Week in Review: MA adult-use cannabis stores reopening, High Times deal unravels, Acreage ‘reset’ & more

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Massachusetts recreational marijuana, Week in Review: MA adult-use cannabis stores reopening, High Times deal unravels, Acreage ‘reset’ & more

Recreational marijuana sales resume in Massachusetts on Monday, but only curbside pickups are permitted and store employees must don personal protective protection like that worn by this CommCan staffer. (Photo courtesy of CommCan)

Massachusetts recreational marijuana retail stores will be allowed to reopen May 25, but sales will be limited to curbside pickup and online or telephone orders.

MJBizDaily takeaway: This ends an expensive shutdown and a sore point for rec store operators in Massachusetts, who have seen counterparts across the country generally treated as essential businesses.

Gov. Charlie Baker ordered all “nonessential” businesses, including adult-use retailers, to close March 24.

Adult-use store operators not only lost two months of sales but also faced rent and other business expenses and failed to qualify for any federal coronavirus-related small business assistance.

But before a retail store can reopen on Memorial Day, it must have a COVID-19 control plan in place and strict public-health protocols must be followed, including mask wearing and social distancing.

High Times ends cultivation deal

High Times Holding Corp.’s plan to acquire Humboldt Heritage, a California cultivation and processing business, has fallen apart.

MJBizDaily takeaway: The deal’s termination raises questions about High Times’ strategy to pivot into retail through a separate agreement to acquire 13 operating and planned retail outlets in California from multistate operator Harvest Health & Recreation.

The Humboldt acquisition would have enabled High Times to control its marijuana supply chain. Such vertical integration could be critical for the company to compete in California’s challenging and saturated marijuana market.

Aurora buys US hemp company

Canadian cannabis producer Aurora Cannabis has made its long-awaited move into the United States with a $40 million all-stock deal to acquire Reliva, a Massachusetts-based maker of CBD lotions and nutritional supplements.

MJBizDaily takeaway: Analysts see the move as an opportunity for Aurora to access a large CBD market in the U.S. But they note the market, while holding long-term upside, is currently saturated and, as a result, extremely competitive.

Pablo Zuanic, an analyst for New York-based financial services firm Cantor Fitzgerald, wrote in a research note that the deal is reasonably priced and is likely to boost Aurora’s earnings before interest, taxes, depreciation and amortization (EBITDA).

Acreage continues cost-cutting

New York-based Acreage Holdings said it will take an $80 million-$100 million charge as it continues to cut costs and sell unprofitable assets.

MJBizDaily takeaway: Acreage is among a group of multistate operators that might have expanded too quickly and now are jettisoning assets to strengthen their finances amid the coronavirus and a looming recession.

Acreage so far has scrapped a Nevada acquisition, sold its North Dakota MMJ operation and undeveloped real estate in Massachusetts, furloughed more than 100 employees and continues to trim overhead costs.

The company hopes it can reach a positive adjusted EBITDA this year through the corporate “reset.” Time will tell.

Colorado cannabis firm takes pay issue to US Supreme Court

A Colorado cannabis security firm is asking the U.S. Supreme Court to overturn a lower-court decision requiring it to follow federal labor laws in paying overtime.

Helix TCS’s argument: Although its business is legal in Colorado, its workers are engaged in a federal drug crime and therefore shouldn’t be entitled to federally mandated compensation.

MJBizDaily takeaway: The cannabis industry has been closely watching this case because of its potentially broad implications.

Unless the Supreme Court hears the case and decides otherwise, state-legal marijuana businesses might need to adhere to federal labor laws in terms of employee compensation and benefits.

CBD lawsuits against local overreach moving forward

Several lawsuits by CBD retailers in Tennessee against local authorities for alleged illegal crackdowns are allowed to move forward.

MJBizDaily takeaway: A federal appeals judge gave credence to the retailers’ claims that a sheriff and assistant district attorney acted outside their duties in pushing forward “Operation Candy Crush” raids against 17 business owners in Rutherford County, Tennessee.

It should be welcome news to the industry that federal judges are starting to signal that local law authorities must tread carefully in cannabis-related enforcement – in other words, first consider whether operations are legal.

In this case, the charges were eventually dropped but not before the raids were heralded as a “drug bust.”

Jeff Smith can be reached at jeffs@mjbizdaily.com

Hemp Industry Daily Editor Kristen Nichols 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.