Cannabis Industry Daily News

Investors awarded restitution of $2.5M in Colorado marijuana fraud case

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Four investors who were defrauded by an illicit marijuana scheme in which a Colorado businessman illegally distributed MJ into various states have been awarded a total of $2.5 million in restitution by a district court judge.

According to a news release from Colorado’s 18th Judicial District Attorney in suburban Denver, the restitution was ordered after businessman Scott Pack was found guilty of racketeering, securities fraud, and other crimes after a three-year criminal case. In July, Pack was sentenced to 12 years in prison.

Judge Michael Spear ordered restitution in the amounts of:

  • $199,935 to Christof Raygot.
  • $299,935 to Pierre Raygot.
  • $950,000 to Kyle Kolb.
  • $1,050,000 to James Hay-Arthur.

Before Pack was indicted in 2017, he ran a Colorado-licensed cover business called Harmony & Green, which prosecutors said was used to illegally distribute marijuana in at least five states but never paid state taxes or recorded any legal sales.

Pack “scammed investors out of millions of dollars” to fund the operation, according to the news release.

Michigan cannabis firm to expand footprint to four states after $45M raise

Learn more about state programs at MJBizCon 2020.  

C3 Industries, a vertically integrated multistate cannabis company based in Ann Arbor, Michigan, closed a funding round that will help the company launch operations in Massachusetts and Missouri.

The firm announced it has raised $45 million in total capital with the closing of the funding round, which will also help with expansion plans in Oregon and Michigan. 

In Massachusetts, C3 is building a 37,000-square-foot cultivation and manufacturing facility and plans to open a retail store in Berlin next year. The company has secured two other retail locations in Massachusetts.

In Missouri, C3 was awarded six licenses, including five retail locations and one manufacturing license. Construction on the full set of properties covered by the licenses will start by the end of the year, with operations slated to begin in the first half of 2021.

In Oregon, C3 has begun construction on an extraction and distillation lab. The company also recently acquired an existing Portland-area store and plans to reopen it in January 2021.

In Michigan, C3 plans to begin construction this winter on an additional 70,000-square-foot cultivation center adjacent to its Webberville facility.

As C3 expands its physical footprint, it also is bolstering its leadership team with the recent hire of Samip Shah as chief operating officer.

Shah formerly served as CEO of Ontario, Canada-based Clear Medical Imaging, where he was responsible for the overall management and growth of a network of retail health centers across the southwest portion of the province.

Virginia governor vows to press for adult-use marijuana program

Virginia’s governor said he plans to push for legalizing an adult-use marijuana market during the 2021 state legislative session.

Gov. Ralph Northam’s comments came Monday, the Associated Press reported, on the heels of voters in New Jersey approving a referendum to develop a recreational market.

“Legalizing marijuana will happen in Virginia,” said Northam, a Democrat.

Democrats took the majority of both chambers of the Virginia General Assembly, which likely will make it easier for legalization to occur. But Northam noted the process could take up to two years.

New Jersey’s adult-use legalization is expected to put pressure on neighboring states as well as Mid-Atlantic markets such as Maryland and Virginia to similarly legalize in the near future.

States also are looking at legal marijuana markets as a way to increase their revenue in wake of the negative economic impacts of the coronavirus pandemic.

Northam previously supported decriminalizing marijuana but not legalizing a recreational marijuana market, according to reports.

But Monday he cited both racial justice issues and the public sentiment for legalization.

“As governor, I listen to people,” Northam said.

Virginia launched a limited medical cannabis market in October.

WA regulators to hear public comment on cannabis pesticide testing rules

Cannabis regulators in Washington state are holding a digital public hearing at 10 a.m. PT Wednesday to collect comments from stakeholders about proposed rules that would require the addition of pesticide and heavy-metal testing for all marijuana products produced, processed and sold in the market.

The state’s Liquor and Cannabis Board (LCB) is proposing to increase the sample lot size of flower to be tested from 5 pounds to 10, with pesticide testing of 10-pound lots beginning in August 2021 and heavy-metal testing of 10-pound lots starting in February 2022.

According to an LCB study, the agency estimates it will cost producers and processors $3,450 per month, or $41,400 annually, to comply with the new rules.

A state industry group, the Washington Sungrowers Industry Association, claims the costs are estimated at $400 per test.

“WSIA is supportive of testing for illegal and disallowed pesticides, however, we believe it should be completed at the farm level using third parties rather than self-selected samples from arbitrarily lot sizes,” the group said in a news release.

The Wednesday meeting will be the second hearing on the topic. A July 8 meeting took public comments, and regulators made subsequent revisions.

“Current testing requirements for recreational marijuana are intended to ensure that products for sale are safe and have accurate potency levels,” the LCB noted in a release.

“However, Washington state recreational marijuana products are not required to be tested for pesticides and heavy metals, and although not precluded from doing so, many producers and processors do not test for either.”

Anyone interested in commenting can find more details here.

Harvest Health sells Arkansas medical marijuana operation for $25 million

Multistate marijuana operator Harvest Health & Recreation said it has completed the sale of its Arkansas medical marijuana operations for $25 million, a move to allow the company to focus on markets such as Arizona.

Arizona-based Harvest Health said it netted $12.9 million in cash from the sale of Natural State Wellness, a vertical operation. The assets included a dispensary in Little Rock that opened in February 2020.

“We are pleased to have completed this divestiture as part of our strategic plan to streamline our business and focus on core markets,” Harvest Chief Executive Officer Steve White said in a news release.

“The additional cash on our balance sheet adds flexibility at a time when we are pursuing growth opportunities such as recreational sales in Arizona.”

Harvest is the leading medical cannabis operator in Arizona, with 15 dispensaries. The company recently acquired three more medical cannabis licenses in the state.

Arizona voters earlier this month legalized a recreational marijuana market that gives priority status to existing MMJ operators. Adult-use sales could begin by April 2021.

Harvest also has marijuana operations in California, Florida, Maryland, North Dakota and Pennsylvania.

The company reiterated financial guidance that total revenues will exceed $225 million for 2020.

San Francisco officials delay new cannabis tax by a year

San Francisco officials decided to hold off by one year the implementation of a new cannabis sales tax.

According to Law360, the city’s Board of Supervisors unanimously approved a delay of the new tax until the end of 2021. The tax was slated to go into effect in January 2021.

The new tariff, approved by voters in 2018, is a sales tax on all marijuana products at 2.5% on gross receipts up to $1 million and at a 5% rate on receipts beyond $1 million.

There’s also a separate tax for marijuana businesses who take in revenues from non-marijuana products: 1% on revenues up to $1 million and 1.5% on revenues above $1 million.

San Francisco Supervisor Rafael Mandelman told the board he proposed the delay in implementation to give cannabis companies some financial relief because the city has had multiple delays in the marijuana business licensing process.

He said that when the tax was approved by voters two years ago, it was anticipated that far more businesses would be operational by January 2021.

But the city’s licensing of marijuana businesses has been slow to date, with many operators needing up to three years to navigate the process and open their doors to consumers.

WV awards medical marijuana processor licenses; several go to MSOs

West Virginia regulators announced the 10 medical cannabis processors that will be receiving business licenses, with several going to multistate operators such as Columbia Care of New York, Holistic Industries of Massachusetts, Trulieve of Florida and Verano Holdings of Illinois.

According to Charleston TV station WOWK, West Virginia regulators said they awarded licenses to:

  • Armory Pharmaceutical (in Buckhannon)
  • Buckhannon WV Processing (Buckhannon)
  • Columbia Care WV (Falling Waters)
  • Harvest Care Medical (Bridgeport)
  • Holistic WV Farms I (Beaver)
  • Mountaineer Integrated Care (Fort Ashby)
  • Tariff Labs (Left Hand)
  • Trulieve WV (Huntington)
  • Verano WV (Beaver)
  • V3 WV GP (Maxwelton)

The winners will be able to process medical marijuana into products allowed by law and sell them to licensed MMJ dispensaries.

The state previously awarded 10 cultivation licenses, and at least three went to multistate operators as well as a number of out-of-state and West Virginia investors.

The next step in West Virginia’s relatively slow rollout of the MMJ program will be for regulators to score dispensary applications – the final permitting phase for the industry.

Once everything is in place, regulators are expected to begin issuing MMJ patient cards in spring 2021.

Nerds candymaker files suit against California cannabis firm

Chicago-based Ferrara Candy Co. filed suit in a federal court against California-based Tops Cannabis, alleging the delivery company has been peddling marijuana-infused parodies of its popular Nerds brand and is infringing on its trademark.

According to, Tops Cannabis has allegedly been selling – but not manufacturing – the parodied product, which has been marketed as “Medicated Nerds Rope.”

The legal news outlet also reported that confusion over the product has led to multiple children ingesting the THC-infused candies.

The candies in question are also reportedly in violation of California marijuana edibles potency limits, since the packages contain 500 milligrams of THC and the state limit for edibles is 100 milligrams per package.

The lawsuit contends that the product represents a “genuine consumer safety risk” and requests an injunction prohibiting further sales of the product.

A Tops Cannabis spokesperson did not immediately respond to a request for comment on Thursday, according to

The suit is the latest in a string of cases filed by longtime candy companies against edibles producers in various states.

In Florida last year, the manufacturers of Sour Patch Kids candies, Mondelez Canada, sued retailers for selling THC-infused edibles dubbed “Stoney Patch Kids,” reported.

Before that, the Hershey Co., producer of some of the world’s most famous chocolates, filed suit against at least two cannabis companies, alleging similar trademark violations.

Rescoring of retail marijuana licenses in Illinois allowed to proceed

An Illinois judge rejected a request to stop state regulators from rescoring retail marijuana license applications, moving a seemingly never-ending saga closer to resolution.

The ruling allows Illinois to go forward with a licensing do-over that Gov. J.B. Pritzker hopes will remedy complaints about the process to award 75 rec retail licenses.

Sangamon County Judge Adam Giganti, in refusing to grant a temporary restraining order against the state, ruled that the plaintiffs hadn’t and were unlikely to prove they would be “irreparably harmed” by the license rescoring, according to the Chicago Tribune.

The legal challenge was filed in early October by three companies that had received perfect scores, thereby qualifying them for a lottery to select the 75 new licenses.

The licensing round, delayed by the coronavirus pandemic, has been chaotic, raising questions about the state’s social equity provisions, once proclaimed as a potential blueprint for the industry. Only 21 applicants qualified for the lottery.

Unsuccessful applicants argued that they were not given notice of problems with their applications that could have been corrected and that the scoring process was inconsistent.

Meanwhile, Illinois’ existing medical marijuana operators, who were giving priority status in the adult-use market, continue to reap the benefits of a sizzling recreational market.

Adult-use sales in October alone reached a record $75 million, and medical marijuana sales added another $33 million to the total.

Montana starts to gear up for $200M adult-use cannabis market

Montana regulators say they are beginning the process to make adult-use cannabis cultivation and sale licenses available by Oct. 1, 2021.

“There’s a lot of work ahead before the first legal sale of nonmedical marijuana in Montana and before the first license is issued,” Gene Walborn, director of the Montana Department of Revenue, told Missoula TV station KECI.

Only medical marijuana operators may apply for the new recreational licenses for the first 12 months they are available. The program also has a residency requirement.

State officials said in a news release that they anticipate lawmakers will address certain aspects of the initiative during its session, which begins Jan. 4, 2021.

The adult-use ballot measure passed by a margin of 57.9% to 42.1%, according to The Washington Post.

The University of Montana projects sales at $217 million for the first full year of the program and $234 million a year by 2024.

Marijuana legalization momentum unstoppable, industry leaders say

Get in-depth analysis from MJBizCon’s Passholder Days about how 2020 local elections in California might impact the marijuana industry as well as financial and investor insights into the overall cannabis industry following Election Day. It’s all available to you on demand.

The “green wave” of marijuana legalization will continue to spread across the United States in wake of the clean sweep of ballot initiative victories on Election Day, industry stakeholders said Thursday.

Trulieve CEO Kim Rivers and Green Thumb Industries CEO Ben Kovler, appearing on a post-election panel during MJBizCon’s Passholder Days Forum, agreed that support for marijuana legalization has firmly crossed party lines but that politicians need to better listen to the people.

Florida-based Trulieve and Illinois-based Green Thumb are two of the more successful multistate marijuana operators in the U.S.

Even if sweeping changes don’t occur on the federal level in the near future, “we’re going to continue to see this green wave occur on a state level,” Rivers said.

Rivers and Kovler offered other insights during the panel discussion:

  • New Jersey could “flip the switch” to launch an adult-use market built on the back of existing medical marijuana operators, Kovler said. One problem though: “There’s not enough supply for the demand” – yet. Adult-use legal markets in neighboring states such as New York and Pennsylvania are all but inevitable, he said.
  • Voter approval last week of a liberal medical marijuana initiative in Mississippi “potentially could have policy shock waves across the South,” Rivers said.
  • Access to capital remains a huge hurdle to new operators, including minority-owned businesses, to fully participate in the industry, Rivers and Kovler agreed. While social equity programs, including incubator loans, in states such as Illinois will help, federal cannabis banking reform as well as access to Small Business Administration loans remains critical.
  • Within two years, marijuana companies will be publicly traded on the major American stock exchanges and the U.S. will be the clear world leader in the marijuana industry, Rivers predicted.

Analyst: Aurora Cannabis’ dip into capital market after stock rally ‘shrewd’

Topics ranging from the role of small producers to global opportunities for Canadian companies, among others, were discussed at MJBizCon’s Passholder Days on Nov. 11. It’s all available to you on demand.

Underwriters for Aurora Cannabis’ previously announced overnight public offering have agreed to purchase roughly 20 million units at $7.50 apiece, the Alberta company said this week, a move that would net the company $142.4 million.

If the over-allotment option is exercised, the net proceeds would increase to $163.8 million.

Aurora said it intends to use the proceeds to fund growth opportunities, working capital and other corporate purposes.

Aurora’s stock had more than doubled in the days before the overnight offering, “not driven by fundamentals, but instead a combination of retail (fear of missing out) and hedge fund short squeeze,” Jefferies analyst Owen Bennett wrote in a note to investors.

Acknowledging the offering leads to further dilution of the company’s shares, Bennett wrote that “you also have to say it is a shrewd move, especially with the U.S. possibly opening up sooner vs. later.

“Without cash, getting a foothold in that market will be very difficult.”

Each unit in the offering consists of one common share and half of one share purchase warrant. The warrants will be valid for 40 months after the closing date.

The offering – expected to close around Nov. 16 – would eat into Aurora’s recently filed $500 million short-form base shelf prospectus.

Aurora was not alone in capitalizing on its rising shares this week.

New Brunswick-based Organigram Holdings announced an underwritten public offering of units for net proceeds of 57 million Canadian dollars ($44 million).

Net proceeds would rise to $69 million if the over-allotment option is exercised.

A syndicate of underwriters led by Canaccord Genuity agreed to purchase 32.5 million units at a price of CA$1.85 per unit.

Each unit consists of one common share and half of one common share purchase warrant.

The warrants are exercisable for a period of 36 months after the closing date at an exercise price of CA$2.50.

The offering is expected to close Nov. 12.

Organigram said it plans to use the proceeds to repay debt and for general corporate purposes.

Aurora trades as ACB on the Toronto Stock Exchange and the New York Stock Exchange.

Organigram trades as OGI on the Toronto Stock Exchange and the Nasdaq.