Cannabis Industry Daily News

Biden selects ex-state attorney general to lead DEA; marijuana stance unclear

President Joe Biden has tapped Anne Milgram, a former state attorney general and longtime criminal justice advocate, to head the U.S. Drug Enforcement Administration.

In 2009, as the state attorney general of New Jersey, Milgram was quoted as saying that a plan there to legalize medical marijuana was “workable.”

But those comments came more than a decade ago, and it was unclear Tuesday what her current stance is on marijuana policy and reform.

“Like Anne Milgram’s prospective boss Attorney General (Merrick) Garland, it is tough to tell exactly what her stance on cannabis will be, but her focus on evidence-based policy is cause to be optimistic,” Morgan Fox, spokesman for the National Cannabis Industry Association, wrote in an email to Marijuana Business Daily.

“Ideally, Milgram would focus the DEA’s resources on non-cannabis issues and violence associated with the drug trade, and will facilitate the eventual transition of jurisdiction over cannabis to regulatory agencies that are not part of the law enforcement sphere.”

The Washington Post reported that Milgram is data-focused, and a proponent of targeting the top of the illegal drug-supply chain rather than going after low-level violators.

Milgram’s appointment comes at a time when states increasingly are legalizing adult-use marijuana and making reparations to communities and individuals disproportionately impacted by the war on drugs.

New York, Virginia and New Mexico are the most recent states to legalize recreational marijuana, after residents of Arizona, New Jersey, South Dakota and Montana voted to do so at the ballot box last November.

In addition to enforcement issues, the DEA has been criticized by the marijuana industry and a number of lawmakers in recent years for dragging its heels in approving applications from businesses and research institutions to study marijuana.

Milgram most recently has been working as an attorney for New Jersey-based Lowenstein Sandler and has been teaching at the New York University School of Law.

Her professional career has included stints as an assistant district attorney in Manhattan and as a civil rights prosecutor in the U.S. Department of Justice.

Massachusetts kicks off online product catalog for licensed cannabis products

Massachusetts cannabis regulators launched a likely one-of-a-kind catalog that’s intended to help clear up any confusion about which marijuana products are legal in the state.

According to the Boston Herald, the online product catalog will list all the flower, pre-rolls, tinctures, edibles and more on offer to cannabis customers to aid police, parents and regulators in identifying licensed products versus those available on the illicit market.

The online catalog launched Monday with limited functionality. But once it’s fully functional, users will be able to search to verify the potency, packaging and labeling, retail locations and more about licensed cannabis products.

Massachusetts marijuana companies are barred from producing products or packaging that appeals to children, Cannabis Control Commission Executive Director Shawn Collins told the Boston Herald.

The idea for the catalog was born out of the vaping crisis of 2019, when thousands were sickened and several dozen died from respiratory illnesses caused by marijuana and nicotine vaping devices obtained mostly from the illicit market.

It’s unclear whether licensed cannabis companies in Massachusetts will be mandated to participate in the catalog, though regulators have said it will be.

New Mexico gov signs adult-use marijuana legalization bill into law

New Mexico Gov. Michelle Lujan Grisham on Monday signed a bill legalizing a potential $425 million adult-use marijuana market in the state.

Retails sales are to begin no later than April 1, 2022.

The New Mexico law reflects the national trend to emphasize small businesses and social equity.

Lawmakers had passed the bill during a recent, two-day special session of the Legislature.

Lujan Grisham called for the special session after legislation had stalled during the regular session.

The newly released 2021 Marijuana Business Factbook projects that a recreational market in New Mexico will generate $150 million in sales in its first full year and $425 million annually by the fourth year.

That marked a slight increase from initial projections of $125 million in the first year and $350 million annually by the fourth year.

House member Javier Martinez, an Albuquerque Democrat and one of the sponsors of the bill, said during the special session that the measure will provide opportunities for small businesses and also allow them to be vertically integrated.

“We want to make sure we’re not just creating an industry for the wealthy people,” he said.

Other elements of the adult-use bill include:

  • An excise tax of 12% on retail sales of marijuana products, on top of local and state sales taxes that range from 5% to 9%. The excise tax would increase over time to 18%.
  • A requirement for the state to create rules that ensure licensing diversity.
  • A provision allowing municipalities to limit adult-use operations but not opt out altogether.
  • A mechanism for Native American communities to participate in the recreational market through agreements with regulators.

A summary of the bill by Marijuana Policy Project is available here.

Uber could get into cannabis delivery business, CEO says

Uber could branch into cannabis deliveries if the federal government repeals its national marijuana prohibition, the CEO of the ride-sharing pioneer said Monday.

“When the road is clear for cannabis, when federal laws come into play, we’re absolutely going to take a look at it,” Uber CEO Dara Khosrowshahi told CNBC.

In Congress, moves are afoot to pass comprehensive reform legislation to reschedule or deschedule marijuana. But it’s unclear if or when such efforts will bear fruit.

California is the largest U.S. marijuana market to date to allow deliveries as a business model.

But the practice has been slow to catch on in other states, with most requiring in-store visits for customer cannabis purchases.

Still, home deliveries are an option that regulators are starting to embrace.

New York’s recent legalization – and business regulatory structure – allows for marijuana deliveries, for instance.

Cannabis deliveries are also permitted in Nevada and Oregon and were recently adopted in Colorado.

NM medical marijuana processor cited for additional violations after explosion

Medical marijuana regulators in New Mexico reportedly found numerous violations when they inspected New MexiCann Natural Medicine’s operation after an October explosion that critically injured two employees.

Inspectors noted untagged marijuana plants, food-safety violations, unlabeled edibles, nonfunctioning security cameras and other violations, the Albuquerque Journal reported, citing information from a public-records request.

The explosion allegedly occurred when ethanol was exposed after a hot plate system used to extract THC was switched from a required closed-loop process to an open-loop method.

New MexiCann owner Carlos Gonzales has been charged with two counts of negligent arson in the case.

A hearing was held in March to determine whether the company’s license will be permanently revoked, Gonzales’ attorney told the Journal.

He said the decision hadn’t been issued yet.

A state official didn’t immediately respond to a Marijuana Business Daily request for comment Monday.

There was an explosion at the New MexiCann facility in 2015 that seriously burned two employees. The company was fined $13,500 in 2016 in connection with that case by the federal Occupational Safety and Health Administration.

New MexiCann, which was established in 2009, operates three MMJ dispensaries in northern New Mexico. A fourth has temporarily closed, according to the company’s website.

Aphria loses CA$361 million as cannabis revenue plunges 24%

Leamington, Ontario-based cannabis producer Aphria reported a net loss of 361 million Canadian dollars ($287 million) for the three months ended Feb. 28, 2021, after its marijuana revenue plunged almost 25% over the previous three-month period.

That brings Aphria’s loss for the first three quarters of its fiscal year to CA$486.7 million.

Overall net revenue declined to CA$153.6 million in the quarter.

Cannabis sales accounted for only 44% of Aphria’s revenue from December through February.

Net cannabis revenue fell 24% from the previous quarter to CA$51.7 million in the quarter ended Feb. 28.

Distribution revenue declined to CA$87 million.

Net revenue from beverage-alcohol was CA$14.8 million, as the acquisition of American craft beer company SweetWater was rolled into Aphria’s books.

Aphria reported lower sales in all three of its main regions.

  • European net revenue fell to CA$85.2 million.
  • North American revenue declined to CA$67.2 million.
  • The company continued to struggle in Latin America, reporting only CA$1.3 million in sales.

Aphria blamed its recent poor cannabis sales on Canada’s January sales decline.

“The provincial boards took measures to lower their inventory levels through a combination of slower replenishments and product returns,” the company said in a regulatory filing.

That resulted in the company receiving product returns worth approximately CA$5 million, it said.

“In addition to these returns, (Aphria) continues to see consumers trend to large-format product labelled as higher potency and general declining pricing during the global pandemic,” management noted in an analysis of the quarter.

Aphria’s cannabis revenue has been flat for the past year, however, even as Canada-wide adult-use sales almost doubled over the same period.

The company said average selling price has been falling.

The average selling price of recreational cannabis, before excise tax, fell to CA$3.82 per gram in the quarter, compared with CA$4.29 per gram in the previous quarter, the company reported.

That contrasts with the average retail selling price of medical cannabis, which fell to CA$6.69 per gram.

Adjusted EBITDA for the quarter was a positive CA$12.7 million.

Cash and cash equivalents at the end of the quarter were CA$267.1 million.

Aphria trades as APHA on the Nasdaq and Toronto Stock Exchange.

Massachusetts marijuana retailer challenges community impact fees

A marijuana retailer in Haverhill, Massachusetts, is alleging in a lawsuit that officials in the store’s host city are violating state law by not justifying the need for so-called community impact fees.

“We believe the city is asking for a large amount of money in impact fees without demonstrating any actual impacts to the community. We believe this is unfair and unlawful,” Stem owner Caroline Pineau told Boston TV station WHDH.

The retailer’s lawsuit is challenging Haverhill’s authority to collect a $400,000 community impact fee, WHDH reported.

Under Massachusetts law, cannabis retailers must obtain a “host community agreement” from the town or city in which they plan to operate.

The host community, however, has the right to seek reimbursement for extra costs related to the marijuana companies doing business in the town – for example, extra police officers for traffic or security – but only up to 3% of the business’ annual revenue.

By state law, however, the town must explain why the impact fees are being imposed.

Many towns, however, simply ask businesses to reimburse them for 3% without explaining what the funds are needed for.

Stem’s lawsuit, filed in Essex Superior Court, is demanding that Haverhill officials clearly state what impact the store is having on the community.

“All we’re asking for is that the fees be substantiated and authenticated with documentation as required by the law and then we’d be happy to pay the money,” Pineau said the TV station.

Haverhill officials disagreed with Stem’s complaint and vowed to fight the lawsuit.

“We are deeply disappointed that this one company, after gaining their permits and getting access to a prime location downtown, now seeks to avoid paying what they agreed to pay,” Mayor James Fiorentini told WHDH.

A judge is expected to hear the case in late May.

Judge stops Detroit adult-use cannabis licensing over residency dispute

A federal judge has temporarily halted Detroit regulators from processing adult-use cannabis license applications in response to a suit challenging the constitutionality of a city ordinance giving preference to longtime residents.

A city official confirmed Detroit is temporarily halting the licensing process.

The city, which started taking applications earlier this year, intends to issue as many as 75 retail licenses, 35 consumption lounge permits and 35 microbusiness licenses.

At least 50% of the licenses must be issued to so-called “Detroit Legacy” residents.

U.S. District Judge Bernard Friedman issued a temporary restraining order that freezes the process, various Michigan media outlets reported, in response to a case filed by Crystal Lowe.

Lowe wanted to apply for an adult-use retail license but doesn’t meet the ordinance requirements even though she has lived in Detroit 11 of the past 30 years.

The social equity ordinance is even stricter, giving priority to residents:

  • Who have lived in Detroit for at least 15 of the past 30 years including the past year.
  • Who have lived in Detroit for 13 of the past 30 years and are low-income.
  • Who have lived in Detroit for 10 of the past 30 years and had a marijuana-related criminal conviction or a parent who did.

Lowe’s attorney has argued that the requirements violate equal-protection provisions of the Michigan Constitution and the commerce clause of the U.S. Constitution.

The Detroit City Council unanimously approved the ordinance in November 2020 with the goal of providing economic opportunities for residents.

Only a few of the city’s 46 medical marijuana dispensaries are owned by residents, according to the Detroit Metro Times.

Georgia lawmakers pass bill to open 30 medical marijuana oil dispensaries

Legislators in Georgia passed a bill that could pave the way for up to 30 medical marijuana oil dispensaries to open in the state, although the law is still awaiting approval from Republican Gov. Brian Kemp.

Senate Bill 195 passed through Georgia’s Senate by a vote of 43-9 and through the House by 164-2 before lawmakers adjourned at the end of March, according to The Atlanta Journal-Constitution.

Georgia approved limited medical marijuana in 2019, although the program has been slow to launch.

Under the program, six producers will be allowed to produce cannabis oil with a THC cap of 5%.

If approved by the governor, Senate Bill 195 would allow five dispensing licenses to be issued to each of those six producers, totaling 30 dispensaries.

Nearly 70 applicants have sought the opportunity to produce medical marijuana oil, the Journal-Constitution reported in February.

At the time, the Georgia Access to Medical Cannabis Commission said it would have further announcements about the program in “late spring and early summer.”

There are roughly 15,000 registered medical marijuana patients in the state, according to the Journal-Constitution.

California cannabis firm Glass House Group to be bought in $567M deal

California cannabis company Glass House Group is set to be acquired by a 2-year-old special acquisition company (SPAC) in a blockbuster $567 million deal aimed at creating California’s largest vertically integrated marijuana business.

According to a news release, Glass House Group will be listed on the Canadian NEO Exchange under the ticker symbol GLAS.U after the deal closes, which is expected to be in the first half of this year.

The transaction has a $1 billion equity valuation.

The deal also includes financing for the acquisition of two Glass House competitors: Retailer Element 7 and cultivator Southern California Greenhouse.

The new owner of Glass House Group will be Toronto-based Mercer Park Brand Acquisition Corp., a SPAC founded in 2019 with the goal of establishing a national marijuana brand.

By the first quarter of 2022, according to the release, Glass House is poised to gain another 17 retail locations by merging with Element 7 and will add to its cultivation footprint by another 5.5 million square feet by acquiring Southern California Greenhouse.

Mercer Park Chair Jonathan Sandelman said in the release that, as a result, “Glass House Group is poised to become the largest, vertically integrated brand-building platform in California.”

Sandelman also is CEO of Ayr Wellness, a multistate marijuana operator with offices in New York and Toronto.

The acquisition is the latest example of the newfound power of SPACs at work in the marijuana industry, which have become drivers of mergers and acquisition deals.

Glass House already runs more than 500,000 square feet of cultivation canopy and controls four retail shops.

The company plans to expand its wholesale cannabis business and is aiming to have products in roughly 700 California MJ stores.

The $567 million deal will include:

  • $325 million for the acquisition of Glass House Group.
  • $219 million for Southern California Greenhouse.
  • $24 million for the 17 store licenses from Element 7.

Marijuana Business Factbook projects nearly $45B US market by 2025

The U.S. recreational and medical marijuana markets are on a trajectory to reach up to $45.9 billion in annual sales by 2025, or as much as twice the level of sales projected for this year, according to the newly released 2021 Marijuana Business Factbook.

U.S. adult-use and medical cannabis sales in 2021 are expected to reach $22 billion-$26.4 billion.

The new Factbook, available now, examines in detail the impacts from new markets, ongoing legalization across the United States and the coronavirus pandemic.

The latest edition includes 41 charts and a state-by-state overview of regulations, taxes, market conditions and what to watch for.

“2020 was an important year in cannabis,” Marijuana Business Factbook Editor Jenel Stelton-Holtmeier said. “Many marijuana businesses were declared essential during the pandemic, and more states legalized cannabis markets. 2021 will see more states join in, and their programs are getting started faster than we’ve previously seen.”

“There is no doubt that marijuana is big business,” added Chris Walsh, CEO of MJBizDaily.

“There is clear momentum for exponential growth, with New York and other states with dense populations starting legal sales.”

The ninth annual Factbook includes these key findings:

  • 100% of investors expect the industry to do better in 2021 than in 2020.
  • The cannabis industry will offer more than 400,000 full-time jobs in 2021.
  • An adult-use market in New York, the country’s financial hub, is expected to launch next year and reach annual sales of $2.5 billion by year five.

MJBizDaily’s annual Marijuana Business Factbook also provides these exclusive cannabis insights for investors, entrepreneurs and business owners:

  • Estimates of the U.S. cannabis industry’s total economic impact.
  • Comparisons of cannabis sales to those in other industries.
  • Annual revenue and operating costs for indoor cultivators.
  • Fastest-growing adult-use edibles and topicals.
  • 2020 revenue for cannabis retailers.
  • Global investment activity in the cannabis industry by company type and year.

For more information about the latest Marijuana Business Factbook or to download a copy, click here.

South Dakota high court to hear recreational cannabis case this month

The South Dakota Supreme Court is expected to hear the state’s voter-approved constitutional amendment to legalize recreational cannabis in April.

According to the Argus Leader of Sioux Falls, the high court will hear oral arguments in a challenge to the amendment on April 28.

This comes after attorneys representing the organization South Dakotans for Better Marijuana Laws appealed a lower-court ruling striking down the amendment.

In February, a district judge ruled the ballot measure was unconstitutional because it contained more than a single topic.

Then the South Dakota Attorney General’s Office dropped its defense of the adult-use marijuana amendment after earlier asserting in court that the initiative was constitutional.

Gov. Kristi Noem opposes the voter-approved effort to legalize marijuana and directed the lawsuit to try to kill the measure.

In addition, the governor is trying to add restrictions to the state’s medical cannabis program, which voters also approved.