$420M raise sets US cannabis industry record, Bank of America begins marijuana coverage, MedMen exec turnover & more of the week’s top MJ news

Vaporizer company Pax Labs boasts a record funding raise, Bank of America kicks off coverage of the marijuana sector, more MedMen execs bid the company adieu – plus other important news from around the cannabis industry.

Pax sets record for U.S. cannabis firm raise

Pax Labs, a San Francisco manufacturer of vape pens, raised $420 million, the largest amount ever raised for a U.S.-based marijuana company.

That number – far larger than initial targets of $150 million – came from both existing and new institutional investors. Pax, which spun off from e-cigarette maker Juul in 2017, formed in 2007.

MJBizDaily takeaway: Pax CEO Bharat Vasan said in a news release the money would allow the company to explore new market opportunities such as CBD as well as international expansion.

Vasan told Marijuana Business Daily that Pax would look at opportunities in Europe and Asia as well as Canada.

Investors said the funding would free up multiple opportunities for M&A.

“I would be shocked if Pax does not become an acquirer of adjacent products or technologies with that kind of balance sheet,” Troy Dayton, CEO of The Arcview Group, told MJBizDaily.

(For more analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our new premium subscription service, Investor Intelligence.)

BofA Merrill Lynch goes green

One of the biggest U.S. financial institutions took a deeper dive into the medical cannabis industry by launching coverage of the sector.

Bank of America Merrill Lynch analyst Chris Carey initiated coverage of the broader industry and some of its market leaders: Aurora Cannabis, Canopy Growth, Cronos Group, The Green Organic Dutchman, Hexo Corp. and Supreme Cannabis.

This isn’t BofA Merrill Lynch’s first foray into cannabis. Last summer, the bank helped finance global liquor giant Constellation Brands’ $3.8 billion investment in Ontario-based Canopy. It was the first time BofA Merrill Lynch financed a cannabis deal.

MJBizDaily takeaway: After Bank of America Merrill Lynch financed the largest M&A transaction to date in North America’s cannabis sector, initiating regular analysis was the next logical step.

It also shows that cannabis is becoming more mainstream on Wall Street – although the final hurdle won’t fall until action is taken at a national level in Washington DC.

Going forward, BofA Merrill Lynch could finance more cannabis transactions and equity raises.

More investment banks in New York may look to get involved. Cheaper and more readily available capital means faster growth potential for businesses.

(Photo by Lindsey Bartlett)

MedMen sheds more executives

MedMen is dealing with further internal turmoil, as the oft-contentious company continues executing its ambitious expansion plans. The latest: Three top executives left the company with little explanation, which could perhaps add to investor uncertainty.

The latest departures include Ben Cook, chief operating officer, Lisa Sergi, general counsel and board of directors member, and Daniel Yi, senior vice president of corporate communications.

None commented publicly about the resignations, but the exits follow on the heels of former Chief Financial Officer James Parker, who decried the company atmosphere in a lawsuit for wrongful termination. In that suit, Parker alleged a toxic workplace and charged the business was used as a personal piggy bank by CEO Adam Bierman and President Andrew Modlin.

It’s important to note that MedMen has continued along its expansion trajectory. In March, the Los Angeles-based company announced a $250 million investment by Gotham Green Partners to fund more acquisitions and growth.

MJBizDaily takeaway: Given all the turnover, it’s hard to imagine that everything is picture perfect at MedMen.

But the core business – cannabis retail – remains the same, and MedMen’s assets are widespread and potentially extremely lucrative.

Whether the latest departures are a sign of serious internal troubles or just run-of-the-mill employee churn is difficult to determine. But they probably don’t inspire investor confidence.

Great Lakes State vape contamination controversy

In Michigan, a batch of cannabis-infused vape oil cartridges that tested positive for lead raised safety concerns and prompted state regulators to urge marijuana retailers to test their cartridges for the heavy metal.

According to a Johns Hopkins Bloomberg School of Public Health study, lead was found in several brands of cartridges, and over time, it leaches into the product.

MJBizDaily takeaway: The social stigma around marijuana continues to recede, but safety scares such as the one in Michigan hurt the industry’s reputation.

And cannabis industry watchers say businesses need to do more to eliminate them.

“We need to make sure these products aren’t continuously stigmatized going forward. There are people who are looking for anything that could be considered dangerous in an attempt to discredit the industry,” said Morgan Fox, a spokesman for the National Cannabis Industry Association.

What can be done? Fox stressed more testing, saying, “We just need to find a balance where it’s not overly financially burdensome.”

Another option: “You could also put the burden of testing on cartridge manufactures,” Fox added.

“It’s also incumbent on these businesses to be careful about where they source their material.”

Only Mainers will get first crack at recreational MJ business permits in the state

Maine issued resident-friendly draft rules for its recreational marijuana industry, more than two years after voters legalized adult use.

Key business provisions of the draft rules, which now will go through a public comment period, include:

  • The state will make licenses available for cultivation (four tiers plus a nursery license), processing, retail and testing.
  • Municipalities where planned sites are located must approve the business.
  • Until June 1, 2021, every officer, director, manager and general partner of a business must prove Maine residency, and Mainers must hold the majority of equity.

MJBizDaily takeaway: Maine’s recreational marijuana industry will offer a variety of licensing opportunities for residents, but any out-of-state MJ business interests will need to cool their heels until mid-2021.

The state expects to begin taking applications for conditional licenses by late this year – if the Legislature passes final rules before adjourning on June 19.

7 comments on “$420M raise sets US cannabis industry record, Bank of America begins marijuana coverage, MedMen exec turnover & more of the week’s top MJ news
  1. Leona Leaver on


    I will be doing transportation for a company here in mass. I’m looking the laws on transporting cannabis any suggestions where to turn to for this info

  2. George on

    How nice for the corporate big boy’s. So far B of A has closed two of my bank accounts. I am locally and State licensed as well as 280 e compliant. When they closed my last account, I closed my five Merrill Lynch accounts. While the bank(s) were very polite about it, they told me they saw a news story about my cannabis company and our work at bringing a THCVA diabetic product to market. 90% of what we sell is CBD, not that that matters. Yet that’s enough to get a bank account closed.
    None of these companies do anything but sell cannabis and raise money. In fact they seem best at just raising money. I feel bad ( not really ) that all of these companies will now lose all of their bank accounts, Aurora Cannabis, Canopy Growth, Cronos Group, The Green Organic Dutchman, Hexo Corp, Supreme Cannabis, Pax Labs, Constellation Brands and many others I read about in this top industry mag should also be required to run their business in cash like the rest of us.
    In fact Merrill Lynch and B of A should have their bank accounts closed for conspiring to funnel these companies massive amounts of money to willfully and unlawfully conduct a Federally CSA listed drug business. That’s how the bank put it to me, and I quote. “it’s a Federal crime to sell cannabis” I guess with that much profit involved, Federal Scheduled 1 drug crimes are worth the risk.
    In the past the DEA and even state and local law enforcement centered in on the companies that appeared only in it for profit. Well this low hanging fruit is ripe for the picking, if you want to play with the little guys, follow the rules or off with your heads.
    I hope none of them are of color as they may also need to go to jail for money laundering.

    • Pat on

      “Well this low hanging fruit is ripe for the picking, if you want to play with the little guys, follow the rules or off with your heads.”

      I think you may have meant: “If you want to play with the little guys, ( DON’T ) follow the rules or off with your heads.”

  3. Pat on

    Let’s talk MedMen and AB 1356 for a bit. Is there any correlation? You be the judge. MedMen is chomping at the bit to expand according to this article. MedMen is HQ’d in Los Angeles. The author’s of AB 1356 district’s are in Los Angles, Ca. AB 1356 is using the argument that about 3/4 of the state doesn’t allow any commercial cannabis commerce; and because of this, many medical patients whom would like to utilize the herb to improve their condition NEED this kind of access. The qualifying access criteria include: 1 pot retailer for every 4 liquor stores ( How this was arrived at, is a mystery ) for those county’s whom voted 51% or better on Prop. 64. Ok. Sounds reasonable. Now, who get’s to be the retailer? Is it defined in the bill? Suggestion: How about using this as a springboard for the social equity program that the state of ca. put on the table, ( and then suddenly scrapped just recently w/o apparent explanation ). This would mean allowing ONLY long time residents; preferably minorities, disabled veteran’s, and other’s from disadvantaged backgrounds of those respective “qualifying” counties, to be allowed to bid on a retail space as a priority ( Not MedMen or any other established deep pockets retailer ). If those Mom-Pop type shops need a little help from the gov. via grants/loans to get up to speed…include that as a provision. To ensure that they have a good shot at succeeding.

    How about everything else in the supply chain for those counties that are green lighted if this law were to pass? Hey, that would include cultivator’s that were not only shut down from participating in the licensing process; they have lost potential market share for all sorts of reasons ( called opportunity costs forgone; but, they can be quantified by some reasonable economist’s ) in their own back yards. The “well connected/monied“ interest’s have had a multi-year head start. Again, at the local mom-pop shop’s expense. The awarding of license’s for cultivator’s ( manufacturer’s/distribotor’s, etc..) in those respective counties that approved Prop 64 should be the priority. Why? Keeps the money largely in those counties as the jobs and a lot more control of that county’s market in medical cannabis. The state would still get their cut. But, is that how the state want’s their cut? Too many people to deal with? Too much “democracy?” Is that what businesses like MedMen want? Doubtful. None of what I suggested is in the bill.

    This bill seems quite benevolent on its face. But, I think this is just another ploy by the ca. legislature and it’s special interest high rollers in the background; to steam roll local communities, yet again. What I think this is, is an attempt by the big box shop retailers to gain even larger market share ( complete domination ) of the cannabis market; and to further shut down mom-pop shop competition before they even get a chance. And, who gets all that re-election campaign money and from whom if this B.S. bill passes? The c.s.king author’s of course.

    Those cultivator’s whom were further away from from the “good ol’ boy” club that aren’t getting their licenses renewed, might find this bill of some relief as the state would likely renew their license’s ( only because the state would stand to see greater tax revenue if more pot retailer’s were licensed to operate ). But, those local communities would stand to not see much in the way of significant revenue if any at all if those businesses weren’t kept local and home grown should this bill come to pass.

    • Pat on

      Correction: Turns out Phil Ting is out of S.F/San Mateo Counties. The other guy is from L.A. Regardless, both these guys come from biggest metro areas of the state, that are not in touch at all with what’s going on in the other roughly 3/4 of the counties that are refusing to engage Prop 64. Again, Why should two guys from these places be the ones “advocating” for mainly Central Valley citizen’s whom been shut out from participating in the business end of the equation? Again, there is no provision in this bill ( nor will there be any of significance, as the intent of this bill seems pretty clear ) that opens the door for COMPLETE Prop. 64 participation in those prohibited counties.

      This bill smacks of serious special interest motivations, as it only cares to address a small part of Prop 64 ( more retailer’s ) and not Prop. 64 in its entirety. Things stay pretty much where they are now when it comes to local opportunity and control of the cannabis market: Continued economic repression by the special interests and their legislative enabler’s/facilitator’s, at the expense of the 75%. This is a veiled attempt to appear benevolent when in actuality, it’s yet another competition killing attempt by the original cartels and state of ca. regulator’s.

  4. NikF on

    MedMen has had over 100 leavers since mid April after a mass lay off of their security, operations, and facilities. More are voluntarily quitting because they no longer trust MedMen.

    I would think they are not in compliance with a lot of the regulatory items since that needs constant maintenance all the time. They are very understaffed and underknowledged and don’t know what they don’t know. They are either hurting for money, so leveraged to the kilt that it’s thin ice, or they are positioning themselves for a buy out. The top two may deny it, but they are readying their golden parachutes.


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