🏦 Bank of America, NRA, and Mastercard Lobbying On Cannabis Banking
Cresco Labs divests AZ operation. 4Front Ventures $10M credit facility. Trait Biosciences financing led by Btomorrow Ventures and Gotham Green Partners. $83M in first 3 quarter of NY rec. sales.
💬 Check out the latest podcast with Eric Schneider from AlphaRoot. I’ll be dropping episodes/write-ups with Marc Beginin from Prodigy Processing Solutions and Cory Azzalino from Eaze this week on www.highlyobjective.com
🌿 Industry
Bank of America, NRA, and Mastercard Lobbying On Cannabis Banking. While Bank of America has disclosed its lobbying activities on both the SAFE Banking Act and the SAFER Banking Act, the NRA has only disclosed such activities in relation to the SAFER Banking Act — Forbes
However, neither of them has disclosed their position, which means it is not possible to determine whether they are in favor of or against the bill
Mastercard is also actively engaged in lobbying efforts related to the SAFER Banking Act. Initially, Mastercard lobbied on Cannabis banking in 2019 and 2020. However, there was a hiatus in their disclosures until the current quarter, when they resumed lobbying efforts, particularly in support of the SAFER Banking Act
Maryland hemp-derived THC retailers could reopen after judge’s ruling. A circuit court judge issued a preliminary injunction allowing them to temporarily resume selling intoxicating THC products — MJBizDaily
The decision halted enforcement of a section of a new state law allowing only licensed marijuana stores to sell hemp-derived products with intoxicating amounts of THC. Products include delta-8 THC, delta-10 THC and synthetic, lab-made THC goods
State governments have wrestled with the explosive growth of hemp-derived products since the 2018 Farm Bill, which legalized hemp but didn’t create a plan for federal oversight of it or its derivatives
Hemp regulations change in Alaska will remove intoxicating hemp products from store shelves next month. — KTUU
New regulations will prevent Delta-9 can no longer be in hemp designated for human consumption
Some stores in Anchorage were selling hemp with Delta-9 that was purchased from outside the state
MN Department of Iron Range Resources & Rehabilitation approves $10 million loan for HWY35. MO-based HWY35 plans to build an indoor grow — MPR News
IRRR would forgive $5 million of the loan if the company reaches employment of 150 people after 5 years, or 175 employees after 10 years
The project is contingent on HWY35 obtaining all the licenses and permits it needs from state regulators. Project financing also calls for a $10 million loan from the Minnesota Department of Employment & Economic Development, as well as $2 million in tax increment financing from the city of Grand Rapids
The Department of Employment & Economic Development said it is not bound by an endorsement of the project by IRRR board
Alabama Medical Cannabis Commission aims to award medical marijuana licenses by end of 2023. This comes after multiple lawsuits over the process — WAKA
The commission adopted an emergency rule approving a new process for selecting license winners. Companies will make presentations to the commission where scores from previously submitted applications can be considered
“It kind of is a reset. We think we have a process to move forward, not ditching what we’ve already done, but making use of it as best as possible” said Commission Chairman Rex Vaughn
Are California Cities Intentionally Misinterpreting Landmark Cannabis Legislation? Local jurisdictions must have ordinances by 2024 allowing medical cannabis delivery, but some bureaucracies are sticking to “outside-in” models — CBT
Under current law governing the state’s adult-use and medical cannabis markets, cities and counties can prohibit cannabis businesses, like retail, from operating within their jurisdictions, and most of them do
And while state law allows cannabis delivery operators to deliver to any jurisdiction within California, Fresno County Superior Court Judge Rosemary McGuire ruled in late 2020 that state law does not preempt local ordinances restricting or prohibiting such deliveries, “whether the ordinance bans all commercial deliveries, bans cannabis deliveries by non-local businesses, requires local licenses for delivery, or regulates local delivery in some other way”
McGuire’s order calling into question the state’s “outside-in” rule has been enough for many cities to keep cannabis delivery bans codified ever since
New York Cannabis Control Board extends deadline for applying for an adult-use cannabis license. The original deadline to apply for a license was December 4 — the new deadline is Monday, December 18 — Rochester First
The board also announced another extension — microbusinesses and retail applicants that have proof of control over a location had the deadlines for priority applications extended to November 17 from November 3
How moldy is Missouri cannabis? Local company’s tests stir up controversy. A St. Charles County microbiologist’s test results for mold in marijuana, which he has shared on social media, are drawing questions from cannabis consumers and legal threats from members of the state’s cannabis industry — STL Today
Kirk Hartwein, owner of Missouri Mold LLC of O’Fallon, has posted dozens of close-up photos of petri dishes, many covered in mold colonies, to his Facebook page this year. The colonies represent mold spores present in one gram of cannabis flower purchased from licensed Missouri dispensaries
Missouri requires its testing labs to screen for four types of Aspergillus mold known to cause illness in humans. The state also requires testing for certain mycotoxins produced by mold
One of the brands mentioned on Hartwein’s page in June, St. Louis-based CAMP Cannabis, recently came under state investigation, apparently triggered by a whistleblower who accused the company of selling moldy weed
Trulieve has contributed another $500,000 to Smart & Safe Florida, the campaign to legalize cannabis for adult use in FL, the firm has donated $39.55 million to the effort
New York’s recreational sales total $83M in first 3 quarters of 2023
Only 5 states saw cannabis tax revenue make up more than 1% of a state's total taxes
Headset data shows Pre-Rolls are the third largest product category in the US after Flower and Vapor Pens and second largest in Canada behind Flower sales, growing 13.4% Y/Y in the US and 36.5% Y/Y in Canada
LeafLink releases Holiday Sales Guide
💵 Deals
Cresco Labs divests sole licensed Arizona operation (Encanto) to an affiliate of Mint Cannabis for $6.5 million in cash. In addition, the Company has closed on a conventional mortgage on its Ellenville, NY properties for a principal amount of up to $25.3 million with an interest rate of 8.43%. ~$20 million was funded at close, with the remaining principal held to fund future capital expenditures. The 10-year mortgage carries an interest rate calculated based on the FHLBank Boston 5-year rate plus 375 basis points, resulting in an initial rate at close of 8.43%
4Front Ventures enters into $10 million senior secured credit facility agreement with Altmore Capital. The funds will be disbursed in two tranches and are committed to building out the Company's retail operations in Illinois in connection with the launch of its new cultivation and processing facility in Matteson. The Credit Facility will bear simple interest at a rate per annum equal to the greater of (i) the WSJ Prime Rate + 7% and (ii) 15.5%, payable monthly (principal payments postponed until six months after funding). Provided the Company extends the maturity of certain other subordinated debt, the maturity date of the Credit Facility will be September 30, 2026
The Company intends to enter into a restricted stock unit agreement with Altmore Capital to issue a total of 15,900,000 RSUs. The issue price of the RSUs will be equal to CAD$0.31 per RSU. If at the time of the Distribution Event, the number of Shares underlying the RSUs is less than 2.12% of the fully diluted Shares (calculated in accordance with the terms of the RSU Agreement) of the Company, an additional number of RSUs will be issuable to the Lender by the Company with respect to the deficiency. The Company has also announced a restructuring of the convertible promissory note previously entered into with Navy Capital Green Fund, LP, Navy Capital Green Co-Invest Fund, LLC, and HI 4Front, LLC, on October 6, 2021. Under the new terms, payment obligations will be deferred from October 6, 2023, to October 6, 2024; the interest rate has been revised from 6% to 10% calculated on a simple interest per annum basis and the conversion price has been adjusted from US$1.03 to US$0.23 per Class A subordinate voting share
Body and Mind Fully Repays Senior Secured Lender. The Company’s wholly owned subsidiary, DEP Nevada has closed the previously announced transaction to sell all of its interests in the Body and Mind Ohio dispensary for total consideration of $8.225M in cash (with an additional $2.5M in potential contingent proceeds). Simultaneously with the closing of the disposition of the dispensary, the Company has fully repaid its $7.33M debt owing to its senior secured lender. The balance of proceeds from the disposition of the dispensary will be used to support the development of the Company’s retail assets in Illinois and New Jersey
Trait Biosciences closes on financing led by Btomorrow Ventures and Gotham Green Partners for commercialization of unique water-soluble cannabinoids. Both firms are already significant investors in Trait and have been closely involved in the company's development and commercialization efforts. The financing will support Trait's partnerships with contract manufacturers and go-to-market partners, and Trait expects a 1Q 2024 launch of its first-generation water-soluble CBD
Vext Science to sell its cultivation facility in Prescott Valley, AZ, to Elevate Cannabis for $6.5 million. Elevate Cannabis will pay the full amount in cash. Vext plans to allocate the funds toward paying off some of its debt, potential acquisitions, and other corporate needs. Missouri-based Elevate Cannabis, which manages five dispensaries in its home state, recently entered the Arizona market
📄 Company Updates
Trulieve files amended Federal Tax Returns claiming $143 Million Refund. This determination is supported by legal interpretations that challenge the Company's tax liability under Section 280E of the Internal Revenue Code
Verano Commences Trading on Cboe Canada
Sunstream USA builds on on Parallel acquisition with Skymint assets
March And Ash sues 10 competitors selling hemp-derived cannabinoid products. In addition to Cookies Creative Consulting & Promotions, the lawsuit names Binoid, Cali Extrax, Canably, Cutleaf Stores, Delta Extrax, Hazy Extrax, Savage Enterprises, 3C, and Tre Wellness
Tilray Brands and Docklight Brands lawsuit regarding Bob Marley-branded cannabis product deal in Canada has been resolved and dismissed by a federal judge
BellRock Brands enters Arkansas Market, Expands Product Offering in Missouri; General Counsel departs
Agrify Receives Nasdaq Staff Determination of Non-Compliance with Listing Rule
Shangri-La dispensary in MO being accused numerous violations of Labor law for aggressively fighting a union organizing campaign
SNDL closes 448,000 sq ft flagship facility in Alberta after spending C$102.5M
Altria (NJOY) filed sweeping litigation against 34 foreign and domestic manufacturers, distributors and online retailers of illicit disposable e-vapor products that are unlawfully marketed and sold in the State of California and elsewhere
🏬 Retail / Cultivation
New York adult-use dispensary count increases to 27
New Jersey currently has 60 medical/adult-use dispensaries with 112 more approved
Palm Springs considers moratorium on new dispensaries
PleasureMed opens 10th West Hollywood dispensary and fourth cannabis lounge
Trulieve opens Apollo Beach, Florida dispensary
Verano opens Zen Leaf Newington, CT (4th Statewide)
PharmaCann conducts “first-planting” ceremony to unveil $130 million cultivation and manufacturing facility in Montgomery (Hudson Valley, NY)
22Red establishes 30,000 sq ft proprietary grow in West Phoenix
Imperial Beach, CA to study whether city should double number of cannabis licenses
🌱 Product
Curaleaf prompts recall over possible Aspergillus contamination
Official Statement from Curaleaf:
On October 10, 2023, Curaleaf management was alerted to a failing test result for Find Flower “Mac N Cheese" Batch No. MNC-C1-230301 and immediately pulled the product from shelves. Following an internal investigation, it was discovered that the original test result failed for aspergillus and the batch was released from production quarantine due to an unintentional human error. Internal disciplinary action was taken and the directly responsible team member has been removed from the production area.
On October 14, 2023, a second re-test confirmed the original failing result, leading to a voluntary product recall. The Company self-reported to the Arizona Department of Health Services (AZDHS) to inform them of the matter and ensure appropriate action is taken, including alerting all customers impacted.
Curaleaf accepts full responsibility and apologizes to our Arizona patients and customers for this inconvenience. Patient and customer safety and satisfaction are our number one priority, and we are immediately evaluating our revised quality control practices to correct any gaps and prevent this mistake from occurring again. Curaleaf is grateful to the ADZHS for their continued partnership as this process demonstrates the integrity of the legal cannabis market.
GTI (incredibles) launches new, fast-acting Pineapple Express Gummies, crafted using molecular encapsulation to provide a faster onset period (5-15 minutes)
Grenco Science (G Pen) launch The Grateful Dead X G Pen Dash
Wyld launches hybrid-enhanced Sour Tangerine gummies
Storz & Bickel Unveils VENTY, a state-of-the-art portable vaporizer for dry herbs. The VENTY's most notable features include an adjustable airflow for more precise customization; temperature precision with adjustable temperatures directly on the device; the fastest heat-up-time of any STORZ & BICKEL vaporizer so far; rapid USB-C charging; smart connectivity via Bluetooth and a Web App for convenient control and customization
Genetica x Jardín to beta test Genetica's Flora OS for elevated retail experience
Alpine IQ x 365 Cannabis advanced integration
Khalifa Kush x CAMP HIGH teams up for Cannabis x Fashion collaboration
Highsman partners with GOLDLEAF in Florida
Heritage Cannabis Holdings commence sales of recreational products in New York
🧔 People
RX Green Technologies appoint Gary Santo as CEO
Weedmaps Head of Corporate Development/IR, Greg Stolowitz, has departed and join J.P. Morgan as Executive Director in Fintech
StateHouse Holdings board member, Marc Ravner, resigns
YourWay Cannabis President of Arizona Operations, Jacob Cohen, resigns
Greenlane board member Jeff Uttz exits, replaced by Gina Collins. Collins currently serves as CMO at Trulieve (though that wasn’t mentioned in the press release)
Hound Labs appoint Steve Lewis as CEO
🎙️ Interviews
In the heart of California’s Coachella Valley, Green Horizons has emerged with an innovative approach to sustainability, wellness, and consumer culture | Different Leaf
Higher Collective CEO Patrik Jonsson | Hartford Business
Wana Brands CFO Sandy Li | mg magazine
Jushi CEO James Cacioppo | The Water Tower Hour