last year, and the company will have ample material for the extraction market. The Colorado market was initially concerned when

Despite early freeze and $7 million in losses, Colorado marijuana grower still enjoys strong sales is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 10, 2019
 

CannTrust Holdings said the New York Stock Exchange has notified the Canadian marijuana producer that its stock price had fallen below the $1-a-share threshold required to continue trading on the Big Board. The Vaughan, Ontario-based company said in a news release it has six months to regain compliance. In the meantime, CannTrust’s stock, which trades

New York Stock Exchange warns cannabis producer CannTrust its listing in danger is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 10, 2019
 

Denmark might need to extend its medical cannabis trial plans in order for the government to conduct a mandated midterm evaluation of the pilot program, Health Minister Magnus Heunicke said. The four-year program launched in 2018, and a formal evaluation is required to take place in 2020. The number of patients who accessed medical cannabis

Denmark eyes medical marijuana trial extension  is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 10, 2019
 

cannabis patent litigation presumptionI recently received an inquiry as to how difficult it would be to invalidate a competitor’s patent in litigation. In short, it’s pretty tough.

A patent is deemed invalid “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

In light of the Supreme Court’s decisions over the years, it’s clear that an infringer asserting the defense of invalidity has high hurdles to overcome due to three considerations:

1. The USPTO examiner having reviewed the prior art, has already made a determination that the patent is not obvious in view of this prior art.

Patents issue only after a pretty extensive examination has been conducted, which includes analysis as to whether the form and content of each application conforms to the applicable laws. Actions taken by agencies of the government are generally granted the presumption of administrative correctness. In this context, that presumption is actually codified into my next point, the existence of 35 U.S.C.A. § 282.

2.  Patents are presumed to be valid under 35 U.S.C.A. § 282, so defendants must prove invalidity by clear and convincing evidence.

That section provides, in relevant part:

A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.”

Although a nebulous concept, “clear and convincing” evidence has been described as evidence which produces in the mind of the trier of fact an “abiding conviction” that the truth of the factual contentions is highly probable. Translation: it’s the highest burden you could bear. (Note, the statutory presumption of validity attaches to each claim independently of other claims).

3.  A federal court will only overturn the district court’s underlying factual determinations under the clearly erroneous standard of review.

The district court will determine the issue of obviousness as a matter of law based on several factual determinations:

  • “The scope and content of the prior art”;
  • “Differences between the prior art and the claims at issue”;
  • “The level of ordinary skill in the pertinent art”; and
  • “Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc.”

These are usually fact-intensive inquiries, and the higher courts trust that the district court reviewed the evidence carefully.  Unless a factual determination is glaringly wrong (which almost never happens), it won’t be questioned.

For more on cannabis patent litigation, check out the following posts:


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George Scorsis Aphria

December 09, 2019
 

cbd litigation charlotte's web california

We’ve written extensively about hemp-derived CBD and the myriad issues faced by manufacturers CBD edibles. You can read more about this topic here:

And now, adding to the regulatory woes faced by many CBD companies, Charlotte’s Web Holdings Inc. and Infinite Product Co. have both been served with consumer class suits in California alleging that the products made by both companies violate FDA regulations and therefore violate California state law.

According to allegations, the Charlotte’s Web CBD products are labeled as dietary supplements, which according to the U.S. Food and Drug Administration (FDA), is not allowed:

Based on available evidence, FDA has concluded that THC and CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B) of the FD&C Act [21 U.S.C. § 321(ff)(3)(B)]. Under that provision, if a substance (such as THC or CBD) is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act [21 U.S.C. § 355], or has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, then products containing that substance are excluded from the definition of a dietary supplement.”

The FDA, as we have covered before, has explicitly stated that it is not legal to sell a food (including any animal food or feed) in interstate commerce to which THC or CBD has been added.

The lawsuit against Infinite Product Co. is slightly different, in that it targets products sold by the company included marketing statements that “CBD can alleviate some symptoms of autism, that cannabinoids have been found to inhibit the growth of cancer cells, and that, because of opiods’ addictiveness and painful withdrawal symptoms, people have moved to using CBD.”

The FDA has issued multiple statements that “[s]elling unapproved products with unsubstantiated therapeutic claims – such as claims that CBD products can treat serious diseases and conditions – can put patients and consumers at risk by leading them to put off important medical care,” and observed that “[t]he FDA has previously sent warning letters to other companies illegally selling CBD products that claimed to prevent, diagnose, treat, or cure serious diseases, such as cancer. Some of these products were in further violation of the Federal Food, Drug and Cosmetic Act because they were marketed as dietary supplements or because they involved the addition of CBD to food.”

Both causes of action in this case include allegations of violations of California Unfair Competition Law, California False Advertising Laws, California Consumer Legal Remedies Act, Breach of express and implied warranties, and the state’s Declaratory Judgment Act.

What is truly unfortunate is that these lawsuits come as no surprise. It has been widely acknowledged that there is no uniform regulatory framework in place to ensure that consumers of CBD products are actually consuming what they think. Leafly recently published a report showing that while most of the 47 CBD products they purchased and tested contained some CBD, most products did not contain the amount of CBD promised on the label. Leafly’s data broke down as follows:

  •     51% of products (24 of 47) delivered the promised CBD within 20% of the labeled dosage;
  •     23% of products (11 of 47) delivered some CBD, but less than 80% of the dosage promised on the label;
  •     15% of products (7 of 47) delivered more than 120% of the promised CBD; and
  •     11% of products (5 of 47) delivered no CBD whatsoever.

These results should be extremely concerning both to consumers, who may lack confidence about the nature of the products they’re purchasing, and to suppliers, who are opening themselves up to product liability lawsuits like those filed against Charlotte’s Web Holdings and Infinite Product. We expect that this is only the beginning of the lawsuits to come against CBD companies, and recommend that operators in this space talk to their attorneys about labeling, marketing, and advertising practices before becoming the next target.


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george scorsis

December 09, 2019
 

Canada’s largest cannabis company by revenue has appointed David Klein as its new CEO, effective Jan. 15, 2020. Klein currently serves as Canopy Growth’s board chair and chief financial officer (CFO) at Constellation Brands, which became the Smiths Falls, Ontario, company’s largest shareholder earlier this year. Klein will step down from his role at Constellation,

Canopy Growth hires ex-Constellation exec David Klein as CEO is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 09, 2019
 

Flurries of meetings and negotiations have occurred behind the scenes in Sacramento since California announced a cannabis tax increase last month. The stakes surrounding these discussions – all aimed at lowering the marijuana industry’s tax burden – are nothing less than the survival of the state’s legal marijuana market, according to some industry watchers. Representatives from multiple

California marijuana tax hike puts future of legal market in spotlight amid worries over state industry’s viability is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 07, 2019
 

At a time society is crying out for businesses to show an environmental conscience, marijuana companies nationwide are searching for ways to do their part and keep their ecological footprints as small as possible.

How marijuana firms can adopt environmentally friendly practices and avoid the greenwashing trap is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 06, 2019
 
Ravenquest
************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

george scorsis

December 06, 2019
 

After Brazil’s health authority shelved a proposal on domestic cannabis cultivation this week, a court decided in the opposite direction, allowing – for the first time in Brazil – a company to grow hemp commercially. The court’s decision could spur other cannabis companies to appeal to the judicial system for permission to cultivate domestically. The

Brazilian court decision could encourage other cannabis companies to seek approval for cultivation is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 06, 2019
 

Findings from Alberta, Canada’s smoking law review could lead to legislative or regulatory changes involving cannabis vaping – though the analysis is not specifically aimed at cannabis – the Treasury Board and Finance ministry told Marijuana Business Daily. The review, which started in October, is being conducted because Alberta’s current legislation does not address vaping

Alberta weighs legal changes for marijuana vape market is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 06, 2019
 

Two federally regulated cannabis companies, including one of the earliest licensed producers in Canada, sought creditor protection this week. Wayland Group on Monday said it is seeking creditor protection to pursue restructuring and consider financing arrangements. Wayland subsidiary Maricann became the 19th licensed producer in Canada by receiving its federal approval in early 2014. NVS

One of Canada’s oldest cannabis producers seeks creditor protection is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 06, 2019
 

hemp

Last month, Nathalie Bougenies and I put on a webinar on the US Department of Agriculture’s (“USDA”) new interim hemp rules. We got some great questions from our viewers but were unable to answer all of them in real-time. In this two-part series, Nathalie and I will respond to a number of those questions. This first part will focus on licensing and transportation questions. In tomorrow’s post, Nathalie will respond to questions relating to THC testing.

LICENSING

If a state, like Tennessee, operates under the 2014 Farm Bill, but the state applies for a USDA state plan and that is approved, does that then void the 2014 pilot rules and regulations for existing farms in Tennessee operating under 2014 Farm Bill?

Each state is handling the transition from the 2014 Farm Bill to the 2018 Farm Bill a little differently so if you are a hemp producer operating under a 2014 Farm Bill program, you’ll need to check with your state’s department of agriculture. Also, the 2018 Farm Bill extended the 2014 Farm Bill for one year after the USDA  published its interim rules on hemp (October 31, 2020) meaning that states who submit 2018 Farm Bill plans can continue to regulate under the 2014 Farm Bill. It’s also likely that most states will implement procedures to allow current licensed producers to transition to the 2018 Farm Bill.

Because this question addresses Tennessee specifically, the following passage from the Tennessee Department of Agriculture is helpful:

The U.S. Department of Agriculture (USDA) has released a draft of the rule outlining federal provisions for the domestic production of hemp. A preview of the rule is posted on USDA’s website, along with answers to frequently asked questions.

Leaders at the Tennessee Department of Agriculture (TDA) are reviewing this draft to determine potential impact on Tennessee’s hemp program.

No immediate changes are expected. Licensed hemp growers in Tennessee will continue to operate under current state regulations at this time.

As of Nov. 1, we have 3,800 producers licensed to grow as much as 51,000 acres of hemp statewide.

TDA looks forward to continue working with farmers and industry partners to support the production of hemp in Tennessee.

Since USDA has not regulated processing, is an entity that grows not allowed to process? Must a separate entity be formed?

Nothing in the 2018 Farm Bill or the USDA’s interim hemp rules explicitly allow or prohibit a hemp producer from processing hemp. The USDA doesn’t really touch on processing at all. Some states issue licenses to process hemp and may continue to do so under the 2018 Farm Bill. State law must be analyzed to determine what is required for processing.

TRANSPORTATION

Can you legally transport extracted Hemp CBD across state lines lab tested which shows less than 0.3% THC?

The 2018 Farm Bill prevents a state from interfering with the transport of hemp that was legally cultivated. Hemp is defined under federal law to encompass hemp derivatives, which includes Hemp-CBD. Strictly speaking, you can legally transport Hemp-CBD across state lines. However, states are free to prohibit the sale or distribution of Hemp-CBD within their borders.


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George Scorsis

December 06, 2019
 

Michigan launches its recreational marijuana industry, California-based Harborside appeals a closely watched federal tax case, Brazil lays the groundwork for what could become one of the world’s largest medical MJ import markets – and more of the week’s top cannabis news. MI adult-use sales begin with limited number of stores open Michigan’s first day of

Week in Review: Michigan begins adult-use cannabis sales, Harborside appeals tax case, Brazil sets stage for big import market & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 05, 2019
 

Colorado Gov. Jared Polis was lauded in May when he signed into law legislation allowing outside money to be invested in the state’s cannabis industry. Since the law went into effect Nov. 1, outside capital has already begun flowing into Colorado marijuana businesses. For example: Denver-based Medicine Man Technologies through the year announced an almost

New Colorado law boon for cannabis capital, but concerns remain for minority businesses is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

December 04, 2019
 

Creating CBD chocolate at home is simple with this easy to follow CBD recipe.

CBD has found its way into a wide range of edibles, including CBD gummies, CBD hard candies, and even CBD chocolates. With our quick recipe, you can make delicious CBD infused chocolate at home with RSHO™ CBD Isolate powder. Keep reading for our easy to follow CBD chocolate recipe.

How to Make CBD Chocolate

CBD chocolates can be a tasty way to add CBD to your system each day. Completely customizable, you can easily change the amount of CBD in each serving, as well as the type of chocolate you use and any special flavor ingredients you want to add to make these CBD chocolates your own.

One of the advantages of using RSHO™ CBD Isolate in this recipe is the ability to customize the potency of your chocolates. Each milligram of CBD isolate is approximately one milligram of CBD. With that in mind, 200 mg of CBD isolate will come out to 20 mg of CBD per ounce of chocolate. This can be adjusted up or down to reach a potency you prefer.

What you will need:

  • Double boiler
  • 10 ounces of chocolate chips
  • 4 tablespoons of coconut oil or unsalted butter
  • RSHO™ CBD Isolate
  • Chocolate molds (optional)

Instructions:

  1. In a double boiler, heat chocolate chips until melted, stirring regularly
  2. Add coconut oil or butter, stirring as it mixes
  3. Remove from heat and mix in RSHO™ CBD Isolate, stirring until thoroughly blended
  4. If you are using chocolate molds, pour your melted CBD chocolate into your molds.

If you are not using chocolate molds, you can also allow the chocolate to cool for about 10 minutes, and then spoon it out onto wax paper in drops to cool fully. You can also pour this chocolate over ice cream, use it to dip strawberries, and more.

Feeling creative, you can add extras to your CBD chocolate by blending in sea salt, crushed candy canes, mini M&Ms, or any other treat you can think of.

Why Make CBD Chocolate

Infusing edibles with CBD is a great way to add the benefits of hemp derived CBD into your diet. CBD naturally promotes balance and wellness by supporting the endocannabinoid system, a network of receptors tasked with keeping the body and its functions running optimally.

When CBD is taken with food, the body is able to more efficiently absorb the CBD and other cannabinoids before transporting throughout the body. Here is more about why you should take CBD oil with food.

This CBD chocolate recipe calls for RSHO™ CBD Isolate, a 99% pure CBD powder that makes it easy to add CBD to nearly any recipe. Using CBD isolate to make CBD chocolate is ideal because it has no odor or flavor. However, you can also make this recipe using our CBD liquids.

There are literally dozens and dozens of possible recipes featuring CBD oil tinctures and liquids. Use our CBD recipes to stimulate your creative cooking juices. Keep in mind that it isn’t suggested that you cook with the oil, as doing so can diminish potency.

You can get RSHO™ Liquids in our Green, Blue, and Gold Labels, giving you the choice between our non-decarboxylated, decarboxylated, and filtered options. You can also opt for our RSHO-X™, which is made with CBD isolate and contains no detectable amounts of THC. Available in 4 oz. bottles, our line of RSHO™ Liquids provide 31 mg of CBD per serving.

Edibles Beyond CBD Chocolate

Explore the benefits of CBD and adding the natural compound in your favorite foods through our CBD Oil Education page.

Visit our CBD Oil Recipes page to discover how to make even more CBD edibles.


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George Scorsis Aphria

December 04, 2019
 

Denver-based cannabis technology company MassRoots’ website has been offline for a number of days, raising fresh questions about the financial health of a company that has been in turmoil since at least 2017. Isaac Dietrich, the company’s founder and chief executive officer, maintained in an email to Marijuana Business Daily that the cannabis social networking pioneer

Is cannabis technology company MassRoots out of business? CEO insists no is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

December 04, 2019
 

New Brunswick, Canada, marijuana publishing company Civilized Worldwide is “temporarily” laying off its entire workforce ahead of a pending sale to Washington DC-based New Frontier Data. New Frontier, a data and analytics company, said in a news release it has completed its diligence and will move forward with its acquisition of Civilized. The companies did

Canadian cannabis publisher Civilized sheds jobs amid New Frontier purchase is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more info, George Scorsis

December 04, 2019
 

Jushi Holdings, a Florida-based marijuana and hemp operator, said it received approval to begin trading on the Canadian Securities Exchange (CSE) as JUSH.

Medical marijuana is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 04, 2019
 

Brazilian health authorities rejected domestic cultivation of medical marijuana but agreed to permit the distribution of medicinal cannabis products that have not completed clinical trials, potentially setting up one of the largest import markets in the world. The new rules, adopted Tuesday, allow bulk imports and sales in pharmacies for the first time. Tuesday’s decision – involving

Brazil’s new medical cannabis rules reject domestic cultivation, potentially setting up large import market is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 04, 2019
 

The number of legal cannabis product batches undergoing lab testing in California each month has rebounded since a lull over the spring and summer and, as of late November, was on pace to grow even more before the end of the year. But the increase in legal product making its way through the supply chain met

Uptick in California lab-tested marijuana products met with both hope and skepticism from industry is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

December 03, 2019
 

A law forming the legal foundation for a medical cannabis industry in Barbados has overcome the last important parliamentary hurdle after being approved by the Eastern Caribbean country’s Senate. The law, which covers activities related to cultivation, processing, dispensing and export, empowers the Medicinal Cannabis Licensing Authority to develop policies and guidelines for a newly

Barbados medical cannabis law clears final hurdle in Parliament is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

December 03, 2019
 

New Brunswick aims to hit the reset button on how adult-use cannabis is sold, and the province might be willing to pull the plug on at least some of the 20 existing government-run stores under any new retail system. If a private company is chosen to run the new system, it will not be required to

New Brunswick looks for cannabis retail reset as future of 20 established stores uncertain is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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addiitional information, George Scorsis

December 02, 2019
 

Federally regulated cannabis producer Aphria expects the first harvest from its Diamond facility in Leamington, Ontario, to be sold to provincial wholesalers in March, capping off a year-plus delay from when shipments were initially expected to start. Aphria expected Diamond to be completed in time for its first sale in January 2019 – a goal long-since abandoned –

Aphria Diamond cost creeps higher as first marijuana sales pushed to March is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

December 02, 2019
 

As the cannabis industry has moved to shed the “stoner” stereotype many have held of its consumers, several marijuana businesses are rebranding themselves via name changes and other steps to try to reflect the companies they’ve become.  Whether the decision revolves around an initial public offering (IPO), including Akerna’s, or the acquisition of multiple dispensaries such

Why some marijuana firms are rebranding in response to cannabis industry’s changing business climate is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

November 30, 2019
 

hemp cbd california

Dozens of times per month, I am asked by clients and potential clients whether hemp-derived cannabidiol (“Hemp CBD”) products are legal in California. With almost any other product, I can give an easy “yes” or “no” answer. But with Hemp CBD, my answer usually takes five to ten minutes to explain and ultimately ends with “there is no clear answer, all of this could change dramatically in the next few months, and all of this will change in the next year”. Given the perplexing state of Hemp CBD laws in this state, I thought it might help to try to answer this all-too-common question here as well.

To really understand the legal status of Hemp CBD in California, one should understand the state’s stance on “cannabis”. The term “cannabis” is a legally defined term that means the Cannabis sativa L. plant with more than .3% delta-9 THC and excludes hemp, which is legally defined as the Cannabis sativa L. plant with .3% or less delta-9 THC. Cannabidiol can be derived from either cannabis (in which case it is generally legal and may be sold through the licensed cannabis chain), or hemp (in which case the law is completely unclear in many cases). If this all seems a bit confusing, it is. I won’t even try to get into the different terminology that the federal government uses.

The state cannabis agencies, ironically, prohibit licensed commercial cannabis businesses from using Hemp CBD in manufactured cannabis products or selling Hemp CBD products in licensed cannabis retail stores. Beyond that, the state has not adopted a single law that expressly outlaws Hemp CBD processing, sale, or consumption (though some cities or counties in the state may actually have laws prohibiting such activities). Instead, about a year and a half ago, the California Department of Public Health’s Food and Drug Branch (“CDPH”) released an FAQ document which stated that in spite of the fact that cannabis derivatives may be lawfully added to edibles, Hemp CBD could not legally be added to foods (including beverages and animal foods) or dietary supplements. The FAQ says nothing about many other products, such as cosmetics, smokeable hemp, or Hemp CBD vapes.

These FAQs, notably, are based expressly on federal law, and do not explicitly cite California law to support CDPH’s attempted ban on Hemp CBD foods. There are really two main arguments in the FAQs for why Hemp CBD foods are unlawful:

  1. Hemp was a Schedule I (illegal) drug under the Controlled Substances Act. This argument is no longer valid, since the Controlled Substances Act (“CSA”) was amended by the 2018 Farm Bill to carve hemp out from the CSA. But either way, it is a bit odd that the CDPH was attempting to ban a substance based on its placement in the CSA, when the CDPH is also responsible for licensing cannabis manufacturers, where cannabis is a Schedule I narcotic.
  2. The FDA did not allow Hemp CBD to be added to foods. This is still the case, as the FDA recently made clear. But again, it is interesting that the CDPH is relying on a federal agency’s position when it comes to Hemp CBD, but not when it comes to cannabis.

While the FAQs really only cite federal law, the CDPH has apparently been threatening enforcement actions and even pulling products under a California law that most people in the state probably aren’t aware of: the California Sherman Food, Drug, & Cosmetic Law. The Sherman Law is in many respects similar to the federal Food, Drug and Cosmetic Act (which is the basis for the FDA’s power over Hemp CBD). Notably, the Sherman Law prohibits selling “adulterated” food. There are numerous different definitions for when food is “adulterated”, but generally it means that it is poisonous, harmful, or unsafe. Though CDPH has made no public fining that Hemp CBD is actually “adulterated”, it has apparently been using this provision as the basis for its enforcement actions. In fact, the Los Angeles Department of Public Health, which to some extent acts as a local enforcement arm for CDPH policies, issued guidance stating that Hemp CBD was an adulterant.

In response to the claim that Hemp CBD was an adulterant, California Assembly Member Aguiar-Curry introduced AB-228 in early 2019, which would have expressly found that Hemp CBD was not an adulterant. In fact, when I started writing about AB-228 back in January, that’s basically all the bill did, though subsequent amendments would have created a much more robust regulatory framework for Hemp CBD. Unfortunately, the bill stalled out in committee a few months ago, so for now there will be no progress on that front. But we are basically guaranteed to see a revival of the bill in some form or another in the 2020 legislative session.

Also interestingly, there appears to have been no public challenge in the courts over whether Hemp CBD actually even qualifies as an “adulterant”. It is certainly possible that over the next few months, we could see a company that was subject to CDPH or local department of health enforcement sue and claim that Hemp CBD is not an “adulterant”. It’s possible that the CDPH would cite the FDA’s assertions that Hemp CBD could have some toxicity issues, but whether those assertions are sufficient for a state to take enforcement actions under state law is not so clear.

Ultimately, there is no great answer to the question “is Hemp CBD really unlawful in California?”, but there are some good pieces of information to consider:

  • While there is no state law that bans Hemp CBD processing, sale, or consumption outside of the licensed cannabis chain, the CDPH or local departments of health may initiate enforcement actions for foods, beverages, animal products, or dietary supplements under federal authority or the Sherman Law.
  • There are a number of products that the CDPH has not publicly identified as unlawful, such as cosmetics. The CDPH has jurisdiction over cosmetics under the Sherman Law, and could take the same position that they are not lawful. But they did not do so in the FAQ. It’s also possible that they could take a similar position to the FDA, which has been much less aggressive when it comes to cosmetics unless they make medical claims.
  • The law is subject to change quickly. As we live in a state where a couple-page-long FAQ document, rather than a law or regulation, can support enforcement actions against an entire industry, it’s entirely possible that the CDPH or another agency could reverse course or take an entirely new position at the drop of a dime.
  • We are pretty much certain that the law will change dramatically in the longer term. The FDA will issue regulations for Hemp CBD (though that may take time), and it’s highly likely that the California legislature will work on new Hemp CBD legislation in 2020.

So stay tuned to the Canna Law Blog as we continue to cover developments on the Hemp CBD front in California.


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George Scorsis

November 29, 2019
 

Aurora’s products are temporarily unavailable in Germany pending a review by health authorities of “a proprietary step” in the Alberta company’s production process, a spokesperson confirmed to Marijuana Business Daily. MJBizDaily corroborated the products’ unavailability with several German pharmacies “until further notice.” According to the pharmacies, the reason is related to a method used by

Aurora Cannabis products unavailable in Germany until further notice is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

November 29, 2019
 

fda hemp cbd

The Food and Drug Administration (“FDA”) had a busy Monday this week. On November 25, the agency issued warning letters to 15 businesses selling hemp-derived CBD (“Hemp-CBD”) products as unapproved drugs. The FDA also released updated consumer guidance on Hemp-CBD.

Warning Letters

The recent batch of warning letters appear to turn on the marketing of Hemp-CBD products as unapproved drugs. The FDA has approved CBD as a drug: Epidiolex. Epidiolex is used to treat epilepsy and requires a prescription. That’s the only approved use of CBD as a drug. The FDA determines whether something is a drug based on how the product is marketed. Any marketing material that includes a health claim will cause the FDA to classify a product as a drug.

These letters warn Hemp-CBD companies that are making health claims about Hemp-CBD products. In addition, the FDA reiterates its view that Hemp-CBD cannot be added to food or dietary supplements and states that it “cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food” based on the available data.

Consumer Update

The FDA’s update to consumers makes it appear that Hemp-CBD is a dangerous and unknown substance. Here is the FDA’s own summary of its latest updates:

  1. CBD has the potential to harm you, and harm can happen even before you become aware of it.
    • CBD can cause liver injury.
    • CBD can affect the metabolism of other drugs, causing serious side effects.
    • Use of CBD with alcohol or other Central Nervous System depressants increases the risk of sedation and drowsiness, which can lead to injuries.
  2. CBD can cause side effects that you might notice. These side effects should improve when CBD is stopped or when the amount ingested is reduced.
    • Changes in alertness, most commonly experienced as somnolence (drowsiness or sleepiness).
    • Gastrointestinal distress, most commonly experienced as diarrhea and/or decreased appetite.
    • Changes in mood, most commonly experienced as irritability and agitation.
  3. There are many important aspects about CBD that we just don’t know, such as:
    • What happens if you take CBD daily for sustained periods of time?
    • What is the effect of CBD on the developing brain (such as children who take CBD)?
    • What are the effects of CBD on the developing fetus or breastfed newborn?
    • How does CBD interact with herbs and botanicals?
    • Does CBD cause male reproductive toxicity in humans, as has been reported in studies of animals?

Let’s start with the FDA’s first point, that Hemp-CBD may hurt you and you may not realize it. During the investigation of Epidiolex, there was some evidence that CBD could cause liver injury. The FDA is therefore concerned that the widespread use of Hemp-CBD without doctor supervision, could result in liver damage. That’s an understandable concern. But the consumer update doesn’t stop there.

The FDA goes onto warn about Hemp-CBD interactions with alcohol and other drugs. I don’t want to diminish these interactions as a legitimate concern, but I do want to point out that concerns over drug and alcohol interactions are not limited to Hemp-CBD. Pretty much all drugs can interact with other substances in a negative way. The FDA didn’t frame the issue of Hemp-CBD interactions as something to be aware of or something to watch out for; it was presented as a way that Hemp-CBD can hurt consumers.

Last year, the World Health Organization (“WHO”) issued a report on CBD, concluding that “there is no evidence of recreational use of CBD or any public health related problems associated with the use of pure CBD.” WHO also raised the issue of CBD’s interactions with other drugs, but still reached the conclusion that CBD, as a compound, was generally low-risk to public health.

Let’s move onto the second point about Hemp-CBD side effects. Here is another passage from the FDA’s  Hemp-CBD consumer update:

In addition, CBD can be the cause of side effects that you might notice. These side effects should improve when CBD is stopped or when the amount ingested is reduced. This could include changes in alertness, most commonly experienced as somnolence (sleepiness), but this could also include insomnia; gastrointestinal distress, most commonly experienced as diarrhea and/or decreased appetite, but could also include abdominal pain or upset stomach; and changes in mood, most commonly experienced as irritability and agitation.

This passage raises some serious questions about side effects. It does not provide citations to the studies that lead the FDA to determine that these side-effects were serious enough to warrant inclusion on the FDA’s website. Also, how did the FDA make the determination that the most common change alertness is somnolence or the most common change in mood is experienced as irritability and agitation? Also, the FDA’s recommendation that side effects will improve if the use of CBD is stopped or the amount ingested is reduced has to based on clincial information, right? The FDA wouldn’t make an unsubstantiated medical claim online, especially when there is so much misinformation out there regarding Hemp-CBD, would it?

I don’t doubt that the FDA based its above conclusions regarding Hemp-CBD on some set of studies or other data set, but it’s hard to justify the FDA making these claims without any reference to how the FDA reached these conclusions. I’ve written before about how the FDA has a credibility problem with the American public. I don’t think this latest consumer update does the FDA’s credibility any favors.

The third point focuses on questions that remain about the safety of Hemp-CBD. These are important questions and should be considered. The fact is that the interest in CBD has eclipsed the scientific data we have available. The FDA’s questions are important and should be studied carefully. The problem is that the FDA appears to have already made a number of determinations about the dangers of Hemp-CBD without showing its work or refuting the data provided by the WHO.

Conclusion

The FDA’s approach to Hemp-CBD has been one of regulatory inaction and even obfuscation. Rather than providing guidance to or issuing regulations concerning manufacturers of Hemp-CBD products, the FDA has focused on telling consumers and Hemp-CBD businesses that most Hemp-CBD products are not legal and not safe. This latest round of warning letters and the consumer update are a continuation of this approach, but with greater intensity. The consumer update strikes a more urgent and alarming tone and the sheer number of warning letters sent out on one day is a departure from the FDA’s norm.  Hopefully, the FDA has also been working behind the scenes to also establish a regulatory framework for the safe manufacture and distribution of Hemp-CBD products. The FDA’s current approach to Hemp-CBD does not seem tenable for much longer.


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more information, George Scorsis

November 29, 2019
 

The Ontario Cannabis Store backtracked on a Black Friday promotion this week after “consulting” with Health Canada, highlighting the limitations facing adult-use marijuana retailers – even ones owned by the government – in getting their message out. In a Tweet earlier this week, the Ontario Cannabis Store (OCS) said “something big” was coming to OCS.ca, its monopoly

Ontario Cannabis Store deletes Black Friday tweet ‘in consultation’ with federal regulator is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

November 29, 2019
 

Trimming and curing marijuana are two crucial steps in the final stages of getting flower to market.

All of the time and effort a marijuana cultivation company spends caring for its plants could be for naught if there's a poor trim or cure.

Proper trimming, curing are key to creating a quality marijuana product is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

November 29, 2019
 
WeedMD Outdoor Harvest Inside Look - Great Buds
WeedMD Inc (CVE:WMD) (OTCMKTS:WDDMF) (FRA:4WE) CEO Keith Merker talkes us through the company’s 27 acre outdoor cannabis grow. While the results of cannabis crops cultivated outside may vary, from what we saw, WeedMD’s growing fantastic looking buds. During our visit to the drying rooms, it became even more apparent that the WeedMD outdoor harvest is likely to result in heavy yields. The buds were large, well-formed, and even though it might not have initially been part of the plan – they can probably sell a portion of it as premium dried flower. WeedMD also has the option to expand if they like what this year’s crop will do to their balance sheet. Behind the current area there is enough land to expand significantly. Not that 27 acres isn’t significant though, it remains to be seen what this will do in terms of revenue and margins, but it does indeed seem very promising for the company to compete for the low-cost crown. ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis Aphria

November 28, 2019
 

Here’s to a great holiday for everyone out there, along with friends and families.

We are thankful for the privilege of working with so many great people and companies every day, and in such a dynamic area of law and policy.

Enjoy the holiday! We’ll be back tomorrow.


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George Scorsis Aphria

November 27, 2019
 

It’s that wonderful time of the year again– the season to focus on family, friends, and gratitude. Show acts of love to your friends and family during the holidays this year by gifting the wellness benefits of CBD and hemp.

In our ultimate CBD and hemp gift guide for 2019, we’ve curated the best gifts to help you check everyone off your list. From delicious CBD gummies to the newest innovative vaporizer to a socially-conscious and eco-friendly hemp tee, we’ve got the best CBD and hemp gifts and stocking stuffers for your family, friends, and colleagues. And don’t forget another special person in your life– you!

Best-Selling CBD and Hemp Gifts

RSHO™ Gold Label CBD Oil Liquid

best CBD giftAn incredibly versatile way to experience the benefits of CBD, RSHO™ Gold Label Liquid combines our award winning CBD oil and sustainably-sourced MCT oil to create a pourable CBD oil supplement with 31 mg of CBD per serving. The CBD oil in our popular Gold Label line has been both decarboxylated and filtered for a smoother and more refined experience. It can be added to foods and beverages or used on its own.

Shop for Gold Label CBD Oil Liquid


RSHO™ CBD Isolate Powder

CBD isolate giftPotent, powerful, and made from superior all-natural hemp oil. The most concentrated CBD product available, our CBD Isolate is a 99% pure powder that can be used on its own, vaped, or easily added to foods and beverages. Each 1 gram jar of RSHO™ CBD isolate powder contains 990 mg of CBD, which can be broken down into specific servings of any size. How does CBD-infused eggnog sound?

Shop for CBD Isolate


RSHO™ Blue Label CBD Oil Capsules

CBD capsules giftGift these high quality CBD oil capsules to that person in your life who is always on the go. RSHO™ Blue Label CBD Oil Capsules conveniently deliver decarboxylated full spectrum hemp oil plus 200mg of calcium, and 200mg of our proprietary blend of powdered turmeric root and white willow bark. Each capsule contains 25 mg of CBD. They come in a 30-count jar, enough for a month’s worth of daily CBD goodness!

Shop for Blue Label CBD Capsules


RSHO™ Green Label CBD Hemp Oil Concentrate

hemp oil giftGive your loved one the gift of raw hemp oil. Packaged in a convenient oral applicator, RSHO™ Green Label CBD Hemp Oil Concentrate offers all the natural components found in hemp as when it was harvested. A 3-gram applicator has 300 mg of CBD and is abundant in terpenes, chlorophyll, CBDa and a range of other cannabinoids– hemp oil kept in its raw, natural state.

Shop for Green Label CBD Oil Concentrate


RSHO™ CBD Hemp Oil Salve

CBD salve giftA perfect gift for the family member whose skin always struggles with dryness during the winter season, this luxurious body balm contains a 50 mg concentration of CBD, plus beeswax, camphor oil, and a unique herbal extract blend to nourish and soften skin. Each 1.3-ounce jar of this hemp topical contains 50 mg of CBD, and it’s compact enough to slip into any bag, drawer, or medicine cabinet for easy access.

Shop for CBD Hemp Oil Salve


HempMeds Active Relief Roll-On

CBD gift for athletesYour friend that loves running marathons or has a physically strenuous day job will surely appreciate HempMeds Active Relief Roll-on that is formulated to offer natural comforting effects. This roll-on mentholated blend of CBD and proprietary herbs is cooling and all but made for strenuous post-workout recovery. Each roll-on bottle contains 50 mg of CBD.

Shop for Active Relief Roll-On


HempMeds Hydrating & Soothing Body Lotion

Everyone loves a skincare treat during the holiday season. Earning the spotlight of HempMeds’ popular Personal Care Line, our Hydrating & Soothing Body Lotion is made with a botanical blend of CBD, jojoba, and almond oils to leave skin silky and smooth. It contains 100 mg of CBD per bottle, allowing your lucky recipient to enjoy the topical balancing benefits of hemp-derived cannabinoids.

Shop for Hemp Body Lotion


Dixie Botanicals CBD Vape Liquid + KandyPens RUBI Vaporizer Bundle

CBD vape giftEverything your loved one needs to get started vaping CBD. With this convenient bundle pack, your friend or family member will receive KandyPens’ popular RUBI vaporizer, plus a 30 mL bottle of delicious and rigorously-tested Dixie Botanicals CBD Vape Liquid. They’ll be relaxing with pure CBD-infused clouds of inhalable vapor in no time. And did we mention that our vape liquid comes in a variety of tasty flavors?

Shop the CBD Vape Liquid Bundle


Hemp for Pets Full Spectrum CBD Oil Tincture

pet CBD giftOf course, you’ll be shopping for your furry family members this holiday. You can gift your dog or cat the benefits of CBD too! Pets can enjoy many of the same benefits that lead humans to seek out hemp oil, and they have cannabinoid receptors that respond to CBD. This pet-specific tincture blends full spectrum hemp oil with MCT oil to naturally promote health and wellness in your pet. A 1-ounce bottle comes with a convenient dropper top and contains a total of 100 mg of CBD.

Shop CBD Oil Tincture for Pets


Hempy’s Save the Humans Hemp T-shirt

Hemp t-shirt giftA winning gift for that socially-conscious loved one in your life, Hempy’s Save the Humans tee features an amusing tongue-in-cheek play on the save the whales movement from the 1970s. Like all of Hempy’s t-shirts, this popular design is made in the USA with eco-friendly hemp blended fabric. Skilled craftspeople use high-quality hemming to construct a high quality tee that fits right every time.

Shop for Hempy’s T-shirts


Hempy’s B-Fold Wallet

Hempy’s Bi-Fold Wallet takes the stress out of carrying your essentials. Crafted in the USA from high quality 100% hemp, the Bi-Fold Wallet features a cash pocket and eight separate slots for your credit cards in a no-nonsense slimline design. A unique double-sided clear ID holder is convenient when checking out or passing through any security points. It comes in a variety of colors.

Shop Hempy’s Bi-Fold Wallet


KandyPens K-Vape Pro Vaporizer

Earn your rightful place as a favorite family member by gifting the K-Vape Pro Vaporizer from KandyPens. Seasoned dry herb vaping enthusiasts will enjoy its high performance and quick-heating capabilities, while beginners will appreciate its straightforward single-button functionality. Handmade in the USA, it is one of the most popular portable dry herb vaporizers available.

Shop the K-Vape Pro


Eyce Spoon

Eyce pipe giftThis funky pipe can be a stunning and unique gift for any dry herb devotee. Its high quality borosilicate glass bowl ensures flavorful draws, while its platinum-cured silicone body makes its nearly indestructible. It even has a built-in poker tool and a hidden stash compartment to keep extra herb safe. You’ll have fun choosing from the several wild color options!

Shop the Eyce Spoon


Revelry Supply “The Confidant” Bag

cannabis luggage giftA great gift for herb-loving jet-setters. If your gift recipient likes to travel with herbs and concentrates, this bag offers a discreet and safe way to do so. Constructed of durable rubber-backed nylon and a carbon filter system, The Confidant from Revelry Supply is a stylish single pocket pouch that keeps odors in and water out. It’s available in several colors.

Shop The Confidant


Best CBD and Hemp Stocking Stuffers

Dixie Botanicals® Orange CBD Isolate Tincture

CBD tincture giftPerfect for both CBD newbies and connoisseurs, this delicious CBD tincture is small enough to slip into any pocket yet offers a considerable 3.3 mg of CBD per serving that’s perfect for supplementing throughout the day. It’s made by combining all-natural hemp oil CBD isolate with MCT oil to naturally boost absorption. With its zesty orange flavor, this CBD tincture will easily be your recipient’s most cherished stocking stuffer.

Shop for Orange Isolate Tincture


Dixie Botanicals® CBD Gummies

The perfect way to introduce CBD-curious loved ones to cannabinoids. Who could possibly resist delicious fruit gummies infused with CBD and its natural benefits? Dixie Botanicals® CBD Gummies are specifically formulated with CBD isolate so they contain no detectable amounts of THC. With 10mg of CBD per gummy, you’re recipient will appreciate having these during the holiday season frenzy. They come in both sweet watermelon and tropical mango flavors.

Shop for CBD Gummies


Dixie Botanicals® + Surface® CBD-Infused SPF50 Sunscreen

best CBD gifts 2019Wear sunscreen in the winter is just as important as other times of year! Give the gift of premium sun protection and skincare with this new innovative CBD-infused sunscreen. Dixie Botanicals® joined forces with respected sunscreen brand Surface® to create a high quality CBD sunscreen that shields the sun’s UVA and UVB rays while enhancing the overall health of your skin. It’s reef safe, water resistant, and feels fresh on the skin.

Shop for CBD Sunscreen


KandyPens Slim Vaporizer Battery

Simplistic functionality combined with performance. The KandyPens Slim Vaporizer Battery will give delight any vaping beginning or enthusiasts who like to keep things simple. With its sleek design and buttonless operation, this vape battery is perfect for discreet and convenient vaping on-the-go. Pair it with any standard pre-filled vape cartridge. An included USB charger keeps the vaping sessions going.

Shop for the Slim Vaporizer Battery


Storz & Bickel Authentic Volcano Grinder

Drop this premium dry herb grinder into the stocking of any dry herb fan and you’re sure to see a smile. Compact yet efficient, the Storz & Bickel Authentic Volcano Grinder shreds herbs to perfection to enhance vaping sessions. Sharp teeth and a built-in stash chamber provide everything needed for perfect grinding, while heavy duty acrylic construction makes this grinder virtually indestructible.

Shop for THE Volcano Grinder


Higher Standards Supreme Clean Kit

If you’re looking for a stocking stuffer that will delight any dry herb consumer or aficionado, look no further than this premium one-stop-shop glass cleaning kit from Higher Standards. Herb enthusiasts know a clean pipe or vaporizer is key to ensuring flavor and smoothness. The Higher Standards Supreme Clean Kit comes with a premium isopropyl alcohol cleaning solution, perfectly-sized salt grains, high-quality pipe sticks, dot wipes, a resin rag, a steam brush, and more for the perfect cleaning ritual.

Shop for the Supreme Clean Kit


Hempy’s 100% European Hemp Beanie

best hemp giftsIf you’re looking for the perfect winter gift, consider a cozy and super soft hemp beanie to keep your loved one warm and toasty during the cold season. Introduced to the U.S. market after popular demand, this sought-after classic workmen-style beanie is made from 100% European hemp yarn for unmatched durability and comfort. Your recipient can unfold it to wear as a slouch beanie, or keep it folded for a classic cuffed style.

Shop for the 100% European Hemp Beanie


Larabar Blueberry Lavender Hemp Bar

hemp stocking stufferRather than filling your family stockings with candy, gift nutritious hemp bars from Larabar. Hemp has been used as a valuable food source for thousands of years, and with good reason. Larabar’s Blueberry Lavender Hemp Bars combine six wholesome superfoods into a delicious, satisfying and healthy snack bar. A sweet combination of dates, blueberries, apples, almonds, hemp seeds, and lavender oil provides a bright taste and an abundance of nutrients. Available in a pack of 15 so you can divvy up tasty hemp bars to all the stockings in your home.

Shop for Larabar Hemp Bars


 

Shop for CBD Gifts

Nothing is better than giving the gift of hemp and CBD products. With our wide array of CBD and hemp products, you’ll have no problem finding the right wellness gift for everyone in your life. Visit our online shop today to finish your holiday shopping.

Unsure which CBD product is best for that hard-to-gift family member or friend? Allow them to choose for themselves with a Medical Marijuana, Inc. gift card, available in several preset values between $25 and $500.


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George Scorsis Liberty Health Sciences

November 27, 2019
 

The Chamber of Commerce in British Columbia wants the province to adopt policies encouraging craft cannabis businesses to join the regulated market, including allowing proprietors to keep their doors open during the transition into the legal fold. The proposals were among a number of policies the chamber asked Public Safety Minister Mike Farnworth to consider during

British Columbia chamber lobbies province over craft cannabis cultivation is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

November 27, 2019
 

On December 4, 2019, at 12:30 PM, Harris Bricken attorney Daniel Shortt and Cascadia Intellectual Property attorney Krista Wittman will be presenting at a seminar put on by the Washington State Bar Association’s International Practice Section titled “U.S. and International Aspects of Cannabis Laws and Legal Practice.” Additional information on the event is available below and on the International Practice Section page.

The presentation will cover the following:

The passage of the 2018 Farm Bill opened the door to importing and exporting hemp in the United States, at least in theory. Cannabis remains illegal under federal law and states that have legalized cannabis sales do not even allow cannabis to cross state lines, let alone international borders. Daniel Shortt will discuss how U.S. cannabis policy impacts the growing international cannabis market.

National laws can also greatly affect whether and how intellectual property rights for cannabis-related businesses can be obtained.  Patent attorney Krista Wittman will discuss her experience prosecuting cannabis-related patent and trademark applications in the United States as well as in select foreign jurisdictions.

The international cannabis market is quickly becoming a reality as countries change their laws and policies on cannabis. Attorneys from both our international and cannabis practice groups are fielding an up-tick in questions on cannabis trade. For more information on the international cannabis market, check out these recent posts:

We hope you can join Daniel and Krista on December 4th! Register here.

Details

Date: Wednesday, December 4, 2019
Time: 12:30 P.M. – 2:30 P.M. (registration begins at 12:00 PM)
Credits:  2.0 Law and Legal Procedure
Tuition: $35 Standard, $0 International Practice Section Member, $18.75 Law Student
In-Person Location:
Foster Garvey PC
1111 Third Avenue, Suite 3000, Seattle, WA 98101


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George Scorsis Aphria

November 27, 2019
 

By now, everyone knows that to export medical cannabis to Germany, which is by far the largest importer of medical cannabis flower in the world, achieving European Union Good Manufacturing Practice (GMP) is a prerequisite. But beyond getting that certification, certain quality requirements could have huge implications if they are not considered and integrated into a business’

What businesses need to know about exporting irradiated medical cannabis to Germany is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more information, George Scorsis

November 27, 2019
 

Back in September Drake, via his Dream Crew company, applied for U.S. federal trademark protection for the warning symbol required on all recreational cannabis products that contain THC by the Health Canada. The symbol resembles a red stop sign with a black cannabis leaf and the letters “THC” prominently displayed:

cannabis marijuana trademark drake

The application specified the following goods:

  • Herbs for medicinal purposes
  • Boots; Coats; Dresses; Gloves; Hats; Hoodies; Jackets; Jerseys; Shirts; Shoes; Shorts; Sneakers; Suits; Sweat pants; Sweatshirts; T-shirts; Ties as clothing; Track suits; Trousers; Undergarments; Waist belts
  • Raw herbs
  • Herbs for smoking

The USPTO examining attorney assigned to this application refused registration on three grounds, all of which are interesting and relevant to would-be cannabis trademark applicants.

First, registration was refused due to likelihood of confusion with an existing trademark registration in Class 25, which covers apparel. This existing trademark registration is for the mark THC. Because the literal element of the applicant’s mark was identical to the registered THC word mark, the examining attorney deemed the marks likely to cause consumer confusion, and denied registration for apparel. This is an illustration of why conducting a trademark clearance search prior to filing your trademark application is a good idea.

Second, the application was denied as to the other three classes of goods specified (herbs) because “applicant did not have a bona fide intent to lawfully use the applied-for mark in commerce as of the filing date of the application.” As we’ve covered before, in order to qualify for federal trademark protection, the use of a mark in commerce must be lawful (Gray v. Daffy Dan’s Bargaintown, 823 F.2d 522, 526, 3 USPQ2d 1306, 1308 (Fed. Cir. 1987)). Here, the examining attorney did some digging and quickly learned that the applicant was a company owned by Drake, who had recently partnered with a Canadian cannabis company to produce marijuana. The wording of the three classes encompassing herbs was broad enough to include cannabis, which is not lawful under U.S. federal law, and is not eligible for trademark protection.

But this leads us to the third and perhaps most interesting grounds for refusal. which involves the nature of the applied-for mark itself. The logo specified in the application is identical to the symbol mandated under Canadian law to indicate that goods bearing the symbol contain THC. This is a warning symbol intended to alert customers that cannabis products contain more than 10 micrograms of THC per gram. The examining attorney asserted that because “the symbol is intended to be used merely to convey information about the material content of the product,” it serves no source identifying function.

The examining attorney’s assertion is an important foundation of trademark law: In order to be eligible for trademark protection, a mark must actually function as a trademark, meaning that it must actually indicate the source of the specified goods. The examining attorney’s considerations here included (1) the significance of the symbol, (2) the nature of the symbol’s use in the relevant marketplace, and (3) the impression created when the mark is used in connection with the identified goods. Ultimately, the examining attorney declared that:

[b]ecause consumers are accustomed to seeing this symbol used in this manner, when it is applied to applicant’s goods, they would perceive it merely as informational matter indicating that the goods are comprised of THC derived from cannabis or marijuana.

These are all valuable lessons in what can and cannot be eligible for U.S. federal trademark protection, and illustrate the ongoing challenges faced by the cannabis industry in developing strong brands that are eligible for federal protection.


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addiitional information, George Scorsis

November 27, 2019
 

The Toronto Stock Exchange (TSX) said it would delist CannTrust’s shares if the Ontario cannabis producer is unable to file relevant financial statements by March 25, 2020. A review will be conducted on the company’s eligibility for continued listing on the stock exchange, CannTrust disclosed this week. The review is a result of CannTrust being late

Toronto Stock Exchange warns CannTrust about possible delisting is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

November 27, 2019
 

The Los Angeles marijuana market is enduring more licensing delays. This time, it’s for a government-ordered audit of the city’s cannabis regulators.  It means more uncertainty for marijuana firms. And, perhaps most excruciating, it means more money down the drain. That’s the ongoing narrative surrounding the L.A. marijuana market, where hundreds of entrepreneurs have waited

Hopeful L.A. cannabis market entrants bleed money as they wait again – this time for licensing audit is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

November 26, 2019
 

Chicago-based multistate cannabis operator Cresco Labs said it is ending its agreement to buy Florida’s VidaCann, becoming the latest U.S. marijuana M&A deal to unravel and highlighting the steps companies are taking to navigate a rocky business environment. Cresco’s decision, in particular, sheds light on how marijuana companies are scrambling to save money and refocus

Cresco terminates VidaCann acquisition, highlighting cannabis industry’s focus on saving cash is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

November 26, 2019
 

The bidding process to cultivate medical cannabis in Cyprus is stalled after government authorities requested a review of the licensing fees. The delay, reported by the Phileleftheros newspaper, stemmed from concerns the fees are too low given the revenue growers are expected to reap. According to previous announcements, winners of the application process would have to pay

Cyprus delays bidding process so medical cannabis licensing fees can be reviewed is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Liberty Health Sciences

November 25, 2019
 

The Danish government is engaging stakeholders about the future of the country’s medical cannabis pilot program, but industry and government sources say the talks are at an early stage and a decision won’t be made until after the scheme’s formal evaluation next year. Denmark’s four-year medical cannabis trial program launched Jan. 1, 2018. A lot

Early talks underway on future of Denmark’s medical cannabis pilot program is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

November 25, 2019
 

cannabis business tax

One of the most fundamental questions facing any businessperson in the cannabis industry and every other industry is: “What type of business entity should I use?”

This is such a loaded question that your lawyer or accountant will first respond with, “That depends,” and then they will need to ask you at least ten follow-up questions to understand your goals and expectations, as well as the goals and expectations of your business partners and financiers. Some of these follow-on questions are tax-driven; others are regulatory-driven; others are dictated by financing relationships; and still others deal with control and flexibility within your business.

This is Part 1 of a two-part series. In Part 2, I will discuss more in depth the difference between and among various legal entities from which you can choose. For those who are wondering whether it is “really necessary” to use a business entity instead of just hanging out your shingle, know that your properly established and maintained business vehicle puts the “limited” in “limited liability.” And don’t forget insurance (here and here) and clean business contracts (here), both of which are also essential in helping you sleep at night.

Some types of industries are relatively low risk (NOT cannabis); some business owners are relatively judgment-proof (but it’s hard to start a business if you have no assets); and some business owners like to drive their cars without windshields and seat belts (neither they nor their businesses tend to last very long). I get that many potrepreneurs are used to taking on more than their fair share of risk, but my short response is: forming a business entity is a relatively inexpensive foundation upon which to build a solid business. Don’t ever cut corners in your business, but really don’t cut corners when it comes to your business entity (or getting good insurance or having great contracts in place).

Let’s go over some of these important questions to help you decide how to move forward with your entity selection.

The tax-related questions:

  • Do you or any of your fellow owners need to offset revenue in other business ventures?
  • Do you or any of your fellow owners need to maximize losses in this business venture? (i.e. will you be 50/50 in the business ownership, but your business partner wants to capture 100% of the losses in the startup years of the business?)
  • Are any of your owners non-residents?
  • If taxed as a pass-through, will you and other owners be prepared to pay all taxes owed while the company builds out its balance sheet?
  • Does your business plan involve real estate ownership?
  • Will your business own other assets that are likely to appreciate over time?
  • What is the anticipated impact of IRC 280E on your business model?

The regulatory questions:

  • Do your state’s cannabis regulations require you to use a particular business entity? (i.e. some states required all licensees to be nonprofit entities or “entities operated on a not-for-profit basis”).
  • Do your state’s regulations require full transparency in entity ownership?
  • If possible, do you want to keep some of the business’ owners out of the public eye?

The purpose-related questions:

  • Are you going to operate your business with a specific mission so that you can draw investment funds from particular types of investors?
  • Are you going to operate your business with a specific mission so that you can provide something good to the world by furthering education, providing charitable assistance, or stepping in to help where governmental resources cannot address needs in your community?

The financing-related questions:

  • Do you intend to have outside financiers involved, such as private equity or venture capital? If so, have your prospective investors made any requests regarding the type of entity in which they prefer to invest?
  • Do you intend to give all owners equal rights to profits, or do you intend to have different classes of ownership (i.e. preferred vs. common ownership interests and voting vs. nonvoting interests)?
  • How many owners do you expect to have in the first five years of the business?
  • Will any of your owners consist of C corps or S corps?
  • Do you intend to take the company public as soon as your business model and U.S. laws permit it?
  • How do you intend to get funds from the company to the owners: via salary, debt payments, distributions, or something else?

The control and flexibility-related questions:

  • Do you intend to have a small group of owners or a larger group?
  • Do you intend that all owners will have equal rights to profits and to decide when profits are distributed?
  • Are you a part of the minority owner group or majority group?
  • What type of governance structure do you envision working best for your company? Small or large?
  • Do you intend to hire outside management for the business?

The answers to these questions will help your legal or tax advisor help you make the right decision on what type of entity to choose and what to do with that business entity. For instance, just because you are already using an LLC does not mean that you cannot take advantage of making a Subchapter S election with that LLC. You just need to have a good reason for doing so, time it correctly, and your accountant needs to know and agree with you. The same is true if you want your business to be taxed as a C corporation or you want to convert your entity to another type of entity.

In a future post we will dig in more deeply to the advantages and disadvantages in the various types of entities you can choose. Stay tuned!


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George Scorsis Liberty Health Sciences

November 25, 2019
 

In the wake of the recent vaping crisis that’s sickened more than 2,000 people and killed dozens more, vape makers and retailers are using a variety of strategies to ease consumer concerns and shore up sagging sales. In particular, marijuana vape manufacturers and dispensaries are: Posting signs in stores and training in-store staff to help consumers understand

As vaping crisis continues to affect legal marijuana vape sales, MJ firms use education to allay consumers’ concerns is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

November 24, 2019
 

minnesota hemp cbd

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Each Sunday, we summarize a new state in alphabetical order. Today we turn to Minnesota.

The Minnesota Department of Agriculture (the “MDA”) has adopted an industrial hemp pilot plan that governs hemp cultivation in Minnesota. The MDA’s program appears consistent with the 2014 Farm Bill: “The Hemp Research Pilot Program studies the growth, cultivation, and marketing of hemp.” And it also appears that the program is consistent with certain provisions of the 2018 Farm Bill: “All first-time applicants must submit an application, pay the program fees, and pass a federal/state criminal background check. An applicant is disqualified from participating in the program if they have a controlled substance-related conviction in the last 10 years.” Minnesota hemp cultivators should therefore be aware that there will be strict requirements for hemp cultivation, unlike other states which have more relaxed rules concerning hemp cultivation.

Minnesota’s primary Hemp-CBD law is SB-12. The hemp provisions of SB-12 take effect on January 1, 2020.  SB-12 will allow the sale of non-intoxicating Hemp CBD products and will impose testing and labeling requirements which are relatively strict. It will also allow Hemp CBD products to be sold to marijuana licensees if the hemp was cultivated in Minnesota, which not all other states allow (e.g., California). Per SB-12, the state health commissioner is required to create a workgroup to advise on how to regulate Hemp CBD product and submit a report to the legislature by Jan. 15, 2020. So we expect to see some kind of regulations on top of SB-12, as soon as next year.

While we’re waiting for SB-12 to take effect, there is not much guidance on most kinds of Hemp CBD products in Minnestota.  The MDA states that it does not regulate food products containing Hemp CBD and instead defers to the FDA guidelines (which as we all know claim that Hemp CBD can’t be added to foods).  For many other kinds of products, there just is no real guidance. And Minnesota has not yet adopted a flavored vape ban, so we don’t yet know (a) if it will, and (b) whether that would apply to Hemp CBD.

There will be a lot of changes to Minnesota Hemp-CBD laws in the future, so please stay tuned for updates.


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George Scorsis

November 23, 2019
 

Though the majority of U.S. financial institutions remain hesitant to offer accounts and loans to non-plant-touching cannabis companies, there are steps those businesses can take to land a banking partner.

Ancillary marijuana businesses can avoid banking hurdles by turning to smaller financial institutions is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

November 23, 2019
 

hemp cbd litigation justcbd

A couple of months ago I wrote a “Hemp/CBD litigation forecast.” (See here.) One topic of that post was the rise in class actions against Hemp-CBD companies and I noted the consumer class action complaint filed against JustCBD in the Southern District of Florida, Case No. 0:19-cv-62067-RS. The gravamen of the complaint is that JustCBD overstated the quantity of CBD contained in its products on numerous occasions and in violation of representations and warranties it made in connection with selling its products. The plaintiff seeks to represent a class of persons defined as all persons in the United States who purchased JustCBD products that contains specific representations about the amount of CBD in the product.  I write today with an update on that case.

On November 18, the defendants filed a joint motion to dismiss the complaint for failure to state a claim. This type of motion – for the unfamiliar – must be filed before a defendant answers the complaint and may be filed against some or all of the claims in the complaint. In simple terms, a motion to dismiss argues: “Court, even if everything alleged in the complaint were true, the plaintiff could not win her lawsuit, so the lawsuit should be dismissed.” More technically, federal courts apply the standards set forth in two Supreme Court cases, Twombly and Iqbal, colloquially referred to by lawyers as Twiqbal.  The guiding principle of these opinions is whether the complaint “plausibly” alleges a claim for relief and courts deciding these motions apply the following principles:

  1. Although the court must accept as true all facts asserted in a pleading, it need not accept as true any legal conclusion set forth in a pleading.
  2. The complaint must set forth facts supporting a plausible claim for relief and not merely a possible claim for relief.
  3. Determining whether a complaint states a plausible claim for relief is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.
  4. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.
  5. Mere conclusory allegations do not suffice.

Although a complaint that does not plausibly allege a claim for relief will be dismissed, a plaintiff may be given leave to amend her complaint to cure the pleading deficiency.

The defendants filed a densely packed 27-page motion, let’s go over some of the key arguments that I’ll simplify in some respects for the sake of brevity:

  1. Gaddis alleges he purchased two JustCBD products in November 2018 (Honey Tincture and Ribbons) and apparently tested the CBD content of one of the products, which he alleges was below the amount listed on the label. But Gaddis purports to bring claims on behalf of a class claiming that every product sold by JustCBD (roughly 50 different products) is mislabeled. Defendants argue that Gaddis lacks standing to assert claims for products he did not purchase. This appears a well-founded argument. In Twiqbal terms, the issue is whether the court may reasonably infer from Gaddis’ allegations every JustCBD product (roughly 50) had a lower CBD content? Or is Gaddis limited to bringing claims regarding only the products he purchased? I expect the defendants have the better argument here, which if accepted by the court would significantly constrain the class action and the potential liability of the defendants.
  2. Gaddis seeks to pierce the corporate veils of the various entities he sued, alleging that a parent company “dominates and controls all aspects” the subsidiaries’ operation. But in Florida – as in most jurisdictions – piercing the corporate veil is a drastic measure taken only in rare circumstances. Defendants argue that the mere fact that one company is a corporate parent or affiliate is insufficient to pierce the corporate veil and that Gaddis’ allegations simply do not plausibly plead the circumstances necessary for a court to reasonably infer that the subsidiaries are “mere instrumentalities” of the parent. I believe the defendants have a good argument here as courts are generally loathe to disregard the corporate forms. A ruling in favor of the defendants would further limit the ability of Gaddis and his attorneys’ to reach into the pockets of the defendant corporations.
  3. Gaddis alleges that he and the Class suffered economic injury as a result of the defendants’ conduct. Namely, that they paid a “price premium” for the JustCBD products based on defendants’ express representations about the CBD content of the products. Defendants argue that Gaddis has not plausibly plead a “price premium” injury because he did not plead the specific price he paid, how the price he paid compared to competitors, or how the competitors’ products are comparable to the products he purchase. This argument is persuasive, the deficiency in pleading probably is one that could be corrected. What I mean is that were the court to rule in favor of defendants on this argument, I expect the court would allow Gaddis to try and remedy the deficiency by filing an amended complaint.

Defendants’ motion includes several other arguments including attacks on Gaddis’ claims for (i) violations of New York’s General Business Law §§ 349, 350, (ii) fraud, (iii) violations of the Florida Deceptive and Unfair Trade Practices Act, and (iv) breach of express and implied warranties. I won’t get into those here except to note that fraud claims are subject to a heightened pleading standard under the federal rules and that at least some of the purported deficiencies may be curable.

We will continue tracking this lawsuit and update the blog accordingly. In the meantime, any company involved in selling Hemp-CBD to consumers ought to be working closely with their regulatory attorneys to avoid getting snared by a class action lawsuit. For more reading about advertising and other statements about products see herehereherehere and here.


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George Scorsis

November 22, 2019
 
James & Ed Investor Research Trip to CannTrust, Hexo, Trulieve, GTII, - Midas Letter RAW 299
Midas Letter RAW highlights the stocks and stories to watch in the Canadian markets today. James West and Ed Milewski provide comprehensive fundamental & technical analysis on all trending business and investment news, while interviewing the top CEOs of all public companies and analysts with the highest reputations in the business. ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis website

November 22, 2019
 

Adult-use cannabis sales fell sharply in September in every Eastern Canadian market except Quebec, a reflection of the industry’s inability to open new stores to meet consumer demand in those provinces. Overall sales of recreational marijuana in Ontario, Quebec, Newfoundland, Nova Scotia, Prince Edward Island and New Brunswick declined 5.5% to 71 million Canadian dollars

Recreational cannabis sales in Eastern Canada punished by lack of retail expansion is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis

November 22, 2019
 

MORE Act legalize marijuana

The House Judiciary Committee approved a 2019 bill to decriminalize marijuana at the federal level and end cannabis prohibition on Wednesday. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act passed by a vote of 24 to 10 after more than two hours of debate. Two Republican representatives, Matt Gaetz (R-FL) and Tom McClintock (R-CA), joined the 22 Democrats who voted for the bill. This marks the first time a marijuana legalization bill has been approved by a congressional committee.

The MORE Act was introduced by House Judiciary Committee Chairman Jerry Nadler (D-NY), which has several critical components. First, it would decriminalize marijuana at the federal level by de-scheduling it from the Controlled Substances Act. Second, it gives states varying incentives to expunge the criminal records of people with low-level marijuana offenses. Third, it instates a 5% tax on cannabis products that would go towards programs benefiting communities that have suffered most from the War on Drugs.

House Judiciary Committee Chairman Jerry Nadler said in his opening statement:

For far too long, we have treated marijuana as a criminal justice problem instead of a matter of personal choice and public health. Whatever one’s views on the use of marijuana for recreational or medicinal purposes, arresting, prosecuting and incarcerating users at the federal level is unwise and unjust.”

While some Republicans argued that the bill was moving too quickly, others appeared to agree with Chairman Nadler’s sentiments but instead pushed for action on the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. The STATES Act would simply allow states to determine their own cannabis policies.

Several amendments were introduced during the markup:

  • Chairman Nadler put forth an amendment that added a “findings” section, which noted the racial disparities in prohibition enforcement and the lack of equity for communities targeted by the War on Drugs (approved).
  • Sheila Jackson Lee (D-TX) put forth a proposal to require the Government Accountability Office (GAO) and National Institute on Drug Abuse to conduct a study examining the demographic characteristics of people convicted of federal marijuana offenses (approved).
  • Cedric Richmond (D-LA) filed an amendment to widen the justice reinvestment provisions. For example, the amendment clarifies that those provisions directed at helping people most harmed by the War on Drugs are not limited to programs that help on an individual-level, they can also include programs like community-wide mentorship programs (approved).
  • Ken Buck (R-CO) filed an amendment requiring the GAO to study the societal impact of legalization (approved).
  • Buck also set forth another amendment that would replace major provisions of the MORE Act with the STATES Act (defeated on voice vote).

As with the SAFE Banking Act, the MORE Act still faces a long road towards becoming law. Seven more House committees must approve or waive the bill before it even gets a vote by the full House. And while it’s certainly possible that it could pass in the Democratic House, it then must face the Republican-controlled Senate. Committee member Ken Buck (R-CO) cautioned:

I don’t think a majority of the Republicans will support this bill. It is even less likely that the Senate would take it up. Therefore, I would just suggest that we deal with other bills that we can get a much larger bipartisan support from.”

If the MORE Act does pass the House, Senator Kamala Harris (D-CA) has already introduced a companion bill in the Senate.


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additional info, George Scorsis

November 22, 2019
 

A key U.S. House panel makes history by passing a federal cannabis legalization bill, Michigan reveals its first adult-use license winners, two states finalize bans on vitamin E acetate as an additive in vaporizer products and more of the week’s top cannabis news. Panel casts first-ever US House vote to federally legalize MJ In a

Week in Review: Landmark cannabis vote by US House committee, first MI adult-use licenses, vitamin E acetate vape additive bans & more is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

November 22, 2019
 

California cannabis regulators have revoked the business license of well-known vaporizer brand Kushy Punch after the company was raided last month and found to be operating from an unlicensed facility. After receiving a complaint about illegal cannabis activity at a location in Canoga Park, California regulators searched the unlicensed facility and seized nearly $21 million

License revoked for California cannabis vape maker Kushy Punch after state seizes $21M worth of products is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis Aphria

November 21, 2019
 

The Boston City Council approved an ordinance creating an independent Cannabis Board, in an effort to boost involvement of minority entrepreneurs in Massachusetts’ growing pot industry. The move also creates the state’s first local fund supporting minority-owned firms, according to officials. – Associated Press

Marijuana social equity is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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George Scorsis website

November 21, 2019
 

Israel’s Medical Cannabis Agency has unveiled transitional guidelines that would approve medical cannabis exports on a case-by-case basis provided local supplies are sufficient to meet patient demand, giving licensed companies a new market to sell their product. The new guidelines, which will be in place for at least six months, were laid out by the

Israel unveils six-month transitional guidelines for medical cannabis exports is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

November 20, 2019
 
Charting Man Dan Talks About the Bounce in the Market This Week
To see more from the chartguys visit ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis Aphria

November 20, 2019
 

California’s cannabis industry continues to struggle with problems that remain much the same since early 2018 when the state transitioned to a legal market – and no clear solutions have yet emerged.  At a two-day marijuana industry conference in Long Beach, California, this past weekend, state regulators and industry insiders mingled to lament those familiar

No one clear path around California marijuana industry’s major business woes, insiders lament is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more details, George Scorsis

November 19, 2019
 

Australia is one step closer to joining Canada and the Netherlands in the competitive medical cannabis export market. New South Wales-based Australian Natural Therapeutics Group said its domestically produced cannabis has been listed on the Register of Therapeutic Goods (ARTG), clearing one of the most important hurdles before exports can occur. Australian Natural Therapeutics Group

Australian-grown medical cannabis clears key export hurdle for first time is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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george scorsis

November 19, 2019
 

Could medical cannabis be a growth engine for the pharmaceutical industry? A subsidiary of Danish pharmaceutical giant Novo Nordisk is betting the answer is yes. NNE A/S, a 1,000-person strong pharmaceutical engineering and advisory unit of Novo Nordisk A/S , has been counselling medical cannabis companies on establishing pharmaceutical-grade facilities in Europe and Asia. NNE’s cannabis

Tips for entering Europe’s medical cannabis market: Q&A with Christian Carlsen of Danish pharma firm NNE is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs


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more details, George Scorsis

November 18, 2019
 
TREC Brands, Save Canadian Mining & Matt Bottomley, Cannaccord Genuity  - Midas Letter RAW 295
Midas Letter RAW highlights the stocks and stories to watch in the Canadian markets today. James West and Ed Milewski provide comprehensive fundamental & technical analysis on all trending business and investment news, while interviewing the top CEOs of all public companies and analysts with the highest reputations in the business. ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

george scorsis

November 18, 2019
 
Matt Bottomly Cannabis Market Analysis
************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis

November 18, 2019
 
Olympic Gold Medalist Levelling the Playing Field in Cannabis
Canadian professional snowboarder, Olympic Gold Medal Winner and Legacy Brands founder and CEO Ross Rebagliati joins Midas Letter to discuss setting the gold standard for cannabis retail companies and his own sporting experiences with the plant. Mr. Rebagliati was the first ever athlete to win an Olympic Gold Medal for men's snowboarding at the 1998 Olympic Games. Subsequent to winning however, having found traces of THC in his system, was disqualified and stripped of his achievement. The decision was eventually overturned but not before Mr. Rebagliati spent time in a Japanese jail. Since his athletic achievements, Mr Rebagliati has maintained belief that cannabis is part of living a healthy lifestyle and has founded a medical marijuana business: Legacy Brands. Watch the full interview to find out Ross Brands business plan and how the legendary snowboarder is levelling the playing field in Cannabis. ************************ Check out our website: https://midasletter.com ************************ SUBSCRIBE to our YouTube: http://bit.ly/MidasLetterYoutube SUBSCRIBE to our 2nd YouTube Channel - Midas Letter Clips: https://bit.ly/2rtQzgy SUBSCRIBE to our Newsletter: http://bit.ly/MidasLetterNewsletter Download Our Podcast on iTunes: http://bit.ly/MidasLetterPodcast ************************ Follow Us on Twitter: http://bit.ly/MidasLetterTwitter Like Us on Instagram: http://bit.ly/MidasLetterInsta Like Us on Facebook: http://bit.ly/MidasLetterFacebook ************************ #WeedStocks #MidasLetter

George Scorsis Liberty Health Sciences

November 17, 2019
 

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Each Sunday, we summarize a new state in alphabetical order. Today we turn to Michigan.

The cultivation of hemp has been authorized in Michigan and overseen by the Department of Agriculture and Rural Development (“MDARD”). Until a year ago, only the MDARD or a college or university could grow industrial hemp for the strict purpose of research.

However, on December 28, 2018, Governor Rick Snyder signed into law Michigan House Bills 6330, 6331 and 6380 (Public Acts 641, 642, and 648 of 2018), amending the Industrial Hemp Research Act and creating the new Industrial Hemp Research and Development Act. The Industrial Hemp Research and Development Act requires the MDARD to regulate the growing, processing and handling of industrial hemp. The other new laws make changes to the Public Health Code and the Michigan Marihuana Facilities Licensing Act to address the new Industrial Hemp Research and Development Act. Despite these enactments, the new laws won’t go into effect until the USDA approves the state’s plan and the MDARD adopts hemp rules.

Michigan does not appear to have a licensing process for creating products derived from industrial hemp. However, Michigan’s office of Licensing and Regulatory Affairs (“LARA”), which oversees Michigan’s medical marijuana program, issued guidance, stating that marketing CBD-infused food is illegal in the state, per FDA guidelines. The guidelines are silent as to whether CBD may be lawfully infused to other categories of products. Earlier this fall, Michigan’s Governor