Cannabis Industry Daily News

New lawsuit filed over Ohio cannabis cultivation licenses

Six companies that lost out in November when Ohio awarded 24 medical marijuana cultivation permits have filed suit against the state’s Department of Commerce over what they allege was a “flawed scoring process.”

According to The (Cleveland) Plain Dealer, the six plaintiff companies are asking a judge to prevent the state from granting 12 large-scale cultivation permits.

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CannAscend Ohio filed the suit and is joined by Appalachian Pharm Products, CannaMed Therapeutics, Palliatech Ohio, Schottenstein Aphria and Trillium Holdings.

The lawsuit alleges:

  • Five license winners should have been disqualified.
  • Two companies that won permits under a diversity provision aren’t actually owned by minorities.
  • 14 applications were incorrectly scored.
  • At least two department scoring consultants had conflicts of interest with companies that won permits.

The suit, which has been expected for months, isn’t the only one the state is facing over its MMJ program.

The filing also follows public critiques from state Auditor Dave Yost, who has said the grow licensing process contained a “critical flaw.”

The department recently said it’s weighing the possible addition of a 25th cultivation permit.

Massachusetts fears medical marijuana shortage once adult-use sales launch

Massachusetts’ medical marijuana industry is worried the MMJ supply will dry up once the state begins legal recreational sales in July.

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According to Masslive.com, industry analysts are convinced there won’t be enough cannabis to support both markets, citing supply problems in other states that added adult-use programs, including Nevada and Washington.

Industry watchers believe it will take too long for businesses to develop a robust supply source to meet the demand for two customer bases.

Here’s what you need to know:

  • Twenty-two dispensaries sell medical marijuana, and nine more are in the final stage of the approval process.
  • The state has 46,300 registered MMJ patients. According to Masslive.com, those patients consume 29,000 ounces of marijuana a month. There is no data on how much cannabis the state’s cultivators produce.
  • Twelve of the state’s medical marijuana dispensaries grow their own cannabis. More cultivation licenses have been issued, but industry watchers anticipate only about two dozen growers will be operational by June.
  • There’s no estimate on how many applications will be submitted for recreational licenses in April. Licenses are slated to be issued June 1.
  • New cultivation facilities won’t have an immediate impact on the supply, however. According to Masslive.com, it can be 18 months to three years before new cultivators actually harvest marijuana crops.

US retailer, Canadian LPs among groups tapped to sell cannabis in Manitoba

The province of Manitoba has tentatively accepted proposals from four applicants to sell recreational cannabis in the province, paving the way for possibly hundreds of stores in the coming years.

In the coming weeks, the Manitoba government will continue to work with the four to determine the number and locations of the stores that will operate.

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From a list of more than 100 applicants, Manitoba conditionally accepted proposals from:

  • 10552763 Canada Corporation: This group involves Denver-based retailer Native Roots, Avana Canada of Ontario, Fisher River Cree Nation of Manitoba, Chippewas of the Thames of Ontario, and MediPharm Labs of Ontario.
  • A consortium of Delta 9 Cannabis and Canopy Growth: Delta 9 is a Manitoba-based licensed producer of medical marijuana. Canopy Growth is based in Smiths Falls, Ontario, and has operations across Canada.
  • National Access Cannabis: Ottawa-based National Access operates medical cannabis care centers across Canada and plans to adapt its medical clinic model to Manitoba’s retail market.
  • Hiku Brands in partnership with BOBHQ: Manitoba-based head shop BOBHQ is teaming with Hiku’s subsidiary, Tokyo Smoke, to build a network of cannabis stores.

Manitoba’s “hybrid” model carves out a space for the private sector to participate in recreational sales and gives the government’s Liquor and Gaming Authority an expanded mandate to regulate the entire sector.

The Manitoba Liquor & Lotteries Corp. will oversee wholesale and distribution, leveraging economies of scale through bulk purchasing to undercut black-market pricing.

The four groups will also be able to sell adult-use cannabis online.

To sign up for our weekly Canada marijuana business newsletter, click here.

Report: California marijuana growers lagging in licensing process

Nearly two months after California launched recreational marijuana sales, less than 1% of the state’s known growers have been licensed, according to a report released by a cannabis industry group.

According to a 38-page report from the California Growers Association, 0.78%, or 534, of an estimated 68,150 marijuana growers were licensed by the state as of Feb. 7.

The association cited such obstacles to licensing as cost and regulatory barriers.

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If more of the state’s smaller, independent growers don’t get licensed, the black market will continue to flourish, according to the association’s report.

“The current system will not achieve its goals without fundamental and structural changes that allow small and independent businesses to enter into compliance,” the report concluded.

About 100 growers expressed their concerns with California’s cannabis regulations during a Jan. 12 meeting with three cannabis regulators.

The growers association said it hopes to work with officials in getting more growers licensed.

“We must develop a regulatory framework that will effectively curb the environmental and public safety impacts of cannabis by providing pathways to compliance for businesses currently operating in the unregulated market,” said Hezekiah Allen, the group’s executive director.

“If they are unable to comply, the unregulated market is likely to persist and there will be an unnecessary strain on law enforcement resources.”

According to Marijuana Business Daily estimates, California’s adult-use industry – which launched Jan. 1 – could generate at least $4 billion in annual retail sales over the next few years.

– Associated Press

Mainstream magazine honors cannabis software company

By Omar Sacirbey , Reporter

LeafLink, an online inventory and ordering platform for the marijuana industry, has been chosen one of the “Top 10 Most Innovative Companies in Enterprise” by a traditional business publication.

Fast Company‘s inclusion of LeafLink on its select list put the software firm in the company of such mainstream businesses as online retail giant Amazon, productivity software developer Atlassian and cloud-based company communications tool Slack.

The print and online magazine said it chose to honor LeafLink for bringing “Salesforce-like tools” to the marijuana sector.

Fast Company’s “Most Innovative Companies” edition profiles businesses in 36 categories that include biotech, design, energy, media and robotics.

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The accolades for LeafLink, which has offices in Los Angeles and New York, add credibility and respectability to the entire cannabis industry

The almost-2-year-old company received another mainstream honor in 2016, when Forbes magazine picked LeafLink CEO Ryan Smith for its “30 Under 30” list.

LeafLink, which has about 450 cannabis brand clients and 2,000 retail clients in six states, raised $10 million last November to increase its sales, client support, marketing and engineering teams.

Ohio may award extra medical marijuana cultivation license

The Ohio Department of Commerce is weighing the addition of a 25th medical marijuana cultivation business permit to the 24 it’s already handed out.

According to WOSU Public Media, the department admitted in a letter to state Auditor Dave Yost that errors in the MMJ grow application scoring system led to the exclusion of one applicant – PharmaCann Ohio – from the process.

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Ohio’s MMJ law limited the department to awarding 24 cultivation licenses, all of which were awarded in November.

Now, however, the agency is “researching how to proceed with 25 licenses, including PharmaCann,” WOSU reported.

Multiple problems with the licensing process have cropped up over the past several months, and Yost has emerged as one of the department’s more prominent critics.

At least two companies that didn’t win MMJ licenses have said they plan to sue the state over licensing flaws, meaning there could be potential delays for Ohio’s MMJ rollout.

Yost has even called on state regulators to redo the entire licensing process, despite some license winners having already broken ground on multimillion-dollar MMJ ventures, WOSU reported.

Michigan unveils symbol that state’s medical cannabis products must carry

Michigan has released an official symbol to label medical marijuana products that are sold in the state and is detailing required label information for such goods.

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The symbol is an upside-down green triangle with an image of a green marijuana leaf in the middle.

The words “CONTAINS THC” sit atop the symbol.

Michigan’s Department of Licensing and Regulatory Affairs also released details on how to label MMJ products under the state’s Medical Marihuana Facilities Licensing Act, including:

  • Date of harvest
  • Other identifying information
  • THC potency levels

Full details are posted on the state’s website.

– Associated Press

Tennessee judge allows CBD sellers shuttered during raids to reopen

Nearly two dozen Tennessee stores padlocked for selling CBD are back open after a local judge ordered that keys and cash registers be returned to the 23 stores shuttered Feb. 12 in Nashville suburbs.

Rutherford County Circuit Judge Royce Taylor ordered the stores to be allowed to reopen Friday, the same day that 16 defendants pleaded not guilty to drug charges, according to Nashville TV station WSMV.

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A lawyer representing some of the businesses argued that the CBD products, which included vape pens and gummies, are legal.

Tennessee allows the sale of hemp-derived CBD products if they contain less than .3% THC.

A hearing will be held March 19 to determine whether the product is legal, and Tennessee lawmakers are expected to consider new legislation clarifying how CBD can be sold.

While Judge Taylor was hearing the raid case, some protesters held signs outside the courthouse in support of CBD and hemp products.

“The fact that we’re closing down vape shops for something that is 100% legal just doesn’t make sense to me,” a protester told The (Murfreesboro) Daily News Journal.

The Tennessee situation comes as a federal appeals court in California is considering whether the U.S. Drug Enforcement Administration erred when it proclaimed cannabidiol an illegal drug in late 2016.

The Hemp Industries Association has challenged the federal CBD rule, using cases like the Tennessee raids to argue that the DEA’s rule is leading to the arrests of entrepreneurs selling legal, nonintoxicating products.

To sign up for our weekly hemp business newsletter, click here.

Legal medical marijuana sales begin in Pennsylvania

A medical marijuana dispensary in Pennsylvania became the first in the state to sell product to a patient on Thursday under the state’s new MMJ program.

The dispensary, Cresco Yeltrah, is located in western Pennsylvania.

Pennsylvania lawmakers overwhelmingly approved MMJ legalization in 2016.

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According to the Associated Press, the first customer was a woman buying medical marijuana for her son, who suffers from seizures. She spent $178.

The AP reported that Democratic Gov. Tom Wolf said Thursday that about 3,000 patients have received medical marijuana identification cards and more than 17,000 patients have signed up for the program.

Pennsylvania’s MMJ program is expected to grow into one of the country’s largest markets.

Five other dispensaries plan to begin sales this week.

Cresco Yeltrah, in Butler County, is a vertically integrated company that is also the first grower to supply cannabis to the market. Its grow operation is located in Jefferson County.

Maryland medical cannabis businesses settle lawsuit that threatened program

A lawsuit that might have been disastrous for the Maryland medical marijuana industry has ended.

The Baltimore Sun reported the suit, filed by Alternative Medicine Maryland, was settled Thursday after 16 months, removing a case that aimed to scuttle existing MMJ cultivation licenses and begin the application process once again.

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The MMJ company, which was denied a cultivation license, sued the state in 2016, arguing the Maryland Medical Marijuana Commission illegally disregarded racial diversity when selecting growers, even though state law required regulators to “seek” minority inclusion.

Here’s what you need to know:

  • African-Americans do not run any of the 15 cultivators that have received licenses.
  • Alternative Medicine Maryland is 80% black-owned.
  • The lawsuit was intended to force the state to tear up the approvals of all 15 approved cultivators and start the application process over again.
  • The license winners joined the suit as defendants to safeguard their permits.
  • The Sun reported state regulators are working to add five more cultivation licenses to companies owned by African-Americans.
  • Alternative Medicine Maryland’s lawyer told the newspaper the marijuana company will apply for one of those licenses.

Louisiana State University’s cannabis cultivation contractor sells 15% stake

GB Sciences, a Las Vegas company contracted to develop the Louisiana State University AgCenter’s medical marijuana products and manufacturing program, has sold a 15% stake in the venture.

Wellcana Group, which was formed last month in Lafayette, Louisiana, paid $3 million for its share of the project, The Advocate reported.

The capital will be used for construction and general corporate purposes.

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The agreement gives Wellcana the option to purchase an additional 35% of equity in GB Sciences Louisiana for $7 million, according to the Baton Rouge newspaper.

The deal also gives Wellcana the right to appoint members to the GB Sciences Louisiana board, two of whom will be residents of the state.

Wellcana’s registered agent is Lafayette attorney Charles Rush, and the officer is K2 Logic.

K2 Logic is headed by Rush and Charlie Hohorst III, a Lafayette businessman who founded online retailer CajunGrocer.com, according to The Advocate.

Louisiana State University had not say in the transaction, a school spokesman said.

Under regulations established by the legislature in 2016, Louisiana State University and Southern University are the only entities permitted to grow medical cannabis for the state’s legal MMJ patients.

The production facility is expected to be finished in March and medical marijuana could be available by late summer, The Advocate reported.

L.A. police: Hundreds of illegal marijuana dispensaries still operational

Los Angeles has issued licenses to nearly 100 marijuana retailers, but police estimate there are at least double that number operating illegally in the city and undercutting cannabis businesses that are playing by the rules.

Police have shut down eight illegal marijuana shops since Jan. 1, a pace that is unlikely to intensify as the department is focused on curbing violent crimes.

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At least 35 people were arrested during the eight raids, including four who were taken into custody last week.

Most of the illegal shops were operating in plain sight from storefronts in busy neighborhoods.

So far, only 99 businesses have been issued licenses to sell recreational marijuana in L.A.

But police estimate 200 to 300 illegal cannabis shops are operating within the city.

A report from the city’s controller last June estimated there were more than 1,700 legal and illegal dispensaries.

Police will continue to identify illegal shops, according to an LAPD spokesman.

Because investigations can be lengthy, police are prioritizing cannabis shops that are causing crime and generating complaints from the community.

– Associated Press