Cannabis Industry Daily News

Judge dismisses California cannabis racketeering suit

A federal judge dismissed a $200 million civil racketeering lawsuit filed by a Southern California cannabis farmer against another grower, ruling the claim had no standing because marijuana is illegal under federal law.

The case was an unusual twist on lawsuits that have been filed against marijuana cultivators under the Racketeer Influenced and Corrupt Organizations Act (RICO).

Most RICO suits have been filed by anti-cannabis individuals seeking to shut down marijuana cultivation operations on the claim they lower property values because of odors and security concerns.

But the California case involved former marijuana business partners.

Plaintiff Francine Shulman, a Santa Barbara County businesswoman, filed the suit in June 2019 alleging that operators of Vertical Companies, a Los Angeles-based marijuana cultivation firm, schemed to defraud her and steal her 1,500-acre farm.

U.S. District Judge André Birotte Jr. ruled that it is unlikely that RICO “was designed to provide redress” for federally illegal activities, Law360.com reported.

New Jersey recreational marijuana sales wouldn’t start right after election

New Jersey’s top medical marijuana regulator squashed the idea that recreational marijuana should be available immediately if an adult-use market is approved in Tuesday’s election.

According to NJ.com, Jeff Brown, the chief of the state health department’s Medicinal Marijuana Program, said “opening up sales even a few months after the election would be a disaster and would really hurt access for patients who need this as medicine.”

Brown’s comments are in response to Sen. Nick Scutari’s statement this week that legislators and regulators might be able to “flip the switch” and allow adult-use stores to begin sales immediately after the vote.

Only 12 growers operate in relatively small facilities in the state, so meeting the surge in demand from New Jersey’s population of 8.9 million plus surrounding states would clean out the stores and hinder MMJ patients’ access if the program is rolled out too hastily, Brown reasoned.

He said the state’s medical marijuana program has about 10,000 pounds of medical marijuana available, both extracts and flower.

MMJ patients bought around 2,500 pounds in September and October, so at that rate, only about four months of supply is available.

Mississippi medical cannabis challenge may not be decided until after election

It looks as if the Mississippi Supreme Court won’t consider a legal challenge to a medical cannabis initiative being on the ballot – until the election is over.

Chief Justice Mike Randolph filed an order Wednesday giving Secretary of State Michael Watson until Nov. 6 to respond to the challenge by Madison Mayor Mary Hawkins Butler, according to the Associated Press.

Butler contends the initiative didn’t meet a state standard requiring an equal number of signatures from Mississippi’s former five congressional districts. Mississippi now has only four congressional districts.

Watson originally was ordered by another Supreme Court justice to respond by Oct. 28.

Supporters for the initiative, Mississippians for Compassionate Care, have called the suit groundless.

They note their group collected 228,000 signatures and that the secretary of state validated more than 105,000 by January 2020, officially placing the initiative on the ballot.

Butler’s legal challenge is just another example of the effort in the conservative state to thwart medical marijuana legalization, which is favored by roughly 80% of residents, according to a recent poll.

State lawmakers also threw a wrench into the process by putting on the ballot a more restrictive, competing medical marijuana measure.

Competing measures make it less likely for either to pass, according to the state’s formula for deciding such ballot issues.

MJBizDaily details plan for wide-ranging coverage of 2020 election

Marijuana Business Daily is rolling out extensive coverage of the 2020 general election to give readers timely updates and analysis of legalization ballot measures in five states as well as key federal races that could affect cannabis reform.

MJBizDaily will offer blog reporting and analysis from its reporters as well as detailed graphics and regularly updated results sourced from real-time election data.

Coverage will extend to an event experience, kicking off MJBizCon 2020 with U.S. Election Week programming, part of MJBizCon Passholder Forums.

“We’ve been providing marijuana industry professionals with live federal election coverage since 2016, and 2020 will be our most comprehensive effort yet,” said Roger Fillion, editorial director of MJBizDaily.

“We’ll build on the election coverage our editorial team has been providing over the last several weeks and months – as well as the industry reporting we’ve been generating since 2011.”

Election coverage will begin Monday at MJBizDaily.com with stories and graphics previewing the state and federal marijuana votes and issues at stake on Nov. 3.

The day’s content also will include video programming via Election Week 2020: What’s at Stake for Cannabis? The panel discussion will feature MJBizDaily journalists Jeff Smith and Omar Sacirbey and three cannabis industry executives:

  • Linda Mercado Greene, founder and CEO of Anacostia Organics.
  • Robert DiPisa, partner and co-chair of the cannabis law Group at Cole Schotz.
  • Lilach Mazor Power, founder and CEO of Giving Tree Dispensary.

Election Day reporting will start at noon MT/2 pm ET and include:

  • A live blog providing continuous news, updates, industry commentary and analysis focused on ballot measures in Arizona, Montana, Mississippi, New Jersey and South Dakota.
  • Blog coverage and analysis of the presidential election as well as key congressional races that could influence federal marijuana policy.
  • Stand-alone election stories and analysis.
  • Live election results using charts for each state ballot measure as well as data feeds to continually update the vote.

On Wednesday, Nov. 4, MJBizCon will host Election 2020: Results and the New Opportunities in Cannabis, a live video panel discussion with industry executives and MJBizDaily’s Smith and Sacirbey analyzing the voting results and what they mean for cannabis businesses as well as reform efforts.

Election coverage can be found at MJBizDaily.com.

Marijuana MSO Harvest Health raises nearly $35 million in stock offering

Marijuana multistate operator Harvest Health & Recreation raised $34.5 million (46 million Canadian dollars) through a public offering of subordinate stock, the company said Wednesday.

The Arizona-based marijuana company said in a previous news release that it will use the proceeds for working capital and general corporate purposes.

The offering was increased from around $23 million (CA$31 million), indicating strong demand.

Each unit was sold for $1.70, which included a subordinate share of stock and one-half a warrant, according to a news release.

Each warrant can be converted into a share of subordinate stock at an exercise price of $2.28 within the next 30 months.

Harvest is trading at around $1.50 a share on the U.S. over-the-counter markets under the ticker symbol HRVSF. The company also trades on the Canadian Securities Exchange as HARV.

Eight Capital and Canaccord Genuity were co-lead underwriters of the offering in a sales syndicate that included ATB Capital Markets and Beacon Securities.

The completion of the capital raise comes as Arizona voters are deciding whether to legalize a commercial adult-use marijuana market.

Harvest is a leading medical cannabis operator in Arizona with 15 dispensaries.

If the adult-use initiative is approved, existing MMJ operators will get priority status in Arizona’s new recreational market.

Illinois cannabis retail applicants get court hearing on license do-over

A group of Illinois cannabis retail license applicants will get to argue their case next week on a suit seeking to compel the state to award 75 new licenses.

The case is potentially a key one in deciding how the state moves forward in a marijuana retail licensing process that has become controversial and mired in litigation.

After the state Supreme Court declined to hear the case on an emergency petition, it now will be argued Nov. 5 in Sangamon County Circuit Court in Springfield, the Chicago Tribune reported.

SB IL, Vertical Management and GRI Holdings claim in the lawsuit that the state’s ongoing delay in awarding the retail licenses is illegal.

The three companies are challenging Gov. J.B. Pritzker’s recent plan to allow unsuccessful applicants a second opportunity.

Here is how the licensing process has unfolded:

  • Illinois, which launched its recreational marijuana program Jan. 1 with existing medical cannabis operators, had been scheduled to award 75 retail licenses by May 1. But the round was delayed because of the coronavirus pandemic.
  • The state finally announced in early September that 21 applicants, including the plaintiffs in the suit, had qualified for a final lottery for the 75 licenses.
  • The lack of applicants raised questions about the state’s much-vaunted social equity plan. The losing applicants sued, alleging the process had been unfair.
  • Pritzker’s administration ordered a do-over. Then came the suit by SB IL, Vertical Management and GRI Holdings.

Marijuana MSO 4Front enters $30M sale-leaseback deal to pay down debt

Multistate operator 4Front Ventures is utilizing a $30 million sale-leaseback transaction to rid itself of debt to a corporate lender, the company said.

The all-cash deal with California-based Innovative Industrial Properties (IIP) involves the sale of cultivation and production facilities owned by 4Front in Tumwater, Washington. and Georgetown, Massachusetts.

IIP will then lease the facilities back to 4Front under 20-year lease agreements so the Arizona company can continue to use them.

The money will be used by 4Front to “pay down the outstanding senior secured debt obligation to affiliates of Gotham Green Partners” of California, according to a news release.

4Front CEO Leo Gonthmaker said in a statement that the move will help shore up the company’s balance sheet and give the business more flexibility to “fund our growth initiatives” in its core markets of California, Illinois, Massachusetts, Michigan and Washington state.

The deal, expected to close by December, is only the latest that Innovative Industrial Properties has entered into in the cannabis arena.

IIP has been on a buying spree for most of 2020 in the marijuana industry, having entered into similar deals with Green Thumb Industries, Parallel, Curaleaf, Cresco Labs, Kings Garden, Ascend Wellness Holdings and Trulieve, to name a few.

As of August, the REIT owned 61 cannabis real estate properties.

4Front trades on the Canadian Securities Exchange under the ticker symbol FFNT and on U.S. over-the-counter markets under the symbol FFNTF.

Innovative Industrial Properties lists as IIPR on the New York Stock Exchange.

Cannabis software firm Akerna seeks to raise $12 million in public offering

Denver-based Akerna, a marijuana compliance software company, plans to raise $12 million by selling 5 million shares.

Shares will be available for $2.40 per during the offering, which is expected to close Oct. 30.

Proceeds from the offering are intended to fund Akerna’s “growth initiatives, including product development, sales and marketing, strategic acquisitions, working capital and general corporate purposes,” according to a news release.

The company recently acquired Canada-based Ample Organics, a seed-to-sale software business that claims to serve more than 70% of Canadian cannabis license holders.

Akerna trades on the Nasdaq as KERN.

MS mayor sues to throw out medical marijuana measure before election

A mayor in Mississippi is making a last-ditch effort to remove a business-friendly medical cannabis initiative from the ballot.

Madison Mayor Mary Hawkins Butler filed the legal challenge with the state Supreme Court on Tuesday, only a week before the general election and more than a month after absentee voting started, according to the Associated Press.

Butler contends the secretary of state didn’t take into account a 2009 legal opinion that a ballot initiative requires an equal number of signatures from what were then five congressional districts. Mississippi now has four.

Supporters of the initiative maintain the suit is groundless.

“The Secretary of State properly qualified Initiative 65 under the same constitutional procedures used for every other successful voter initiative,” Jamie Grantham, spokeswoman for Mississippians for Compassionate Care, said in a statement posted on social media.

“The lawsuit from the City of Madison is meritless.”

The statement noted that Mississippians for Compassionate Care collected 228,000 signatures and that the secretary of state validated more than 105,000 by January 2020, officially placing the initiative on the ballot.

State Supreme Court Presiding Justice Leslie King ordered the current secretary of state, Michael Watson, to respond to Butler’s lawsuit, according to Associated Press.

Proponents of the initiative, which calls for MMJ licensing without caps, have run into other issues in this conservative state in the Deep South.

Lawmakers placed a restrictive, competing referendum on the ballot, which Mississippians for Compassionate Care – also known as Medical Marijuana 2020 – say is designed to confuse voters and defeat their initiative.

Mississippi has a complicated formula for passage when two competing measures are on the ballot, and polling shows the vote to pass the more liberal MMJ initiative could be close.

MJBizDaily, Cowen launch exclusive cannabis research-distribution deal

Marijuana Business Daily has teamed up with diversified financial services firm Cowen to distribute the New York-based company’s acclaimed “Ahead of the Curve” research reports to the cannabis business community.

The reports are now available for purchase through MJBizDaily.

The initial set of reports provide critical insights on a variety of topics, including:

  • Market and political trends in the United States.
  • The evolving medical cannabinoid landscape.
  • CBD-market projections and opportunities.
  • Near-term drivers of cannabis-sector growth.
  • The interplay between legal marijuana and alcohol sales.

“Every day, MJBizDaily provides news and data to connect the cannabis community and help the field continue to evolve,” said Pamela Moore, Marijuana Business Daily’s vice president of publishing.

“Providing access to Cowen’s cannabis industry insights expands the ways we help our readers.”

Lisa Thomas, managing director and associate director of research at Cowen, called MJBizDaily “an ideal partner for Cowen’s cannabis research.”

“As two pioneers in the space, we both recognized the potential of the emerging cannabis industry early on and now have positioned ourselves as leaders in the sector,” she said.

“Together, with our leading research and their unmatched channels in the cannabis industry, we can leverage one another’s capabilities to maximize the impact of our cannabis research content.”

With offices around the world, Cowen offers a range of financial services, including equity and credit research.

Marijuana Business Daily is the leading business news resource for the global marijuana and hemp industries. The Colorado-based company also produces the world’s largest cannabis industry trade show, MJBizCon.

Tobacco firm spends $15M to bring L.A. marijuana line to THC-free markets

(A version of this story originally appeared at Hemp Industry Daily. It has been updated to include conditions surrounding the investment.)

A Kentucky tobacco company is investing $15 million in a Los Angeles marijuana vape company that plans to expand its footprint by building out a line of THC-free CBD products.

Turning Point Brands of Louisville said in a news release its investment in Dosist will be used to develop new THC-free products and a national CBD brand that hasn’t been announced.

In addition, Turning Point said it has an option to invest another $15 million at predetermined terms within the next 12 months.

Dosist currently sells THC products in 700 dispensaries in California, Colorado, Nevada and Canada. The partnership with Turning Point helps Dosist access another 180,000 retail locations in the United States.

Turning Point said its investment won’t be used for THC business lines in the U.S.

According to the news release, Turning Point’s investment targets Dosist’s THC-free and Canadian business units “and cannot be used in connection with or for any cannabis or cannabis-related operations in the United States” – unless marijuana is legalized in the U.S.

In fact, the deal gives Turning Point an option to invest in Dosist’s THC operations if they become legal under federal law as well as a seat on the company’s board of directors.

Turning Point trades on the New York Stock Exchange as TPB.

Massachusetts regulators delay vote on cannabis delivery permits

Massachusetts cannabis entrepreneurs will have to wait at least a month longer for clarity on marijuana delivery licenses.

The state’s Cannabis Control Commission (CCC) was scheduled to vote Thursday on new rules for those licenses, but the agency instead delayed the decision until Nov. 30, according to the State House News Service.

The delay comes after 19 state lawmakers asked the CCC to push the vote back to allow for additional public comment. A public hearing on the issue is scheduled for Nov. 13.

Earlier this week, the commission voted 3-1 to adopt new delivery policies that would allow:

  • A “cannabis courier” license where a business would charge a fee to make deliveries from licensed retailers and dispensaries.
  • A “cannabis delivery operator” permit that could buy wholesale marijuana from cultivators and manufacturers and sell directly to customers.

The new rules would also allow one business to own up to two delivery licenses – either two marijuana delivery courier licenses or two MJ delivery operator permits or one of each.