🤥 Missouri company (Delta Extraction) at center of cannabis recall used synthetic hemp
🤥 Missouri company (Delta Extraction) at center of cannabis recall used synthetic hemp
Sun Theory acquires Dialed In. Frontier Risk raises $3.1M. Happy Cabbage Analytics raises $2M. Cresco Labs launches first-ever Cannabis advertisements on Spotify. GTI Share Repurchase Program.
I’m sure you’ve read enough about HHS’s recommendation on rescheduling and have seen countless takes, so I’ll leave you with the below chart which shows that the Cannabis ETF MSOS is +88% since the news broke on August 30th through September 11th. The ETF is now +33% YTD and -24% LTM. Important to also see the huge jump in trading volume.
💬 I’m doing another drawing for 3 GA tickets to the Benzinga Cannabis Capital Conference—this time, I’m asking that you share this post with anyone who should be subscribed but may not be. Even if they are already subscribed, just have them respond to this newsletter and mention your name and I’ll enter you into the drawing that I’ll run on Friday.
🌿 Industry
Missouri company at center of cannabis recall used hemp instead of marijuana in products. Business owners say they had no idea they were paying marijuana prices for a “synthetic” THC that had been converted from hemp. — Missouri Independent
The Clear has been partnering with a licensed Missouri manufacturer, Dark Horse Medicinals, to produce pre-rolled joints. Some were infused with distillate purchased from Delta Extraction. The Clear’s confirmed that absolutely none of these joints were sold or distributed to stores and remain in quarantine in the warehouse
As Delta Extraction was fighting off their license suspension and the recall by state regulators, the company revealed it had been importing concentrated THC oil made from industrial hemp — which is about four times cheaper to make than THC concentrate in Missouri
From May 4 to July 26, Delta bought almost 1,700 liters of hemp-derived THC-A from Arvida Labs in Fort Lauderdale, according to exhibits in the case. Delta is arguing that it has been making these products since 2022 and was never told by state regulators that it couldn’t
The companies that bought the oil found it on the state’s tracking system, Metrc. The state has paid the company running Metrc between $700,000 and $900,000 every year since 2020
Anthony David, COO of Kansas City-based Green Precision Analytics said that labs aren’t capable of testing for the safety of products made with both hemp-and marijuana-derived THC
Why Oakland’s beloved cannabis dispensary, Rose Mary Jane, closed. On Aug. 9, after around a year and a half in business, Rose Mary Jane officially closed its Oakland location to the public, citing an unaffordable lease and burglaries. — Kron 4
“The three burglaries in the last six months, the increased violence, loss and damage from the burglaries, and the unwillingness of our property manager, Erik Murray, with Oak Investment Funds, to negotiate a sustainable rental rate (our predatory lease terms were nearly $60K per month), have made operating Rose Mary Jane untenable for the time being,” the Instagram post said
However, with internal conflicts over ownership and pending lawsuits between stakeholders, with allegations ranging from fraud to blackmail to misaligned ethics, accounts of why the store closed differ vastly among those involved
In May, Origins Tech (owners) sued Murray and Oak Equity Holdings—a holding company Murray created to tie himself and four social equity partners, businesses and licenses with the Rose Mary Jane brand—alleging that the defendants took out a $900K loan from Origins but failed to make any interest payments
NJ Cannabis Regulatory Commission (CRC) fined TerrAscend $100,000 and Columbia Care $50,000 for not adhering to the state’s rules on serving medical patients and collective bargaining in good faith with labor unions. Before the final penalties were approved, CRC Vice Chair Sam Delgado had called for the equivalent of a slap on the wrist, suggesting fines as low as $1,000. — NJ.com
Prior to a testy debate, Jeff Brown, the commission’s executive director laid out the violations from TerrAscend, recommending a maximum $25,000 fine for not prioritizing medical patients at all three of its NJ locations, as required by state law
The commission has latitude to go below or above Brown’s recommendation. Its chair, Dianna Houenou, however, increased the final amount to $100,000, saying it reflected the systemic nature of TerrAscend persistently ignoring the law
CEOs of Curaleaf, GTI, PharmaCann and Acreage send letter to Gov. Kathy Hochul urging regulators to allow medical cannabis licensees to serve the broader adult-use market. This has resulted in “a demonstration of ‘worst’ practices rather than best,” the operators wrote, concluding that “the state’s entire cannabis ecosystem is in dire need of a new direction.” — Cannabis Business Times
The CEOs claim that in its rollout of the adult-use market, the New York Office of Cannabis Management (OCM) “abused its authority under New York’s adult use law, played politics with the licensing process, and allowed thousands of unregulated, commercial scale sellers to flood the market with unregulated and unsafe cannabis products”
There are currently only 18 adult-use storefronts and five delivery-only retailers operating in the state
Eastern Band of Cherokee vote to legalize recreational Cannabis; only place in NC. The Sept. 7 referendum showed overwhelming support for the change with 2,464 voting yes and 1,057 voting no. — Citizen Times
The recreational cannabis referendum is not technically binding and would have to be followed by legislation, though the Tribal Council has already signaled its support for the change
The move is a much bigger step than the 2021 decision by the Eastern Band of Cherokee Indians to allow medical marijuana. The medical system is now in place and is on the verge of opening sales to qualifying patients
Judge blocks Arkansas ban on delta-8 THC, other hemp products. In at least a temporary victory for the Arkansas hemp industry, a federal judge blocked enforcement of a recent state ban on products containing intoxicating hemp-derived cannabinoids such as delta-8 THC. — MJBizDaily
Calling the ban confusing and arbitrary, U.S. District Court Judge Billy Roy Wilson on Thursday granted an injunction that stops the state from enforcing it
Arkansas in May became the latest state with a legal marijuana industry to regulate or ban intoxicating hemp-derived products, which have exploded in popularity since the 2018 Farm Bill legalized hemp production nationwide
The judge wrote in his decision that “Arkansas law criminalizes hemp derived products without an effective exemption for interstate commerce.” He noted that Arkansas has the right to restrict delta-8 products but can’t prohibit transporting them through the state
Arizona Cannabis Testing Lab Accused of Tampering With COAs; Owner Calls it Sabotage. State regulators say OnPoint Laboratories misreported Aspergillus testing results and then changed a certificate of analysis, among other deficiencies. — CBT
This comes more than a year after the lab paid a $470,000 settlement to keep its license after state regulators found it had unreliable THC testing methods and multiple procedure violations
With a roughly 10,000-square-foot high-throughput screening facility and more than 50 employees, OnPoint is one of the largest among 28 licensed cannabis laboratories in Arizona
MA sales reached $139.3M in August, YTD of $1.05B
MD sales of $91.4M in August, up from $87.4M in July
CT sales of $24.9M in August
ME sales of $21.6M in August
💵 Deals
Sun Theory acquires Dialed In, one of Colorado's first rosin-infused edibles. The merger will bring Dialed In's popular rosin gummies and simple syrup to more Colorado dispensaries which are already available in ~550 stores across the state. Dialed In quickly became one of Colorado's most popular gummy manufacturers after launching in 2020 thanks to collaborations with popular Colorado growers and extractors such as 710 Labs and Soiku Bano. Sun Theory has been busy acquiring established Colorado cannabis businesses this summer. Months before the Dialed In announcement, the company announced it had bought Roots RX, a chain of six mountain town dispensaries. This came after Sun Theory acquired recreational dispensaries 3D Salida and Durango Rec Room; it owns a recreational cultivation in Moffat, as well.
Frontier Risk raises $3.1M led by Casa Verde Capital. Frontier Risk has agreements with reinsurers, many of whom don't understand or directly service cannabis, and argues that stringent regulations on cannabis growers means they have less intrinsic risk than do their agricultural peers. Other investors include Euclid VC, Inter-Atlantic Capital Group and lawyer Bruce Macfarlane.
Happy Cabbage Analytics raises $2M from current investor Delta Emerald Ventures. The company is also adding David Havlek to its Board of Directors. Havlek most recently served as EVP & Deputy CFO at Salesforce, where he managed finance as the company scaled revenue by 50x over 14 years.
Fika wins Fire & Flower bid for CAD$36M. The bid was CAD$12.3M more than the value of the stalking horse bid” put forward by Fire & Flower’s majority shareholder, Alimentation Couche-Tard. The CAD$36M bid “is sufficient to repay all of (Fire & Flower’s) secured liabilities and leaves a significant recovery available to (the company’s) unsecured creditors,” according to FTI Consulting. It is still unclear exactly which Fire & Flower assets Fika is buying.
TILT Holdings, Shinnecock Nation and PowerFund Partners Finalize Change in Partnership of Little Beach Harvest Joint Venture. CGSF Investments, LLC, a wholly owned subsidiary of PowerFund Partners has acquired from TILT Holdings/SFNY all the membership interests in Standard Farms NY for the agreed consideration of $1,400,000. Standard Farms NY holds a 75% interest in CGSF Group LLC, which was formed to establish vertical cannabis operations on the Shinnecock Nations aboriginal tribal territory in the Hamptons on Long Island, New York. The cannabis project development firm Conor Green Consulting, LLC will continue to hold a minority interest in CGSF Group. Little Beach Harvest is nearing its completion and slated to officially open Fall 2023.
Lucy Scientific Discovery Acquires HIGH TIMES Intellectual Property, Including Existing Licensing Agreements in All-Stock Transaction. The Transaction includes international and domestic rights of the brand High Times, Cannabis Cup, and 420.com brands, and its respective domain names. Lucy will issue 19.9% of its outstanding stock to High Times and make payments semi-annually for the next 5 years based on EBITDA generated from the acquired IP, which can be settled with either stock or cash at Lucy’s option. Additionally, Lucy will license the right to operate retail stores and manufacture and sell THC products in the U.S. back to High Times, in return for a license fee of $1.0M per year, increasing to $2.0M per year upon Federal legalization.
Christina Lake Cannabis intends to complete a non-brokered private placement with gross proceeds of up to $5M. The Company will be issuing convertible promissory notes secured by land and buildings. The Note bears interest at a rate of 15% per annum over a term of 36 months. Repayment of the Note shall be in the form of interest only payments for the first 15 months and a blended principal and interest payment for the remaining Term. Outstanding principal and interest from the Notes will be convertible into common shares at a conversion price of $0.06 per common share during the Term. The Company shall also have the right to redeem or repay the Notes at any time during the Term.
📄 Company Updates
Cresco Labs Launches First-Ever Cannabis Advertisements on Spotify. The ad campaign, which aims to communicate the benefits of shopping at Sunnyside dispensary, includes 30 second audio and in-app digital banners that drive to the retailer’s proprietary e-commerce platform. Advertising is supported by a volume-driving paid media campaign that includes programmatic buying, native ads, connectedTV and more.
GTI Share Repurchase Program. GTI’s Board has authorized the Company to spend up to $50M or up to 10,486,951 of its Shares (up to 5% of the class) from time to time over a 12-month period for the repurchase program. There were 209,239,033 Shares outstanding as of August 1, 2023. While the timeframe to purchase shares starts on September 11, 2023 and ends not later than September 10, 2024, GTI is not obligated to purchase any Shares. If management determines it has a better use for its cash reserves, it is under no obligation to continue to purchase Shares and share purchases may be suspended or terminated at any time at GTI’s discretion.
Springbig delists from Nasdaq. The company now trades on the OTCQX markets under the symbols SBIG and SBIGW. In addition, Steven Bernstein, Patricia Glassford and Amanda Lannert have resigned from the board of directors with immediate effect.
Grown Rogue Partial Conversion of $2.0M Debenture Financing. Mindset Capital converts $1.5M of debentures in Grown Rogue that mature on December 5, 2025. The early retirement of the debt will save the Company $300K+ in interest payments over the length of the term. The conversion results in the issuance of 10,151,250 common shares of the Company at a price of CAD$0.20 per share in accordance with the terms of the December Debentures. After the conversion, the Company's common shares outstanding increased from 170,832,611 to 180,983,861.
King City Gardens opens 25,000 sq ft cultivation to provide a premium selection of medical-grade craft cannabis in Cincinnati, OH. King City Gardens won its Level 1 medical marijuana cultivation license following a five-year lawsuit with the state. In total, 23 licenses have been issued. It’s the 19th in operation.
StateHouse Holdings Q2 Revenue increased 2% sequentially to $25.3M with a 15% improvement in gross margin for a consolidated Q2 Gross Margin of 49.9%. The company generated $635K in Positive Adjusted EBITDA.
Body and Mind continues to build out operations and licenses in Illinois and New Jersey while divesting Ohio dispensary for $2M.
Unrivaled Brands reduces debt and liabilities by $53.6M from 2021 and increases GM from 37% in Q4 2021 to 52% in Q2 2023.
Leafly effects 1-for-20 reverse stock split of its common stock.
Aurora repurchased $9.0M principal amount of its convertible senior notes in multiple transactions between August 16 and September 8, 2023. Total cash cost was ~$9.0M, including accrued interest, satisfied by the issuance of an aggregate ~20.1M common shares of Aurora. Following completion of these repurchases, Aurora will have ~$39M of Notes outstanding.
🏬 Retail
Embarc opens Ventura’s first dispensary. Embarc was one of three companies to win permits in the first round along with The Artist Tree and Wheelhouse. Megan's Organic Market, Shryne (Stiizy), and Safeport won an additional 3 license after appealing.
Standard Wellness opens The Forest Cincinnati, the first dispensary in the Cincinnati area with a fully functioning drive-through. Founded in 2017, Standard Wellness became the first vertically integrated medical marijuana company in Ohio when it was awarded cultivation, processing, and a dispensary license through its affiliate company, The Forest, in 2018. The Forest Sandusky served the first patient in Ohio's history on January 16th, 2019. Since that time, Standard Wellness and affiliates has expanded its footprint and is vertically integrated in Ohio, Utah, and Missouri with verticals operations coming in Maryland.
Sanctuary Cannabis awarded provisional retail license in Scotch Plains, NJ. Also known as Sanctuary Medicinals, the company also operates in Massachusetts, New Hampshire, and Florida.
Puffin opens in New Brunswick, NJ near Rutgers University and Johnson & Johnson. Puffin hopes to attract customers from Edison, Metuchen, Perth Amboy, North Brunswick and all over Central Jersey.
🌱 Product
Curaleaf launches Zero Proof, a new brand of THC drinkables in fast-acting, sessionable and easy-to-use formats. The brand's inaugural product offering, Squeeze, is now available at all Curaleaf locations in Illinois and will be followed by additional SKUs in the coming months.
POSaBIT launches POSaBIT POS 2.0, the next-generation of the Company's POS. After receiving positive feedback during its beta phase, the Company is confident that POSaBIT POS 2.0 will redefine the customer experience across the cannabis industry. New features include a simplified and more intuitive user interface, enhanced data analytics, and expanded integrations with popular e-commerce platforms.
Curio Wellness enters into exclusive partnership with Eddie Osefo of The Real Housewives of Potomac, to launch his new cannabis product line Happy Eddie in Maryland. The line will include flower and pre-rolls, available at Curio Wellness-owned Far & Dotter and Pharmkent dispensaries, and additional dispensaries across the state.
Nevis Brands signs licensing agreement with Silver State Wellness for Nevada. Its Major brand is a 100mg THC beverage known for its rapid onset and will be available in Nevada dispensaries starting in September 2023. For Nevis, the expansion increases Major’s footprint from five states to six in <65 days since acquiring the brand.
TYSON 2.0 enters Montana with Yellowstoned.
Old Pal launches in New York.
🧔 People
Columbia Care Chief Scientific Officer Rosemary Mazanet transitions to Board. Dr. Mazanet began advising Columbia Care in 2013 and then joined its Scientific Advisory Board as its Chair in 2015.
C21 Investments promotes current Head of Nevada Operations, Aron Swan, to COO.
Blaze Life Holdings (BLH) appoints Shreyas Balakrishnan as CEO. Since 2019, Balakrishnan has served as President of Cutwater Spirits, acquired by AB in 2019. Prior to Cutwater, Balakrishnan was President and General Manager at Elysian Brewing.
🎙️ Interviews
Tim Seymour Breaks Down FDA Concerns | The Dales Report
August sales numbers | High Rise
From Battlefields to Buds with Soc Rosenfeld | Proud To Work In Cannabis