Cannabis Industry Daily News

California cannabis business owner pleads guilty to bribery, tax evasion

By MJBizDaily Staff

Cannabis businessperson Helios Dayspring entered formal guilty pleas to federal criminal charges, apparently ending a lengthy corruption saga involving multiple marijuana companies and local California officials.

According to the Santa Maria Times, Dayspring appeared in court on Friday via Zoom to enter guilty pleas for one charge of bribery and one of tax evasion.

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He agreed to a plea deal in July, and the town of San Luis Obispo subsequently revoked the business license of one of his four stores.

Dayspring, the owner of Natural Healing Center and 805 Agricultural Holdings, bribed a former San Luis Obispo County supervisor in exchange for favors. He also was found to have not paid federal taxes or reported any income for a five-year span.

The supervisor he bribed – Adam Hill – committed suicide in 2020.

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Dayspring was also accused of attempting to bribe the mayor of Grover Beach, but the mayor declined the bribe.

Dayspring is slated to be sentenced Feb. 11 in Los Angeles.

He faces a maximum penalty of 13 years in prison and a $500,000 fine as well as the $3.4 million he has agreed to pay the IRS in back taxes.

Oregon marijuana processor fined $100,000 for skirting packaging rules

By MJBizDaily Staff

Oregon regulators fined a recreational marijuana processor $100,000 for allegedly sidestepping packaging and labeling rules.

In a news release, the Oregon Liquor and Cannabis Commission (OLCC) said it voted to uphold the decision of a state administrative law judge who found Luminous Botanicals sold vials of marijuana tincture that were not in compliance with the agency’s rules.

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The OLCC said the labels on the tinctures “were not properly affixed” and could fall off, which could lead to an unsuspecting consumer inadvertently using the product.

“Small vials of marijuana product don’t provide any distinction on whether or not the product is from the legal or illegal market,” OLCC Executive Director Steve Marks said in the release.

The OLCC said it worked with Luminous Botanicals for more than a year to find a solution, but the company continued to sell products that violated state rules.

Key insights to inform decisions: MJBizFactbook 

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Luminous Botanicals did not immediately respond to an MJBizDaily request for comment.

The OLCC charged the company with a violation for each sale of the trial-sized vial and offered to settle the case for $30,000 instead of the maximum $100,000 penalty.

Luminous’ legal counsel argued that the company had been exemplary in its dealings with the OLCC but misunderstood the rules and made an innocent error.

The counsel argued the company deserved leniency in the form of a warning, instead of a fine. The OLCC disagreed.

Future of cannabis sales relies on data-driven, targeted marketing, expert says

By MJBizDaily Staff

Sending promotions for cannabis concentrates to a longtime shopper who buys only flower is not just a waste of resources.

Such blanket marketing practices also could drive consumers to look for a different company that better understands their preferences, Lisa Buffo, founder and CEO of the Cannabis Marketing Association, told an audience during MJBizCon in Las Vegas.

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Buffo addressed how marijuana companies can amplify their branding while customizing experiences to retain consumers.

She noted that using good data – such as what a specific customer buys at a dispensary – helps foster a sense of loyalty, keeps individual shoppers returning and potentially drives others to your brand.

“Your customers can turn into promoters who then attract strangers,” said Buffo, who referenced a report by software developer and marketer HubSpot that said the biggest threat to a company’s growth is bad customer experience.

“We all have a low tolerance for a bad customer experience,” she added.

Key insights to inform decisions: MJBizFactbook 

Say hello to marijuana business data, curated by the editors of MJBizDaily to help cannabis industry leaders make informed decisions.

  • U.S. marijuana industry financials
  • Licensing, funding and investment trends
  • State-by-state guide to regulations, taxes and opportunities
  • Insights for business and investment strategy

One of the best ways to mitigate the problem is to ask employees for points of friction in the company, because they often have a better handle on such issues than executives, Buffo said.

The staff’s perspective about internal friction might not be customer-facing, but it can point to poor internal processes or lack of communication within the organization.

“I have seen companies eliminate friction and see enormous returns,” she said. “Eliminating friction can be better than any kind of marketing program.”

Buffo noted data that showed less than 30% of Americans participate in the regulated marijuana industry.

Rather than trying to woo consumers from other businesses, she urged companies to focus on people who don’t currently buy cannabis at all.

If only 10% of that population started using cannabis somewhat regularly, it would make a world of difference in sales, Buffo said.

“There is a big opportunity to find customers out there,” she added.

(Video and slides from Buffo’s presentation will be available to MJBizCon‘s full-conference and digital-only passholders through the end of 2021.)

– Kate Lavin

Rhode Island’s medical marijuana dispensary lottery set for Oct. 29

By MJBizDaily Staff

Rhode Island’s lottery to more than double the number of medical cannabis dispensaries in the state is scheduled to take place Oct. 29, according to a public notice from state regulators.

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The lottery, according to the Associated Press, will choose five new dispensary operators, bringing the total to eight.

The state Office of Cannabis Regulation preapproved 23 companies to participate in the drawing.

A blindfolded former FBI agent will select numbered balls from a transparent tumbler, the AP reported.

Key insights to inform decisions: MJBizFactbook 

Say hello to marijuana business data, curated by the editors of MJBizDaily to help cannabis industry leaders make informed decisions.

  • U.S. marijuana industry financials
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  • State-by-state guide to regulations, taxes and opportunities
  • Insights for business and investment strategy

A lottery to choose the owner of a ninth store will be conducted at a later date, according to the notice.

The Oct. 29 lottery will be livestreamed via Zoom.

Florida official calls for probe into Black farmer cannabis license

By MJBizDaily Staff

Florida’s agricultural commissioner is calling for the state’s top prosecutor to investigate a new rule that provides for a Black farmer medical marijuana license, saying it is discriminatory against Black farmers and “beyond unacceptable.”

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Agricultural commissioner Nikki Fried, who also is running for governor, is critical of a nonrefundable $146,000 application fee for the license and other extensive requirements, according to a letter to Florida Attorney General Ashley Moody.

The application fee is more than double what was paid by the initial group of MMJ operators in the state.

Florida marijuana regulators passed an emergency rule last week to establish a process for issuing an MMJ license for one Black farmer in the state’s fast-growing, billion-dollar industry.

The state’s 2017 medical marijuana law required a license to be issued to a Black farmer who was part of a class action discrimination lawsuit in the late 1990s against the U.S. Department of Agriculture.

Litigation, including a challenge to the 2017 provision by a Black farmer outside the class, has held up additional MMJ licensing in Florida.

Fried questioned whether the new rule was created with “discriminatory intent.”

“Because Black farmers have lost out on this time spent waiting for their chance to apply, they now face significant barriers to entry in the now-established Florida medical marijuana market,” Fried wrote in her letter, which also was addressed to Florida’s Chief Inspector General Melinda Miguel and the state’s Joint Administrative Procedures Committee chairs.

“The fact that Black farmers in Florida had to wait years for FDOH (Florida Department of Health) to release a rule that more than doubles their application fees is not only an affront to the legislature’s directive but is beyond unacceptable.”

Marijuana firms need consistency in products, packaging expert says

By MJBizDaily Staff

Marijuana companies should adhere to the same practices as traditional consumer packaged goods (CPG) companies when it comes to offering products to customers, according to a packaging expert.

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Jim Chrzan – vice president of content and brand development at Packaging World Magazine – told MJBizCon attendees this week to imagine going to the breakfast cereal aisle for a box of cornflakes – only to find a grocery worker who says, “We don’t have cornflakes. We have cornflakes crumbs that we can put in a package.”

In addition to offering a more consistent menu of products, Chrzan believes cannabis companies have options for streamlining their packaging as well as saving on money and the use of plastic.

Chrzan pointed to one Oregon-based marijuana company that prints beautiful boxes but leaves room to add digitally printed information in case regulations change and require label updates, as they often do.

Conversely, he singled out an infused beverage maker that was left with “thousands of dollars worth of labels spilling out onto the floor” when state regulators ruled the company’s branding appealed too much to children.

Chrzan also recommended companies choose a color palette and seek out a type of packaging that can be used for multiple product lines, thus creating brand continuity.

Key insights to inform decisions: MJBizFactbook 

Say hello to marijuana business data, curated by the editors of MJBizDaily to help cannabis industry leaders make informed decisions.

  • U.S. marijuana industry financials
  • Licensing, funding and investment trends
  • State-by-state guide to regulations, taxes and opportunities
  • Insights for business and investment strategy

Finally, Chrzan said packaging purchases should be made holistically. “You should never order a package and then try to find a machine for it,” he said.

Rather, buy supplies in tandem so you know they work well together.

Otherwise, it “makes it very hard have any continuity in the product.”

(Video and slides from Chrzan’s presentation will be available to full-conference and digital-only passholders at MJBizCon through the end of 2021.)

– Kate Lavin

Curaleaf cannabis store workers unionize in Worth, Illinois

By MJBizDaily Staff

Workers at a Curaleaf Holdings cannabis dispensary in Worth, Illinois, are joining the United Food and Commercial Workers after a yes vote in a union election, Local 881 of the UFCW said.

Multistate operator Curaleaf operates 10 dispensaries in Illinois, according to the local union’s news release.

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Union organizing in the cannabis industry has increased during the pandemic amid employee anxiety and as concerns rise over workplace health and safety as well as demands for higher wages and benefits.

According to Local 881’s news release, Curaleaf’s Worth dispensary employees cited issues such as inadequate wages, scheduling, lack of benefits and the need for more COVID-19 protections.

The National Labor Relations Board is expected to certify the results of the election in seven days, barring objections, the release noted.

Local 881 has already negotiated cannabis contracts with other dispensaries in Illinois owned by Massachusetts-based Curaleaf and Chicago-based Cresco Labs.

“Illinois welcomed the cannabis industry with open arms and the larger companies, like Curaleaf, are clearly reaping all the benefits and posting major revenue gains,” Local 881 UFCW President Steve Powell said in the release.

“It’s clear now that the companies need to be held accountable for how they operate and more importantly how they treat their workers.”

Curaleaf shares trades on the Canadian Securities Exchange under the ticker symbol CURA and on the over-the-counter markets as CURLF.

Cannabis sales in Canada set 6th straight monthly record in August

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Spending on recreational cannabis products grew to 357 million Canadian dollars ($290 million) in August, according to newly released data by Statistics Canada, the sixth consecutive month of record sales.

Just two provinces, however, accounted for most of the growth that month.

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Ontario and British Columbia represented 91.1% of the retail sales growth in August compared to just over half of July’s growth.

Ontario’s sales rose 9.9% in August compared to the previous month, to CA$139.2 million.

In British Columbia, consumers spent CA$52.3 million in the regulated adult-use cannabis market, up 7.1% over July.

The province of Quebec slipped to fourth among all provinces, with CA$52.2 million in sales, effectively flat compared to the month before.

Quebec bans the sale of cannabis vapes and edibles. Quebec also has the slowest rollout of regulated cannabis stores among Canada’s biggest provinces.

Monthly recreational cannabis sales in the remaining provinces totaled:

  • Alberta: CA$60.4 million (even)
  • Quebec: CA$52.2 million (even)
  • Manitoba: CA$14.3 million (+11.3%)
  • Saskatchewan: CA$13.4 million (+1.5%)
  • Nova Scotia: CA$8.6 million (-1.5%)
  • New Brunswick: CA$7.2 million (-1.5%)
  • Newfoundland and Labrador: CA$5.5 million (+3.5%)

Statistics Canada withheld data for Prince Edward Island, Yukon, Northwest Territories and Nunavut.

By municipality, Vancouver, British Columbia saw blistering growth of 21% over July as sales increased to CA$17.9 million in August.

Toronto, Ontario, topped all cities with CA$46.7 million in sales in August, nearly as much as all of Quebec.

August recreational cannabis sales in the remaining cities totaled:

  • Montreal, Quebec: CA$26.4 million (+1.8%)
  • Edmonton, Alberta: CA$20.7 million (even)
  • Calgary, Alberta: CA$16.6 million (+1%)
  • Ottawa, Ontario: CA$14.1 million (+5%)
  • Winnipeg, Manitoba: CA$10 million (+13.3%)
  • Quebec City: CA$5.9 million (even)
  • Gatineau, Quebec: CA$1.7 million (+14%)

The cities listed above accounted for approximately 40% of Canada’s sales growth in August, meaning that month’s growth was largely driven by store sales outside the biggest cities in the country.

The July cannabis retail sales figures are available here.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.

Looking to sell your marijuana company? Focus on profits first

By MJBizDaily Staff

Marijuana companies looking to sell their businesses should focus on profits first.

That’s the advice of Julie Herzog, a partner at Fortis Law Partners and Full Velocity Consulting, who spoke Thursday at the “Peace Out! Insights into Exit Strategies” session during MJBizCon 2021.

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“Buyers are looking for acquisitions of companies that are No. 1,” Herzog said. That can either be first in a product category or a geographic area.

“These buyers are looking to scale up and to enter markets they might not already be in,” she said.

While creating profits and demand, Herzog said companies should also plan ahead to make the process easier and more attractive to potential buyers.

She suggests:

  • Hire people who love to keep your house in order, especially when it comes to cannabis-specific headaches such as compliance, taxes and accounting.
  • When selling your company, be wary of stock deals, because the price fluctuations can impact tax implications.
  • Start early with good recordkeeping. The lack of financial-support documentation is one of the biggest deal breakers.
  • Understand that buyers will want contracts, agreements and ownership of intellectual properties.
  • Be prepared to tell your story of success. Create the slide deck now with numbers that demonstrate your story and show how strong your culture is.

Herzog said selling a company can seem scary, but it shouldn’t be if you prepare yourself.

– Andrew Long

US Postal Service enacts cannabis vape product restrictions

By MJBizDaily Staff

The U.S. Postal Service on Thursday issued a final rule that bans sending marijuana and hemp vape products in the mail, subject to certain exceptions.

The ban was ordered by Congress last year in a law directed mostly at nicotine products.

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But the final rule, published Thursday in the Federal Register, covers marijuana and hemp vapes, too, even those made from legal hemp.

High-THC vapes remain illegal to mail in any amount.

Cannabinoid vape manufacturers across the THC spectrum have been watching to see how the Postal Service regulates vape commerce.

The impacts can be substantial.

U.S. consumers ordered $44 million in CBD vape cartridges online in 2020, according to Nielsen IQ, a market analytics firm. Almost all were delivered by mail.

The new rule includes exceptions for consumer testing, public health and non-commercial uses. Adults, for example, can make up to 10 noncommercial shipments in a 30-day period.

Hemp and CBD products not in the form of electronic delivery systems may be mailed as long as they contain less than 0.3% of THC.

It’s unclear to what extent enforcement will occur.

But the rule states that banned products that are mailed will be subject to seizure and that the senders will be subject to criminal fines, imprisonment and civil penalties.

BIPOC marijuana entrepreneurs share tips on getting into the industry

By MJBizDaily Staff

Ancillary marijuana businesses offer disadvantaged entrepreneurs a way into the industry without having to compete for a cannabis license or start with enormous liquid assets, according to industry leaders.

At the “Achieving Equity in Cannabis” networking event at MJBizCon, entrepreneurs of color advised their colleagues not to count on political promises that states and cities will do better to ensure communities damaged by the drug war are included in the new industry.

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“Stop calling it ‘social equity,'” said Christine De La Rosa, CEO of The People’s Ecosystem, a business accelerator and group of California cannabis brands.

“None of you can point to any state that has a successful social equity program. … They made it into ‘Hunger Games’ for people of color.”

But ancillary businesses such as lighting and heating-and-ventilation companies offer lower barriers to entry because owners don’t need to compete for a limited number of licenses or pay steep cannabis taxes.

Key insights to inform decisions: MJBizFactbook 

Say hello to marijuana business data, curated by the editors of MJBizDaily to help cannabis industry leaders make informed decisions.

  • U.S. marijuana industry financials
  • Licensing, funding and investment trends
  • State-by-state guide to regulations, taxes and opportunities
  • Insights for business and investment strategy

“Look at what else you can do to get into this business,” said Hope Wiseman, CEO of Mary and Main, a dispensary in Maryland.

MJBizCon continues through Friday in Las Vegas.

Read more about equity in the cannabis industry in this free report, “Women & Minorities in the Cannabis Industry.”

– Kristen Nichols

Cannabis firm Jushi secures $100 million funding with 9.5% interest rate

By MJBizDaily Staff

Multistate cannabis operator Jushi Holdings secured a $100 million credit facility with a 9.5% annual interest rate to bankroll expansion in the company’s core and targeted U.S. markets.

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For the funding, Florida-based Jushi tapped a portfolio company of SunStream Bancorp, a joint venture sponsored by Sundial Growers, a Canadian licensed producer.

In a news release, Jushi said it intends to draw $40 million initially to fund the cash portion of its recently completed acquisition of Nature’s Remedy, a deal that allows Jushi to enter the Massachusetts cannabis market.

“Securing non-dilutive funding from Sunstream strengthens our balance sheet and positions us to aggressively pursue our national growth plans,” Jushi CEO Jim Cacioppo said in the release.

The CEO said the funding will allow Jushi to continue its expansion in existing markets, such as Nevada, Illinois, Ohio and California, as well as pursuing potential target markets like New Jersey and Maryland.

Once drawn upon, the SunStream loans will bear an annual interest rate of 9.5%. They will mature five years from the closing date.

Jushi will be able to make draws for 18 months and will have a two-year, interest-only period before partial amortization begins on a quarterly basis.

Jushi can increase the loan package by up to $25 million.

Shares of Jushi  are traded on the Canadian Securities Exchange as JUSH.