Cannabis Industry Daily News

California awards $15 million more in cannabis social equity grants

California is handing out $15 million in grant money to 10 cities and counties that have adopted social equity programs to help get minorities and those harmed by the war on drugs involved in the legal marijuana market.

The new allotment, awarded by Gov. Gavin Newsom’s Office of Business and Economic Development and the state Bureau of Cannabis Control, builds on the $40 million previously awarded for the same cause.

A minimum of $11.5 million of the funds will go straight to social equity entrepreneurs in the form of loans or grants, according to a news release.

“As we work to safely reopen our economy, leading with equity across all sectors will ensure a just recovery and further our commitment to create a truly diverse legal industry,” said Nicole Elliott, senior adviser on cannabis to the governor.

It’s the third round of state funding for cities with existing social equity programs. The recipients and their grant awards include:

  • Oakland, $2.4 million
  • San Francisco, $2 million
  • Los Angeles, $2 million
  • Sacramento, $1.8 million
  • Long Beach, $1.2 million
  • Fresno, $1.2 million
  • Humboldt County, $1 million
  • Lake County, $888,000
  • Palm Springs, $869,000
  • Mendocino County, $832,000

Another eight local governments received up to $75,000 apiece to help create social equity programs:

  • San Diego County
  • Sonoma County
  • Trinity County
  • Escondido
  • Modesto
  • Richmond
  • San Diego
  • Isleton (received $22,000)

4Front eyes Illinois expansion through $51.5M marijuana sale-leaseback deal

Marijuana multistate operator 4Front Ventures entered into definitive agreements to finance the construction of a massive $51.5 million cultivation and processing facility in Illinois through a sale-leaseback arrangement.

The agreements call for San Diego-based Innovative Industrial Properties (IIP) to acquire the land for $6.5 million and fund the approximately $45 million, 258,000-square-foot project, according to a news release.

Arizona-based 4Front has previously used sale-leaseback transactions to raise cash, pay down debt and bolster its financial position.

But this deal is focused on taking advantage of the booming, $1 billion-a-year recreational marijuana market in Illinois.

IIP will lease the cultivation and processing facility back to 4Front in the form of a 20-year lease with two, five-year extensions at 4Front’s option.

4Front said the transaction is subject to securing “appropriate” county and state incentives as well as other conditions.

The 258,000-square-foot facility will include 65,000 square feet of canopy space and about 70,000 square feet for processing flower, edibles, concentrates and other products.

The new facility will generate more than 240 new jobs, according to the release.

4Front indicated that it hopes to eventually add 300,000 square feet to the facility to meet market demand.

Cannabis tech platform Dutchie raises $200M, acquires Greenbits, LeafLogix

Cannabis retail technology platform Dutchie has raised $200 million in a Series C funding round it says values the company at $1.7 billion.

The funding round was led by investment firm Tiger Global and also included previous investors Casa Verde Capital and former Starbucks CEO Howard Schultz.

“Our investment will help Dutchie extend its platform and deepen relationships with merchants, consumers, and brands to drive better outcomes for all in this ecosystem,” said Tiger Global partner John Curtius in a news release issued Tuesday.

According to the release, Dutchie would use the new funding “to add and attract top talent, assist with expansion into new markets, and launch major product developments to support cannabis dispensaries while meeting evolving consumer demand and expectations.”

The Oregon-based company also announced it had acquired two other marijuana software platforms, Greenbits and LeafLogix, without disclosing the prices of those acquisitions.

Dutchie raised $35 million in August 2020 from a group of investors that included Casa Verde and Schultz.

Unserved CO areas getting recreational marijuana stores after election

Regulated recreational marijuana stores are coming to untapped Colorado markets after pro-marijuana ballot wins last November.

Voters in eight Colorado municipalities voted in last November’s election to allow recreational marijuana sales in the 2020 election, and the first store of the new crop has already launched, according to Denver alt-weekly Westword.

Ascend Cannabis in Littleton commenced adult-use sales in late February, Westword reported, with local medical marijuana dispensary Silver Stem Fine Cannabis hoping to start non-MMJ sales by the end of April.

In Lakewood, a new law that permits existing MMJ dispensaries to apply for recreational licenses has reportedly drawn interest from four applicants.

According to Westword, some other Colorado municipalities are further behind after approving medical marijuana sales:

  • Broomfield is still approving new rules and regulations for adult-use businesses. The city currently has no marijuana businesses.
  • Buena Vista closed its initial licensing application process on March 8, with licenses expected in the near future.
  • Cedaredge approved marijuana business rules in February and will discuss plans this week to schedule a timeline for applications. Cedaredge will cap its MMJ dispensaries and recreational retailers at two apiece.
  • Fort Lupton authorities postponed discussions about the town’s application and licensing process until later in April.
  • Paonia is expected to implement application and regulation policies by May.
  • Romeo currently has no licensed cannabis businesses and hasn’t established regulations.

Combined medical and recreational marijuana sales in Colorado have exceeded $10 billion since the state’s adult-use program launched in 2014.

Arizona adult-use cannabis sales hit $2.9 million during initial 10 days

Adult-use cannabis sales in Arizona reached $2.9 million in the first 10 days that sales were permitted, according to figures released by the state.

Recreational sales in Arizona began Jan. 22 after 73 of 130 licenses were approved by the Arizona Department of Health Services.

Medical cannabis dispensary operators were granted first crack at the new adult-use licenses.

The Arizona recreational market launched less than three months after voters approved adult-use sales during last November’s general election.

There is a delay in Arizona’s recreational sales reporting because marijuana taxes are collected a month after transactions occur.

The state collected $226,355 in tax revenue on the sales.

Marijuana Business Daily projects that Arizona’s recreational market will reach $375 million-$400 million in its first full year of sales and more than $700 million yearly by 2024.

SPAC to acquire four marijuana operations in $210 million deal

New York-based Greenrose Acquisition Corp., a special purpose acquisition company, entered into definitive agreements to acquire four marijuana businesses in a deal initially valued at $210 million.

The companies to be acquired are Futureworks (doing business as The Health Center), Shango Holdings, Theraplant and True Harvest.

The four companies combined have cannabis operations in seven states: Arizona, California, Colorado, Connecticut, Michigan, Nevada and Oregon.

The deal reflects the increasing popularity of cannabis-focused SPACs and a strengthening of investor sentiment, particularly since Democrats won the presidency and, by slim margins, both chambers of Congress.

Greenrose said the acquisitions will establish a footprint in high-growth, limited-license markets that include new and potential recreational marijuana states.

The companies to be acquired and their operations include:

  • Futureworks/The Health Center: Three cultivation facilities, one processing facility and three dispensaries in Colorado with a focus on the Denver metro area.
  • Shango: Operations in Arizona, California, Michigan, Nevada and Oregon. The Nevada and Oregon companies are vertical operations.
  • Theraplant: One of only four cultivators in Connecticut. The company also has a processing and packaging facility in Connecticut.
  • True Harvest: Cultivation and processing facility in Arizona. Known as a premium craft producer.

The $210 million deal will include about $170 million in cash, $15 million in stock and $25 million in debt, according to a Greenrose news release.

Greenrose, which previously raised $150 million, said it intends to conduct an additional $150 million private offering of securities and debt for the acquisition and general corporate purposes.

According to the release, the company will be renamed The Greenrose Holding Co. and expects to transition its stock listing from the Nasdaq (GNRS) to the U.S. over-the-counter markets.

Greenrose also will list its stock on the Canadian NEO Exchange.

Maine’s largest city about to open recreational cannabis license floodgates

Maine’s biggest city, Portland, could soon be awash in recreational cannabis retailers after a slow implementation process.

SeaWeed Co. opened March 12, Grass Roots Marijuana Shop is expected to open Tuesday March 16 and another 31 applicants are awaiting licensing approval, the Portland Press Herald reported.

Most of those applicants are expected to be operating by November, if not sooner, Jessica Hanscombe, the city’s acting director of permits and inspections, told the newspaper.

Only one or two applicants have been denied, she noted.

Regulators currently have 59 cannabis business license applications to consider, including retailers, testing labs and manufacturing sites, according to the Press Herald.

Portland has moved relatively slowly in opening its recreational marijuana program in a state where sales launched last October.

Since then, Maine’s recreational market has generated $9.29 million in revenue, the Press Herald reported, including almost $2.5 million in January and more than $2.5 million in February.

Ohio high court orders state to act on medical marijuana cultivation expansion

(This story has been updated with a comment from a state official.)

The Ohio Supreme Court told state regulators they can’t just ignore applications to expand medical marijuana cultivation facilities.

In an eight-page decision, Ohio’s highest court ordered regulators to either approve or deny Fire Rock’s application in February 2020 to expand its Akron cultivation facility.

Fire Rock’s application to double its 3,000-square-foot operation came at a time when Ohio’s MMJ program suffered from product shortages and high prices.

State regulators had defended a decision not to act on the application by arguing that Ohio law prohibited cultivators from submitting an expansion application on their own initiative.

But the Supreme Court called that a “flawed legal theory.”

The court said that although the relevant state rule “limits how often a cultivator may submit an expansion application, it does not prohibit a cultivator from submitting an application on its own initiative.”

The court also said that the Ohio Department of Commerce has a “clear legal duty to either approve or deny (a) cultivator’s application.”

Fire Rock had applied for an expansion, saying it couldn’t grow enough marijuana to meet customer demand.

The company’s application not only included a floor plan and proposed construction timeline, but it also included sales projections and letters from dispensaries that wanted more product.

A state spokesperson wrote in an email to Marijuana Business Daily on Friday that the “Commerce (Department) has not yet made a decision on the expansion request, but will now do so in accordance with the Supreme Court’s decision.”

Michigan to spend $20 million from cannabis tax revenue on MMJ research

Michigan is allocating $20 million of its recreational marijuana tax revenue this year toward cannabis-related medical research.

The move to fund research comes after some confusion about marijuana tax disbursements earlier this month, MLive.com reported.

A March 4 announcement about the disbursement of marijuana tax revenue from the Michigan Department of Treasury made no mention of putting the money toward research.

However, Michigan law requires that the treasury department use that revenue to “provide $20 million annually to one or more clinical trials … researching the efficacy of marihuana in treating the medical conditions of United States armed services veterans and preventing veteran suicide.”

Michigan’s cannabis regulator, the Marijuana Regulatory Agency (MRA), previously told MLive.com that the agency was still setting up a dispersal system for the funding.

Now, the MRA has told the news website that the $20 million in research funding has been appropriated and will start being distributed over the current fiscal year, which ends in September.

Adult-use marijuana sales in Michigan approached $440 million in the first full year of the program, which launched in December 2019.

New marijuana group, including tobacco and alcohol firms, pushes for reform

The major stakeholders pushing Congress to enact sweeping federal marijuana reform just got bigger with the formation of a new band of businesses and industry experts who believe legalization is a foregone conclusion and that the real prize will be shaping a nationwide MJ regulatory framework.

According to a news release, the Coalition for Cannabis Policy, Education and Regulation is a combination of major players from mostly outside the traditional marijuana space but includes some that already have a financial stake in the industry.

Members include:

  • Altria Client Services, the producer of Marlboro cigarettes, a major investor in Canadian marijuana producer Cronos Group.
  • Constellation Brands, an alcohol company that invested nearly $4 billion in Canadian cannabis company Canopy Growth.
  • Molson Coors Beverage Co., a beermaker that has already entered the cannabis space with infused beverages.
  • The Brink’s Co., a private security firm.
  • National Association of Convenience Stores.
  • The Council of Insurance Agents & Brokers.
  • Convenience Distribution Association.

Those advising the coalition through its “Center of Excellence” include:

  • Former Minority Cannabis Business Association President Shanita Penny.
  • John Hudak of the Brookings Institution.
  • Brandy Axdahl of the Foundation for Advancing Alcohol Responsibility.
  • Derek Smith of the Resource Innovation Institute.
  • Caroline Kitchens of the R Street Institute.
  • Karmen Hanson of the National Conference of State Legislatures.
  • Dr. Staci Gruber of McLean Hospital in Massachusetts.

Andrew Freedman, who oversaw the rollout of Colorado’s recreational marijuana market under then-Gov. John Hickenlooper, is the coalition’s executive director.

“The conversation is no longer about simply whether or not to legalize cannabis – the states and their constituents have already answered that question,” Freedman said in the release.

“The question before us now is how to craft a responsible federal framework for a legalized cannabis marketplace, and to do that right, we need all voices at the table.”

The new group was announced only a month after the formation of the U.S. Cannabis Council, which is comprised of even more businesses, advocacy groups and activists.

– John Schroyer

New Rhode Island governor pitches adult-use cannabis legalization plan

Rhode Island Gov. Dan McKee wants to legalize adult-use cannabis, proposing a program that would issue 25 retail licenses a year with a market launch in April 2022.

McKee, a Democrat who included the proposal as part of his fiscal-year 2022 budget, is following the lead of his predecessor, Gina Raimondo, who also advocated for adult-use legalization.

Raimondo recently resigned as governor to become President Joe Biden’s commerce secretary.

State Senate leaders have proposed a separate legalization plan calling for a Cannabis Control Commission to determine licensing and regulate the industry, according to the Providence Journal.

McKee’s proposal includes these elements:

  • Of the 25 annual retail licenses, five would be set aside for minority business enterprises.
  • An Office of Cannabis Regulation would license applicants and ensure compliance with packaging, labeling, security and safety requirements.
  • A retail excise tax of 10% on marijuana products would be imposed on top of the state’s 7% sales tax. There also would be a weight-based excise tax on marijuana cultivation.
  • Creation of a task force to make recommendations on investing marijuana revenues in job training, access to capital for small businesses, community development and other areas.

– Jeff Smith

Marijuana SPAC Silver Spike II prices IPO to raise $250 million

Marijuana industry special purpose acquisition company (SPAC) Silver Spike Acquisition Corp. II priced an initial public offering on the Nasdaq exchange to raise $250 million.

The company is issuing 25 million units at $10 each. Each unit includes one share and one-quarter of a redeemable warrant that entitles the holder to purchase a share at $11.50 per warrant.

The units will trade on the Nasdaq under the symbol SPKBU, with shares trading as SPKB and warrants as SPKBW.

The SPAC “intends to focus on businesses in the cannabis industry that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate,” Silver Spike Acquisition Corp. II noted in a news release.

The SPAC’s planned business combination could also target “related industries such as consumer packaged goods, health & wellness, technology, pharmaceuticals, manufacturing, distribution, logistics, and brand management,” according to a preliminary prospectus filed with the U.S. Securities and Exchange Commission.

“Given the management team’s extensive financial expertise, we may also pursue a business combination in the financial services and asset management industries,” the filing said.

Silver Spike Acquisition Corp. II is headed by founder and CEO Scott Gordon, who was also chief executive of a previous SPAC, Silver Spike Acquisition Corp., that merged with cannabis tech firm Weedmaps in December 2020.