Week in Review: Acreage cannabis loan’s steep interest rate, Big Tobacco-MJ bankruptcy, Missouri cultivation & more

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Cannabis multistate operator Acreage Holdings obtained a $15 million short-term loan with an eye-popping 60% yearly interest rate. The secured note, received from an unidentified institutional investor, matures in four months.

MJBizDaily takeaway: That astronomical interest rate, which required Acreage to put up as collateral its marijuana business facilities in three states as well as its intellectual property, indicates the company needs cash – in a hurry.

“A 60% annual rate is extremely high even for cannabis, where the capital crunch has made rates of 10%-20% common,” said Mike Regan, an equity analyst and managing member of Denver-based MJResearchCo.

“This sounds more like a payday loan with $3 million in interest to borrow $15 million for four months and implies that Acreage needs the cash right now despite the $60 million financing announced only two weeks ago.”

Big Tobacco goes bust

The first Big Tobacco company to enter the marijuana and hemp sectors, Morrisville, North Carolina-based Pyxus International, filed for bankruptcy protection, claiming the coronavirus pandemic caused its financial problems.

MJBizDaily takeaway: As consumers shy away from inhaled products including tobacco cigarettes during the respiratory-related COVID-19 outbreak, cannabis companies that have relied on similar smokable offerings such as pre-rolls should take note and plan accordingly.

Missouri plants MMJ

Missouri regulators approved the first medical cannabis company to begin cultivating MMJ in the state, which should lead to a sales launch in the fourth quarter of 2020. A second grower also was approved.

MJBizDaily takeaway: Plants in the ground is good news for Missouri’s cannabis industry. Growers were supposed to begin operations in the spring, but the coronavirus pandemic threw a wrench in the works.

Marijuana Business Daily estimates the market will generate $300 million in annual sales within a few years of its launch, provided it can overcome pending legal hurdles.

New data shows mixed sales numbers

Sales in certain cannabis markets that aren’t relying on tourism, such as Oregon and Washington state, have increased during the coronavirus pandemic, but others – including California, Colorado and Nevada, which have a good amount of tourist traffic – aren’t faring as well.

MJBizDaily takeaway: Those strong numbers for states that rely on in-state consumption are testament to the cannabis market’s resiliency during an economic downturn in markets that draw on local consumers.

But tourism-dependent economies could suffer during a recession, and the marijuana market will likely not be immune to taking a hit from a lack of visitors.

Some cannabis companies in states such as Nevada have focused efforts on catering to local consumers, for instance, offering loyalty programs. Marketing to encourage purchases from those in-state customers is one way to drive revenue.

Drug giant takes up CBD

Major global drug manufacturer Perrigo Co., based in Dublin, Ireland, is expanding into the CBD market through a new partnership with Colorado CBD manufacturer Kazmira.

Perrigo has invested $50 million for a 20% equity stake in Kazmira.

MJBizDaily takeaway: While it seems Perrigo isn’t interested in the marijuana market – its CEO told Business Insider as much – the fact that one of the world’s largest producers of over-the-counter drugs is entering the CBD space should be noted by both the hemp and MJ industries.

The company’s sheer distribution reach and production power put it at a significant advantage, and the company’s debut signals Big Pharma’s interest in CBD.

Canadian cannabis oil exports surge

Exports of Canadian cannabis oil products jumped fivefold in 2019 over the previous year.

Overall, 5,372.3 liters of cannabis oil products were exported for medical and scientific use in 2019.

Australia was the top destination, with roughly 3,700 liters (977 gallons) shipped there in 2019. Germany and Denmark were second and third, respectively. The three markets accounted for 90% of all exported oil products.

MJBizDaily takeaway: Though the numbers look impressive, Canadian companies have so far failed to convert international orders into meaningful revenue drivers.

Furthermore, most of the shipments went to one market, Australia, which itself is keen on becoming a net exporter.

That means Canadian exporters are going to have to diversify if they hope to sustain global momentum.

Bart Schaneman can be reached at barts@mjbizdaily.com

International editor Matt Lamers contributed to this report.

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