Cannabis Industry Daily News

Apple platform offers another California marijuana company app

After changing its terms of service this summer, the Apple App Store has added at least three California marijuana company apps, starting with Eaze, then The Parent Co. and now Emjay.

According to a news release, the app for marijuana delivery service Emjay debuted on the Apple platform on July 29, allowing cannabis customers to browse businesses’ MJ menus and place orders for deliveries in Los Angeles, San Diego and San Francisco.

The company has plans to improve the app and add even more features, according to the release.

Because Emjay anticipated Apple’s policy change, CEO Chris Vaughn said, the company was ready to act.

“We’re thrilled to now be live on the App Store, be one of the first native iOS applications for cannabis shopping and to be able to provide a more convenient and seamless experience for our customers,” Vaughn said in the release.

Finally! Illinois awards 55 new recreational cannabis retail licenses

Fifty-five recreational cannabis store licenses were awarded in Illinois, including 36 in the Chicago area, after a yearlong delay in actualizing the state’s vaunted social equity program.

Up to this point, existing medical marijuana operators have controlled the 19-month-old, billion-dollar adult-use market, while additional retail licensing has been tangled up in litigation.

An additional 130 retail licenses are to be awarded via two lotteries over the next month.

It’s uncertain how quickly the new licensees will be able to build out their stores, pass final inspections and start operations.

Then there’s the challenge of carving out a viable market share – although new entrants will be aided by robust market growth, with sales exceeding $100 million a month.

The existing MMJ operators that enjoy the first-mover advantage currently operate 110 retail stores.

The 55 new licensees were selected in a lottery out of 662 applicants, according to a news release by the Illinois Department of Financial and Professional Regulation.

The winners included a group, Westside Visionaries, headed by state Sen. Rickey Hendon, according to Crain’s Chicago Business.

Hendon is known for his advocacy efforts to increase minority ownership in the cannabis industry.

Another winner, according to Crain’s, was a company called Haaayy, which had sued the state over the application process.

Haaayy and the Wah Group, in fact, won a court stay this week preventing the state from issuing final licenses.

But Haaayy will drop that effort now that it has won a license, its attorney told Crain’s. It’s unclear what the Wah Group will do.

Marijuana industry veteran Kris Krane leaving 4Front Ventures

Kris Krane, co-founder of 4Front Ventures and president of Mission Dispensaries, is stepping down after nearly 11 years with the Arizona-based multistate operator.

The transition was months in the making, according to a news release, with Krane staying on as strategic adviser.

4Front doesn’t plan to immediately fill Krane’s post as president of Mission Dispensaries.

“In the last 11 years, we went from a few people in a room with an idea, to building a national, vertically integrated cannabis operator with operations and facilities in strategic medical and adult-use cannabis markets, including California, Illinois, Massachusetts, Michigan and Washington,” Krane said in the release.

“I feel incredibly fortunate to have played an instrumental role in 4Front’s journey.”

Rhode Island’s medical cannabis business license lottery delayed again

Rhode Island regulators have again delayed a lottery for medical cannabis business licenses.

The lottery, which was expected to take place next week, was postponed because of an ongoing administrative appeal by a rejected lottery applicant, the Providence Journal reported.

It is the second delay for the much-anticipated lottery, which was originally supposed to take place last spring.

According to the newspaper, the head of the state’s Office of Cannabis Regulation said the lottery won’t be scheduled “until that appeal has run its course.”

When the appeal will run its course isn’t clear, but it could become clearer “in a couple weeks,” regulatory chief Matthew Santacroce said.

The Department of Business Revenue (DBR), which oversees the Office of Cannabis Regulation, earlier this year selected 24 companies from 28 applications to participate in the lottery, the Journal reported.

The four companies that failed to make the cut were Enlite RI, Livity Compassion Center, The Edward O. Hawkins Center and Atlas Enterprises.

Atlas Enterprises filed the appeal that is holding up the lottery, according to a previous report by Providence TV station WPRI.

Regulators are still figuring out how the lottery will work, the Journal reported, because the DBR did not receive any bids from companies to oversee the process.

Mississippi lawmakers drafting medical marijuana measure

A Mississippi Senate committee is close to finishing draft legislation to legalize medical marijuana, two months after the state’s highest court struck down a voter-approved, business-friendly bill, Lt. Gov. Delbert Hosemann said.

The development leaves open the possibility that Gov. Tate Reeves could call a special session later this summer to address the issue, according to WAPT-TV in Jackson and other media.

The governor might feel pressure to do so after voters in the Deep South state approved MMJ legalization by an overwhelming margin at the ballot box in November.

The measure, however, isn’t expected to be nearly as pro-business as the voter-approved version. Full details of the potential Senate bill weren’t disclosed.

The 2021 MJBizFactbook had projected that a medical marijuana program built on the Mississippi ballot referendum would generate $265 million in sales in the first full year and $800 million annually by the fourth year.

Hosemann indicated that the Senate bill will include taxes on MMJ sales as well as an opt-out provision for cities and counties, according to WAPT.

The lieutenant governor noted during an address at the Neshoba County Fair that three legislative committees already have held hearings this summer on the issue.

626 qualify for Illinois cannabis retail licenses on rescored applications

Candidates for a lottery to receive cannabis retail store licenses in Illinois jumped to 626 after the state rescored applications.

Only 21 applicants qualified for the lottery last year, but 97% now qualify for the social equity bonus, the Chicago Tribune reported.

The first of three scheduled lotteries will award 55 licenses out of a pool of 937 total candidates who submitted more than 4,500 applications. That lottery is set for July 29.

The eligible applicants qualified by scoring at least 85% of the maximum 250 points, instead of needing a perfect score, which was required last year.

Under the law that legalized recreational marijuana in Illinois, social equity applicants received a 20% bonus on their score.

An Aug. 5 drawing, also for 55 licenses, is set for social equity applicants who live in an area impacted by the war on drugs or have past arrests for marijuana-related offenses as well as scored 85% on the state’s scale.

Then, on Aug. 19, comes the originally planned lottery for 75 licenses that were expected to be issued in 2020.

California marijuana business owner to plead guilty to bribery charges

A marijuana businessman in California agreed to plead guilty to two felony charges tied to his companies, including a retail chain called Natural Healing Center.

According to a news release from the U.S. attorney for the Central District of California, Helios Raphael Dayspring was charged with one count of filing a false federal tax return and one count of bribery for paying a San Luis Obispo County supervisor $32,000 between 2016 and 2019 in exchange for favors.

In addition to Dayspring’s guilty pleas, he will pay $3.4 million in restitution to the Internal Revenue Service, prosecutors said.

Dayspring, who is scheduled for an Aug. 25 court hearing, could face up to 13 years in prison.

The former county supervisor Dayspring allegedly bribed – Adam Hill – committed suicide in August 2020.

Prosecutors also said that Dayspring tried to bribe a former mayor of Grover Beach in 2017, allegedly offering $100,000 in exchange for help securing marijuana retail permits in that city. The then-mayor, who was not identified, did not respond to Dayspring’s offer, prosecutors said.

Dayspring’s business footprint included upwards of 18 cannabis farms, all in San Luis Obispo and Santa Barbara counties, according to The Tribune, as well as four retail stores. It’s unclear yet what will become of Dayspring’s businesses.

Tilray reports $336M annual loss, targets $4B in cannabis sales by 2024

Canadian cannabis producer Tilray reported an annual loss of $336 million (422 million Canadian dollars) for its fiscal year ended May 31, capping off a transformative year in which the company closed a reverse-merger with Aphria and bought U.S. brewer SweetWater Brewing Co.

The financial data include four weeks of results flowing from the merger with Aphria, which closed May 3.

Tilray attributed its annual net loss to transaction costs from the Aphria deal plus a $170 million unrealized loss on convertible debentures.

On a quarterly basis, net revenue increased 16% over the previous three-month period to $142 million, helping the company post net income of $33.6 million.

However, cannabis sales ($53.7 million) accounted for only 38% of overall net revenue.

Besides cannabis, British Columbia-based Tilray’s revenue consisted of:

  • Distribution ($66.7 million, or 47% of sales).
  • Beverage alcohol ($16 million, or 11% of sales).
  • Wellness ($5.8 million, or 4% of sales).

Adjusted EBITDA, a measure of profitability, was $12.3 million during the fourth quarter.

Distribution revenue, which comes from the company’s CC Pharma subsidiary in Germany, declined from the previous quarter.

Tilray said business operations in Germany were shut down for three days in July due to flooding, which will have an impact of up to $4 million.

Free cash flow increased to $3.3 million.

In a conference call with analysts to discuss the quarter, CEO Irwin Simon said Tilray is aiming to achieve $4 billion in sales by the end of 2024.

He said the forecast includes expected sales in the United States of up to $1.5 billion.

Irwin outlined two paths to possible expansion in the U.S.

The first route is alcohol and food goods, which could be converted to THC and CBD products once legalization in the U.S. happens.

“Alongside that, (Tilray) would be looking at optionality and investments in (multi-state operators) that make sense, that strategically align with Tilray, and look to acquire or merge with them 100% once legalization does happen,” he said.

Irwin said the company needs to remain flexible to compete against smaller producers.

“We have to remain nimble, flexible and entrepreneurial. If not, a lot of the little guys will nibble at us,” he said.

Shares of Tilray trade on the Nasdaq as TLRY.

Missouri reminds medical marijuana businesses about advertising limits

Missouri’s medical marijuana regulatory agency recently warned MMJ dispensaries that they could be violating state rules by advertising sales events or discounts on products.

According to a July 9 email obtained by the St. Louis Post-Dispatch, the Department of Health and Senior Services (DHSS) told dispensaries it was aware of promotional events that had to “immediately” stop because they violated state regulations prohibiting dispensing “medical marijuana as part of a promotional event.”

“The Department views a promotional event as any activity, advertisement, or publicity designed to increase interest in purchasing medical marijuana or a particular product or brand of medical marijuana,” the email noted.

According to the newspaper, the email also said:

  • “Facilities are not allowed to advertise price discounts on a particular product,” and ads promoting holiday discounts are prohibited.
  • Discounts are allowed, but they can’t be advertised.
  • Dispensaries aren’t allowed to accept online cannabis orders that are routed through a third-party business.

Regulators warned they are keeping track of such violations.

The Missouri Medical Cannabis Trade Association responded to the email, asking the DHSS to waive the advertising rules.

The trade group called the rules “neither helpful for patients or dispensaries. If dispensaries want to discount prices on medical marijuana to Missouri patients, they should be able to promote those discounts.”

Lawsuit that could have delayed Illinois cannabis business licensing dropped

A Michigan-based marijuana company withdrew a lawsuit it filed less than two weeks ago against Illinois’ governor, removing a potential delay for 185 pending cannabis business permits.

According to the Chicago Sun-Times, Michigan-based Sozo Illinois dropped the federal lawsuit it filed July 16 claiming that social equity rules for the marijuana permits are “fundamentally unfair” and requesting that the licensing process be halted.

Sozo Illinois was formerly known as Sozo Health, according to the lawsuit.

Illinois authorities are scheduled to hold three lotteries starting July 29 to determine the winners of the 185 business licenses.

The move comes after social equity advocates pleaded with Sozo Illinois to drop the suit during a news conference Tuesday, calling the action “hurtful to social equity and racial equity” in the marijuana industry.

Several other license applicants characterized Sozo as an out-of-state carpetbagger owned by a white man who was attempting to game the social equity system by hiring employees with criminal marijuana records or who lived in areas of Illinois that were particularly affected by the war on drugs.

Sozo issued a statement supporting social equity, but the company remained critical of the law overseeing the licenses being issued.

In its statement, Sozo said the law has produced “a deeply flawed and unconstitutional process for distributing cannabis dispensary licenses in which rules of qualifying applicants were changed after applications were scored.”

Michigan credit union to offer banking services to marijuana companies

The Frankenmuth Credit Union in Michigan launched a product to provide banking to marijuana companies in the area, only months after regulators went after another financial institution for a similar move.

According to the Detroit Metro Times, the Frankenmuth-based credit union:

  • Created Envy, a pilot program dedicated to servicing cannabis businesses.
  • Unveiled a plan to add one or two new marijuana-related business members each month for the remainder of 2021.

The credit union, which services roughly 60,000 people, is partnering with Green Check Verified, a financial technology company that enables financial institutions to “safely and efficiently” offer services to legal marijuana businesses.

The move comes after the National Credit Union Administration in March sent a cease-and-desist order, citing Live Life Federal Credit Union for failing to comply with marijuana banking regulations and ordering the financial institution to stop opening new cannabis accounts.

Since then, Michigan Gov. Gretchen Whitmer has shown support for the Secure and Fair Enforcement (SAFE) Banking Act, which would allow cannabis companies to bank with financial institutions.

Colorado launches Cannabis Business Office to assist MJ companies

Colorado is forming a new state agency, the Cannabis Business Office, designed to provide more governmental support to marijuana companies, particularly social equity entrepreneurs.

The new department, announced Wednesday by Colorado Gov. Jared Polis, will dole out loans and grants to social equity cannabis entrepreneurs and provide technical assistance to MJ business owners.

The Cannabis Business Office will be an arm of the Colorado Office of Economic Development and International Trade.

The agency was created just this year by the Colorado Legislature with the passage of Senate Bill 111.

In a statement, Polis said the creation of the department is part of his overall goal of making Colorado a national cannabis industry leader.

“The Cannabis Business Office shows our administration’s focus on growing this thriving industry that supports jobs and our economy,” the governor said.

“This office will offer tools like technical help and improve access to money for businesses. Where the federal government has fallen behind, Colorado will lead.”