Cannabis Industry Daily News

Marijuana cultivation giant purchases gardening store in Washington state

GrowGeneration Corp., a Denver-based marijuana cultivation company, is continuing its shopping spree with the acquisition of Hoagtech Hydroponics in Bellingham, Washington.

The acquisition of the hydroponics equipment and indoor gardening store is GrowGeneration’s 13th this year, according to a news release.

Terms of the deal were not disclosed.

GrowGeneration, which recently raised its full-year 2021 revenue guidance to $455 million$475 million, said in the release it expects its portfolio to include more than 70 garden center locations by the end of the year.

The company currently owns 59 stores, including 21 in California, where GrowGeneration recently purchased Mendocino Greenhouse and Garden Supply.

The Hoagtech acquisition increases GrowGeneration’s footprint in Washington state to three locations, according to the release.

Nevada cannabis consumption lounges on pace to open in 2022

Nevada’s cannabis industry will have a new way to reach consumers with marijuana consumption lounges planned to open next year, a potential boon to businesses in a state that annually receives a large influx of tourists.

The prospect of a 2022 launch came to light when the state’s Interim Finance Committee approved funding to assist the Cannabis Compliance Board (CCB) in overseeing the new lounges, according to the Nevada Independent.

“All goes as planned, we’re looking at – at least the first quarter, or the first half of 2022 – not only to see the lounges open, but then also the first part is where we would start to realize that revenue,” CCB Executive Director Tyler Klimas said, according to the news outlet.

The state Legislature in June approved a bill that created two types of licenses for cannabis consumption lounges.

Nevada’s casinos and hotels don’t allow cannabis use on-site, so marijuana lounges would provide options for visitors and for Nevada residents who live in apartments or other housing situations not conducive to marijuana consumption.

The Independent reported that 59 marijuana retailers have expressed interest in opening consumption lounges.

According to the news outlet, the Interim Finance Committee approved the allocation of $10.9 million for the Cannabis Compliance Board to hire 23 full-time employees.

Those positions would handle the licensing of marijuana consumption lounges, compliance checks, background checks and determining lounge suitability, among other duties.

Leafly challenges Florida’s ban of third-party online marijuana services

Leafly filed a legal challenge against Florida regulators who claim the online marijuana e-commerce company violates a state law banning third-party cannabis-dispensing services.

Seattle-based Leafly argues that it doesn’t dispense marijuana products and has asked an administrative law judge to rule that the Florida Department of Health is using an “unadopted and invalid” regulation to support its claim, the Tampa Bay Times reported.

“Leafly does not prepare, possess, purchase, transmit, distribute, sell or dispense any medical marijuana in Florida or elsewhere,” Seann Frazier, a lawyer representing Leafly, wrote in the legal petition, according to the newspaper.

Leafly and similar third-party websites such as I Heart Jane enable potential customers to view dispensary menus online, place orders and then pick up orders at the dispensaries.

Most, if not all, medical marijuana operators in Florida quit using such  services, the Times reported, after receiving a warning from the health department in February that they would be fined up to $5,000 per violation.

The department’s chief of staff wrote in the memo that regulators had received complaints about the practice and had determined that such services violated the law.

Leafly’s legal challenge in Florida coincides with plans to go public and expand its business.

Hexo sets $140 million raise for acquisition, US cannabis expansion

Canadian cannabis grower Hexo Corp. priced a public offering to raise $140 million.

The offering follows a shelf prospectus supplement that Hexo filed May 25.

Proceeds from the share offering will be used to pay part of the cash component of Hexo’s acquisition of Canadian competitor Redecan as well as “for expenditures in relation to the company’s U.S. expansion plans,” which include a Colorado production facility.

The underwriters of the offering agreed to purchase 47,457,628 units at $2.95 per unit, according to a Friday news release.

Each unit includes one common Hexo share and 0.5 share purchase warrants.

Each warrant can be exercised to acquire one common share at $3.45 within five years of the closing date of the offering, “subject to adjustment in certain events.”

The underwriters have been granted a 30-day option to purchase 7,118,644 more units on the same terms.

The offering is expected to close on or around Aug. 24, subject to conditions such as Toronto Stock Exchange approval.

Hexo’s U.S. shares currently trade on the New York Stock Exchange, but the company recently applied to list on the Nasdaq.

The company’s Canadian shares trade on the Toronto Stock Exchange.

Illinois marijuana lotteries over, but legal fights make future uncertain

The third and final lottery of the summer for Illinois’ quickly expanding adult-use marijuana market resulted in the awarding of 75 new retail permits.

But there’s still a good bit of uncertainty as to what will happen next: A court order from a judge overseeing an ongoing lawsuit might force the licenses to be put on hold until that case is resolved. The suit was filed by the Wah Group and Haaayy.

According to the Chicago Sun-Times, the winners of new cannabis business licenses include:

  • The Wah Group, which won two licenses after the judge ordered that the company be awarded a place in the lottery. An attorney for Wah told the newspaper that the business would withdraw its standing in the suit but couldn’t speak for Haaayy.
  • Viola Brands, whose ownership includes former NBA players Allen Iverson and Al Harrington, won a second license.
  • GRI Holdings, which was among a group that filed a different lawsuit, won two permits.
  • Jeffrey Rehberger and his firm Fortunate Son Partners won their second permit. He is the CEO of video gambling company Lucky Lincoln Gaming.
  • Edie Moore, executive director of the influential Chicago chapter of the National Organization for the Reform of Marijuana Laws (NORML), won four licenses and now possesses six.
  • So Baked Too and Suite Greens, which recently filed a lawsuit over the lottery, each won a license.
  • The Herbal Care Center, which is being acquired by Chicago-based Verano Holdings, won two permits.

Canada’s retail cannabis sales grow to CA$318.7M in June, another record

Retail sales of legal adult-use cannabis in Canada increased to nearly 318.7 million Canadian dollars ($246.9 million) in June, growing more than 1.7% from the previous record set in May.

The seasonally unadjusted national retail sales figure released Friday by Statistics Canada represents a fourth consecutive month of growth for Canada’s regulated cannabis sector, despite the fact June has one fewer day than May.

Statistics Canada’s sales total for May was revised downward slightly to CA$313.2 million.

Year-over-year, June recreational cannabis sales in Canada increased by 58.5%.

Nova Scotia led Canada’s 10 provinces in terms of monthly growth, with sales increasing 10.5% to CA$8.2 million.

Recreational marijuana sales in Ontario, the nation’s largest market, grew 8% on a monthly basis to CA$120.1 million.

However, June sales shrank on a monthly basis in Canada’s second-, third- and fourth-largest provincial markets, as follows:

  • Alberta: CA$57.1 million (-4.4%)
  • Quebec: CA$49.2 million (-0.7%)
  • British Columbia: CA$44.5 million (-4.1%)

June recreational cannabis sales in the remaining provinces were:

  • Saskatchewan: CA$13 million (+0.7%)
  • Manitoba: CA$12.1 million (+2%)
  • New Brunswick: CA$6.6 million (+3.4%)
  • Newfoundland: CA$4.9 million (+3.8%)

Statistics Canada did not release June cannabis sales figures for the province of Prince Edward Island or for Canada’s three territories.

June cannabis sales and monthly growth in selected Canadian metropolitan areas were:

  • Toronto: CA$43.7 million (+4.9%)
  • Montreal: CA$24.8 million (-2%)
  • Edmonton: CA$19.8 million (-2.4%)
  • Calgary: CA$15.2 million (-4.6%)
  • Vancouver: CA$14.4 million (-1.4%)
  • Ottawa: CA$12.1 million (+13.3%)
  • Winnipeg: CA$8.5 million (+1.3%)
  • Quebec City: CA$5.9 million (-0.6%)
  • Gatineau: CA$1.5 million (-3%)

June’s cannabis retail sales figures from Statistics Canada are available here.

The federal statistics agency is scheduled to release July retail sales figures on Sept. 23.

New Jersey’s initial adult-use marijuana rules give edge to small businesses

New Jersey regulators took a key step Wednesday toward developing a billion-dollar recreational marijuana market, announcing an initial set of rules that prioritize local and minority entrepreneurs.

That could help satisfy worries, NJ.com reported, that most of the state’s 12 existing medical marijuana operators are owned by out-of-state interests.

The development of regulations means that the state is now on a 180-day clock to launch adult-use sales, according to NJ.com, meaning sales would launch by February 2022, if not sooner.

But it’s likely those initial sales will be made by existing MMJ operators.

New Jersey cannabis attorney Rob DiPisa of Cole Schotz gave regulators high marks in their “commitment to the timetable set forth in the legislation,” which called for regulations to be developed by Aug. 21.

Because of that, DiPisa said, “we may see adult-use sales in New Jersey faster than anticipated.”

“However,” he added, “I think we need to keep in mind that the Cannabis Regulatory Commission has made it clear that existing operators will need to show that the state is meeting the needs of existing patients before we can cross the threshold into an adult-use market.”

New Jersey’s progress also might put additional pressure on New York’s incoming governor, Kathy Hochul, to move quickly to develop a recreational marijuana program that already is experiencing lengthy delays.

The first set of recreational cannabis rules in New Jersey, according to NJ.com, include:

  • Licensing priority to women, minorities, disabled veterans, social equity businesses and those in “impact” zones, or areas disproportionately affected by the war on drugs.
  • A separate encouragement for microbusinesses. Those businesses, defined as 10 or fewer employees, won’t count toward any license caps the commission establishes. The enterprises must be totally New Jersey-owned, however.
  • A limit of 37 growers to be licensed before February 2023. The commission didn’t set limits on other types of licenses.

The next big date for adult use in New Jersey is Aug. 21, the deadline for municipality opt-outs. Recently, it came to light that roughly half could ban adult-use marijuana businesses.

Oklahoma taps new director to oversee thriving medical cannabis market

Oklahoma’s marijuana regulatory agency hired another director, the fourth in the past three years.

According to The Oklahoman, the state’s Medical Marijuana Authority (OMMA) chose Adria Berry to replace Kelly Williams, who served as director for nearly a year.

Berry, an attorney who advised Gov. Kevin Stitt on cannabis policy while working for the Oklahoma secretary of state, begins her new role Aug. 30.

Three years after legalization, Oklahoma’s medical marijuana market is booming, with more than 12,500 total business licenses in the state.

Berry takes over a regulatory agency struggling to hire enough inspectors to keep up with the growth in businesses as well as a program without an operating seed-to-sale tracking system.

Williams, who was appointed interim director in 2020, was preceded by Travis Kirkpatrick (2019) and Adrienne Rollins (2018).

Court OKs Trulieve’s acquisition of fellow marijuana MSO Harvest Health

Multistate marijuana operator Trulieve’s blockbuster $2.1 billion deal to acquire another cannabis MSO, Harvest Health & Recreation, is a step closer to reality after Harvest received a final court order approving the arrangement from the Supreme Court of British Columbia.

“We have and will continue to work collaboratively with the entire Trulieve team until we obtain all of (the) required regulatory approvals needed to close,” Harvest Health CEO Steve White said in a Thursday news release.

The deal, announced in May, was subject to approval by the Canadian court because it “will be effected by way of a plan of arrangement pursuant to the Business Corporations Act (British Columbia),” Trulieve said at the time.

Harvest Health is based in Arizona, but its shares trade as HARV on the Canadian Securities Exchange and HRVSF on the U.S. over-the-counter markets.

Shares of Florida-based Trulieve trade as TRUL on the CSE and as TCNNF on the U.S. OTC markets.

California county offers $10,000 grants to cannabis farmers

Officials in Humboldt County, California, launched a program to help bolster the community’s struggling – but legal – cannabis farmers.

According to the Eureka Times-Standard, county officials have authorized $2 million in grant monies for marijuana growers to be dispersed in $10,000 increments “per service” for those who qualify.

The program is called Project Trellis.

But only about 200 of the roughly 900 cannabis farmers deep in the heart of Northern California’s legacy marijuana growing region would qualify for any of the grant money, said Natalynne DeLapp, executive director of the Humboldt County Growers Alliance.

And even so, the grant money might not be enough to stave off financial disaster for farmers that are facing a wholesale market price crash, she said.

“Unless we want an extinction event, which means losing our legacy farmers, it is imperative for the county to maximize funding allocations directly into the hands of our farmers,” DeLapp told the Times-Standard.

Applications for grant money must be submitted by 5 p.m. Sept. 17 to the Humboldt County Office of Economic Development.

Once the paperwork is in, it might take 60 days or more for an application to be approved, the newspaper reported.

Delivery platform Eaze to acquire CO, FL marijuana retailer Green Dragon

California-based marijuana delivery platform Eaze struck a deal to acquire multistate cannabis retailer Green Dragon.

Eaze, which is privately held, did not disclose the value of the transaction in a Wednesday news release.

Denver-based Green Dragon is also privately held. The company’s website lists 15 cannabis retail outlets in Colorado and one medical marijuana dispensary in Florida with a second location planned in that state.

“The combined company will operate 42 delivery and storefront retail locations and serve markets with a combined value of nearly $10 billion,” Eaze noted in the release.

The transaction requires regulatory approval at the local and state levels, according to the release.

In a statement, Eaze CEO Rogelio Choy said Green Dragon’s Colorado operations “and expansion into Florida’s booming market adds key operational capabilities to our national footprint and cements our leadership as California’s largest (multistate operator).”

According to the release, Green Dragon “plans to have at least 20 locations secured in Florida by the end of 2021.”

In addition to its California operations, Eaze has announced plans to launch its cannabis delivery platform in Michigan.

Illinois hit with another lawsuit over cannabis licensing

Another lawsuit has been filed against the state of Illinois over its cannabis licensing process, this time by two companies that claim they were “forced” to relinquish lottery spots for retail permits by a state agency.

According to the Chicago Sun-Times, Suite Greens and So Baked Too allege in the suit against the Illinois Department of Financial and Professional Regulation that agency officials pushed them to give up coveted spots in one of three lotteries for marijuana retail permits.

Both companies have nine spots, or chances, to win in the final lottery of the three, but they allege they should have an additional three, according to the lawsuit.

The third of the three lotteries is scheduled for Aug. 19, but it likely will be delayed after a judge last week ordered regulators not to issue any new licenses until a ruling is handed down on one of the many lawsuits filed against Illinois’ licensing process.

The suit filed by Suite Greens and So Baked Too requests that a Cook County court judge force the state to give them back the three spots they relinquished but doesn’t ask that the licensing process be halted or redone.

Among the lawsuits filed in Illinois by would-be marijuana licensees:

  • Michigan-based Sozo Illinois filed a federal lawsuit in July in an attempt to stop the licensing process.
  • Three businesses connected to Justice Cannabis filed a federal lawsuit in July, alleging they had been wrongly left out of one of the lotteries.
  • High Haven Dispensary filed a state lawsuit in August, claiming the company should have received more social equity points than it got during the license application process.