By Bart Schaneman and John Schroyer
Privateer Holdings raises $58 million for expansion of marijuana facilities, Dixie Elixirs recalls some edibles products, and Roger Stone’s role as a keynote speaker leads to boycotts of a cannabis conference.
Here’s a closer look at some notable developments in the marijuana industry over the past week.
Privateer gets boost
Privateer Holdings’ recent $58 million raise proves the Seattle-based medical marijuana firm was wise to go beyond U.S. borders, says an industry analyst.
Troy Dayton – CEO of The Arcview Group, an Oakland, California-based investment and market research firm – attributes Privateer’s success in securing funding to its decision to seek opportunities internationally.
Aside from U.S. cannabis companies Leafly and Marley Natural, Privateer owns Canadian MMJ licensed producer Tilray.
Last year, Tilray became the first North American company to export medical cannabis overseas and has since sent MMJ to several countries, including Australia and Chile.
The company has recognized there’s “way less competition in other countries and there’s less regulatory issues” than in the United States, Dayton said.
He pointed out that “it takes a lot of expensive exploratory costs” to expand into Canada. Once Privateer did so with Tilray, it used that subsidiary as a steppingstone into other international markets.
“There are other companies that are doing it,” Dayton said, “but Privateer was first and has a leg up.”
As for the $58 million raise, he believes Privateer benefited from investors’ growing comfort level with the cannabis sector – and its lessening apprehension about the Trump administration.
“Not completely,” Dayton said of the dissipating federal fear factor, “but enough to get the capital flowing.”
As for those investors still on the fence, he said, “there’s no question that investing in the cannabis sector is a risky endeavor. This is a nascent industry that’s highly fragmented and is fraught with all kinds of potential risks.
“(But) it’s also pretty clear this industry is going to grow at about a 27% compound growth rate over the next five years.”
Sign of the times
Dixie Elixirs’ recall of multiple marijuana edibles products may have come as a surprise to some in the industry, since the Colorado company has a reputation for keeping its nose clean.
But there’s a case to be made that no one should be shocked when any cannabis company recalls products. After all, as the cannabis sector moves more into the mainstream, increased product recalls is a virtual certainty.
That’s part of the transition into the licit market by the marijuana industry, which for decades has operated in the shadows. A key to such an evolution is product safety, quality assurance and government oversight.
California will likely prove to be a prime example of transition pains – not just for product recalls but also in the ability to get cannabis products to market. (Remember when Steep Hill found last year that 84% of MJ samples tested positive for potentially toxic pesticides?)
That ties in to testing standards, which have been anathema to growers who prefer to cut corners by using potentially dangerous pesticides, for instance. The situation will likely be exacerbated when California eventually becomes one of the largest marijuana bureaucracies in the world and likely oversees thousands of plant-touching companies.
As for Dixie, it’s unclear who’s to blame for the recall.
A company statement seemed to place fault with a supplier of essential oils used for flavoring. Regardless, snafus like this happen in business from time to time, no matter who’s to blame.
So don’t be surprised if more marijuana product recalls start popping up across the country.
Words can hurt
The backlash against Roger Stone that led a number of speakers and exhibitors to pull out of an upcoming cannabis conference was less about Stone’s connection to the Trump administration and more about some past comments, according to one marijuana industry leader.
Stone is scheduled to give a keynote speech at the Cannabis World Congress & Business Exposition (CWCBE), scheduled for Sept. 13-15 in Los Angeles.
Jesce Horton, co-founder and board chairman of the Minority Cannabis Business Association, said he and his organization withdrew from the conference because of Stone’s “racist and misogynistic rhetoric.”
“We said we didn’t want to be involved with the conference because we didn’t want to help or prop Roger Stone up as a leader of the cannabis industry,” Horton said. “It’s not because he’s connected to the Trump administration directly.
“The real reasons are the racist rhetoric, the misogynistic rhetoric.”
Horton reminded that Stone called the Rev. Al Sharpton – who will also speak at the CWCBE – a “professional negro” and referred to commentator Herman Cain as a “mandingo,” a derogatory term for black men.
“I think he’s a very dangerous person to be propping up as a leader in our industry,” Horton said.
He clarified that the MCBA didn’t initiate the boycott, as has been reported, and emphasized his organization isn’t the “panel police.”
“We’re not the people walking around saying (to the CWCBE), ‘You don’t have enough black people on your panel,’ Horton added. “That has nothing to do with it. We simply have to be careful about the compromises we make for quote unquote progress.”
Stone responded to the controversy, telling L.A. Weekly he won’t “be silenced in the fight for states’ right to legalize a medicinally beneficial plant that helps millions of Americans … my critics propose censorship.”
Bart Schaneman can be reached at [email protected]
John Schroyer can be reached at [email protected]