Cannabis Industry Daily News

MJBizDaily cannabis investor webinar on tap Tuesday

The clock is ticking to register for Marijuana Business Daily’s Investor Intelligence webinar, “State of the Industry and 2020 Trends,” which is scheduled for 1 p.m. ET/10 a.m. PT on Tuesday.

Investor Intelligence analysts Craig Behnke and Mike Regan will provide a framework on how to invest in the cannabis sector now for the long term, including:

  • Who does (and doesn’t) have the balance sheet and business plan to survive.
  • Where valuations will bottom out.
  • Canadian Market Analysis: Supply and Demand.
  • Trends and changes in key U.S. markets
  • Opportunity versus valuation in the U.S. and Canada.

Register for the webcast here and feel free to email questions to [email protected].

Colorado eases hiring process for cannabis firms eyeing casino workers

In a positive business development for Colorado’s marijuana industry, state regulators are allowing cannabis companies to hire casino workers during the coronavirus crisis without having to obtain any additional credentials.

The Colorado Marijuana Enforcement Division established the emergency rule easing hiring requirements for the state’s marijuana businesses because casino employees and cannabis workers undergo similar background checks, MED spokeswoman Shannon Gray told the Denver Post.

Nearly 9,000 casino workers were furloughed when Colorado’s governor ordered the state’s casinos to close on March 17 in hopes of slowing the coronavirus, according to the newspaper.

Marijuana companies, by contrast, were classified as critical businesses that can remain open during the health crisis.

Gray said the marijuana division is “considering all viable options for businesses to maintain continuity of operations that are consistent with social distancing requirements.”

She noted, however, that casino workers must be licensed by the Colorado Limited Gaming Commission and cannabis companies should alert the MED about prospective hires from that industry.

State-legal marijuana businesses across the U.S. are struggling with balancing staffing and the bottom line as the industry grapples with COVID-19.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

Illinois adult-use marijuana stores sell $110 million in first three months

Adult-use cannabis stores in Illinois sold almost $110 million in products in the first quarter of 2020, state regulators say.

In March, stores sold 812,203 marijuana products for a total of $35.9 million, according to the Illinois Department of Financial and Professional Regulations.

Recreational retailers in Illinois sold $27.1 million, or 75.5% of total sales, to residents and $8.8 million to out-of-state customers.

That total comes on the heels of $34.8 million in adult-use sales in February, the Chicago-Sun Times reported, and $39.2 million in January.

“Three straight months of consistent adult-use cannabis sales show there is – and will continue to be – strong support and demand from consumers,” Toi Hutchinson, senior adviser to the governor on cannabis control in Illinois, said in a statement.

Illinois’ legal recreational marijuana retailers recorded almost $3.2 million in sales on Jan. 1.

Cannabis REIT inks $49 million sale-leaseback deal with Ascend

Innovative Industrial Properties, a real estate investment trust that specializes in the marijuana industry, bought a cannabis cultivation and processing facility in Massachusetts from Ascend Wellness Holdings (AWH) in a $49 million sale-leaseback deal.

San Diego-based IIP paid $26.8 million to Boston-based AWH – a vertically integrated, multistate marijuana operator – for a 199,000-square-foot facility in Athol, Massachusetts.

The marijuana processed at the facility can be sold for both the adult-use and medical cannabis markets, an AWH spokeswoman told Marijuana Business Daily.

IIP also agreed to reimburse Ascend Wellness up to $22.2 million in tenant improvements, bringing the total deal to $49 million.

AWH has agreed to pay the REIT an initial rent rate of 13.5% on the initial purchase price and tenant improvement allowance.

This marks the third, and largest, sale-leaseback deal IIP has done with Ascend Wellness.

In December 2018, IIP acquired a 75,000-square-foot facility in Illinois from AWH in a deal with a total value of $33 million.

Last July, IIP acquired a 145,000-square-foot property from AWH in a $19.8 million deal.

Ascend Wellness has raised $100 million in capital since 2018, including a $55 million raise in February 2019 to be used for expansion.

Innovate Industrial Properties trades on the New York Stock Exchange as IIPR.

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

Marijuana giant Acreage cuts 120 jobs, ends deals in light of COVID-19

New York-based Acreage Holdings on Friday announced it is furloughing 122 employees and taking other cost-cutting measures, becoming the latest multistate marijuana operator to slash costs in response to the coronavirus pandemic.

As part of its efforts, Acreage also disclosed in a news release the resignation of a top executive and announced it is:

  • Scrapping a $120 million acquisition of Nevada cannabis company Deep Roots.
  • Temporarily closing some facilities across several states.
  • Terminating a medical marijuana dispensary acquisition in Rhode Island involving Greenleaf Compassionate Care Center.
  • Suspending its previously announced 2020 financial guidance.

Acreage CEO and Chair Kevin Murphy said that, as “result of the COVID-19 pandemic, we have made the very difficult decision to furlough several of our employees and close certain facilities while we navigate through the crisis.”

In addition to furloughing employees in its corporate office and its field operations, Acreage also announced it is temporarily closing:

  • Medical marijuana dispensaries in Maryland and North Dakota.
  • A wholesale MMJ operation in Iowa.
  • Cannabis factory operations in California, Oregon and Washington state.

In addition, the company converted a medical marijuana dispensary in Queens, New York, into a delivery hub

Acreage also announced that Steve Hardardt, the company’s executive vice president, has resigned, effective immediately.

In April 2019, Acreage was an acquisition target of once high-flying Canadian marijuana company Canopy Growth in a $3.4 billion deal. But the deal was contingent on the U.S. government legalizing the sale of marijuana.

Acreage trades on the Canadian Securities Exchange as ACRG.U and on the over-the-counter exchanges as ACRGF.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

Denver man sues cannabis firm for alleged spamming

A Denver man filed a lawsuit alleging that the operator of marijuana stores in Colorado, Massachusetts and Nevada violated federal telemarketing law by sending him promotional text messages without his permission.

In a proposed class action suit, Bryce Abbink sued Denver-based Good Chemistry for the alleged spam promotions.

According to the 13-page lawsuit, the “alleged Class consists of over 100 persons,” and when they are aggregated, the claims together exceed $5 million.

In a similar case last December, a Tennessee man sued Trulieve, the largest medical marijuana operator in Florida, for allegedly sending illegal text messages to his cellphone.

In the latest suit, filed in Colorado’s U.S. District Court, Abbink claimed that on March 16 he received a text message from Good Chemistry asking him to “Take advantage of online ordering at Good Chemistry for express, in-store pickup. Click the link below to start your order. Reply STOP WS54 to cancel.”

He then received two other marketing messages on March 18, according to the suit.

The company “intentionally and repeatedly violated” the Telephone Consumer Protection Act, according to the suit.

Abbink was enrolled in Good Chemistry’s loyalty program, but in the suit, he said he did not provide written consent for the messages to be sent to him.

“The texts disturbed and interfered with Plaintiff’s use and enjoyment of his phone, in addition to the wear and tear on the phone’s hardware (including the phone’s battery) and the consumption of memory on Plaintiff’s phone,” according to the suit.

Good Chemistry did not immediately respond to a request for comment from Marijuana Business Daily.

One of the lawyers representing Abbink is State Democratic Rep. Steven L. Woodrow of Denver.

Massachusetts medical marijuana workers sick with coronavirus

In what could be a warning to medical cannabis business owners throughout Massachusetts, state regulators are looking into complaints that a large MMJ company was not following social-distancing guidelines and other measures to lessen the spread of the coronavirus after two employees were diagnosed with COVID-19.

One person who tested positive worked at a large cultivation and processing facility owned by the New England Treatment Access in Franklin, Massachusetts, and the other worked at a NETA-owned medical marijuana dispensary in Northampton, Massachusetts, according to The Boston Globe.

Employees told the newspaper that the social distancing guidelines are either only enforced on occasion or they are not practical.

The Franklin facility, where more than 400 work, grows strains of marijuana that is turned into edibles and other products. None of the product was contaminated by the coronavirus, the company told the newspaper.

NETA officials also said that a group of workers who had been in “close contact” with the infected dispensary worker are self-quarantining.

Medical marijuana operations in Massachusetts have been deemed “essential” businesses that can remain open during the pandemic.

But Republican Gov. Charlie Baker has required recreational MJ stores to close, because he fears out-of-state customers could spread the virus.

A Cannabis Control Commission spokeswoman told The Globe that it is “looking into” complaints from NETA employees who allege the company isn’t doing enough to protect them from the coronavirus.

In addition to strictly enforce social distancing between customers and employees, the commission has urged medical marijuana companies to:

  • Allow sick employees to stay home.
  • Switch to pre-orders at dispensaries.
  • Increase sanitization measures.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

L.A. cannabis licensing audit finds flawed process, no corruption

(This story had been updated to include the Department of Cannabis Regulation’s response to the audit.)

The marijuana business licensing round in Los Angeles last September was “confusing and prone to human error,” but city regulators did not bungle the process to the point that applicants were disenfranchised, according to an independent audit.

City officials requested the audit last year after an outcry from stakeholders over a flawed rollout.

The launch involved a first-come, first-served application window in September for 100 marijuana retail permits, which were supposed to have been awarded before the end of 2019.

What will happen next in the city’s marijuana licensing plan is unclear.

The L.A. Department of Cannabis Regulation (DCR) has not yet announced a timeline for completing last fall’s licensing round – which was set exclusively for qualified social equity applicants – or for future licensing rounds.

Four licensing rounds remain for hundreds of available storefront and delivery permits.

The audit found that before the latest licensing round opened – at 10 a.m. PT Sept. 3 – 226 applicants were able to sign on early to the Accela-run platform. Of those, only 14 began the licensing application process before 10 a.m.

When DCR officials realized what had happened, the audit reported, they instituted a “normalization process” to ensure every applicant began to file at the same time.

Part of the problem, the audit found, was poor messaging by the DCR, which led applicants to believe they wouldn’t be able to sign on to the system before 10 a.m. Rather, what was not allowed before 10 a.m. was the actual application process.

That might have put those applicants who misunderstood at a disadvantage, according to the audit.

The licensing round “created potential for confusion regarding the starting line,” the audit found, but no “nefarious activities occurred.”

The DCR wrote in an email to Marijuana Business Daily that it “accepts the findings” of the audit.

The department added it is “preparing a series of recommendations” for legislative amendments to retail and delivery application procedures. The recommendations will be “based on insights gained from the audit.”

– John Schroyer

New York adult-use marijuana legalization appears stalled

Recreational cannabis legalization in New York likely will be shelved for now because of the coronavirus crisis, but experts expect the legislation to be back in play later this year.

New York Gov. Andrew Cuomo said Tuesday the state isn’t likely to legalize rec cannabis as part of its budget bill because it’s “too much, too little time,” according to the Democrat & Chronicle of Rochester, New York.

Cuomo and state lawmakers are under pressure to agree on a budget before the fiscal year begins April 1, and efforts to do so have been delayed because of the COVID-19 outbreak.

While it might be easier to pass adult-use legalization through the budget process, experts said they believe adult-use marijuana has a good chance as a stand-alone bill later this year.

Jeremy Unruh, director of public and regulatory affairs for Illinois-based PharmaCann, told Marijuana Business Daily on Tuesday that he expects adult-use cannabis legalization to be a priority for New York later this year.

PharmaCann is one of New York’s licensed medical cannabis operators.

Unruh and Rob DiPisa, co-chair of the cannabis law group at Cole Schotz in New Jersey, cited several factors that bode well for legalization this year, including the state’s growing multibilllion-dollar budget deficit and the fact that marijuana is seen as an “essential” business.

New York also is under pressure to act because neighboring New Jersey will vote on adult-use legalization in November.

If New Jersey launches a rec cannabis program first, New York likely would lose out on a lot of revenue.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

– Jeff Smith

Two Iowa medical cannabis dispensaries close

(This story has been updated to note Harvest Health & Recreation’s purchase of Have a Heart.)

Two medical marijuana dispensaries in Iowa permanently closed their doors.

The dispensaries, in Council Bluffs and Davenport, were operated by Have A Heart Compassion Care, a multistate medical and recreational marijuana operator based in Washington state.

Earlier this month, Harvest Health & Recreation, an Arizona-based multistate cannabis operator, confirmed its $85.8 million plans to acquire Interurban Capital Group, the owner of Have a Heart.

It’s unclear whether the Iowa closures are tied to that purchase. Have A Heart did not immediately respond to Marijuana Business Daily‘s request for comment.

Iowa now has only three licensed dispensaries, operated by Iowa Cannabis Company and MedPharm Iowa.

Iowa health officials said the department “will work to license two new dispensaries as soon as possible,” Des Moines TV station KCCI reported.

The state’s MMJ law allows for the licensing of five dispensaries and two manufacturers.

Colorado marijuana retailers get OK to resume in-store sales

Colorado regulators delivered good news to the state’s recreational cannabis store operators: They can resume selling their products inside their storefronts.

The state Marijuana Enforcement Division (MED) bulletin informing cannabis businesses they can allow customers in their stores comes days after the governor told retailers to limit transactions to curbside pickups in an effort to reduce the spread of the coronavirus.

Democratic Gov. Jared Polis’ March 25 “stay-at-home” order allowed marijuana retailers to stay open as “critical businesses.” However, the order banned in-store sales and allowed only curbside service for adult-use transactions.

Under the MED’s amended bulletin, dated March 30, recreational marijuana businesses are “no longer prohibited from allowing retail customers on the licensed premises.”

However, cannabis retailers are permitted to restrict customers to the lobby or the waiting area. They also are allowed to continue curbside sales for preordered, prepaid rec marijuana products, according to the latest bulletin.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

Cannabis giant 4Front cuts workforce, appoints new CEO

Multistate marijuana operator 4Front Ventures on Monday said it has slashed its corporate workforce by almost 40% and cut the number of employees at its recreational and medical cannabis stores by almost 45%.

The company did not release the number of employees who lost their jobs.

The cuts, which took place over the past four months, are expected to save the Phoenix-based company $7 million to $8 million annually.

The company also said it promoted Leo Gontmakher to CEO. He had served as the company’s chief operating officer.

Before joining 4Front, Gontmakher was COO at Cannex Capital Holdings, a Canadian marijuana company that merged with 4Front in July in a deal valued at almost $500 million.

Gontmakher said in a statement that 4Front’s workforce reduction was necessary and there “are still more efficiencies to be achieved.”

He replaces Josh Rosen as CEO. Rosen will serve as 4Front’s executive chair.

The company also announced it:

  • Is delaying the launch of its marijuana manufacturing facility in Commerce, California, saying that the state’s adult-use marijuana market faces “challenging conditions” and has been even before the COVID-19 pandemic.
  • Sold its PHX Interactive subsidiary, which managed 4Front’s Mission North Mountain MMJ dispensary in Phoenix, for $6 million in cash.

The company is considering “divesting additional noncore assets,” Rosen said in a statement.

With marijuana operations in eight states, 4Front also plans to “meaningfully expand” its cultivation and manufacturing facilities in California, Illinois and Massachusetts, Gontmakher said.

The company trades on the Canadian Securities Exchange as FFNT and on the U.S. over-the-counter markets as FFNTF.

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.