Cannabis Industry Daily News

Trulieve to purchase Pennsylvania medical cannabis retailer for $60 million

Florida-based medical cannabis company Trulieve is spending $60 million to buy more MMJ dispensaries in Pennsylvania.

The multistate operator said Monday it will be purchasing Keystone Shops, a medical cannabis company with retail locations in PhiladelphiaDevon and King of Prussia.

The deal is comprised of $40 million in Trulieve subordinate voting shares and $20 million in cash.

There is no deferred payment or earnout period for the deal, which is expected to close during the second quarter of 2021.

“The Keystone Shops are located in a densely populated area of Pennsylvania and with their staff’s knowledgeable and customer-centric approach to patients, these dispensaries are valuable additions to our Pennsylvania portfolio,” Trulieve CEO Kim Rivers said.

In 2020, Trulieve purchased two Pennsylvania MMJ companies – PurePenn and Keystone Relief Centers – in a $66 million deal.

Adding the three dispensaries will grow Trulieve’s retail footprint to 83 dispensaries nationally.

Key Democrat: US Senate will consider comprehensive marijuana reform

Senate Majority Leader Chuck Schumer said Democrats will move forward with comprehensive marijuana reform regardless of whether President Joe Biden embraces the idea.

“He said he’s studying the issue, so (I) obviously want to give him a little time to study it,” Schumer said in an interview with Politico.

“I want to make my arguments to him, as many other advocates will. But at some point, we’re going to move forward, period.”

Schumer, of New York, is working with fellow Democrats Sen. Cory Booker of New Jersey and Ron Wyden of Oregon on a major marijuana reform bill that Schumer said will be unveiled “soon.”

He said the bill’s proponents then would sit down with those who are opposed, listen to their objections and “try to educate them.”

While Schumer favors a comprehensive approach to marijuana reform, experts say a cannabis banking measure is more likely to be passed this year. That would enable financial institutions to serve the marijuana industry without fear of prosecution.

Biden has been less than enthusiastic about marijuana reform. The Democratic Party platform does support medical marijuana legalization but calls for MJ to be rescheduled rather than removing it entirely from the federal Controlled Substances Act.

Many in the cannabis industry were further disappointed recently when several White House staffers were asked to resign for admitting to past marijuana use. Others were suspended or told to work remotely, according to the Daily Beast.

Industry officials hope that Vice President Kamala Harris, who supported marijuana reform as a U.S. senator, ultimately might have influence on Biden.

Schumer told Politico he believes legalization of marijuana by states has “worked out remarkably well.”

“The parade of horribles never came about and people got more freedom,” he said.

Illinois breaks monthly recreational cannabis sales mark at $109 million

New stores, stimulus checks, warming temperatures and tourists combined to help drive Illinois recreational cannabis sales to yet another monthly record with $109 million in purchases in March.

Illinois adult-use retail sales increased 24% over the previous monthly sales record of $88 million set in January, the Chicago Tribune reported, quoting figures from the Illinois Department of Financial and Professional Regulation.

Rec sales in March were also 35% higher than in February, when cold temperatures and the shorter month checked sales at $80 million.

About $33 million, or 31%, of Illinois’ adult-use sales in March came from tourists, according to The Pantagraph of Bloomington.

At the clip set during the first three months of 2021, recreational sales in Illinois this year will surpass $1 billion, according to the Sun-Times.

Last year, the first full year of recreational legalization, total recreational cannabis sales hit nearly $670 million, the newspaper reported.

Florida governor not in favor of limiting THC in marijuana

While saying marijuana products available today might be too potent, Florida’s governor said he does not support capping THC in his state’s medical cannabis market.

Gov. Ron DeSantis’ comments on THC caps is significant because Florida is one of several states considering imposing THC limits on marijuana products.

The Florida measure, HB 1455, would cap THC at 10% for flower and 60% for concentrates.

The bill is one committee vote away from a floor vote in the state House but is stalled in the Senate, Florida Politics reported.

“I have not endorsed (capping THC),” DeSantis said, according to Florida Politics. “That is not something I’m pushing.”

However, the governor did express concerns about the strength of marijuana products.

“If you look at some of the stuff that’s now coming down, there’s a lot of really bad things in it,” he said.

“It’s not necessarily what you would’ve had 30 years ago when someone’s in college and they’re doing something.”

Other states where anti-cannabis groups are seeking to impose THC limits include Colorado, Massachusetts, Montana and Washington.

Vermont caps potency of flower at 30% and concentrates at 60% for recreational cannabis products, but the state’s adult-use market has yet to launch.

The state has set no potency limits for medical marijuana products.

Closely watched Colorado cannabis patent lawsuit dropped

Colorado-based United Cannabis (UCANN) dropped a landmark CBD-related patent lawsuit against Pure Hemp Collective, leaving the legal issue unresolved.

The end of the lawsuit, first reported by Law360, follows an unsuccessful attempt by UCANN to reorganize its finances under federal bankruptcy laws.

The filing in US District Court in Colorado on March 31 ends the patent case for UCANN but notes that Pure Hemp’s “counterclaims shall be dismissed without prejudice.”

That indicates Pure Hemp, also of Colorado, could bring counterclaims forward in the future.

UCANN sued Pure Hemp in 2018 for allegedly infringing on a patent related to the formula of a cannabinoid-based tincture.

Cannabis industry attorneys were closely monitoring the suit because of the legal and financial implications of such formulations being considered intellectual property.

Pure Hemp had argued that UCANN’s formula wasn’t patentable because “substantially pure liquid CBD products are ubiquitous” in the marketplace.

U.S. District Judge William Martinez in 2019 denied an early motion by Pure Hemp to dismiss the suit, indicating that, despite certain ambiguities in case law, UCANN’s claims might involve a patentable matter.

But a year later, in April 2020, UCANN filed for Chapter 11 bankruptcy reorganization in Colorado federal court. That also was closely watched by the cannabis industry.

The bankruptcy case was dismissed in January 2021, when a judge sided with the U.S. Department of Justice that UCANN had some ties to the marijuana industry, which prevented it from getting relief under federal bankruptcy laws.

Orion Armon, UCANN’s outside attorney on the patent case, told Marijuana Business Daily on Friday that he wasn’t authorized to talk about the outcome of the patent lawsuit.

He referred questions to UCANN’s CEO, who couldn’t be reached for comment.

James Gourley, who represented Pure Hemp in the patent litigation, said he had no comment at this time.

Marijuana MSO Parallel moves into Illinois with $100 million acquisition

Atlanta-based Parallel, one of the largest privately held multistate marijuana operators in the United States, entered into a definitive agreement to acquire six stores belonging to an Illinois retail chain for $100 million.

The acquisition of Windy City Cannabis, expected to close in the second half of this year, is comprised of $60 million in cash and $40 million in Parallel stock.

The deal could be worth $155 million if certain performance-based, earnout payments payable through 2023 are attained, according to a Parallel statement.

The acquisition makes Illinois the sixth limited-license state in which Parallel has operations. The others are Florida, Massachusetts, Nevada, Pennsylvania and Texas.

Windy City currently operates four medical and recreational marijuana stores in the Illinois cities of Homewood, Highwood, Posen and Litchfield and is expected to open two more adult-use outlets in Carpentersville and Macomb later in April.

Parallel’s CEO, chewing-gum heir William “Beau” Wrigley Jr., struck a mammoth deal in February in which the company will be purchased by Ceres Acquisition Corp.

Ceres, a special purpose acquisition company, will take Parallel public through a transaction that values the MSO at $1.9 billion.

Developers planning 70-acre ‘cannabis campus’ in upstate New York

Following the legalization on Tuesday of recreational marijuana in New York, developers in South Buffalo announced they’re moving ahead full steam with a new business park that they envision could become home to multiple marijuana companies.

The proposed multimillion-dollar project – which backers are calling a “cannabis campus” – will cover upwards of 70 acres and is expected to bring 500 to 1,000 jobs to South Buffalo, according to Buffalo TV station WIVB.

The mayor of South Buffalo and other stakeholders are fully behind the project, which is being built by Zephyr Partners.

The company’s CEO, Brad Termini, told WIVB he believes the campus could house marijuana cultivation, manufacturing and research and development businesses.

It’s still unclear, however, when the project might get fully built out, because the launch of the New York market is somewhat up in the air.

“We will be ready to start as soon as the state of New York allows us to,” Termini told WIVB.

Detroit adult-use marijuana license applications now open to all

Detroit opened its adult-use marijuana license application process to all comers on Thursday.

That includes applicants with or without existing medical marijuana licenses, although applicants with existing MMJ permits have some advantages.

Applicants without a medical cannabis license will have to wait until Aug. 1 for their applications to enter the review process. Application from medical licensees will be reviewed beginning June 16.

Applications from certified “Detroit Legacy” applicants will be reviewed as early as May 1.

That special certification is available to applicants who meet criteria such as:

  • Having lived in Detroit for a certain amount of time.
  • Being in a low-income category.
  • Previous marijuana convictions.

Those criteria led to a recent lawsuit from an aspiring marijuana business owner.

There are 395 certified Detroit Legacy applicants, according to a news release from the office of Mayor Mike Duggan.

Those applicants will receive 50% of new adult-use licenses issued in Detroit, including adult-use retail, growing and processing and microbusiness licenses.

They will also get a 99% discount on application fees.

Detroit will issue 75 licenses for medical marijuana dispensaries, 75 for adult-use stores, 35 for consumption lounges and 35 for microbusinesses.

The city has no cap on the number of licenses for growing, processing, secured transportation, safety-compliance facilities, marijuana event organizers and temporary cannabis events.

Prospective businesses may apply for Detroit marijuana business licenses through this website.

Virginia governor wants to push up parts of recreational cannabis timeline

Virginia Gov. Ralph Northam proposed amendments to the state law legalizing recreational marijuana that would bump up aspects of the program’s timeline, but sales or commercial cultivation would not start any sooner.

While Northam recommended that provisions in the legislation legalizing home growing and possession of cannabis take effect on July 1, 2021, rather than on Jan. 1, 2024 – the enactment date initially approved by lawmakers – the timeline for commercial marijuana cultivation and sales remains July 1, 2024.

According to Patch, Northam’s amendments would allow people 21 or older to possess up to 1 ounce of marijuana and home growers to cultivate up to four marijuana plants.

The governor’s comments come only days after the Virginia House speaker said she will support a measure to legalize adult-use marijuana on July 1 instead of waiting nearly three years.

Marijuana giants Greenlane, KushCo to merge in all-stock deal

Two of the marijuana industry’s biggest ancillary companies, Greenlane Holdings and KushCo Holdings, entered into an all-stock merger agreement.

Under terms of the deal, KushCo, based in Garden Grove, California, will become a wholly owned subsidiary of Boca Raton, Florida-headquartered Greenlane, according to a news release.

The transaction is expected to close in the late second quarter or early third quarter of 2021.

KushCo’s stockholders will receive approximately 0.2546 shares of Greenlane Class A common stock for each share of KushCo common stock they own, according to the release.

That arrangement is expected to result in Greenlane stockholders owning roughly 50.1% of the combined company’s common stock and KushCo stockholders owning approximately 49.9%.

The combined company, which will be named at a later date and be based in Boca Raton, is expected to generate pro forma revenue of $310 million-$330 million for the year ended December 31, 2021, the release noted.

Nick Kovacevich, co-founder, current chair and CEO of KushCo, will serve as chief executive of the combined company.

Greenlane co-founders Aaron LoCascio and Adam Schoenfeld will serve as president and chief strategy officer, respectively, and Greenlane’s chief financial officer, Bill Mote, will retain that role with the combined company.

The combined company plans to sell:

  • Consumption devices.
  • Vaporizers and accessories.
  • Supplies and child-resistant packaging.
  • Rolling papers and wraps.
  • Complementary solvents and natural products.

KushCo laid off 49 employees in March 2020, citing the COVID-19 pandemic.

Canadian cannabis producer Canopy hires diversity and inclusion leader

Canadian cannabis producer Canopy Growth appointed Sumayyah Emeh-Edu as its first vice president of diversity, equity and inclusion.

Emeh-Edu previously worked as the director of diversity and inclusion strategy at financial services firm Charles Schwab.

“While cannabis and CBD industries have flourished, the history of racial inequities surrounding cannabis prohibition and the resulting disproportionate social justice consequences create a responsibility and necessity for Canopy to lead in diversity, equity, and inclusion for the global industry,” Canopy said in a Wednesday news release.

“This commitment will be further realized through Emeh-Edu’s role, as she will be focused on ensuring diversity, equity, and inclusion priorities are reflected and measured throughout Canopy, with a priority on implementing talent-driven practices fundamental to an open and inclusive environment.”

Canopy announced its search for a diversity, equity and inclusion leader in September 2020. The move was part of a series of diversity-focused initiatives that included a review of human-resources policies and hiring practices and an inaugural diversity, equity and inclusion report.

Diversity is an increasingly important issue for both Canadian and U.S. cannabis businesses.

Most leadership roles at regulated Canadian marijuana companies are held by white men, according to an October 2020 analysis from researchers with the University of Toronto’s Centre on Drug Policy Evaluation.

Marijuana Business Daily previously reported that only 4% of Canadian cannabis licensees are Indigenous-affiliated and men hold 93% of Canadian cannabis boardroom positions.

New York Senate passes historic adult-use marijuana bill

(This story has been updated to reflect that the Senate passed the adult-use bill).

The New York state Senate on Tuesday night passed a landmark recreational marijuana bill by a vote of 40 to 23.

New York’s Assembly is now considering the bill.

The quick action comes just days after legislative leaders and Gov. Andrew Cuomo agreed on the main details of the measure.

Marijuana Business Daily projects that a recreational marijuana market in New York would generate $2.3 billion in annual sales by its fourth full year.

Sales could begin as soon as a year from after the measure is enacted.

The bill provides huge licensing opportunities and support to social equity applicants and microbusinesses. In fact, the measure has a stated goal to issue 50% of adult-use licenses to social and economic equity applicants.

Microbusinesses would be allowed to have vertical operations.

The state’s 10 existing medical marijuana operators could enter the adult-use market, but they would pay large licensing fees to do so. The fees would help fund the social equity programs.

The medical marijuana companies would be permitted to operate three adult-use stores apiece, co-locating them with three of their MMJ dispensaries.

Existing MMJ companies also could double their current number of dispensaries from four to eight, provided two are in unserved or underserved areas.

Cannabis products would be taxed at 13%, of which 9% would go to the state and 4% to localities.

A state cannabis advisory board would be created, with the authority to:

  • Recommend a number of licenses “to ensure a competitive market where no licensee is dominant in the statewide marketplace or in any individual category of licensing.”
  • To “actively promote and potentially license social and economic equity applicants.”

– Jeff Smith