Cannabis Industry Daily News

New Mexico marijuana operator prevails in drawn-out legal case

In what seems like a mere formality at this point, a New Mexico appellate court upheld a 2018 lower court ruling allowing the state’s largest medical marijuana operator, Ultra Health, to open two new dispensaries.

Ultra Health went ahead and opened the two new retail outlets after prevailing in a lower, district court case in October 2018, the Santa Fe New Mexican reported.

In fact, Ultra Health has opened 16 dispensaries since that ruling and now operates 25 statewide, according to a company news release.

Back in 2018, the New Mexico Department of Health refused to approve the two dispensaries, one on the grounds it was located inside a senior living facility and another because of stocking issues.

The District Court ruled that regulators had no basis in law to prohibit the facilities in Española and Los Lunas from opening, but the state appealed the decision.

The appellate court made a similar ruling, saying state regulators had no “discretionary” authority to stop Ultra Health from opening the dispensaries, according to the Santa Fe newspaper.

US-based Cookies plans flagship cannabis store in Toronto this year

Gage Growth Corp. announced details of its previously disclosed plan to bring the U.S. cannabis brand Cookies to the Canadian market, including the location of its first store.

Detroit-based Gage will work with Canadian producer Noya Cannabis to launch Cookies products exclusively in Ontario, Canada, before expanding into other provinces, according to a news release.

In the announcement, Gage said it expects to open a flagship retail store in Toronto by the end of this year.

Gage signed an agreement with Cookies last November to incorporate Cookies Retail Canada Corp, or Cookies Canada.

Under the deal, Gage received 80% of the new company.

As part of a license agreement with California-based Cookies signed in April 2019, Gage holds the rights to sell Cookies-branded products in Ontario, Canada’s largest marijuana market, per a recent regulatory filing. Those rights were transferred to Cookies Canada.

Gage did not answer an MJBizDaily query about whether it has acquired, or is seeking, rights to sell Cookies-branded products beyond Ontario.

According to a May 2021 filing, Cookies Canada intends to open two retail outlets in Canada this year.

“The growth of the Canadian market creates more diverse and demanding consumers, and we’re excited to bring one of the best-known cannabis brands in the world to customers across Canada,” Gage CEO Fabian Monaco said in a statement.

Shares of Gage Growth trade on the Canadian Securities Exchange as GAGE.

New Mexico novelty store gets cease-and-desist order for ‘gifting’ marijuana

New Mexico’s Cannabis Control Division is cracking down on a Las Cruces business for “gifting” marijuana to shoppers who bought non-MJ merchandise.

Speak Easy – described by its owner as “a novelty and gift shop … not a dispensary” – was giving “samples” of cannabis to customers who bought stickers for prices ranging from $15 to $90, according to El Paso, Texas, TV station KVIA.

When KVIA first reported the story on July 23, Speak Easy co-owner Jason Estrada told the news outlet he believed the practice was legal.

In an update to the story posted July 26, KVIA reported that the Cannabis Control Division (CCD) had served a cease-and-desist order to Speak Easy.

On July 20, CCD officials visited Speak Easy and warned the store that “gifting” cannabis “appeared to be violating the trafficking provision of (New Mexico’s Cannabis Regulation Act)” and “could result in a felony conviction,” according to a copy of the order posted online by KVIA.

“By open admission of the co-owners of Speak Easy … the business has knowingly and repeatedly engaged in conduct that constitutes intentional trafficking of cannabis products,” the order notes.

An attorney for Speak Easy told KVIA that the issue of cannabis gifting is “an unsettled area of law” in New Mexico.

New Mexico legalized recreational marijuana in April, but legal adult-use sales have not yet launched.

Cannabis “gifting” has recently come under regulatory scrutiny in New Jersey, where authorities have also issued cease-and-desist orders regarding the practice.

Massachusetts medical cannabis dispensary sued over $21 million debt

A medical cannabis dispensary in a Boston suburb has been sued by a creditor for more than $21 million in debt and interest the shop owes.

According to the Boston Business Journal, Quincy-based Ermont is being sued for $21.8 million by Teneo Funds SPVi.

Teneo requested in its lawsuit that the court halt any transfer of assets by the dispensary and that a receiver be appointed to run the medical marijuana business.

The lawsuit follows Teneo’s acquisition of the debt from Ermont’s former creditor, Tilt Holdings, which sold the debt to Teneo in February for $1.25 million and a portion of future collections – a fraction of the overall value.

Tilt Holdings acquired the debt in 2018 and extended a line of credit to Ermont.

Selling the debt was part of Tilt’s attempt to resolve issues with Massachusetts regulators over allegations the Boston-based company had overstepped industry caps on ownership stakes in marijuana businesses in the state. Tilt paid a $275,000 settlement to the state.

In March, Ermont said it would pay all debt in question except for $220,000, the Business Journal reported. But Teneo claimed that, as of April, the debt was in default.

Verano to acquire Nevada marijuana company Sierra Well for $29 million

Illinois-based cannabis multistate operator Verano Holdings said it is spending $29 million to acquire Sierra Well, a vertically integrated marijuana company in Nevada with two retail outlets plus production and cultivation facilities.

According to a news release, the deal includes $5.6 million in cash and 1.5 million shares.

In the deal, Verano is getting 11 cannabis licenses in Nevada:

  • Two for medical marijuana cultivation.
  • Two for MMJ dispensaries.
  • Two for adult-use cultivation.
  • Two for adult-use stores.
  • One for MMJ production.
  • One for adult-use product manufacturing.
  • One for adult-use distribution.

The two retail stores are located in Carson City and Reno.

“Following completion of this accretive transaction, Nevada will become a core market for us,” George Archos, Verano’s founder and CEO, said in the release.

“We are pleased to strategically expand our distribution in Nevada while partnering with a like-minded ownership group that has built a profitable business through sound operational management.”

Verano has been awarded licenses in 14 markets and is operational in 11 states.

Denver cannabis retailer asks Supreme Court again to review its IRS fight

After the U.S. Supreme Court in June declined to hear arguments in a case between a Denver-based cannabis retailer and the Internal Revenue Service, the company decided to ask the justices to reconsider.

According to Bloomberg Tax, Standing Akimbo marijuana retailer submitted paperwork to the high court last week requesting again that the Supreme Court hear its case.

The Supreme Court took a pass on the case in June after Standing Akimbo lost in appellate court last year.

Standing Akimbo unsuccessfully argued that:

  • The IRS exceeded its authority by allegedly investigating drug crimes.
  • Their Fourth Amendment privacy rights were being violated.

This case and a parallel legal fight have made clear that the Biden administration is sticking with the IRS’ treatment of state-legal marijuana companies under 280E, the section of the federal tax code that bars legal cannabis operators from claiming standard business tax deductions.

Florida man ordered to repay nearly $3 million in Colorado marijuana scheme

A Florida businessman has been ordered to pay the U.S. Securities and Exchange Commission nearly $3 million to resolve allegations that he bankrolled a lavish lifestyle with investor money that was to be used to acquire Colorado marijuana stores.

A federal judge in Tampa, Florida, ordered Steven L. Brickner to “disgorge” $2,423,229 in ill-gotten gains plus $186,306 in interest and pay a civil fine of $390,094.

The SEC said Brickner raised $5.5 million from more than 60 investors with promises of huge investment returns in Colorado’s marijuana industry.

Instead, the SEC claimed, Brickner spent about $3 million on himself.

That included, the SEC alleged:

  • 11 classic and luxury cars.
  • $465,000 of cryptocurrency coins.
  • A personal loan of $580,000 to pay off his mortgage.
  • $335,000 in expenses at an adult-entertainment facility in Tampa.

Brickner, without admitting or denying the allegations, entered into a consent agreement with the SEC before the determination of how much he should repay.

As part of the consent agreement, Brickner agreed not to argue that he didn’t violate SEC regulations.

But, according to an SEC court filing last week, Brickner opposed the motion outlining the penalties, made “jabs” at the SEC and put forth “unsupported speculation, theories” about his case.

Last week’s ruling was made by federal Judge Steven Merryday in the U.S. Middle District of Florida.

– Jeff Smith

Biden nominee for drug czar consulted for medical cannabis business

President Joe Biden’s pick to lead the Office of National Drug Control Policy, Dr. Rahul Gupta, consulted with a Massachusetts-based medical cannabis business for nine months in 2020.

Ethics documents released this week by the White House confirmed Gupta’s work with marijuana multistate operator Holistic Industries, CNN reported.

A Biden spokesperson told the cable-TV news outlet that Gupta provided “consulting on regulatory compliance matters” for physician recommendations for medical marijuana in West Virginia.

West Virginia is not yet one of the states where Holistic has a cannabis business footprint.

According to the company’s website, Holistic has marijuana operations in California, Maryland, Massachusetts, Michigan, Pennsylvania and Washington DC. But the company is planning to expand into the Appalachian state, where an MMJ market is expected to launch later this year.

As West Virginia’s former medical officer, Gupta helped craft the state’s MMJ industry regulations.

The revelation is perhaps an indicator that Biden might need to further soften his stance toward legal marijuana.

The White House made headlines in March after several employees were fired for marijuana use, and Biden himself has remained steadfastly opposed to legalizing cannabis at the federal level.

But a number of Biden appointees have had ties to legal cannabis in various ways, Gupta now included.

Georgia awards six medical marijuana cultivation licenses

Georgia’s medical marijuana industry took a major step toward launching when state regulators approved on six cultivation licenses for six MMJ companies.

The Georgia Access to Medical Cannabis Commission (GMCC) announced during a public hearing Saturday it is awarding two Class 1 licenses and four Class 2 permits to manufacture low-THC medical cannabis oil.

The two Class 1 winners are Trulieve GA, a subsidiary of powerful Florida-based multistate operator Trulieve Cannabis, and Botanical Sciences, which is based in Georgia. They beat out such heavyweight MSOs as Columbia Care, Curaleaf, Parallel and Verano Holdings, according to the GMCC website.

The four Class 2 winners are also based in Georgia: FFD GA Holdings, Theratrue Georgia, Nature’s GA and Treevana Remedy. They were chosen over major players such as Columbia Care, Curaleaf, Parallel and Verano.

A Class 1 license allows grow facilities up to 100,000 square feet; a Class 2 permit allows facilities up to 50,000 square feet.

There were 69 applicants, according to a GMCC news release.

The licensees are expected to start operations in the coming months, and each company will be allowed to open five dispensaries, The Atlanta Journal-Constitution reported.

Cannabis tech firm Tilt Holdings gets new $10 million credit line

Massachusetts-based Tilt Holdings said Friday that its Jupiter Research vape cartridge subsidiary has signed a $10 million credit facility that will boost the cannabis tech firm’s capital for operations and growth.

Money borrowed under the new revolving credit line will be at the prime interest rate – currently 3.25% – plus 3.5%. The credit line will be secured by Jupiter’s inventory, accounts receivable and related property, the company said in a news release.

The credit facility is with New York-based Entrepreneur Growth Capital.

“Signing this new credit facility marks a first step in establishing a more normalized capital structure,” Tilt CEO Gary Santo said in a statement.

The terms are favorable for a cannabis company, he added, and “provides us with additional working capital to execute our growth initiatives.”

Santo, formerly Tilt’s president, was installed as CEO on June 1 and his predecessor, Mark Scatterday, became board chair.

Scatterday is working closely with Santo and the senior management team as well as serving as an adviser to the company’s research and development team.

Marijuana brand Old Pal gets $8M infusion from consumer products firm

Consumer products company Turning Point Brands (TPB) is making an $8 million strategic investment in marijuana brand Old Pal Holding.

Louisville, Kentucky-based TPB’s investment involves “a convertible note which includes additional follow-on investment rights,” according to a news release.

“TPB’s investment will enable Old Pal to expand product offerings in existing states, which include California, Nevada, Michigan, Oklahoma, Ohio, Washington and Massachusetts, and will help create the infrastructure necessary to support continued territory and product expansion” the release noted.

California-based Old Pal is a non-plant-touching cannabis and lifestyle brand that partners with licensed cultivators and manufacturers to produce branded cannabis products.

Old Pal products are available in dispensaries, but the company also sells directly to consumers.

“Given Old Pal’s favorable market position, the awareness of its products outside its current geographies and its unique licensing model, we are confident the brand is well-positioned to further penetrate the market and capitalize on the growth potential of the cannabis industry,” Turning Point Brands CEO Larry Wexler said in a statement.

TPB’s brand portfolio includes Zig-Zag rolling papers and Stoker’s tobacco products.

Shares of TPB trade on the New York Stock Exchange as TPB.

Cannabis cultivation giant buys second garden center this week

Barely 48 hours after acquiring a hydroponic and gardening business in Oregon, cannabis cultivation company GrowGeneration Corp. said it is buying Mendocino Greenhouse and Garden Supply, a hydroponic and gardening store in Northern California.

Terms of the deal were not disclosed.

Denver-based GrowGeneration, which owns 58 hydroponic and organic garden centers across the U.S., said in a news release that it expects its new acquisition’s sales to surpass $8 million annually.

Founded in 2005, Redwood Valley-based Mendocino Greenhouse has eight employees, including founder Nick Halfacre, who will stay on as general manager.

That acquisition comes on the heels of GrowGen’s Tuesday purchase of Aqua Serene, a hydroponic garden center with two stores in southern Oregon.