Cannabis Industry Daily News

Harvest Health sells Arkansas medical marijuana operation for $25 million

Multistate marijuana operator Harvest Health & Recreation said it has completed the sale of its Arkansas medical marijuana operations for $25 million, a move to allow the company to focus on markets such as Arizona.

Arizona-based Harvest Health said it netted $12.9 million in cash from the sale of Natural State Wellness, a vertical operation. The assets included a dispensary in Little Rock that opened in February 2020.

“We are pleased to have completed this divestiture as part of our strategic plan to streamline our business and focus on core markets,” Harvest Chief Executive Officer Steve White said in a news release.

“The additional cash on our balance sheet adds flexibility at a time when we are pursuing growth opportunities such as recreational sales in Arizona.”

Harvest is the leading medical cannabis operator in Arizona, with 15 dispensaries. The company recently acquired three more medical cannabis licenses in the state.

Arizona voters earlier this month legalized a recreational marijuana market that gives priority status to existing MMJ operators. Adult-use sales could begin by April 2021.

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

The company reiterated financial guidance that total revenues will exceed $225 million for 2020.

San Francisco officials delay new cannabis tax by a year

San Francisco officials decided to hold off by one year the implementation of a new cannabis sales tax.

According to Law360, the city’s Board of Supervisors unanimously approved a delay of the new tax until the end of 2021. The tax was slated to go into effect in January 2021.

The new tariff, approved by voters in 2018, is a sales tax on all marijuana products at 2.5% on gross receipts up to $1 million and at a 5% rate on receipts beyond $1 million.

There’s also a separate tax for marijuana businesses who take in revenues from non-marijuana products: 1% on revenues up to $1 million and 1.5% on revenues above $1 million.

San Francisco Supervisor Rafael Mandelman told the board he proposed the delay in implementation to give cannabis companies some financial relief because the city has had multiple delays in the marijuana business licensing process.

He said that when the tax was approved by voters two years ago, it was anticipated that far more businesses would be operational by January 2021.

But the city’s licensing of marijuana businesses has been slow to date, with many operators needing up to three years to navigate the process and open their doors to consumers.

WV awards medical marijuana processor licenses; several go to MSOs

West Virginia regulators announced the 10 medical cannabis processors that will be receiving business licenses, with several going to multistate operators such as Columbia Care of New York, Holistic Industries of Massachusetts, Trulieve of Florida and Verano Holdings of Illinois.

According to Charleston TV station WOWK, West Virginia regulators said they awarded licenses to:

  • Armory Pharmaceutical (in Buckhannon)
  • Buckhannon WV Processing (Buckhannon)
  • Columbia Care WV (Falling Waters)
  • Harvest Care Medical (Bridgeport)
  • Holistic WV Farms I (Beaver)
  • Mountaineer Integrated Care (Fort Ashby)
  • Tariff Labs (Left Hand)
  • Trulieve WV (Huntington)
  • Verano WV (Beaver)
  • V3 WV GP (Maxwelton)

The winners will be able to process medical marijuana into products allowed by law and sell them to licensed MMJ dispensaries.

The state previously awarded 10 cultivation licenses, and at least three went to multistate operators as well as a number of out-of-state and West Virginia investors.

The next step in West Virginia’s relatively slow rollout of the MMJ program will be for regulators to score dispensary applications – the final permitting phase for the industry.

Once everything is in place, regulators are expected to begin issuing MMJ patient cards in spring 2021.

Nerds candymaker files suit against California cannabis firm

Chicago-based Ferrara Candy Co. filed suit in a federal court against California-based Tops Cannabis, alleging the delivery company has been peddling marijuana-infused parodies of its popular Nerds brand and is infringing on its trademark.

According to Law360.com, Tops Cannabis has allegedly been selling – but not manufacturing – the parodied product, which has been marketed as “Medicated Nerds Rope.”

The legal news outlet also reported that confusion over the product has led to multiple children ingesting the THC-infused candies.

The candies in question are also reportedly in violation of California marijuana edibles potency limits, since the packages contain 500 milligrams of THC and the state limit for edibles is 100 milligrams per package.

The lawsuit contends that the product represents a “genuine consumer safety risk” and requests an injunction prohibiting further sales of the product.

A Tops Cannabis spokesperson did not immediately respond to a request for comment on Thursday, according to Law360.com.

The suit is the latest in a string of cases filed by longtime candy companies against edibles producers in various states.

In Florida last year, the manufacturers of Sour Patch Kids candies, Mondelez Canada, sued retailers for selling THC-infused edibles dubbed “Stoney Patch Kids,” Law360.com reported.

Before that, the Hershey Co., producer of some of the world’s most famous chocolates, filed suit against at least two cannabis companies, alleging similar trademark violations.

Rescoring of retail marijuana licenses in Illinois allowed to proceed

An Illinois judge rejected a request to stop state regulators from rescoring retail marijuana license applications, moving a seemingly never-ending saga closer to resolution.

The ruling allows Illinois to go forward with a licensing do-over that Gov. J.B. Pritzker hopes will remedy complaints about the process to award 75 rec retail licenses.

Sangamon County Judge Adam Giganti, in refusing to grant a temporary restraining order against the state, ruled that the plaintiffs hadn’t and were unlikely to prove they would be “irreparably harmed” by the license rescoring, according to the Chicago Tribune.

The legal challenge was filed in early October by three companies that had received perfect scores, thereby qualifying them for a lottery to select the 75 new licenses.

The licensing round, delayed by the coronavirus pandemic, has been chaotic, raising questions about the state’s social equity provisions, once proclaimed as a potential blueprint for the industry. Only 21 applicants qualified for the lottery.

Unsuccessful applicants argued that they were not given notice of problems with their applications that could have been corrected and that the scoring process was inconsistent.

Meanwhile, Illinois’ existing medical marijuana operators, who were giving priority status in the adult-use market, continue to reap the benefits of a sizzling recreational market.

Adult-use sales in October alone reached a record $75 million, and medical marijuana sales added another $33 million to the total.

Montana starts to gear up for $200M adult-use cannabis market

Montana regulators say they are beginning the process to make adult-use cannabis cultivation and sale licenses available by Oct. 1, 2021.

“There’s a lot of work ahead before the first legal sale of nonmedical marijuana in Montana and before the first license is issued,” Gene Walborn, director of the Montana Department of Revenue, told Missoula TV station KECI.

Only medical marijuana operators may apply for the new recreational licenses for the first 12 months they are available. The program also has a residency requirement.

State officials said in a news release that they anticipate lawmakers will address certain aspects of the initiative during its session, which begins Jan. 4, 2021.

The adult-use ballot measure passed by a margin of 57.9% to 42.1%, according to The Washington Post.

The University of Montana projects sales at $217 million for the first full year of the program and $234 million a year by 2024.

Marijuana legalization momentum unstoppable, industry leaders say

Get in-depth analysis from MJBizCon’s Passholder Days about how 2020 local elections in California might impact the marijuana industry as well as financial and investor insights into the overall cannabis industry following Election Day. It’s all available to you on demand.

The “green wave” of marijuana legalization will continue to spread across the United States in wake of the clean sweep of ballot initiative victories on Election Day, industry stakeholders said Thursday.

Trulieve CEO Kim Rivers and Green Thumb Industries CEO Ben Kovler, appearing on a post-election panel during MJBizCon’s Passholder Days Forum, agreed that support for marijuana legalization has firmly crossed party lines but that politicians need to better listen to the people.

Florida-based Trulieve and Illinois-based Green Thumb are two of the more successful multistate marijuana operators in the U.S.

Even if sweeping changes don’t occur on the federal level in the near future, “we’re going to continue to see this green wave occur on a state level,” Rivers said.

Rivers and Kovler offered other insights during the panel discussion:

  • New Jersey could “flip the switch” to launch an adult-use market built on the back of existing medical marijuana operators, Kovler said. One problem though: “There’s not enough supply for the demand” – yet. Adult-use legal markets in neighboring states such as New York and Pennsylvania are all but inevitable, he said.
  • Voter approval last week of a liberal medical marijuana initiative in Mississippi “potentially could have policy shock waves across the South,” Rivers said.
  • Access to capital remains a huge hurdle to new operators, including minority-owned businesses, to fully participate in the industry, Rivers and Kovler agreed. While social equity programs, including incubator loans, in states such as Illinois will help, federal cannabis banking reform as well as access to Small Business Administration loans remains critical.
  • Within two years, marijuana companies will be publicly traded on the major American stock exchanges and the U.S. will be the clear world leader in the marijuana industry, Rivers predicted.

Analyst: Aurora Cannabis’ dip into capital market after stock rally ‘shrewd’

Topics ranging from the role of small producers to global opportunities for Canadian companies, among others, were discussed at MJBizCon’s Passholder Days on Nov. 11. It’s all available to you on demand.

Underwriters for Aurora Cannabis’ previously announced overnight public offering have agreed to purchase roughly 20 million units at $7.50 apiece, the Alberta company said this week, a move that would net the company $142.4 million.

If the over-allotment option is exercised, the net proceeds would increase to $163.8 million.

Aurora said it intends to use the proceeds to fund growth opportunities, working capital and other corporate purposes.

Aurora’s stock had more than doubled in the days before the overnight offering, “not driven by fundamentals, but instead a combination of retail (fear of missing out) and hedge fund short squeeze,” Jefferies analyst Owen Bennett wrote in a note to investors.

Acknowledging the offering leads to further dilution of the company’s shares, Bennett wrote that “you also have to say it is a shrewd move, especially with the U.S. possibly opening up sooner vs. later.

“Without cash, getting a foothold in that market will be very difficult.”

Each unit in the offering consists of one common share and half of one share purchase warrant. The warrants will be valid for 40 months after the closing date.

The offering – expected to close around Nov. 16 – would eat into Aurora’s recently filed $500 million short-form base shelf prospectus.

Aurora was not alone in capitalizing on its rising shares this week.

New Brunswick-based Organigram Holdings announced an underwritten public offering of units for net proceeds of 57 million Canadian dollars ($44 million).

Net proceeds would rise to $69 million if the over-allotment option is exercised.

A syndicate of underwriters led by Canaccord Genuity agreed to purchase 32.5 million units at a price of CA$1.85 per unit.

Each unit consists of one common share and half of one common share purchase warrant.

The warrants are exercisable for a period of 36 months after the closing date at an exercise price of CA$2.50.

The offering is expected to close Nov. 12.

Organigram said it plans to use the proceeds to repay debt and for general corporate purposes.

Aurora trades as ACB on the Toronto Stock Exchange and the New York Stock Exchange.

Organigram trades as OGI on the Toronto Stock Exchange and the Nasdaq.

Marijuana regulators across US to share best practices, offer advice

Marijuana regulators from 19 states have established a nonpartisan organization to share best practices and industry knowledge.

The Cannabis Regulators Association (CANNRA) also will assist federal, state and local ities that have approved or are considering legalization, according to a news release.

Government groups that share knowledge and best practices are common, such as the North American Securities Administrators Association, which includes state securities regulators in the U.S. as well as securities regulators in Canada and Mexico.

“The Cannabis Regulators Association will provide a much needed forum for regulators to engage with each other to identify and develop best practices, create model policies that safeguard public health and safety and promote regulatory certainty for industry participants,” Norman Birenbaum, CANNRA’s inaugural president, said in a statement.

Birenbaum is director of cannabis programs for New York, which is expected to legalize an adult-use market next year.

The announcement of CANNRA comes as marijuana legalization momentum continues across the country, even in the most conservative states.

Arizona, Montana, New Jersey and South Dakota legalized adult-use markets on Election Day, while Mississippi and South Dakota legalized regulated medical marijuana programs.

Regulators emphasized that the association won’t be an advocacy group and, therefore, won’t take a formal position for or against cannabis legalization.

Rather, it will seek to provide government jurisdictions with unbiased information to help make informed decisions when considering whether or how to legalize or expand regulated marijuana markets.

“Our intent in forming this organization is to have CANNRA serve as a resource for policymakers, elected officials, researchers and other stakeholders to engage with regulators from across the country and receive unbiased information and recommendations regarding the impact and implementation of cannabis policies,” Birenbaum said.

CANNRA founding members include the principal cannabis regulators from 19 states: Colorado, Delaware, Hawaii, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Oregon, Rhode Island, Utah and Washington.

Pennsylvania medical cannabis operator raises $22M for expansion

Pennsylvania-based Organic Remedies plans to build out a 240,000-square-foot cultivation and processing facility in the state and three additional medical marijuana dispensaries thanks to a $22 million raise.

The financing reflects how capital continues to become more plentiful in the marijuana industry after some tight times.

Florida-based Advanced Flower Capital, also known as AFC Gamma, is providing the credit facility, which can be drawn over the course of one year, according to a news release.

The loan is secured by first-lien mortgages on Organic Remedies’ properties and certain other assets.

Organic Remedies is part of the state’s clinical MMJ research program through a partnership with Philadelphia College of Osteopathic Medicine.

The clinical research license qualifies Organic Remedies to run a vertically integrated operation with up to six dispensaries.

The company currently has three operational dispensaries in Chambersburg, Enola and York, so it will now be expanding to its maximum of six.

Pennsylvania is a fast-growing medical cannabis market projected to reach $400 million-$500 million in sales this year.

The state is expected to legalize an adult-use market within the next year or two, prompted in part by voters in neighboring New Jersey approving a recreational marijuana referendum on Election Day.

Two tribes take action to further marijuana markets

Recent action on the tribal front regarding marijuana saw the first tribal-owned MJ business open in Michigan and, in Oklahoma, the Muscogee (Creek) Nation passed a law protecting licensed medical cannabis operators and patients.

Northern Light Cannabis Co. and dispensary, located in the Bay Mills Indian Community in Michigan’s Upper Peninsula, is the first of its kind in the state.

“Now we’ve seen here with the legalization of cannabis in Michigan that a lot of the people who are benefiting from this industry are wealthy investors,” Bryan Newland, tribal chair for Bay Mills Indian Community, told Marquette TV station WJMN.

“What sets us apart is we’re a community-owned cannabis company, and the benefits flow right back into our local community in the eastern U.P.”

Before the Oklahoma law change, the tribe’s older statutes defined medical marijuana as a controlled substance, which meant individuals and businesses located on the MCN Reservation that were compliant with state law could still be subject to criminal prosecution under tribal law, according to Mvskoke Media.

The new law states that marijuana in any form – cultivated, manufactured, dispensed, tested, possessed or used – will no longer be classified as a controlled substance as long as the person complies with all MMJ license laws under state and any other tribal statutes.

Ohio medical cannabis businesses are now on the market to highest bidders

Ohio medical cannabis businesses have begun changing hands, particularly now that a year-long waiting period for the sale of dispensaries has expired.

According to the Cleveland Business Journal, at least eight licensed businesses have been purchased and another three sales are awaiting approval by state regulators.

Six MMJ dispensaries and two cultivation operations have already been sold, and three dispensaries are poised to be sold.

Under state law, dispensaries had to wait at least a year after starting operations before selling to another owner. Cultivators and other MMJ business types are under no such restriction.

Ohio medical marijuana sales began in January 2019, and the state approved the first sale of a dispensary on Sept. 1 this year.

Business purchases announced so far in Ohio include:

  • Clubhouse dispensary in Elyria was sold to Body and Mind, a publicly traded Canadian company, for $3.1 million.
  • Pure Ohio Wellness in Springfield was sold to Standard Wellness, another Ohio company.
  • Verdant Creations sold four of its five dispensaries – in Cincinnati, Chillicothe, Marion and Newark – to Illinois-based Cresco Labs.
  • Akron-based Klutch Cannabis purchased a grow operation in the same town from Massachusetts-based Calyx Peak Cos.
  • Ohio Grown Therapies announced a deal in May 2019 to sell a business in Johnstown to Massachusetts-based Curaleaf, but it’s unclear if the deal ever closed.