Cannabis Industry Daily News

South Dakota lawmakers introduce bill to legalize adult-use cannabis

By MJBizDaily Staff

South Dakota lawmakers introduced a bill to legalize adult-use cannabis, heeding a recommendation from a legislative subcommittee that was assigned to study the issue.

According to Sioux Falls TV station KELO, the bill will next go to the full regular legislative committee on recreational marijuana and then would head to the Legislature’s executive board – meaning it has a long way to go before it could possibly be signed into law.

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Even if the measure were to cross the legislative finish line, it would face a likely veto from Gov. Kristi Noem, who has been a vocal opponent of legalizing recreational marijuana.

Noem has supported a lawsuit brought last year that seeks to overturn a voter-approved ballot measure from 2020 that legalized adult-use cannabis, and the state’s Supreme Court has yet to rule on that case.

A spokesperson for Noem also confirmed this week to KELO that the governor does not support legalization.

The new adult-use legalization bill is also substantively different from the initiative voters approved last year, in that it would prohibit consumers from growing cannabis at home and would ban outdoor marijuana cultivation.

US Senate panel removes barrier to DC recreational marijuana sales

By MJBizDaily Staff

The U.S. Senate’s Appropriations Committee this week released a spending bill backed by Democrats that removes a longstanding prohibition on adult-use cannabis sales in the District of Columbia.

But as The Washington Post reported, the bill still faces significant opposition from Senate Republicans and so might never get signed into law as-is.

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All 50 Democrats and 10 Republicans would have to support the spending package in order to bypass a filibuster – and the marijuana provision is not the only major change proposed for the appropriations package.

Democrats also removed a provision preventing DC from subsidizing abortions for low-income residents, a change that Republicans vociferously opposed.

Democratic “bills are filled with poison pills and problematic authorizing provisions,” GOP Sen. Richard Shelby of Alabama, the Appropriations Committee vice chair, told The Post.

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

DC voters approved recreational marijuana legalization in 2014, but Congress has forbidden the city from launching legal, licensed MJ sales.

Because it’s legal in DC for residents “gift” each other marijuana, consumers often will pay extra for a T-shirt or some other cheap commodity to receive cannabis along with the purchase.

Hexo taps cannabis beverage head as next CEO

By MJBizDaily Staff

Hexo Corp. appointed Scott Cooper, current head of its beverage joint venture, as its new chief executive officer, effective immediately.

Cooper takes over from founder Sébastien St. Louis, who was recently shown the door of the Quebec cannabis producer he helped create almost a decade ago.

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St. Louis departs Hexo after having built the business into one of the biggest licensed producers in Canada by sales.

Cooper helped Truss Beverage Co., a joint venture between Molson Coors Canada and Hexo, take a leading the share of Canada’s infused beverage category.

However, industrywide sales for beverages amounted to only 23.6 million Canadian dollars ($19.5 million), or just 1.3% of the CA$1.8 billion Canadian cannabis market in the first half of this year.

“Scott’s two decades of experience in consumer-packaged goods, his success in launching and growing Truss’ innovative portfolio to be the Canadian market leader in cannabis beverages, and experience working in the United States position him well to defend Hexo’s position as a market leader in Canada and secure our place as a top-three global cannabis products company,” board chair Michael Munzar said in a news release announcing Cooper’s appointment.

Before leading Truss, Cooper held senior roles at Molson Coors, including chief innovation officer, in addition to positions at food retailer Sobeys and British multinational consumer goods company Unilever.

In addition to his duties at Hexo, Cooper will continue in his role as Truss CEO for an interim period, the release noted.

In a note to investors, BMO Capital Markets analyst Tamy Chen said St. Louis’ departure “largely reflects the board seeking a different skill set than the entrepreneurial drive that enabled Mr. St-Louis to build Hexo to a leading LP by market share.”

“Investors will recall that many other LPs have undertaken similar executive changes.”

Hexo is also laying the groundwork to expand into the coveted U.S. market via Truss CBD USA, another joint venture with Molson Coors.

Hexo lost CA$546 million in its previous fiscal year.

Shares of Hexo trade on the Nasdaq and Toronto Stock Exchange.

– Matt Lamers

MJBizCon speaker highlights dangers of delta-8 THC, touts benefits

By MJBizDaily Staff

The cannabis industry should be concerned about the safety of delta-8 THC, but it might have a place in the market for therapeutic or recreational uses, said the chief scientist for a Massachusetts-based testing lab that specializes in medical marijuana.

During a session focused on delta-8 THC at the Science Symposium at MJBizCon, Chris Hudalla, president and chief science officer for ProVerde Laboratories, crunched the numbers on the financial viability of naturally producing the cannabinoid.

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According to him, it would require 55,000 kilograms (12,1254 pounds) of hemp to produce 1 kilogram of natural delta-8 THC.

At $400 per kilogram for biomass, the cost of raw plant material alone would be $22 million.

The estimated market value for natural D-8 extract would be somewhere between $200 million and $500 million per kilogram.

Hudalla also outlined the practicalities of producing delta-8. He sees it has having a high potential for therapeutic and recreational applications.

“Like many minor cannabinoids? It’s relatively easy to produce, without much oversight,” he said.

Couple that with minimal capital investment for production equipment and supplies, as well an oversupply of CBD isolate resulting in lower margins.

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

“That provides salvation for investors expecting FDA approval for CBD,” Hudalla said of the U.S. Food and Drug Administration.

But there’s also a long list of reasons why delta-8 is currently problematic as a business concern.

“There’s a potential for intoxication with Delta-8 use and much of hemp’s legislative success is based on absence of intoxicants,” Hudalla said.

It could have negative consequences to future cannabis legislation and unregulated products cut into regulated cannabis profits.

“When these producers are spending millions of dollars on these regulated processes this is going to hurt their bottom line,” Hudalla said.

There’s also the question of consumer safety, since much delta-8 is produced without regulatory oversight.

Hudalla said that out of 18,000 samples, the vast majority didn’t have any D-8, but the company is under no regulatory obligation to spell out the actual components.

“Or they’ll tell you it’s 80% delta-8, but they won’t tell you what the other constituents are,” he said.

That’s not to mention that testing has discovered unidentified contaminants in delta-8 products, with no efficacy or toxicity information available for these contaminants, according to Hudalla.

“These are questions I don’t have any answers to, and I don’t know anyone who does,” he said.

Delta-8 THC products often involve use of potentially harmful chemicals to create the concentrations of delta-8 THC claimed in the marketplace, he added.

Hudalla also pointed out that delta-8 THC products haven’t been evaluated or approved by the FDA for safe use and might be marketed in ways that put the public health at risk.

The FDA has received reports of adverse effects from delta-8 THC products and believes it can have psychoactive and intoxicating effects.

“Everything I’ve said about delta-8 is pretty negative,” Hudalla said. “But I truly believe delta-8 has a place in therapeutics and has a place in recreational use.”

– Bart Schaneman

MJBizFinance Forum speakers bullish on marijuana industry’s outlook

By MJBizDaily Staff

Three industry experts who presented at the MJBizFinance Forum on Tuesday predicted the marijuana industry is heading in the right direction, albeit with bumps along the way.

“Year-over-year industry growth … remains incredibly attractive,” Vivien Azer, managing director and senior research analyst at Cowen, told those attending the one-day event ahead of the formal kickoff of MJBizCon in Las Vegas.

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But Azer said Cowen analysts agree that federal marijuana reform is unlikely this year or in 2022 because of various political dynamics in Washington DC.

“Don’t hold your breath,” Azer said.

At the same time, the industry is continuing to attract investment capital, and mergers and acquisitions are expected to continue, said Scott Greiper, president of Viridian Capital Advisors.

“Despite all the headwinds that face this industry every day, the industry is doing quite well,” Greiper said.

According to a Viridian analysis, Greiper said, investors have pumped roughly $70 billion into the cannabis industry overall, including $5 billion so far in 2021.

One of the more interesting trends, Greiper said, is that inexpensive debt has been driving a lot of the acquisition deals this year, since larger multistate operators are getting 8%-10% interest rates on debt capital.

“The big MSOs have been having a field day” thanks to cheap capital and smaller companies that have been up for sale, Greiper said.

So-called special purpose acquisition companies (SPACs) remain a viable option for cannabis funding, said Mike Regan, founder of MJResearchCo.

He noted that roughly $1.3 billion in SPAC investment capital is waiting to be invested in cannabis companies. That total includes $510 million raised by several SPACs for plant-touching companies and another $813 million by SPACs dedicated to ancillary cannabis businesses.

Oregon county officials seek National Guard help versus illicit cannabis grows

By MJBizDaily Staff

Commissioners from a county in Southern Oregon are asking for help from the state’s National Guard in their fight against illegal cannabis grow sites.

According to the Associated Press, Jackson County commissioners requested that Oregon Gov. Kate Brown send in the National Guard to help enforce the law in a situation that is worsening.

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Jackson County recently declared a state of emergency last week to deal with the flood of illegal marijuana grows in the state.

On the same day, the Associated Press reported, police raided an illegal cultivation site that had about 2 tons of processed cannabis and 17,500 plants.

Oregon Senate President Peter Courtney said he agrees the National Guard should be sent in.

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

“You can’t solve it just at the local level, and you cannot solve it, I’m afraid, just at the usual state level and have some more state troopers down there,” Courtney told the AP.

“The National Guard, they’re going to have to get deployed down there some way or other.”

Brown is holding off on deploying the National Guard but could reconsider next year, her office said.

There is precedent for such a move.

In 2019, for example, 150 National Guard troops were deployed in Northern California to go after illegal cannabis farms.

Marijuana ancillary firm Greenlane to buy vape maker for up to $20 million

By MJBizDaily Staff

Greenlane Holdings, a Florida-based provider of cannabis accessories, said Tuesday it agreed to purchase portable vape manufacturer DaVinci in a deal worth up to $20 million.

According to a filing with the U.S. Securities and Exchange Commission, Greenlane will pay for the acquisition through a combination of cash and stock.

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The company expects the deal to close in the fourth quarter.

Greenlane shares trade on the Nasdaq as GNLN.

“This acquisition perfectly illustrates our mission of elevating all elements of the consumption experience, and we look forward to building on our recent success of acquiring strategic and accretive brands,” Greenlane CEO Nick Kovacevich said in a news release, adding that the company has a “robust pipeline of acquisition targets.”

Greenlane’s portfolio already includes ancillary brands such as Pollen Gear, the K. Haring Glass Collection by Higher Standards, Vibes rolling papers and Marley Natural, according to the release.

Greenlane also owns and runs online e-commerce platforms Vapor.com and Vaposhop.com.

Greenlane merged with Kushco in March and since then has raised at least $32 million from selling stock and warrants.

Cannabis cross-pollination concerns getting new look in Colorado

By MJBizDaily Staff

Colorado has assembled its panel of cannabis experts to suggest fixes for cross-pollination concerns among outdoor hemp and marijuana growers.

The group comes in response to a new law that calls for solutions to cannabis pollen-drift concerns.

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The law also aims to look at the prospect of wild or volunteer cannabis, plants growing outside facilities licensed for marijuana or hemp.

Colorado has licensed 564 hemp farmers on 19,707 outdoor acres.

State analysts estimate the state has 120 outdoor growers of medical or recreational marijuana. (Colorado’s marijuana regulators do not keep track of which registrants are growing outdoors, making the number an estimate.)

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

The cross-pollination working group members are:

  • Brian Higgins.
  • Bill Conkling.
  • Grant Orvis.
  • John McKay.
  • Thomas Dermody.
  • Christian Barr.
  • Mike Sullivan.
  • Jon Vaught.
  • Steve Turetsky.
  • Veronica Carpio.
  • Eric Singular.
  • Damian Farris.
  • Scott Perez.

The group has until November 2022 to recommend new requirements on spacing and timing for cannabis cultivation.

Marijuana real estate firm inks $60M sale-leaseback with Gold Flora

By MJBizDaily Staff

Innovative Industrial Properties (IIP) said it closed on the purchase of a property in Southern California and sealed a long-term lease with marijuana company Gold Flora in a sale-leaseback deal valued at $60 million.

The 201,000-square-foot industrial property is located in Desert Hot Springs.

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According to a news release, San Diego-based IIP paid $51 million for the parcel, excluding transaction costs.

Gold Flora, a vertically integrated operator based in Costa Mesa, California, is using the property as a cultivation and processing facility.

IIP said Gold Flora is expected to perform additional tenant improvements on the property.

The real estate investment trust (REIT) agreed to reimburse Gold Flora for up to $9 million.

Assuming full reimbursement for the improvements, the REIT’s total investment is expected to be $60 million.

As of Oct. 18, 2021, IIP owned 76 properties in multiple states nationwide, representing about 7.5 million rentable square feet.

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

Arizona tightens social equity rules in advance of cannabis licensing

By MJBizDaily Staff

Arizona regulators finalized rules for the 26 social equity licenses to be issued as part of the state’s adult-use cannabis program, adding language that prevents an applicant from entering into a prior agreement to sell or transfer the license to a nonqualifying operator.

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The Arizona Department of Health Services issued the final rules last week, with applications scheduled to be accepted during the first two weeks of December, the Arizona Daily Star in Tucson reported.

The licenses are to be selected by a random drawing in early 2022.

The adult-use measure passed by voters in November 2020 requires Arizona to issue licenses to applicants “from communities disproportionately impacted by the enforcement of previous marijuana laws.”

As previously reported, applicants must live in one of 87 zip codes for at least three of the five past years. Those are areas deemed to have been disproportionately impacted by the war on drugs.

Licensing also factors in household income criteria and whether the applicant or family member has marijuana convictions.

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

Critics said the final draft is better because it will prevent applicants from making deals now to sell out to large operators once they win a license.

“But there’s still some things that are missing,” such as a point-based application system and more controls on transferring social equity licenses, Zsa Zsa Simone Brown, a potential applicant, told the Daily Star.

The social equity licensing could mark the end of available retail store permits at least in the short term, based on a store-to-pharmacy formula.

But Arizona could continue to see merger and acquisition activity.

Most notably, Florida-based Trulieve Cannabis recently acquired Arizona’s leading marijuana operator, Harvest Health & Recreation.

Marijuana SPAC Achari Ventures goes public in $100 million IPO

By MJBizDaily Staff

Achari Ventures Holdings Corp. I, a special purpose acquisition company (SPAC) formed to acquire non-plant-touching marijuana companies, went public on the Nasdaq Global Market.

The newly organized blank check company priced its initial public offering of 10 million units at $10 per unit for a raise of $100 million.

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The units began trading on the Nasdaq on Oct. 15 under the ticker symbol AVHIU.

“The company’s initial focus will be on identifying acquisition opportunities with an ancillary, non-plant touching company operating in the cannabis industry, including equipment, hardware, technology/software, or hydroponics,” the SPAC said in a news release marking its first day of trading.

According to the release, the company is sponsored by Achari Sponsor Holdings I, which it describes as an affiliate of Achari Ventures.

Achari is led by CEO and Chair Vikas Desai.

“Our team has been an active and early participant in the cannabis industry, having identified, early on, its significant potential for explosive growth,” Desai said in the release announcing the IPO.

“We believe a unique opportunity exists to partner with an established and successful company in the space, leveraging our capital, industry and operating expertise to rapidly scale its business as the cannabis regulatory environment matures.”

Each unit consists of one common share and one warrant.

Each warrant entitles the holder to purchase three-quarters of one common share at a price of $11.50 per share.

After two-year wait, New Jersey issues 14 more medical cannabis permits

By MJBizDaily Staff

New Jersey regulators awarded 14 new medical cannabis business licenses in advance of next year’s likely adult-use market launch.

The issuance of the licenses fulfills a 2-year-old plan to expand the state’s MMJ program.

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According to NJ.com, the state’s Cannabis Regulatory Commission on Friday announced the permit winners, a mixture of 10 cultivation and four manufacturing licenses.

All 14 licenses went to companies owned by minorities or women:

  • Hillview Med
  • CYOURNJ
  • GSCC Management
  • NJ Nectar Ventures
  • Noble Valley Harvest Co.
  • Green Medicine NJ
  • ZY Labs
  • The NAR Group
  • Bloom Medicinals of PA
  • Garden State Releaf
  • Etain NJ
  • Altus New Jersey
  • Holistic NJ
  • Greenhouse Wellness of NJ

Do you have a ticket to MJBizCon in Las Vegas, October 19-22?

Tens of thousands of cannabis executives already have reservations for the most anticipated event of the year:

  • 1,100 exhibits for cultivators, manufacturers and retailers.
  • 70+ presentations, plus a keynote by Shark Tank’s Daymond John
  • Networking and partnerships

The expansion is a partial culmination of a plan that began in 2019 to expand New Jersey’s relatively small MMJ market, which currently has only 23 dispensaries to serve 117,000 registered patients in the state.

But the expansion was paused for a year and a half because of a lawsuit, which was finally resolved in February.

The commission will likely award even more licenses in coming weeks, NJ.com reported, since the original expansion plan called for 24 new MMJ licenses, including 15 dispensaries, five cultivators and four vertically integrated operations.

But the commission decided at the last minute Friday to double the number of cultivators to 10.

The commission also still must set a date for when adult-use sales might begin.