Cannabis Industry Daily News

Green Thumb sues Arkansas over medical cannabis licensing

Multistate marijuana company Green Thumb Industries’ division in Arkansas is suing the state for allowing a medical cannabis business there to receive a second MMJ dispensary license.

According to Law360.com, GTI Arkansas contends the language of Amendment 98 – which legalized MMJ sales in the state – stipulates that “no individual can own an interest in more than one dispensary,” which means the decision by the Arkansas Medical Marijuana Commission and the Department of Finance Administration is unconstitutional.

The company in question, Native Green, was told on July 1 that it had been selected for a license in Zone 5 of the state, even though the company already accepted and used another license to operate a dispensary in Zone 6.

GTI, which seeks possession of the Zone 5 license, had the next highest-scoring business application.

The lawsuit comes less than a week after five Arkansas companies with permits to grow medical cannabis sued to stop three more cultivation licenses from being issued.

That suit claims the three licenses that were issued in June violate language in the law that stipulated new licenses would be granted only if the existing growers couldn’t meet dispensary demand.

Marijuana-infused drinks create stir in Oklahoma

THC-infused slushies have emerged at some Oklahoma medical cannabis dispensaries as a popular summer drink, despite guidance suggesting the beverages run afoul of the state’s regulations and statutes.

“It’s definitely been a go-to right after work just to cool down,” one customer told Tulsa TV station KOTV.

The slushies were prevalent enough that the Oklahoma Medical Marijuana Authority issued guidance earlier this month that the drinks are “unlikely to meet requirements set forth in Oklahoma statutes and rules.”

Additionally, regulators said that since slushies are considered food products, they must be compliant with Oklahoma State Department of Health food regulations.

But the lack of complete certainty in the guidance or threat of enforcement has caused some MMJ businesses in the state to continue selling the slushies.

“They’re completely compliant under my understanding of the law,” Drew Todhunter, an owner of Fighting Flower Dispensary in Tulsa, told KOTV.

He said the dispensary’s $15 premade drink is sold in compliant packaging, including a childproof cup.

“So if it leaves the store in a compliant package, then I personally don’t see an issue with it.”

Cannabis platform LeafLink raises $250M in debt financing

LeafLink, a marijuana industry wholesale inventory and ordering platform, raised $250 million in a credit financing deal to help provide liquidity to the cannabis supply chain.

The New York-based company said its supply chain financing arm closed the senior secured credit facility with a private commercial lender, but terms weren’t disclosed.

A credit facility enables a company to draw on funds as it needs them.

The transaction could be a sign that cannabis capital markets are loosening some.

According to a news release, LeafLink plans to use the capital to provide liquidity directly to licensed cannabis businesses at a time when they face challenges such as limited access to basic financial services.

The company said its platform currently operates in 26 North American “territories,” enabling more than 5,000 retailers to order wholesale cannabis products directly through LeafLink’s e-commerce marketplace.

Curaleaf finalizes Grassroots deal, grows marijuana footprint to 23 states

Marijuana multistate operator Curaleaf said Thursday it has completed its acquisition of privately held Grassroots Cannabis, expanding Curaleaf’s presence to 135 dispensary locations and licenses in 23 states.

The original value of the deal was $875 million, but Massachusetts-based Curaleaf in June announced an amended agreement that reflected a selloff of unspecified Grassroots assets in Illinois, Maryland and Ohio to comply with license caps in those locations.

Analysts at that time put the value of the revised deal at about $700 million.

Curaleaf said it has appointed Mitchell Kahn, co-founder and CEO of Chicago-based Grassroots, to its now six-member board of directors.

Here are key business aspects of the deal, according to a news release:

  • The acquisition expands Curaleaf’s footprint from 18 to 23 states.
  • Curaleaf said it now will have 88 operational dispensaries, 30 processing facilities and 22 grow sites with a total of 1.6 million square feet of cultivation capacity.
  • The transaction, the company said, accelerates its expansion into Illinois, the country’s newest recreational marijuana market, and Pennsylvania, a growing medical cannabis market.
  • Remaining Maryland operations previously affiliated with Grassroots might be transferred to Curaleaf after a statutory three-year ownership holding period expires. The transfer is subject to regulatory approval and compliance with license caps.

Curaleaf trades on the Canadian Securities Exchange as CURA.

Shares were up slightly to $9.75 Canadian dollars in early trading Thursday.

Two Maine medical cannabis companies raided by federal authorities

Two medical marijuana companies in Farmington, Maine, were raided by agents from the FBI, the U.S. Drug Enforcement Administration and the local U.S. attorney’s office.

Narrow Gauge Distributors and The Homegrown Connection were targeted in the Tuesday raids, during which agents piled marijuana plants outside one of the locations, the Bangor Daily News reported.

It is unclear whether anyone was arrested or if charges have been filed.

An FBI spokesperson told the newspaper without elaborating that “several” locations in the state were tied to the investigation.

Narrow Gauge bills itself as “the largest cannabis distribution company” in the state, and Homegrown Connection says it is a hydroponics marijuana grow shop.

The two are connected by Luke Sirois, who owns Homegrown Connection and is the registered agent for Narrow Gauge.

According to the Lewiston Sun Journal, Farmington officials approved both companies for MMJ business licenses in August 2019. The license applications were submitted by Sirois.

Nevada regulators levy fine, strip marijuana company of 14 licenses

The newly installed Nevada Cannabis Compliance Board took swift action at its first meeting by penalizing vertically integrated operator CWNevada for a range of regulatory violations.

According to the Las Vegas Review-Journal, the board and CWNevada agreed to a settlement regarding an alleged 21 violations of state marijuana regulations. The penalties included:

  • A $1.25 million fine.
  • The revocation of six business permits.
  • The required sale of eight additional licenses.

CWNevada was accused of failing to pay state taxes, running afoul of the state’s MJ inventory track-and-trace program, selling untested cannabis products and employees hiding or destroying evidence and lying to regulators.

The company has operated the Canopi dispensaries in Las Vegas as well as grow operations and production facilities in other parts of Nevada.

A court-appointed receiver took over CWNevada in June to keep the company operational until its assets could be redistributed to creditors after several of its dispensaries were shuttered due to nonpayment of taxes.

In 2019, the company was ordered by an arbitration panel to pay $4.99 million for breach of contract and failure to pay for services provided.

Arizona lawsuit seeks to bar recreational cannabis legalization

A group opposed to legalized recreational marijuana in Arizona filed a lawsuit to halt an initiative that would allow adults in the state to possess up to 1 ounce of adult-use cannabis.

The lawsuit challenges the 100-word summary of the Smart and Safe Arizona Act, saying it misleads voters about key provisions of the initiative.

Voters see the summary when they sign petitions to qualify an initiative for the ballot.

The lawsuit was filed by several voters belonging to a group called Arizonans for Health and Public Safety, a political committee opposed to legalizing marijuana.

The challenge to the marijuana legalization initiative claims the summary of the proposal failed to tell voters who signed petitions that the proposed law:

  • Would cover more potent forms of marijuana.
  • Doesn’t specifically say that a 16% tax on cannabis sales can’t be increased by the Legislature.
  • Change state law on driving under the influence.

The lawsuit will be heard in the coming weeks under expedited scheduling orders.

Arizonans for Health and Public Safety’s primary funding comes from the Center for Arizona Policy, a conservative organization that backs traditional families and promotes religious freedom and anti-abortion legislation.

Associated Press

Massachusetts eyes end of medical marijuana vertical integration

Regulators in Massachusetts are considering eliminating the vertical-integration requirement for medical cannabis operators, a move that would open up the industry to stand-alone operations that would cost less to launch.

Dispensaries in the state currently are required to cultivate and process most of the medical marijuana they sell, but they can buy limited amounts from other operations.

There were 60 vertical MMJ licenses in Massachusetts as of the second quarter of 2020.

The Massachusetts Cannabis Control Commission (CCC) discussed the potential for lifting the requirement during an online meeting Monday and said they would seek public comment before deciding, the Boston Business Journal reported.

It’s unclear whether the commission could take action or whether lawmakers would need to.

“Right now, the law says there has to be vertical integration,” CCC Chair Steven Hoffman said, according to the Business Journal.

“There’s a question about whether we can, within that, allow people to only do one or two, rather than all three of the operations. The answer to that is unclear, and we’re going to solicit public comment and we’re going to have a debate.”

The commissioners indicated they would like to keep the per-company cap at three licenses each for cultivation, processing and retail.

Public comment on the draft regulations will be taken until Aug. 14. The commission is scheduled to vote on the final regulations in September.

Additionally, the commission is considering tougher regulations on businesses that fail testing for pesticide or heavy metals.

The new Marijuana Business Factbook projects that Massachusetts MMJ sales will reach $220 million-$265 million this year, up from $165 million-$205 million in 2019.

Oklahoma fines medical cannabis processor $500,000 for pesticide use

Oklahoma regulators levied a $541,000 fine on a medical marijuana business and ordered it to cease operations after allegedly exceeding pesticide limits and committing other violations.

The Edmond-based processor of concentrates and extracts, Moon Mix, was the subject of the state’s first product recall in May.

According to Oklahoma City TV station KWTV, state regulators found three batches of Moon Mix that tested above legal limits and were sold to customers.

A recent KWTV investigation “showed four different pesticides testing above the legal limit,” including bifenazate, and found customers who reported getting sick from using the products.

The pesticides can create harmful gases when heated and vaporized, according to the report.

A Moon Mix spokesman told the TV station that the company was preparing a response to the state’s action.

State regulators also alleged that the company illegally bought out-of-state marijuana products and sold them to family and friends.

Only 2% of Long Beach, CA, marijuana social equity applicants operating

Just one out of 50 business applicants who qualified for Long Beach’s marijuana social equity program has actually entered the California city’s cannabis industry.

The astonishingly low 2% participation rate can be chalked up to a lack of seed money for those who qualify for the program, according to the Long Beach Business Journal, which estimated that it can cost upwards of $1 million to enter the city’s market.

In a letter to city leadership, the acting Long Beach city manager wrote that according to applicants:

“The primary reason for the discrepancy between interest in the program and actual business license applications received is the substantial amount of capital necessary to start a cannabis business.”

Long Beach was one of several California localities that received state grant money to bolster their cannabis social equity programs.

The city took in $2.7 million in funding, but so far that hasn’t translated to more minorities actually owning marijuana companies.

Long Beach’s cannabis program manager told the Business Journal he was not aware of any Black-owned marijuana retail stores in the city.

For a sampling of organizations and efforts that support, foster and enhance social equity in the cannabis industry as well as opportunities for minorities, overall diversity and racial justice, click here

Rhode Island approves first medical cannabis lab

Rhode Island licensed its first lab to test medical marijuana, a move that likely will prove beneficial to the dispensary and cultivation operators who had been contracting private labs or conducting testing themselves.

Green Peaks Analytical of Warwick will be the first state-licensed cannabis lab in the state to test for contaminants, including pesticides, metals and solvents, the Providence Journal reported.

The Rhode Island Department of Business Regulation will work with the lab, growers, dispensaries and MMJ patients to solidify a time frame for requiring medical cannabis products to be labeled with potency numbers and a verification that the products have been tested.

The Department of Health also plans to require cannabis to be tested for contaminants in order for growers and retailers to receive certification.

Green Peaks is a division of R.I. Analytical Laboratories, which has been testing water and soil for environmental and compliance purposes since 1976.

Massachusetts marijuana corruption trial pushed until early 2021

The trial of a former Massachusetts mayor accused of trying to extort $600,000 from at least four prospective marijuana businesses was delayed for a second time because of the coronavirus pandemic.

Former Fall River Mayor Jasiel Correia now isn’t expected to go to trial until January 2021 at the earliest, according to legal news service Law360.com.

Correia, who has pleaded not guilty, allegedly took bribes to help prospective business owners obtain marijuana licenses.

He originally was slated to go on trial in May, but the case was rescheduled for September because of COVID-19 concerns.