Cannabis Industry Daily News

New York governor vows to make adult-use marijuana a priority

New York Gov. Kathy Hochul, who took over this week for embattled Andrew Cuomo, pledged to move forward with the state’s multibillion-dollar adult-use marijuana program as quickly as possible.

“Nominating and confirming individuals with diverse experiences and subject-matter expertise, who are representative of communities from across the state, to the Cannabis Control Board is a priority for Gov. Hochul,” the new governor’s spokesman, Jordan Bennett, told The New York Post.

But it’s unclear how quickly Hochul can narrow the increasing gap between New York and rival New Jersey, which last week released a set of initial rules for its recreational cannabis program.

Hochul will need the state Senate to confirm the key appointment of chair of the Cannabis Control Board, and the Legislature currently isn’t in session.

Hochul expressed her intent to move forward with the cannabis board appointments in a discussion with legislative leaders this week, and the issue will be part of a private meeting next week with Senate Majority Leader Andrea Stewart-Cousins, the Post reported.

Cuomo signed recreational marijuana legislation into law in late March but failed to move the program forward.

The New York market had been expected to launch as soon as spring 2022, but that timeline is likely to slip, according to experts.

Further delays especially will hurt small businesses and entrepreneurs, who must be careful not to make real estate and other financial commitments too soon, industry officials said.

Financial experts said that any fast-tracking done by New York likely would be in allowing existing medical cannabis operators to transition first to adult use.

But nine of the 10 are multistate operators, which could put smaller businesses at a disadvantage and undermine the state’s commitment to develop a diverse industry.

The recreational marijuana law states an ambitious goal of issuing 50% of all adult-use business licenses to social and economic equity applicants.

Tilt Holdings to partner with New York tribe to build cannabis company

Massachusetts-based Tilt Holdings and the Shinnecock Indian Nation on Long Island, New York, are partnering to create a vertically integrated cannabis company.

Through a joint venture with the tribe’s cannabis project development firm, Conor Green, marijuana tech firm Tilt will finance, build and provide management services for the operation, according to a news release.

A Tilt subsidiary bought all the “Class A units” of Standard Farms New York, which will hold a 75% interest in the Conor Green joint venture.

The Tilt subsidiary paid approximately $700,000 in cash and stock and, according to Forbes, “up to $2.65 million will be paid in additional shares priced at the time of closing, contingent upon certain milestones, like commencement of retail and wholesale cannabis sales.”

The marijuana company formed by the joint venture will be called Little Beach Harvest. The company will be wholly owned by the Shinnecock Nation and will be built on territory in the Hamptons.

Tilt plans to provide management services to Little Beach Harvest for the development of the facilities, including planning, design and funding of up to approximately $18 million in capital expenditures.

Several Native American communities in New York are jumping into the cannabis sector and could be the first to sell recreational marijuana in the state.

Aurora sends first shipment of ‘free’ marijuana to France

A subsidiary of Edmonton, Alberta-based Aurora Cannabis delivered its initial shipment of medical marijuana to France for use in the country’s pilot program, the company announced Wednesday.

The program is reportedly set to start serving medical cannabis to patients at no charge in the coming weeks.

Aurora was among companies from Australia, Canada, Israel and the United Kingdom chosen to provide products, in partnership with French pharmaceutical distributors, for up to 3,000 patients.

The medical marijuana is being supplied by participating companies at their own cost, and neither the government nor patients will have to pay for it.

“The first prescriptions of dried medical cannabis as part of the French pilot program are a significant step toward providing access to patients and will support the destigmatization of medical cannabis in France,” Aurora CEO Miguel Martin said in a statement.

The company’s Danish subsidiary, Aurora Nordic, is producing the dried flower. It will be transported to France via Aurora’s European distribution hub in Berlin.

The dried flower will be administered with vaporizers by Storz & Bickel, a subsidiary of Canada’s Canopy Growth.

France is among a handful of European nations experimenting with medical marijuana distribution by launching temporary pilot programs.

Though some cannabis producers often tout potential future windfalls in such European markets, not all pilots have gone smoothly.

Denmark’s program experienced strong patient uptake early on, but patient access collapsed to fewer than 500 people – about half the program’s peak two years ago.

Experts have warned it will likely be many years before Europe’s regulated medical marijuana industry, which is already hypercompetitive, sees meaningful revenue opportunities.

For instance, Germany imported only 9,231 kilograms (20,351 pounds) of cannabis flower for pharmacy dispensing last year – less than the 14,463 kilograms of cannabis reimbursed for Canada’s veterans that year.

Some of France’s other suppliers include:

  • Australia-based Little Green Pharma.
  • Canada-based Tilray.
  • Israel-based Panaxia.

Companies were also chosen as potential substitutes.

Shares of Aurora trade as ACB on the Toronto Stock Exchange and the Nasdaq.

Cresco Labs invests $40 million to triple Ohio cannabis production capacity

Chicago-based multistate operator Cresco Labs is investing $40 million to expand a cannabis cultivation and processing facility in Ohio, a fast-growing medical marijuana state with adult-use legalization on the horizon.

Cresco’s project, which has been approved by local authorities, will nearly triple the size of its facility in Yellow Springs, which is part of the Dayton metro area.

The project will consist of two buildings, according to the Dayton Business Journal, including a 24,000-square-foot processing facility and a 71,000-square-foot facility used mainly for cultivation.

“We really felt that now was the time to not only reinvest in the facility but to double down on Yellow Springs,” Christian Ficara, vice president of government affairs for Cresco Labs, told the publication.

The 2021 MJBizFactbook projects that Ohio’s medical marijuana market will grow more than 50% this year to sales of $350 million-$425 million.

Adult-use legalization also could occur within the next couple of years.

Democratic state lawmakers introduced a bill in late July to legalize recreational marijuana, but key Republican lawmakers are opposed.

The best bet for adult-use legalization could come through a referendum that is expected to be on the ballot in fall 2022.

Idaho high court overturns law that may have hindered marijuana measures

The Idaho Supreme Court overturned a new law that would have made it harder for independent campaigns to get their own ballot measures before voters, including a potential medical marijuana legalization question.

According to the Associated Press, the state’s high court rejected the law and found that it undermined the rights of Idaho voters.

The law, signed by the governor in April, required any proposed ballot measure campaign to gather at least 6% of signatures to qualify for the ballot from each of the state’s 35 legislative districts. The previous law required signatures from only 18 districts.

Critics said that the Republican authors of the law were attempting to make it harder for campaigns – such as a move to legalize MMJ in 2022 – to actually get measures on the ballot.

The state Supreme Court’s ruling found that the new law effectively gave each district “veto power” over proposed new laws.

But the court’s ruling means that the former law is now back in effect for all statewide ballot campaigns.

All types of cannabis remain illegal in Idaho, but the Legislature this year also killed a separate anti-MMJ legalization measure.

Judge orders New Mexico to lift medical cannabis purchase restrictions

A New Mexico state district court judge ordered that purchase limits for medical cannabis patients should be increased to conform with the new recreational marijuana law approved by lawmakers this year, a move that could result in a sales boom for dispensaries.

According to the Santa Fe New Mexican, District Court Judge Benjamin Chavez issued a writ on Friday directing state officials to allow registered MMJ patients – including the plaintiff in the case, Jason Barker – to buy up to 2 ounces of marijuana per day.

That total is the legal purchase limit set by New Mexico’s new adult-use marijuana law signed by the governor in April.

That’s a significant increase over the previous limit under the state’s MMJ program – 8 ounces every 90 days.

The state health department and the Regulation and Licensing Department now must reply in court to the judge’s order – which stems from the lawsuit Barker filed in May – or comply with the writ.

Spokespeople for both agencies declined to comment to the Santa Fe New Mexican.

Recreational marijuana sales are not expected to begin until next year.

In the meantime, the judge’s order could mean a big increase in sales for the state’s dispensaries if the registered 120,000 patients will be able to purchase up to 2 ounces a day.

US Supreme Court passes – again – on hearing IRS marijuana lawsuits

The U.S. Supreme Court confirmed for a second time that it will not enter the legal fray between a number of marijuana businesses and the IRS.

According to Law360, the nation’s highest court again declined to hear appeals from Standing Akimbo and Eric Speidell, who owns The Green Solution and other marijuana businesses, in a long-running fight over the impact Section 280E of the federal tax code has on the cannabis sector.

The Colorado plaintiffs had attempted to persuade the justices that their cases were worth hearing in the wake of:

  • Justice Clarence Thomas’ comments in June that federal marijuana prohibition “may no longer be necessary.”
  • Allegations that the IRS had retaliated against the plaintiffs with additional tax assessments.

Standing Akimbo tried to argue that the IRS had no right to the company’s state tax records during the course of a federal tax audit.

Speidell tried to convince the courts that the IRS didn’t have the legal authority to determine if The Green Solution’s operations were prohibited under federal law and the Controlled Substances Act.

Both cases were attempts at overturning 280E, the federal tax provision that bars marijuana businesses from claiming standard tax deductions.

The cases now appear to be at an end, after both plaintiffs lost at the 10th Circuit Court of Appeals last year and have now been denied hearings twice by the U.S. Supreme Court, Law360 reported.

Schwazze buys indoor cannabis cultivation company for $6.7 million

Continuing a string of acquisitions, Colorado-based Schwazze signed a deal to purchase Denver indoor cannabis cultivation company Brow 2 for $6.7 million.

The deal includes a 37,000-square-foot building with 27,000 square feet of canopy, according to a news release.

The grow will provide product directly to Colorado retail chain Star Buds, which Schwazze acquired in March.

In July, Schwazze bought a 34-acre marijuana grow in southern Colorado for $11.3 million.

“The new facility will supply our growing network of dispensaries and customers with a broad assortment of high-quality indoor flower,” Justin Dye, Schwazze’s CEO, said in the release.

Schwazze, formerly known as Medicine Man Technologies, trades on the over-the-counter markets as SHWZ.

Canadian firm invests $20 million in Michigan ancillary marijuana company

Toronto-based Sol Global Investments entered the Michigan medical marijuana market through a $20 million investment in a company that provides financing and support services to MMJ operators in the state.

Sol, a diversified investment and private equity firm that also targets high-growth marijuana markets, said it acquired 1.4 million units of Common C Holdings, a Michigan-based limited partnership.

Common C, which was formed in 2018, provides financing, real estate support, intellectual property licensing work and professional services such as accounting to licensed marijuana operators in Michigan.

“We reviewed a number of Michigan opportunities over the last 24 months knowing it was a state we wanted to be in,” Sol Global CEO Andy DeFrancesco said in a news release.

“Common C Holdings is the perfect fit for our portfolio.”

Sol also has a stake in the Illinois-based multistate operator Verano Holdings and an indirect interest in Chicago-based Cresco Labs, among other cannabis-related holdings, according to regulatory filings.

Sol Global trades on the Canadian Securities Exchange as SOL.

Indiva revenue surges on growing appetite for cannabis edibles

Canadian licensed cannabis producer Indiva experienced a substantial climb in net revenue in the April-June quarter that stemmed, in large part, from growing sales of edible products.

The Ottawa, Ontario-headquartered company reported net revenue of 9.1 million Canadian dollars ($7.2 million) for the period, up 209% year-over-year and 46% over the previous quarter.

Cannabis edibles were the main driver of sales.

Edibles sales in the latest quarter amounted to CA$8.4 million, accounting for 93% of Indiva’s revenue.

That is 52% higher than the previous quarter’s edibles sales of CA$5.53 million and 445% higher than the comparable period last year.

The company also reported positive adjusted EBITDA, a measure of profitability, of CA$544,000.

Net loss for the quarter was CA$1.42 million, which includes one-time expenses and noncash charges worth CA$1 million, according to the company’s second quarter financial results.

“Becoming a top 10 ranked LP nationally by dollar share and top three measured by units, and doing so by driving organic growth rather than through acquisition, is a testament to the talent, dedication and hard work of the entire Indiva team,” the company’s CEO, Niel Marotta, said in a statement.

Marotta expects Indiva to experience continued growth through the second half.

Countrywide, Canadians purchased CA$109 million worth of recreational cannabis edibles in 2020, the first full year they were available, per Statistics Canada data.

Indiva said it held the No. 1 market position for edibles in Alberta, British Columbia, Ontario, Manitoba and Saskatchewan, citing data from analytics firm Hifyre.

The Ottawa company has utilized partnerships with U.S.-based firms to bring established cannabis brands to Canada.

One such arrangement is with Las Vegas-based Bhang, which gives Indiva exclusive rights to make and sell Bhang’s products north of the border. The arrangement also gives the Canadian LP the right to export those products overseas in medical channels.

Indiva also has an agreement with Colorado-based Wana Brands, one of the largest U.S. edibles makers, giving the Canadian company exclusive rights to produce and distribute Wana products in Canada.

In February, the license agreement was extended to a five-year term.

Indiva is one of the smaller, more focused cannabis companies in Canada to experience steady growth, while the largest companies have been flat or continue to decline.

Indiva ended the quarter with a cash balance of CA$3.4 million.

Its shares trade on the TSX Venture exchange as NDVA.

More than 70% of New Jersey towns ban adult-use marijuana retail

The number of New Jersey communities opting out of the legal marijuana industry has increased dramatically in recent weeks, reaching almost three-quarters of the municipalities in the state.

According to the USA Today Network, roughly 71% of New Jersey towns – about 400 of them – have approved local ordinances that ban adult-use marijuana businesses.

That’s a significant jump from just a few weeks ago, when about half of New Jersey municipalities were expected to ban the industry.

By contrast, according to the USA Today Network analysis, only 98 municipalities have passed laws that will allow for adult-use cannabis retailers, growers, manufacturers and other business types. Most of those are located in southern and central New Jersey.

An additional 41 towns have approved ordinances that ban cannabis retail but allow other types of marijuana companies, such as distributors or grows.

And another 10 opted out of the recreational side of the cannabis industry but still allow for medical marijuana operations.

Edmund DeVeaux, president of the New Jersey CannaBusiness Association, told the USA Today Network that a similar trend took place in states that previously adopted recreational marijuana, including California and Colorado, but, over time, many municipalities reversed course and opted to allow adult-use businesses.

All New Jersey municipalities faced a hard Aug. 21 deadline to opt out of the industry before a five-year moratorium on such bans went into effect.

Cannabis group drops suit against Los Angeles over social equity licensing

Three cannabis companies withdrew their year-old federal lawsuit against Los Angeles over the city’s controversial social equity licensing program.

ARMLA One, ARMLA Two and Gompers SocEq voluntarily dropped the suit without explanation, according to a one-page filing in U.S. District Court in central California.

According to the filing, each side will pay its own legal costs.

The three unsuccessful social equity applicants, which have common ownership, sued Los Angeles last September, alleging the city was biased in its licensing decisions.

ARMLA One had a winning application that was revoked because a preschool was within 700 feet of the planned marijuana store.

The company argued in the suit that several other license winners also were in violation of being too close to schools or libraries.

Over the course of the litigation, however, the group introduced additional legal arguments, according to Law360, including a claim that the city’s social equity program violates the U.S. Constitution by erecting barriers for out-of-state companies.

Los Angeles officials subsequently accused the group of participating in an “endless game of whack-a-mole” by adding legal arguments that weren’t part of the original lawsuit, Law360 reported.

A settlement on another legal challenge prompted Los Angeles to double the number of social equity licenses to 200.

But it’s unclear how many of those businesses will open their doors, and the first group started sales only a few months ago.