Cannabis Industry Daily News

Oklahoma medical marijuana regulators sued over new business rules

Two Oklahoma attorneys sued the state’s medical marijuana regulators, claiming the MMJ board didn’t adhere to public meeting laws in adopting new emergency rules that have a wide range of business impacts.

According to The Oklahoman, the rules, which took effect June 28, include a number of changes that affect medical cannabis inventory tracking, inspections, licensing and other areas.

The lawsuit, filed in Oklahoma County District Court, specifically alleges that the Food Safety Standards Board distributed an incomplete and “intentionally misleading” agenda for the June 16 meeting and failed to give timely notice of that meeting, the newspaper reported.

Here are examples from a state summary of the emergency rule changes:

  • Adds language requiring operators to maintain written standard operating procedures and use a seed-to-sale tracking system or integrate their tracking system with the state’s inventory tracking system.
  • Redefines marijuana as specifically not including any plant or material containing delta-8 THC.
  • Adds a provision allowing municipal governments to object to a dispensary renewal or ownership transfer if the required setback distance to a school hasn’t been met.
  • Creates new language allowing a grower, processor or transporter to submit documentation adding a publicly traded company as an owner of up to 40% of the business.

Oklahoma Medical Marijuana Authority spokeswoman Terri Watkins told The Oklahoman that the agency doesn’t comment on pending litigation.

The suit was filed by Oklahoma attorneys Ron Durbin and Rachel Bussett, both of whom were actively involved in the development of the state’s medical marijuana law and have filed lawsuits to ensure that the statute is being upheld.

Hydrofarm continues acquisition spree, buys Canadian cannabis firm for $83M

Hydrofarm Holdings Group is on an acquisition tear in the cannabis cultivation infrastructure space.

In its fourth purchase of the year, the Pennsylvania-based company bought Canadian plant nutrients firm Greenstar Plant Products in an $83 million cash-and-credit deal.

According to a news release, Greenstar – which owns the Grotek and Gaia brands of plant nutrients – will become a wholly owned subsidiary of Hydrofarm.

Previously in 2021, Hydrofarm acquired Oregon-based hydroponics equipment manufacturer Aurora Innovations along with three California nutrient brands, Heavy 16, House & Garden and Mad Farmer.

The acquisition of Greenstar was a “natural next step in our efforts to broaden our company’s footprint and strengthen our product portfolio,” Hydrofarm CEO Bill Toler said in the release.

Hydrofarm projects that Greenstar will generate about $26 million in sales this year, a 50% increase over 2020.

Hydrofarm trades on the Nasdaq under the ticker symbol HYFM.

Beena Goldenberg appointed CEO of Canadian marijuana firm Organigram

Canadian marijuana producer Organigram Holdings hired Beena Goldenberg as its new chief executive officer, effective Sept. 9.

The move makes Organigram the only major publicly traded Canadian cannabis company with a female CEO.

Goldenberg previously served as CEO of Supreme Cannabis, which was acquired by Canopy Growth in a deal that closed in June.

Before that, she worked as CEO of food company Hain-Celestial Canada.

Organigram cited Goldenberg’s “success in post-transaction integration” in announcing her hiring in a Wednesday news release.

“Beena has an impressive track record of building exceptional consumer businesses and is known for creating engaging workplace environments that encourage the development of strong teams that are empowered to achieve industry-leading results,” Organigram Executive Chair Peter Amirault said in the release.

Organigram’s previous CEO, Greg Engel, stepped down in May. No reason was provided for his departure.

The Moncton, New Brunswick-based company reported a net loss of 4 million Canadian dollars ($3.2 million) for the quarter ended May 31, an improvement over the previous quarter’s loss.

Organigram shares trade as OGI on the Nasdaq exchange and the TSX.

Tobacco titan wins trademark lawsuit against cannabis e-cigarette company

In yet another trademark suit filed against the marijuana industry, a judge permanently barred Los Angeles-based cannabis e-cigarette company Capna Intellectual from using a product logo that resembles Kool cigarette’s brand image.

According to Law360, U.S. District Judge Otis D. Wright ruled that Capna, which does business as Bloom Brands, cannot use the logo “or any other marking containing interlocking OOs and/or circles.”

In December 2020, Kool’s parent company, ITG Brands, sent a cease-and-desist letter after learning about Bloom’s trademark application.

ITG Brands filed suit in January, and the judge issued a preliminary injunction in June that temporarily barred the company from using the logo.

The parties entered into a settlement agreement on July 27.

This case is the latest in a growing list of trademark disputes between the cannabis industry and mainstream companies:

  • The makers of the popular Nerds candy filed suit in 2020 against a California edibles maker, alleging trademark violations.
  • The Hershey Co. has for years been actively filing trademark-violation lawsuits against marijuana companies.

The judge’s order requires Capna to notify the general public as well as the company’s retail distributors of the injunction by Nov. 15 and inform them they can return any materials with the banned logo and offer them new materials.

The judge also ordered Capna to eradicate by Dec. 31 anything that contains the banned logo.

Capna and Bloom officials declined to comment, according to Law360, and ITG Brands couldn’t be reached.

Three Illinois marijuana applicants sue to be included in license lottery

Three entities reportedly connected to marijuana multistate operator Justice Cannabis filed a federal lawsuit in Illinois claiming they have been wrongfully excluded from an Aug. 19 retail license lottery.

JG IL, Emerald Coast and ReNu filed the lawsuit against state regulators in the Northern District of Illinois in efforts to be included in next month’s licensing round.

Based on secretary of state business records, the three appear to be connected to Chicago-based Justice Cannabis, formerly known as Justice Grown. Other media also reported the connection.

Justice Cannabis has operations in eight states, including Illinois, according to the company’s website.

In the lawsuit, JG IL claims it should have qualified for the lottery based on plans to employ the majority of its workforce from a disproportionately impacted area.

Emerald Coast and ReNu claim they qualify as military veteran-owned businesses.

The plaintiffs say the state Department of Financial and Professional Regulation has denied hearing requests and that they will be “irreparably harmed” if hearings aren’t held in time to participate in the lottery.

After more than a yearlong delay amid litigation and the pandemic, Illinois is in the middle of licensing additional adult-use marijuana businesses in efforts to actualize what was once considered a social equity template for the industry.

– Jeff Smith

Montana adult-use cannabis draft rules have advertising focus

Draft rules for adult-use cannabis businesses in Montana concentrate mostly on advertising options.

According to Helena TV station KTVH, the draft regulations released by the state Department of Revenue, include:

  • Companies would be permitted to use only two outdoor signs 11 square feet or smaller, and they must contain explicit warnings about marijuana use.
  • No billboards, banners or flags would be permitted, and the signs would need to be attached to a building or other permanent structure.
  • No TV, radio, social media or newspaper ads would be allowed.
  • Websites would be permitted, but businesses would need to show that they’ve taken reasonable precautions to prevent anyone younger than 21 from accessing them.
  • No promo items or sponsorships of sporting or charitable events would be permitted.

Revenue department leaders told lawmakers during the legislative session that the rules are in line with what they were directed to produce by the Legislature, which was to “severely curtail forms of advertising pertaining to the sale, cultivation, or manufacture of marijuana.”

One medical marijuana dispensary chain owner told KTVH the proposed restrictions will lead those in the industry to question whether there will be any cannabis advertising allowed at all.

The agency will hold public comment periods to solicit input on the draft regulations through Aug. 23, including a public hearing in Helena on Aug. 13.

Montana voters approved recreational marijuana sales during the November 2020 election.

Sales are expected to begin Jan. 1, 2022, and existing medical cannabis businesses will have an 18-month head start to sell adult-use products before new businesses can be awarded licenses.

Arkansas, Missouri groups aim to put recreational marijuana on 2022 ballots

Grassroots activist groups in both Arkansas and Missouri have begun campaigns in their respective states to get recreational marijuana legalization before voters in the 2022 general election.

Arkansas True Grass is leading the charge in its state and has already begun collecting signatures to get their initiative on the ballot, Rogers TV stations KHBS and KHOG reported.

The group has until next July to gather the necessary signatures in order to make the ballot.

If the measure ultimately passes, the industry would be regulated by the state Department of Agriculture and home cultivation would also be legalized.

Meanwhile, according to St. Louis Public Radio, Missouri might have competing campaigns with the same goal – legalizing adult use.

Fair Access Missouri has already submitted – and seen rejected – seven proposed ballot measures that would have legalized recreational cannabis, but it’s now refining its initiative language and will try again, a spokesperson told the news outlet.

The campaign expects to have finalized ballot language by September and begin the signature-gathering process in October.

Another organization, New Approach Missouri – which ran the successful 2018 medical marijuana legalization campaign – will also be attempting to put adult-use cannabis legalization on the statewide ballot, a spokesperson confirmed to St. Louis Public Radio.

Illinois awards 70 permits in flurry of adult-use cannabis business licensing

Illinois regulators on Monday issued 70 additional adult-use cannabis business licenses, including permits to an initial 32 craft cultivators, 28 to processors and 10 to transporters.

More than 80% of the licenses issued fall under the category of social equity ownership as the state tries to make good on its pledge to diversify the industry and provide opportunities to individuals and communities most harmed by the war on drugs.

More than two-thirds of the new licensees identify as nonwhite, according to a news release by the Illinois Department of Agriculture.

A list of the licensees is available here.

The awards come on the heels of the state issuing 55 retail licenses.

“With the issuance of these first licenses, Illinois is expanding access to people and communities that were previously shut out,” Toi Hutchinson, the governor’s senior adviser on cannabis, said in a news release.

“We look forward to seeing businesses get off the ground in the months ahead.”

The 19-month-old, booming adult-use industry in Illinois currently is controlled by existing medical marijuana operators.

Acquisition propels Green Thumb into RI medical marijuana market

Green Thumb Industries said it closed a deal to acquire one of only three operational medical cannabis dispensaries in Rhode Island, further advancing the Chicago-based company’s national industry footprint.

According to a news release issued Monday, Green Thumb Industries (GTI) is acquiring CanWell Processing and Mobley Pain Management and Wellness Center. Both companies hold stakes in Summit Medical Compassion Center, a nonprofit MMJ dispensary in Warwick, just south of Providence.

Terms of the deal were not disclosed.

GTI’s acquisition is notable because Rhode Island currently has only three licensed MMJ dispensaries, called compassion centers. The state has approved the licensing of six more compassion centers, but a lottery to award those permits is currently stalled.

The acquisition also brings GTI’s footprint to almost 50% of the operational cannabis markets in the United States, with interests in California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, Pennsylvania and Virginia.

“Entry into the Rhode Island cannabis market further strengthens Green Thumb’s position on the East Coast,” GTI Chief Executive Officer Ben Kovler said in the release, adding that the deal “provides immediate scale within a limited license market and sits squarely in our enter, open, scale strategy to expand.”

GTI has been on an acquisition spree for some time now, including a recent purchase of Liberty Compassion, a vertically integrated MMJ operator in Massachusetts.

Cannabis grow-supply giant buys Michigan garden center chain

GrowGeneration Corp., a Denver-based specialty hydroponic and organic garden center giant, said it is buying HGS Hydro, a chain of hydroponic garden centers with six stores across Michigan and a seventh store slated to open in the fall.

Terms of the deal weren’t disclosed.

The acquisition adds to a string of recent purchases by GrowGeneration, including gardening stores in California and Oregon.

If the HGS Hydro deal goes through, it will bring the total number of GrowGeneration hydroponic garden centers in Michigan to 14 and the total number of stores nationwide to 65, according to a news release.

“Michigan is one of the fastest growing states for medical and recreational cannabis sales,” Darren Lampert, GrowGen’s CEO, said in the release.

“The addition of HGS Hydro will propel Michigan to GrowGen’s second largest state behind California.”

Marijuana MSO Jushi Holdings awarded $14.4 million in Florida dispute

Marijuana multistate operator Jushi Holdings said it won a $14.4 million interim arbitration award in connection with a claim that a Florida medical cannabis licensee improperly terminated a franchise agreement in 2018.

A three-person American Arbitration Association panel found that San Felasco Nurseries terminated the franchise agreement with Jushi without cause and in bad faith, according to a news release.

The interim award is subject to a final decision by the arbitration body.

Arizona-based Harvest Health & Recreation acquired San Felasco later in 2018, depriving Jushi of potential royalties, the Florida-headquartered MSO claimed.

San Felasco became a Harvest subsidiary.

Harvest now operates 11 MMJ dispensaries in Florida through that license, according to the state’s weekly update.

The panel’s interim decision calls for Jushi to receive $10.6 million in damages as well as $3.7 million in pre-award interest and post-award interest at a 12% annual rate.

Christine Hersey, Harvest’s director of investor relations, told MJBizDaily on Monday that the company isn’t commenting about the case.

Harvest is in the process of being acquired by Florida-based Trulieve in a deal initially valued at $2.1 billion.

Jushi CEO Jim Cacioppo said in the release that the arbitration panel’s decision reflects Jushi’s ability to “successfully navigate through this complicated and highly regulated industry.”

– Jeff Smith

Ohio lawmakers introduce bill to legalize recreational cannabis

Two Democratic state lawmakers in Ohio on Friday introduced a bill to legalize recreational cannabis.

According to Toledo TV station WTVG, the measure would establish a 10% excise tax on gross receipts of marijuana retailers.

The bill sponsors – state Reps. Casey Weinstein and Terrence Upchurch – said they’re hopeful the measure will pass with bipartisan support.

But at least two Republican lawmakers told WTVG they’re staunchly opposed to legalizing recreational marijuana.

The move follows an announcement earlier this week that a group of cannabis advocates have launched a campaign to put adult-use cannabis on Ohio’s 2022 ballot.

The Coalition to Regulate Marijuana Like Alcohol filed formal paperwork with the secretary of state’s office to get the ball rolling on the campaign, reported.

The adult-use bill introduced Friday has similar provisions, including the excise tax rate.

The situation could prove to be a repeat of 2016, when medical marijuana supporters in Ohio were able to force the state Legislature to pass an MMJ legalization measure simply by organizing their own campaign.

Once lawmakers approved a bill, the backers suspended their campaign. There are rumblings that could be the goal this time as well.