Cannabis Industry Daily News

Hawaii medical cannabis sales poised for lift as edibles bill passes

Hawaii lawmakers passed a bill allowing medical marijuana edibles, a move that could significantly boost the roughly $16 million-$20 million-a-year market.

The legislation has been sent to the desk of Gov. David Ige, a Democrat, who has been resistant to some cannabis policy reforms. The bill enjoyed strong support in the Legislature.

The Hawaii Cannabis Industry Association (HCIA) praised the Legislature’s action, which came in a session shortened by the coronavirus pandemic.

“Medical cannabis patients have been asking for alternative ways to take their medication other than inhalation since the first dispensary opened their doors,” according to a Facebook post by the HCIA.

“This is especially important in a COVID-19 world where lung and overall health are on the forefront of our minds.”

Edibles sales have been strong in many U.S. markets during the coronavirus crisis. And the cannabis industry has been bolstered by the fact that many states have categorized medical marijuana dispensaries as essential businesses.

The Hawaii legislation would take effect on Jan. 1, 2021, but the state health department would need to develop rules before edibles sales could begin, a dispensary owner told Big Island Now.

Hawaii currently has about 30,000 registered medical cannabis patients. The program is heavily regulated, with only eight vertically integrated licensees.

Marijuana Business Factbook projects that 2020 sales will reach $16 million-$20 million, up from $14 million-$17 million in 2019.

NACB drawing up marijuana social equity advice for state regulators

One of the cannabis industry’s only self-regulatory standards organizations is creating social equity recommendations for state rulemakers.

The goal of the National Association of Cannabis Businesses, based in Washington DC, is to get state marijuana regulators to change their ways.

Regulators have shown a tendency to want to start from scratch when developing rules for new cannabis programs and fail to consult other states’ existing frameworks.

According to a news release, the NACB’s recommendations will address:

  • Criteria for social equity licensee candidates.
  • Support and services for qualified candidates.
  • Funding to disproportionately impacted communities.
  • Social justice reform.

“The objective is to assist all regulated cannabis states to move forward with programs to improve social and economic welfare at the local level,” Gina Kranwinkel, president and CEO of the association, said in a statement.

Kranwinkel said states can give licensing preferences and low-interest loans to create business ownership opportunities and jobs in disadvantaged communities.

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

Multiple states continue to post record-breaking cannabis sales numbers

Colorado, Illinois and Oregon have all maintained record-breaking sales numbers in recent months despite the coronavirus and the recession.

In Colorado, marijuana shops sold more than $192 million in May, according to Denver alt-weekly Westword. That’s up from $148 million the month prior.

In Illinois, the state’s cannabis stores sold $47.6 million worth of marijuana in June, another record for the nascent recreational cannabis market, according to the Daily Herald of Arlington Heights. That was up from a high of $44 million in May.

In Oregon, marijuana sales totals hit $103 million in May, topping the $100 million mark for the first time, the Portland Business Journal reported.

Then the state set a record in June, reaching just over $100 million.

High Times marijuana stock offering delayed until audited financials are filed

High Times Holding, owner of the iconic High Times magazine, said Friday it can’t close on its small-investor Regulation A initial public offering until its audited financials for 2019 are filed.

But the Los Angeles-based company, which is trying to make a pivot into retail and brand licensing, took exception to reports that the U.S. Securities and Exchange Commission had “halted” its IPO.

“High Times was delayed in its public filing (of its audited financials for 2019) and as a result cannot close on any Reg A investments until its financials are filed,” High Times executive chair Adam Levin said in a statement to Marijuana Business Daily.

“The company has followed SEC protocol and believes the recent media articles surrounding the Reg A has been misleading and inflammatory.”

Levin appeared to be referencing some reports suggesting that High Times has improperly continued to solicit investments.

He didn’t elaborate on why the filing of the audited financials has been delayed.

During a recent investor call, Levin told current and prospective investors that the Reg A offering had been extended to Sept. 30.

High Times continues to promote the IPO on its website.

During the investor call, company officials discussed at length a recent agreement to acquire a California cannabis delivery company called Mountain High Recreation.

Meanwhile, a San Francisco property that High Times touted as the flagship of a dispensary deal with Arizona-based Harvest Health & Recreation has been put on the market, according to leasing agent Thor Equities.

Levin wouldn’t address with MJBizDaily why the flagship property is for lease, except to say, “We’re working with all the stakeholders to move forward on these opportunities.”

Alexis Bronson, social equity partner and 40% owner of the pending marijuana license for the Geary Street location, told MJBizDaily this week that he hasn’t heard anything recently about the property from either High Times or Harvest.

Bronson noted in an email to MJBizDaily that “luckily the license application is portable to a new location with the approval of the director of the (San Francisco) Office of Cannabis.”

– Jeff Smith

Massachusetts cannabis businesses fined for pesticide, ownership infractions

Three marijuana cultivation companies in Massachusetts will pay hundreds of thousands of dollars in fines for pesticide use and other violations.

The state’s Cannabis Control Commission approved penalties against Garden Remedies, Healthy Pharms and The Botanist, reported.

Each company agreed to settlements, complied with the commission’s inquiries and admitted to the wrongdoing.

The fines are all much steeper than some handed out only last year.

Garden Remedies was fined $200,000 on Thursday for using pesticides and lying about it. The company has also been told to cease and desist using pesticides not labeled for use in growing marijuana and will be on probation for two years.

Health Pharms was fined $350,000 for using unlawful pesticides, including misusing hydrogen peroxide and not correctly operating the state’s seed-to-sale tracking system, Metrc.

The company has been told to cease and desist using pesticides and hire an employee versed in using Metrc. Health Pharms will be on probation for two years.

The Botanist, which is owned by New York-based multistate cannabis company Acreage Holdings, was fined $250,000 for violating regulations around ownership and control.

The commission found that, under rules that went into effect Nov. 1, The Botanist and Acreage didn’t disclose contractual arrangements Acreage had made with other cannabis companies in the state.

Ohio adds first medical marijuana condition since program launch

While rejecting anxiety and autism spectrum disorders, Ohio medical marijuana regulators officially added cachexia to the list of conditions for which doctors in the state can recommend MMJ for treatment.

Cachexia, or wasting syndrome, is the first condition added to the MMJ qualifying conditions list by the State Medical Board of Ohio.

State lawmakers set the other 21 qualifying conditions when they passed legislation legalizing medical marijuana sales in 2016.

In their final signoff on cachexia, board members once again decided against adding anxiety and autism spectrum disorders to the list. The board ruled that the risks for those patients might outweigh the possible benefits.

Other qualifying conditions for legal use of medical marijuana in Ohio include:

  • Alzheimer’s disease.
  • Cancer.
  • Epilepsy.
  • Parkinson’s disease.
  • Post-traumatic stress disorder.

– Associated Press and Marijuana Business Daily

Massachusetts cannabis grow facility workers unionize

Employees at a cannabis cultivation facility in Massachusetts voted to unionize, a further indication that organized labor is picking up steam since the coronavirus pandemic.

Workers at Mayflower Medicinals in Holliston Massachusetts, voted to join the United Food & Commercial Workers Union Local 1445, according to the Worcester Business Journal.

Mayflower is owned by New York-based iAnthus Capital Holdings.

According to the Business Journal, the employees were trying to unionize before the coronavirus lockdown but made the vote a priority as the pandemic began to affect their jobs.

In recent weeks, other cannabis workers have voted to unionize, including at a New England Treatment Access grow facility in Massachusetts and a Cresco Labs dispensary in Illinois.

A number of other organizing efforts are pending across the United States.

CA marijuana exec sues MedMen affiliate Captor Capital for fraud, more

(This story has been updated with comment from Captor Capital.)

A longtime Southern California marijuana entrepreneur and executive filed suit against Toronto-based Captor Capital – a former financial partner of MedMen Enterprises – for fraud, breach of contract and other misdeeds and is seeking at least $2.8 million in damages.

Matt Longo, a founder of cannabis dispensaries in Santa Ana and West Hollywood that have operated under the MedMen brand name for years, filed his suit against Captor in Los Angeles County Superior Court on July 2, alleging that Captor pulled a “bait and switch” on him by promising company stock and wages that were not delivered.

MedMen is not involved directly in the lawsuit.

Rather, Longo’s suit contends, he was forced out of all company positions with Captor subsidiaries between 2019 and 2020 without being paid what he was owed.

The suit contends that Longo is owed, in part, a portion of the $31 million sale to MedMen in 2019 of ICH California Holdings, a Captor subsidiary that owned the two shops in Santa Ana and West Hollywood. Both shops are still operated under the MedMen brand.

Longo’s suit also claims that Captor defrauded him in an acquisition deal for another company he founded, Mellow Extracts, in which he was promised 3.75 million shares of stock in I-5 Cannabis Holdings, one of many Captor subsidiaries.

The shares were supposed to be worth 1.5 million Canadian dollars ($1.1 million), but the suit alleges that Longo received only $525,000 worth of stock in Captor Capital.

Captor Capital released a statement about Longo’s suit in a July 10 investor update, saying:

“The company is aware that it has been named in a lawsuit commenced by Matt Longo … (but) the company has not yet been served with the complaint.

“This company believes that this lawsuit is without merit and intends to vigorously defend itself against it.”

A spokesperson for Los Angeles-based MedMen declined to comment.

Captor Capital trades on the Canadian Securities Exchange under the ticker symbol CPTR and on over-the-counter markets under the symbol CPTRF.

MedMen shares trade under the ticker symbol MMEN on the Canadian Securities Exchange and as MMNFF on the U.S. over-the-counter markets.

– John Schroyer

Biden task force takes states-rights approach to cannabis legalization

A joint Joe Biden-Bernie Sanders task force has recommended rescheduling marijuana on a federal basis, legalizing medical marijuana nationwide and allowing states to decide about recreational cannabis.

The recommendations have been submitted to the Democratic National Committee’s Platform Committee in advance of next month’s scheduled Democratic National Convention, according to Politico.

The proposals come short of the progressive wing’s desire to remove marijuana entirely from the federal Controlled Substances Act.

In a milestone event, the U.S. House Judiciary Committee last November passed a descheduling bill that moved the multibillion-dollar marijuana industry closer to full federal legalization. But the full House has yet to consider the legislation.

The so-called Unity Task Force marijuana recommendations are centrist. Here are key points in the language of the document:

  • “Democrats will decriminalize marijuana use and reschedule it through executive action on the federal level.
  • “We will support legalization of medical marijuana (federally), and believe states should be able to make their own decisions about recreational use.
  • “The Justice Department should not launch federal prosecutions of conduct that is legal at the state level.”

That approach would be more aligned with the STATES Act, which experts say does have some support in the Republican-controlled Senate.

The task force was formed by the former Democratic rivals in May after Sanders, a U.S. Senator from Vermont, withdrew from the campaign and endorsed Biden, the presumptive nominee. The task force includes members and co-chairs selected by each.

The goal is to unite the Democratic party before the November election around such key policy issues as climate change, criminal justice reform, the economy, education, health care and immigration.

Politico reported that the 110-page document will be personally reviewed by Biden ahead of the convention.

Marijuana tissue-culture technology company raises more than $15 million

Conception Nurseries, a Sacramento, California-based cannabis genetics firm, raised $15 million with the addition of approximately $12 million in a Series A funding round to help add scale and automation to its operation.

According to Green Market Report, the funding round was led by New York-based cannabis data group Viridian Capital Advisors with facilitation by broker-dealer Pickwick Capital Partners.

Raises of this amount are particularly noteworthy during the global coronavirus pandemic.

Conception CEO Kevin Brooks said the company’s goal is to help cultivators by bringing tissue-culture technology, also known as micropropagation, to the cannabis industry.

Growers are typically dependent on “mother plants” to produce clones that, according to the company, deliver inconsistent harvests with diluted and uncontrollable traits.

“This results in cultivators being unable to accurately forecast production and end users being unable to depend on a consistent experience,” Brooks told Green Market Report.

“Tissue-culture technology allows Conception to quickly mass-produce identical, disease-free plantlets with customized and consistent profiles.”

According to Brooks, the company’s technology will reduce growers’ operational risks and costs while increasing yields.

Oklahoma medical cannabis regulators won’t rush to enforce new rules

Oklahoma medical marijuana regulators won’t immediately enforce a stricter two-year residency requirement and a 1,000-foot school buffer zone rule that could put many dispensaries out of business in the fast-growing market.

The state Attorney General’s Office said it won’t enforce the medical marijuana rules until a lawsuit challenging them plays out in court, The Oklahoman reported.

A 1,000-foot school buffer rule had been in effect for some time, but regulators expanded the definition to include preschools and head-start programs, Oklahoma cannabis attorney Sarah Lee Parrish recently told Marijuana Business Daily.

There also have been questions about how to measure the distance.

The medical marijuana business group that filed the suit against the state claimed the new buffer rule could affect hundreds of dispensaries.

As for the stricter residency requirement, businesses issued a medical marijuana license before the law was enacted last summer are exempted, Parrish said.

But companies that applied for licenses between the enactment date of March 15, 2019, and its effective date, Aug. 29, 2019, were in limbo. The governor vetoed legislation that would have fixed that issue.

Parrish said state regulators already have been treating those licensees in a “pending” status and believes discussions to resolve the issue will be successful.

L.A.’s 100 extra retail marijuana permits a result of settlement, plaintiff says

The Los Angeles City Council’s decision to double the number of social equity retail marijuana licenses was the result of a court room settlement, according to a plaintiff in the lawsuit.

Madison Shockley III, an actor turned entrepreneur, told Marijuana Business Daily that L.A.’s permit increase from 100 to 200 for a licensing round that took place last fall was the direct result of a lawsuit filed by Shockley and the Social Equity Owners and Workers Association.

This is the latest example of litigation resulting in an increase in cannabis business permits.

According to Shockley, the City Council agreed to increase the number of licenses as part of a settlement agreement under which the lawsuit will be dropped.

The L.A. Department of Cannabis Regulation declined to comment on the settlement.

The lawsuit, which asked the court to order L.A. officials to redo the entire licensing process from last fall, was scheduled for a July 9 hearing pertaining to a preliminary injunction against the city.

That, plus a request for a temporary restraining order, forced the city’s hand, Shockley said.

If the plaintiffs had won either the injunction or the TRO and the case had gone to trial, the city’s marijuana licensing process would have been held up until the matter was resolved.

Nobody wanted to delay the licensing longer than necessary, Shockley said, and a doubling of the retail licenses is arguably the biggest victory he and the association could hope for.

“Even if we won the injunction and won the lawsuit, the most we could win was basically a do-over on those first 100 licenses,” Shockley said.

“So we were looking at 100 licenses versus 200, and clearly 200 was for the greater good.”

Shockley acknowledged that he and his social equity business partner, Kika Keith, stand to benefit directly because they’re amid the 200 who now will receive retail permits. Another 602 retail applicants who tried to win permits last fall remain out of luck.

A spokesperson for the L.A. city attorney’s office said Mayor Eric Garcetti is expected to sign a copy of the settlement as soon as this week.

– John Schroyer