👨⚖️ Pelorus Fund Files Complaint to Place StateHouse Holdings into Receivership
👨⚖️ Pelorus Fund Files Complaint to Place StateHouse Holdings into Receivership
Tilray launches Hemp-Derived Delta-9 THC Beverages. GTI $50M Share Repurchase Program. SEC fines Weedmaps / former executives over misleading MAUs. Planet 13 acquires dispensary from Exhale.
💭 Slow news over the past two weeks, but as usual, this should capture anything relevant since the last newsletter
🎟️ I am also rafflling off a free ticket to the Benzinga Cannabis Capital Conference, just reply to this email if you’d like to enter
🌿 Industry
SEC fines Former Weedmaps executives $175,000 for “misleading” user numbers. The SEC announced earlier that the company agreed to a $1.5 million fine to settle the same allegations of wrongdoing. — GMR
The SEC charged WM former CEO, Christopher Beals, and former CFO, Arden Lee, for making negligent misrepresentations in WM Technology's public reporting of Mmonthly Active Users (MAUs)
For more than a year, beginning in May 2021, shortly after Weedmaps went public, the Company relied on faulty MAU numbers, due to pop-up ads on third-party websites redirecting many customers to Weedmaps, which Weedmaps then counted as part of its MAU statistics as evidence to the SEC and investors that its website was much more popular than it actually was
Fourth California marijuana testing lab loses license as crackdown continues. The revocation of Verity Analytics’ license comes as a long-awaited crackdown on unscrupulous labs continues. — MJBizDaily
Most of the revocations stemmed from THC-potency inflation and sloppy lab practices, tut state regulators revoked ProForma’s permit after a reference lab discovered chlorfenapyr, a banned pesticide, in a product the lab had approved
Several lab operators contacted by MJBizDaily last week welcomed what they interpret as a sign that regulators are acknowledging the problem. However, they stressed much more needs to be done to police unscrupulous labs and rebuild consumer and industry confidence in testing reliability
Treez Files Summary Judgement in Lawsuit Against Feds Over Cannabis-Related Visa Denial. The federal government claims Treez must show its software developer from India “does not aid and abet activities that violate the CSA.” — CBT
California-based Treez petitioned the USCIS in December 2021 for H-1B status for Ameya Vinayak Pethe, a “highly skilled and educated software developer,” to work as the company’s director of development operations while residing in Missouri, according to the motion for summary judgment the legal team at Davis Wright Tremaine LLP filed this week on behalf of Treez in the U.S. District Court for the Northern District of California
In January 2022, the USCIS approved Treez’s petition for Pethe’s H-1B status to work as a software developer through Jan. 12, 2025, according to the motion
However, when Treez filed an amended petition a few months later—solely to change Pethe’s employment location from Missouri to Pennsylvania—federal government officials sent a request for evidence (RFE) invoking an “illegality rule,” demanding that Treez prove Pethe’s work as a software engineer does not “aid and abet activities” that violate the Controlled Substances Act (CSA)
New cannabis test rules have Connecticut cultivators concerned. Rather than testing a batch of cannabis from a single crop, testing must now be conducted on the cannabis in its final packaging based on new procedures released by the state's Department of Consumer Protection. — CT Insider
If one batch of cannabis is used in several different products, a sample from each one of those products must be tested
That, cultivators say, will dramatically increase the number of samples tested and, therefore, the cost of testing which could then be passed on to the consumer, and make providing a wider array of products less feasible
Wyden Introduces Legislation to Clean Up Hemp Market, Keep Products Out of Kids’ Hands. U.S. Senator Ron Wyden, D-Ore., introduced the Cannabinoid Safety and Regulation Act (CSRA) to establish national standards to protect public health and safety and keep cannabis products out of the hands of children. — Wyden
The CSRA would establish a national age restriction to prevent those under 21 from purchasing hemp-derived cannabis products. The legislation would require that all hemp-derived products are tested for safety and are manufactured using clean and safe processes
The CSRA would require truth in labeling, and would require the Food and Drug Administration (FDA) to recall or ban any cannabis products with dangerous chemicals or additives
The CRSA is endorsed by the U.S. Hemp Roundtable, the National Cannabis Industry Association, National Industrial Hemp Council, and hemp industry associations from California, Colorado, Arizona, Michigan, Illinois, Kentucky, Missouri, South Dakota, Virginia, and Texas
Minnesota Gov. Tim Walz, the Democratic nominee for vice president, declined to endorse nationwide cannabis legalization. — MJBizDaily
Despite the rise in refund claims, IRS will continue to defend and enforce 280E unless the Supreme Court issues a different interpretation. — Cannabis Musings
Kentucky awarded the first business license for its startup medical cannabis program to KCA Labs, a hemp-testing facility. The lottery to award licenses to cultivators and processors will be on Oct. 28, the lottery for dispensary licenses will be announced later but will likely be in November. — KentuckyToday
South Carolina Solicitor General Robert D. Cook issued an opinion that it is legal to manufacture, distribute and sell nonalcoholic beverages containing hemp-derived delta-9 THC in compliance with the 2018 Farm Bill.
Sales of products containing intoxicating hemp-derived cannabinoids may resume in Missouri after a top state official indicated a change in enforcement priorities.
BeLeaf Medical is arguing the post-harvest employees at its Sinse facility in St. Louis don’t have the right to unionize because they’re considered agricultural workers
A recent Minnesota poll shows 14% of Minnesota voters reported consuming Cannabis or THC-infused hemp products in the last month
Michigan sales of $295M in August
Maryland sales of $100M in August ($73M recreational, $27M medical)
New Mexico sales of $51.1M in August, mostly flat at this point
Canada retail sales grew for the fifth consecutive month in July, reaching $326.7M
💵 Deals
Planet 13 acquires dispensary from Exhale. Planet 13 is paying $6.9M ($4.0M cash, $2.9M secured promissory note) plus the value of the cannabis inventory. The 3,158 square-foot dispensary, operating as Exhale, has a drive-through and is located at 4310 W Flamingo Rd, Las Vegas, Nevada.
4Front Ventures Amend Credit Facility and Issues RSUs. The Company has agreed to a modification of its senior secured credit facility previously announced on October 16, 2023 with Altmore Capital. As part of the Amendment, the Lender has advanced ~$850,000 to the Company. An additional $1.75M remains available to the Company at the discretion of the Lender. The outstanding principal of the Credit Facility will bear simple interest at a rate per annum equal to the greater of (i) the WSJ Prime Rate plus 10% and (ii) 18.5%, payable monthly; and the Amendment includes a paid-in-full fee provision, in addition to the existing exit fee, payable at maturity.
GTI Refinances its Senior Debt Via Syndicated Credit Facility. GTI closed on a $150M 5-year syndicated credit facility led by Valley National Bank, a regional bank with over $62 billion in assets and the principal subsidiary of Valley National Bancorp. The Company intends to use the proceeds along with existing cash to retire its $225M senior secured debt due April 30, 2025. The Notes have a maturity date of September 11, 2029 and will bear interest from the date of issue at Secured Overnight Financing Rate (SOFR) + 500 basis points, payable quarterly. The transaction did not involve the issuance of any Green Thumb equity to any of the participating banks.
Acreage Enters into Amended and Restated Credit Agreement. The New Lender advanced $65M with an original issue discount of 10%. ~$48M of the amount advanced by the New Lender was used to repay amounts owing by Acreage pursuant to the Prior Credit Agreement to the non-Canopy lender. As a result, the Prior Lender has been repaid in full. The net proceeds of the loan to Acreage totals ~$8M after closing costs and expenses.
Village Farms International Acquires Remaining Equity Ownership Interest in Leli Holland. Leli Holland is among 10 licensed cannabis producers in the Netherlands’ pilot program. The Company also completed construction of its cultivation facility in the town of Drachten, an indoor facility with five flower rooms and additional space for drying, manufacturing, and packaging of finished goods for distribution to ~80 Dutch coffeeshops in participating jurisdictions. Leli anticipates commencing cultivation in October, pending final regulatory inspections, with its first sales expected to occur during the first quarter of 2025.
📄 Company Updates
Pelorus Fund REIT Files Complaint to Place StateHouse Holdings into Receivership. This action follows the Company's default on four existing loans and seeks the immediate appointment of a Receivership to assume control of all StateHouse assets and operations. Pelorus is in active communication with StateHouse management and expects that they will support the appointment of a receiver.
GTI $50M Share Repurchase Program. Under the previous repurchase program that expired on September 10, 2024, GTI repurchased 6.5M shares for $73.3M.
Aurora Cannabis receives patent related to autoflower cannabis. Following years of research, Aurora Cannabis received a patent that allows the company to better identify and select for autoflowering traits in cannabis plants. The patent, filed in April 2022, was awarded in June 2024 for US Patent 12,002,546, “Methods of Determining Sensitivity to Photoperiod in Cannabis”. The work provides an opportunity to support future breeding strategies and can be leveraged to “revolutionize” outdoor cannabis cultivation in high-latitude regions, such as Canada.
Silver Spike Investment Corp. Stockholder Approval of Loan Portfolio Acquisition. Stockholders of the Company have voted to approve the proposal related to the Company’s acquisition from Chicago Atlantic Loan Portfolio of a portfolio of loans in exchange for newly-issued shares of SSIC’s common stock.
Conception Nurseries Launches TrueClones X. The new line of Generation Zero hardened tissue culture clones are larger and stronger, requiring less time acclimating, allowing cannabis cultivators to speed up their growing process, reduce production costs and increase revenue.
Flora Growth sign Supply Agreement with Blossom Genetics to Bring Colombian Medical Cannabis to Germany. With this agreement, Flora will leverage its expertise in distribution to deliver two strains—Chemmy Jones and Northern Light, both known for their potential properties, to Germany's evolving medical cannabis market.
SOMAÍ Pharmaceuticals Launches in Ireland, Offering the Broadest Range of Cannabis-Based Medicines to Patients. SOMAÍ has partnered with Georgelle Pharmaceutical to bring an innovative range of cannabis-based medicines to patients in Ireland. This extends its global footprint to Ireland, making it the fifth country to establish its presence, following UK, Australia, Germany, and Poland earlier this year.
🏬 Retail / Cultivation
The Flowery opened its second New York dispensary in Forest Hills. This is as part of its broader expansion, with plans to open a new location in Brooklyn next.
Jersey City to cap dispensaries at 48. The City Council has already approved 47 dispensaries to open.
RIV Capital and Etain open second Adult-Use location in New York.
MariMed Commences Adult-Use Sales at Thrive Wellness Dispensary in Tiffin, OH. The dispensary opened in June 2023.
Verano opens Zen Leaf™ Arcadia in Prime New Phoenix Location. Verano Elevates Florida Retail Footprint to 79 Dispensaries with the Openings of MÜV Melbourne and MÜV Okeechobee.
GTI opened its 20th Florida dispensary in Jacksonville, FL.
Trulieve opened its 150th Dispensary in Florida with Lake Worth, FL location. Also opened Hudson, FL.
Ascend opens Fifth Dispensary in Pennsylvania (Whitehall) and its 39th Nationwide.
C3 Industries expanded its cultivation facility in O'Fallon, Missouri, through an ongoing partnership with NewLake Capital Partners. The 50,000 square foot addition features cutting-edge automation and environmental control systems, significantly increasing the Company's production capacity in the state.
Texas Original opens Katy, TX medical cannabis prescription pickup location. Texas Original has opened its newest medical cannabis prescription pickup location in Katy—the company’s only location in the Katy area. This location joins existing Houston-area Texas Original locations in Houston Heights, Sugar Land and Conroe. This location, in partnership with Buena Vida Hospice, a Katy-area hospice and palliative care provider that provides patients access to medical cannabis medication, under the direction of Buena Vida Hospice Medical Director Dr. Francisco Medrano.
🌱 Product
Tilray Brands Leverages Hemp and Beverage Scale to Launch Hemp-Derived Delta-9 THC Drinks in Key Markets Across the United States. With the leading branded hemp food business in North America and the 5th largest craft beer business in the U.S., Tilray is strategically entering the growing HDD9 beverage category in the U.S. market with a consumer-centric model that targets different occasions across various consumer audiences and price segments. Tilray’s inaugural portfolio of HDD9 brands includes 420 Fizz, Herb & Bloom, Fizzy Jane’s, and Happy Flower. Additionally, Tilray plans to introduce other HDD9 brands and product categories later this year. Aaron Edelheit (Mindset Value) points out that Tilray’s CEO Irwin Simon has said before that one of Tilray’s greatest asset is its NASDAQ listing so this should mean the company has received an “ok” from NASDAQ to launch into the HDD9 category.
LeafLink launches Payment on Sell Through (PoST), guaranteeing payments to brands as retailers pay for what they sell. Along with Direct Pay and FlexPay, PoST marks the 3rd payment option offered on the LeafLink platform. In July, LeafLink acquired Dama Financial to offer customers access to a reliable, secure, and compliant banking solution. By using PoST, payment is guaranteed to the brand (the supplier), who receives automated weekly payments based on the prior week’s sell-through by the retailer. This new model will help alleviate delinquent payments to brands, free up needed capital for retailers, provide data insights to help both make better business decisions, and help build a more profitable cannabis industry.
Dutchie Launches Metrc Connect Integration, Next Generation Traceability Technology. Metrc Connect will have a profound impact on user experience for operators. The Metrc Connect API returns results faster with more information, requiring less back-and-forth interaction between systems.
CULTA Exclusive Genetics Deal With Praetorian. Praetorian is a leading brand owner and intellectual property provider to the global cannabis industry.
🧔 People
AYR Wellness CEO David Goubert has stepped down as the President and CEO. Goubert joined the company in October 2022.
Cresco Labs CFO Dennis Olis to Retire from Company. Sharon Schuler, who recently joined will take the role of CFO upon Olis’s departure. Schuler was most recently an executive leadership team member at BJ’s Wholesale Club.
Aurora Cannabis CEO Takes on Executive Chairman Role. Outgoing Chairman Ron Funk will serve as Lead Independent Director.
Prelude adds Shane Gelinas as Head of Business Development. Gelinas was previously Director of Sales at Kiva Sales and Service (KSS).
Springbig adds Marc Shiffman to Board. Shiffman was CFO, President and ultimately CEO of SMS Assist until its sale in early 2023 to Lessen.
Jushi Options Issued to Executive Officers. The board of directors has approved 5,385,000 replacement options for Jim Cacioppo, the Company’s Chairman and CEO, 2,383,000 replacement options to other executive officers of the Company, and 394,758 replacement options to the Company’s non-employee directors. Jushi’s board of directors has also approved 300,000 options for issuance to Michelle Mosier, the Company’s CFO. Pursuant to the Employment Agreement Amendments, Cacioppo, has agreed to waive his annual bonus entitlement of $950K for receiving the following: (1) a lump sum cash payment in the amount of $237,500; (2) US$1.4M aggregate principal amount of 12% second lien notes on the same terms as the notes that were issued by the Company in its private placement that was initially closed in December 2022; and (3) options granted under the Company’s 2019 Equity Incentive Plan, as amended, expiring five (5) years from the date of grant to purchase up to 1,062,732 of the Company’s subordinate voting shares at an exercise price of $0.65.
🎙️ Interviews
Why Cannabis is still an excellent LT investment opportunity | Cannabis Investing
Under the Hood of Cresco Labs — Zach Marburger | The Dime
Leveraging Data for Competitive Growth | This is Supercritical
The Cannabis State Of The Union — Hirsh Jain | TDR
Executive Insight with Sunderstorm’s Cameron Clarke | mg
How Tech is Revolutionizing the Cannabis Industry — Metrc CEO | Highly Informed