🔍 Ohio closer to issuing Certificates of Operation for adult-use market
East West Bank sues Irwin Naturals for default on $40M loan. AWH $235M Senior Secured Notes, will use $215M to repay TL. Overseed raises €6.7M. Lucid Green raises $1.4M. Metrc up to $113M CA contract.
🗣️ It’s been a much longer cadence between this newsletter and the last one (~3 weeks), fortunately, its been slow on the news front in that span. I’ll also use this as a reminder that though some news may be delayed, I usually try to capture relevant news between newsletters as they should serve as a way to keep up with the Cannabis industry even if you’ve stepped away for a month or two. If there are any major breaking news (i.e. sizeable equity raise or M&A), I usually try to write that up and send out the same day.
🌿 Industry
Ohio Initiates Next Step to Kick-Start Adult-Use Cannabis Program. The state’s Division of Cannabis Control is in the process of issuing certificates of operation to cultivators to supply adult-use cannabis. — CBT
The division had approved 208 provisional licenses for dual-use operations as of July 12, according to the state’s licensing database:
6 testing laboratories (of 8 operational licensees in the medical market)
22 Level I cultivators (of 22 in the medical market)
12 Level II cultivators (of 14 in the medical market)
40 processors (of 45 in the medical market)
128 dispensaries (of 128 in the medical market)
Jason Erkes, Chief Communications Officer at Cresco Labs said “The next step, there’s actually some physical things that need to take place, like an inspection, testing security, and staffing requirements—things like that. Those are the things that are happening now, and we’re going to see those happen on the cultivation and lab side first because no stores will be able to sell product that doesn’t come from an approved supplier”
The DCC is prioritizing dual-use licensure in the order of the supply chain, meaning cultivators, processors and testing laboratories will begin receiving certificates of operation before dispensaries
Palm Springs dispensaries continue to struggle even after moratorium on new businesses, tax cut. With only two fewer active licenses in the city since a moratorium was first imposed last fall, retailers say there’s still well over the number needed to level the playing field. — The Palm Springs Post
There are 25 active dispensaries in the city right now—one for every 1,700 residents. At one point, there was one dispensary for every 1,350 residents
An amended budget adopted during a June City Council meeting shows a predicted 44% decrease in cannabis tax revenue in 2024–from $3.5M to $1.9M
Minnesota raises $10 million in first year from hemp-derived THC sales, but isn’t the industry bigger than that? With nearly 3,900 businesses registered to sell the products, some observers think tax revenues should be higher. — MinnPost
Nearly a year into tax collections on Minnesota’s new lower-potency hemp industry shows that the sale of hemp edibles, beverages and other products is a $130 million business, at least
According to numbers compiled by the state Department of Revenue, the 10% tax on cannabis product sales raised $1.2M in May from 1,873 tax paying businesses. Over the 11 months that the tax has been collected, the state took in $10.0M with average collections of a little more than $900K/month
Bloomberg estimated the THC beverage industry in Minnesota at $180M/year. While Minneapolis Cider Company (Trail Magic) CEO Jason Dayton thinks that is too high, he estimates the THC beverage market—which makes up half of hemp-derived product sales in the state—is closer to $100M
Maine has no testing requirement for medical cannabis. Public health advocates want that to change. Medical cannabis businesses in Maine are not required to test their products for contaminants and are not subject to potency limits, unlike what is required for recreational cannabis businesses. — Penobscot Bay Pilot
The Office of Cannabis Policy tested 120 samples from medical cannabis sellers last fall and found 42% had at least one contaminant that would have prohibited them from being sold on the recreational market, including pesticides, heavy metals, yeast and mold
Testing is required for medical programs in most other states. A 2022 study from Safe Access, a medical cannabis patient advocacy organization, found that of the 35 states with medical cannabis programs, Maine was one of the two without required testing. The other was Louisiana
East West Bank sues Irwin Naturals, Klee Irwin for defaulting on $40M loan. The bank accused Klee Irwin of diverting money away from the business for personal expenses. — GMR
East West Bank claims the founder violated the terms of the loan agreement and diverted money meant for the company for personal use, such as landscaping at his Hawaiian property and car payments. The bank also took over the company and removed Irwin from the board of directors
The bank accused Irwin of self-dealing by adding several family members to the payroll even as the company was laying off employees. In addition to paying people like his wife, daughter, and goddaughter, EWB claims he used some of the loan money for living expenses for his wife, children, sister, and pets
To guarantee the loan, Irwin pledged the Class A & Class B stock and assets in Irwin Nevada to EWB
California Cannabis Regulators Recall Pesticide-Tainted Vape. The product ordered pulled from sale is an “Orange Cookies”-flavored West Coast Cure vape cartridge produced in September. The state recall said the vape exceeded safety limits for a single chemical, the insecticide chlorfenapyr. — LA Times
The product’s safety certificate came from Verity Analytics, whose license has since been suspended
It was among a dozen West Coast Cure batches manufactured in September — consisting of more than 62,000 vapes that private lab Infinite Chemical Analysis tested last fall and reported to state regulators as containing pesticides that exceeded state limits. All had been certified as safe by other labs
In 2021, the cannabis agency signed an $11-million, five-year contract with UC San Diego’s cannabis research program to create a state lab “in order to confirm that licensed testing laboratories are accurately and reliably testing cannabis goods.” Four years and $9 million in payments later, the San Diego lab is not certified to check pesticide levels, its accreditation record shows
Kentucky medical marijuana program applications opened for businesses, physicians on July 1st. The rollout of Kentucky's medical marijuana program is moving six months ahead of schedule. — WHAS
Gov. Andy Beshear said, starting on July 1, the state will begin accepting applications from prospective medical cannabis businesses looking to come to Kentucky
Kentucky's Board of Medical Licensure and Board of Nursing will also begin taking applications from physicians and Advanced Practice Registered Nurses (APRNs) looking to become authorized to write medical cannabis certifications
There are 16 cultivations licenses for facilities of various sizes, ten processor licenses and 48 licenses for dispensaries up for grabs
Holland Cannabis' license pulled after second alleged pesticide violation. Holland Cannabis, a mixed indoor outdoor grower, no longer has a license following a hearing on its second alleged fungicide violation. — Reformer
The owners disputed the second violation issued by the Vermont Cannabis Control Board after entering into a two-year corrective action plan with the board for the first one in June 2023
They also paid administrative penalties of $27,000, according to the CCB decision to revoke their license
They had been accused of using or buying clone plants with myclobutanil, which the CCB described as "the active chemical compound in the commercial fungicide Eagle 20 among others." Myclobutanil is prohibited in cannabis cultivation in Vermont and several other states
Cannabis laboratories in Washington will have six months from July 1 to become compliant with the state’s new, more stringent standards and receive accreditation from the state Department of Agriculture. The new authority to accredit cannabis labs comes after five years of the department overseeing the testing process in Washington.
Trump VP pick JD Vance opposed marijuana banking but silent on legalization
30,000+ Comments Submitted on DEA’s Proposed Rescheduling Rule
Delaware Bill To Let Medical Cannabis Dispensaries Begin Recreational Sales Clears Senate Committee
Maryland cannabis sales top $1.1B in first year
Illinois surpassed $1 billion in cannabis retail sales in the first half of 2024. The milestone was reached on July 1, nearly two weeks earlier than last year
Arizona cannabis sales have leveled out at ~$110M monthly
Arkansas medical cannabis sales down $5.5M in first half of 2024. Arkansans for Patient Access (APA) submitted over 111,000 petition signatures to expand medical marijuana amendment.
Stockton University will offer a B.S. in Hemp and Cannabis Business Management
NCAA removes cannabis from list of banned drugs during championships
💵 Deals
Ascend Wellness to Issue $235M of Senior Secured Notes. The company has received commitments for a private placement of $235M of its 12.75% Senior Secured Notes due 2029. The Notes are expected to be issued at a price of 94.75% of face value. The Company intends to use the net proceeds of the Notes, together with cash on hand, to prepay $215M of principal amounts outstanding under its existing term loan. The $60M of principal remaining outstanding under the Term Loan may be carried through to the existing maturity at 9.5% interest.
French Cannabis medtech Overseed raises €6.7M. French biotech Overseed has raised €6.7M to become first French manufacturer of 100% medical cannabis medicines. Within a strict pharmaceutical framework, France is preparing to authorize the use and health insurance coverage of medical cannabis in January 2025. Overseed Biotech specializes in agronomic research and the development of medicines derived from the cannabis plant. This round has been secured from Anthony Bourbon's Blast.Club and the seed capital fund of the Centre-Val de Loire region, managed by UI Investissement, which supports young innovative companies in the region with the support of the European Union (Feder funds).
Lucid Green raises additional $1.4M. This follows Lucid Green's $10M Series B funding in 2022, underscoring its continued success in revolutionizing how cannabis products are managed across the supply chain. Lucid Green's proprietary technology has already powered over 80 million products with LucidIDs, enabling unparalleled inventory management and seamless product transparency, underpinned by the GS1 Digital Link standard. The platform provides critical inventory insights and enhances compliance throughout the supply chain. Lucid Green partners with over 400 brands, leveraging its Direct-to-Consumer (DTC) marketing platform, LucidConnect, to engage with over 200,000 consumers.
Jones Soda increases the size of its private placement to $4M (from $3M previously). The Company now intends to issue up to 10,000,000 units of the Company at a price of $0.40 per Unit. Each Unit will be composed of: (i) one (1) common share in the capital of the Company and (ii) one‐half (1/2) of one detachable share purchase warrant exercisable into one Common Share at a price of $0.50 per share for a period of 24 months from the date of issuance.
SNDL acquired the principal indebtedness of Delta 9 Cannabis from Connect First and Servus Credit Union (CFCU) for C$28.1M. As a result of the Debt Acquisition, SNDL has become Delta 9's senior secured creditor with a first priority security interest in all of the assets of Delta 9 and certain Delta 9 subsidiaries. The Purchased Indebtedness brings Delta 9's total indebtedness to SNDL to C$40.7M. In a bid to withstand its creditors, Delta 9 also agreed to sell the retail and logistic arms of its operations, as well as some debt, to FIKA, an Ontario-based cannabis company operating around 140 stores across Canada. FIKA is scheduled to provide Delta 9 with $16M in interim financing and another $13M to repay a portion of SNDL's loans.
High Tide will acquire Cantopia Dispensary (Mississauga, Ontario)for C$600K. For the trailing three months ended May 31, 2024, the store generated annualized revenue of $2.3M and annualized Adjusted EBITDA of $0.4M. The purchase price represents 1.5x annualized Adjusted EBITDA for the trailing three months ended May 31, 2024.
Simply Solventless Concentrates (SSC) to acquire CannMart for $2.5M. CannMart owns the brands Roilty and Zest Cannabis, both are leading brands in hydrocarbon extract products in Alberta, Ontario, Saskatchewan, and Manitoba, and with a presence in Quebec, the Maritimes, and the Territories. The purchase price consists of $500K cash, $500K in Units on the same terms as the Financing (SSC also raising $3.5M), and a vendor takeback note of $1.5M on closing of the Acquisition. Acquisition valuation of ~0.18x estimated NTM gross revenue (net of inventory acquired) and assumes ~$20M annual gross revenue.
📄 Company Updates
Metrc secures up to $113M cannabis track-and-trace contract extension in California. The new contract took effect July 1 and will run for four years. The state has an option to extend the contract another two years. The contract will not exceed $28.4M annually, or $113.6M for four years. Metrc holds exclusive government contracts in every region of the U.S., and has a particularly strong presence in the West, where it holds contracts with California, Colorado, Montana, Nevada, Oklahoma, Oregon, South Dakota, and the Twenty-Nine Palms Band of Mission Indians.
MedMen wind-down proceeding as receiver works to sell off assets. MedMen's properties in Illinois, Nevada, and New York are moving closer to sales, but the outlook is bleaker in California and Massachusetts. In a report filed July 12 with the Los Angeles County Superior Court, its receiver reiterated that most of MedMen’s ~$560M in debts remain unpaid, including more than $262M owed to Superhero Acquisition L.P. and another $59.9M to Hankey Capital, both of which are senior secured lenders. The receiver re-emphasized the estimated value of between $70–$100M for MedMen’s remaining assets. But most major asset sales have yet to close, Ormond reported, though he has lined up interested buyers for MedMen facilities in Illinois, Nevada, and New York.
Schwazze has finalized an agreement with two of its lenders to restructure its $15.0M Altmore Loan Agreement and its $17.0M R. Greenleaf Promissory Note, both previously due in February 2025. This improves the Company's financial position by extending the maturities of both debt instruments to the end of 2025 and materially reducing amortization payments for the Altmore Loan Agreement.
Altmore Loan Agreement: Reduction of quarterly principal payment from $750K to $300K, effective in the Q2 2024 payment. Additionally, the Company will pay a quarterly administrative fee of $75,000. No change in interest rate of 15%
R. Greenleaf Promissory Note: 10% of the principal amount will be paid in February 2025, No change in interest rate of 5%
Fernway reported $10.2M in wholesale revenue for the quarter ending June 30, with an estimated annualized retail GMV of $85M+. That represents a 135% year-over-year growth, accelerating from the previous quarter. Fernway also secured $6M in April, led by Delta Emerald Ventures with participation from LAGO Innovation Fund. Additionally, Fernway obtained a line of credit from a New England-based bank in June, at a current rate of 10.5% annually.
4Front Ventures Withdraws Brokered Offering and Appoint New Board Chair. The decision comes after a comprehensive review of current market conditions, including recent controversies regarding the federal regulatory outlook. The Company also announced that current Company director Kris Krane became Chair of the Board in place of Robert Hunt, who is departing the Board.
Schwazze to Transition to OTC Expert Market and Provides Update on Delayed Filing. Schwazze will soon transition to the OTC Expert Market, under the ticker symbol “SHWZ” due to the Company’s delayed filing of its Form 10-Q for the period ended March 31, 2024, with the SEC. The delay was a result of an SEC Order regarding the Company’s previous auditor, BF Borgers, who was dismissed as Schwazze’s auditor prior to the SEC’s Order. As previously announced, Schwazze dismissed BF Borgers as its independent registered public accountant and engaged Baker Tilly.
Treez Expands into New York Market with POS, eCommerce, TreezPay and Analytics.
Safe Harbor Financial Exits $3.1M Loan in Default, Collecting 100% of Principal, Plus $200K+ in Accrued Interest. The $3.1M first-lien loan was originated in 2021 and secured by Class A industrial real estate in the Denver metropolitan area.
Cookies Worcester sues TRP over failed deal. According to the suit, TRP (Cookies Retail) and its affiliates agreed in 2021 to pay $2M to buy a 49% stake in New Dia, the legal entity that owns Cookies Worcester. But the would-be buyers never paid, the lawsuit alleges. Instead, according to the suit, they repeatedly attempted to renegotiate the deal–including bringing in a third party–before finally telling plaintiff Ross Bradshaw and New Dia that “we simply don’t have the cash to pay you.”
Hall of Flowers add festival to trade show. Hall of Flowers will invite in thousands of Cannabis enthusiasts for Day 2 and expand into a festival environment powered by direct-to-consumer sales. Experiences include Cannabis & Lifestyle Market, Interactive Art, 'A Taste of Sonoma Culinary Experience' presented by Sonoma Hills Farm, Charity Art Gallery, Live Music, Ride & Games, Glassblowing Demos, and The Northern California Experience, presented by the WOODS.
🏬 Retail
Snoop Dogg opens S.W.E.D (Smoke Weed Every Day) at former Dr. Greenthumb's location. C3 Industries opens 9th Dispensary in Missouri, 25th Store Nationwide. The new dispensary is located in the Scenic Ozark Mountains and Live Entertainment Capital of the World. Sunburn Cannabis opened its first Panama City Beach dispensary, its 14th in Florida. GTI opened Two RISE Dispensary Locations in Tallahassee. Trulieve opens Wilkes-Barre Township, PA dispensary (its 21st in PA) and Gulf Breeze, FL. MariMed received approval of Adult-Use sales at Panacea Wellness Dispensary in Quincy, MA. Theory Wellness opens first NJ dispensary in Trenton, NJ. SEquity Ventures (The Dispensary Champaign) became the 100th social equity cannabis dispensary to open in Illinois. Gotham is opening a second dispensary at The Refinery at Domino in Brooklyn, NY. Shangri-La Dispensaries opens first Illinois dispensary in Springfield, IL. TRENDS opens 6,000 sq ft dispensary in Long Island City. Fine Fettle opened its first dispensary in Atlanta. Cannabis Xpress opens 9th private dispensary in New Brunswick. Nova Cannabis opened its 100th Location in Canada. William Norgard Opening 10,000-SF Cannabis Dispensary in Times Square.
🌱 Product
Timeless Enters Illinois Cannabis Market. Timeless will launch in Illinois with six strains from its signature "Choose Your Mood" collection, "Energy" (Sativa), "Chill" (Hybrid), and "Rest" (Indica), as well as its NOIR Live Resin Terpenes and Timeless All-In-One vaporizers. Timeless also dropped its latest Artist Legacy Collaboration with Nyla Lee, a multidisciplinary artist reshaping portraits through vibrant imagery.
Snoop Dogg and Death Row Records Cannabis Unveil Limited Edition 2Pac Collection. Customers can choose from one of five strains: a crowd favorite, an Alien OG, and Take 1, Take 2, Take 3, Take 4—phenotypes from the same parent genetics. Fans can vote for their favorite "Take" through a QR code, where the winning "Take" will make the cut for the exclusive and permanent 2Pac collection, due out this fall. In addition to the jarred flower, customers will receive one of four never-before released collectible photos of 2Pac in front of a DRR graffiti-covered wall, as well as a DRR matchbook, recreated precisely from the shoot.
CCELL Debuts First Smart All-In-One Vaporizers on 710 alongside a refreshed brand identity. The Vision Box Series includes the Vision Box and the Vision Box Elite, the first CCELL® all-in-one vaporizers with smart displays, enabling users to view battery levels and voltage settings while consuming. Vision Box vaporizers feature the world's first anti-burn and anti-clogging technologies, with an intelligent temperature monitoring system ensuring zero burnt taste and a multi-purpose slide switch designed to prevent clogs and seal in aromas. The Vision Box Elite is engineered with HeRo heating technology particularly compatible with live rosins and solventless oils.
Raw Garden Launches 100% Solventless Live Rosin. The extraction method uses only cold temperatures, agitation, and pressure.
CTrust launches credit scoring platform for cannabis businesses. CTrust is launching a cannabis credit scoring platform, available to financial institutions, investors, and business owners. CTrust’s Cannabis Trust Score (CTS) and Report provides a credit score with detailed insights into the financial health and credit risk of state-licensed cannabis-related businesses (CRBs). Using a proprietary algorithm, the cannabis industry-tailored CTS and Report incorporates data from more than 1,700 correlation points across 42 unique business categories within 3 main areas. Those three areas include asset, structure and character, point of sale (POS) software, and company structure documents and third-party market data.
Houseplant partners with Kith for Cannabis Homeware Line. Made with premium materials, the four-piece collection includes the Ashtray Set by Set, Marble Rolling Set, Glass Grinder and Gloop Candle. Notably, each design keeps its signature Houseplant shape with custom tones from Kith’s palette.
Verano Expands Cabbage Club™ to Connecticut, Maryland and Michigan. Cabbage Club™ members at all tier levels gain access to exclusive perks including monthly store credits and seasonal coupons, members-only merchandise, early access to new product drops, a dedicated Member Appreciation Day, and VIP access to additional events. Members also receive additional in-store and online perks including private concierge services, line-skipping privileges, and as a perfect cannabis complement, warm cookies at checkout2 to enjoy alongside their favorite products.
TYSON 2.0 Expands in Washington State Through Partnership with Perfect Harvest. Focusing on indoor cannabis cultivation, Perfect Harvest prides itself on its proprietary solutions to design and operate facilities and consult with cannabis cultivators across Washington and other markets in the US.
Method Man’s TICAL Official Launches in Illinois in partnership with Flora Arbor LLC, launching with the Judgement Day, Love Jones, and The Method lyrical edition strains.
🧔 People
Workers at Cresco cultivation voted to leave UFCW. Workers at Cresco Labs’ production facility in Joliet, the first cannabis workers in the state to unionize, have voted to leave their union. Workers voted 97-34 to decertify their unit with the United Food & Commercial Workers. It’s the second group of employees at Cresco to dump their union. Workers at a production facility in Fall River, Mass., voted to drop the UFCW in April. It’s a sign that the enthusiasm of workers for unionization may be waning in cannabis and other industries, as well as an indication that the marijuana business itself is maturing, says Jonathan Keselenko, a partner at Foley Hoag.
Director of CT's cannabis agency resigns amid audit into expenditures, policies. In a bitter letter to the Social Equity Council, Ginne-Rae Clay, its executive director, said that while she is proud of the council's work in the first years of the full legalization of cannabis, she has become a lightning rod and target of undue criticism, making her job untenable. Clay has been the subject of reports in the CT Mirror news site about a church she attends in Waterbury being the recipient of a grant from the Social Equity Council.
Lowell Farms CFO Jamie Schniedwind resigns. Mark Ainsworth, CEO, has agreed to act as Interim CFO until such time as the Company appoints a successor CFO.
Glass House Brands Welcomes Hector De La Torre Back to The Board of Directors. De La Torre previously served as an original member of the Board until 2023, when he stepped down due to time restraints connected to other commitments.
RIV Capital Strengthens Senior Leadership Team Ahead of Anticipated Transformational Merger with Cansortium. RIV Capital and Cansortium appoint David Vautrin as Chief Retail Officer (CRO). Vautrin joined Harbour Community as an investor and active Operating Partner in 2022. Over the following 18 months, Harbour and its license partners secured licenses, locations, developed the Travel Agency branding, and opened three prime retail locations including Union Square, Downtown Brooklyn and, most recently, Fifth Avenue. Prior to this, Vautrin was instrumental in launching CannaRoyalty, which operated in California as Origin House.
SLANG Worldwide Director Sandra Levy Resigned. Levy joined the board in June 2022 and has a background in human resources.
🎙️ Interviews
Matt Hawkins Shares Update on Institutional Investments In Cannabis Stocks | TDR
Ethos Cannabis CEO Gibran Washington on Growth and Profitability | CBE
Ricky Williams on Cannabis, Stress Management, and His New Business Ventures | SI
Curaleaf's European Breakout & Strategy for The Hemp Company | The Dime
Can the California Cannabis Industry be Saved? | Harris Sliwoski
So very interested in that UCSD lab deal 👀 great letter, as always!!