CANNABIS LEGALIZATION IN 2020: A COVID-19 CASUALTY

Cannabis legalization – key to the $50 billion+ illicit-to-legal value migration in the industry – is emerging as one of the casualties of the COVID-19 pandemic. In the last three weeks, we have discussed the impact that the spread of coronavirus is having on the cannabis industry, ranging from disruption of the industry supply chain (especially vape related) to a spike in marijuana sales due to stockpiling by consumers to the emergence of cannabis as an essential industry. This week, we focus on what COVID-19 means for cannabis legalization efforts in 2020, and the prognosis is not positive. Legislative sessions across states have been suspended for weeks or months, and even though cannabis has been deemed “essential” in many states, legalization bills are getting stalled across the board, implying that many state-level cannabis reforms – which had a high chance of passage before the outbreak – are now unlikely to see the light of day in 2020. While this does not change the long-term legalization trajectory of the cannabis industry, it will slow the pace of the $50 billion+ illicit-to-legal value migration in the industry, at least in the short term.

The impact will hurt New York state – which was close to legalizing its $2.4 billion adult-use marijuana market – the most. In our Feb. 26 Stash report, we highlighted why New York could soon become the 12th U.S. state to legalize recreational marijuana and emerge as the third largest state market ($3 billion+) for cannabis by 2025. The biggest driver was the support that legalization received from Governor Andrew Cuomo who is looking for ways to reduce the state’s $6 billion+ budget deficit. However, with New York becoming the epicenter of COVID-19 in the U.S., the administration’s priorities have changed and are now geared toward reducing the spread of the virus and allocating sufficient budget for its healthcare needs. As a result, marijuana legalization has been left out of the state’s draft budget report which “omits the Executive proposal to legalize adult-use cannabis” and also “eliminates $34.31 million in funding for the Office for Cannabis Management,” a government body that would have been responsible for regulating the marijuana market. The draft budget all but confirms that New York is unlikely to legalize recreational marijuana this year. And while a separate legislation could still be introduced later in the year, the uncertain economic outlook in the state and at the federal level makes that a low-probability event in our view.

Many other states will also have to wait for the growth and tax inflows that accompany marijuana legalization. Activists in Nebraska have officially suspended its medical cannabis legalization campaign which needs to collect 130,000 signatures by July to qualify for the November ballot. Ohio’s recreational marijuana legalization efforts are facing a similar problem – activists have until July 1 to gather 443,000 signatures, but with Governor Mike DeWine issuing a stay-at-home order, gathering sufficient support in time will be an uphill battle. The legalization campaign in Missouri is also in jeopardy as activists have announced that “their effort to put a cannabis legalization measure on the ballot has no practical way of succeeding amid the pandemic.” Lawmakers in Vermont, whose House and Senate passed an initial recreational marijuana bill in February, had to work toward achieving common ground on tax rates and other issues. And while the state has formed a committee to focus on those issues, its progress is likely to be slowed considerably due to COVID-19. Legalization efforts in many other states, including Arizona, Alabama, and Kentucky, are now stuck in limbo (read here and here for updates). This, coupled with the already low probability of federal reforms like the SAFE Banking Act passing this year, means that investors should expect a pause in cannabis legalization in 2020 and re-evaluate state expansion plans of cannabis companies in their portfolios/watchlists.

Chart 1: U.S. Marijuana Legalization Landscape Unlikely to Change Soon as Lawmakers Focus on Other Priorities Source: Intro-Blue, DISA Global Solutions

Chart 1: U.S. Marijuana Legalization Landscape Unlikely to Change Soon as Lawmakers Focus on Other Priorities
Source: Intro-Blue, DISA Global Solutions

CANNA NEWS

COVID-19

Coronavirus stimulus package covering hemp industry signed into law. A new $2.2 trillion package designed to prevent the U.S. economy from collapsing has room for hemp businesses and farms. The relief package signed into law allows legal hemp operators to seek loans and direct aid to help keep their businesses afloat. The measure includes: 1) $10 billion for Small Business Administration emergency grants, with up to $10 million of emergency relief per business; 2) Up to $50 billion in borrowing authority for the U.S. Department of Agriculture’s Commodity Credit Corp., often called CCC; and 3) $100 million in grants to improve rural broadband. Read More (Hemp Industry Daily)

Canada classifies medical cannabis ‘essential’ amid COVID-19 pandemic. Canada’s federal government has deemed medical cannabis production “essential” to the country’s critical health-care infrastructure during the COVID-19 pandemic. The designation is intended to assist provinces, municipalities, and businesses in their decision making around the types of employees considered essential for the health, safety, security and economic well-being of the country. Even though the designation is nonbinding and advisory in nature, it is important because all cannabis production, including medical marijuana, is regulated by the federal government. “The manufacturer, logistics and warehouse operations, and distribution of cannabis for medical purposes have been identified as essential services,” according to an email, obtained by Marijuana Business Daily, that was sent to multiple stakeholder groups by the acting director of the Office of Medical Access and Specialized Authorizations. Read More (Marijuana Business Daily)

COVID-19 made cannabis ‘essential,’ but governments aren’t treating the industry that way. Cannabis has long been considered essential by its consumers, but the COVID-19 crisis made that status official. Allowing legal cannabis businesses to continue operating amid the shutdown has created a unique opportunity for them. There is unlikely to be any such progress, however, unless governments start treating their legal cannabis sectors as essential, rather than simply putting them on the list of businesses that are allowed to stay open amid the shutdown. As right now, that designation appears to provide none of the expected benefits. In both Canada and the U.S., cannabis businesses are blocked from accessing multi-billion-dollar — or, in the U.S. case, multi-trillion-dollar — bailout packages that are being made available to virtually every other sector of the economy. America at least can cite its ongoing federal cannabis prohibition as an excuse — illegal businesses cannot access legal funding, after all — but Canada can no longer hide behind the law. Read More (National Post)

Recreational cannabis sales in three key markets still falling after initial coronavirus-related spike. Despite a couple of temporary sales spikes in recent weeks, adult-use cannabis sales in California, Colorado, and Washington state are all suffering from the economic fallout surrounding the coronavirus pandemic. According to point-of-sale data provided by Seattle-based Headset, adult-use cannabis sales were less than those for the same day in 2019 for six consecutive days in Colorado and five consecutive days in Washington state. Until now, none of the three adult-use cannabis markets tracked by Headset have experienced declining sales over such an extended period of time. The latest drops underscore that the coronavirus pandemic has thrust the cannabis industry into uncharted waters, including the growing likelihood of a painful recession. The slump has been particularly pronounced in Colorado. Sales over the weekend (Friday, March 27 – Sunday, March 29) were down 47% compared to the same weekend in 2019. Read More (Marijuana Business Daily)

Chart 2: Adult-Use Cannabis Sales by Day and Market: Percent Change vs. Same Day in 2019 Source: Intro-Blue, Marijuana Business Daily, Headset

Chart 2: Adult-Use Cannabis Sales by Day and Market: Percent Change vs. Same Day in 2019
Source: Intro-Blue, Marijuana Business Daily, Headset

COVID-19 may affect drivers of U.S. cannabis consumption. Research firm SoapBoxSample released new data from their ongoing CANNApinion Poll research initiative. The survey of 1,000 U.S. cannabis consumers, fielded March 21 – March 24, 2020, focused on how the recent COVID-19 outbreak may be affecting cannabis consumption habits. While some report that they are consuming more cannabis as a way to relieve stress and anxiety, others say that they are consuming and purchasing less because they want to avoid going out in public to make their purchases (36% of those who report consuming less cannabis). About half (51%) of those surveyed say they are somewhat or very concerned that their personal supply will run out during the recommended quarantine. A majority of respondents (68%) agreed or strongly agreed with the statement: If I run out during this time, that’s ok, I can live without it. Read More (SoapBoxSample)

Coronavirus & cannabis: Chaos breeds opportunity. Cannabis businesses deemed as ‘essential’ among forced closures and ‘stay-at-home’ mandates. Cannabis sales have increased significantly as consumers stock up in preparation for shelter-in-place. States have relaxed previous restrictions to accommodate better access to cannabis. There is an argument for the increased pace of legalization at the state level. Historical data suggest that private equity’s outperformance increases during distressed periods: 1) A broad reset of valuations is taking place today, 2) Fund managers invest over the long-term at more attractive terms and valuations, and 3) Investors with deployable capital have the advantage of investing at the bottom of a cycle. Read More (Key Investment Partners)

Chart 3: California – Same Store – Number of Transactions and Basket Size ($) Source: Intro-Blue, Key Investment Partners, BDS Analytics

Chart 3: California – Same Store – Number of Transactions and Basket Size ($)
Source: Intro-Blue, Key Investment Partners, BDS Analytics

Chart 4: Acceptance of Marijuana for Recreational & Social Use and/or for Health and Medical Reasons Source: Intro-Blue, Key Investment Partners, BDS Analytics

Chart 4: Acceptance of Marijuana for Recreational & Social Use and/or for Health and Medical Reasons
Source: Intro-Blue, Key Investment Partners, BDS Analytics

Coronavirus: Baker doesn’t plan to lift restrictions on adult-use marijuana sales under non-essential business order; medical marijuana still labeled essential. Massachusetts Gov. Charlie Baker’s updated executive order closing all non-essential businesses does not exempt shops selling recreational marijuana, and he doesn’t plan to lift restrictions on those businesses early, either. Licensed medical dispensaries can remain open in Massachusetts, but Baker said that the push to add adult-use marijuana dispensaries to the list of essential businesses is a “non-starter” because of the out-of-state customers they would likely attract. “There is tons of evidence that because Massachusetts is one of the few states in the Northeast that’s legalized recreational marijuana, that if we make recreational marijuana an essential business … we are going to have to deal with the fact that people are going to come here from all over the place,” Baker said, arguing that would hamper the state’s efforts to contain the outbreak. Read More (MassLive)

Massachusetts marijuana companies are making hand sanitizer to donate to local hospitals. With recreational marijuana sales currently on hiatus in Massachusetts, local dispensaries are focusing on a new product instead: hand sanitizer. Revolutionary Clinics, one of the state’s largest cannabis providers, recently completed the first 100-gallon batch of hand sanitizer produced at its Fitchburg facility, and had it packaged and ready to be donated to local hospitals on March 30. The delivery is part of a larger movement within the state’s cannabis industry, which kicked into gear after John Hillier, a board member of the Commonwealth Dispensary Association (CDA), brought the feasibility of the project to the association’s attention. Shortly thereafter, the CDA and the Massachusetts Health & Hospital Association (MHA) announced a hand sanitizer partnership, with Gov. Charlie Baker authorizing CDA member organizations like Revolutionary Clinics to produce hand sanitizers. Read More (Boston Globe Media)

The impact of COVID-19 on the purchasing practices of cannabis consumers. New Frontier Data recently conducted a survey to gauge how cannabis consumers were responding to the uncertainty. A majority (60%) of them reported having purchased cannabis or cannabis products in the previous two weeks as a direct response to the COVID-19 outbreak. Medical cannabis patients were more likely to have stockpiled products in the past two weeks than were recreational consumers (65% vs. 47%, respectively). While 33% of consumers reported extending their supply for up to two weeks, more than half (53%) stockpiled beyond two weeks’ supply. Roughly a fifth (17%) of consumers indicated that they had extended their supply for up to two months. Again, when segmented by user type, medical users were more likely to have extended their supplies by up to a month than were recreational consumers (22% vs. 13%). Read More (New Frontier Data)

Chart 4: Estimated Time Span of Cannabis Stockpile Source: Intro-Blue, New Frontier Data

Chart 4: Estimated Time Span of Cannabis Stockpile
Source: Intro-Blue, New Frontier Data

Chart 5: Product Purchases among Cannabis Stockpilers Source: Intro-Blue, New Frontier Data

Chart 5: Product Purchases among Cannabis Stockpilers
Source: Intro-Blue, New Frontier Data

Responding to coronavirus, marijuana firms shift to virtual 4/20 celebrations with online concerts, giveaways. Cannabis companies that were planning to host elaborate monthlong celebrations around 4/20 have been forced to change plans and are turning to virtual parties that include specials and giveaways. Gone are large gatherings of people celebrating the unofficial April 20 cannabis holiday. The pivot has proved costly and forced companies to scramble. The ways cannabis businesses plan to celebrate the monthlong 4/20 celebration this year include: Virtual parties and concerts; Giveaways of cannabis accessories and swag; Discounts on products, such as companies offering a coin for a large purchase now and special deals for the rest of the year; Using social media influencers to spread their message on Instagram and Facebook. Read More (Marijuana Business Daily)

Colorado marijuana retailers get OK to resume in-store sales. Colorado regulators delivered good news to the state’s recreational cannabis store operators: They can resume selling their products inside their storefronts. The state Marijuana Enforcement Division (MED) bulletin informing cannabis businesses they can allow customers in their stores comes days after the governor told retailers to limit transactions to curbside pickups in an effort to reduce the spread of the coronavirus. Democratic Gov. Jared Polis’ March 25 “stay-at-home” order allowed marijuana retailers to stay open as “critical businesses.” However, the order banned in-store sales and allowed only curbside service for adult-use transactions. Under the MED’s amended bulletin, dated March 30, recreational marijuana businesses are “no longer prohibited from allowing retail customers on the licensed premises.” Read More (Marijuana Business Daily)

As the COVID-19 crisis deepens, U.S. pot producers prosper. As COVID-19 began to clobber the U.S. in February, sales of medical marijuana jumped at Trulieve Cannabis (TCNNF). The Florida-based chain sold 50% more smokable stuff in the month’s third week than in the same week of January. By March’s third week, new Covid cases in the state were soaring and Trulieve’s sales had jumped another 50%, to more than 21 thousand ounces in the week ended March 19. Medical-marijuana customers were loading up on a product they thought essential in a disaster. “We are very accustomed to hurricanes here,” says Kim Rivers, chief executive officer of Trulieve. “There was a rush of activity prior to any potential stay-in-place order.” Read More (Barrons)

Ontario cannabis stores to close after removal from ‘essential’ list. Private-sector cannabis stores in Ontario, Canada’s largest market, have been ordered to close their doors by late Saturday, April 4 in response to the COVID-19 pandemic, leaving the outlets with nowhere to turn as the government maintains a legal monopoly over online sales. The store closures – which will last at least two weeks – could be devastating for Ontario’s roughly four dozen private-sector marijuana stores, because the province has long barred them from offering online sales and home cannabis delivery services to customers. Ontario previously classified cannabis stores as “essential workplaces,” but they were removed from an updated list of essential workplaces issued April 3. Businesses not on the list must close their doors as of 11:59 p.m. local time on April 4. The closure order will last at least 14 days and might be extended. Read More (Marijuana Business Daily)

STATE AND REGULATORY NEWS

Cannabis sales peaked again in late March, but then declined. According to cannabis market research firm BDS Analytics, Canada and the U.S. continued to display similar cannabis sale trends in late March, even as the impacts of the coronavirus became more drastic. In Canada, the highest sales peak in March fell between Friday 13th and Saturday 14th, which matches the timeline of the reported stockpiling. But rather than dipping significantly after that period, sales reached two more slightly smaller peaks on Tuesday 17th and Friday 20th. Overall, according to BDS, Canada’s sales in this period of March were significantly stronger than previous weeks. Similar results were seen in the U.S. Initial spikes in demand occurred between Friday 13th and Monday 16th, but another spike – higher than any recorded in January or February this year – was also recorded on Friday 20th. In California, many of these later orders were fulfilled through deliveries and pick-ups, as shelter-in-place orders prevented consumers from visiting dispensaries. Read More (Analytical Cannabis)

IRS report foreshadows national uptick in cannabis audits but offers a big loophole, experts say. A new report from a branch of the U.S. Treasury Department confirms the Internal Revenue Service is preparing to launch an increase in marijuana industry audits nationwide, but it also offers a possible way for cannabis companies to dodge millions in federal taxes, according to industry experts. The report corroborates what cannabis industry tax and legal experts have warned about for months – that the IRS is closely watching the marijuana industry and intends to target companies that have failed to pay their full federal tax obligations. In other words, the agency plans to enforce the collection of those taxes. Read More (Marijuana Business Daily)

IRS rejects watchdog recommendation to provide marijuana business tax guidance. A new Treasury Department internal watchdog report criticizes the Internal Revenue Service (IRS) for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. In its review of IRS policy with respect to cannabis businesses, the Treasury Inspector General for Tax Administration (TIGTA) found that IRS is missing millions of dollars in tax assessments in state-legal markets and that taxpayers experience a significant impact due to an federal tax code known as 280E that prevents marijuana companies from making business deductions that are available to other industries. Part of the solution, TIGTA said, should be for IRS to “develop and publicize guidance specific to the marijuana industry.” Read More (Marijuana Moment)

Audit says L.A. took ‘reasonable’ steps to prevent unfairness in cannabis licensing. A newly released audit found that although some cannabis entrepreneurs got into Los Angeles’ application system ahead of time, the city took “reasonable and appropriate” steps to prevent them from having any unfair advantage. An L.A. official is recommending, in light of those findings, that the Department of Cannabis Regulation press forward with processing and awarding licenses for new retailers, which had been suspended last year amid concerns about fairness. Auditors found that the department “conducted the process in good faith and found no evidence of bias or unfairness,” City Administrative Officer Richard Llewellyn wrote in a summary of the report, concluding that the department should be directed to “commence the necessary work” to continue the licensing process. Read More (Marijuana Retail Report)

Illinois dispensaries sold $36 million worth of recreational marijuana in March. Illinois marijuana dispensaries sold almost $36 million worth of legal weed in March — a slight increase over February — even as the coronavirus pandemic shut down the state and people were ordered to stay at home. Purchases by out-of-state residents comprised roughly one-quarter of sales, according to data from the Illinois Department of Financial and Professional Regulation, which regulates dispensaries. Since recreational sales started January 1, Illinois dispensaries have sold roughly $110.2 million worth of legal weed. March sales were up slightly over February sales, which totaled about $35 million, and down from the $39.2 million in revenue during January. Read More (Chicago Tribune)

How Humboldt County is managing a marijuana green rush from space. Humboldt County, California, part of an “Emerald Triangle” that is the nation’s largest cannabis-producing region, has gone above and beyond — literally — to deal with the challenges of a Green Rush brought on by the legalization of recreational marijuana use. Satellite imagery has enabled the county to identify hundreds of unpermitted and illegal cannabis-cultivation operations and drive abatement efforts to reduce renegade growers’ impact on some of the nation’s most unique and beautiful natural resources. The county has partnered with Planet, a San Francisco-based satellite imaging and analytics startup, in an effort to stay ahead of both changing regulatory requirements and expanding markets. Read More (Governing)

Michigan’s early recreational marijuana sales a fraction of their future potential. Michigan sold more than $31 million in adult-use cannabis during its first three months of sales, though the state is still working out the kinks in this developing market. Despite near-term disruption from the coronavirus, early sales are just a fraction of their potential in a market that could reach $1.5 billion in sales annually. Data from the Michigan Department of Licensing and Regulatory Affairs shows that from December 1, 2019, through February 29, 2020, the state’s 59 recreational retailers sold $31.6 million in recreational marijuana. Sales in February were more than twice December’s, likely a result of the state’s quick decision to bump up the start of sales from spring 2020 to December 1, 2019. Although dispensaries were allowed to convert half their product on hand from medical to recreational to meet the accelerated start date, Michigan already had been experiencing a shortage of flower. Tight flower supply and limited local approval recently caused wholesale flower prices to soar above 2019 levels. But retail prices on recreational flower declined 2% from a December average of $507 per ounce to $495 – possibly due to production increases. Read More (Marijuana Business Daily)

Chart 6: First Three Months of Recreational Marijuana Sales in Michigan Source: Intro-Blue, Marijuana Business Daily, Michigan Department of Licensing and Regulatory Affairs

Chart 6: First Three Months of Recreational Marijuana Sales in Michigan
Source: Intro-Blue, Marijuana Business Daily, Michigan Department of Licensing and Regulatory Affairs

Why California’s black market continues to thrive — and what is being done about it. While the black market is thriving in nearly every market where cannabis is sold — it was 60% of second quarter sales in Canada in 2019 — it appears to be particularly troublesome in California, where a lack of enforcement, a lack of oversight, and regulatory burdens on legal businesses has allowed it to grow. A report by cannabis research firm BDS Analytics found that California’s illicit market is predicted to comprise 53% of all sales in 2024; the black market in other states with more supportive regulatory regimes are expected to shrink to 30% or less of total sales in that time frame, according to the report. Read More (The Fresh Toast)

U.S. cannabis spot index up 2.3% to $1,388 per pound, October forward initially assessed at $1,400 per pound. The simple average (non-volume weighted) price increased $23 to $1,588 per pound, with 68% of transactions (one standard deviation) in the $815 to $2,361 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.06 and the simple average price was $3.50. The average reported forward deal size was 37 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 37%, and 17% of forward arrangements, respectively. Read More (Cannabis Benchmarks)

Chart 6: Cannabis Benchmarks U.S. Spot Index Source: Intro-Blue, Cannabis Benchmarks

Chart 6: Cannabis Benchmarks U.S. Spot Index
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 7: Cannabis Benchmarks U.S. Implied Forward Curve Source: Intro-Blue, Cannabis Benchmarks

Chart 7: Cannabis Benchmarks U.S. Implied Forward Curve
Source: Intro-Blue, Cannabis Benchmarks

Canada cannabis industry sales estimates for March. Since the COVID-19 pandemic reached Canada, universities and colleges in Canada have closed, businesses have instituted work-from-home programs, and unemployment has skyrocketed. At the same time, the sale of cannabis in legal channels has spiked across the country. In most provinces, cannabis is now considered an essential business, meaning cannabis retailers will remain open as most other businesses close their doors. Cannabis Benchmarks has updated its sales forecast from our pre-COVID-19 base case. Cannabis Benchmarks believes the cannabis industry will see a spike in sales in March, which will help cushion the drop in sales expected in April and May. Its base case assumes that life returns to normal in June, with many of the stores that were expected to open in April and May pushed back to the summer, and a new consumer base formed at the expense of the illicit cannabis market. Read More (Cannabis Benchmarks)

Chart 8: Recreational Cannabis Monthly Sales (CAD $000’s) Source: Intro-Blue, Cannabis Benchmarks

Chart 8: Recreational Cannabis Monthly Sales (CAD $000’s)
Source: Intro-Blue, Cannabis Benchmarks

Canada’s COVID-19 wage subsidies could keep cannabis workers on payroll. Canadian cannabis firms of all sizes could be eligible for a three-month emergency wage subsidy program during the COVID-19 pandemic, welcome news for businesses that may be struggling financially. The Canada Emergency Wage Subsidy program could help the Canadian cannabis industry and other employers keep workers on payroll during the crisis or give them the ability to rehire staffers who have already been laid off. Still, critical details about eligibility requirements for the upcoming federal program remain murky. The program for private-sector employers will: Subsidize 75% of an employee’s wages up to 847 Canadian dollars ($595) a week; Cover a 12-week period from March 15 to June 6; and Make wage subsidies available within six weeks, or mid-May. Read More (Marijuana Business Daily)

COMPANY NEWS

Big cannabis companies scale back amid coronavirus, raising questions about industry’s overall health. The COVID-19 outbreak is causing serious jitters among large cannabis companies, with a growing list of multistate marijuana operators scaling back by laying off workers and shuttering operations in a bid to slash costs. The widespread cutbacks last week by Acreage Holdings (ACRGF), MedMen Enterprises (MMNFF), and 4Front Ventures (CNXXF) also call into question the overall health of the marijuana industry as the U.S. economy appears headed into a sharp downturn. But as the coronavirus pandemic worsens in the U.S. and destabilizes both the marijuana and mainstream markets, many cannabis businesses have pivoted to restructuring, eliminating inefficiencies and pulling back on plans for expansion. Read More (Marijuana Business Daily)

Some cannabis businesses add employees, others mull layoffs in response to coronavirus crisis. Marijuana businesses navigating staffing issues during the COVID-19 outbreak are taking different tacks as they strive to keep employees and customers healthy and safe – while keeping close tabs on their companies’ bottom lines. Some businesses are seeing a spike in sales, but others are concerned about the economic and financial fallout from the coronavirus pandemic. Strategies different cannabis companies are using or considering include: 1) Ramping up hiring to ensure existing employees aren’t overloaded or forced to come to work when they’re sick, 2) Furloughs, layoffs, terminations or a combination to conserve cash, and 3) Adjusting store hours and shifts. Read More (Marijuana Business Daily)

Acreage cuts 120 jobs, ends deals in light of COVID-19. New York-based Acreage Holdings (ACRGF) announced it is furloughing 122 employees and taking other cost-cutting measures, becoming the latest multistate marijuana operator to slash costs in response to the coronavirus pandemic. As part of its efforts, Acreage also disclosed in a news release the resignation of a top executive and announced it is: 1) Scrapping a $120 million acquisition of Nevada cannabis company Deep Roots, 2) Temporarily closing some facilities across several states, 3) Terminating a medical marijuana dispensary acquisition in Rhode Island involving Greenleaf Compassionate Care Center, and 4) Suspending its previously announced 2020 financial guidance. Read More (Marijuana Business Daily)

Canopy temporarily lays off 200, re-opening some corporate stores. Canopy Growth (CGC) has temporarily laid off 200 retail staff members and is re-opening some of its corporate-owned pot stores across the country while adopting standards aimed at preventing staff from contracting COVID-19. “We’ve temporarily laid off 200 retail workers and have started re-opening some corporate-owned locations using a click and collect model and reduced hours,” Jordan Sinclair, vice president of communications at Canopy Growth, told BNN Bloomberg. “As you can appreciate, the situation is changing quickly and subject to different rules in different provinces,” Sinclair said. Sinclair wasn’t immediately able to disclose which stores the company would be opening. While Canopy owns 23 stores under its Tweed and Tokyo Smoke banners, it operates a total of 36 retail outlets across Canada that sell legal cannabis. Read More (BNN Bloomberg)

Canopy Growth announces changes to its board of directors. Canopy Growth (CGC) announced that Ms. Terry Yanofsky and Mr. David Lazzarato have been appointed to the company’s board of directors, effective immediately. Ms. Yanofsky has extensive experience working with big-name retailers and is respected for her strategic leadership and disciplined approach to driving revenue. She most recently served as the senior vice-president, general manager of Sephora Canada. Mr. Lazzarato’s impressive career includes senior executive positions with Alliance Atlantis Communications, Allstream, Bell Canada and CAE. He also has extensive board experience and currently serves as The Star Group’s chairman of the audit committee and as a member of the corporate governance and nominating committee. Read More (Yahoo! Finance)

Supreme Cannabis completes first shipment to Israel. The Supreme Cannabis Company (SPRWF) announced the completion of its first international cannabis shipment from Canada into Israel. Supreme Cannabis partnered with Breath of Life International, Israel’s largest and leading producer of medical cannabis and cannabis products, to offer Truverra-branded premium medical cannabis to patients in Israel. “This transaction represents a new international revenue opportunity for Supreme Cannabis and builds Truverra’s global medical brand in one of the most sophisticated medical cannabis markets in the world,” said Colin Moore, Interim President and CEO of Supreme Cannabis. Read More (Newswire)

CannTrust granted creditor protection as walls close in on embattled pot producer. CannTrust Holdings (CTST) announced that it obtained protection from creditors amid ongoing struggles to recover from last year’s scandal over illicit cannabis production that resulted in its licenses being suspended by Health Canada. The company said it was granted protection under the Companies’ Creditors Arrangement Act (CCAA), giving it a stay of proceedings for at least 10 days from creditors and plaintiffs who are looking to enforce their claims in various lawsuits. “Despite the efforts by CannTrust’s management and board of directors to preserve the company’s cash liquidity while seeking to restore the company to operations and resolve the multiple litigations and other contingent claims facing the company, the company’s future remains uncertain,” CannTrust said in a statement. Read More (BNN Bloomberg)

James E. Wagner agrees to restructuring. James E. Wagner Cultivation (JWCAF) announced that it has agreed with Trichome Financial to a consensual restructuring where in JWCAF will seek an initial order approving an application for creditor protection under the companies’ Creditors Arrangement Act (Canada) (CCAA). The restructuring was negotiated and recommended by the special committee of the board of JWCAF and approved by the board on March 31, 2020. It is expected that the initial order granting JWCAF’s application for CCAA will be granted by the Ontario Superior Court of Justice. Read More (Newswire)

Charlotte’s Web hires new chief operating officer. Colorado-based CBD maker Charlotte’s Web (CWBHF) has appointed a chief operating officer to replace Stephen Lermer, who left the company January 31. The Boulder company said in a release that David Panter is its new COO, effective March 30. Charlotte’s Web said Panter has more than 20 years of “global supply chain experience” at businesses including the Estee Lauder, Campbell Soup, and Tyco Healthcare/Covidien. Panter will report to Deanie Elsner, Charlotte’s Web CEO. Lermer left the company exactly one year after starting his job. Read More (Hemp Industry Daily)

MedMen taps interim CEO, withdraws guidance. Financially struggling MedMen Enterprises (MMNFF) has retained a management advisory firm to help it restructure. The Los Angeles-based company also tapped two executives from the firm, Sierra Constellation Partners (SCP), to serve as MedMen’s interim CEO and chief operating officer. The multistate marijuana operator said in a news release it hired SCP on an interim basis to “support the company in the development and execution of its turnaround and restructuring plan.” As part of the engagement, Tom Lynch was appointed interim CEO and chief restructuring officer, succeeding the previous interim chief executive, Ryan Lissack. Lissack took the reins of MedMen on an interim basis after co-founder Adam Bierman resigned as CEO on February 1. Read More (Marijuana Business Daily)

Marrone Bio Innovations’ Jet-Oxide 15% sanitizer product is allowed by U.S. EPA for use on industrial hard surfaces for human coronaviruses. Marrone Bio Innovations (MBII) announced that its Jet-Oxide 15% post-harvest sanitizer and industrial disinfectant product is now allowed by the U.S. EPA for use against human coronaviruses to sanitize industrial food and agricultural hard surfaces. The allowed use was based on a study conducted by the EPA with Human Coronavirus Strain 229E (one of the viruses associated with human colds) on the effectiveness of spreading of diseases on hard surfaces. The study, conducted at a sanctioned EPA laboratory, met all requirements for 40CFR 160 – yielding a 99.99% reduction of Human Coronavirus Strain 229E. Read More (Extraction Magazine)

EARNINGS

Missed earnings, misdirection put Canadian cannabis executives in hot seat. The exodus of cannabis executives in Canada is in full swing after their companies raked up collective net losses exceeding CAD $6 billion ($4.4 billion) in 2019, the first calendar year recreational products were allowed to be sold. Most of Canada’s top cannabis producers have replaced their chief executives or chief financial officers over the past year after failing to meet customer and investor expectations. Some left on their own volition, and others were forced out. Loss leaders with new corporate leadership include the following companies, with the former chief executive in parentheses: Canopy Growth (CGC) (Bruce Linton), Aurora Cannabis (ACB) (Terry Booth) and Sundial Growers (SNDL) (Torsten Kuenzlen). What went wrong? Experts say the CEOs spent too much money on greenhouses, were too focused on investors and did not pay enough attention to customers, real markets or quality control. Read More (Marijuana Business Daily)

Flower One announces preliminary first quarter 2020 revenues. Flower One Holdings (FLOOF) announced that the company continued to see strong monthly sales growth through the month of March. Monthly sales have grown 17%, on average, since the Company’s first full month of production from its greenhouse in September 2019. Unaudited preliminary first quarter 2020 revenues of $8.9 million, near the mid-point of the company’s guidance range of $8 million to $10 million. March 2020 cannabis sales of $3.9 million, the company’s highest recorded monthly sales to date and a sequential increase of 47% compared to February 2020. Read More (Flower One)

Hexo books CAD $298 million net loss in second quarter. Major cannabis producer Hexo Corp. (HEXO) posted a second-quarter net loss of CAD $298.2 million ($210 million), nearly five times larger than the CAD $62.4 net loss reported in the previous quarter. Almost half that loss stemmed from an impairment charge for disposing of a Niagara, Ontario, cannabis cultivation facility bought from Newstrike Brands in 2019. Ottawa-based Hexo’s net revenue from adult-use cannabis sales reached CAD $16.3 million in the quarter ending January 31, up 20% from the first quarter. Net revenue from medical cannabis shrank by 20% between quarters to CAD $695,000. About 72% of Hexo’s value brand Original Stash volume in the quarter went to Quebec’s government-owned retailer, Société québécoise du cannabis (SQDC). Read More (Marijuana Business Daily)

Cronos’ quarterly gross loss grows to $20.4 million. Cronos Group (CRON) reported a gross loss of nearly $20.4 million for the fourth quarter ending December 31, 2019, widening from a restated gross loss of $14.8 million (CAD $21 million) in the previous quarter. The Toronto-based company has begun reporting its quarterly results in U.S. dollars. For all of 2019, Cronos posted a gross loss of $17.9 million versus a gross profit of $6.2 million in 2018. In the fourth quarter, Cronos reported inventory write-downs of $24 million, including a $1.9 million write-down related to the repurposing of its Peace Naturals facility – part of which is being converted from cultivation to research and design – and a $22.1 million write-down in the value of cannabis plants. Read More (Marijuana Business Daily) and More (New Cannabis Ventures)

Village Farms International reports year end 2019 financial results. Village Farms International (VFFIF) announced its financial results for the fourth quarter and year ended December 31, 2019. Village Farms currently has a majority (non-controlling) interest of 57.4% of its cannabis joint venture, Pure Sunfarms, however, at December 31, 2019 had a majority (non-controlling) interest of 53.5%. Village Farms’ financial results for the year ended December 31, 2019 compared to the year ended December 31, 2018: 1) Produce sales were $144.6 million compared with $150.0 million; 2) Net income of $2.3 million, which included the positive net income from Pure Sunfarms of $16.3 million (CAD $21.7 million) (Village Farms’ proportionate share). This compares with a net loss of ($7.5 million); 3) Earnings per share was $0.05 compared with a loss per share of ($0.17); and 4) Adjusted EBITDA was $0.9 million, including the positive contribution from Pure Sunfarms of $20.6 million (CAD $27.3 million) (Village Farms’ proportionate share). This compares with adjusted EBITDA of $2.6 million. Read More (Newswire)

Sundial revenues decline 32%, company forced to sell U.K. assets. For the fourth quarter of 2019, Sundial Growers (SNDL) earned revenues of $23.06 million for the quarter, while posting a net loss of $145.08 million. Revenues were down significantly for the firm on the quarter over quarter basis, with third quarter 2019 revenues coming in at $34.18 million, the firm saw a decrease of 32.5% on a quarterly basis. This was just the start of the firms problems however, with many red flags being present in the firms filings. First and foremost, the company took a $100.3 million impairment on goodwill associated with the firms Bridge Farm UK CBD assets as a result of regulatory uncertainty, just six months after having acquired the property for $129.9 million on July 2. The write off in under 6 months consists of 79.03% of the total consideration paid for the acquisition. Read More (the deep dive)

MediPharm Labs report sees quarterly revenue drop 25%. In 4Q 2019, MediPharm Labs’ (MEDIF) revenue increased to $32.4 million from $10.2 million in Q4 2018, and decreased 25% from $43.4 million in Q3 2019 due to a reduction in volume of bulk extract sold and average selling price. Adjusted EBITDA increased to $2.7 million in Q4 2019 from $2.1 million in Q4 2018, and decreased 74% from $10.1 million in Q3 2019. The decrease from Q3 2019 reflects a decrease in revenue and gross profit and increased operating expenses attributable largely to ERP implementation expenses. Read More (New Cannabis Ventures)

CAPITAL MARKETS

Cannabis Municipal Bonds could be the future. MPG Consulting has recently authored a report looking at the potential of Cannabis Municipal Bonds (CMB). Adam Orens, Founder of MPG and Sal Barnes, Managing Director, MPG have conducted a theoretical analysis using Colorado showing how the state can translate its cannabis revenue into a short-term bond amount of $166 million and long-term bond issued in the amount of $591 million resulting in $123 million and $438 million available for educational initiatives and infrastructure, respectively. States and municipalities already use revenue bonds as a way to pay for large projects. The investors of such bonds feel that the risk for these investments is lower since there is a captive source of revenue to pay the interest. The report gives Iowa as an example. That state allocates $55 million in gaming taxes every year to pay the debt on revenue bonds that were issued in 2009 and 2010. That money raised selling these bonds was then used for community revitalization, flood mitigation, and bridge improvement efforts. Read More (Green Market Report)

Cannabis REIT inks $49 million sale-leaseback deal with Ascend. Innovative Industrial Properties (IIPR) bought a cannabis cultivation and processing facility in Massachusetts from Ascend Wellness Holdings (AWH) in a $49 million sale-leaseback deal. San Diego-based IIPR paid $26.8 million to Boston-based AWH – a vertically integrated, multistate marijuana operator – for a 199,000-square-foot facility in Athol, Massachusetts. The marijuana processed at the facility can be sold for both the adult-use and medical cannabis markets, an AWH spokeswoman told Marijuana Business Daily. IIP also agreed to reimburse Ascend Wellness up to $22.2 million in tenant improvements, bringing the total deal to $49 million. Read More (Marijuana Business Daily)

NYSE aims to boot CannTrust after concluding cannabis producer ‘no longer suitable for listing.’ The New York Stock Exchange’s regulatory enforcement arm has initiated the delisting process for CannTrust (CTST) after concluding the Canadian cannabis producer “is no longer suitable for listing.” NYSE Regulation said it reached its decision after the Ontario-based company obtained a creditor protection order from the Ontario Superior Court of Justice. “The company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange,” the NYSE said in a statement. The NYSE said it “will apply to the Securities and Exchange Commission to delist (CannTrust’s) common shares upon completion of applicable procedures, including any appeal by the company.” Read More (Marijuana Business Daily)

U.S. marijuana firm Columbia Care to list on Canadian Securities Exchange. Columbia Care (COLXF), a New York-based multistate marijuana operator, said it will start trading on the Canadian Securities Exchange (CSE) on March 31. The company also said it will maintain its listing on Toronto’s NEO exchange, where it trades as CCHW. Columbia Care will have the same ticker symbol on the CSE. Columbia Care, which operates in 17 jurisdictions in the U.S. and Europe and has 96 facilities either operating or in development, also trades on the U.S. over-the- counter markets as CCHWF. Read More (Marijuana Business Daily)

Collective Growth Corp. delays IPO due to uncertain stock markets during coronavirus outbreak. The initial public offering for “blank check” company Collective Growth Corp. continues to be delayed on the Nasdaq because of the volatile stock market and uncertainty caused by the global coronavirus outbreak. The newly organized company, led by former Canopy Growth (CGC) executives Bruce Linton, Tim Saunders, and Geoff Whaling, was established in hopes of investing in and further developing the U.S. hemp market for hemp-derived cannabinoid and fiber products. In March, Collective Growth filed with the U.S. Securities and Exchange Commission seeking a target capital raise of $150 million to $175 million to purchase or invest in a combination of businesses. Read More (Hemp Industry Daily)

PharmaCielo Ltd. announces best efforts private placement offering. PharmaCielo (PHCEF) announced that it is undertaking a “best efforts” private placement offering of special warrants of the company at a price of $0.75 per special warrant. The company has received interest from multiple investors for the offering, including a subscription agreement for special warrants totaling $5 million, conditional on aggregate proceeds committed to the company pursuant to the offering of $9 million. The size of the offering may increase upon exercise by the agents (as defined herein) of the overallotment option (as defined herein). The offering will be conducted through a syndicate of agents led by Cormark Securities. Read More (Newswire)

World-Class acquires controlling interest in Pineapple Express cannabis delivery. World-Class Extractions (PUMP-CA) announced the signing of a definitive investment agreement, dated effective March 27, 2020, outlining the terms and conditions with respect to an acquisition of Pineapple Express Delivery, an arm’s length, privately held, Toronto-based company offering different types of legal delivery services (including same day and next day) to the cannabis sector in Canada. Pineapple Express Delivery’s financial results will be reported with World-Class on a consolidated basis. Read More (Accesswire)

Tilray to allow early release of 11 million locked-up shares. Tilray (TLRY) announced that the board of directors of Tilray unanimously approved the pro rata release of 11 million shares of Class 2 common stock held by the former equity holders of Privateer Holdings. The shares are being released from lock-up agreements entered into in under the agreement and plan of merger and reorganization, dated September 9, 2019, by and among Tilray, Privateer, Down River Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Tilray, and Michael Blue, as the stockholder representative. The waiver and release will take effect on April 3, 2020, and the released shares may be sold on or after that date, subject to applicable securities law or contractual limitations. Read More (New Cannabis Ventures)

MEDICAL CANNABIS

InMed submits clinical trial application to evaluate INM-755 in second phase 1 trial. InMed Pharmaceuticals (IMLFF) announced the filing of a Clinical Trial Application in the Netherlands to initiate a second Phase 1 human clinical trial for INM-755 in healthy volunteers. 755-102-HV is a randomized, double-blind, vehicle-controlled, Phase 1 study designed to evaluate the safety and tolerability of INM-755 cream applied daily on epidermal wounds in healthy volunteers. Two strengths of INM-755 cream will be evaluated in 8 adult subjects over a 14-day treatment period. “This second Phase 1 trial represents another important step towards efficacy trials with INM-755,” said Alexandra Mancini, Senior Vice President of Clinical and Regulatory Affairs. “The review of this CTA application will proceed as usual despite the restrictions in place in the Netherlands for the COVID-19 pandemic. Once the CTA is approved, enrollment will begin as soon as possible after those restrictions are lifted.” Read More (Extraction Magazine)

Can cannabis treat COVID-19? Toronto firm hopes clinical trial will provide answers. As misinformation on COVID-19 continues to spread almost as fast as the virus itself, one Canadian company wants to separate fact from fiction on whether compounds in cannabis can help treat the disease. Toronto-based Cannalogue, a medical cannabis e-commerce firm, has applied to Health Canada to conduct a clinical trial to see if cannabidiol (CBD) can reduce the severity of COVID-19 symptoms in patients. Dr. Mohan Cooray, the CEO of Cannalogue, said the company has been talking to Health Canada since December to expedite the study. “If there’s very important questions that we can potentially help answer we should do it now — not three months from now, not six months from now,” Dr. Cooray said. Read More (Mugglehead)

New research sheds light on potentially negative effects of cannabis. Coughing fits, anxiety, and paranoia are three of the most common adverse reactions to cannabis, according to a recent study by Washington State University researchers. The researchers surveyed more than 1,500 college students on the type and frequency of adverse reactions they had experienced while using cannabis for their study in the Journal of Cannabis Research. They also collected information on the students’ demographics, personality traits, cannabis use patterns and motives for using the drug. More than 50% of the study participants reported having experienced coughing fits, anxiety and/or paranoia while using cannabis. Read More (Science Daily)

Marijuana may impair female fertility. Female eggs exposed to THC, the psychoactive ingredient in marijuana, have an impaired ability to produce viable embryos, and are significantly less likely to result in a viable pregnancy, according to an animal study accepted for presentation at ENDO 2020, the Endocrine Society’s annual meeting. In the new study, researchers treated cow oocytes, or female eggs, with concentrations of THC equivalent to therapeutic and recreational doses. The oocytes were collected and matured into five groups: untreated, control, low THC, mid THC and high THC. The eggs’ developmental rates and gene expression were measured. The researchers evaluated the ability of embryos to reach critical stages of development at specific time points. With higher concentrations of THC, they found a significant decrease and delay in the ability of the treated oocytes to reach these checkpoints. Read More (Science Daily)

CBD/HEMP

Is CBD retail ‘essential?’ Shuttered hemp retailers fight to stay open alongside grocery, marijuana stores. Hemp production has been classified as “essential” by the federal government during the coronavirus pandemic. But the classification doesn’t extend to retailers selling hemp and CBD — and some retailers told to shut down during the coronavirus response are asking authorities to reconsider and designate them “essential” businesses. They point out that many states classify medical and recreational marijuana dispensaries as “essential” and that some customers rely on CBD products for anxiety relief during this time of crisis. The state of Texas is a strong example of the essential-or-not patchwork facing CBD retailers. Some Texas counties are allowing CBD shops to remain open if they practice acceptable social distancing by providing phone and online orders, curb-side delivery and other services. But law enforcement in other counties have forced CBD retailers to close completely. Read More (Hemp Industry Daily)

Guide to federal aid available to hemp businesses impacted by coronavirus. Legal hemp businesses are eligible for emergency loan assistance and other lifelines included in the $2.2 trillion economic stimulus signed into law to hold off economic devastation from the coronavirus pandemic. To help clarify the details, Hemp Industry Daily researched some quick facts and guidelines about the program and other assistance: Who is eligible? All small business owners in the U.S. and its territories are eligible to apply for an advance of up to $10,000. The disaster loan program, meanwhile, provides small businesses with working capital loans of up to $2 million to help overcome a temporary loss of revenue. Read More (Hemp Industry Daily)

CBD demand may be waning; Can e-commerce & lower prices help it bounce back? How demand for hemp-CBD will fare in the current COVID-19 crisis remains to be seen. CBD products should remain available to consumers, both physically in national grocery and pharmacy chains that are deemed essential businesses and exempted from shutdown orders, as well as through e-commerce channels. Although not a direct comparison, cannabis, hemp’s high-THC cousin, has seen surges of demand in states where it is legal, as consumers stocked up in late March ahead of stay-at-home orders from state and local officials. Additionally, a recent report from Bloomberg cites survey data that shows demand for cannabis is inelastic, similar to alcohol, even in an economic downturn. Whether this will be the case for hemp-derived CBD is uncertain. However, given the price declines for CBD biomass and extracted forms of the cannabinoid over the past year, lower retail price points could encourage continued purchasing. Read More (Hemp Benchmarks)

Chart 9: Wholesale Refined Hemp Oil (Aggregate) Month-on-Month % Change Source: Intro-Blue, Hemp Benchmarks

Chart 9: Wholesale Refined Hemp Oil (Aggregate) Month-on-Month % Change
Source: Intro-Blue, Hemp Benchmarks

Charlotte’s Web to acquire Abacus Health Products for combined 35% market share of CBD in food/drug/mass retail channel. Charlotte’s Web Holdings (CWBHF) and Abacus Health Products (ABCS-CA) announced that they have entered into a definitive arrangement agreement pursuant to which Charlotte’s Web proposes to acquire all of the issued and outstanding subordinate voting shares of Abacus, after conversion of all outstanding proportionate voting shares of Abacus into Abacus shares. Under the terms of the arrangement agreement, shareholders of Abacus will receive 0.85 of a common share of Charlotte’s Web for each Abacus Share held. This acquisition combines Charlotte’s Web, the market leader in hemp-derived CBD wellness products, with Abacus, the market leader in OTC topical products combining active pharmaceutical ingredients with hemp extract, to create the world’s largest vertically integrated hemp-derived CBD company. Read More (Extraction Magazine)

South Dakota governor legalizes hemp but says coronavirus could affect program budget. Hemp production is legal in South Dakota after a year-long battle between Gov. Kristin Noem and lawmakers. Noem signed the industrial hemp production bill, which takes effect immediately and includes $3.5 million to set up South Dakota’s state production program. South Dakota farmers will have to wait to produce hemp until the state receives U.S. Department of Agriculture approval for its hemp production plan, which could be as late as June, according to state lawmakers. But the Republican governor said the budget allocation for hemp production – along with 15 other programs for which she signed bills – is subject to change, depending on how much money the state receives from the federal stimulus package that was signed into law by President Trump. Read More (Hemp Industry Daily)

Military interested in hemp fiber and polymers; Wisconsin university researching possibilities. The U.S. military and researchers at a Wisconsin university are discussing making hemp fiber to replace imported polyester and polymer in Army vehicles – a potential partnership that would return the state to the days it was the epicenter of fiber production during both World Wars. To make it a reality, researchers at the University of Wisconsin-Stevens Point are working to create a textile that the military can test. Two state lawmakers, meanwhile, are leading the charge to pass legislation that would grant $250,000 to the research effort. “Let’s reposition Wisconsin as the No. 1 hemp fiber state in the nation,” said Paul Fowler, executive director of the Wisconsin Institute for Sustainable Technology at UW-Stevens Point. “Let’s make sure that we’re using the entire plant and all the potential that it has built in.” Read More (Hemp Industry Daily)

FDA warns former NFL player to stop claiming CBD can cure coronavirus. The Food and Drug Administration (FDA) and Federal Trade Commission (FTC) have taken enforcement action against a former NFL player’s CBD company over unsubstantiated claims that its products can be used to cure or prevent coronavirus. The agencies sent a warning letter demanding that Kyle Turley’s NeuroXPF business cease making the claims, remove them from any marketing material and advise FDA on steps taken to correct the issue within 48 hours. Failure to comply can result in “legal action, including, without limitation, seizure and injunction,” the letter states. Read More (Marijuana Moment)

South Carolina, West Virginia receive USDA approval for hemp production plans while Indiana extends pilot. Two Southern states have received federal approval for their hemp production plans under the U.S. Department of Agriculture’s interim final rule for the 2020 season, while a Midwestern state has chosen to extend its 2014 pilot program. The USDA approved plans for South Carolina and West Virginia, bringing the total number of states approved under rules written based on the 2018 Farm Bill to 14 thus far. Indiana joins 20 other states that have decided to extend pilot rules based on the 2014 Farm Bill for this production season. According to its plan, West Virginia has proposed that the new rules take effect as of October 31, when the 2014 pilot program rules are set to expire. Read More (Hemp Industry Daily)

Chart 10: States Divided on 2014 Rules vs. 2020 Interim Final Rules Source: Intro-Blue, Hemp Industry Daily

Chart 10: States Divided on 2014 Rules vs. 2020 Interim Final Rules
Source: Intro-Blue, Hemp Industry Daily

Trans-Atlantic hemp trade hit by uncertainties. Supply-chain disruptions and delivery delays have become the new normal for hemp and other agricultural commodities as governments keep their borders shut and planes grounded to contain the spread of the coronavirus. Trans-Atlantic hemp transportation has been strained since at least mid-March, when U.S. President Donald Trump imposed a 30-day ban on passenger flights into the U.S. from Europe. The president vowed that the move would have no impact on trade. But the restriction led to a drastic reduction in trans-Atlantic flights and freight capacity. Air carriers’ capacity for flying goods from Europe to North America fell 23% in March, while demand only fell 7%, according to CLIVE Data Services, a UK company that tracks global freight traffic. Some airlines have flipped their passenger aircraft into cargo-only transporters of medical equipment, food and other essential goods, and fees for chartering aircraft have gone through the roof, according to Bloomberg. “Flights are getting fuller, and to get on board, you have to pay a higher price,” Niall van de Wouw, managing director of CLIVE Data Services, told Hemp Industry Daily. Read More (Hemp Industry Daily)

Green Growth Brands places struggling CBD business into receivership. The CBD business side of Columbus, Ohio-based cannabis retailer Green Growth Brands (GGBXF) is going into receivership, just a few weeks after it said it wants to sell the struggling business. The company announced that it filed a motion to appoint a receiver with the Franklin County Court of Common Pleas in Ohio. Green Growth Brands, which owns the nation’s largest chain of CBD retail kiosks in malls, plans to sell most of its CBD business to focus on running its marijuana dispensaries in Florida, Massachusetts and Nevada instead. Read More (Hemp Industry Daily)

CONSUMER AND SOCIAL TRENDS

4/20 goes virtual: The high holiday brings cannabis events to your home. This year was supposed to be a big one for ganja consumers and cannabis entrepreneurs alike. In 2020, there’s an excuse to celebrate the unofficial cannabis holiday daily, as it reads 4/20 on the calendar throughout the entire month of April. Due to the overwhelming spread of COVID-19 and efforts to flatten the curve, events celebrating the high holiday are being postponed or canceled. However, there are six quaran-THC events that gives a hope for the consumers and cannabis entrepreneurs: 1) The Dabvent Calendar, 2) Lightshade’s Virtual 420 Party, 3) Tony Greenhand’s LET’S ROLL Series, 4) The Spliff Film Festival, 5) Haus of Jane 420 Celebration, and 6) Puff, Pass & Paint. Read More (Green Entrepreneur)

RETAIL

Inner Spirit Holdings announces expansion of Spiritleaf retail cannabis store network into Newfoundland and Labrador. Inner Spirit Holdings (INSHF) announced that it has signed a master agreement with a wholly owned subsidiary of Atlantic Cultivation for the operation of franchised Spiritleaf branded retail cannabis stores in Newfoundland and Labrador. Atlantic Cultivation is currently building a cannabis production facility in St. John’s, Newfoundland. Pursuant to a supply, development and retail agreement previously entered into with the government of Newfoundland and Labrador and strategic partner Auxly Cannabis Group (CBWTF). Atlantic Cultivation is eligible to apply to be granted five retail licenses to operate retail cannabis store locations in the province. Read More (Newswire)

Texas CBD shop offers extra social distancing with drone delivery. A CBD store in Texas has started a drone delivery service to adhere to social distancing measures to help slow the spread of the coronavirus. John Elmore, the owner of Green Cross CBD in Austin, told broadcaster KTBC that he was sterilizing products and offering curbside pickup before he started drone deliveries. “I was able to come up with a contraption where I could drop it in your front yard and unlatch and just take off,” Elmore said. Austin issued new social distancing rules for residents and business on March 21 to help slow the spread of the coronavirus. The rules encouraged retail establishments to “increase the use and capability of drive-thru, curbside, or delivery services.” “The drone can hold up to 2 pounds safely,” Elmore said. “I don’t like to exceed that, but, yeah, that’s quite a bit of CBD.” Read More (Hemp Industry Daily)

INTERNATIONAL

Hemp applications are expanding in the European market. Hemp cultivation in Europe is well established, with traditional cultivation methods dating back hundreds of years. Beyond its historic significance, hemp is a remarkably versatile plant, offering myriad applications for nearly every part of the plant. In September 2019, New Frontier Data reported how Europe cultivates up to 25% of the world’s hemp. New Frontier Data found 13% of EU respondents claiming to have purchased a hemp product in the previous two years. CBD consumers were far more likely to have purchased a product made of hemp (42%) than were non-consumers (9%). Individuals who had the most enthusiastic impressions of CBD were also more likely to have purchased a hemp product. Read More (New Frontier Data)

Chart 11: Top Hemp Products in the European Market Source: Intro-Blue, New Frontier Data

Chart 11: Top Hemp Products in the European Market
Source: Intro-Blue, New Frontier Data

New Zealand launches its medical cannabis program. New Zealand’s medical cannabis scheme is officially open for patient access, less than four months after the government finalized its regulatory foundation in December. Despite concerns of a delay due to the coronavirus pandemic, the scheme was launched as planned on April 1 by the government’s Ministry of Health. Unlike medical cannabis schemes in other countries, such as the UK, the New Zealand system gives all general practitioners the authority to prescribe medical cannabis products without any oversight from a specialist. Patients will be able to access pharmaceutical cannabinoid medicines and dried products that can be vaporized; smokable and edible forms are still prohibited. All products must meet good manufacturing practice standards (extensive documentation, safety testing, etc.), as set out by the country’s Medicinal Cannabis Agency. While the New Zealand scheme allows for the domestic cultivation and distribution of medical cannabis, the first licenses aren’t expected to be issued until midway through 2020. Read More (Analytical Cannabis)

New Zealand allows cannabis vaporizers approved by overseas regulators. New Zealand has followed through with its plan to update a rule banning certain cannabis vaporizers ahead of the launch of the country’s medical marijuana program in April. The move is expected to create a market for compliant vaporizers, since the country’s upcoming regulations prohibit medical cannabis products being sold in a form intended for smoking. The notice enables the import of vaporizers that have been approved as medical devices by an overseas regulator. The new rule enters into force April 1, the same day that new regulations for the sector kick in. Read More (Marijuana Business Daily)

Deadline extended to apply for Germany’s cannabis distribution tender. The deadline to apply to be the distributor of domestically grown medical cannabis in Germany was extended from April 28 to May 26. The Federal Institute for Drugs and Medical Devices (BfArM) revealed the new deadline on March 31. The document announcing the change did not provide a reason for the shift, but the current coronavirus pandemic is the likely cause. The BfArM on April 2 published a new document replying to questions it received about the application process. Two of the three questions had asked the agency to postpone the application deadline amid the current crisis. In a BfArM reply, it said the contract initiation date remains unchanged. The plan is to begin the contract in September to start with the first delivery in October. The winning company will be responsible for distributing all medical cannabis flower produced in Germany to pharmacies. Read More (Marijuana Business Daily)

CANNA SCIENCE

Cannabis scientists are chasing the perfect high. INSA, a farm-to-bong cannabis company in western Massachusetts, is confident enough that it has figured out which kind of high each of its products will deliver that it offers a customer-satisfaction guarantee if the experience it advertises doesn’t match what the user gets. INSA isn’t the only one changing the way cannabis is marketed. Wherever weed is legal, companies are claiming that they have figured out how to produce a bespoke high. The promises are specific — one California company, MedMen (MMNFF), offers its customers “a surefire explosive orgasm” — and backed by scientific-sounding terminology like “terpene profile” and “cannabinoid breakdown.” Read More (The New York Times)

After 4-year delay, DEA will review dozens of requests to grow marijuana for research. After nearly 4 years of what some researchers saw as foot dragging, the Drug Enforcement Administration (DEA) has announced it will evaluate 37 applications to grow marijuana for medical research and proposed new rules for the prospective growers that outline how the cannabis-growing program would work. “The release of this framework is absolutely monumental and is the biggest, the most meaningful, and material progress made in federal cannabis policy in decades,” says George Hodgin, CEO of the Biopharmaceutical Research Company, one of the applicants. “It opens up a path for traditional drug development in the U.S.,” whereby researchers can conduct clinical trials and seek approval from the Food and Drug Administration (FDA). Read More (Science Mag)

Cannabis labs carry on testing, but COVID-19 disruptions loom large. While many companies have suffered an economic hit from the coronavirus (COVID-19) pandemic, the labs that test cannabis products for impurities and potencies are reporting a steady stream of business. As the labs perform the bulk of the sector’s safety compliance, their continued work will be paramount to the welfare of consumers and patients throughout the pandemic period. But, as global economic uncertainty persists, many labs are reportedly preparing for a loss of revenue over the coming months. Although cannabis retail outlets across the U.S. and Canada recently saw a surge in cannabis sales – mainly attributed to coronavirus-related stockpiling – the cannabis testing sector hasn’t felt the same spike in demand. “Read More (Analytical Cannabis)

TECHNOLOGY

Black Dog Grow Technologies announces Colorado’s first LED hemp cultivation research facility. Black Dog Grow Technologies, a provider of high-tech LED grow devices and other grow technologies, has announced that it has received a license amendment from the Colorado Department of Agriculture to begin cultivating 2018 Farm Bill compliant hemp flower. This new facility will greatly enhance Black Dog Grow Technologies’ test grows to perfect growing technologies and techniques used with cannabis–specifically cannabis sativa hemp. Maximizing yields, cannabinoid content (CBD, CBG, CBN) and terpene profiles will be one of the key research goals. This new research facility will allow Black Dog Grow Technologies to test new innovations in lighting and grow technology and refine growing methodologies for cultivating top-shelf federally compliant hemp flowers. Read More (Cannabis Business Times)

COVID-19 outbreak urges us to perfect future of supply chain. Now that the Coronavirus pandemic is threatening the stability of supply chains, some have started to wonder how they actually work in the grand scheme of things. “People are going to become supply chain experts when they are going to find something is missing in the shops,” says Kyle Moffitt with STEM Cultivation. “We live in an age where the supply chain is critical, and this was an issue for the cannabis industry even before this pandemic. The physical supply chain of cannabis has never been perfected.” Read More (MMJ Daily)

LEGAL & IP

Wisconsin hemp seed seller sues Canadian producer over distribution dispute. A Wisconsin hemp seed seller is in a contract dispute with a Canadian seed producer over where and for how long it can sell a grain cultivar. Hemp of Hastings, Minnesota, says that Terramax Holdings is trying to renege on the length of time Legacy Hemp has the rights to sell the seeds in the U.S. The lawsuit alleges that Terramax Holdings, based in Regina, Saskatchewan, sold distribution rights on a cultivar called X-59 Hemp Nut — a seed described in the lawsuit as stable and well-tested, with low THC and large seeds. The 2016 agreement to sell the seeds in the U.S. gave Legacy Hemp exclusive rights to sell X-59 in seven states: Kentucky, Illinois, Minnesota, Iowa, North Dakota, Nebraska, and Indiana. But Legacy Hemp says the agreement doesn’t forbid it from selling the seeds in other states, too, just not exclusively. Terramax disagrees. Legacy Hemp also says its agreement should last through 2023. The company is seeking unspecified damages. Terramax has 20 days to respond to the complaint in Wisconsin. Read More (Hemp Industry Daily)

Cannabis insurance claims dominated by ‘inside’ theft jobs. Theft remains by far the biggest concern for both marijuana and hemp businesses in the U.S. The nature of the product and its popularity on the black market make it a prime target for petty and organized crime. This is painfully clear in cannabis insurance claims data, which has been dominated by theft-related issues thus far. “About 90% of the theft claims I’ve seen in the cannabis insurance space have been an internal problem,” said Chris Boden (pictured), cannabis practice group team leader at Crouse and Associates Insurance Services, a California-based wholesale insurance broker. Read More (Insurance Business)

SUSTAINABILITY

Greener lights for green growers. In the burgeoning legal marijuana industry alone, New Frontier Data’s latest Cannabis Energy Report pegs legal cannabis cultivation electricity consumption in the U.S. at approximately 1.1 million megawatt hours annually. Cannabiz media has reported that indoor cultivation requires ten times as much energy per square foot as a typical office building and four times as much as a hospital. With 33 states and the District of Columbia having passed laws legalizing marijuana cultivation in some form, New Frontier Data forecasted that the sector’s electricity usage will increase 162 percent from 2017 to 2022, and recommended the industry “evaluate energy-efficient and renewable energy technologies”. Read More (The Environmental Magazine)

CANNA FACTS

Chart 12: Canadian Jurisdictions Allowing Adult-Use Cannabis Stores to Operate Despite Physical-Distancing Orders Source: Intro-Blue, Marijuana Business Daily

Chart 12: Canadian Jurisdictions Allowing Adult-Use Cannabis Stores to Operate Despite Physical-Distancing Orders
Source: Intro-Blue, Marijuana Business Daily

CANNA CAPITAL MARKET TRENDS

Chart 13: Weekly Summary (March 23 – March 27, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 13: Weekly Summary (March 23 – March 27, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 13: Weekly Summary (March 23 – March 27, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 13: Weekly Summary (March 23 – March 27, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 14: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 14: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 15: Cannabis M&A Activity by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 15: Cannabis M&A Activity by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 16: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 16: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 16: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 17: U.S. Implied Forward Prices (Week Ending April 3, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 17: U.S. Implied Forward Prices (Week Ending April 3, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 18: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 18: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: CALIFORNIA

Chart 19: Best-Selling Flower Brands and Products in California Source: Intro-Blue, Headset

Chart 19: Best-Selling Flower Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 20: Best-Selling Edibles Brands and Products in California Source: Intro-Blue, Headset

Chart 20: Best-Selling Edibles Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 21: Best-Selling Vapor Pens Brands and Products in California Source: Intro-Blue, Headset

Chart 21: Best-Selling Vapor Pens Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 22: Best-Selling Beverage Brands and Products in California Source: Intro-Blue, Headset

Chart 22: Best-Selling Beverage Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 23: Best-Selling Capsules Brands and Products in California Source: Intro-Blue, Headset

Chart 23: Best-Selling Capsules Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 24: Best-Selling Topical Brands and Products in California Source: Intro-Blue, Headset

Chart 24: Best-Selling Topical Brands and Products in California
Source: Intro-Blue, Headset

CANNA INDEX

Chart 29: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 29: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 30: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 30: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Important Disclosures

Analyst Certification

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