Cannabis Industry Daily News

Hydrofarm spends $58 million on another marijuana acquisition

By MJBizDaily Staff

Hydrofarm Holdings Group entered an agreement to acquire Illinois-based Innovative Growers Equipment (IGE) for $58 million, the cannabis cultivation equipment maker’s fifth acquisition in 2021.

Pennsylvania-based Hydrofarm said in a news release that it will fund the acquisition through cash, a new credit agreement and $11.6 million in stock.

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The transaction is expected to close in early November.

IGE is a manufacturer of LED lighting systems, racking and horticulture benches, a product range that complements Hydrofarm’s product line.

Hydrofarm said it expects IGE to generate $48 million in sales in 2021.

Since May, Hydrofarm has acquired Greenstar Products in Canada, Aurora Innovations in Oregon and House & Garden and Heavy 16 in California.

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In addition, Hydrofarm announced a $125 million senior secured, seven-year loan at a current annual interest rate of 6.5%.

Some of the funds from that credit facility will be used for the IGE acquisition.

Hydrofarm also released preliminary financial results for its third quarter ended Sept. 30.

Those results include estimated net income between $13.3 million and $18.3 million, based on sales ranging from $121 million to $124 million.

Columbia Care partners with boxing great Mike Tyson on cannabis brand

By MJBizDaily Staff

New York-based Columbia Care said Wednesday it plans to launch a new cannabis brand in partnership with former heavyweight boxing champion Mike Tyson.

The brand line – which will be called Tyson 2.0, according to a news release – will be sold across Columbia Care’s 99-dispensary network in 18 states and will include flower, concentrates and “consumables.”

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The line will also be sold wholesale to other retailers.

The brand launch – no date has been announced – will be overseen by Adam Wilks, former CEO of One Plant, and Chad Bronstein, CEO and founder of Chicago-based Fyllo.

The new Tyson 2.0 brand has completed a $7 million seed round, Forbes reported.

The funds will be used to “solidify cultivation agreements, develop proprietary strains, and build a national sales team,” according to the release.

Tyson is not new to the marijuana industry. In 2018, he announced his plans for a 40-acre California cannabis ranch and production facility as well as a brand, Tyson Holistic.

PharmaCann marijuana workers in New York ratify union contract

By MJBizDaily Staff

Employees of New York marijuana business Verilife, operated by multistate cannabis company PharmaCann, voted to ratify a three-year union contract.

According to a news release, the contract with the Local 338 Retail, Wholesale, Department Store Union (RWDSU)/United Food and Commercial Workers (UFCW) covers approximately 60 workers at PharmaCann’s cultivation and processing facility in Orange County, New York.

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The contract will be in effect for three years and includes increased wages and benefits, including:

  • Annual wage increases and bonuses. Members’ hourly pay rate will increase by $1.25 per hour in the first year and 3.75% in the second and third years.
  • A higher minimum starting rate for all new hires.
  • Additional paid time off and two new paid holidays.
  • The company will provide workers with an increase to their annuity benefit, as well as a new 401(k)-matching program.

Local 338 represents roughly 500 workers at seven medical cannabis companies in New York across the industry’s supply chain.

According to the release, the union plans to begin contract talks next month with PharmaCann regarding the company’s four dispensaries.

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The new union contract represents the UFCW’s latest successful unionization drive at U.S. marijuana firms.

Most recently, workers at New Jersey cannabis company Verano NJ voted to ratify a union contract with local chapters 152 and 360 of the UFCW.

Louisiana plans to regulate, not ban, delta-8 THC

By MJBizDaily Staff

Louisiana is set to allow hemp-derived delta-8 THC in food, a surprising step as more than a dozen states are doing the opposite and banning the isomer or limiting it to marijuana retailers.

The Louisiana position came in an email this week from the Louisiana Department of Health, which told businesses that applications are open to register for licenses to make foods containing cannabinoids.

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“This includes the addition of food products containing CBD and delta-8 (THC) products,” the agency clarified.

Louisiana’s health department cited a new law that clears the path for delta-8 THC.

The law creates a new category for “consumable hemp,” which is defined as “any product derived from industrial hemp that contains any cannabinoids and is intended for consumption or topical use.”

Delta-8 THC is an isomer of the better-known delta-9 THC for which marijuana is bred.

The isomer is rare in the cannabis plant but can be easily made from extracted CBD, which has opened new market opportunities because drug laws across the country generally address only delta-9 THC.

Roughly 18 states have responded to the rise of delta-8 THC sales by banning the cannabinoid.

The U.S. Food and Drug Administration warned in September that the cannabinoid is causing illnesses, and the Drug Enforcement Administration added delta-8 THC to its “orange book” as an intoxicant that should be classified the same as delta-9 THC.

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Louisiana has a limited medical marijuana market with only nine operating dispensaries as of earlier this year. The dispensaries are projected to hit a cumulative $25 million-$30 million in sales in this year, according to the 2021 MJBizFactbook.

The delta-8 change in Louisiana comes on the heels of the state opening the sale of smokable marijuana flower, with sales expected to begin in 2022.

Driven by Stem enters new cannabis market by acquiring Colorado Harvest

By MJBizDaily Staff

Florida-based cannabis multistate company Stem Holdings, known as Driven by Stem, signed a letter of intent to expand into the Colorado market by acquiring one of Denver’s oldest vertical operators.

The purchase price wasn’t disclosed.

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Colorado Harvest Co., which is registered as a limited liability company under High Country Supply, has two cultivation facilities, three retail outlets and two delivery permits.

“We have long been looking for the right partners and assets to enter the Colorado market,” Driven by Stem CEO Adam Berk said in a news release, noting the $2 billion-plus market’s continued strong growth.

“(Colorado Harvest) has long been recognized as a cannabis industry pioneer and a consumer favorite, known for its exciting lineup of proprietary in-house strains, and an extensive selection of quality concentrates and edibles.”

Colorado Harvest CEO Tim Cullen said the agreement with Driven by Stem “will provide our customers with a new array of products and services, as well as allow us to build on the success Stem has enjoyed in other states.”

Harvest launched operations in 2009. Earlier this year, it won Colorado’s first adult-use cannabis delivery license.

Colorado Harvest is expected to generate more than $13 million in revenue this year and a gross profit margin of roughly $5 million, according to the release.

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Driven by Stem has five cultivation facilities in Oregon and one in Las Vegas as well as one under construction in California.

The company has three retail stores in Oregon under the TJ’s Gardens brand and one each in Oklahoma City (under Stem) and Massachusetts (Rebelle) as well as the Foothills Heath & Wellness Center in Sacramento, Calif.

Driven By Stem shares trade on the Canadian Securities Exchange under STEM and on the U.S. over-the-counter markets under STMH.

South Dakota bars medical marijuana companies from advertising

By MJBizDaily Staff

South Dakota lawmakers finalized rules prohibiting advertising of medical marijuana products and eliminating a potency cap on smokable flower.

An interim rules committee solidified the half-dozen remaining regulations for the medical cannabis program that went into effect July 1, the Grand Forks Herald reported.

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The state health department drafted nearly 150 rules that the bipartisan, bicameral committee approved in September. But six were sent back for revision.

Health department Secretary Kim Malsam-Rysdon told the Herald the finalized rules will “help clarify that we have restrictions in place (on advertising) until such time that this product is not illegal at the federal level.”

The potency cap for flower came from a proposed rule that sought to ban inhalation of products containing higher THC levels.

The committee also finalized a measure that removed doctors from the role of certifying who can home grow cannabis. Previously, the health department wanted to require a medical professional to sign off on who could home grow.

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However, a doctor will still need to be involved if someone wants to grow more than three plants at home.

Another rule also eases a regulation that would have barred the bulk transfer, without prepackaging, of any marijuana product out of safety for children.

The health department’s rules will now allow flower to be shipped in a container up to 10 pounds.

The agency is required by South Dakota law to be prepared by Nov. 18 to issue medical marijuana registration cards to patients.

Tilray latest Canadian firm to strike cannabis supply deal in Luxembourg

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Tilray reached a deal with Luxembourg’s Ministry of Health to supply the small European country with medical cannabis, the company announced Tuesday, becoming the third Canadian cannabis producer since 2019 to supply the burgeoning market.

Tilray, which has offices in Leamington, Ontario, and New York, will provide a variety of pharmaceutical-grade medical marijuana products such as extracts and dried flower, according to the announcement.

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“We believe that Tilray’s growth potential in the European Union represents a $1 billion opportunity, and today’s announcement affirms that we are turning potential into performance,” CEO Irwin Simon said in a statement.

Previous deals to supply Luxembourg included:

  • Aurora Cannabis, in May 2019, said it had become the “exclusive supplier” of medical cannabis to Luxembourg.
  • Rival producer Canopy Growth, in October 2019, announced its own “exclusive” deal to supply the country.

Few details of Tilray’s arrangement were disclosed, including financial terms, and the company didn’t say whether the deal was exclusive.

Some details were released in August via a parliamentary query.

The Ministry of Health said it had requested 3 million euros ($3.5 million) from the Ministry of Finance to buy 30 kilograms (66 pounds) of medical cannabis this year.

That included:

  • 28.5 kilograms of product containing 18% THC and less than 1% CBD.
  • 2.25 kilograms of product containing 10% THC and 10% CBD.

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Luxembourg will need more if it hopes to match supply with demand.

The country suffered a supply shortage in 2021, the Luxembourg Times reported, after doctors prescribed 140 kilograms in 2020.

Luxembourg recently backpedaled on its plan to establish Europe’s first fully regulated recreational marijuana market.

An early plan called for the country to establish an adult-use market “inspired by the Canadian model.”

Instead, Luxembourg plans to allow home cultivation of up to four plants for personal use.

Retail will not be permitted.

The move is still a milestone for Europe, as Luxembourg would be the first country in mainland Europe to permit and regulate adult-use marijuana home cultivation.

But it’s short of original expectations.

Legalizing recreational marijuana was part of the coalition agreement of the current government, which called for the production, purchase, possession and consumption to be regulated within Luxembourg’s borders.

Shares of Tilray trade on the Nasdaq as TLRY.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.

Florida judge rules online marijuana ordering sites may resume business

By MJBizDaily Staff

Florida Judge Suzanne Van Wyk threw out a state marijuana industry rule that prohibited Leafly and other websites from facilitating online medical cannabis dispensary orders.

The rule, which the state health department warned MMJ businesses about in a February memo, elicited a lawsuit from Seattle-based Leafly.

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The Leafly suit maintained that the company wasn’t violating any state laws by helping medical marijuana patients place orders.

According to the memo, licensed MMJ businesses in Florida were barred from working with “Leafly, or any other third-party website, for services directly related to dispensing” medical cannabis.

But Van Wyk disagreed with the regulators’ interpretation of state law and ruled that there was no such prohibition, the News Service of Florida reported.

According to Van Wyk’s ruling, “the statute does not address third-party websites or online ordering.”

“The (health department memo) constitutes the department’s interpretation that online ordering is a service directly related to dispensation of medical marijuana; thus the letter implements the statute and prescribes policy,” the judge wrote.

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In a statement emailed to MJBizDaily, Leafly CEO Yoko Miyashita said she was “thrilled” with the outcome.

“We look forward to working with our partners to restart Leafly Pickup throughout Florida effectively immediately,” Miyashita wrote.

Van Wyk further dismissed assertions by state attorneys that Leafly lacked standing to sue over the matter and found that the company had “sustained cancelation of real contracts.”

Leafly estimated during the litigation that the memo had cost the company at least $300,000 in canceled contracts with MMJ businesses in Florida.

Many of those businesses backed out of contracts after the February memo, which warned that violations could cost licensees as much as $5,000 per incident.

Leafly alone had contracts with 277 Florida MMJ dispensaries before the February memo, the company’s chief operating officer said during legal hearings, according to the News Service of Florida.

I Heart Jane, another online MMJ ordering site, was also affected by the memo and online ordering ban.

Massachusetts Cannabis Advisory Board gets five new members

By MJBizDaily Staff

Massachusetts Treasurer Deborah Goldberg added five people to the state’s Cannabis Advisory Board, including three reappointments and two new appointees.

The board, which has 25 members, is tasked with making recommendations to the state’s Cannabis Control Commission regarding the regulation and taxation of marijuana in Massachusetts.

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Members serve two-year terms.

The state cannabis law requires the governor, treasurer and attorney general to each appoint five members to the board.

According to a news release announcing the new members, the treasurer’s appointees are required to have expertise in marijuana cultivation, retailing, product manufacturing, laboratory sciences and toxicology as well as providing legal services to marijuana businesses.

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The three members reappointed by Goldberg are:

  • Amanda Rositano, an expert in marijuana product manufacturing.
  • Alan Balsam, an expert in laboratory sciences and toxicology.
  • Michael Dundas, an expert in marijuana cultivation.

The treasurer’s two new appointees are:

  • Marion McNabb, an expert in marijuana retailing.
  • Laury Lucien, an expert in providing legal services to marijuana businesses.

McNabb and Lucien replace two original board members, Shanel Lindsay and Jaime Lewis, who declined to reapply, according to Goldberg’s spokesperson.

Beringer Capital buys majority stake in financial site covering marijuana

By MJBizDaily Staff

Toronto-based private equity firm Beringer Capital acquired a majority stake in Benzinga, a business website covering various sectors, including marijuana.

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Financial terms of the sale were not disclosed.

According to a Monday news release announcing the transaction, Detroit-based Benzinga has 100 employees and its website has “nearly 25 million readers each month – spanning more than 125 countries worldwide – and organizes industry conferences to connect individual investors with public companies.”

“Benzinga is just entering the second inning of what we will build. Partnership with Beringer drastically accelerates the timeline to realize our ambitions of what we can provide investors globally,” Jason Raznick, founder and CEO of Benzinga, said in a statement.

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Canaccord Genuity advised on the transaction.

The deal comes one month after Detroit-headquartered media company Crain Communications acquired Green Market Report, which covers financial news in the cannabis sector.

California cannabis company sues over ‘Breez’ trademark

By MJBizDaily Staff

A trademark battle is in the wind in California over the use of  Breez – and Breeze – as a cannabis product brand.

Oakland-based Promontory Holdings sued The Breeze Brand of Los Angeles in state court, claiming infringement over Promontory’s California-registered “Breez” trademark, Law360 reported.

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Promontory sells popular CBD-THC combo mints, tincture sprays and tablets under the “Breez” brand, while The Breeze sells CBD gummies and vape pens under “Breeze.”

The lawsuit, filed in Orange County Superior Court, could cast light on the legal strength of a cannabis trademark in California.

Promontory’s lawsuit, according to Law360, claims that the value of its Breez brand has been harmed and will continue to be harmed because of customer confusion.

The complaint says that Breez consistently is ranked as one of the top cannabis brands in California by the independent firm BDS Analytics.

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Promontory registered the Breez trademark in December 2020, according to California secretary of state records. That registration doesn’t expire until 2025.

Officials from the Breeze Brand couldn’t be reached for comment by MJBizDaily.

‘Big Business,’ marijuana culture need each other, industry insiders agree

By MJBizDaily Staff

Five marijuana industry insiders – ranging from the CEOs of multistate operators to a farmer in California’s Emerald Triangle – agreed that while there’s been friction between business interests and grassroots activists, both sides need each other and can work together for the wider legalization movement.

Still, there’s room for improvement, the participants noted during a panel discussion at MJBizCon.

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The panel – dubbed “Clash of the Titans” – focused on the culture wars that have long characterized divisions between the activists of the pro-cannabis movement and the industry’s corporate executives.

“Big business cannot survive without what cannabis culture has brought to the table,” said Wanda James, owner of Denver-based Simply Pure, a vertically integrated cannabis company.

James lambasted much of the industry, arguing that women and minorities have had too hard a time getting a toehold in the business.

She decried that as a disservice to the legacy of the marijuana plant and its cultural roots.

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Two MSO panelists – Curaleaf Holdings CEO Joe Bayern and Ayr Wellness co-Chief Operating Officer Jennifer Drake – insisted their companies are based in cannabis culture, adding that they want to empower everyone who feels an affinity for cannabis.

“Setting up this dichotomy of ‘Big Business versus cannabis culture’ is a false dichotomy,” Drake said.

“There’s going to be plenty of room for everyone to succeed.”

More generally, panelists agreed that more can be done to encourage collaboration between business interests and advocates who want policies that cover such areas as home cultivation, medical marijuana caregivers and support for minority entrepreneurs.

– John Schroyer