Cannabis Industry Daily News

US House lawmakers make marijuana banking reform pitch to key senator

The four lead sponsors of the successful cannabis banking bill in the U.S. House of Representatives are urging the chair of a key U.S. Senate panel to work in partnership to move the issue forward in the Republican-controlled Senate.

In a letter released Tuesday, the four representatives praised Senate Banking Chair Mike Crapo, an Idaho Republican, for his attention to the issue.

The two Democrats and two Republicans who signed the letter also emphasized the shared goals of addressing public-safety concerns that currently result from cannabis-related transactions outside the regulated banking system.

The letter noted that marijuana businesses are targets for crime because of the cash on hand. In fact, burglaries at cannabis businesses are increasing in some areas.

The full House passed the so-called SAFE Banking Act last September by an overwhelming 321-103 vote.

The bill would enable financial institutions to serve cannabis-related businesses without fear of federal reprisal.

Crapo now is considering his own, more restrictive version.

A month ago, he unveiled details about his thinking and asked for input.

The House group said it welcomed discussing Crapo’s concerns about how to “keep out bad actors and prevent illicit cash from entering the financial system.” But the lawmakers don’t want Crapo’s version to impose “unworkable burdens on financial institutions.”

Experts say that Crapo seems committed to advancing a cannabis banking bill, but the timing is uncertain.

Full Senate approval remains a high hurdle, however.

– Jeff Smith

Illinois adult-use cannabis stores might face more shortages

Recreational marijuana sales in Illinois could be hurt by a surge in medical cannabis applications with the Jan. 1 launch of adult-use sales.

More than 2,570 people applied for medical marijuana cards Jan. 1-17, nearly a 34% jump from Dec. 1-17, the Chicago Tribune reported.

Regulators earlier in January warned marijuana retailers they are required to keep enough product on hand for MMJ card holders, which means the stores might not have enough recreational product to meet demand.

Some marijuana stores already have had to temporarily close because they didn’t have enough product.

The increase in medical marijuana card applications is likely a way to avoid paying “sky high” taxes on recreational cannabis, the Tribune reported.

Marijuana Business Daily projects recreational marijuana sales in Illinois could hit $2.5 billion annually.

Judge sides with Missouri medical cannabis store in zoning fight

Missouri regulators cannot deny an application for a medical marijuana dispensary license before a hearing challenging zoning rules is held later this month, a judge ruled.

Healing Center of Kansas City filed a lawsuit against the Missouri Department of Health and Human Services and the city of Independence contending the municipality’s zoning regulations for MMJ dispensaries were overly restrictive, The Kansas City Star reported.

After the filing, Circuit Court Judge Daniel Green ruled that the state cannot reject the license application based on the city’s zoning rules until a Jan. 27 hearing.

The dispensary’s suit contends the city zoning rules creates an undue burden on the applicant, violating the Missouri Constitution.

Independence’s zoning eliminated 88% of the commercially zoned space in the city that could be used by dispensaries, Healing Center’s suit alleges.

“If nobody can sell (medical marijuana) then nobody can buy it,” Lowell Pearson, attorney for the plaintiff, told the Star. He also described the zoning restrictions as an “extraordinary restraint.”

California marijuana firm Falcon seeks $50 million from Harvest

California-based cannabis firm Falcon International wants a $50 million breakup fee from multistate operator Harvest Health & Recreation.

Falcon is asking for a cash payment as part of a move to dismiss a complaint that Arizona-based Harvest filed Jan. 8.

In that lawsuit, Harvest sought to terminate its acquisition of Falcon, a deal that was announced in February 2019.

As part of the suit, Harvest is seeking the $50 million it paid to Falcon as part of the merger agreement.

Falcon described the planned acquisition as a “heavily negotiated merger agreement.”

The company noted in a statement that “amounts previously funded by Harvest to Falcon are convertible into Falcon equity at Harvest’s or Falcon’s option” and are “unlikely to be paid.”

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

Large Florida medical cannabis retailer stops most deliveries

Surterra Wellness, the second-largest owner of medical marijuana dispensaries in Florida, has eliminated its delivery services except to customers in the Florida Keys.

The Atlanta-based company, whose corporate parent is now called Parallel, told customers in a notice that it made the adjustments to “optimize” its business. Surterra also cut deliveries because its expanding retail footprint now covers a broad swath of Florida’s population.

Company spokeswoman Kali Caldwell declined to disclose the number of employees affected by the decision.

She also wouldn’t address reports on internet job boards that many of the Florida employees have been converted from full-time to part-time status.

“We are focusing our efforts on opening new stores in Florida,” Caldwell said in a statement.

“We currently operate 38 retail locations, and over the next year, we will grow that number to 50.”

Surterra is the second-largest seller in Florida of medical marijuana in milligrams but is sixth in smokable flower sales.

The company’s dispensaries account for 17% of the state’s total, but its share of milligram sales is only 12.6% and smokable flower sales 5%, according to the state’s latest weekly update.

Surterra was a major donor to a campaign to legalize recreational marijuana in Florida, an effort that now is being pushed beyond the 2020 elections.

– Jeff Smith

Price war erupts among Oklahoma medical marijuana dispensaries

Medical cannabis dispensaries in Oklahoma are engaged in a price war, fueled by an oversupply of retail stores and no qualifying medical conditions required for an MMJ card, according to a nonprofit journalism publication.

There are 2,242 licensed dispensaries, according to the latest figures from the Oklahoma Medical Marijuana Authority.

According to Oklahoma Watch:

  • There are 56 dispensaries per 100,000 residents in the state.
  • The 238,786 medical marijuana cards issued equates to one in 13 adults in Oklahoma holding one.
  • Dispensaries recorded medical marijuana sales of $345 million in 2019.

Oklahoma launched medical marijuana sales in 2019 and has quickly grown to be one of the largest and most valuable cannabis markets in the nation

That success has led to “intense competition” among licensed dispensaries as well as a saturation in which some stores are on the “same block of a city street,” according to Oklahoma Watch.

Cannabis store burglaries on the rise in Denver

The number of break-ins at Denver marijuana stores hit a three-year high in 2019.

Five robberies and 122 burglaries were reported to the Denver Police Department last year.

In 2018, marijuana businesses reported one robbery and 120 burglaries, according to the Denver Post.

Last September, Denver police warned of an increase in burglaries of marijuana operations and urged owners to beef up security measures.

Criminals primarily targeted retail stores and cannabis grows, a police official told the newspaper.

Such increases in theft point to the need for marijuana businesses nationwide to seriously take a look at any security measures they have in place.

Thefts in states such as Colorado with lower marijuana prices might contribute to the illicit market elsewhere in the U.S.

Denver Police Commander James Henning told the Post that cannabis sells for $3,000-$3,500 a pound on the East Coast and only about $1,200 a pound in Colorado.

Bills would legalize adult-use marijuana in New Mexico

Proposed legislation in New Mexico would legalize recreational cannabis sales in the state.

Cities and counties could not opt out, even if they don’t approve of adult-use cannabis sales, under the proposed bills, although they would retain control with local zoning restrictions and hours of operations for the retailers.

Under mirror legalization bills filed in the New Mexico House and Senate:

  • Licensed recreational marijuana growers, processors, retailers and transporters would be overseen by the state.
  • Every recreational dispensary would be required also to offer medical marijuana, making it the first in the U.S. to do so, according to Carly Wood, state policies coordinator at the National Organization for the Reform of Marijuana Laws.
  • “Micro business” licenses would be available to aid small family farms and entrepreneurs who have limited resources.

While the Democrats control both houses and the governor’s office, Republican House Minority Whip Rod Montoya said it would be unfair to force counties into allowing marijuana businesses when local elected officials don’t want the industry.

– Associated Press

Oregon cannabis sales soar along Idaho border

Marijuana sales in Oregon near the Idaho border are 420% the statewide average, according to a report by the Oregon Office of Economic Analysis.

The report also showed stronger marijuana sales for Washington state along its border with Idaho in 2019 than along its borders with Oregon or Canada.

State economist Josh Lehner said that “there remains a huge border effect,” even when accounting for the number of retailers and other data points.

Roughly 75% of Oregon sales and about 35% of Washington state sales in counties along the Idaho boundary were caused by the border effect, according to the report.

Idaho borders three states that have legalized recreational marijuana sales – Nevada, Oregon and Washington.

– Associated Press

Washington state marijuana group wants its legislation withdrawn

The Washington CannaBusiness Association (WACA) on Friday requested that legislation it proposed last September to create a cannabis social equity fund be withdrawn for consideration this year.

WACA requested the withdrawal of two bills: One called for removing barriers to capital for minority business owners. The other sought to eliminate a residency requirement for potential investors in the MJ market.

The group made the withdrawal request following a state House committee hearing on one of the proposed bills. It did not give an explanation for the decision.

WACA, however, “remains concerned that Washington’s potentially unconstitutional ban on access to capital continues to be in effect,” Vicki Christophersen, executive director of the WACA, said in a statement.

Tilt changes cannabis ‘management and loan’ practices in Massachusetts

Tilt Holdings, a Massachusetts-based marijuana company being investigated for allegedly trying to control more than the state-allowed three cannabis stores, has backed off the practices that got it into trouble with authorities.

The Cannabis Control Commission noted in an investigative report that Tilt “has agreed with regulators to scrap the management and loan contracts it had signed with several smaller companies seeking marijuana retail licenses in Massachusetts,” according to The Boston Globe

Now, Tilt plans to renegotiate the “strings-attached” contracts and replace them with simple loans.

Some observers contended Tilt’s contracts were designed to give the company control of cannabis firms that appeared to operate independently.

More details about this situation are available here.

Marijuana tech firm Fyllo buys Denver’s CannaRegs for $10 million

Chicago-based Fyllo, a digital marketing firm that focuses on the cannabis industry, on Friday said it has agreed to pay $10 million to acquire Denver-based CannaRegs.

CannaRegs provides a web-subscription service and technology platform that offers access to state and municipal cannabis rules and regulations.

In February, the company said it secured a $2 million capital raise to launch Regs Technology, a vehicle to move CannaRegs beyond the cannabis industry.

Amanda Ostrowitz, CannaRegs’ founder and CEO, will join Fyllo as its chief strategy officer.

CannaRegs was poised to be acquired in 2017 by Denver-based cannabis technology firm MassRoots for $12 million, but the deal collapsed.