Cannabis Industry Daily News

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.

California REIT, Curaleaf strike $5.5M cannabis deal on New Jersey property

Innovative Industrial Properties, a San Diego-based, marijuana-centric real estate investment trust (REIT), has solidified yet another sale-leaseback deal, this time partnering on a New Jersey property with multistate operator Curaleaf Holdings.

Innovative Industrial Properties (IIP) bought a 111,000-square-foot facility on land in Blue Anchor, New Jersey, for $5.5 million, then leased it back to a subsidiary of Massachusetts-based Curaleaf for use as a commercial marijuana facility, Benzinga reported.

The California REIT has also agreed to reimburse Curaleaf for up to $29.5 million in improvements to the property.

Sale-leaseback real estate deals such as this have become increasingly common in the U.S. marijuana sector, with IIP having emerged as a dominant player in the practice.

The company has also brokered deals with cannabis MSOs such as Cresco Labs, Green Thumb Industries and Trulieve.

Innovative Industrial trades on the New York Stock Exchange under the ticker symbol IIPR.

Curaleaf trades on the Canadian Securities Exchange under the ticker symbol CURA and on the U.S. over-the-counter markets as CURLF.

Arkansas medical marijuana growers sue to keep others from entering market

Five Arkansas companies with permits to grow medical cannabis are suing to stop three more cultivation licenses from being issued.

The lawsuit 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, according to the Arkansas Times.

The plaintiffs – Bold Team, Natural State Medicinals Cultivation, Natural State Wellness Enterprises, Osage Creek Cultivation and Delta Medical Cannabis – are suing:

State regulators were allowed to issue up to eight cultivation licenses under the 2016 law that legalized MMJ in Arkansas.

Rhode Island taking applications for six more medical cannabis dispensaries

Rhode Island medical cannabis regulators started accepting applications Friday for six potentially lucrative dispensary licenses, a move that will triple the number of retail outlets for the $60 million-plus market.

With only three dispensaries now licensed, the state ranks at the top of the U.S. in terms of patients per dispensary, according to the recently released Marijuana Business Factbook – despite Rhode Island having only roughly 18,000 patients.

That situation prompted regulators to announce in March they would issue additional licenses for six MMJ dispensaries.

But the new licensees, unlike the three existing vertically integrated dispensaries, will not be allowed to grow their own marijuana, according to the Providence Journal.

The six new dispensaries, called compassion centers, will have to procure their product from the 56 stand-alone cultivators in the state as of the second quarter.

That situation could change once the dispensaries are operational, however, because “the regulations include the possibility of seeking a variance to grow,” the Journal reported.

The licenses will be issued through a lottery process, with one permit issued for each of six geographic zones.

State regulators plan to take their time, however.

The application deadline isn’t until Dec. 15 because regulators want to give time for applicants to select locations and for local governments to hold public hearings, according to the Journal.

Winning licensees aren’t expected to start selling medical marijuana until late 2021.

The licensing plan spurred a power battle between Gov. Gina Raimondo and legislative leaders who objected to the state’s plan for retail-only dispensaries. Raimondo has won – for now.

And the stand-alone cultivators argued that additional vertically integrated dispensaries could drive them out of business.

Marijuana operator MedMen on the hook to pay legal fees of former CFO

A California judge has ruled that MedMen Enterprises must abide by an employment contract and pay the legal fees of a former chief financial officer who sued the marijuana multistate operator.

The judge ruled that the employment contract is “clear and unambiguous” in requiring Los Angeles-based MedMen to reimburse former CFO James Parker for up to $500,000 a year in legal fees, Law360 reported.

But the court did hold out the possibility that MedMen could later successfully argue that the employment contract isn’t valid.

Parker sued MedMen in January 2019, alleging breach of contract, wrongful termination and other misconduct such as campaign finance violations in Nevada.

His multimillion-dollar lawsuit also portrayed a hostile work environment.

MedMen has called the lawsuit baseless.

California authorities raid illegal cannabis ‘farmers market’

An illicit gathering of marijuana buyers and sellers in Fresno, California, was broken up by the state’s Bureau of Cannabis Control and the city’s police department.

The action this week might have been the first of many raids on so-called “smoke sessions” that typically function as underground cannabis farmers markets.

“That’s how it was described to me as well,” Alex Traverso, the BCC’s communications chief, said when asked if it the gathering was akin to a farmers market.

He confirmed that at least seven different vendors were identified during the July 14 raid.

In addition, authorities seized almost 40 pounds of marijuana flower, nearly 94 pounds of cannabis concentrates, a little over $2,000 in cash and six illegal firearms.

The value of the confiscated goods totaled more than $700,000, the BCC posted on its Twitter account.

Neither the BCC nor the Fresno County District Attorney’s office had any immediate information regarding whether any arrests were made.

Traverso said a complaint filed with his office led to the raid, which is an indication that more actions of this type are likely amid a “broadening of the overall enforcement efforts.”

“This shows a shift away from the norm” on enforcement against the state’s illicit market, Traverso said.

“These things – along with illegal delivery – are a little harder to crack down on, because you don’t have a brick-and-mortar storefront that’s advertising,” he added.

He was referencing the “smoke sessions,” which are typically informal gatherings of unlicensed marijuana growers, peddlers and consumers.

“Even if these things are flying under the radar, it shows that they’re not, because people will find them and report them,” Traverso said.

New Jersey governor touts benefits of marijuana legalization amid recession

New Jersey Gov. Phil Murphy has long planned to legalize adult-use marijuana in his state, but now he’s adopted a new line of reasoning: Doing so could help the economy.

During a radio talk-show appearance, Murphy said legalizing recreational cannabis would be “an incredibly smart thing to do,” NJ.com reported.

Murphy acknowledged that New Jersey – like every other state – is facing a serious budget shortfall because of the coronavirus crisis and the resulting recession, but the Democrat said legalizing marijuana could help bridge the financial gap.

Though Murphy tried to persuade state lawmakers to legalize rec marijuana, the Legislature couldn’t agree on a plan and punted to the voters.

So adult-use marijuana will be on the ballot in New Jersey in November.

A 2016 report from the New Jersey Policy Perspective estimated that legalizing marijuana could bring in more than $300 million annually to the state in tax revenues, and a recent poll found that roughly six in 10 voters back legalization, NJ.com reported.

Ultra sues New Mexico health department over new cannabis rules

New Mexico’s largest medical marijuana company is suing the state over new MMJ regulations it calls “arbitrary and capricious.”

According to the Santa Fe New Mexican, Ultra Health, based in Bernalillo, is challenging the state health department over several new rules, including:

  • Strict testing requirements for pesticides, heavy metals and microbials.
  • Regulations concerning hemp cultivation and extracts.
  • Labeling requirements.
  • Criteria about license suspensions or revocations.

Ultra Health CEO and President Duke Rodriguez has been successful in several other lawsuits against the health department over other medical cannabis rules.

Florida high court wants to hear more in medical marijuana licensing case

A court case that could open up stand-alone licensing opportunities in Florida’s vertically integrated medical marijuana market isn’t going to be decided anytime soon.

In a rare move, the Florida Supreme Court – which held oral arguments on the issue in early May – scheduled a second set of oral arguments for Oct. 7.

Industry officials had expected a ruling this summer.

The case, filed by Tampa-based Florigrown, has been dragging on since the summer of 2018, when Leon County Circuit Judge Charles Dodson declared that licensing limits imposed by a 2017 law violated the MMJ constitutional amendment approved by Florida voters in 2016.

At one point, Dodson told Florida regulators to quit stalling and issue additional licenses, but the state instead decided to fight his ruling.

Under the current vertically integrated structure and licensing caps, a handful of operators control a Florida medical cannabis market that Marijuana Business Factbook projects will reach $775 million to $950 million in sales this year.

Florida-based Trulieve by itself has a market share exceeding 50% and operates 51 of Florida’s 258 dispensaries, according to the state’s latest weekly update.

Metrc fights for right to charge fees to Missouri medical cannabis operators

Marijuana track-and-trace company Metrc continues its legal tangle with Missouri state officials over the right to charge “tag fees” to medical cannabis dispensaries.

In the latest development, Metrc wants a Missouri appellate court to overturn a lower court’s decision that would prevent the Florida-based company from charging fees for radio-frequency identification (RFID) tags, Law360 reported.

The dispute dates to 2019, shortly after Metrc was awarded a $5 million contract by the state after a competitive bidding process.

Almost immediately, a rival protested to the state that Missouri’s deal with Metrc could contain hidden costs.

State regulators rejected the notion, saying Metrc’s contract did not allow the company to charge tag fees to MMJ licensees.

Metrc later sued in court, claiming that Missouri’s medical marijuana program rules do allow such fees.

The track-and-trace dispute is one of several controversies dogging a Missouri medical marijuana program that has been delayed by the coronavirus pandemic.

In addition, Missouri faces hundreds of licensing appeals and investigations into possible misconduct by state regulators.

Struggling marijuana firm iAnthus plans restructuring deal, recapitalization

Multistate cannabis grower and retailer iAnthus Capital Holdings announced a restructuring support deal with a recapitalization component, giving the company an opportunity to reduce its outstanding debt.

The New York-based company with offices in Toronto received a demand for repayment on its secured debentures in June after defaulting on interest payments.

After a strategic review, iAnthus’ board “concluded that the recapitalization transaction represents the best available alternative to improve the company’s capital structure and to maximize and preserve value for the company and its stakeholders,” iAnthus said in a news release.

The restructuring support agreement announced Monday is supported by all of iAnthus’ secured lenders and more than 91% of unsecured debenture holders, the company said.

The deal would reduce iAnthus’ outstanding debt from nearly $169 million to about $101 million and provide $14 million in interim financing.

The company would also issue $20 million in equity to its secured lenders and unsecured bondholders.

The deal is subject to court approval in Canada.

Interim CEO Randy Maslow said iAnthus has faced liquidity challenges stemming from a “decline in the overall public equity cannabis markets” combined with the impact of the COVID-19 pandemic.

The company trades on the Canadian Securities Exchange as IAN, but trading is currently suspended.