Cannabis Industry Daily News

Massachusetts permits hemp sales by marijuana retailers

By MJBizDaily Staff

(A version of this story first appeared on Hemp Industry Daily.)

Hemp growers in Massachusetts can now sell hemp extracts and smokable flower to the state’s more than 200 licensed marijuana retailers, a move that should allow MJ stores to serve a wider selection of consumers.

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A new rule that took effect Monday gives Massachusetts hemp farmers instructions for testing and labeling their products for sale to adult-use or medical marijuana shoppers.

The change was made by Massachusetts lawmakers late last year. The change applies only to farmers growing hemp in Massachusetts.

Out-of-state hemp products remain off-limits for Massachusetts marijuana retailers.

The new rules require hemp products sold in Massachusetts dispensaries to carry labels that include:

  • Manufacturer name and address.
  • THC and CBD concentrations.
  • A warning that the product “has not been tested, analyzed, or approved by the Massachusetts Department of Agricultural Resources or the FDA (U.S. Food and Drug Administration).”

The law did not end a prohibition on processing hemp and marijuana products at the same locations.

Marijuana manufacturers will need licenses from the state agriculture department before producing products listed as hemp or hemp-derived.

Massachusetts has roughly 65 hemp farmers on 407 acres and 95,000 indoor square feet this year.

The state is home to about 168 recreational marijuana retailers and 68 medical marijuana dispensaries.

Those retail outlets sold about $1.4 billion-$1.7 billion worth of product last year, according to the 2021 MJBizFactbook.

Cannabis financier AFC Gamma to raise $100 million in new notes offering

By MJBizDaily Staff

Cannabis real estate lender AFC Gamma announced plans to raise $100 million through an upcoming debt offering.

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According to a Wednesday news release, net proceeds from AFC Gamma’s offering of senior unsecured notes will be used:

  • “To fund loans related to unfunded commitments to its existing borrowers.”
  • To originate new loans and for working capital and other general corporate purposes.

The senior unsecured debt will be due in 2027.

The Florida-based company did not specify the interest rate of the notes.

The timing of the offering, as well as the exact terms, “will depend on market conditions and other factors,” the release noted.

AFC Gamma priced a March initial public offering on the Nasdaq exchange to raise nearly $119 million.

The company also priced a June underwritten public offering to raise at least $56 million.

This year, AFC Gamma has loaned money to cannabis companies such as Justice Cannabis of New Jersey, Nature’s Medicines of Arizona and BeLeaf Medical of Missouri.

Shares of AFC Gamma trade as AFCG.

Illinois recreational marijuana sales already nearing $1 billion for 2021

By MJBizDaily Staff

Recreational marijuana sales in Illinois have reached nearly $1 billion, and three months remain in the calendar year.

According to monthly data released by the Illinois Department of Financial and Professional Regulation,  the state’s adult-use industry sales were at just over $997 million at the end of September.

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That total is leaps and bounds over 2020, when Illinois’ recreational cannabis businesses brought in $669 million for the entire year.

Illinois rec sales didn’t go above $100 million in any month in 2020, the year the market launched. But sales have exceeded that threshold every month in 2021 with the exception of January and February.

The high-water mark so far this year is July, when sales reached $127.7 million; in 2020, the top month for rec sales was December, with $86.8 million.

Though the agency doesn’t release medical marijuana sales figures, the Chicago Tribune reported that the MMJ program in Illinois has grown significantly as well, with patient numbers increasing by roughly 30% since a year ago.

As in most medical marijuana markets, chronic pain was the most-cited reason for patients’ need for MMJ, at 31%. Next came post-traumatic stress disorder (16%), migraines and osteoarthritis (10% each) and cancer (5%).

US judge tosses investor lawsuit targeting cannabis producer Sundial

By MJBizDaily Staff

(A version of this story first appeared at Hemp Industry Daily.)

A federal judge in New York cleared Sundial Growers of wrongdoing in a lawsuit filed by angry investors who said the Calgary, Alberta-based cannabis producer misled them about plans to export hemp and CBD to the European Union.

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Sundial was accused of being dishonest when it said it was acquiring a British company that could “almost immediately” start exporting hemp and CBD products to the European Union, Law360 reported.

The plan was beset by delays, however, and Sundial sold the U.K. company (Bridge Farm) in 2020.

A group of investors sued Sundial in New York, seeking more than $7 million.

But a federal judge dismissed the case, saying that Sundial’s discussions about exporting hemp and CBD into Europe were “accompanied by meaningful cautionary language” and that Sundial isn’t responsible for the investors’ losses.

Sundial trades on the Nasdaq as SNDL.

Marijuana technology company Akerna raises $20 million

By MJBizDaily Staff

Colorado-based marijuana technology company Akerna raised $20 million of capital to support a recently announced acquisition, future growth and investments in its enterprise software infrastructure.

The debt financing with existing institutional investors follows Akerna’s $17 million deal to buy 365 Cannabis, a Las Vegas-based marijuana business management software company.

Akerna, which trades on the Nasdaq as KERN, said it will net $14.6 million from the financing. The details:

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  • The three-year notes have a face value of $20 million, bear no interest but are being issued at a discount of 10%, or $2 million. The notes are to be repaid in monthly installments beginning Jan. 1, 2022.
  • The notes will be convertible into Akerna stock at a price of $4.05 a share. Akerna currently is trading at about $2.70 a share.
  • The net proceeds of $14.6 million reflects deductions from the loan discount and $3.3 million to pay off previous convertible notes and other expenses.

Akerna indicated that $4.5 million of the proceeds from the capital raise will be used to close the company’s acquisition of 365 Cannabis.

Cannabis firm Agrify buys two Sinclair Scientific brands for at least $50 million

By MJBizDaily Staff

Ancillary cannabis business Agrify said it acquired two marijuana- and hemp-related equipment and services brands from Sinclair Scientific for at least $50 million.

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The acquired brands are:

  • Precision Extraction Solutions, described as “the industry leader in cannabis and hemp extraction equipment, technology, lab design and site planning.”
  • Cascade Sciences, which produces processing equipment such as vacuum ovens and evaporators.

“These leading brands have collectively worked with over 30 multi-state operators and over a thousand cannabis and hemp customers,” Agrify said in a Monday night news release.

Agrify said it expects the acquired brands to generate roughly $40 million in revenue in 2021.

“As a result of this transaction, Agrify now has a physical presence in seven states with a growing number of clients and business partners distributed throughout the country.”

The $50 million acquisition includes $30 million in cash and $20 million of Agrify stock.

The price might increase to up to $65 million based on Cascade and Precision’s performance for 2021.

Billerica, Massachusetts-based Agrify produces hardware and software for use in cannabis cultivation and other crops.

The company went public in January and raised additional capital through an underwritten public offering in February.

Agrify shares trade as AGFY on the Nasdaq exchange.

Oklahoma medical marijuana chief calls for more inspectors, regulations

By MJBizDaily Staff

Oklahoma’s medical marijuana market is one of the loosest in terms of regulations of any agency in the state, but the program’s new chief cannabis regulator is looking to change that.

In what she’s calling a “hard reset” of the program, according to NPR affiliate KOSU, Oklahoma’s new Medical Marijuana Authority director, Adria Berry, is hiring more inspectors and creating new policies.

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Berry began her role as director on Aug. 30.

By Dec. 1, the regulatory agency aims to hire 40 more compliance inspectors as well as six “peace officers” to work with the state’s narcotics bureau to root out illegal marijuana businesses.

Less than 40% of the state’s licensed cannabis companies have been inspected this year, according to Berry.

Berry also said the program has had a 25% increase in cannabis license applications over the past year, the radio station reported.

Barrett Brown, deputy director and legislative liaison for the regulatory agency, also said state lawmakers might consider adding a license cap.

Cannabis MSO Ascend Wellness to acquire two Ohio dispensaries

By MJBizDaily Staff

New York-based cannabis multistate operator Ascend Wellness Holdings is expanding its vertically integrated medical marijuana operation in Ohio.

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According to a news release, Ascend Wellness has:

  • Completed the acquisition of BCCO, a medical marijuana dispensary operating as Ohio Provisions in Carroll.
  • Entered into an agreement to acquire Coshocton-based dispensary Ohio Cannabis Clinic.

Terms of the deals were not disclosed.

Columbus is the closest big city to the two dispensaries.

“With adult-use legislation currently under consideration (in Ohio), now is an opportune time to scale our footprint,” said Abner Kurtin, CEO and chair of Ascend Wellness.

Ascend also owns cultivation and processing facilities in Monroe, Ohio.

Ohio regulators recently announced that medical marijuana growers may request an expansion of their cultivation operations, which could ease product shortages, boost sales and allow cultivators to better meet patient demand.

The Parent Co. agrees to buy marijuana firm Coastal for up to $56.2M

By MJBizDaily Staff

The Parent Co. said Monday it agreed to acquire 100% of the equity of California-based Coastal Holding Co. in a cash-and-stock deal worth up to $56.2 million, adding a new wrinkle to a set of lawsuits filed by the co-founders of MedMen Enterprises against five Coastal co-owners.

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In a news release, San Jose, California-based The Parent Co. said it will pay for the transaction with up to $16.2 million in cash and another $20 million in its common stock upon signing management-services agreements at each Coastal location and another $20 million in stock “contingent upon the successful transfer of Coastal’ s cannabis licenses.”

The vertically integrated operator also said it will inherit a minority stake that Coastal holds in a Southern California dispensary and an option to purchase the remainder of that business for $9 million in cash.

The transactions are expected to close next year.

But there’s a potential stumbling block: Former MedMen executives Adam Bierman and Andrew Modlin, who are minority owners of Coastal, have sued other co-owners to halt the sale of the company.

Coastal holds eight marijuana business licenses around Southern and Central California for retail, delivery, distribution and manufacturing.

Los Angeles-based attorney Hilary Bricken said last week that litigation like what Coastal is facing might be enough to cause potential buyers to change their minds.

According to court records, one would-be buyer of Coastal has backed out of a similar acquisition deal struck earlier this year.

The Parent Co. said in the release that the Coastal deal would expand its California retail store and delivery depot footprints to 11 and six, respectively, and position the company “with the second largest operating retail dispensary and delivery hub in the State with an expanded reach to over 80% of California’s population.”

The Parent Co., known formally as TPCO Holding Corp., trades on the NEO Exchange in Canada under the ticker symbol GRAM.U and on the over-the-counter markets as GRAMF.

AFC Gamma expands Justice Cannabis loan to $75 million

By MJBizDaily Staff

Marijuana industry finance company AFC Gamma significantly boosted a loan to Chicago-based Justice Cannabis Co., increasing it from the $22 million figure announced in May to $75.4 million.

Justice Cannabis plans to use the additional capital to further develop cultivation and processing operations in New Jersey and Pennsylvania, purchase assets and refinance existing debt.

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Florida-based AFC Gamma committed an additional $43.4 million, and another $10 million was syndicated to an affiliate, according to a news release.

The loan is secured by a first-lien mortgage on Justice Cannabis-owned real estate in New Jersey and Pennsylvania, and other commercial interests. The interest rate wasn’t disclosed.

AFC Gamma CEO Leonard Tannenbaum said in the release that the increase in the senior secured credit facility reflects the lender’s belief that Justice Cannabis “has one of the best license stacks for a multistate operator.”

New Jersey and Pennsylvania both have “favorable supply and demand dynamics,” Tannenbaum added.

New Jersey approved a recreational cannabis market earlier this year and is preparing for a 2022 launch.

Pennsylvania’s medical cannabis industry has been sizzling, although price competition has increased.

Pressure is increasing on Pennsylvania to legalize adult use to keep pace with neighboring New Jersey.

Lawmakers in Pennsylvania recently introduced an adult-use bill, but the measure could face stiff opposition in the GOP-controlled state Senate.

Report: Female, minority executives lose ground in marijuana industry

The percentage of executive positions held by women and minorities in the U.S. cannabis industry fell between 2019 and 2021, according to a new report now available from MJBizDaily.

Notably, in 2021, the percentage of women who hold executive positions, 22.1%, fell below the average recorded across the larger U.S. business landscape, 29.8%, according to the 2021 report, “Women & Minorities in the Cannabis Industry.”

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Previously, the portion of executive positions held by women in the cannabis industry – 36.8% in 2019 – consistently outpaced that of mainstream businesses.

This shift isn’t driven solely by a decline in female cannabis executives.

The latest data from the U.S. Bureau of Labor Statistics indicates that women hold a higher percentage of these roles in the broader economy – up to nearly 30% from only 21% in 2018.

Image of Women & Minorities report cover

The new report from MJBizDaily, “Women & Minorities in the Cannabis Industry,” can be  downloaded here for free.

The percentage of executive positions held by minorities fell to 13.1% in 2021, down from 28.0% in 2019 but in line with the average across all U.S. businesses.

This is despite increased focus at the state level to improve racial diversity within the cannabis industry.

In previous years, minorities held a higher proportion of executive positions at cannabis businesses than they did at mainstream companies.

Industry experts suggest that competitive markets tend to favor businesses with white men in ownership and leadership positions, primarily because of their established access to capital.

In addition, more executives from mainstream sectors are opting into the cannabis industry as a new opportunity, accelerating the increase of white men in power positions.

The free report, “Women & Minorities in the Cannabis Industry,” can be downloaded here.

Cole Memo author joins National Cannabis Roundtable as adviser

By MJBizDaily Staff

The National Cannabis Roundtable announced the formation of a new advisory board this week, and its members include former Deputy U.S. Attorney General James Cole, the author of several influential U.S. Department of Justice memos that paved the road for the modern U.S. marijuana market nearly a decade ago.

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Cole joins several other major political figures from both sides of the aisle already associated with NCR, including:

  • Former House Speaker John Boehner, a Republican.
  • Former Secretary of Health and Human Services Kathleen Sebelius, a Democrat.
  • Former U.S. Sen. Cory Gardner, a Colorado Republican.

“Cannabis reform is incredibly complicated not least because of the robust state marketplaces, which have
developed under federal prohibition,” Cole said in a news release.

Cole added that he’s “looking forward” to being part of the federal legalization debate as Congress continues grappling with marijuana-related bills such as the MORE Act, the SAFE Banking Act and the Cannabis Administration and Opportunity Act.

Cole, who served in the Obama administration’s DOJ from 2010 to 2015, was the principal author of three separate memos.

The most influential of those likely was in 2013, after Colorado and Washington State voters approved recreational legalization in 2012. The memo effectively gave both states the green light to go ahead with marijuana sales to all adults 21 and older without federal intervention.

Though all of Cole’s memos were rescinded in 2018 by then-Attorney General Jeff Sessions, their permissiveness allowed the cannabis industry to truly take root across the country without fear of reprisals by the U.S. Drug Enforcement Administration.

And that climate has led the marijuana business to its current status as one of the fastest-growing industries in the nation.