Cannabis Industry Daily News

Cannabis SPAC acquires Caliva and Left Coast Ventures, hires Jay-Z

New York-based Subversive Capital Acquisition Corp., a special purpose acquisition company (SPAC), said it has acquired two California cannabis companies and hired rapper and producer Shawn “Jay-Z” Carter to foster social equity in the industry.

The company is purchasing marijuana brand Caliva and cannabis investment firm and producer Left Coast Ventures.

The purchases will create a new parent company, TPCO Holding Corp., and include $36.5 million worth of equity commitments from new and existing shareholders, according to a news release.

Terms of the transaction, which is expected to close in January 2021, were not disclosed.

The merger of the two California companies creates a vertically integrated platform that includes cultivation, manufacturing, brands, retail and delivery – allowing TPCO to control its supply chain.

According to the news release, Caliva and Left Coast Ventures expect combined pro forma revenues of $185 million in 2020 and $334 million in 2021.

“California is the most powerful cannabis economy in the world, and we have a unique opportunity to consolidate the market,” Subversive Capital Acquisition Corp. (SCAC) Chair Michael Auerbach said in a statement.

The news release predicts TPCO will “have the greatest consumer reach of any cannabis company in California reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022.”

SPACs are growing in popularity for private cannabis companies looking to raise money and become publicly traded. SCAC itself currently holds around $575 million in cash-in-trust.

Steve Allan, meanwhile, will serve as TPCO’s CEO.

Carter will serve as the holding company’s chief visionary officer, a role in which he will help guide brand strategy as well as lead the company with a goal of raising $10 million to invest in minority- and Black-owned cannabis companies, among other efforts.

TPCO will also contribute at least 2% of its net annual income to support social equity initiatives.

“The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice. We’re creating something people can trust and we’re investing in our future, our people and our communities,” Carter said in the release.

Marijuana firm Vireo files prospectus to issue up to $200 million in securities

Minneapolis-based Vireo Health International said it has filed a preliminary prospectus in Canada to sell as much as 260 million Canadian dollars ($200 million) in securities if and when market opportunities permit.

Such a shelf offering doesn’t mean a company will sell the securities, but it gives a business the option when market conditions are ripe to do so.

Vireo’s prospectus is just preliminary and hasn’t yet become final for the purpose of actually selling the securities.

“Our balance sheet continues to strengthen, and we believe we have ample flexibility to continue executing our strategy pushing toward producing positive cash flow from operations,” Vireo CEO Kyle Kingsley said in a news release.

“This prospectus ensures that we are able to take advantage of a favorable equity market in the event that additional capital is deemed necessary in the future.”

The specific terms of any offering, and a description of how the proceeds will be used, will be set forth in a supplement filed with Canadian securities regulators.

Vireo said it filed the preliminary prospectus with securities regulators in every province of Canada with the exception of Quebec.

Vireo has operations in several key U.S. markets, including Arizona, New York and Pennsylvania.

The company generated $10.8 million in revenue for its second quarter ended June 30, up from $6.7 million in the same period of 2019. Vireo plans to release its third-quarter results on Nov. 25.

Vireo trades on the Canadian Securities Exchange under the ticker symbol VREO and on U.S. over-the-counter markets as VREOF.

California judge rules against cannabis billboard ads on interstate highways

Billboards for marijuana companies are commonplace in California, but that advertising option for cannabis businesses is about to shrink based on a district court judge’s ruling.

According to TV station KSBY, San Luis Obispo Superior Court Judge Ginger Garrett ruled on Nov. 20 that billboards on interstate highways are illegal under Proposition 64, the 2016 voter-approved ballot measure that legalized adult-use marijuana.

The ruling invalidates a 2019 regulation from the state’s Bureau of Cannabis Control (BCC) that permitted billboards advertising marijuana along highways that cross state borders, including both federal interstates and state highways.

The ruling will impact 35 highways, the San Luis Obispo TV station reported, including major thoroughfares such as Interstate 80, I-10, I-15 and I-5.

However, remaining billboard advertising options include highways that don’t cross state borders, so not all billboards advertising cannabis have been banned.

It’s unclear what the deadline will be to take down marijuana advertising on billboards along interstates, pursuant to the order, and the BCC did not indicate whether it would appeal the ruling.

Maine’s recreational marijuana sales reach $1.4 million in first month

Regulated recreational marijuana retailers in Maine sold $1.4 million worth of cannabis in the first month of adult-use legalization, which kicked off on Oct. 9.

The preliminary, unaudited sales data from Maine’s Office of Marijuana Policy (OMP) covers 31 days of sales through Nov. 8.

Roughly $260,000 of those sales were made on the four-day long weekend following the market’s debut, according to previously released figures from the state regulator.

The OMP’s online adult-use retail sales data dashboard shows 21,194 recreational marijuana transactions in the first month, including 16,294 transactions for the partial month of October and 4,900 transactions for the first eight days of November.

Maine collected $140,954 in sales tax during the first 31 days, according to the sales dashboard.

The data also shows that smokable marijuana products comprised 76% of sales in Maine’s first month, according to an OMP news release.

Concentrates accounted for 14% of sales, and cannabis-infused products comprised 10% of sales for the month.

As Maine’s recreational market launched, some licensed retailers told Marijuana Business Daily that supply was tight, wholesale prices were high and some cannabis-derivative products such as edibles were hard to source.

“While it is easy to focus solely on the numbers, it is important to note that the Office of Marijuana Policy’s primary objective is maintaining the high standard of public health and safety we have set for the adult-use program,” OMP Director Erik Gundersen noted in the news release.

Gundersen praised Maine’s recreational retailers for complying with COVID-19 public health protocols.

Maine is currently 凯发在线app下载home to 11 adult-use marijuana retailers with active licenses, compared with eight active retail licenses when the market launched.

Cannabis MSO Jushi plans $50 million expansion in Pennsylvania

Fast-growing multistate cannabis operator Jushi Holdings said it will invest $50 million to expand its Pennsylvania cultivation and processing facility to meet increasing market demand.

The Florida-based MSO plans to expand the facility in Scranton from 90,000 square feet to more than 160,000 square feet, with the first phase to come online in mid-2021 and the entire project completed by the second quarter of 2022.

The expansion will focus on nearly tripling canopy space to 98,000 square feet.

San Diego-based Innovative Industrial Properties will partly finance the expansion project through an amended lease agreement between the parties, Jushi said in a news release.

The project, which is expected to create more than 100 jobs, is subject to certain milestones, approvals and permits.

“The medical cannabis market in Pennsylvania is rapidly growing and with our products in high demand, this investment will significantly expand our cultivation capacity and market share,” Jushi CEO and Chair Jim Cacioppo said in a statement.

Jushi operates eight Beyond/Hello retail dispensaries in Pennsylvania.

The company bought Vireo Health International’s cultivation facility in Pennsylvania earlier this year and recently expanded the facility’s indoor cultivation space.

Pennsylvania has a robust medical cannabis market and is poised to legalize adult use as soon as 2021 if it can overcome resistance by some key Republican lawmakers.

Pennsylvania is feeling pressure to legalize recreational marijuana sales for fiscal reasons and in wake of neighboring New Jersey voters legalizing adult use on Election Day.

South Dakota’s recreational marijuana law to be challenged in court

A lawsuit in South Dakota backed by the governor questions the constitutionality of the voter-approved amendment that legalized recreational marijuana in the state.

The lawsuit was filed Friday by Pennington County Sheriff Kevin Thom and South Dakota Highway Patrol Superintendent Rick Miller and has the support of anti-legalization Gov. Kristi Noem, the Rapid City Journal reported.

South Dakota became the first state in the U.S. to simultaneously legalize adult-use and medical marijuana on Election Day, and the recreational measure, Amendment A, passed 53.5%-46.5%.

The law enforcement officers’ suit specifically targets Amendment A.

According to the Argus Leader in Sioux Falls, the officers argue that “because the amendment inserts a new section into the constitution, it should be considered a revision to the constitution.”

Such a move, the suit contends, can be placed on the ballot only through a state convention, which has not happened since South Dakota joined the union in 1889.

The state is footing part of the bill for the suit, according to the Journal.

“The governor approved this because she took an oath to support and defend the constitution,” Ian Fury, a Noem spokesman, told the Rapid City newspaper.

“This is part of her duty as governor.”

Noem, who strongly opposes marijuana legalization and vetoed the state Legislature’s attempt to legalize industrial hemp in 2019, told the Journal she looks “forward to the court addressing the serious constitutional concerns laid out in this lawsuit.”

Lawsuits contesting new marijuana markets are common, and a suit in Nebraska used the constitutional argument earlier this year to keep medical marijuana off the ballot in that state.

Cannabis firm Liberty Health settles class action suit for $1.8 million

Canada-based cannabis operator Liberty Health Sciences said it agreed to settle a 2019 securities fraud class action lawsuit for $1.8 million.

The settlement is “made without any admission or finding of liability and is subject to court approval,” Liberty Health noted in a news release.

Liberty Health is based in Toronto but has a vertically integrated medical marijuana operation in Florida with 27 dispensaries.

The lawsuit charged Liberty Health with making false or misleading statements about its business operations that enriched company insiders.

That included allegedly misleading investors about its relationship with Canadian-based marijuana operator Aphria, which established Liberty Health but announced the sale of its interest in the operation in 2018.

The federal lawsuit, filed in the southern district of New York, defined the class as Liberty Health investors between July 20, 2017, and Dec. 6, 2018, according to an amended complaint.

It wasn’t clear, however, which dates the proposed settlement would cover.

Liberty Health trades on the Canadian Securities Exchange under the ticker symbol LHS, and on the U.S. over-the-counter markets as LHSIF.

In a letter to the court, Liberty Health’s attorney said the company anticipates filing a motion by Jan. 8, 2021, for court approval of the preliminary settlement.

Marijuana operator Harvest settles dispute over Washington state assets

Multistate marijuana operator Harvest Health & Recreation said it has settled litigation in connection with the Washington state portion of an $85.8 million deal the company announced last March to buy the Seattle-based Have a Heart retail group.

The disagreement emerged after the deal was announced.

Arizona-based Harvest filed litigation last April against Have a Heart and some of the owners of Interurban Capital Group (ICG), which formerly owned the Washington state stores.

Under the settlement, Harvest won’t acquire the five Have a Heart retail marijuana outlets but instead will receive a $12 million, secured five-year promissory note at 7.5% annual interest.

The settlement also cancels the 42,378 Harvest shares issued to the previous owners of ICG as well as an agreement that Harvest provide services to the Washington state stores.

“We are pleased to settle this dispute and move forward,” Harvest Chief Executive Officer Steve White said in a statement.

“We are very excited to continue to focus on our core business operations as we execute on our plan to return to profitability.”

Harvest is the leading medical cannabis operator in Arizona, which is transitioning to adult use after voters approved a recreational cannabis measure on Election Day.

Harvest also has operations in California, Florida, Maryland, North Dakota and Pennsylvania.

– Jeff Smith

Longtime California cannabis czar Lori Ajax is stepping down

After nearly five years of overseeing the rollout of California’s statewide marijuana regulatory system, Lori Ajax is retiring.

Alex Traverso, spokesman for the California Bureau of Cannabis Control, confirmed Ajax’s resignation on Friday to Marijuana Business Daily.

Ajax informed the agency’s staff this past week of her departure, he said.

“She didn’t really give a reason other than just it feels like it’s time. Her husband retired a year or so ago. I think it just made sense,” Traverso said.

Ajax’s resignation will be effective Dec. 2, Traverso said.

Ajax was appointed in February 2016 by then-Gov. Jerry Brown to initially oversee the state’s Bureau of Medical Marijuana Regulation.

Her appointment came only a few months after legislators approved the first statewide regulatory system for California’s MMJ industry in the fall of 2015.

Ajax remained chief of the agency after its name was changed to the Bureau of Cannabis Control (BCC) after the 2016 election when voters approved recreational legalization and then oversaw the rollout of the state’s legal marketplace in January 2018.

She was retained by Gov. Gavin Newsom after he took office in January 2019.

Through her years of work, Ajax developed a reputation among many in the industry for her outreach to marijuana companies and her common appearances at business events to answer questions about state regulations and other issues – particularly from frustrated MJ company owners who were dealing with a painful transition into the regulated marketplace.

Traverso likened Ajax to “the baseball player who stays and signs autographs until everyone’s gone.”

He also noted that whoever takes over the job of running the BCC will have “huge shoes to fill.”

“She definitely did whatever she could to be accessible, to hear people, empathize with people. Whatever it took,” Traverso said.

“She was here every day for like 12 hours a day working, and that set the tone for everyone else.”

Traverso said it’s unclear whether Newsom will appoint an interim director to run the BCC.

That uncertainty stems, in part, from the BCC’s impending merger in 2021 with the other two state regulatory agencies that oversee the California cannabis industry. The new agency will be called the Department of Cannabis Control.

On Friday, several members of the Newsom administration praised Ajax’s work.

Lourdes Castro Ramirez, the secretary of the Business, Consumer Services and Housing Agency – of which the BCC is part – said in an emailed statement that Ajax “rose to an immense challenge” as the state’s first-ever cannabis czar.

“Her leadership and skill have earned the respect of local governments, law enforcement, and the cannabis industry, who haven’t always seen eye to eye. Thanks to her efforts, California is now a model for other states and nations as they begin to legalize cannabis,” Ramirez said.

And Nicole Elliott, Newsom’s senior adviser on cannabis in the Office of Business and Economic Development, praised Ajax’s “leadership and vision” in a Twitter post.

“Throughout her time leading the BCC she has steered CA’s efforts w/ ingenuity, flexibility & understanding. I join the many others across the state who are deeply grateful for her service,” Elliott wrote.

– John Schroyer

Rhode Island grappling with model for adult-use marijuana legalization

Lawmakers in Rhode Island met this week to begin debate on how – not if – they will legalize adult-use recreational marijuana in 2021, but a consensus appears a long ways off.

According to East Providence TV station WPRI, one of the fundamental questions is whether the state will establish a government-run industry – which Gov. Gina Raimondo has proposed – or allow private industry to take the lead.

Neither model has gained a clear upper hand among lawmakers, WPRI reported.

But members of the state Senate Finance Committee met Wednesday to discuss the matter and to begin hammering out details for a bill to legalize adult-use marijuana in 2021.

And the incoming chair of the committee, Sen. Ryan Pearson, told reporters he fully expects the issue to arise in January when the Legislature convenes.

“I certainly do think we will act on the issue, whether it’s more private or whether it’s more state,” Pearson said.

No states that have recreational marijuana industries are run by their respective state governments.

But Louisiana’s medical marijuana program is run by universities – which are the only allowed cultivators – and licensed pharmacies, which are the only approved retailers.

New Jersey recreational cannabis bill advances, but differences remain

Two key New Jersey legislative budget committees advanced a recreational cannabis implementation measure, but differences in the Assembly and Senate versions must be resolved before a full-floor vote.

New Jersey lawmakers are moving rapidly since residents overwhelmingly voted to legalize adult use on Election Day, setting into motion the formation of a billion-dollar market.

But the differences could delay passage. Lawmakers had hoped a bill would be passed next week and sent to Gov. Phil Murphy’s desk.

Lawmakers said they must get a measure signed before the constitutional amendment passed by voters takes effect Jan. 1.

Here are some of the key differences between the measures passed Thursday by the Assembly Appropriations Committee and the Senate Budget Committee, according to the Associated Press:

  • Cultivation licenses: The Senate version would eliminate caps, while the Assembly bill would set limits at 37, up from 28 in an earlier version. Regardless, experts are generally bullish on the grower opportunities in New Jersey.
  • Transition period: The Assembly bill would lengthen the transition to a full, recreational marijuana market from 18 months to two years.
  • The Senate measure seeks to allocate 70% of the sales tax revenue to community programs, according to

Lawmakers have agreed to add a small, one-third of a 1% tax on top of the state’s 6.625% sales tax, according to the Associated Press.

The Cannabis Regulatory Commission also could implement an optional additional excise tax on growers to support social equity programs aimed at narrowing racial disparities stemming from the war on drugs, according to media reports.

However, some social justice advocates say the excise tax should be required.

The original bill also called for the state regulatory cannabis commission to give licensing priority to businesses owned by minorities, women and disabled veterans.

Utah marijuana business licensing process biased, audit shows

A state investigation into the Utah agency that regulates the state’s medical marijuana program turned up problems with the process for selecting cannabis growers.

According to The Salt Lake Tribune, a report by the Office of the State Auditor took issue with how the Utah Department of Agriculture and Food handed out eight cultivation licenses last year and recommends the state reevaluate the permits.

Former Commissioner Kerry Gibson is at the heart of the investigation after having chosen six members for the evaluation committee that selected the eight license winners.

The audit found two of the members selected by Gibson scored the roughly 80 applications in close fashion, ranking the top seven applicants in similar order, the Tribune reported.

According to the audit, the likelihood of that happening by accident is less than 5%, raising the possibility that Gibson’s choices were working together.

After the initial application evaluations, the audit found, the other committee members’ scores were adjusted to reflect the tallies of the two aforementioned members.

Three of the winning cultivators wouldn’t have succeeded without those adjustments, according to the report.