Cannabis Industry Daily News

New Mexico cannabis firm fined $142K for safety violations, might lose license

A medical cannabis company in New Mexico is facing $142,000 in fines and the possible loss of its business license stemming from a fire that harmed multiple workers.

According to the Santa Fe New Mexican, the state Environment Department has already levied the fines against New MexiCann Natural Medicine, which runs three MMJ dispensaries. And the state health department is attempting to yank the company’s business permit.

At issue is an explosion and resulting fire in October at one of New MexiCann’s production facilities, which state authorities allege resulted from willful disregard for safety protocols during a cannabis extraction process.

Multiple employees told regulators that a hot plate used for extraction was set with its temperature above state-mandated safety standards, which led to the explosion.

The Environment Department fined the company for failing to:

  • Ensure a safe, quick exit for employees from the extraction room.
  • Control flammable vapors.
  • Control potential ignition sources.
  • Analyze hazards and provide safety gear for workers.
  • Install a respirator program.
  • Address potentially hazardous chemicals.

A spokesperson for the state health department told the Santa Fe newspaper that an officer submitted a report April  9 recommending that New MexiCann’s business permit be revoked.

The state health secretary has 30 days after receiving the report to decide whether to rescind the license.

Also, the owner of the company, Carlos Gonzales, is facing two felony charges of arson over the incident.

The company’s main headquarters in Santa Fe has been closed.

The business, one of 34 licensed medical marijuana companies in New Mexico, has been in operation since 2009.

Oklahoma medical marijuana regulators sued over seed-to-sale tracking

An Oklahoma medical marijuana operator filed a lawsuit seeking to halt the April 30 implementation of a seed-to-sale tracking program in the state, raising the question of its legality.

The suit by DR Z Leaf of Tulsa, which seeks class action status, questions whether the Oklahoma State Department of Health exceeded its legal authority in implementing a seed-to-sale program and requiring more than 10,000 MMJ licensees to pay for the program.

The suit, filed in Okmulgee County District Court this week, also questions whether the contract between the state and Florida-based Metrc “constitutes the creation of an unlawful monopoly.”

The legal challenge reflects the tension between some Oklahoma medical marijuana businesses and the state over increasing regulations and the cost of complying with those standards.

As of March 2, Oklahoma had 10,587 active medical marijuana business licenses, according to the state.

Oklahoma launched a wide-open medical cannabis market in 2018, but additional regulations have since been put in place in large part to conform with industry best practices.

Terri Watkins, spokeswoman for the Oklahoma Medical Marijuana Authority (OMMA), told Marijuana Business Daily on Friday that the state doesn’t comment on pending litigation.

Metrc spokeswoman Bronwyn Flores also declined comment on the suit, which lists only the state and OMMA as defendants.

KOKH, a Fox TV affiliate in Oklahoma City, quoted several MMJ operators complaining about the tracking program including the prices charged by Metrc.

RFID tags cost 45 cents per plant for growers and 25 cents per package for wholesalers.

Flores told MJBizDaily that Metrc’s software and plant-tag fees are standard across the 16 markets it serves.

Metrc has seed-to-sale contracts in 15 states, including Oklahoma, and in Washington DC.

Seed-to-sale tracking systems in state-legal marijuana markets are served by one software provider so there is a centralized system for inventory tracking. The contract for the provider is awarded after a competitive bidding process.

The Metrc system replaces mandatory monthly reports that Oklahoma medical marijuana businesses were sending to OMMA.

Many businesses were doing those reports on paper, so transitioning to an electronic system has been a costly adjustment for some. Metrc has been providing training on its system.

“There’s always challenges coming into a market that’s already been established with a lot of questions from (businesses), and rightfully so,” Flores said.

But from Metrc’s viewpoint, she said, the implementation has been going well.

– Jeff Smith

Cannabis firm Tilray reduces minimum quorum after delayed investor meeting

British Columbia-based Tilray amended its bylaws to reduce the required quorum for shareholder meetings, the cannabis producer said in a news release.

The move comes one day after the company postponed a special meeting regarding its pending merger with Aphria, effectively giving stockholders additional time to vote on the business combination.

This means the required quorum for shareholder meetings has been reduced from 50%-plus-one of shareholders to 33% of shareholders.

An analyst told Marijuana Business Daily that Tilray might have delayed the vote and amended its bylaws because the company was concerned it wouldn’t achieve the minimum quorum needed for the meeting to happen.

The analyst speculated that was because the company’s shareholder base is composed of too many retail investors, which creates volatility since stock changes hands frequently, making it harder to get shareholders to vote.

Tilray’s meeting is now scheduled for April 30.

Shareholders who held stock as of March 12 are eligible to vote, according to the release.

Aphria shareholders overwhelmingly approved the merger on Wednesday. The business combination was approved by 99.38% of votes cast, which represented roughly 34.43% of Aphria shares, the company said.

The plan to merge the companies was announced in December.

Idaho lawmakers shoot down anti-marijuana legalization measure

Idahoans received a vote of confidence that marijuana legalization might one day occur after the death in the state House of a proposed constitutional amendment that would have prevented legalizing MJ without the approval of two-thirds of the Legislature.

The Associated Press reported that the amendment, which had already passed in the Senate, failed on a 42-28 vote. The measure needed 47 votes to move forward.

Democratic members of the House uniformly opposed the amendment, and even some staunchly conservative members of the Republican-led House joined with them to stop the measure.

Idaho remains one of only three states in the U.S. without some form of legalized marijuana, but pro-legalization activists have been gaining support in their bid to add an initiative to the ballot in 2022.

The effort to preempt cannabis legalization in Idaho was another example of new ploys that anti-marijuana advocates are using to try to stop the domino effect of state-by-state legalization across the U.S.

Cannabis producer Hexo eyes US entry with CA$1.2 billion shelf prospectus

Canadian cannabis producer Hexo Corp. filed a preliminary short form base shelf prospectus that could enable it to raise up to 1.2 billion Canadian dollars ($960 million) in capital over a 25-month period.

Once the prospectus is finalized, Ottawa-headquartered Hexo will be able to issue securities such as common shares, warrants, subscription receipts and units.

According to the preliminary prospectus, Hexo might use the proceeds from the sale of securities for general corporate purposes, to repay debt, expand into the United States and for potential acquisitions, including international expansion, among others.

In the filing, Hexo said its operations and financial position “have not been materially impacted by COVID-19 related issues.”

According to the company, “We have not experienced material disruptions in our labor inputs and cultivation and processing activities, there have been no indicators of material issues to our supply chain, and on the consumer side, product demand has remained stable and cannabis retail has been declared an essential service across Canada and, as such, our provincial distribution remains relatively unimpeded.”

“We currently do not foresee any impact to supply to the market and therefore, any impact on our cultivation, manufacturing and producing activities.”

In February, Hexo entered into a definitive arrangement agreement to acquire rival producer Zenabis Global for approximately CA$235 million.

Zenabis shareholders will vote on the pending deal at a special meeting scheduled for May 13.

British Columbia-based Zenabis lost CA$70 million last year.

Hexo reported a net loss of CA$21 million for its second quarter ended Jan. 31.

Despite the recent losses, Hexo expanded its overall market share in 2020 from an estimated 2.9% in the first quarter of 2020 to 6% one year later.

The company’s shares trade as HEXO on the New York Stock Exchange and Toronto Stock Exchange.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].

LivWell running Colorado’s first-ever marijuana retail ads on TV, report says

Marijuana retailer LivWell Enlightened Health is running a television advertisement on Denver NBC affiliate KUSA, marking a key step toward cannabis promotions in mainstream media.

The commercial is a first for Colorado, according to the Denver Business Journal.

“We’ve been interested in getting our brand awareness in traditional media since Day 1,” LivWell CEO Michael Lord told the business publication.

The ads, which portray positive testimonials about Denver-based LivWell by paid spokespeople, do not use the words “cannabis” or “marijuana” and do not include images of cannabis products or LivWell stores.

“LivWell Enlightened Health have the most educated and professional staff and helped me navigate through what could have been a very overwhelming process,” a spokeswoman says in one advertisement posted to LivWell’s website.

“I even joined the rewards program.”

The promotions comply with Colorado marijuana regulations by ensuring that no more than 28.4% of the broadcast audience will be younger than the legal age to purchase cannabis, according to the Business Journal.

Lord told the news outlet that the promotion was an attempt to build LivWell’s brand and reach consumers in the fast-growing, 55-and-older segment.

A 2015 attempt to air marijuana advertisements on a Colorado ABC affiliate failed after the TV station decided not to broadcast the commercials because of legal concerns.

New Mexico cannabis growers press state to increase plant-count limits

Five of New Mexico’s medical cannabis cultivators, including the state’s largest operator, are requesting that regulators more than triple plant-count limits immediately to avert a supply shortage this summer.

The request came in a letter to state officials this week, according to the Albuquerque Journal, only days after Gov. Michelle Lujan Grisham signed an adult-use legalization measure into law.

Recreational marijuana sales aren’t expected to start until April 2022.

But the new law also strengthens the state’s medical cannabis program and, according to the five growers, would enable MMJ patients to purchase larger quantities of marijuana beginning June 29.

Plant-count limits have long been a source of tension between producers and regulators in New Mexico.

The growers argued in their letter that the current plant-count limit of 1,750 mature plants per cultivator isn’t enough to supply MMJ patients and will lead consumers to the illicit market or other states.

They want the figure to be more than tripled to 5,500 and suggest they might file legal action if their request isn’t met.

A spokesperson for the state health department told the Journal that regulators are reviewing the letter.

The letter was signed by UltraHealth, the state’s largest MMJ operator, Sacred Garden, Kure, Budding Hope and G&G Genetics, according to the newspaper.

UltraHealth has complained about plant-count limits for years and is engaged in ongoing legal battles in an effort to be able to grow more marijuana.

In November 2018, a court found the limit to be arbitrary and ordered the state to raise it.

The state did so in 2019, but UltraHealth contends market growth has offset that increase and that the ratio of plant per patient pales in comparison to neighboring states and leads to higher prices.

Curaleaf medical marijuana workers in Massachusetts unionize

Employees of a Curaleaf medical marijuana dispensary in Hanover, Massachusetts, voted in favor of joining the United Food and Commercial Workers (UFCW) Local Union 328.

“The workers wanted to address issues related to the pandemic as well as other issues such as low pay and unfair discipline,” the UFCW noted in a news release.

The UFCW’s push to unionize the dispensary began in March 2020, according to the release.

A union vote in 2020 resulted in some ballots being challenged, leading to a hearing with the National Labor Relations Board (NLRB), according to the UFCW.

After Curaleaf unsuccessfully appealed the NLRB’s decision, the UFCW said, four remaining ballots were finally counted this month, resulting in a final tally of 8-3 in favor of unionization.

UFCW Local 328 said it’s now working toward negotiating a contract with Curaleaf.

The vote is part of a recent trend toward cannabis retail unionization in multiple states, including Massachusetts.

In the past year, the UFCW has also been involved in unionizing employees at an MMJ grower in Rhode Island as well as a cannabis cultivation and processing facility in Massachusetts.

Rhode Island lottery for new medical marijuana stores in limbo

Rhode Island marijuana authorities are without a company to run a lottery to award six new medical marijuana dispensary licenses.

The state put out a call in February for bids to develop the process but received no takers.

Brian Hodge, a spokesman for the Department of Business Regulation, told the Providence Journal the state is “exploring alternative options” and still expects to conduct a lottery “later this spring.”

The lottery was originally scheduled for around May 14 if the state received an acceptable bid from a company to oversee the process.

Rhode Island currently has three medical cannabis dispensaries in operation.

The plan developed under former Gov. Gina Raimondo is to expand the number of dispensaries to nine; last year, 45 applications were submitted for the six licenses up for grabs in the lottery.

Meanwhile, new Gov. Dan McKee, who is keen on legalizing adult-use cannabis, proposed a program in which 25 retail licenses would be issued for a market that would launch in April 2022.

Under the proposal, Rhode Island’s existing MMJ companies might get a head start.

Cannabis producer Tilray postpones shareholder vote on Aphria merger

Canadian cannabis producer Tilray postponed a special shareholder meeting to vote on its proposed mega-merger with Aphria.

The meeting, which was originally scheduled for Friday, will now be held two weeks later, on April 30.

Tilray offered little explanation for the last-minute postponement in a news release issued Thursday, except to say the delay will “(allow) Tilray stockholders additional time to vote on the business combination.”

Shareholders who have already cast votes do not need to vote again, Tilray said.

Separately on Thursday, Aphria announced that its shareholders approved the merger in a Wednesday vote.

The business combination was approved by 99.38% of votes cast, which represented roughly 34.43% of Aphria shares.

The plan to combine Aphria and Tilray was announced in December 2020.

MJBizCon wins awards for growth from Trade Show Executive

Marijuana Business Daily‘s flagship cannabis industry event, MJBizCon, has won two awards from trade show industry publication Trade Show Executive (TSE).

MJBizCon was awarded TSE’s Gold 100 Grand Awards for:

  • The Fastest-Growing Gold 100 Show in Net Square Feet in 2019 based on percentage growth.
  • The Fastest-Growing Gold 100 Show in 2019 based on “blended growth.”

TSE’s Gold 100 category includes the 100 largest trade shows in the United States, measured by net area of paid exhibit space. MJBizCon 2019 ranked No. 72 on that list.

MJBizCon 2019 featured 1,312 exhibitors, 27.6% more than in 2018.

“This is truly an incredible honor to share the stage with the most innovative and influential trade shows in the events industry,” said Jess Tyler, MJBizDaily’s senior vice president of events.

“We are so grateful to our cannabis community who have supported MJBiz throughout the past 10 years, making MJBizCon the premier event in the industry.

“It’s an exceptional group of attendees and exhibitors who join us each year, and we cannot wait to see everyone this October.”

MJBizCon went virtual in 2020 because of the pandemic, but the show is returning to Las Vegas from Oct. 20 to Oct. 22 of this year, and there will be an online component.

“This is a reflection of the industry’s rapid growth and truly shows how far it has come in a very short period of time,” MJBizDaily CEO Chris Walsh said.

“While we weren’t able to gather in person last year because of the pandemic, we’re gearing up to bring the industry together once again this fall to celebrate our collective triumphs and serve as the key annual event that fuels growth going forward.”

Mississippi high court hears arguments contesting medical marijuana measure

The Mississippi Supreme Court heard oral arguments Wednesday on a constitutional challenge that seeks to nullify a medical marijuana legalization initiative – after voters overwhelmingly approved the measure last November.

At stake is a potentially huge, business-friendly MMJ market in the Deep South: The recently released 2021 Marijuana Business Factbook projects that a Mississippi medical cannabis industry would generate $265 million in sales the first full year and $800 million annually by the fourth year.

Efforts also are being made to try overturn adult-use legalization in Montana and South Dakota.

Mississippi Supreme Court Chief Justice Michael Randolph appeared to strongly lean toward striking down MMJ legalization, and the most pointed questions from the justices were directed to the attorney defending the initiative on behalf of the Secretary of State’s office.

But a legal expert noted that some justices appeared supportive and others didn’t ask any questions, so it’s difficult to assume how the Supreme Court will rule.

“It was a little dispiriting if you were in favor of legalization,” said Whitt Steineker, co-chair of the Birmingham, Alabama-based Bradley law firm’s cannabis practice.

But, as “for predicting an outcome, if I was on a casino on the Mississippi River, I’d probably find something else to bet on.” He said it could come down to a 5-4 vote.

Before the hearing, NORML State Policies Manager Carly Wolf issued a statement characterizing the legal challenge as using “overly undemocratic tactics” to try to overturn the will of the voters.

More than 70% of Mississippians voted in favor of the measure, a level of support that surprised even MJ advocates.

The city of Madison filed the legal challenge.

The crux of the argument, as articulated Wednesday by attorney Kaytie Pickett, is that the plain language of a provision in the state’s Constitution requires citizen ballot petitions to collect 20% of the signatures from each of five congressional districts.

But in 2000, Mississippi lost a congressional district, and state lawmakers have failed seven times since then to update the initiative language.

So, by Pickett’s argument, it’s a mathematical impossibility to put a voter initiative on the ballot because 20% times four congressional districts equals only 80%.

Justin Matheny, an attorney defending the initiative for the Secretary of State’s office, argued that the “fairest” way to read the intent of the law is to use five districts as defined by state code.

Steineker said that if the Mississippi Supreme Court shoots down MMJ legalization, it will “undo the will of a supermajority of the people and fundamentally alter the ability of Mississippians to utilize a ballot initiative procedure in the foreseeable future.”

But Steineker noted that, in the meantime, the state’s health department is moving forward to develop rules and regulations by July 1 for a MMJ industry in Mississippi.

Chief Justice Randolph closed the hearing by saying that the justices would issue an opinion as quickly as possible.