Cannabis Industry Daily News

Arkansas awards sixth medical cannabis grow permit as sales rise

Arkansas regulators approved a sixth cultivation license to support a rapidly growing medical cannabis market nearing $100 million in total sales.

Carpenter Farms Medical Group, a minority-owned company, was awarded the license Tuesday, according to the Northwest Arkansas Democrat Gazette.

Currently, only three growers have sold products, but two additional ones are expected to harvest soon.

The Arkansas Medical Marijuana Commission awarded the sixth cultivation license after accepting a settlement agreement that resolved a lawsuit by Carpenter Farms, according to the Democrat Gazette.

Carpenter Farms had placed sixth in the license scoring but was disqualified for application errors.

The company alleged in its legal challenge that the errors were typographical and that the commission hadn’t similarly punished competing applications.

Several lawmakers argued an additional license is needed to bring down costs, noting that some MMJ patients are traveling across the border to Oklahoma to buy cheaper products.

But officials representing the existing cultivators and the Arkansas Medical Marijuana Association opposed the move, arguing that current demand can be satisfied by the five licensed cultivators.

Arkansas officials recently reported that sales have totaled $92 million over the past year and are projected to hit the $100 million milestone by July 1. The program launched on May 10, 2019.

The number of qualified patients stood at 60,268 as of June 12, according to state figures.

Marijuana firm Acreage gets $15 million loan at 60% interest rate

(This story has been updated to note the loan came from an unidentified institutional investor.)

Marijuana multistate operator Acreage Holdings has secured a $15 million short-term loan with a whopping 60% yearly interest rate, the company said Wednesday.

The secured note, obtained from an unidentified institutional investor, matures in four months, according to a news release.

Acreage put up as collateral its marijuana business facilities in Florida, Illinois and New Jersey as well as its intellectual property.

Under the terms of the loan, if Acreage were to default, it would owe the lender an additional $6 million.

The new cash infusion will be used for “working capital and general corporate purposes,” according to the release.

The loan might be an eye-opener for investors watching Acreage’s moves, since the New York-based company recently announced a plan to raise $60 million by selling equity to a private investor and through debt financing.

The company has also been selling off unprofitable assets, furloughed 122 employees in April and recently exited the Iowa medical cannabis market.

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

Michigan recreational cannabis sales top medical for first time

Adult-use marijuana sales in Michigan surpassed medical cannabis sales on a weekly basis for the first time since the state’s recreational market launched Dec. 1, 2019.

According to MLive.com, recreational marijuana sales totaled $10.02 million between June 8 and June 14, beating out the MMJ market’s $9.97 million in sales for the same time period.

Some medical marijuana patients seem to be migrating to the recreational market, MLive.com reported.

Since adult-use sales began, Michigan’s medical marijuana patient count has declined by 7%, or 19,000 people, and the state now has 2,900 fewer registered caregivers.

And the coronavirus pandemic isn’t slowing the growth of the state’s rec market. Since April 13, adult-use sales in Michigan have increased each week.

Michigan’s recreational market is still constrained by a lack of participation from municipalities. Roughly 1,400 of Michigan’s municipalities are not allowing adult-use cannabis sales.

First Big Tobacco firm in marijuana seeks bankruptcy protection

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

Pyxus International, the first Big Tobacco company to enter the marijuana and hemp sectors, filed for bankruptcy protection after  the coronavirus pandemic dealt a financial blow to its operations.

Morrisville, North Carolina-based Pyxus filed a prepackaged plan to reduce debt by $400 million and give control to a group of bondholders, according to The Wall Street Journal.

Pyxus’ Canadian marijuana operations, Prince Edward Island-based Figr, aren’t part of the bankruptcy filing, an executive told Marijuana Business Daily.

The company also grows hemp in the United States.

Known as Alliance One International at the time, Pyxus first entered the cannabis industry in 2018 when it purchased Canada’s Island Garden and an 80% stake in Goldleaf Pharm.

At the time of the acquisitions, Island Garden was one of three licensed producers chosen by Canadian regulators to supply Prince Edward Island with cannabis, and Goldleaf Pharm had applied to become a licensed medical marijuana cultivator in Ontario, Canada.

Pyxus, one of the world’s largest tobacco suppliers, was hit hard by declining tobacco consumption and supply disruptions fueled by the COVID-19 pandemic.

The company trades as PYX on the Nasdaq and New York Stock Exchange.

Colorado lawmakers pass cannabis social equity measure

A Colorado bill that would set aside cannabis social equity licenses for prospective entrepreneurs and give them a leg up in getting started sailed through the state Legislature and was sent to the governor’s desk for his signature.

Under the legislation, social equity license holders would qualify for mentorship programs and financial incentives to help get their business off the ground.

Introduced only a week ago after the death of George Floyd in Minneapolis, House Bill 20-1424 changes the term “accelerator licensee” to “social equity licensee” in the state’s marijuana regulations.

If signed by Gov. Jared Polis, a social equity licensee could participate in the state’s accelerator program, which provides mentorship opportunities and financial incentives for prospective cannabis entrepreneurs.

The idea behind the accelerator program: A social equity licensee would get hands-on training from a veteran retailer, processor or cultivator at the business owner’s facility.

The licensee also could receive financial incentives from the state’s revenue department or the Office of Economic Development and International Trade.

In addition, the Colorado Senate added an amendment that would clarify a process to have convictions for possessing up to 2 ounces of marijuana expunged from a person’s record and allow that person to apply for a cannabis business license.

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

Missouri medical marijuana growing starts; sales expected in 4th quarter

Missouri regulators approved the first medical cannabis company to start growing MMJ in the state, extending a sales launch into the fourth quarter of 2020.

BeLeaf Medical’s Sinse cultivation facility in St. Louis County received final state approvals to begin cultivation, according to the St. Louis Business Journal. BeLeaf won three cultivation, two processing and five dispensary licenses.

John Curtis, chief operating officer of BeLeaf Medical, told the Business Journal that the company anticipates being able to begin wholesale sales by the fourth quarter.

Missouri’s MMJ program initially was expected to launch in the spring but has been delayed by a number of factors, including the coronavirus pandemic.

Marijuana Business Daily has projected that the market will generate $300 million in annual sales within a few years of its launch.

The state took in more than 2,200 applications for 192 dispensary, 60 cultivation and 86 processing licenses.

But the program faces more than 800 appeals, several lawsuits, and a state legislative inquiry into alleged misconduct and conflicts of interest.

Florida medical cannabis operator starts trading on Canadian exchange

Bluma Wellness, which operates as One Plant in Florida’s fast-growing medical marijuana market, started trading on the Canadian Securities Exchange on Monday under the ticker symbol BWEL.

Fort Lauderdale-based Bluma is the result of a reverse takeover transaction with CannCure Investments. The latter was a portfolio company of Sol Global Investments.

Bluma CEO Brady Cobb recently told Marijuana Business Daily that the company initially will focus on expanding in Florida, particularly emphasizing the premium flower market and next-day delivery.

“We hand-trim everything,” Cobb said.

He noted the company has a new 54,000-square-foot Nexus greenhouse and a second, older 24,000-square-foot cultivation facility in Florida.

One Plant currently has three dispensaries in Florida, with lofty ambitions to open an additional seven dispensaries and delivery hubs by November.

In regulatory filings, the company cautions that its plans could be affected by impacts of the coronavirus pandemic.

Trulieve remains the dominant player among Florida MMJ companies, but Cobb said he’s confident that One Plant can take some market share away by focusing on the premium flower niche.

One Plant sold 514.1 ounces of smokable flower in the week ended June 11, according to state data.

Colorado marijuana sales dip in April after strong March

Colorado’s marijuana market took a hit in April – almost certainly the result of coronavirus-related restrictions – by nearly 8% combined for the state’s medical and recreational markets.

Recreational sales in Colorado were down roughly 12% in April, clocking in at $112 million, while medical sales were actually up by 10%, at $36.5 million, according to Denver alt-weekly Westword,

The total monthly sales haul for the state’s marijuana industry was $148.5 million – a 7.8% drop from March, when sales hit $161 million.

That, as Westword noted, is an “unusually large decrease” for Colorado compared to previous sales records in a month that includes the unofficial cannabis holiday, 4/20.

And state fiscal projections aren’t too rosy for the coming year, meaning Colorado marijuana retailers might have to brace for a disappointing sales year overall.

Method Man starts cannabis firm to bolster blacks in industry

Rapper and actor Method Man said he’s launching a new marijuana business specifically aimed at boosting other black-owned cannabis companies.

According to Bloomberg News, the business – dubbed Tical, short for Taking Into Consideration All Lives, also the name of Method Man’s first solo album – will soon begin selling marijuana products to black-owned retailers in California.

“Personally, it is essential that we use our brand to help bring awareness to the social, systemic and economic injustice in communities that have struggled with oppressive mass incarceration and racially biased policing policies,” Method Man, whose legal name is Clifford Smith, said in a statement.

Method Man owns a 20% stake in Tical, and the company is developing its own strains in partnership with Clone Guy Industries, the New York Post reported.

Tical’s first three strains will be on sale immediately, according to the Post.

California marijuana excise tax to remain stable through 2020

The California state cannabis excise tax won’t go up in July as it did in January.

The state Department of Tax and Fee Administration (CDTFA) made that announcement in a little-noticed news release in May.

Per state law, the agency is required every six months to recalculate the markup rate upon which the state’s 15% excise tax is based.

In November, the agency announced that its calculations would result in a tax increase, which went into effect New Year’s Day and led to an outcry from industry insiders who had already been urging policymakers to reduce state MJ taxes.

If another increase had been deemed necessary, it would have gone into effect July 1.

But the agency stated that the current rate will remain unchanged for at least another six months, until its next recalculation.

“We have determined the cannabis markup rate will remain unchanged at 80% for the remainder of the 2020 calendar year,” the CDTFA noted in its bulletin.

“To make this determination, we used an analysis of statewide market data to calculate the markup rate between the wholesale cost and the retail selling price of cannabis and cannabis products.”

Cannabis firm iAnthus says it likely will default on interest payments again

Multistate marijuana operator iAnthus said it expects to default on interest payments due June 30 and likely will delay its quarterly earnings past an extended June 15 deadline – a move that could result in a stock trading suspension.

The New York-based company, which has partly blamed the coronavirus crisis on filing delays, also said in a news release that, although its previously announced strategic review is ongoing, the firm can’t assure that any alternatives pursued will provide value to stockholders.

Here’s more from iAnthus’ update:

  • As of June 11, debt totaled $159.1 million, including $97.5 million of 13.0% senior secured convertible debentures, $60 million of 8.0% unsecured convertible debentures and $1.6 million of other debt obligations.
  • The company previously announced that it did not make $4.4 million in interest payments due March 31 and said it doesn’t expect to be in a position to make interest payments due June 30.
  • Although it is “working diligently” to make its required filings “as soon as feasible,” iAnthus said a cease-trading order could go into effect until it makes those quarterly financial filings.

The MSO also has faced executive turmoil in the past few months.

In late April, Hadley Ford resigned as CEO after a company investigation found he failed to disclose two loans totaling $160,000.

The company trades on the Canadian Securities Exchange as IAN.

High Times revises deal to buy CA marijuana retail stores from Harvest

High Times Holding Corp.’s agreement to buy planned and operating California dispensaries from multistate operator Harvest Health & Recreation has been cut to 10 from the 13 announced in late April.

The Los Angeles-based owner of High Times magazine announced the amended nearly all-stock agreement on Friday.

Two properties cut from the deal are operating dispensaries, which would leave High Times with only three operational outlets in the state from the acquisition.

The $67.5 million deal calls for High Times to pay a maximum of $1.5 million in cash, compared with $5 million of cash in the original $80 million deal.

Here are some additional details:

  • In addition to up to $1.5 million in cash, High Times will pay for the retail outlets with a one-year $4.5 million promissory note at 10% interest as well as $61.5 million of preferred stock.
  • Arizona-based Harvest said in a news release that it is keeping two operating outlets: Harvest of Palm Springs and Harvest of Venice. The parties didn’t disclose the third outlet eliminated from the original purchase agreement.
  • High Times provided this caveat: The transaction is subject to various closing conditions and contingencies, including third-party and regulatory approvals. Additional assets may be excluded from the transaction if required approvals are not obtained.

High Times has been trying to raise money through a small investor Regulation A stock offering, but the offering has been extended multiple times and currently has a June 30 deadline.