Cannabis Industry Daily News

California provides another $30 million for marijuana social equity programs

California awarded an additional $30 million to 16 different cities and counties to bolster social equity programs, which are designed to get victims of the war on drugs more directly involved in the legal cannabis industry.

The new grant money is on top of $10 million disbursed by the state last fall for social equity programs.

The lion’s share of the new funding – nearly $29 million – went to local governments that already have social equity programs in place, including Long Beach, Los Angeles, Oakland, Sacramento, San Francisco and Humboldt and Mendocino counties.

Oakland was the top recipient, with $6.5 million. Mendocino County was at the bottom, with $2.2 million.

At least $23 million of that funding pool will go directly to qualified social equity businesses in the form of loans or grants, according to a news release from the Bureau of Cannabis Control (BCC) and Gov. Gavin Newsom’s Office of Business and Economic Development.

Much of the funding is earmarked for “small business support services,” according to the release.

Those services include “technical assistance to individuals, reduced licensing fees or waived fees, assistance in recruitment, training and retention of a qualified and diverse workforce, and business resilience such as emergency preparedness.”

The other recipients each received $150,000 or less to help develop social equity programs. Those localities include Clearlake, Coachella, Palm Springs, San Jose, Santa Cruz, Stockton as well as Lake, Monterey and Nevada counties.

Oregon cannabis retailer Oregrown in court fight over leadership

Oregrown, a vertically integrated cannabis operator based in Bend, Oregon, filed a lawsuit to remove the firm’s CEO and chief brand officer for “allegedly jeopardizing the interest of the company.”

The lawsuit, filed in a local circuit court, notes that Oregrown already removed CEO Aviv Hadar and his wife, Christina Hadar, chief brand officer, as shareholders and directors in the company, the Bend Bulletin reported.

Christina Hadar is accused in the suit of violating a nondisclosure agreement, and the Hadars are also accused of fostering an atmosphere where workers were afraid of being laid off.

In addition to the Hadars’ removal, the suit seeks to have the couple hand over control of web-based accounts and pay $90,000 in damages.

Oregrown President and co-founder Kevin Hogan wrote in an email to Marijuana Business Daily that the lawsuit was filed after “extensive deliberation.”

“It was Oregrown’s only option to restore control over its email, social media and internal communication tools,” he noted.

According to Hogan, the actions were in the best interests of its employees and customers.

Attorneys for the Hadars, Joe Mabe and Dana Sullivan, wrote in an email to MJBizDaily that the couple “dispute the allegations that the company is making against us and intend to vigorously defend against this baseless litigation.

“The Hadars,” the attorneys continued, “care deeply about Oregrown and remain devoted to the company, its employees and the Bend community.“

– Bart Schaneman

Marijuana operator Medicine Man Technologies rebrands as Schwazze

Medicine Man Technologies, a Denver-based multistate cannabis operator, is now calling itself Schwazze, an offshoot of a proprietary marijuana pruning technique developed by the company.

The name change and corporate rebranding is designed to differentiate the company and “marks the next stage of our strategic growth,” Shane Sampson, chief marketing officer, said in a news release Monday announcing the move.

Medicine Man Technologies joins a number of multistate operators that have changed names or rebranded retail outlets in response to a rapidly changing business climate.

The company, currently trading on the over-the-counter markets with the ticker symbol MDCL, will start trading as SHWZ on Tuesday.

Schwazze also said it has completed its acquisition of Mesa Organics (aka MesaPur) and its Purplebee’s business. Mesa Organics operates four dispensaries in southern Colorado.

As recently as a year ago, Medicine Man Technologies was primarily a cannabis consulting firm.

Then it embarked on a $300 million acquisition spree, largely propelled by a new law in Colorado that opened up the marijuana space to public companies and out-of-state investment.

The former Medicine Man Technologies recently reported 2019 revenue of $12.4 million, an increase of 31% over $9.4 million in 2018.

CEO Justin Dye said in late March that the company remained on schedule to close 11 pending acquisitions despite the challenge of the coronavirus pandemic.

A Schwazze spokeswoman didn’t immediately return a query from Marijuana Business Daily for additional comment about the name change.

Lawsuit seeks to overturn Los Angeles’ cannabis social equity licensing process

lawsuit filed last week aims to have the results of Los Angeles’ social equity retail licensing round last fall thrown out and the entire process redone.

The suit, filed in California Superior Court in Los Angeles County, is led by the newly formed Social Equity Owners and Workers Association and actor-turned-cannabis entrepreneur Madison Theodore Shockley III.

The suit names the city’s Department of Cannabis Regulation (DCR) and its executive director, Cat Packer, as defendants.

The lawsuit points to the results of an independent audit released in March that show 226 applicants for 100 available social equity marijuana retail permits were able to log into L.A.’s online application platform before the official 10 a.m. start time for the first-come, first-served permitting line.

“Clearly, with only 100 applications being processed on a ‘first come, first serve basis’ … the 226 applicants that accessed the Accela portal early would have a significant advantage over other applicants that waited until 10:00 a.m.,” the suit argues.

The lawsuit also alleges that city officials have “no reliable means of determining which applicants actually won the race and where they should be placed in the licensing processing queue.”

The suit requests that:

  • A judge order the DCR to evaluate all 802 applications for social equity permits received last September.
  • A new licensing round be held to replace September’s process.
  • An emergency injunction be issued to prevent the DCR from moving forward with issuing permits to any of the 100 winners from last fall.

The DCR declined to comment on the lawsuit.

An agency spokeswoman confirmed to Marijuana Business Daily that the DCR on April 10 requested authorization from the mayor’s office to move forward with the licensing process but has not yet received the OK.

The agency paused the process last October, pursuant to the mayor’s request for an audit, so Los Angeles’ licensing process remains at a standstill.

Members of Congress seek marijuana industry inclusion in coronavirus relief

Almost three dozen members of the U.S. House of Representatives have signed a letter to congressional leaders urging that cannabis companies be included in future federal relief packages aimed at stimulating the economy during the COVID-19 outbreak.

The letter was spearheaded by the bipartisan Congressional Cannabis Caucus, which is led by Democratic U.S. Reps. Earl Blumenauer of Oregon and Barbara Lee of California as well as Republican Reps. Don Young of Alaska and Tom McClintock of California.

The letter was sent to House Speaker Nancy Pelosi, a Democrat, and Minority Leader Kevin McCarthy, a Republican.

The move was the result of the industry being largely left out of the $2 trillion CARES Act, which Congress passed in March to help the U.S. economy stave off some of the impacts from the coronavirus.

“As you draft the next COVID-19 relief bill, we write to ask that you address one of the shortcomings of the CARES Act – the exclusion of state-legal cannabis businesses and their employees,” the letter notes.

The letter:

  • Describes the marijuana industry as “a major contributor to the U.S. economy” and noted that the industry employs roughly 240,000 Americans and created nearly $2 billion in state and local tax revenue in 2019 alone.
  • Further emphasized the national trend of the industry being deemed “essential” by state governments during the coronavirus breakout.
  • Specifically requests that the industry be granted access to loans from the U.S. Small Business Administration and other assistance.

“The COVID-19 outbreak is no time to permit federal policy to stand in the way of the reality that … state-legal cannabis businesses are sources of economic growth and financial stability for thousands of workers and families, and need our support,” the letter stresses.

The letter was signed by a total of 34 House members – including many who are commonly political opponents, such as Florida Republican Matt Gaetz, a vocal supporter of President Donald Trump, and Michigan Democrat Rashida Talib, one of the four-woman liberal House group “The Squad.”

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

MJBizDaily offers calculator to help cannabis businesses plan

Marijuana Business Daily is providing a free calculator intended to help cannabis companies forecast their financial performance based on different revenue assumptions during the current economic tumult.

The tool is designed to provide a snapshot of how a prolonged pandemic situation – or some other variable – might affect a business:

  • If revenue drops 20%, for example, will your company remain profitable?
  • If your company sells more product, will costs begin to overrun profits?
  • If employees are given a 10% pay increase, what is the impact on the bottom line?

Get the calculator here.

It involves downloading the free Excel spreadsheet, then inputting your data. The spreadsheet does the math for you.

MJBizDaily’s full list of resources for cannabis businesses is available here.

MedMen creditor seeks to seize cannabis firm’s former execs’ homes

A MedMen Enterprises creditor is claiming in a civil lawsuit that three men with ties to the California-based marijuana company – including former CEO Adam Bierman and ex-President Andrew Modlin – owe the deeds to their personal homes as part of an investment guaranty from late 2019.

Alaska-based Milestone Investments filed the suit against MedMen Chief Strategy Officer Christopher Ganan, Bierman and Modlin in California Superior Court in Los Angeles County.

Bierman and Modlin stepped down from their MedMen leadership posts in January.

But Bierman remains a member of the board of directors and Modlin is now the company’s chief brand officer, according to the company’s website.

Ganan is the Los Angeles-based multistate operator’s chief strategy officer.

Milestone alleges that, as part of an investment deal in December 2019, the three agreed to enter into a “pledge of their personal residences in the form of a mortgage or deed of trust” as collateral for Milestone’s purchase of 23.7 million shares of MedMen stock for just under $10.2 million.

The creditor also loaned the group an additional $2 million, which they were reportedly going to use to purchase another 4.6 million MedMen shares.

But, the suit alleges, Bierman and Modlin failed to live up to their end of the arrangement, though Ganan provided a deed of trust in February for his Los Angeles home. The company sent notices of default on the guaranty to all three in March.

“In the days and weeks following defendants’ execution of the guaranty, Milestone repeatedly asked defendants to provide Milestone with deeds of trust to their personal residences as required,” the suit noted. “Defendants did not comply.”

Bierman, Modlin and Ganan and their attorneys could not immediately be reached.

A MedMen spokesman declined to comment, noting the company isn’t a party to the suit.

The lawsuit requests:

  • A jury trial.
  • That the court order Bierman and Modlin to “provide Milestone either a mortgage or deed of trust securing Bierman and Modlin’s personal residences.”
  • Damages for breach of guaranty.

In March, MedMen announced a restructuring of its capital structure and operations.

Recreational marijuana won’t make Missouri ballot this year

Voters in Missouri won’t have an opportunity to legalize recreational cannabis in 2020.

Missourians for a New Approach, the campaign working to gather signatures to put an adult-use cannabis initiative on the ballot, is suspending its efforts, the Springfield News-Leader reported.

In announcing the campaign is over, the group cited difficulties related to the state’s shelter-in-place orders issued in response to the coronavirus crisis.

Campaign Chair Dan Viets told the newspaper the state’s COVID-19 lockdowns have made “petitioning very difficult” and that it was going to be virtually impossible to gather the 170,000 signatures needed to make the November 2020 ballot.

Efforts to persuade Missouri officials to allow campaigners to collect signatures online instead of in-person were unsuccessful, Viets told the News-Leader. A legalization advocacy group on Montana filed a lawsuit seeking the right to collect signatures digitally.

The end of the Missouri campaign is the latest blow to U.S. marijuana legalization efforts, many of which have also been stalled because of the coronavirus.

Missouri legalized medical marijuana in 2018 by a statewide ballot measure, but the industry has yet to launch.

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

Ruling backs MA gov’s closure of adult-use cannabis stores – but offers options

A Massachusetts judge has ruled that Gov. Charlie Baker was within his authority to shutter recreational cannabis stores during the current coronavirus crisis, disappointing an industry that is losing nearly $2 million a day because of the closures.

But industry officials pledge to continue discussions with Baker’s administration about reopening the stores and noted the judge’s ruling indicated a path for adult-use cannabis shops to reopen.

David Torrisi, president of the Commonwealth Dispensary Association, said in an emailed statement to the media that the ruling confirming Baker’s executive authority was expected.

However, “we are encouraged by the judge’s acknowledgement that the cannabis industry has several tools at its disposal which would allow adult-use cannabis shops to reopen without harming public health or safety – including limiting sales to Massachusetts residents, reserve-ahead ordering and curbside pickup,” Torrisi wrote.

Adam Fine of the Boston office of the Vicente Sederberg law firm, the plaintiffs’ co-counsel in the case, added that the judge acknowledged the situation is challenging for medical cannabis patients who have been relying on the adult-use market.

Fine indicated in a statement that the plaintiffs are reviewing their legal options, but “we hope the governor will follow his legal option to reopen adult-use cannabis stores with a temporary ban on sales to nonresidents.”

Baker instituted the closure on March 24, and unless it’s modified, the order is in effect until May 4.

Montana adult-use marijuana advocates sue to collect ballot signatures digitally

Backers of a recreational marijuana legalization campaign in Montana are taking the state to court for the right to collect signatures electronically during the coronavirus crisis.

The group, New Approach Montana, also is requesting that the deadline for submitting signatures be extended from June 19 to August 3, according to Helene TV station KTVH.

The suit, filed in Lewis and Clark County District Court, reflects a push by ballot initiative proponents in many states for digital signature collection. It’s unclear how many states eventually will allow the electronic process.

Nationwide, medical and recreational marijuana ballot measures have stalled because of stay-at-home and social-distancing orders stemming from the COVID-19 outbreak.

Cannabis industry experts believed in January that the Montana proposal had a relatively good chance to make the ballot and pass.

Under the initiative, the Montana Department of Revenue would regulate a commercial adult-use marijuana industry and impose a retail sales tax of 20% on adult-use products.

New Approach must collect at least 25,468 valid signatures for the measure to be placed on the November ballot.

MJBizDaily webinar to offer bull, bear views on cannabis market

The latest webinar from Marijuana Business Daily’s Investor Intelligence, “Bull vs. Bear: Perspectives on the Industry,” is scheduled for 1 p.m. ET/10 a.m. PT on Tuesday, April 21.

The emerging legal marijuana industry has its share of cheerleaders and naysayers, and this webinar is intended for seasoned cannabis investors on both sides of that debate.

Speakers will include:

  • Korey Bauer, chief investment officer, managing director and portfolio manager, Foothill Capital Management.
  • Rupesh Parikh, senior equity research analyst, Oppenheimer & Co.

This session will provide insights on:

  • What to look for when assessing cannabis investing opportunities.
  • What the market’s enthusiasm gets right and wrong.
  • What could change the participants’ positions on the industry.

Register for the webcast here and email questions in advance to [email protected].

What’s your take on COVID-19’s impact on marijuana investments?

Coming Soon
How will the coronavirus pandemic affect interest and investments in new cannabis licensing opportunities?
How will the coronavirus pandemic affect interest and investments in new cannabis licensing opportunities?
How will the coronavirus pandemic affect interest and investments in new cannabis licensing opportunities?

A heavily regulated marijuana industry such as Illinois’ and the current status of cannabis in the state might be just what’s needed to deal with the coronavirus crisis and a probable economic recession, according to industry officials.

Yet, newly licensed entrants to that state’s cannabis industry will not only be challenged by a lingering coronavirus pandemic but also the subsequent economic downturn.

We’d like to know your thoughts on how the COVID-19 outbreak is going to affect future marijuana licensing and investments, not only in Illinois, but nationwide.

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