Cannabis Industry Daily News

Proposed bill would decriminalize all drugs federally, not just marijuana

Two members of the U.S. House of Representatives on Tuesday unveiled a measure to end criminal penalties at the federal level for the possession of all drugs, including marijuana.

The Drug Policy Reform Act, which is expected to be formally introduced in the next few days, underscores how decriminalization and legalization are advancing at the federal level – even though it’s uncertain how far this bill will get.

The announcement by Democratic Reps. Bonnie Watson Coleman of New Jersey and Cori Bush of Missouri came two days ahead of the 50th anniversary of President Richard Nixon’s declaration of a federal “war on drugs.”

“We have an opportunity to put this dark chapter in history behind us,” Watson Coleman said during a news conference organized by the Drug Policy Alliance.

The lawmakers said they are just beginning to work to get more support, such as a Senate sponsor of a companion bill.

However, it remains to be seen whether the measure will get a hearing in the U.S. House.

The bill also would:

  • Shift regulatory authority from the U.S. attorney general to the secretary of Health and Human Services.
  • Reinvest in health-focused approaches to treating substance abuse.
  • Expunge drug records and provide for resentencing.
  • Issue incentives to states to follow suit in decriminalizing all drugs.

California OKs $100 million grant to help with cannabis business licensing

A one-time $100 million grant to help California cities and counties streamline cannabis business licensing requested by California Gov. Gavin Newsom won approval in the state Legislature.

According to the Los Angeles Times, lawmakers on Monday signed off on exactly what Newsom requested in May – $100 million to be split among 17 cities and counties that have already issued marijuana business licenses to companies but are struggling to move them from “provisional” permits to “annual” licenses.

Licensing is a major problem in California because more than 80% of the state’s licensed marijuana companies are still operating on temporary provisional licenses and lawmakers have yet to authorize an extension of those licenses beyond 2021.

Subsequently, any company without an annual license is currently in danger of having to close its doors – at least temporarily – when its provisional permit expires in 2022.

The $100 million grant is designed to alleviate that issue by speeding up local license processing.

At $22 million, Los Angeles is the largest recipient of the funds, the Times reported.

Other local governments in line for funding include:

  • Adelanto
  • Commerce
  • Desert Hot Springs
  • Humboldt County
  • Lake County
  • Long Beach
  • Mendocino County
  • Monterey County
  • Nevada County
  • Oakland
  • Sacramento
  • San Diego
  • San Francisco
  • Santa Rosa
  • Sonoma County
  • Trinity County

However, California marijuana industry insiders said the funding likely will not be nearly enough to solve the systemic issue it’s intended to address: a monthslong bottleneck in getting annual business permits approved.

Jerred Kiloh, president of the L.A.-based United Cannabis Business Association, said he’d prefer to see the Newsom administration focus its efforts on reforming the licensing process itself instead of throwing money at the existing problem.

In addition, Kiloh noted, because the $100 million is going only to cities and counties that have already approved legal cannabis programs, the move won’t incentivize local governments that have banned marijuana businesses to change their stance.

Massachusetts extends marijuana curbside pickup, telehealth consults

In another example of how the COVID-19 pandemic has affected the cannabis industry, Massachusetts regulators are extending curbside pickup of marijuana and telehealth consultations for medical MJ patients for at least a few more months.

The state’s Cannabis Control Commission said telehealth consults and curbside pickup will be continued until Sept. 1 or when regulators rescind or amend administrative orders, whichever comes first, according to MassLive.com.

During the pandemic, in a move to ensure safety, Massachusetts regulators permitted cannabis retailers to implement curbside sales, where customers could place orders via phone or online and then pick them up their purchases in front of stores.

Meanwhile, patients looking to enroll in the medical cannabis program for the first time can keep using the telehealth option until Sept. 1.

After that date, MMJ patients can make in-person clinical visits or participate in telehealth. But, according to the regulations, a “clinical visit for issuing an initial certificate of registration must be conducted in-person.”

Cronos inks deal to buy cannabis MSO PharmaCann stake for $110 million

A subsidiary of Toronto-based Cronos Group purchased an option to acquire approximately 10.5% of PharmaCann, one of the largest privately held cannabis companies in the United States, for $110.4 million (134 Canadian dollars).

The deal, if executed, would give Cronos a toehold in the U.S. with which to expand and follows a similar optional agreement between Canopy Growth and Acreage Holdings.

According to a news release, Cronos’ option is based on several factors, including:

  • The status of U.S. federal cannabis legalization.
  • Regulatory approvals, including in states where PharmaCann operates.

Chicago-based multistate operator PharmaCann has six production facilities and 23 dispensaries across six states, including Illinois, Maryland, Massachusetts, New York, Ohio and Pennsylvania.

In a note to clients, Piper Sandler analyst Michael S. Lavery said U.S. federal legalization expectations could help drive deals like this one.

“As expectations for federal legalization adjust to legislative reality, Canadian LPs have to look for ways to prepare besides just waiting for the gates to the U.S. to open,” he wrote.

“We believe this motivation is behind Cronos’ approach to the PharmaCann deal, and likely fuels other deals to come, too. In the absence of organic growth opportunities near-term, partnering with key existing strategic operators gets increasingly important.”

However, the analyst said that the level of regulatory change needed to drive meaningful revenue growth from deals such as this could still take several years.

“We were attracted to PharmaCann as an investment because of their disciplined capital allocation, strong track-record and compelling licensed manufacturing and retail footprint,” Cronos CEO Kurt Schmidt said in a statement.

The $110.4 million was deposited by Cronos via a third-party agent to be distributed to PharmaCann shareholders, according to the release.

“At Cronos Group’s election and following its exercise of the option, Cronos Group and PharmaCann will enter into commercial agreements that would permit each party to offer its products through either party’s distribution channels,” the release states.

The two companies will enter into an investor-rights agreement that provides Cronos with certain governance rights, including a board seat or board observer subject to certain conditions, following the exercise of the option.

The release also said Cronos Executive Chai Michael Gorenstein and Jason Adler, a director, each have an indirect interest in PharmaCann via their interest in a fund affiliated with PharmaCann stockholder Gotham Green Partners.

A Cronos special committee composed of independent directors was formed to make a recommendation to the board regarding the conditional deal as well as other opportunities in the U.S.

The deal has been approved by the respective boards of PharmaCann and Cronos.

Cronos trades as CRON on the Toronto Stock Exchange and the Nasdaq.

Groups drop lawsuit challenging Montana adult-use marijuana measure

A legal challenge to voter-approved adult-use marijuana legalization in Montana has been dropped in the wake of the state Legislature weakening the measure.

SAFE Montana and Wrong for Montana voluntarily abandoned their challenge, according to Missoula radio station KGVO.

As a result of the legislative action, “it is our belief that the issue raised in the lawsuit is moot,” Steve Zabawa, executive director of SAFE Montana, told the radio station.

Key business aspects of the weaker measure passed by lawmakers and signed by Gov. Greg Gianforte include:

  • A 35% THC potency cap for flower.
  • Edibles potency caps.
  • A longer, 18-month head start for existing medical cannabis operators over industry newcomers.

The market launch now is scheduled for Jan. 1, 2022, instead of Oct. 1, 2021.

While not happy, industry officials say the revised measure is “workable.”

The 2021 MJBizFactbook projects Montana adult-use sales at $90 million in the first year and $325 million in year four.

Montana is an example of a trend of anti-marijuana advocates trying to weaken or overturn voter-approved legalization referendums.

Power REIT buys Oklahoma cannabis facility, leases it to cultivator

Real estate investment trust Power REIT acquired a cannabis property in northeastern Oklahoma and signed a 20-year lease to rent the facility to a marijuana producer.

According to a Friday news release, Power REIT is spending roughly $2.65 million to acquire and renovate the real estate, which includes:

  • A 9.3-acre property and approximately 40,000 square feet of greenhouse space.
  • Office space.
  • 100,000 square feet of fenced outdoor growing area.

Old Bethpage, New York-based Power REIT did not specify who sold the property.

The property will be leased to Vinita Cannabis, also known as VinCann, which will use it to cultivate cannabis.

“Taking over the existing operations gives us a running start in Oklahoma,” VinCann president Jared Schrader noted in the release. “We believe this property is well-positioned to allow us to become a large-scale producer of high-quality cannabis at a competitive cost.

“We are focused on speed to revenue as well as ramping up our plant count which will drive substantial revenue growth.”

VinCann will pay expenses, including maintenance, insurance and taxes on the property.

“We are expanding our nationwide footprint and diversifying portfolio risk with this acquisition in Oklahoma,” Power REIT Chair and CEO David Lesser said in a statement.

“This cultivation facility is already operational and will be upgraded to provide operational improvements. There is also ample expansion opportunity that will allow our tenant to capitalize on the increasing demand for cannabis products in Oklahoma.”

Power REIT recently acquired a marijuana greenhouse in Michigan and raised $37 million for cannabis real estate acquisitions earlier this year.

Shares of Power REIT trade as PW on the New York Stock Exchange.

Terra Tech to acquire marijuana delivery company SilverStreak Solutions

California-based Terra Tech Corp. is in the process of acquiring SilverStreak Solutions, a direct-to-consumer marijuana delivery company based in Sacramento.

Terra Tech believes the acquisition will help the company expand its delivery and distribution across California, according to a news release.

Terms of the deal, which is expected to close in 90-120 days, were not disclosed. Terra Tech did not respond to MJBizDaily requests for more details.

The Silverstreak acquisition comes three months after Terra Tech finalized a deal to acquire West Coast marijuana multistate operator Umbrla. Umbrla, which does business as Unrivaled, includes multiple marijuana brands in its portfolio.

“We believe the synergies with Unrivaled’s existing brand portfolio and distribution operation makes enormous economic and operational sense,” Terra Tech CEO Frank Knuettel II said in the release.

According to the release, Terra Tech will receive a fleet of 22 vehicles and approximately 42,000 monthly customers in the 100-mile radius in which SilverStreak currently operates.

SilverStreak CEO Sterling Harlan is expected to consult with Terra Tech for six months after the deal closes. During that time, he’s expected to help with the transition.

Terra Tech also owns two retail stores and a cultivation facility in California as well as a cultivation and manufacturing plant in Nevada.

Terra Tech trades on the over-the-counter markets as TRTC.

Cannabis SPAC Greenrose to delist from Nasdaq, trade on OTC markets

Cannabis industry special purpose acquisition company (SPAC) Greenrose Acquisition Corp. said it will delist its shares from the Nasdaq Capital Market and relist them on the OTCQX Best Market.

The move comes nearly three months after New York-based Greenrose announced deals to acquire four cannabis businesses in seven states, which will turn the blank-check company into a multistate marijuana operator.

“The reason for the delisting is that upon closing of its previously announced business combinations, Greenrose expects to become a U.S. cannabis company with plant-touching operations and would no longer be in compliance with Nasdaq rules,” Greenrose said in a Thursday news release.

Greenrose said its shares are expected to begin trading on the OTCQX market on June 21, under the same ticker symbols as before.

Common shares of Greenrose currently trade on the Nasdaq exchange as GNRS.

Ohio adds three health conditions treatable with medical marijuana

Three more illnesses were approved for treatment with medical marijuana in Ohio, potentially expanding the scope of the state’s MMJ market.

The State Medical Board of Ohio added the following medical conditions to its list of qualifying conditions, according to a Wednesday announcement:

  • Huntington’s disease.
  • Terminal illness.
  • Spasticity.

However, the board rejected petitions to add several other medical conditions to the list: autism spectrum disorder, restless leg syndrome, panic disorder with agoraphobia and spasms.

There are now 25 qualifying conditions to use medical marijuana in Ohio, including AIDS or an HIV-positive status, cancer, Crohn’s disease, fibromyalgia, multiple sclerosis and post-traumatic stress disorder.

Would-be medical marijuana patients in Ohio must have one of the qualifying conditions and receive a recommendation from a board-certified physician.

The board added cachexia, or wasting syndrome, to the list of qualifying conditions in 2020, the first time an illness was added since the MMJ program was launched in 2019.

The next submission period for new qualifying medical conditions is scheduled for Nov. 1-Dec. 31.

Ohio recently approved licenses for up to 73 new medical marijuana dispensaries across the state.

The MJBizFactbook projects that annual MMJ sales in Ohio will total $350 million-$425 million in 2021.

CA county sues cannabis grower for creating ‘public nuisance’

Santa Barbara County in California filed the jurisdiction’s first nuisance lawsuit against a cannabis company after receiving eight complaints from neighbors about odors from the growing operation.

The lawsuit claims that Island View Ranch and Island Breeze Farms created a “continuing public nuisance” since at least March 2019 and should be shuttered, according to the Santa Barbara Independent.

Such a lawsuit could embolden other communities to similarly crack down on marijuana operations.

Already, federal racketeering lawsuits based on such nuisance claims have become a business liability risk for state-legal marijuana operations.

But in this case, the lawsuit also claims that Island Breeze hasn’t “diligently pursued” obtaining the county and state business licenses to operate and therefore is illegally growing and processing marijuana, the Independent reported.

The lawsuit also claims the operation is violating the state’s Unfair Competition Law by profiting to the “detriment of lawful cannabis businesses operating in the county,” the newspaper reported.

The Independent wasn’t able to reach Island View and Island Breeze officials for comment.

In another county enforcement action, Sunshine Organics Greens, a 144,000-square-foot greenhouse operation, “surrendered” its provisional state cultivation licenses after local officials notified state regulators that the company wasn’t moving quickly enough through its zoning-permit process.

That case is complicated by a dispute between the operator and property owner.

California’s capital city charging illegal marijuana business fees, suit alleges

A lawsuit filed against Sacramento, California, alleges that the local government has been charging licensed marijuana businesses illegal fees equal to roughly 1% of their gross receipts.

According to a news release, the lawsuit was filed in Sacramento County Superior Court by Garner & Associates on behalf of a number of unidentified marijuana companies.

The suit alleges that California’s capital city overstepped its legal authority by establishing fees through its “Neighborhood Responsibility Plan” with the intent of using the income to “mitigate alleged negative impacts from ‘novel business activities.'”

The fees, according to the lawsuit, have not been put to any such use and are repetitive because marijuana companies in Sacramento already pay a local operations tax equal to about 4% of their gross receipts.

“The Cannabis Business Operations Tax is 100 times higher than that of every other business in the City. Non-cannabis businesses are taxed at .0004% and have taxes capped at $5,000,” the law firm noted in the release.

Sacramento officials declined to comment.

Vermont passes law to assist cannabis social equity applicants

Vermont Gov. Phil Scott signed a bill into law to establish a fund to help people of color and others impacted by the war on drugs to open licensed cannabis companies.

According to Montpelier-based VTDigger, Senate Bill 25 sets aside $500,000 from the state coffers to establish a marijuana business-development fund that is slated to provide financial assistance, loans, grants and outreach to social equity business applicants.

The exact wording of the fund is still under development.

The new law also:

  • Establishes regulations for how marijuana retailers can market their products.
  • Gives municipalities control over whether they allow marijuana stores.
  • Sets aside a portion of tax revenue for substance-abuse prevention programs.
  • Requires store owners to buy 25% of their cannabis flower from licensed small cultivators.

The advertising rules and tax revenue earmarks take effect on March 1, 2022. The rest of the law goes into effect immediately.

Recreational sales are not expected to begin in Vermont until October 2022.