Cannabis Industry Daily News

Full US House set to vote on marijuana legalization next month

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After postponing a proposed September vote, the full U.S. House of Representatives is expected to vote in December on a bill that would effectively legalize marijuana federally by removing it from the Controlled Substances Act.

According to Politico, the House Democratic leadership is preparing for a vote on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019.

In addition to legalizing marijuana federally, the legislation would allow states to continue to choose how to regulate a commercial MJ industry.

House Majority Leader Steny Hoyer sent a letter to colleagues outlining the legislative schedule for November and December.

The letter said the House would vote on the bill but didn’t specify exactly which day in December. The House is in session Dec. 1-4 and Dec. 7-10.

“The House will vote on the MORE Act to decriminalize cannabis and expunge convictions for non-violent cannabis offenses that have prevented many Americans from getting jobs, applying for credit and loans, and accessing opportunities that make it possible to get ahead in our economy,” Hoyer wrote in the letter, according to Politico.

Even if the MORE Act is approved, the vote would be largely symbolic. The Republican-controlled Senate isn’t expected to take up the bill and a new Congress will convene in 2021. Moreover, former Vice President Joe Biden will become president.

Originally scheduled for a September vote, some Democrats in close elections balked at voting on the MORE Act amid concerns that voters might question the importance of legalizing marijuana when Congress had failed to agree on a coronavirus aid package.

But in the November election, five more states legalized medical and/or recreational marijuana, and a recent poll shows cannabis legalization is more popular than ever.

Denver medical cannabis dispensary takes 280E appeal to Supreme Court

A Colorado medical cannabis dispensary is asking the U.S. Supreme Court to review a lower-court decision that allowed the IRS to obtain business records in order to apply the onerous 280E provision of the tax code.

The filing this week is a long shot, but it’s the last legal avenue for Denver-based Standing Akimbo, which claims the IRS overstepped its ity and also violated the company’s Fourth Amendment privacy rights.

The appeal was reported by Colorado Politics.

Standing Akimbo is asking the nation’s highest court to settle some of these questions:

  • Does the Fourth Amendment protect taxpayers from having confidential information released to the IRS and federal law enforcement ities?
  • Does the application of Section 280E to state-legal marijuana businesses violate the federal constitution? Under 280E, cannabis companies can’t deduct ordinary business expenses because marijuana is illegal on a federal basis.

Standing Akimbo in effect is arguing that it has a reasonable expectation of privacy and that its conduct cannot be “simultaneously lawful and unlawful.”

Underlying the issue is the conflict between state and federal marijuana laws.

The Supreme Court has passed on considering similar challenges to 280E and hears only a small percentage of appeals filed each year.

FBI raids near L.A. highlight ongoing corruption tied to marijuana licensing

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Three raids conducted by FBI agents in recent weeks have again put the spotlight on potential corruption related to marijuana business licensing in California.

According to the Los Angeles Times, FBI agents served search warrants on Oct. 28 at the 凯发在线app下载homes of a Compton city councilman and a San Bernardino planning commissioner as well as the law offices of the Baldwin Park city attorney.

All three raids were part of an investigation into Baldwin Park’s marijuana licensing process.

None of the three men have been arrested or charged with any crimes, however, and details of the investigation remain sparse.

But in September, a former Baldwin Park police officer said in a sworn statement that some of the marijuana business operators in the city had been alleging potential extortion, including “paying as much as $250,000 cash in a brown paper bag to city officials.”

Bribery charges have been filed against at least six counties in recent years in connection with marijuana licensing, the Times reported, including Alameda, Humboldt, San Bernardino and Siskiyou Counties, and industry insiders say corruption is rife across the state.

Baldwin Park officials began its marijuana licensing process in 2017 with a cap of 25 permits, and controversy has swirled around the program since then.

Baldwin Park Mayor Manuel Lozano defended his city’s marijuana permitting process and told the Times he’s unaware of any corruption.

Cresco cannabis cultivation workers unionize in Massachusetts

Cannabis cultivation employees at a Cresco Labs facility in Fall River, Massachusetts, completed the process to unionize.

According to a news release, “an overwhelming majority of workers” were officially certified by the Massachusetts Department of Labor Relations to join United Food and Commercial Workers Local 328, which now allows the employees to negotiate a union contract.

Cresco Labs, a multistate marijuana company based in Chicago, operates a cultivation and processing facility as well as Sunnyside Dispensary in Fall River.

In unionizing, the Fall River workers join Cresco employees in Chicago as well as workers at other cannabis companies in Massachusetts.

This latest move to unionize by Massachusetts workers comes as the marijuana industry in the state surpassed $1 billion in sales since adult-use sales began two years ago.

“We applaud cannabis workers for forming unions to make sure that, as this industry grows, workers are able to share in the success,” said Timothy Melia, president of UFCW Local 328.

“The cannabis industry should be a place where workers earn a living wage, have access to affordable health care and protection from unfair discipline and discrimination.” 

According tot he union, more than 10,000 cannabis workers nationwide have joined the UFCW at laboratories, processing and manufacturing facilities, cultivation facilities and medical and adult-use dispensaries.

New Jersey legislative panels advance adult-use marijuana bill

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Two New Jersey legislative committees advanced legislation Monday that would implement an adult-use marijuana  market, a first step after voters passed a milestone legalization referendum on Election Day.

The identical state Senate and Assembly measures, which build on a previous Senate bill, would enable existing medical marijuana operators to fast-track into a recreational market.

The current version of the implementation bill also sets targets for the state to issue at least 15% of licenses to minorities and another 15% to women-owned and disabled veterans businesses.

But social justice advocates criticized the legislation for not explicitly reinvesting marijuana tax revenue into communities affected by the war on drugs, reported.

The approvals by the Senate Judiciary Committee and the Assembly Oversight Reform and Federal Relations Committee came after the first set of public hearings on the legislation Monday.

“What this market does, and the way it is written now, is give 70% of the licenses, the finances and the economic windfall, quite frankly, to white men,” Rev. Charles Boyer, founder of the racial justice group Salvation and Social Justice, said during one of the public hearings, according to

Additional hearings are scheduled for Thursday. The measure is expected to be amended as further discussions and negotiations take place.

Lawmakers had hoped for the full Senate and Assembly to pass the measure by Nov. 16. But it’s unclear whether that timetable will be met.

“I think we do have a great piece of legislation here,” state Sen. Nicholas Scutari said, according to “We’ll make it a little bit better in the next week.”

Scutari introduced the Senate bill to legalize marijuana.

Marijuana Business Daily projects that the New Jersey adult-use marijuana program will generate $850 million-$950 million in annual revenues by 2024.

Experts say that legalization in New Jersey increases the pressure on neighboring states such as New York and Pennsylvania to follow suit.

Canadian cannabis producer Tilray sees net loss shrink to $2.3M in Q3

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British Columbia-based marijuana producer Tilray reported third-quarter results showing flat total revenue growth compared to the same quarter a year before.

Tilray, which reports in U.S. dollars, booked $51.4 million in revenue for the third quarter of its 2020 fiscal year, which ended Sept. 30.

That included $31.4 million in cannabis income plus nearly $20 million in revenue from hemp operations.

The company’s net loss for the quarter was $2.3 million, a significant improvement over the previous quarter’s $81.7 million net loss.

Tilray’s adjusted EBITDA loss was $1.5 million.

In a news release, Tilray attributed its narrowing EBITDA loss to “significant efforts to implement cost reductions and operating efficiencies.”

Tilray, one of a number of Canadian cannabis producers to cut greenhouse capacity this year, closed a large production facility in May.

“Given the broad-based improvements we have achieved through the third quarter of 2020, we believe we are poised to deliver positive or break-even adjusted EBITDA in the fourth quarter of 2020,” Tilray noted in a news release.

At quarter’s end, Tilray’s balance sheet showed $155.2 million cash and cash equivalents plus $209 million remaining on an at-the-market offering.

The company said it had enough capital “to manage operations and execute plans for the remainder of 2020 and well into 2021.”

Tilray said work on its Portuguese facility is expected to be completed by the end of the fourth quarter.

The company shares trade on the Nasdaq exchange as TLRY.

Marijuana legalization reaches new level of support, survey shows

Americans are more in favor of marijuana legalization than ever before, according to a new Gallup poll released on the heels of a clean sweep of statewide marijuana legalization efforts.

According to the poll, 68% of U.S. adults support the legalization of cannabis, a small increase from the 66% in favor when Gallup conducted the same poll in 2019 but double the backing marijuana received roughly 20 years earlier.

Gallup conducted the poll from Sept. 30 to Oct. 15, ahead of voters approving recreational marijuana sales in Arizona, Montana, New Jersey and South Dakota. Voters also passed medical cannabis markets in Mississippi and South Dakota on Election Day.

The poll, which surveyed 1,035 adults, also found:

  • The strongest support came from the 18-29 age group, with 79% in favor.
  • Of those 30-49 years old, 75% were in favor.
  • Of those 50-64, 60% were in favor.
  • Of those 65-older, 55% were in favor.

Marijuana legalization was more likely to be supported by those who identified as liberals and Democrats and also those who identified as moderates and independents.

Less than half those who identified as conservatives and Republicans were in favor of legalizing cannabis.

Aurora Cannabis reports quarterly loss amid restructuring push

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Major Canadian marijuana producer Aurora Cannabis reported a slight quarterly revenue increase during its first fiscal quarter, despite an adjusted EBITDA loss of 57.9 million Canadian dollars ($44.7 million) as the company worked through its transition plan.

Net revenue was CA$67.8 million for the quarter ended Sept. 30, and Aurora’s quarterly net loss was CA$109.5 million.

Excluding payments worth CA$47.4 million related to the company’s ongoing restructuring, Aurora said its quarterly adjusted EBITDA loss was CA$10.5 million.

The Alberta-headquartered company said it plans to achieve positive adjusted EBITDA in the second quarter.

Aurora’s Canadian recreational cannabis revenue shrank by 3% on a quarterly basis to CA$34.3 million.

CEO Miguel Martin struck an optimistic tone on a Monday morning conference call, highlighting overall growth in Canada’s adult-use market and consumers “(demonstrating) very dynamic tendencies, with market share moving very quickly between brands unlike in more stable (consumer packaged goods) categories.”

“This provides us with a great opening for our pivot to premium brands,” he said.

Martin added that Aurora’s Canadian recreational strategy is focused on:

  • Driving sales of premium flower brands.
  • Increasing market share of “key growth formats,” including vape products, pre-rolls, edibles and concentrates.
  • Aligning production costs with sales and shifting from fixed-cost production to variable-cost production.

Medical cannabis net revenue, including international medical marijuana income, increased 4% from the previous quarter to CA$33.5 million.

Aurora attributed that growth to strong international medical growth and “consistent performance” in Canada’s medical marijuana market, where the company said it holds a first-place position in terms of net revenue.

Aurora recently filed a preliminary short-form base shelf prospectus that will allow it to raise as much as $500 million over 25 months.

“But we are firmly convinced that our focus on getting to cash-flow positive as quickly as possible will both demonstrate the excellent long-term value creation possible in this industry and will alleviate the need for additional equity capital as far as possible,” Chief Financial Officer Glen Ibbott said Monday.

The Edmonton-based firm reported an annual loss of CA$3.3 billion for its 2020 fiscal year, including a CA$1.6 billion write-down.

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

Canopy reports record cannabis revenue, pledges profit next fiscal year

Sessions at MJBizCon’s Passholder Days were devoted to the Canadian market, with topics ranging from the role of small producers to global opportunities for Canadian companies to roundtable discussions about retail, processing and cultivation. It’s all available to you on demand.

(This story has been updated with comments from Canopy Growth’s conference call with analysts.)

Smiths Falls, Ontario-based Canopy Growth reported record net revenue of 135 million Canadian dollars ($104 million) in the second quarter ended Sept. 30, topping analyst expectations, as well as a net loss of about CA$97 million.

The revenue gain was led by dry bud sales in the Canadian recreational market, which grew 60% from the previous quarter to CA$64 million.

That helped drive market share in Canada to 15.5% in the quarter, Canopy said in a news release.

Ancillary revenues were another bright spot for the company.

The “all other revenue” category grew to CA$43 for the quarter, a substantial improvement from the previous period’s CA$32 million. The category captures sales of Storz & Bickel vaporizers globally as well as BioSteel – a sports drink – in North America.

Canopy said it expects to see Martha Stewart-branded CBD products “in thousands of stores as we launch additional SKUs in the coming weeks.”

In a conference call with analysts, CEO David Klein said the company is on track to be profitable.

“I’m confident we’re now firmly on a path to achieve positive adjusted EBITDA at some point next fiscal year,” he said.

However, sales of Cannabis 2.0 products, which Canopy has invested heavily in, rose marginally to CA$8 million.

That covers sales of cannabis-infused chocolates and beverages and marijuana vape products.

Canopy’s CEO has touted the important role beverages will play in the company’s future, even though those products have yet to prove themselves with consumers.

On growing the category, Klein said the biggest barrier is equivalency standards changing over time in Canada “so people can buy more than a couple of units at a time.”

“Then we think the entire category gets to grow,” Klein said.

Medical cannabis sales continued to stall.

International medical revenue fell 15% from the previous quarter to CA$17.5 million.

Sales of medical marijuana overseas – especially in Europe – are an important part of the value proposition for many publicly traded Canadian cannabis companies.

Canopy lost ground in the competitive Germany market.

Dried flower sales there fell 5% in the quarter compared to one year ago.

In Canada, Canopy sold CA$13.9 million of medical cannabis, the same amount as the previous quarter.

Canopy said it set in motion a plan to “capture savings” worth up to CA$200 million.

In the analyst call, Chief Financial Officer Mike Lee said Canopy is working to “make sure we’re growing the right product, for the right category, out of the right facility and hitting the right costs.”

“We’re working toward that balanced inventory, and for the most part, we achieved that this quarter,” Klein added.

Canopy’s shares trade as CGC on the New York Stock Exchange and WEED on the Toronto Stock Exchange.

New Jersey governor picks cannabis czar after legalization vote

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New Jersey Gov. Phil Murphy isn’t wasting any time getting the ball rolling after voters legalized adult-use marijuana on Election Day.

Murphy on Friday appointed a top adviser, Dianna Houenou, to chair the state’s new Cannabis Regulatory Commission.

He also chose Jeff Brown, who oversees the state’s medical marijuana program, to serve as the commission’s executive director.

The commission, once fully developed, will regulate New Jersey’s medical cannabis market, as well as its forthcoming recreational marijuana program.

The appointment of Houenou reflects the importance of social justice issues as state lawmakers consider a bill to implement an adult-use market that Marijuana Business Daily projects will approach a billion dollars a year in sales by 2024.

Houenou currently serves as Murphy’s senior policy adviser and formerly was policy counsel with the American Civil Liberties Union of New Jersey.

“Dianna has been a critical voice for social justice and equity on my team for the past year and a half after spending several years working on the fight to legalize marijuana with the ACLU,” Murphy said in a news release.

“Since Day One, we have said that the legalization of recreational marijuana must prioritize the communities marginalized and decimated by the failed war on drugs.”

Brown currently serves as assistant commissioner at the New Jersey Department of Health, overseeing the Division of Medicinal Marijuana.

TerrAscend to buy Maryland marijuana firm from Curaleaf for $27.5 million

Cross-border marijuana firm TerrAscend Corp. on Friday announced an agreement to acquire HMS, a Maryland medical cannabis processor and cultivator, from Curaleaf Holdings for $27.5 million.

The price tag includes $25 million in cash plus a $2.5 million note at 5% annual interest, and it’s due to Curaleaf in April 2022.

HMS operates a 22,000-square-foot cultivation and processing facility in Frederick, Maryland, that currently produces medical marijuana flower and oil “and has the capability to produce edibles upon regulatory approval,” according to a TerrAscend news release.

TerrAscend said it plans to expand the facility.

“This acquisition enables TerrAscend to expand its footprint into another robust limited license medical cannabis market with strong, long-term growth potential,” TerrAscend Executive Chair and CEO Jason Ackerman said in the release.

“By combining HMS with our industry-leading scaled operations in the adjacent states of Pennsylvania and New Jersey, we will leverage our strong management team and corporate support functions to drive economies of scale.”

The deal is subject to regulatory approval.

TerrAscend, which is based in both New York and Toronto, recently announced preliminary third-quarter financial statements signaling revenue growth.

Massachusetts-based Curaleaf said the sale of HMS will allow it to proceed with its proposed acquisition of Maryland Compassionate Care and Wellness, which has a 55,000-square-foot cultivation and processing facility in Taneytown, Maryland, and the Herbology dispensary in Gaithersburg.

Also on Friday, Curaleaf announced the sale of Curaleaf Maryland, holder of a processing license in Cumberland for $4 million.

The company did not reveal the buyer in that transaction.

“The asset sales we announce today will allow us to optimize Curaleaf’s vertically integrated presence in Maryland within the regulation which limits operators to a single grow and single processor,” Curaleaf CEO Joseph Lusardi said in a news release.

Colorado, Illinois cannabis industries set for gains after ballot measures

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The recreational marijuana industry is poised to expand further in Colorado and Illinois, where voters in several municipalities approved local ballot questions that will repeal previous business bans, according to early returns.

In Colorado, at least 12 cities voted on marijuana-related ballot measures.

As of Thursday, eight that would ize new marijuana businesses were passing, and another two to ize special sales taxes for MJ transactions were also winning, according to Denver alt weekly Westword.

Towns now poised to allow rec marijuana sales include:

  • Broomfield.
  • Buena Vista.
  • Cedaredge.
  • Fort Lupton.
  • Lakewood.
  • Littleton.
  • Paonia.
  • Romeo.

In addition, the resort town of Winter Park approved a recreational marijuana sales tax but did not explicitly sign off on allowing rec sales.

And the town of Dinosaur approved a cannabis sales tax increase. But the towns of Kiowa and Eckley both rejected ballot measures to allow new marijuana businesses.

In Illinois, at least seven Chicago suburbs voted on whether to allow commercial cannabis in their towns, and as of Thursday, six of those pro-marijuana questions were passing, the Chicago Tribune reported.

Those included:

  • Batavia.
  • Elk Grove Village.
  • Glen Ellyn.
  • Mount Prospect.
  • Park Ridge.
  • Wilmette.

Western Springs was the only Illinois town to reject a recreational marijuana sales ballot question.

The development in both states follows a yearslong trend of once-resistant localities repealing bans on commercial marijuana in favor of the jobs and tax revenue the industry brings, typically after it becomes clear that neighboring cities have rolled out successful markets.