Connecticut Governor Signs Cannabis Legalization Into Law

Rhode Island Senate approves Bill to Legalize Cannabis. Trulieve/Harvest – Expiration of HSR Act waiting period. Former Grassroots CMO alleges CEO of defrauding her. Body and Mind reports Q3 2021.


Top News

Connecticut Governor Signs Marijuana Legalization Into Law. The governor of Connecticut on Tuesday signed a bill to legalize marijuana—making it the 19th state to enact the reform. Connecticut is the fourth state to legalize cannabis for adult use this year alone, following New YorkVirginia and New Mexico. Under the Connecticut measure, possession of marijuana by adults 21 and older will become legal on July 1. Commercial cannabis sales could begin as soon as next May, but the bill does not specify an exact start date.

Rhode Island Senate Approves Bill to Legalize Marijuana for Adults. With little time remaining in the regular legislative session, the Rhode Island Senate has approved a bill to legalize the possession, purchase, and cultivation of cannabis for personal use for adults 21 and older. The original proposal was introduced in March and amended last week by the Rhode Island Senate Judiciary Committee. In addition to legalizing cannabis for adults, the amended version of S 568 would establish a Cannabis Control Commission to regulate the legal cannabis market, tax adult-use cannabis sales at 20%, and establish a social equity program to support communities disproportionately impacted by cannabis criminalization. The House has until the legislative session adjourns June 30 to approve the bill. Gov. Dan McKee has indicated he favors legalizing recreational marijuana in the state. If the House does not approve the measure by June 30, some observers are expecting a special legislative session to be called so lawmakers can finalize legalization.

Trulieve — Expiration of HSR Act Waiting Period for the Proposed Acquisition of Harvest Health & Recreation. Closing of the Transaction remains subject to the satisfaction or waiver of all remaining conditions in the agreement. The Harvest shareholder vote is expected to occur in the third quarter of 2021.

Former Grassroots CMO alleges CEO Mitch Kahn defrauded her of millions. The former CMO of Grassroots Cannabis, Lisa Hurwitz, alleges CEO Mitch Kahn defrauded her out of millions of stock options, according to a lawsuit recently filed in Cook County, IL Circuit Court. Documents filed with the allegations, brought by Hurwitz, provides a September 2018 employment agreement where Kahn promises Hurwitz $2,000,000 of stock, 1% of the company’s value at the time. Hurwitz’ suit alleges that Kahn dragged his feet in providing a necessary second agreement assigning the stock options, and two months after her start date, she refused to perform additional public relations work until the agreement was provided. In response, Kahn did not provide a restricted stock agreement, Hurwitz says, but rather a phantom stock agreement. Hurwitz alleges that Kahn assured her that the value of her agreement was in line with other executives’ compensation, but actually resulted in many millions of dollars less compensation when Grassroots merged with Curaleaf in 2020.

Marijuana firms, developers line up real estate ahead of New York’s adult-use sales. With adult-use cannabis newly legal in New York, entrepreneurs and developers on the prowl for real estate are scooping up everything from a former prison site to greenhouses – and there are even plans for a sprawling “cannabis campus.” In addition, MJBizDaily projects that an adult-use market in New York will generate $2.3 billion in annual sales by its fourth full year. In response, companies that already are in New York’s medical marijuana industry – many of them multistate operators (MSOs) – have been scouting locations and even purchasing facilities in anticipation of expanding into the adult-use market.

Planet 13 — adds Select and STIIIZY Store-in-Stores at Orange County SuperStore. Based on the success of the store-within-store concept at the Las Vegas SuperStore, Planet 13 has created three shop-in-shop spaces within its new SuperStore in California. The first two partners that the Company will host at P13 OC are Select and STIIIZY - two of California's most prominent brands.

Lume Cannabis Co. and 313 Presents — Exclusive Cannabis Partnership for Michigan's legendary DTE Energy Music Theatre.

Per the five-year agreement, DTE Energy Music Theatre will include Lume branding throughout the venue, including widespread signage, a dedicated 6,000 square-foot "Tree House" lounge and satellite activations throughout the venue. Located inside DTE Energy Music Theatre's West Entrance, Lume's newly built "Tree House" provides ample outdoor space for concert goers to socialize and enjoy food and beverage offerings. Cannabis consumption and purchase is not permitted on-premises; however, the lounge contains indoor areas where guests can purchase Lume-branded merchandise and learn about the company's retail offerings across its 18 off-site recreational dispensaries. Ranked #1 in the top 100 amphitheaters worldwide in Pollstar's 2019 Year End Rankings, DTE Energy Music Theatre is an iconic music venue in Michigan that has hosted a wide array of talent since opening in 1972. The venue accommodates 15,000 attendees and hosts an average of 50 live events each summer, featuring some of the most renowned names in music and entertainment.

Australis Corporation — Changes Name to Audacious Brands and Operationalizes Missouri Asset. The Company has decided to rename its operations focused on the U.S. adult use market to Audacious Brands. The Company’s ticker symbol will remain AUSA on the CSE and AUSAF on the OTC. The Company will consolidate its brands under the new Audacious banner, as well intends to launch additional products lines under the new name. A full and official brand launch is anticipated in the coming months. The operation in Missouri, which the Company is acquiring as part of the Green Therapeutics transaction, has received its license to operate. Once the license transfer is complete, Audacious will own 25% of a processing and manufacturing license. Missouri is a medical market that has been operational since October 2020. The Missouri market is anticipated to reach $225-$300 million for 2021, and is anticipated to show continued strong growth to $500-$625 million by 2025 (Marijuana Business Factbook 2021). To date 25 manufacturing licenses have been approved to operate. Further licensing is currently capped.

Canadians no longer “canna-curious” about edibles: report. Canadians are getting used to the idea of legal cannabis, a new study from the Dalhousie University Agri-Food Analytics Lab (AAL) shows, but interest in edibles has waned. Support for legalization is up — from 49% in 2019 to ~80% today — and disapproval has more than halved (30% in 2019 to 14% in 2021). According to the survey of 1,047 Canadians in May 2021, 25% of cannabis consumers prefer edibles, which is down from 36% in 2019. And while 65% of Canadians don’t have a problem with restaurants adding cannabis-infused items to their menus, only 24% would consider ordering one. Gummies and other sweets are Canada’s first choice for edibles by far; 35% of cannabis consumers favor them. Chocolates are also popular, but beverages — much buzzed about leading up to legalization — are only preferred by 4%.

Former officers and directors of CannTrust charged with Securities Act Offences. These allegations relate to efforts to conceal the illegal growing of cannabis at CannTrust over a 10-month period in 2018 and 2019. During this time, the three accused did not disclose to investors that ~50% of the total growing space at CannTrust’s facility in Pelham, Ontario, was not licensed by Health Canada. In press releases, corporate disclosures, analyst calls and prospectuses, they asserted that CannTrust was compliant with regulatory requirements, and they included all cannabis production in the company’s financial statements, without stating that half was grown without a license. Additionally, Litwin and Aceto signed off on prospectuses used to raise capital in the United States, which stated that CannTrust was fully licensed and compliant with regulatory requirements. Litwin and Paul also traded shares of CannTrust while in possession of the material, undisclosed information regarding the unlicensed growing.

Truss aims to shake off pot drink sales. Getting people interested in cannabis-infused drinks has been a challenge for Canada's legal marijuana industry. The category represents roughly just 2% of all cannabis sales, according to industry data provider Hifyre. Cannabis beverages amounted to only $28 million of the $2.6 billion in total legal marijuana sales made last year, though ~$24 million in drinks have been sold in the first five months of the 2021 according to Hifyre. It's a far cry from the $529 million in annual sales that Deloitte predicted cannabis-infused beverages would bring in a 2019 report. The marketing or advertising of cannabis is mostly restricted to age-gated establishments or social media, with drinks only available at licensed stores. Customers are also limited to buying roughly five individual items per purchase.

Little Green Pharma — Accelerates Growth Strategy with Acquisition of World-Class Production and Manufacturing Facility in Denmark for C$20M from Canopy Growth. Little Green Pharma Ltd (ASX: LGP) has acquired a world-class, fully-operational, GMP medicinal cannabis cultivation and manufacturing facility in Denmark from Canopy Growth Corporation (TSX:WEED, NASDAQ: CGC). The facility, located in Northern Odense, has the capacity to produce in excess of 12 tonnes per annum of finished flower and provides LGP with much-needed product supply from its current inventory of ~1 tonne (1,000 kg or 2,204.6 lbs ) of medicinal cannabis flower products. The LGP Group plans to immediately focus on delivering products in Australia and Germany as it grows its portfolio of export destinations over time. The facility is also well advanced along the medicine registration process for its first medicinal cannabis products for the Danish market, with current plans to release in early 2022. The C$20 million acquisition of the 21,500 m2 cultivation and 4,000 m2 GMP manufacturing facility positions LGP as the leading Australian medicinal cannabis producer and owner of one of the largest and highest-quality cannabis production facilities in Europe.

Podcast: New York’s Big Marijuana Moves. Jeremy Berke (Business Insider) joins host Ben Larson to talk about the rumored embrace of cannabis companies by the Toronto Stock Exchange, the substantial cannabis reform enacted in New York and the business opportunities soon to flow, and the latest news out of international cannabis.

Delays in cannabis nominations may stall recreational sales in New York. Talks over who will oversee the industry apparently are at a standstill.


Earnings / Deals

Body and Mind — Q3 2021 Financial Results

  • Revenue: $7.2M, a 13% increase over Q2 FY2021 ($6.3M), and a 580% increase over Q3 FY2020 ($1.05M)

  • Adjusted EBITDA: $1.5M, an improvement of 133% over Q2 FY2021 ($0.7M)

  • Cash: $1.3M (as of April 30, 2021)

House of Wise — Raises $2M; Launches Full Line of Organic CBD Products to Help Women Take Control of Sleep, Sex, and Stress. The series seed round was led by Sugar Capital, with participation from Selva Ventures, Max Ventures, Dream Ventures, and notable strategic angels NBA Star Baron Davis, Fabletics Co-founder Jack McCue, Former President & COO of Focus Brands, Kat Cole, and leading millennial women's podcast platform Dear Media. The funding will be used to drive House of Wise's strategy and growth in building the leading CBD brand at the thoughtful intersection of community, content and commerce. House of Wise products are available now at houseofwise.co.


👋 Newsletter curated by Dai Truong.