Cannabis Industry Daily News

Massachusetts regulators developing cannabis product catalog

Massachusetts marijuana overseers are taking a new approach to tracking industry inventory – a statewide product catalog listing all the various edibles, pre-rolls, tinctures and more that manufacturers and retailers have to offer customers.

The catalog, under development by the Massachusetts Cannabis Control Commission, is a way for regulators to get a better handle on what the legal market is producing and what the illicit market might be responsible for, the State House News Service reported.

Although participation by licensed marijuana companies in the state is not yet mandatory, regulators say it likely soon will be.

The Cannabis Control Commission’s executive director, Shawn Collins, told the news service he emailed marijuana licensees in May to notify them that the state track-and-trace system now has an added function where companies can upload:

  • Product photos.
  • THC or CBD potency.
  • Serving sizes.
  • Ingredients lists.
  • General descriptions.

“This information is optional, currently, for the licensee for them to assist us in developing this product catalog … We do anticipate that some of these fields could at some point become a requirement,” Collins told the State House News Service.

The catalog concept was spurred by the vaping crisis of 2019, when thousands were sickened and several dozen died from respiratory illnesses caused by marijuana and nicotine vaping devices obtained mostly from the illicit market.

High Times strikes $25M marijuana licensing deal for three markets

The parent company of High Times magazine signed a deal to license its iconic brand and High Times-branded products at 18 operational and planned cannabis dispensaries in Michigan, with additional rights in Illinois and Florida.

High Times Holdings on Tuesday touted the value of the licensing deal with Canada-based Red, White & Bloom Brands (RWB) at $25 million, but most of the transaction will be in RWB stock. The deal is subject to closing and state regulatory approvals.

High Times will receive a minimum cash royalty payment of $10.75 million in the first 18 months of the licensing deal, according to a filing with the U.S. Securities and Exchange Commission.

The California company also will receive $15 million worth of RWB common shares and, subject to certain conditions, might get another $5 million in shares, according to a news release.

In a corporate update Monday, Red White & Bloom, formerly Tidal Royalty Corp., said its Michigan “investee” has 10 operating dispensaries, eight in development and two cultivation facilities.

Toronto-based RWB also has a subsidiary with a 3.6 million-square-foot CBD cultivation facility in Illinois. The company hopes to have a retail presence in Illinois and Florida.

High Times also announced Tuesday it entered definitive agreements to acquire two Northern California cannabis dispensaries in a mostly stock deal that is expected to close within 60 days.

Under new CEO Peter Horvath, High Times is trying to pivot into retail and recently announced an agreement to acquire 13 California dispensaries from Arizona-based multistate operator Harvest Health & Recreation. But a deal to buy California cultivation and processing facilities from Humboldt Heritage recently collapsed.

RWB trades on the Canadian Securities Exchange under the ticker symbol RWB and on the U.S. over-the-counter markets as TDRYD.

Cresco Labs co-founder cuts official ties with cannabis MSO

Joe Caltabiano, a co-founder of Chicago-based marijuana multistate operator Cresco Labs, resigned from the board of directors.

His departure from the board completes Caltabiano’s exit from Cresco after his resignation as company president in March.

Caltabiano, who co-founded Cresco in 2013 with CEO Charlie Bachtell, told the Chicago Tribune that he’s looking into “other opportunities” in the cannabis industry and didn’t see a path forward while still remaining on the company’s board.

Caltabiano will keep his status as one of Cresco’s largest shareholders, with roughly 17 million shares, or 5% of the company.

Cresco trades on the Canadian Securities Exchange as CL.

Vireo Health parts ways with marijuana industry veteran Bruce Linton

Cannabis multistate operator Vireo Health International terminated former Executive Chair Bruce Linton, effective immediately and “on an entirely without-cause basis,” the company announced Monday in a news release.

Linton’s exit comes roughly seven months after his November hiring, and Vireo said it does not expect to hire a new executive chair.

Linton will remain on the board of directors until his term expires July 15.

Vireo CEO Kyle Kingsley said in the release that the Minneapolis company will remain focused on expanding its footprint in the U.S. markets of Arizona, Maryland, Minnesota, New Mexico, New York and Pennsylvania.

After making a name for himself as co-CEO of Canadian cannabis giant Canopy Growth, Linton was fired from that job last August by the company’s board of directors after disappointing earnings.

Linton then signed on with Vireo. He also took advisory roles at several other cannabis companies, including California-based Oram and Michigan-based Gage Cannabis Co.

During his time as Vireo’s executive chair, Linton even invested $1 million into the company and oversaw a successful capital raise of roughly $7.7 million.

Vireo trades on the Canadian Securities Exchange as VREO and on the U.S. over-the-counter markets as VREOF.

US cannabis markets now officially face test of whether they’re recession-proof

The United States is officially in a recession and, in fact, has been for several months, but the jury is still out to what extent marijuana and ancillary businesses truly are recession-proof.

The National Bureau of Economic Research on Monday formally proclaimed that the recession began in February, when the coronavirus crisis caused much of the U.S. economy to pause amid lockdowns and shelter-in-place orders.

In mid-March, several industry experts made a well-reasoned argument that cannabis might be as essential and recession-proof as alcohol was during the Great Recession from December 2007 to June 2009.

While it’s a bit early to tell, April data provided some evidence that demand for cannabis is likely to remain strong even during recessionary distress.

U.S. cannabis markets also are starting to report strong May numbers: Oklahoma, for example, recorded a record $73 million in medical marijuana sales, about 20% above its previous high.

For more of Marijuana Business Daily‘s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

Judge orders sheriff in California to return seized marijuana oil, cash

Two California marijuana companies won a significant victory over the Santa Barbara County sheriff’s office when a superior court judge ordered the law-enforcement agency to return 1,800 pounds of cannabis oil and $620,000 in cash that it seized in January.

Judge Thomas Anderle ruled on May 15 that the sheriff’s office had to return the seized property because “the record here shows that a California licensed cannabis operator committed no crime, much less intentionally committed a crime.”

After Santa Barbara sheriff’s deputies raided Arroyo Verde Farms in January and seized the oil and cash, the sheriff’s office tried to persuade Judge Anderle that the assets should be forfeited to them because they were connected to an ongoing criminal investigation into the farm.

Anderle disagreed and ordered the oil released to its owners.

The seized oil had already been sold to manufacturer Eagle Bay Enterprises, doing business as Procan Labs, and was being stored by Carpinteria, California-based Arroyo Verde.

John Armstrong, attorney for Procan Labs in Concord, California, said in a news release that the case was an instance of a “police mistake.”

“Licensed cannabis operators should not be at risk of losing their business because police mistake lawful cannabis operations for illegal black-market activities,” Armstrong said.

“This decision shows that our courts will side with the cannabis industry when provided evidence of good-faith efforts to comply with state regulations.”

Anderle noted in his ruling that Procan Labs had already been forced to cut its staff by 40% because of the January seizure and that the 1,800 pounds of oil represented roughly 65% of its saleable inventory.

“Unless the seized cannabis oil is returned to Procan expeditiously, the company will likely be forced to close its business,” Anderle wrote.

Schwazze signs deal to buy Colorado cannabis retailer Star Buds for $118M

Denver-based Schwazze, a vertically integrated cannabis company formerly operating as Medicine Man Technologies, signed definitive acquisition agreements to purchase 14 Star Buds retail locations in Colorado for $118 million in a cash and stock deal.

The acquisitions include 13 retail operations – four dispensaries in Denver, two dispensaries in Aurora, one dispensary each in Commerce City, Longmont, Louisville, Niwot, Pueblo, Pueblo West and Westminster – as well as a cultivation facility in Denver.

“The addition of Star Buds builds on our customer-centric focus and will significantly expand our retail operations footprint while also increasing return to shareholders,” Schwazze CEO Justin Dye said in a news release.

The deal was part of a larger Schwazze buying spree that began in 2019 under new Colorado legislation regarding outside capital and the company planned to purchase up to 11 marijuana businesses.

But not all the deals have materialized.

Colorado Springs, Colorado-based Strawberry Fields recently terminated a $31 million agreement in which Schwazze would have acquired the marijuana retail chain.

Colorado Harvest Co. also walked away from a deal in which Schwazze had agreed to buy three cannabis storefronts for $12.5 million.

Schwazze, which in April took the name of a proprietary marijuana pruning technique developed by the company, trades on the over-the-counter markets as SHWZ.

Report: Lobbyist’s ties to MO medical marijuana officials raises questions

A Missouri lobbyist reportedly under state and federal scrutiny had direct contact with state medical marijuana officials as they were developing the program’s regulations and taking business license applications, a newspaper reported.

According to The Kansas City Star, medical marijuana license applicants raised the question of whether lobbyist Steve Tilley received an unfair advantage in terms of access and influence.

Tilley reportedly made specific suggestions about licensing rules, according to The Star, which based its report on hundreds of pages of emails between the lobbyist and state medical cannabis regulators.

His clients include the Missouri Medical Cannabis Trade Association (MoCann Trade).

Tilley didn’t immediately comment about the story when his lobbying firm was contacted Monday.

A state legislative panel is investigating possible misconduct in the state’s handling of MMJ licensing, which sparked more than 800 appeals and allegations of conflicts of interest among officials.

Scrutiny of the process recently escalated to officials close Gov. Mike Parson, including Tilley, a close friend and adviser.

The Star has reported that Tilley also is under scrutiny by the FBI, but Tilley, through a colleague, told Marijuana Business Daily that he’s unaware of the investigation.

A MoCann trade official recently downplayed the state legislative inquiry and said he doesn’t expect it to affect the program’s rollout later this summer or fall.

Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services, told MJBizDaily via email recently the state MMJ program had an “open-door approach” from the beginning.

She also said that communications between program director Lyndall Fraker and Tilley were “commensurate” with other interested cannabis industry representatives.

How two cannabis businesses pivoted during the COVID-19 pandemic

CommCan, a vertically integrated cannabis company in Massachusetts, and Golden Leaf Holdings, with dispensaries in Oregon, responded differently to coronavirus-related lockdowns.

But both were successful.

Ellen Rosenfeld, president and founder of CommCan, was granted expedited approval by Massachusetts regulators to do home deliveries to her medical customers.

Ultimately, however, CommCan didn’t go the home delivery route, Rosenfield said during a Marijuana Business Daily webinar moderated by MJBizDaily science and technology reporter Omar Sacirbey.

Ninety percent of CommCan’s customers live within 20 minutes of the storefront, data revealed, so the staff focused on fulfilling customers’ needs on site. All staff were retained full time during the coronavirus crisis.

CommCan also offered special pricing in relation to 4/20.

Golden Leaf Holdings took a different approach, rapidly executing on both home delivery and curbside pickup, said Jeff Yap, CEO of the Portland, Oregon, company.

The key, both agreed, was to meet the needs of medical cannabis clients in an uncertain time.

A snippet of their chat can be viewed below.

Their full discussion, including results and details on all the pivots they made to respond to the COVID-19 pandemic, can be accessed here.

Join the “Survive to Thrive” executive strategy session at MJBizConNEXT Direct for additional guidance on adjusting staffing, structure and more.

Multistate operator Columbia Care sued over Florida medical marijuana license

A Florida partnership has sued multistate marijuana operator Columbia Care for allegedly conspiring to fraudulently strip its rights to a medical cannabis license worth tens of millions of dollars.

Florida MCBD filed the lawsuit against New York-based Columbia Care in the commercial division of the New York County Supreme Court.

Columbia Care co-founders Michael Abbott and Nicholas Vita also are named as defendants.

Columbia Care couldn’t be reached for comment.

According to the suit, an MCBD-Sun Bulb joint venture applied in 2015 for a medical marijuana license, which eventually was awarded by Florida regulators in 2017.

MCBD claims in the suit that it had a 65% ownership interest in the license and that it spent $850,000 on the application.

The CEO of the venture was to be MCBD member Hugh Hempel, co-founder of Las Vegas-based Strainz, which makes CBD products, the suit said.

The 2015 MMJ application was submitted under the Sun Bulb name.

The complaint lists eight counts against Columbia Care, including allegations that:

  • The MSO induced Sun Bulb to breach its joint-venture obligations to MCBD and fraudulently transfer the cannabis license to a Columbia Care affiliate.
  • Columbia Care knew it was acting wrongfully because it agreed to indemnify Sun Bulb for any license ownership claims made by MCBD.
  • The New York company aided and abetted fraud and unjust enrichment.

The lawsuit seeks at least $50 million in damages and requests that the transfer of the MMJ license from Sun Bulb to Columbia Care be voided.

MCBD is in a separate arbitration with Sun Bulb over the matter, according to a news release by MCBD’s law firm.

Columbia Care has 13 dispensaries in Florida, according to state figures, but holds only a 1.4% share of the smokable market and less than 1% of total milligram sales.

Nonprofit resource group seeks to set water standards for cannabis growers

Portland, Oregon-based Resource Innovation Institute (RII) is hoping to establish standards for water quality and water use for marijuana cultivators, including both indoor and outdoor growers.

Members of the cannabis industry have been calling for standards across sectors for years, though few have been put in place.

According to Greenhouse Grower, Derek Smith, executive director of RII – a nonprofit that advocates for resource efficiency – said the group hopes to clear up misconceptions about water use by cannabis growers.

RII plans to do so by employing data and scientific standards, including developing an accurate method to benchmark how much water cannabis cultivation requires.

In addition, the organization would like to measure cannabis water use by the gallons applied per square foot of flowering canopy rather than on a per-plant basis.

RII has created an advisory council that includes:

  • Marijuana growers.
  • Government officials.
  • Water utility companies.
  • Water technology manufacturers.

RII plans to publish “The Cannabis Water Report” – which will detail the group’s research findings in partnership with the Berkeley Cannabis Research Center and New Frontier Data – in time for MJBizCon in Las Vegas in December.

Two San Francisco marijuana stores announce layoffs, furloughs

At least two California retailers have seen enough of a downturn in sales amid the coronavirus pandemic that they’ve had to reduce their workforces.

The Apothecarium and Sparc, longtime San Francisco marijuana shops, confirmed to the Bay Area Reporter that they were forced to cut staff in response to slower-than-usual sales.

Ryan Hudson, CEO of The Apothecarium, told the publication that his company recently furloughed about 20% of its staff and laid off a handful more. In total, 25 employees were affected by the cutbacks, Hudson said.

Sparc also furloughed seven staffers, eliminated some positions and cut salaries for its executive team, a company spokesman told the Bay Area Reporter.

Both retailers have experienced a sales decline during the coronavirus outbreak because not as many customers are allowed in their stores at a single time.

That restriction alone has driven down foot traffic and sales.

The downsizing by the two companies comes just after California Gov. Gavin Newsom predicted in his recent budget proposal that the state’s legal marijuana industry is in for a rough year, with expected tax revenues having been adjusted down from $590 million to $435 million for the coming fiscal year beginning July 1, according to the Los Angeles Times.

For more of Marijuana Business Daily‘s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.