Cannabis Industry Daily News

Acreage completes New Jersey medical cannabis acquisition

Multistate marijuana operator Acreage Holdings said it has closed on a deal to acquire a New Jersey medical cannabis operation for $10 million, plus the assumption of debt.

The acquisition, announced last year, gives Acreage a firm foothold in a marijuana market positioned for potential adult-use legalization. New Jersey residents will vote on an adult-use initiative in November.

Acreage’s acquisition of Compassionate Care Foundation Inc. includes licenses for cultivation, processing and three dispensaries.

Acreage said it currently has licenses to operate two other New Jersey dispensaries – one in Egg Harbor and another on the Atlantic City Boardwalk. The company operates under The Botanist brand.

The closing of the New Jersey deal comes just a few days after Canadian cannabis producer Canopy Growth reached an agreement to amend its acquisition of Acreage and slash the values of the deal from $3.4 billion to about $900 million. The price cut reflects the cannabis stock slide and Acreage’s financial condition.

Reflecting a cash-strapped status, New York-based Acreage recently secured a short-term loan for $15 million with an interest rate of 60%.

Acreage’s revenues in the first quarter of this year totaled $24.2 million, up 15% from the previous quarter, but the company has yet to break even on its operations.

Acreage trades on the Canadian Securities Exchange as ACRG.U and on the U.S. over-the-counter markets as ACRGF.

MJBizConNEXT keynoter Simms urges marijuana industry to ‘be audacious’

MJBizConNEXT Direct and Hemp Industry Daily Direct kicked off Monday with a virtual keynote speech from Dia Simms, an award-winning entrepreneur and member of The BRN Group, a New York-based cannabis tech company.

Simms called on the cannabis industry to move in unison to overcome over a century of stigma, to think bigger and to consider innovation and creativity.

She mentioned the virtual conference as an example of the industry creating a new product that required “a ton of work” but could create lasting value for business owners in the cannabis space.

“During unusual and trying times, you shift, have an opportunity to learn – even if the backdrop is more difficult than what we’re accustomed to,” Simms said.

Her talk was themed around “leaning into audacity.”

Among other points, she challenged the industry to think creatively about distribution points – including how and where products are sold, because “historically over 50% of customer decisions are made at the point of purchase.”

“If your company is glossing over what happens at that point of purchase, you’re doing yourself a disservice,” Simms said. “When you think about building brands and being audacious you need to think through … what are some unique distribution places besides dispensaries and grocery stores and drug stores?”

She encouraged the industry to recognize that this is a “once in a millennium” opportunity to change the global economy.

“There’s no reason that this industry couldn’t be a trillion dollar industry,” she said.

Business owners have a chance to build it from scratch “in the proper way,” Simms added.

“In the way that science and data shows us work,” she said, “we know for a fact that companies that are more diverse make more cold, hard cash. If you’re not doing it for your heart, you should be doing it for your wallet. Countless studies reiterate that point.”

More information about MJBizConNEXT Direct is available here.

– Bart Schaneman

Oklahoma cannabis firms sue over residency, zoning laws

(This story has been updated to include new information from an Oklahoma cannabis attorney.)

A group of medical marijuana businesses in Oklahoma have sued the state in efforts to prevent regulators from enforcing new definitions to a 1,000-foot school buffer zone and a stricter two-year residency requirement.

The disputes threaten to upset a fast-growing, free-wheeling market, and the school buffer rules are an especially thorny issue.

The MMJ businesses, which filed the lawsuit in Oklahoma County District Court, say the new buffer rules could affect “hundreds if not thousands” of licensed dispensaries, according to The Oklahoman.

Oklahoma cannabis attorney Sarah Lee Parrish told Marijuana Business Daily that the 1,000-foot buffer rule from a school has been in effect for some time. But regulators expanded the definition to include preschools and head-start programs, and measuring the 1,000 feet has been a moving target.

For example, what if a school adds a softball field on the side of the property closest to a dispensary?

Parrish said that if a dispensary was in compliance when it was awarded its license, then “to force the business to move (by denying a license renewal) likely would trigger great constitutional arguments.”

She said she successfully argued for a client last summer that had set up a dispensary at a location based on the National Center for Education’s SAFE (Schools are Far Enough Away) map. However, the dispensary was unaware of a school’s existence on the second floor of a nearby church building.

As for the stricter residency requirement, businesses issued a medical marijuana license before the law was enacted last summer are exempted.

But companies that applied for licenses between the enactment date of March 15, 2019 and its effective date of Aug. 30, 2019, are in limbo. The governor vetoed legislation that would have fixed that issue.

Fortunately, however, Parrish said the state regulators are treating those licensees in a “pending” status and she believes discussions to resolve the issue will be successful.

The Oklahoma Medical Marijuana Authority (OMMA), which regulates the industry, didn’t immediately respond for comment.

As of June 1, Oklahoma’s largely free-market MMJ industry had 9,266 active business licenses, including 2,035 dispensaries, according to the OMMA.

Medical marijuana sales in Oklahoma totaled nearly $300 in the first five months of 2020.

New Jersey medical marijuana dispensaries can now deliver

New Jersey’s 11 medical marijuana dispensaries are now allowed to deliver products to patients at home, provided they fill out a state waiver.

According to, the state department of health has issued paperwork for MMJ shops to fill out so their employees can begin performing home deliveries.

That options may well result in a sales uptick for dispensaries, since many patients are staying at home to avoid the coronavirus.

There are caveats. Among others:

  • Only dispensary employees can perform deliveries.
  • Any vehicle performing deliveries must be outfitted with a GPS tracking device, additional security and a lock box.

Although a change to the state MMJ law last summer allowed for delivery provisions, no action was taken until recently, reported.

New Jersey joins multiple other states – including California, Oregon and Nevada – that already allow marijuana to be delivered.

The delivery trend has grown during the coronavirus outbreak, since many MMJ patients prefer ordering from the safety of their own home.

Also, regulators in multiple markets have agreed that it’s a safer approach for providing patients with their medicine.

Cresco cannabis dispensary workers in Chicago area vote to unionize

Employees at Cresco Labs’ Illinois marijuana dispensary in Lakeview have voted to unionize, one of the industry’s first unionization elections since the coronavirus pandemic.

Workers voted 16-4 to be represented by the United Food and Commercial Workers Local 881, according to Moises Zavala, the local’s organizing director.

Cresco, a multistate operator based in Chicago, employs about 40 at the Chicago suburban outlet.

In January, employees at Cresco’s cultivation facility in Joliet became the first cannabis workers in the new adult-use state market to unionize by a margin of 58-32.

“Workers in this industry are voting for the union because they want to turn these jobs in the industry into careers and to be treated as the professionals that they are,” Zavala told Marijuana Business Daily on Thursday.

He said the union will initiate contract negotiations after the National Labor Relations Board certifies the vote. “We look forward in negotiating a strong contract for these workers.”

The UFCW has been actively trying to unionize cannabis workers in Illinois, especially singling out Cresco.

A union leaflet claimed that Cresco Sunnyside in Lakeview was slow to provide protections during the coronavirus pandemic and paid low wages.

Cresco disputed those allegations, saying it immediately implemented strong health and safety protocols around COVID-19, and offered competitive pay and benefits.

DOJ memo defends marijuana merger scrutiny ordered by Barr

An internal document from the U.S. Department of Justice’s misconduct office found nothing wrong with Attorney General William Barr’s decision ordering antitrust prosecutors to review 10 proposed marijuana business mergers.

Politico reported the agency’s Office of Professional Conduct found that it was “reasonable” for the DOJ’s antitrust division to “seek additional information from the industry through its Second Request process,” according to a memo from the office.

The memo was written in response to a pair of whistleblower complaints from within the DOJ’s antitrust division, which had alleged that the reviews violated federal law by “conducting pretextual investigations” of MJ industry mergers.

On Wednesday, a career prosecutor from the DOJ, John Elias, testified to the House Judiciary Committee that Barr had ordered the 10 investigations because he was prejudiced against the cannabis industry, adding that the moves were tantamount to “harassment.”

Elias also told lawmakers he had seen the memo defending the investigations, and that he disagreed with its conclusions, Politico reported.

“If your sole motivation is animosity, that is impermissible. If there is no rule or regulation, there is one missing because that’s obviously wrong,” Elias said.

Cannabis firm iAnthus receives demand for debt repayment

Multistate cannabis operator iAnthus Capital Holdings received a demand for repayment on a secured debenture issuance as well as a notice of intention to enforce security under Canadian bankruptcy law.

New York-based iAnthus defaulted on interest payments on that debt in April and expects to default on payments again at the end of June.

The debt totaled $159.1 million as of June 11, iAnthus said earlier this month.

The company, which is in the midst of a strategic review, said financial adviser Cannacord Genuity “has received several expressions of interest, including expressions of interest, which if completed, would repay the secured debentures in full and in cash.”

The company trades on the Canadian Securities Exchange as IAN.

However, trading of iAnthus shares on that exchange was suspended Tuesday after a cease-trade order.

In the news release issued Tuesday, iAnthus said the cease-trade order followed its failure to file continuous disclosure documents by a June 15 deadline.

The company operates 35 marijuana dispensaries in eight states, including Arizona, Colorado, Florida, Maryland, Massachusetts, New Mexico, New York and Vermont.

Former iAnthus CEO Hadley Ford stepped down in April after an investigation into undisclosed personal loans totaling $160,000.

Prosecutor: AG Barr ordered politically motivated probes of marijuana mergers

A federal prosecutor will testify before members of the U.S. House of Representatives on Wednesday that U.S. Attorney General William Barr ordered “politically motivated” reviews of 10 marijuana business mergers.

The expected testimony to the House Judiciary Committee will come from John Elias, the acting chief of staff for the assistant attorney general and part of the Department of Justice’s  antitrust division.

The testimony is part of the committee’s investigation into Roger Stone, a longtime confidant of President Donald Trump.

According to a prepared version of Elias’ opening remarks, he will testify that the 10 investigations were not “bona fide” but, rather, driven by Barr’s personal dislike of the marijuana industry.

The investigations in sum totaled 29% of the antitrust division’s “full-review merger investigations” in the 2019 fiscal year, Elias alleges.

Elias wrote in his statement that one of his superiors said in September 2019 that “the investigations were motivated by the fact that the cannabis industry is unpopular ‘on the fifth floor,’ a reference to the location of Barr’s office at DOJ headquarters.

“Personal dislike of the industry is not a proper basis upon which to ground an antitrust investigation,” Elias wrote.

At least one of the investigations, a probe into a planned merger between MedMen and PharmaCann, led to the collapse of the deal in late 2019 because of regulatory delays.

Elias’ statement blames Barr for those delays and alleges the DOJ staff originally concluded that the deal was “unlikely to raise any significant competitive concerns.”

Nevertheless, Barr ordered a further investigation.

“The rationale for doing so centered not on an antitrust analysis, but because he did not like the underlying nature of their business,” Elias wrote in his statement.

The MedMen-PharmaCann merger investigation concluded in the fall of 2019 with no enforcement action taken, Elias wrote, but “the merger collapsed nonetheless, with MedMen citing unexpected delays in obtaining regulatory approval.”

In the interim, Elias noted, MedMen’s stock price dropped by about a third.

The other nine investigations were not identified in Elias’ statement.

Initial closing of $61.5 Harvest-High Times cannabis retail deal completed

Multistate operator and vertically integrated marijuana company Harvest Health & Recreation finalized a deal to sell eight California retail stores to Los Angeles-based High Times Holding.

Under terms of the recently updated agreement, Harvest has sold a portfolio of equity and assets of eight operational and planned dispensaries in California for a total of $61.5 million, including up to $1.5 million in cash and $60 million in stock.

In a second closing, subject to various conditions and regulatory approvals, High Times could acquire two more planned dispensaries in California from Harvest for $6 million in additional shares of High Times.

The deal means the majority of the entities changed hands from Have a Heart founder Ryan Kunkel to Harvest to High Times in a matter of months.

Arizona-based Harvest Health announced a deal in March to acquire Have a Heart in March for $85.8 million.

Oregon mulls banning additives in marijuana vaping products

The Oregon Liquor Control Commission, which regulates marijuana in the state, took its first step toward adopting rules that would ban non-cannabis additives from inhalable products containing THC, though MJ-derived terpenes will be allowed.

Although much of the evidence for the vaping illness outbreak that began in the summer of 2019 points to illicit-market products, two people in Oregon died with lung-related illnesses and more than 20 fell ill from vaping.

According to a release from the OLCC, the move to ban the additives arose from product safety concerns.

“Non-cannabis additives are not necessary to make a vape product work with vaping technology,” the release notes.

The OLCC also said that while such additives might be safely ingested, there is no regulatory body that evaluates the safety of these ingredients when inhaled.

In related news, the OLCC also moved to extend the ability of licensed marijuana retailers to continue curbside delivery.

A temporary rule allowing cannabis stores to sell curbside expires in September.

For more of Marijuana Business Daily’s ongoing coverage of the vaping crisis, click here.

Curaleaf amends deal to acquire cannabis multistate operator Grassroots

Vertically integrated cannabis company Curaleaf Holdings revised its deal to acquire privately owned multistate operator Grassroots Cannabis.

The stock and cash transaction was originally announced in July 2019 with a price tag of $875 million. But since then cannabis stock prices have fallen.

In a note issued Monday, Stifel GMP analysts Robert Fagan and Andrew Partheniou said the amended deal should be worth a total of approximately $700 million based on Curaleaf’s current share price.

Massachusetts-based, publicly traded Curaleaf said in a news release that the amended deal for Chicago-based Grassroots:

  • Eliminates the $75 million cash component of the original agreement.
  • Increases the Curaleaf share consideration from $40 million to $90.1 million.

The share consideration for the deal will now total about 118.9 million Curaleaf subordinate voting shares.

Curaleaf said unspecified Grassroots assets in Illinois, Maryland and Ohio will also be sold off under the updated deal “to comply with local (limitations) on license ownership.”

Fagan and Partheniou wrote in their note that those divestitures could include store licenses in Illinois, stores and a facility in Maryland and a production facility in Ohio.

Proceeds from selling those assets could be worth between $100 million and $150 million, the analysts wrote.

The completed merger will “expand Curaleaf’s presence from 18 to 23 states, with the combined company having over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities and 22 cultivation sites,” according to the release.

Curaleaf trades on the Canadian Securities Exchange under the ticker symbol CURA.

Marijuana MSO Jushi buys Vireo grow facility in Pennsylvania for $37 million

Florida-based Jushi Holdings, a multistate marijuana and hemp company, agreed to purchase Vireo Health International’s grower-processor operations in Pennsylvania for $37 million.

To fund the purchase, Jushi secured $15.25 million in debt financing that was led by insiders and existing shareholders.

The acquisition involves the purchase of Pennsylvania Medical Solutions (PAMS), a licensed medical marijuana grower-processor in Scranton owned by Vireo, an MSO based in Minneapolis.

PAMS manufactures cannabis-based products in a 90,000-square-foot, co-located cultivation and processing facility.

According to a news release, Jushi will:

  • Pay $16.3 million in cash.
  • Pay a $3.8 million seller note at 8% interest maturing in four years.
  • Assume a $17 million facility associated with a long-term lease obligation. No equity is involved in the transaction.

“This acquisition allows Jushi to expand its presence in one of the most attractive medical cannabis markets in the country,” Jushi CEO Jim Cacioppo said in the release.

The deal also includes an 18-month option for Jushi to purchase equity in another Vireo Health subsidiary, Pennsylvania Dispensary Solutions, for an additional $5 million in cash.

Meanwhile, Jushi expects to receive the debt funding on or before July 11. The notes will mature on Jan. 15, 2023, with a 10% yearly interest.

According to a Vireo news release, the PAMS facility recently underwent a significant expansion in order to meet increasing medical marijuana demand in Pennsylvania.

“This transaction secures Vireo’s capital position for the foreseeable future and will enable us to comfortably execute our fiscal year 2020 operating strategy and begin generating positive cash flow in the first half of next year without requiring any additional capital infusions,” Vireo founder and CEO Kyle Kingsley said in the release.