Cannabis Industry Daily News

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.

Lawsuit: Tilray execs misled investors over ABG cannabis deal

A new lawsuit alleges the top brass of Canada-based cannabis company Tilray misled shareholders and engaged in insider stock sales during 2019 and early 2020.

The so-called verified stockholder derivative suit was filed by Tilray shareholder Lee Morgan on June 5 in the U.S. District Court for the District of Delaware. The complaint was filed on behalf of the company.

The complaint alleges the defendants – including Tilray CEO Brandon Kennedy, former Chief Financial Officer Mark Castaneda and several board members – breached their fiduciary duties regarding a revenue-sharing agreement between Tilray and lifestyle brand portfolio Authentic Brands Group (ABG) and engaged in insider trading surrounding that deal.

Under the deal, announced in January 2019, Tilray paid New York-based Authentic Brands Group $100 million, plus up to $250 million for achieving unspecified future milestones, in exchange for ABG developing, marketing and selling consumer cannabis products made with Tilray-supplied cannabinoids.

A Tilray spokeswoman declined comment to Marijuana Business Daily about the pending litigation.

The complaint alleges Tilray leadership made false and misleading statements about the ABG deal, overstating its benefits throughout 2019 when the agreement was actually underperforming.

Accordingly, the complaint alleges Tilray shares sold by the defendants that year were offloaded at “artificially inflated prices” with insider information about the deal.

Kennedy sold more than $22.9 million worth of Tilray shares in 2019, the complaint shows, and Castaneda sold shares worth more than $2.6 million.

Tilray released disappointing fourth-quarter results in March, when the company disclosed impairment charges of $112.1 million related to the ABG agreement.

The complaint claims Tilray’s market capitalization has suffered and alleges the defendant’s conduct “irreparably damaged Tilray’s corporate image and goodwill.”

It seeks damages against the defendants, an order requiring them to forfeit the proceeds from their 2019 stock sales and reform of Tilray’s corporate governance.

Seth Goldberg, a partner at Philadelphia-based Duane Morris who practices business and litigation law in the cannabis space, said the suit against Tilray is “another example of the plaintiffs’ bar that files these kinds of cases in other industries waking up to the potential to file these claims in the cannabis industry.”

“And it demonstrates, I think, the maturation of the cannabis industry,” he added.

“Over the past year, more and more class actions – either securities class actions or consumer class actions – have been filed, which reflects that plaintiffs’ attorneys view cannabis industry defendants as a potential source for damages, awards, or valuable settlement payments.”

Tilray trades on the Nasdaq as TLRY.

The court document is available here.

Solomon Israel can be reached at [email protected]

Missouri judge allows suit challenging marijuana license caps to proceed

A lawsuit challenging Missouri’s medical cannabis licensing caps and scoring process can move forward toward a potential trial, a judge ruled.

A county circuit judge rejected the state Department of Health and Senior Services motion to dismiss the suit filed by four unsuccessful medical marijuana license applicants, according to Law360 and a news release from the plaintiffs.

The businesses claim the license cap is in conflict with a state constitutional amendment that voters passed in 2018 to legalize MMJ.

The group, led by Sarcoxie Nursery, also is challenging the licensing scoring process, which included extra points for applications from economically disadvantaged areas based solely on unemployment rates by zip code.

The state has defended the licensing process and also has argued that the plaintiffs need to work through the state appeals process before litigating.

Missouri regulators did award 192 dispensary, 60 cultivation and 86 processing licenses. But more than 800 licensing appeals have been filed, reflecting industry concerns about the fairness of the scoring.

Missouri’s MMJ program is expected to launch by late summer or early fall.

Ohio OKs another medical cannabis qualifying condition, rejects 2 others

Ohio regulators have recommended adding cachexia, or wasting syndrome, to the list of conditions that qualify for medical marijuana recommendations, which could slightly increase sales for the state’s MMJ dispensaries.

The state medical board committee proposed adding that condition but rejected adding autism and anxiety to the list, according to The (Cincinnati) Enquirer.

The board is expected to finalize its decision during a meeting in July.

Cachexia causes severe weight loss and can be associated with chronic conditions such as cancer and HIV or AIDS.

Sales of medical marijuana have been strong in Ohio.

At the end of April, roughly $50 million of medical marijuana had been sold in 2020 and more than 100,000 Ohio patients had signed up for the program.

Marijuana company Cresco Labs adds first person of color to board

Cresco Labs, a Chicago-based marijuana multistate operator, appointed Michele Roberts to its board of directors, making the executive director of the NBA players union the first person of color on the board.

The Cresco board currently consists of eight white men.

The announcement comes a few days after Cresco’s co-founder and former president, Joe Caltabiano, resigned from the board, thus cutting all executive ties with the company he helped found in 2013.

Roberts, a longtime trial lawyer, arrives at the company at a time when protests across the United States have prompted calls for companies to do more by way of social equity.

“We are advocates of a more diverse and inclusive cannabis industry,” Cresco CEO and co-founder Charlie Bachtell said in a news release.

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

Oklahoma medical cannabis dispensary settles trademark dispute

Dank of Oklahoma, a medical marijuana dispensary in Tulsa, resolved a trademark suit by agreeing to drop its name, hexagonal logo and other marks likely to cause confusion with those used by the Bank of Oklahoma.

According to a federal judge’s consent judgment Tuesday, Dank of Oklahoma and Bank of Oklahoma “agreed to amicably” resolve the suit, which the bank filed in March.

The case reflects the importance of cannabis companies conducting trademark searches before developing their business names and logos as well as the costly risk of playing off other company names to promote their business.

Bank of Oklahoma alleged that Dank of Oklahoma’s name, similar hexagonal logo – albeit with a marijuana leaf in the middle – and slogan “What’s in your dank account?” were “clearly intended to evoke the services offered” by the bank and to confuse consumers.

The bank registered the mark with the U.S. Patent and Trademark Office in 1975 and uses it at its subsidiary banks in nine states. The logo also is on the arena it sponsors in Tulsa called the BOK Center.

Acreage pulls out of Iowa medical marijuana market

(This story has been updated with a comment from Acreage Holdings.)

Marijuana multistate operator Acreage Holdings relinquished its medical cannabis manufacturing license in Iowa, two months after halting operations at the facility.

The move is a hit to the small, heavily regulated market, which now has only one medical marijuana manufacturer, MedPharm in Des Moines.

The withdrawal from the market of Acreage’s Iowa Relief is a “big blow” to the program, MedPharm General Manager Lucas Nelson told The Gazette in Cedar Rapids. “We can’t quite seem to get our footing in this program.”

Howard Schacter, Acreage’s vice president of communications, told Marijuana Business Daily that the decision to pull out of Iowa “is in keeping with our recent announcement that our focus going forward will be on those markets with the greatest potential for growth.”

The New York-based MSO has embarked on a series of cost-cutting moves and asset sales as it refocuses on its most profitable markets amid a recession and coronavirus crisis.

Iowa lawmakers recently passed a medical cannabis bill that would increase the THC cap, which could bolster the roughly $5 million-a-year market.

State officials still are determining the timetable to take applications for another medical marijuana cultivator/manufacturer, according to The Gazette.