Cannabis Industry Daily News

California cannabis sales reach record $348 million in July

California set a marijuana sales record of $348 million in July, the biggest month since the 2018 rollout of the state’s legal market.

That sales figure comes from Headset, a marijuana data tracking firm based in Seattle.

Before July, the biggest cannabis sales month in California came in March, when many retailers witnessed panic-buying by consumers when the coronavirus pandemic took hold. That month, sales were just under $332 million.

This has been a good year all around for California’s legal marijuana market, which is still in something of a multiyear transition after its 2018 launch: Only January’s sales registered below $300 million, and sales that month reached $299.9 million.

California’s 2020 monthly totals are a stark contrast to 2019, when sales got above $300 million for only the final three months of the year.

In the first month of legal sales in California, in January 2018, legal cannabis retailers brought in only $100 million.

Oklahoma appoints medical marijuana program interim director

Oklahoma’s fast-growing, business-friendly medical cannabis program is getting another new regulatory czar – at least on an interim basis.

Kelly Williams, the deputy director of the Oklahoma Medical Marijuana Authority (OMMA), will serve as interim director of the regulatory agency, replacing Travis Kirkpatrick.

Kirkpatrick was recently appointed deputy commissioner of prevention and preparedness at the Oklahoma State Department of Health.

Kirkpatrick, who will oversee the OMMA from his new position, chose Williams for the interim post.

Kirkpatrick had been chosen to serve as director of OMMA only in January after serving as interim director for about three months.

“This is a young agency and we have seen massive growth over the past two years,” Williams said in a statement.

“I look forward to the challenges and the rewards of growing the Oklahoma Medical Marijuana Authority into an agency that will make Oklahomans proud.”

Oklahoma voters legalized medical cannabis in June 2018, approving a wide-open market that has proved to be relatively inexpensive for businesses to enter though fiercely competitive in certain areas.

The new Marijuana Business Factbook projects medical marijuana sales on Oklahoma will hit $700 million-$860 million this year, more than double the $345 million of 2019.

Associated Press and Marijuana Business Daily

Canopy reports CA$128 million loss as recreational cannabis revenue falls

Canadian cannabis producer Canopy Growth Corp. reported a net loss of more than 128 million Canadian dollars ($95.7 million) in the first quarter of its fiscal year, with total revenue improving slightly on a quarterly basis as the company continues its corporate transformation plan.

Net revenue for the quarter ended June 30 was CA$110.4 million, an increase of 2.3% from the previous quarter.

That includes net Canadian recreational marijuana revenue of CA$44.2 million – including CA$7.2 million in excise taxes – a decline of more than 11% from the CA$49.8 million worth of recreational revenue reported last quarter.

Canopy’s non-recreational cannabis revenue streams included net Canadian medical revenue of CA$13.9 million, including $1.4 million in excise taxes, and international medical revenue of CA$20.2 million.

“Other revenue” was CA$32.1 million, a figure that also accounts for returns and pricing adjustments.

On a Monday morning conference call with analysts and investors, Canopy Chief Financial Officer Mike Lee said the company was no longer disclosing the exact number of kilograms sold or the average selling price per gram, “as our business shifts to a more diversified product line, from flower.”

However, Lee said Canopy’s business-to-business flower sales declined 20% on a quarterly basis, “driven by a volume decline of 5% and an average selling price decline of 15%.”

Lee said Canopy’s Twd. value flower brand accounted for 40% of flower sales in the first quarter, up from 26% in the previous quarter.

Business-to-consumer sales through Canopy-operated retail stores decreased by 12% from the previous quarter, Lee said, attributing that drop to coronavirus-related store closures.

Canopy is in the midst of an effort to improve the quality of its cannabis flower, CEO David Klein said.

“We’ve initiated a consumer research initiative to better understand the flower consumer, including how they define overall product satisfaction and the critical elements that drive those perceptions,” he said.

Klein said other quality-improvement initiatives include an optimized drying process to improve moisture content, plus an attempt to refine “aroma and terpene profiles.”

Canopy’s cannabis-infused beverage portfolio accounted for 74% of all ready-to-drink cannabis beverages sold year-to-date in Canada, Klein said.

However, Canopy’s Canadian recreational revenue from “Cannabis 2.0” products, including those marijuana beverages plus other products such as vape cartridges, comprised just CA$7 million of the company’s CA$44.2 million net recreational revenue for the quarter.

Recreational dried bud sales were CA$40.1 million, or 73% of recreational sales, exclusive of excise taxes and other adjustments.

In the United States, Klein said Canopy’s Martha Stewart-branded CBD products will launch within the coming month.

Canopy said it has decreased its staff headcount by more than 18% since the beginning of this year.

The Smiths Falls, Ontario-based firm had cash and short-term investments of CA$2 billion, boosted by a CA$245 million investment by Constellation Brands, Canopy’s largest shareholder.

Canopy’s shares trade as CGC on the New York Stock Exchange and WEED on the Toronto Stock Exchange.

Earnings details from some publicly traded companies in the cannabis industry are available here.

Trump’s move to restore some jobless benefits could help marijuana sales

The coronavirus-related enhanced jobless benefit of $600 a week that recently expired would be cut to $400 a week under an executive memorandum signed by President Donald Trump over the weekend.

It’s unclear how quickly the jobless benefit will be put in place or to what extent the stimulus will influence cannabis spending patterns.

Marijuana sales generally have increased during the coronavirus pandemic.

The $600-a-week temporary lifeline expired July 31, raising issues about the potential impact especially on recreational marijuana sales during the recession.

Trump’s executive action calls for cash-strapped states to pay for 25% of the jobless benefit, or $100 a week per qualified individual.

But Trump indicated Sunday that the federal government could pick up the full tab on a case-by-case basis if a state governor requests help.

Trump also signed executive actions that would defer payroll taxes and give key federal agencies the power to extend moratoriums on renter evictions. Both measures could help bolster marijuana sales, but again, it’s unclear to what degree.

The president’s executive orders came as Congress failed to make progress on an economic stimulus deal.

Democrats wanted to preserve the $600-a-week enhanced jobless benefit; Republicans wanted to slash it to $200.

Federal spending decisions are under the domain of the Congress, so it’s possible Trump’s executive actions will face legal challenges.

Illinois governor appoints Danielle Perry as cannabis czar

Illinois Gov. J.B. Pritzker has chosen a new marijuana “czar” to oversee the state’s industry.

According to Crain’s Chicago Business, Pritzker appointed former Obama administration insider Danielle Perry as Illinois’ cannabis regulation oversight officer.

Perry will begin her job after being confirmed by the state Senate.

She will be the second person appointed to the job, following former state Sen. Toi Hutchinson.

Hutchinson had to step down because of a state law prohibiting former lawmakers from holding jobs that were created while they were in office.

Perry will take the reins amid an industry expansion in the state and as a number of entrepreneurs eagerly await results from a new licensing round that will significantly add to the number of legal marijuana businesses.

Before accepting the Illinois post, Perry:

  • Oversaw an agriculture job training program.
  • Served as communications director at the Chicago Inspector General’s office.
  • Was a member of Chicago Mayor Lori Lightfoot’s transition committee.
  • Served in President Barack Obama’s Department of Agriculture.

A spokeswoman for the Cannabis Association of Illinois told Crain’s Chicago Business that Perry is a “perfect fit” for her new assignment.

Arizona adult-use marijuana initiative wins key legal battle

An Arizona county judge rejected a challenge to a proposed voter initiative to legalize recreational marijuana.

If the ruling is upheld after expected appeals to the state Supreme Court and if enough qualifying signatures are certified by the Secretary of State in the coming weeks, recreational marijuana will appear on Arizona’s November ballot.

Opponents argued the 100-word ballot petition summary that Arizona residents signed misrepresented the proposal by failing to outline a host of changes the initiative would make.

But Maricopa County Superior Court Judge James Smith wrote in his ruling Friday that the principal provisions of the Smart and Safe Arizona Act were included in the summary while noting that lawyers for legalization foes took 25 pages to describe provisions they said should have been included.

“Addressing legalizing a previously illegal substance must account for laws touching many parts of life,” Smith wrote. “But if everything in an initiative is a principal provision, then nothing is.”

Backers of the initiative gathered 420,000 signatures, a significant cushion over the 237,645 required to make the November ballot.

The initiative:

  • Features a licensing structure that would favor existing medical marijuana operators.
  • Would allocate 26 social equity licenses.
  • Calls for a 16% retail sales tax on adult-use marijuana products.

Associated Press and Marijuana Business Daily

Epidiolex maker GW Pharma turns in flat second quarter on pandemic impact

United Kingdom-based GW Pharmaceuticals posted marginal revenue growth in the second quarter over the previous quarter, citing challenges stemming from the COVID-19 pandemic.

GW reported revenue of $121.3 million for the quarter ended June 30 – about the same as the previous period.

GW’s quarterly net loss rose slightly to $8.8 million.

By product, Epidiolex sales of $117.7 million accounted for most of the company’s revenue.

The United States was GW’s most important market, with Epidiolex sales reaching $111.1 million – or 92% of overall.

That’s a $5 million improvement over the first quarter.

In a conference call with analysts, executives said GW faced challenges stemming from medical centers being closed because of the coronavirus crisis.

“The vast majority of customer interactions at this time remain virtual,” Darren Cline, U.S. chief commercial officer, said during the call.

“We witnessed the shift to telemedicine by providers and a significant reduction in patient clinic and institution visits,” he said.

CEO Justin Gover said the company’s teams in both the U.S. and Europe maintained “active engagement by remote channels” with clinicians prescribing Epidiolex.

In May, executives had warned that the pandemic could impact sales if fewer patients visit their doctors – which is how the quarter unfolded.

In late July, Epidiolex received approval from the U.S. Food and Drug Administration to treat seizures associated with a third medical condition.

The new approval, granted in July to GW’s American subsidiary, Greenwich Biosciences, means the drug can be used in the United States to treat seizures associated with tuberous sclerosis complex.

GW Pharma trades on the Nasdaq as GWPH.

Massachusetts cannabis processor fined $120,000 for using excess ethanol

Massachusetts regulators fined a marijuana grower/processor $120,000 for selling vape cartridges in late 2018 and early 2019 that exceeded ethanol limits.

The state’s cannabis tracking system flagged a transaction that showed a failed test for cartridges processed by Fitchburg-based Revolutionary Clinics.

Revolutionary Clinics, which said it was unaware of the failed test, then conducted an internal investigation that found a lab technician hadn’t read the complete test results on the cartridges, the State House News Service reported.

The excess ethanol was referenced on the fourth page of the certificate of analysis. The technician has since been fired, according to the news outlet.

For its part, Revolutionary Clinics, which also was put on probation for four months, took responsibility for the infraction.

The company noted that it provided the Massachusetts Cannabis Control Commission (CCC) with a full account of transactions involving products with excess ethanol.

“Patient and consumer safety were not compromised during this time, and we accepted full responsibility for our shortcomings in 2019, as well as the fine levied by the CCC, which is now being announced publicly,” the company said in a statement Thursday.

Although the infraction didn’t pose a public-safety issue, Revolutionary Clinics said it asked retailers to return unsold cartridges for a full refund.

The CCC recently stepped up enforcement, imposing a total of $800,000 in fines last month against three marijuana businesses:

  • Acreage Holdings, $250,000 for trying to control more dispensaries than allowed by law.
  • Garden Remedies, $200,000 for using banned chemical pesticides.
  • Healthy Pharms, $350,000, for repeatedly using banned chemicals.

Lawsuit over California marijuana deliveries continues

A landmark legal battle over marijuana delivery operations in California won’t be settled anytime soon.

That’s the upshot Thursday from a short hearing on the case in Fresno, where representatives from the state attorney general’s office faced off with lawyers from 25 local governments that are trying to neuter a California policy allowing cannabis businesses to deliver products into any jurisdiction they wish – regardless of local MJ business bans.

Instead of handing out a decision, Judge Rosemary McGuire of the Fresno County Superior Court issued a tentative ruling and scheduled further briefing deadlines for both sides to argue whether the case is ripe for litigation.

The judge will hear arguments Nov. 16.

Multiple California marijuana delivery companies have said in the past year that their ability to deliver into any jurisdiction is “critical” to their bottom lines because roughly two-thirds of California’s local governments maintain bans on commercial cannabis companies.

But attorneys watching the case have also predicted that whichever side loses is certain to appeal, meaning the case could drag on for years until being decided by the state Supreme Court.

Michigan cannabis worker allegedly licked pre-rolls, sparking vast recall

Michigan marijuana regulators issued a broad product recall Thursday based on a “confirmed complaint” that a processing worker licked pre-rolls.

The Michigan Regulatory Agency’s product recall covered more than 3,000 pre-rolls from 14 retail locations across the state. It’s unclear how many pre-rolls the worker allegedly licked.

The processing center was identified as 3843 Euclid in Bay City.

The center’s processing license has been suspended for 14 days, according to MLive.com.

“It’s an overall unhygienic process that has the potential to spread a host of respiratory and gastrointestinal illnesses,” Bob Wheaton, public information officer for the Michigan Department of Health & Human Services, wrote in an email to Marijuana Business Daily.

“An analog in food safety would be a cook at a restaurant licking someone’s eating utensils.”

While there probably isn’t sufficient data to make a judgment about the possibility of COVID-19 transmission, Wheaton wrote, “we do not think we can eliminate the possibility. The virus that causes COVID can certainly be found in saliva.”

State regulators said their investigation is ongoing.

Sales of the recalled products occurred between June 10 and Aug. 3. A number of brands were identified in the recall.

Multiple pre-roll sales were made after the state started its investigation, MLive.com reported, suggesting that some sales might have occurred after the products had been placed on an “administrative hold” in the Michigan cannabis tracking system.

The state bulletin said consumers who bought the recalled pre-rolls should return them to the point of purchase for proper disposal. Retail outlets are required to notify patients and caregivers who purchased the pre-rolls.

State officials also asked consumers who had any adverse reactions to contact the regulatory agency.

Illinois urged to apply adult-use marijuana tax revenue to social equity

Illinois should use tax revenue from recreational marijuana sales to help social equity applicants who continue to accrue expenses because of extended coronavirus-fueled licensing delays, an industry group says.

The Cannabis Business Association of Illinois suggested the move in a letter to Gov. J.B. Pritzker, according to the Chicago Tribune.

“We all recognize that the industry cannot reach its full potential without awarding these social equity licenses, and many of these applicants cannot afford an extended delay,” the industry association wrote in its letter.

“Their expenses continue to mount every day these licenses are delayed.”

The state is falling months behind in awarding the next round of licenses in an adult-use market that launched Jan. 1.

Currently, the Illinois rec market is controlled by medical marijuana operators who were given a head start.

For its part, the association said it is:

  • Offering free memberships to qualified social equity applicants for the remainder of the year.
  • Creating a social equity advisory committee to support the applicants in other ways.

Illinois has developed a social equity program that some believe could become an industry blueprint, but it is unclear if the rules will go far enough to result in robust minority participation.

Meanwhile, rec sales in Illinois are off to a fast start, exceeding $300 million year-to-date, including a record $61 million in July.

For a sampling of organizations and efforts that support, foster and enhance social equity in the cannabis industry as well as opportunities for minorities, overall diversity and racial justice, click here.

California cannabis company settles enforcement case for $546,000

(This story has been updated with more details about the settlement and comment from Lowell Farms and to clarify that the company’s $500,000 payment was not a penalty.)

A first-of-its kind enforcement case in California ended in a settlement in which a licensed marijuana company agreed to pay the state nearly $550,000 but avoided any loss of its business permits.

The lawsuit, filed by the state attorney general’s office in 2019, charged Lowell Farms with operating without a license at its facility in Nipomo between December 2018 and March 2019.

The case marked the first time California regulators brought a civil enforcement suit against a state-licensed marijuana business.

The suit was dismissed on July 31 after the parties reached a settlement, according to court records.

Under terms of the settlement, Lowell Farms agreed to pay just over $546,000, including:

  • $500,000 to the state as part of the overall settlement.
  • $33,560 to the California Department of Food and Agriculture as reimbursement for attorney fees and investigation costs.
  • $12,852 to the state Department of Fish and Wildlife for attorney fees, investigation expenses and the cost of destroying illegal cannabis that was seized during a raid on Lowell’s facility in March 2019.

An attorney representing Lowell Farms described the settlement in an email to Marijuana Business Daily as a “quick, amicable and forward-looking resolution.”

The attorney, Sean Walsh, emphasized the company did not admit to any wrongdoing.

“Because we sat at the table and thoughtfully worked with our regulators, we were able to resolve all outstanding issues and, as part of the settlement, the state’s claims were dismissed with prejudice,” Walsh wrote.