Cannabis Industry Daily News

Alabama adds three members to medical cannabis commission

Alabama Gov. Kay Ivey named three appointments to the state’s new Medical Cannabis Commission that will administer much of the business licensing and regulation of the state’s MMJ market.

The 14-member regulatory body was created under the state’s MMJ law approved by the Legislature in May, AL.com reported.

According to the Washington DC-based Marijuana Policy Project, the Alabama Department of Agriculture will play a key role in regulating marijuana cultivation.

The three new appointments to the commission are:

  • Sam Blakemore, a pharmacist at Children’s of Alabama hospital in Birmingham.
  • Dr. William Saliski Jr., a pulmonologist from Montgomery.
  • Dwight Gamble, a bank executive from Headland.

The commission that will tap a director to manage the program.

The state’s lieutenant governor, the president pro tempore of the Senate, the speaker of the House, the agriculture commissioner, and the health officer also make appointments to the commission, AL.com reported.

The attorney general and secretary of state each name a non-voting advisory member.

The state Senate must approve the appointments; but appointments made while the Legislature is out of session can start serving now.

Report warns of Michigan’s illicit marijuana market, but some dubious

(This story has been updated to delete a reference that Wana Brands is a member of the MCMA. Confusion arose because High Life Farms, a licensee of Wana Brands, is a member of the trade organization.) 

Roughly 70% of cannabis sales in Michigan in 2020 occurred outside of licensed retail shops, according to a report released this week by the Michigan Cannabis Manufacturers Association (MCMA).

The report, compiled by the Anderson Economic Group, found that the state had a $3.2 billion marijuana market, but only $1 billion was sold through legal retailers.

That, to the MCMA, indicates a serious threat to law-abiding marijuana businesses.

“While there have been many successes in Michigan’s regulated cannabis industry, there are major storm clouds on the horizon,” MCMA Executive Director Stephen Linder said in a statement.

“Large quantities of untested, illicit cannabis continue flooding the market. This poses a significant threat to patient and consumer safety.”

The MCMA’s members include several multistate operators and brands, including LivWell Enlightened Health and Kiva Confections.

But Robin Schneider, the executive director of the Michigan Cannabis Industry Association, scoffed at the report, calling it “corporate protectionism.”

Schneider, who said her organization has more than 300 member companies in Michigan in all verticals, said the illicit market poses no threat to legal marijuana businesses.

Her primary takeaway from the report was that legal cannabis businesses have made inroads with the Michigan consumer base since legal adult-use sales began in December 2019 after voters approved recreational use in 2018.

“This report is fantastic, because it demonstrates the tremendous amount of progress we’ve made in a short period of time,” Schneider said.

“Our members are not at all concerned” about competition from caregivers, home growers or the underground market, Schneider added, noting she’s received zero complaints from member companies about how they’re performing financially.

“We’re crushing it,” she said. “Our organization would never reignite the drug war to shore up our profit margins.”

The MCMA came under fire earlier this year from consumers and activists because it was actively lobbying state lawmakers to tighten regulations on medical marijuana caregivers.

Cannabis MSO Columbia Care raises $74.5 million in private placement

Multistate marijuana operator Columbia Care has closed a private payment of convertible notes to raise $74.5 million.

The senior secured notes carry a 6% interest rate, and mature on June 29, 2025, unless they are redeemed, repurchased or converted earlier than that.

Each $1,000 worth of notes can be converted to 154 common shares of Columbia Care, representing a premium of about 25% over the shares’ closing price on June 17.

New York-based Columbia Care can redeem the notes at par on or after June 29, 2023, as long as its shares are worth more than 120% of the conversion price.

“The net proceeds from the offering will be used for working capital and general corporate purposes,” Columbia Care said in a news release.

Earlier this month, Columbia Care announced a deal to acquire vertically-integrated Colorado marijuana company Medicine Man for $42 million.

The company also announced a deal to acquire a New York cultivation site in April.

Shares of Columbia Care trade on the Canadian NEO Exchange under the symbol CCHW.

Clarence Thomas: US marijuana ban ‘may no longer be necessary’

One of the U.S. Supreme Court’s most conservative justices on Monday wrote in a legal opinion that the federal government’s ongoing prohibition of cannabis may be out of date.

“A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the federal government’s piecemeal approach,” Justice Clarence Thomas wrote, in an opinion that also denied a Colorado retailer a Supreme Court hearing in a legal fight over the merits of Section 280E of the federal tax code.

Thomas wrote that a 2005 Supreme Court ruling – Gonzales v. Raich – may now be useless from a legal standpoint because the federal government has taken a hands-off approach to the modern marijuana industry, effectively rendering its own prohibition meaningless.

“Whatever the merits of Raich when it was decided, federal policies of the past 16 years have greatly undermined its reasoning,” Thomas wrote. “The Federal Government’s current approach is a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.”

Thomas further wrote that the case at hand – which dealt with a Colorado marijuana business attempting to avoid the tax burden created by federal prohibition and 280E – is a “prime example” of the “mixed signals” coming from the federal government regarding cannabis.

Aside from taxes, Thomas also noted that marijuana businesses could run afoul of criminal laws that penalize the use of firearms while trafficking in controlled substances just by hiring armed security. He also pointed out inconsistencies in banking practices due to federal prohibition.

“The Federal Government’s current approach to marijuana bears little resemblance to the watertight nationwide prohibition that a closely divided court found necessary to justify the Government’s blanket prohibition in Raich,” Thomas wrote.

Thomas’s sentiments mirror those of the American public, and signify again that it’s time for Congress to end marijuana prohibition, NORML Executive Director Erik Altieri said in a press release.

“Justice Thomas’ comments reflect what has been obvious to the vast majority of Americans for some time now,” Altieri said. “This intellectually dishonest position (of federal MJ prohibition) … complicates the ability of states to successfully regulate and oversee state-legal marijuana businesses.”

The Parent Co. buying West Hollywood cannabis retailer for $11.5 million

TPCO Holding Corp. (The Parent Co.), a California-based vertically integrated marijuana operator, announced Monday it would acquire MJ retailer Calma in West Hollywood, California, for $11.5 million.

According to a news release, TPCO will spend $8.5 million in cash and another $3 million in company equity. The purchase is expected to close in the third quarter.

The founders of Calma will remain at the helm of the shop, according to the release, to “ensure Calma remains a staple in West Hollywood.”

Steve Allan, CEO of TPCO, said the company plans more acquisitions in California, noting it would “evaluate and identify additional strong retail and delivery operators in strategic locations.”

TPCO came about last year when New York-based Subversive Capital Acquisition Corp., a special purpose acquisition company (SPAC), made a pair of California acquisitions: marijuana brand Caliva and cannabis investment firm and producer Left Coast Ventures.

The business has hired rapper Shawn “Jay-Z” Carter to work on cannabis industry social equity.

The Calma acquisition brings TPCO’s retail footprint in the state to four shops, including two in San Jose and two in the greater Los Angeles metro area.

TPCO trades on the NEO exchange in Canada under the ticker symbol GRAM.U and on the over-the-counter markets as GRAMF.

Colorado law caps patient purchases of medical marijuana concentrates

Colorado medical marijuana dispensaries will be required to limit patients’ purchases of cannabis concentrates and younger patients will have less access to MMJ under a new state law.

The Denver Post reported that Gov. Jared Polis signed HB21-1317 into law Thursday.

The law is focused on evaluating the effect of “high-potency THC marijuana on the developing brain and mental health.” It goes into effect Jan. 1, 2022.

Patients will now be limited to 8 grams of concentrates per purchase, down from a previous limit of 40 grams. MMJ patients 18-20 years old will be capped at 2 grams per purchase, with some exceptions.

Dispensaries must also log each transaction into the seed-to-sale traceability program to prevent patients from purchasing more concentrates at another store on the same day.

Cannabis manufacturers will have to include warnings on packages for concentrates as well as guidance on serving sizes.

The law adds more rules for 18-20-year-old patients, including requiring MMJ recommendations from two doctors and more thorough consultation from physicians before the recommendations are given.

UN report: Cannabis markets likely grew because of pandemic

A new report by the United Nations Office on Drugs and Crime says the coronavirus pandemic created circumstances that likely caused cannabis markets in some parts of the world to expand faster than they otherwise would have, particularly in high-income countries.

That in turn created opportunities for both criminal as well as legal enterprises – where sale of the drug is regulated – to expand their business.

“Indeed, large, multibillion-dollar businesses, which have a private interest in the expansion of the cannabis use market, are moving into the market in the jurisdictions where cannabis has been legalized,” according to the report, which was released this week.

The report notes that “COVID-19 may have accelerated the preexisting trends towards increased use and availability of cannabis in some high-income countries as some people have turned to the drug to alleviate stress or manage boredom brought on by stay-at-home orders.

“This, in turn, may have opened up new opportunities for cannabis markets due to an emerging acceptance of the drug.”

The UN body cites a global survey conducted last year that found cannabis consumption was perceived to have increased in approximately 32 countries.

“In the absence of information on global production of cannabis, this can be read as an indication that supply may have expanded to meet the increase in consumption,” according to the report, which deals mostly with unregulated cannabis markets.

“Some cannabis markets have grown strongly during the pandemic – and likely because of it – as a result of stay-at-home orders and social distancing restrictions,” it said.

The report suggests cannabis use patterns in European Union countries remained relatively stable during the first lockdown period, compared with the pre-lockdown period, “although with some signs of possible increases in the amounts used by more frequent users.”

The UN noted that over one-third of Canadians who previously reported consuming cannabis said that their consumption rose during the pandemic, while 12% said it fell, citing a Statistics Canada report.

“However, this trend was ongoing before the onset of the pandemic, which may have simply accelerated it,” the report states.

The report claims cannabis is more potent nowadays compared to previous decades, but fewer young people see it as harmful.

In response, the UN body wants nations to prioritize public health over private business and implement comprehensive bans on cannabis-product advertising.

It also called for nations to combat misinformation about potential impacts of the increased strength of cannabis, and for greater investments in research into both the harm cannabis use poses to health and any possible medical advantages.

The report estimates that approximately 200 million people, amounting to 4% of the world’s population, consumed cannabis in one form or another.

“The annual prevalence of the use of cannabis remains highest in North America (14.5%), the sub-region of Australia and New Zealand (12.1%), and West and Central Africa (9.4%)”

Other findings in the report include:

  • In 2020, a trend towards larger shipments of illegal drugs, including cannabis, emerged.
  • COVID-19 mobility restrictions led to an increase in home deliveries.
  • Drug trafficking using the Internet may have accelerated during the COVID-19 pandemic.

The World Drug Report 2021, which comes in five parts, can be found here.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at matt.lamers@mjbizdaily.com.

Marijuana MSO PharmaCann completes $85 million debt offering

Multistate marijuana operator PharmaCann has completed a private debt offering of $85 million worth of senior secured notes at a 12% interest rate.

The Chicago-based, privately held company said net proceeds from the offering were approximately $79.9 million, which “will be used for strategic growth opportunities and general corporate purposes.”

The notes are due on June 30, 2025.

PharmaCann did not identify who purchased the notes, but described the buyers as “leading U.S. and Canadian lenders” in a news release.

The company operates in Ohio, Pennsylvania, Massachusetts, New York, Illinois and Maryland.

Toronto-based cannabis producer Cronos Group agreed to pay $110 million for the option to acquire a 10.5% stake in PharmaCann earlier this month.

Arizona cannabis businesses recall products for salmonella, mold

Arizona marijuana retailers have issued a voluntary recall for eight products following the discovery on Wednesday by state regulators that some of the merchandise may have been contaminated with salmonella or a type of mold called aspergillus.

According to Phoenix TV station KNXV, the products being recalled include:

  • Harvest Platinum, 14-gram Pre Pack Indica Flower (Glazed Apricot Gelato)
  • Harvest Platinum, 14-gram Pre Pack Sativa Flower (Tiger Haze)
  • Modern Flower, 3.5-gram Pre Pack Indica Flower (Orange Acai)
  • Sol Flower Dispensaries and Establishments, Tahiti Lime
  • EHF (Elephant Head Farms), HAT Trick #17 Flower
  • Mohave Cannabis, Pre-roll
  • Tru Infusion Flower, Caked Up Cherries
  • The Pharm, Chemistry #1 (HD 3/24/21)

The Arizona Department of Health Services told media outlets it’s working with cannabis companies to notify consumers of the recalls and to examine how the tainted products were able to make it onto store shelves.

The products had been tested by a third-party lab and cleared for sale.

AZFamily.com reported that the lab that provided the testing which cleared the products for sale was OnPoint Laboratories, located in Snowflake, Arizona.

“OnPoint Laboratories takes full responsibility, and reiterated today that all of the products, dispensary companies and brands associated with this recall have always followed rigorous state testing requirements and continuously provide clean products for consumers,” a company representative wrote in an email to CBS 5.

Canada’s High Tide buying US marijuana accessory retailer for $10M

High Tide, an Alberta-based cannabis retail chain that owns several cannabis accessory and CBD retailers outside of Canada, is acquiring U.S. online marijuana accessories retailer Daily High Club.

Daily High Club shareholders will receive $10 million, comprising $6.75 million in High Tide shares and $3.25 million in cash.

In a Friday news release, High Tide described the acquisition as “another step towards solidifying itself as the leader within the U.S. e-commerce marketplace for consumption accessories.”

“Daily High Club stood out to us because it is an increasingly popular consumption accessories online retailer, with a rapidly growing subscription box model which can easily be tailored to include cannabis products in the event of U.S. federal legalization,” said High Tide CEO Raj Grover in a statement.

High Tide intends to enter U.S. cannabis retail in the event of marijuana legalization at the federal level, the release added.

Harrison Baum, Daily High Club’s founder and CEO, will be appointed High Tide’s director of digital marketing on closing.

The acquisition follows High Tide’s January acquisition of cannabis accessories and CBD seller Smoke Cartel, and its May acquisition of online CBD marketplace FabCBD.

High Tide acquired Amsterdam-based cannabis accessories retailer Grasscity in 2018.

In April, High Tide filed a shelf prospectus to raise up to 100 million Canadian dollars ($81 million).

High Tide was approved to list on the Nasdaq Capital Market in late May, after consolidating its shares to meet the exchange’s listing requirements.

The company’s shares trade as HITI.

US tobacco firm Pyxus International sells Canadian cannabis subsidiaries

U.S. tobacco company Pyxus International has sold off its Canadian cannabis subsidiaries, according to a media report and court filings.

North Carolina-based Pyxus announced in January that it was divesting its Canadian assets, which included Figr Brands, Canada’s Island Garden, and Figr Norfolk, after filing for bankruptcy protection in June 2020.

Figr Brands and Canada’s Island Garden are being acquired by a group of Prince Edward Island investors, according to a Wednesday report in Atlantic Canada media outlet SaltWire Network.

Figr Norfolk, which is located in Ontario, is being purchased by a different company and will not keep the Figr name, according to the report.

SaltWire reported that Alex Smith, identified as a member of Canada’s Island Garden’s management team, will be the CEO-designate of Figr after the deal closes.

Smith said he could not disclose the purchase price, and that the company would continue operating in Canada’s recreational and medical cannabis markets.

Court orders approving both sales were approved on June 10, and may be viewed on the website of court-appointed monitor FTI Consulting.

Denver taking applications for marijuana delivery and other businesses

Denver is taking applications for cannabis delivery licenses, a first for one of the country’s most established marijuana markets.

As part of a major overhaul of the city’s marijuana regulations, regulators also are accepting applications for new recreational MJ stores in certain areas – something that hasn’t happened since 2016.

Only social equity applicants as defined by the state are eligible to apply for manufacturing, cultivation, transportation and retail licenses.

Stores are required to use a licensed transporter for delivery for the first three years of Denver’s delivery program. So the city is offering new licenses for transporters, but only those who qualify as social equity applicants can apply.

The city hasn’t set a cap on the number of licenses and permits available, and there is no deadline to apply.

“This is a big part of the largest overhaul in marijuana rules and regulations since initial legalization that our mayor signed into law on 4/20,” wrote Eric Escudero, spokesperson for the city’s excise and license division, in an email to MJBizDaily.

Escudero said the city doesn’t anticipate accepting applications for social consumption lounges – or “hospitality” venues – until November.

There are currently 205 marijuana stores in Denver, and the city has issued 920 total marijuana licenses of many types.