Cannabis Industry Daily News

TerrAscend to buy Maryland marijuana firm from Curaleaf for $27.5 million

Cross-border marijuana firm TerrAscend Corp. on Friday announced an agreement to acquire HMS, a Maryland medical cannabis processor and cultivator, from Curaleaf Holdings for $27.5 million.

The price tag includes $25 million in cash plus a $2.5 million note at 5% annual interest, and it’s due to Curaleaf in April 2022.

HMS operates a 22,000-square-foot cultivation and processing facility in Frederick, Maryland, that currently produces medical marijuana flower and oil “and has the capability to produce edibles upon regulatory approval,” according to a TerrAscend news release.

TerrAscend said it plans to expand the facility.

“This acquisition enables TerrAscend to expand its footprint into another robust limited license medical cannabis market with strong, long-term growth potential,” TerrAscend Executive Chair and CEO Jason Ackerman said in the release.

“By combining HMS with our industry-leading scaled operations in the adjacent states of Pennsylvania and New Jersey, we will leverage our strong management team and corporate support functions to drive economies of scale.”

The deal is subject to regulatory approval.

TerrAscend, which is based in both New York and Toronto, recently announced preliminary third-quarter financial statements signaling revenue growth.

Massachusetts-based Curaleaf said the sale of HMS will allow it to proceed with its proposed acquisition of Maryland Compassionate Care and Wellness, which has a 55,000-square-foot cultivation and processing facility in Taneytown, Maryland, and the Herbology dispensary in Gaithersburg.

Also on Friday, Curaleaf announced the sale of Curaleaf Maryland, holder of a processing license in Cumberland for $4 million.

The company did not reveal the buyer in that transaction.

“The asset sales we announce today will allow us to optimize Curaleaf’s vertically integrated presence in Maryland within the regulation which limits operators to a single grow and single processor,” Curaleaf CEO Joseph Lusardi said in a news release.

Colorado, Illinois cannabis industries set for gains after ballot measures

Get in-depth analysis from MJBizCon’s Passholder Days about how the 2020 election impacted the marijuana industry. It’s available to you on demand.

The recreational marijuana industry is poised to expand further in Colorado and Illinois, where voters in several municipalities approved local ballot questions that will repeal previous business bans, according to early returns.

In Colorado, at least 12 cities voted on marijuana-related ballot measures.

As of Thursday, eight that would authorize new marijuana businesses were passing, and another two to authorize special sales taxes for MJ transactions were also winning, according to Denver alt weekly Westword.

Towns now poised to allow rec marijuana sales include:

  • Broomfield.
  • Buena Vista.
  • Cedaredge.
  • Fort Lupton.
  • Lakewood.
  • Littleton.
  • Paonia.
  • Romeo.

In addition, the resort town of Winter Park approved a recreational marijuana sales tax but did not explicitly sign off on allowing rec sales.

And the town of Dinosaur approved a cannabis sales tax increase. But the towns of Kiowa and Eckley both rejected ballot measures to allow new marijuana businesses.

In Illinois, at least seven Chicago suburbs voted on whether to allow commercial cannabis in their towns, and as of Thursday, six of those pro-marijuana questions were passing, the Chicago Tribune reported.

Those included:

  • Batavia.
  • Elk Grove Village.
  • Glen Ellyn.
  • Mount Prospect.
  • Park Ridge.
  • Wilmette.

Western Springs was the only Illinois town to reject a recreational marijuana sales ballot question.

The development in both states follows a yearslong trend of once-resistant localities repealing bans on commercial marijuana in favor of the jobs and tax revenue the industry brings, typically after it becomes clear that neighboring cities have rolled out successful markets.

Governor signals NY will consider adult-use marijuana legalization soon

(This story has been updated with comments from Connecticut’s governor.) 

Days after New Jersey voters approved adult-use marijuana, New York Gov. Andrew Cuomo reiterated that he will push for recreational legalization in the coming months as a way to help offset the state’s multibillion-dollar budget deficit.

“I think this year it is ripe because the state is going to be desperate for funding,” Cuomo said, according to North Country Public Radio in Canton, New York.

In neighboring Connecticut, Gov. Ned Lamont signaled he’d support adult-use legalization to curb the spread of COVID-19.

“I think so,” Lamont told Yahoo Finance Live when asked if he would pursue legalization next year.

“Right now, I’m surrounded by states – New Jersey and Massachusetts – where marijuana is already legal. I don’t need a lot of people driving back and forth across the border,” Lamont added, referring to the coronavirus pandemic.

In terms of New York, experts have said that a recreational marijuana measure would be easier to pass if it’s tucked into the state’s budget bill early next year.

But it’s possible that Cuomo could press state lawmakers to consider a measure before that.

New York also might want to wait until it knows how the next coronavirus relief package will affect the state’s budget, one marijuana industry official observed recently.

But Cuomo said that “even with the stimulus, we’re still going to need funding.”

New Jersey’s legalization of adult-use marijuana puts pressure on neighboring New York and Pennsylvania to follow suit.

“The alternative is New York and Pennsylvania are senselessly donating millions of dollars to the Garden State,” Matt Schweich, deputy director of Marijuana Policy Project, said during an election panel Wednesday as part of Marijuana Business Daily‘s Passholder Days Forum.

Schweich was referring to the fact that New York and Pennsylvania would lose out on marijuana revenue to New Jersey.

New York lawmakers haven’t been able to agree on legalization and will face potential stumbling blocks in terms of taxation and how to ensure that small businesses, women and minorities are included in the industry.

Experts also warn that the state’s highly restrictive medical marijuana program will make it difficult to transition into adult use.

Canada’s Ayr Strategies buys Arizona medical cannabis firm for $81 million

Sessions at MJBizCon’s Passholder Days were devoted to the Canadian market, with topics ranging from the role of small producers to global opportunities for Canadian companies to roundtable discussions about retail, processing and cultivation. It’s all available to you on demand.

Multistate cannabis operator Ayr Strategies announced an $81 million acquisition deal that will allow the Toronto-based company to enter Arizona, giving it three storefronts in the Phoenix metro area and two cultivation facilities.

The deal comes on the heels of Arizona’s Election Day move to legalize recreational marijuana, which will largely benefit the existing operators in the state.

Ayr purchased a company that operates under the dispensary brand Oasis, according to a news release and the Arizona Republic. The deal includes:

  • Two storefronts in Chandler and another in Glendale – both Phoenix suburbs.
  • A grow and manufacturing facility in Chandler.
  • An indoor growing operation in Phoenix.

Oasis sold for $10 million in cash, $41 million in stock and $30 million in seller notes.

The acquisition will bring Ayr’s storefront footprint to 11 dispensaries in five states, and CEO Jonathan Sandelman said the company is “positioning ourselves as one of the top multistate operators in the U.S.”

Ayr already owns or has entered into acquisition deals in four other states, including Massachusetts, Nevada, Ohio and Pennsylvania.

“We’ve always looked to go deep in the best markets, targeting attractive assets in limited-license states with large populations, and where we can build a vertically integrated presence and continue adding to our deep talent pool. Importantly, it needs to be at the right price,” Sandelman said.

Ayr Strategies trades on the Canadian Securities Exchange under the ticker symbol AYR.A and on over-the-counter markets as AYRSF.

California marijuana industry opportunities on the rise

The turbulent California marijuana market is slowly moving toward stability with strong sales growth and plentiful business opportunities – despite being roiled by the coronavirus pandemic, looting from civil unrest and wildfires.

That was among the messages from three sessions focused on the California market during Marijuana Business Daily’s Passholder Days Forum.

The pandemic actually has become an ally of sorts, according to MJBizDaily senior reporter John Schroyer.

He noted how the industry was declared “essential” during the outbreak, which helped lead to robust sales and incentive for local jurisdictions to embrace recreational marijuana to generate tax revenue and economic opportunities.

The California industry got more good news on Election Day, when 31 local marijuana ballot initiatives passed, many of them establishing or setting the stage for new marijuana licensing opportunities.

“The war on drugs is over, and drugs won,” Elizabeth Ashford, senior director of corporate communications for cannabis delivery company Eaze, said in describing the big takeaway from the elections.

Here are some of the bright spots for a $3 billion-plus market where hurdles persist, such as competition from the illicit market, high taxes and lack of access to capital and banking services.

  • License opportunities exist, and more are on the horizon. Schroyer said that while there are openings in markets such as Los Angeles, some of the best opportunities are in small towns and suburbs, which might allow only a few licenses. But, he cautioned, entrepreneurs need to be of the mindset that they won’t turn a profit quickly. “The long game is the only game,” he said.
  • Some of the best opportunities will be in retail. Hirsh Jain, director of government affairs for San Jose-based Caliva, noted that only about one-fifth of California’s cities have authorized retail marijuana shops but more are taking action as evidenced by Tuesday’s election. California has roughly 700 marijuana retailers, but it should have 4,000 or 5,000, he said. The process to open a store in the state currently can take a few years, but Jain said he expects that time frame to decrease to 12-18 months.
  • Investment managers described a climate in which capital is slowing coming back, but only to companies that are well-managed and financially sound. Right now, capital is mostly trickling into multistate operators, but it will “cycle down” to private companies, said Morgan Paxhia, managing partner of San Francisco-based Poseidon Asset Management.
  • Panelists also said that better access to banking services is urgently needed for marijuana businesses. They were hopeful that cannabis banking reform could occur even if the Republicans maintain control of the U.S. Senate, as it looks like they will.

– Jeff Smith

Canadian cannabis firm Hexo claims win in California trademark settlement

Sessions at MJBizCon’s Passholder Days were devoted to the Canadian market, with topics ranging from the role of small producers to global opportunities for Canadian companies to roundtable discussions about retail, processing and cultivation. It’s all available to you on demand.

Canadian cannabis producer Hexo Corp. said it has reached a settlement in a trademark-infringement lawsuit against California-based Assi Project Management.

Hexo sued Assi for unfair competition and trademark infringement in the U.S. District Court for the Southern District of California after discovering the company had been selling CBD products in the U.S. under the name “HEXOCBD,” according to a news release issued Thursday.

Hexo said the settlement includes a permanent injunction preventing Assi and its principals from using any name that contains the word “Hexo” or a similar term.

Assi must destroy all materials referencing “HEXOCBD” and any reference to the term “Hexo.”

Assi also abandoned U.S. trademark applications for “HEXOCBD” and has transferred its website domain names containing the term “Hexo” to the Canadian company.

Hexo CEO Sebastien St. Louis said in a statement that the settlement “sends a message that we will not tolerate violations of our trademark rights.”

“We are creating a company and brands that can stand the test of time and that can grow in legal markets as they become available to us,” St. Louis said.

The Hexo release noted that the company and its beverage partner, Molson Coors, are working on plans for hemp-derived CBD beverages in Colorado.

The Hexo-Molson beverage joint venture launched adult-use cannabis drinks in Canada this summer.

Ottawa, Ontario-based Hexo recently reported a net loss of 546 million Canadian dollars ($419 million) for its 2020 fiscal year.

The company’s shares trade as HEXO on the New York Stock Exchange and Toronto Stock Exchange.

Copperstate Farms expands its marijuana operations in Arizona

Copperstate Farms Management is expanding its footprint in Arizona through an agreement to acquire control of two licensed medical marijuana dispensaries in North Scottsdale and Tempe.

The dispensaries, Level Up, were formerly the property of Los Angeles-based MedMen Enterprises and branded as MedMen Arizona.

Financial terms weren’t disclosed for the deal, which includes a 25,000-square-foot cultivation and processing warehouse.

The transaction follows on the heels of Arizona voters legalizing a recreational marijuana market this week.

Existing medical marijuana operators such as Copperstate will be getting priority status in the state’s impending adult-use market.

MedMen agreed to pay $15 million for the two dispensaries in February 2019, but the financially struggling multistate operator put the assets up for sale in November 2019.

The dispensaries became mired in litigation earlier this year when MedMen allegedly still owed $12 million, plus interest, from the original deal.

With the Level Up acquisitions, vertically integrated Copperstate Farms now controls four retail operations.

“Copperstate Farms sees tremendous value in these locations, which will allow us to further expand our Sol Flower dispensary brand,” Copperstate Farms CEO Pankaj Talwar said in a news release.

Copperstate Farms is home to the one of the largest indoor cannabis facilities in the U.S. with 40 acres under glass and operates multiple product lines, including Good Things Coming edibles.

Arizona is one of the country’s largest medical marijuana markets, with sales projected to reach $770 million-$910 million a year.

Marijuana Business Daily projects that Arizona’s adult-use sales will total around $760 million a year by 2024.

Cannabis legalization wins could unite US lawmakers on reform, insiders say

Industry stakeholders joined MJBizCon’s second Passholder Days Forum on Wednesday to discuss “Election 2020 Results: The New Opportunities in Cannabis.”

 

Learn more about the state of the industry at MJBizCon 2020.

The U.S. general election on Tuesday proved that cannabis legalization is popular across vastly different regions of the country – provided it makes it to the ballot box, industry experts said.

Speaking on an election panel Wednesday during Marijuana Business Daily‘s Passholder Days Forum, Dan Pabon, chief government affairs officer for Denver-based vertically integrated cannabis company Schwazze, said “cannabis is becoming less and less of a partisan issue.”

“If cannabis can serve as the uniter on these issues, perhaps we have a pathway forward where we can find common ground on both sides of the aisle,” he added, referring to Democrats and Republicans.

Overall, the marijuana industry secured big wins on Election Day as voters in five states legalized medical and recreational cannabis.

But the results of the federal elections remain murky in terms of what will happen in the U.S. Senate and who will win the White House – President Donald Trump or former Vice President Joe Biden.

Pabon noted that with the five marijuana legalization victories, congressional lawmakers in those states will have “more cover on this issue than they had previously.”

That could help further the cause for federal legalization of medical and/or recreational marijuana.

The panel agreed that both federal banking reform for cannabis companies and changing Section 280E of the federal tax code will largely depend on the likelihood of the Democrats flipping the Senate, which appears increasingly unlikely.

Below are summaries of what the panel said about the five state initiatives:

New Jersey

Matt Schweich, deputy director of the Marijuana Policy Project, agreed that the state could be a domino and cause others in the region to legalize recreational marijuana, including New York and Pennsylvania.

“The alternative is New York and Pennsylvania are senselessly donating millions of dollars to the Garden State,” he added.

Arizona

Schweich pointed out that Arizona is more of a purple state in terms of Republican and Democratic voting habits, which “speaks to the fact that marijuana reform can win in every country.”

He added that the state’s medical marijuana is well-developed, which should lead to a smooth transition to recreational sales.

Montana

The new law allows only Montanan residents to own recreational marijuana businesses, a licensing structure that has resulted in legal challenges elsewhere, including in Maine.

Schweich said the initiative was drafted to appeal to voters, despite those “legal question marks.”

South Dakota

“This is the smart way to do it,” Schweich said of voters’ approval of both medical and recreational marijuana.

He added that there’s “no rational reason” why a program must begin with medical marijuana sales before moving to recreational cannabis.

“That transition is fraught with challenges,” he added.

Mississippi

Chanda Macias, CEO of Louisiana-based Ilera Holistic Healthcare and head of cannabis professionals group Women Grow, said the legalization of medical marijuana picks up on trends seen elsewhere in the South.

For example, Florida, Oklahoma and Arkansas allow the sale of MMJ flower in those markets, and Mississippi will do the same under its new medical program.

She expects other states in the region to follow suit.

“Texas is coming,” Macias said. “It’s not ready yet, but it does hit, it will be a tremendous force for the industry.”

– Bart Schaneman

2020 election results signal growing public approval of cannabis

Get insights on state ballot initiatives and all things Election 2020 for cannabis at MJBizCon. On Wednesday, our Election Week panel discussed the results.

Marijuana ballot measures in five states passed more resoundingly in 2020 than initiatives did four years ago in what might represent further growth in voters’ acceptance of the plant – particularly its recreational use.

According to a Marijuana Business Daily analysis, the average margin of victory for adult-use and medical marijuana campaigns this year was 24.6 percentage points compared with only 16.5 points in 2016.

The shift was most evident in Arizona, the only state where a legalization ballot measure suffered a defeat four years ago.

In 2016, nine states voted on marijuana legalization initiatives: Five, including Arizona, involved recreational cannabis, and four had MMJ on the ballot.

Arizona voters rejected adult use in 2016 by a slim 2.64 percentage points – only to pass it by 20 points on Tuesday night.

Recreational and medical marijuana ballot measures in Mississippi, Montana, New Jersey and South Dakota also passed, according to media projections, although some states are still counting votes.

Voter approval was apparent in the polls leading up to the 2020 election, and there were few surprises when the votes were counted.

South Dakota was the tightest of the legalization races, with only a 6-percentage-point margin of victory involving the state’s recreational ballot measure.

Medical marijuana continues to be popular with voters, as initiatives in Mississippi and South Dakota easily won by a margin of more than 35 points.

State ballot initiatives also faced less opposition, with marijuana proponents outraising opponents 36-to-1 this election cycle.

This was particularly evident in the adult-use legalization race in Montana, where supporting campaigns raised $6.9 million to the opposition’s $78,000.

Los Angeles hit with another marijuana social equity lawsuit

Another group of frustrated social equity marijuana applicants filed a lawsuit against Los Angeles.

In this suit, eight companies and individuals – led by Angel City Partners – contend business applications they filed in September 2019 for social equity retail storefront licenses were for some reason ignored.

According to Law360.com, the lawsuit – filed Oct. 30 in L.A. County Superior Court – alleges that some marijuana companies received help from city staff.

The suit requests that:

  • An emergency injunction be granted to halt all license processing until the case is resolved.
  • The entire licensing results from last fall be thrown out and redone if the plaintiffs’ business license applications aren’t given due consideration.

Such moves could result in further delays for L.A. cannabis stakeholders hoping to open new companies in the city.

This is at least the fourth lawsuit filed in the past year over L.A.’s marijuana licensing program.

An April suit, also filed by jilted social equity applicants, resulted in a settlement and an increase in the number of storefront permits from 100 to 200.

A lawsuit filed in September seeks redress over the same storefront licensing window from 2019.

And a suit filed in early October seeks to overturn a city ordinance that reserves all marijuana delivery permits for social equity applicants until 2025.

South Dakota OKs adult-use cannabis after passing medical measure

Get insights on state ballot initiatives and all things Election 2020 for cannabis at MJBizCon. On Wednesday, our Election Week panel will discuss the results.

South Dakota became the first state in the country to legalize medical and adult-use marijuana simultaneously during Tuesday’s election.

In addition to handily passing Measure 26, which creates a medical marijuana market in the state, voters also passed Amendment A, the adult-use cannabis ballot item, with 53.5% in favor and 46.5% against.

The Washington Post called the contest with 90% of precincts reporting.

Melissa Mentele, executive director of New Approach South Dakota, said the success of both initiatives was crucial to cover the needs of all South Dakotans.

Post-traumatic stress disorder (PTSD) is a condition that often affects veterans and is a qualifying condition for MMJ in many states, but the Veterans Health Administration won’t recommend medical marijuana.

“Our veterans cannot be part of a statewide MMJ registry. So having adult use allows us to serve patients that couldn’t be under a medical program,” Mentele said. “A lot of adult-use states serve our vet population more than almost anyone.”

Both ballot issues will become law July 1.

– Kate Lavin

Montana becomes 14th state to legalize recreational marijuana

Get insights on state ballot initiatives and all things Election 2020 for cannabis at MJBizCon. On Wednesday, our Election Week panel will discuss the results.

Montana became the 14th state to legalize recreational marijuana, joining New Jersey and Arizona on Tuesday in approving recreational cannabis during the 2020 election.

The Washington Post called the election with 58% of voters in favor  of Initiative 190 and 60% of precincts reporting.

Initiative 190 creates a recreational marijuana market in a state that already has a medical marijuana program expected to draw $60 million-$75 million in sales this year.

A University of Montana study projected the adult-use initiative would generate sales of $217 million in the first year and $234 million in 2024.

Under I-190:

  • Smokable flower will be permitted.
  • A seed-to-sale tracking system will be implemented.
  • Montana residency will be required for licensees.
  • Marijuana operations will have to be at least 500 feet from churches and schools.

Additionally, local governments looking to ban cannabis businesses would have to get agreement from voters under I-190, a departure from the current MMJ program.