OREGON AND OKLAHOMA ARE BEST PLACED TO BENEFIT FROM CANNABIS’ ESSENTIAL STATUS

High per capita marijuana dispensary density means that cannabis markets in Oregon (OR) and Oklahoma (OK) are in the best position to benefit from its essential industry status. In the last few weeks, we have discussed how cannabis’ essential designation is driving sales higher and why COVID-19 is a net positive for the marijuana industry. This week, we try to identify the states that have the retail infrastructure required to service the growing demand for cannabis and benefit from its essential designation. The two states that come out on top are Oregon and Oklahoma. According to data from Verilife and state departments, Oregon is home to the most marijuana dispensaries per capita – the state has more than 660 dispensaries or 16.5 per 100,000 residents. Oklahoma, which legalized medical marijuana in 2018, is the second leading state with 15.6 dispensaries per 100,000 people, followed by Montana (15.1), Colorado (14.1), and Alaska (12.7). Oregon and Oklahoma account for 17 of the top 30 cities by per-capita marijuana dispensary density in the U.S., with Medford, OR (17.0) the best city in which to buy marijuana. Click here to view the ranking of U.S. states and cities based on per capita marijuana dispensary density.

The dominance of Oregon and Oklahoma over bigger state markets like California (CA), Florida (FL), Washington (WA), and Illinois (IL) implies that regulatory support is more important than opportunity size for development of the legal cannabis industry. According to our analysis of data from New Frontier Data, CA, FL, WA, and IL will be the four biggest state markets and will account for 47% of the ~$30 billion legal sales cannabis in the U.S. in 2025. However, the marijuana dispensary density in these states – CA (1.6), FL (1.1), WA (6.2), and IL (0.4) – is much lower than Oregon (16.5) and Oklahoma (15.6), and no city from these four states is featured on the top 10 in the country. We believe that the key reason for this trend is the regulatory environment in each state. Oregon was among the first to legalize marijuana in the U.S. This, coupled with low barriers to entry and a favorable regulatory environment, meant that cannabis supply and retail outlets grew rapidly in the state. And with demand remaining strong and prices rebounding, the cannabis industry and retail outlets in the state are looking at a strong 2020. Oklahoma’s medical cannabis market surpassed all expectations and recorded ~$350 million in retail sales in 2019. The medical cannabis launch in the state outpaces that of other markets – including Illinois, Maryland, and Ohio – with sales figures more akin to a recreational launch. Driving this surge are the following factors: 1) there are no caps on the number of business licenses that can be awarded (3,000+ so far); 2) doctors are allowed to recommend the product for any condition they see fit; and 3) municipalities are prohibited from enacting zoning restrictions to prevent dispensaries from opening. These favorable regulatory conditions are in contrast with those in the nation’s biggest state market, California, where suspension of retail licenses, high taxes, strict product testing, and local bans on the adult-use industry throughout the state have resulted in below-par growth of the cannabis industry. Cannabis sales have not lived up to expectations in Washington either, primarily due to poor access of products for consumers as marijuana cannot be purchased with a credit card, insurance companies do not cover the cost, and there are restrictions on home delivery by retailers. Overall, the trends in these state markets suggest that while a large opportunity is a good to have, favorable regulatory conditions are more important for investors to make money in the cannabis industry.

Next week, we will look at the two stocks that are well placed to benefit from strong cannabis retail markets in Oregon and Oklahoma, respectively.

Chart 1: Marijuana Dispensaries per 100,000 Residents – Oregon (OR) and Oklahoma (OK) Are the Leaders Source: Intro-Blue, Verilife

Chart 1: Marijuana Dispensaries per 100,000 Residents – Oregon (OR) and Oklahoma (OK) Are the Leaders
Source: Intro-Blue, Verilife

 

Chart 2: State Ranking – Marijuana Dispensaries per 100,000 Residents Source: Intro-Blue, Verilife

Chart 2: State Ranking – Marijuana Dispensaries per 100,000 Residents
Source: Intro-Blue, Verilife

 

Chart 3: City Ranking – Marijuana Dispensaries per 50,000 Residents Source: Intro-Blue, Verilife

Chart 3: City Ranking – Marijuana Dispensaries per 50,000 Residents
Source: Intro-Blue, Verilife

 

Chart 4: City Map – Marijuana Dispensaries per 50,000 Residents Source: Intro-Blue, Verilife

Chart 4: City Map – Marijuana Dispensaries per 50,000 Residents
Source: Intro-Blue, Verilife

CANNA NEWS

COVID-19

Could legal marijuana dollars be the boost the U.S. economy needs during a pandemic-triggered recession? Despite the havoc COVID-19 continues to wreak upon our lives, communities and the economy, some believe cannabis could provide an avenue for recovery. Jackie Cornell, chief of health and policy innovations at 1906, said legalizing adult-use cannabis would create thousands of jobs in the leaf-touching industry and through auxiliary services — “construction, security, materials, marketing, legal…the list of work created beyond the license holders themselves is sizable.” “While an outbreak of this size and scale is a once in a lifetime event, COVID is highlighting the fragility of our collective safety net,” Cornell told NJ Cannabis Insider. “Unemployment is soaring, the strain on our healthcare system is unrelenting and we still have a long road ahead of us before we return to ‘business as usual.’” Read More (NJ.com)

How COVID-19 is affecting marijuana legalization efforts across the U.S. The coronavirus crisis has hurt marijuana legalization efforts in the short term, with state legislatures pivoting to focus on more pressing issues and citizen groups struggling to collect enough signatures to place initiatives on November ballots. However, several recreational and medical marijuana initiatives already had qualified for the November election before the coronavirus outbreak. Looking ahead, some experts believe legalization could accelerate once the coronavirus is contained. Read More (Marijuana Business Daily)

Chart 5: Important States to Watch as Cannabis Legalization Prospects in 2020 Source: Intro-Blue, Marijuana Business Daily

Chart 5: Important States to Watch as Cannabis Legalization Prospects in 2020
Source: Intro-Blue, Marijuana Business Daily

How the coronavirus crisis is reshaping the cannabis industry for the long term. The COVID-19 outbreak has exacerbated fault lines in the rapidly evolving market and led to number of new outcomes, including: 1) Retailers adapting to changing consumer behavior by offering delivery, curbside pickup, etc.; 2) State-by-state legalization movements hitting major obstacles; 3) Businesses hoping for post-pandemic real estate deals; 4) An acceleration of acquisitions and business failures, specifically in California; 5) Canadian companies making the best of market uncertainty and changing regulations; and 6) Firms reevaluating the viability of the international supply chain. Read More (Marijuana Business Daily)

Marijuana has been deemed ‘essential’ — but essential for whom? As the coronavirus spread across the country in March, and stay-at-home orders began to go into effect, every state with a regulated cannabis system allowed weed sales to continue in some form, deeming medical-marijuana businesses essential during the pandemic, along with groceries and pharmacies. However, the patchwork of emergency orders during coronavirus has been confusing and difficult to navigate for recreational, or adult-use, cannabis businesses, projected to hit $12 billion in retail sales in the U.S. this year. Massachusetts Gov. Charlie Barker issued an order allowing medical-marijuana dispensaries to stay open, but halted recreational sales. In Colorado, recreational pot shops are limited to curbside pickup, while medical dispensaries can stay open. In Nevada, adult-use sales are only allowed through home delivery. It’s tough to keep track, since laws vary widely from state to state. Read More (Rolling Stone)

D.C.’s medical dispensaries can temporarily deliver marijuana because of the pandemic. D.C.’s seven medical marijuana dispensaries can now deliver to patients and offer curbside and at-the-door pickup, according to an emergency rule from the D.C. Department of Health that went into effect on April 14. “It’s definitely a step in the right direction,” says Norbert Pickett, owner of Deanwood dispensary Cannabliss. “It’s good that we’re doing this now, but it should have been done a long time ago. This patient-centric, emergency rulemaking is necessary to protect the health, safety, and welfare of District residents, and is similar to what other states are putting in place to continue access to medical marijuana,” the city said in a press release. Read More (dcist)

Coronavirus fuels marijuana industry’s push for online sales, delivery in Colorado. Colorado has made online sales of recreational marijuana legal during the coronavirus pandemic, fulfilling one of the pot industry’s biggest wishes and fueling its argument for more concessions that could be made permanent when the crisis eases. It’s one of several signs emerging from the virus outbreak of just how far ingrained marijuana has become in mainstream life in several states. Dispensaries are being designated “critical businesses” and are allowed to operate through statewide stay-at-home orders. Large markets such as California, Washington state and Oregon are allowing curbside pickup during the crisis. Now under Colorado’s emergency rules, customers can pay for marijuana online and then pick up their purchase at the store. Read More (Cannabis Business Executive)

Members of Congress seek marijuana industry inclusion in coronavirus relief. Almost three dozen members of the U.S. House of Representatives have signed a letter to congressional leaders urging that cannabis companies be included in future federal relief packages aimed at stimulating the economy during the COVID-19 outbreak. The letter was spearheaded by the bipartisan Congressional Cannabis Caucus, which is led by Democratic U.S. Reps. Earl Blumenauer of Oregon and Barbara Lee of California as well as Republican Reps. Don Young of Alaska and Tom McClintock of California. The move was the result of the industry being largely left out of the $2 trillion CARES Act, which Congress passed in March to help the U.S. economy stave off some of the impacts from the coronavirus. “As you draft the next COVID-19 relief bill, we write to ask that you address one of the shortcomings of the CARES Act – the exclusion of state-legal cannabis businesses and their employees,” the letter notes. Read More (Marijuana Business Daily)

Stimulus checks boost cannabis sales to new highs. Business intelligence firm Akerna (KERN) shows that April 15th, after the COVID-19 stimulus checks were received by many, was far and away the biggest Wednesday in the history of legal cannabis, with both ticket size and total revenue up over 50% compared to a normal Wednesday in 2020. Year over year, March 2019 to March 2020, total cannabis sales increased 78%. During the same period, recreational cannabis spending is up with a 20% increase in ticket size. The ticket size for the under 30 age group also increased by 17%. As the industry evolves to meet customer needs, product pick-up as a fulfillment method increased 200%, accounting for 9% of total sales. However, as panic buying started to subside, business intelligence shows, medical cannabis revenues have returned to early 2020 ranges; the slightly smaller number of transactions is being offset by larger tickets. In contrast, overall recreational sales remain below early 2020 revenues; a 30+% increase in average ticket size has not been enough to compensate for a smaller number of shoppers. Read More (Akerna)

How lack of tourism during COVID-19 is affecting cannabis retailers in certain markets. Marijuana retail businesses in markets that depend on travelers and tourism for at least a portion of their sales are being forced to pivot in response to the coronavirus pandemic in part by appealing more to local customers. Marijuana markets such as Nevada, where Las Vegas receives more than 40 million visitors a year, and Massachusetts, where droves of tourists from the East Coast head to Cape Cod each summer, would be severely impacted by a prolonged shutdown of tourism. Several other states with legal markets and strong tourism industries, including Alaska, Colorado and Florida, could also experience similar negative fallout. To stay afloat during these difficult circumstances, marijuana retailers in tourism-heavy markets are: 1) Focusing on regular customers within their communities by offering discounts and incentives such as loyalty programs; 2) Pumping more resources into building out alternative sales strategies such as delivery and online ordering; and 3) Working on brand awareness among locals, not tourists, to compete for nearby customers. Read More (Marijuana Business Daily)

Ontario online pot purchases jump 600% amid COVID-19 pandemic, data shows. Cannabis purchases rose as much as 600 percent since the beginning of March in Canada’s biggest market thanks to stockpiling by consumers during the COVID-19 pandemic – and demand may be sticking around. Sales data provided by the Ontario Cannabis Store (OCS) over the past six weeks – the same period that COVID-19 spread across the country – show legal pot appears to be a more “habitual” purchase than a one-time novelty, according to Cheri Mara chief commercial officer at the provincial retailer. Daily online orders hovered in the mid-2,000 range for the first half of last month, and abruptly tripled to 6,042 on March 16, the same day that Prime Minister Justin Trudeau announced Canada would restrict entry at the U.S. border. Read More (BNN Bloomberg)

Talks underway in Canada to add cannabis to internal free trade deal. Canada’s federal, provincial and territorial governments have launched discussions to incorporate recreational cannabis into a nationwide trade deal, Marijuana Business Daily has learned. However, the talks – which began in December – are expected to be delayed as resources are directed toward fighting the current COVID-19 pandemic. Efforts to incorporate nonmedical cannabis into the Canadian Free Trade Agreement (CFTA) would ensure regulated cannabis companies do not face barriers when operating in other provincial markets. Read More (Marijuana Business Daily)

Could COVID-19 boost the illicit cannabis market? “It’s always difficult to have data on the illicit market in the first place,” BDSA’s CEO, Roy Bingham, told Analytical Cannabis. “Typically, you have data on the legal market and then you [work out] what might be happening in the illicit market.” Current data suggests that some consumers are fitting their cannabis shopping around the ‘shelter in place’ announcements from local governments. With all aspects of modern life affected by the coronavirus social distancing measures, trade in the state’s illicit market may also be down. If illegal sources struggle to reach their usual sales figures, prices will likely rise to make up for the loss in revenue. This kind of inflation has already been reported in the illicit cannabis markets in other countries. So, pricier than ever and more difficult to come by, illicit cannabis might also be taking a hit from COVID-19. But, as the state of the global economy becomes more uncertain, the financial prospects of the legal cannabis industry aren’t looking great, either. Read More (Analytical Cannabis)

Raises, professional development courses boost cannabis workers’ morale during COVID-19 pandemic. In states where cannabis businesses have been deemed essential, employees at many companies are being asked to continue working, putting themselves at risk of infection from the coronavirus. In response, their employers are taking a variety of measures to keep up morale. Some of the morale-boosting measures companies are taking include giving bonuses and raises, handing out gift cards, increasing internal communication and breaking down silos, implementing safety measures to protect employees, offering education and training courses, reimbursing employees for transportation costs, engaging ownership and management in day-to-day operations. Read More (Marijuana Business Daily)

STATE AND REGULATORY NEWS

Recreational marijuana won’t make Missouri ballot this year. Voters in Missouri won’t have an opportunity to legalize recreational cannabis in 2020. Missourians for a New Approach, the campaign working to gather signatures to put an adult-use cannabis initiative on the ballot, is suspending its efforts, the Springfield News-Leader reported. In announcing the campaign is over, the group cited difficulties related to the state’s shelter-in-place orders issued in response to the coronavirus crisis. Campaign Chair Dan Viets told the newspaper the state’s COVID-19 lockdowns have made “petitioning very difficult” and that it was going to be virtually impossible to gather the 170,000 signatures needed to make the November 2020 ballot. Read More (Marijuana Business Daily)

Illinois cannabis license caps might bode well for new market entrants amid pandemic, economic downturn. Illinois’ heavily regulated marijuana industry and the current status of cannabis in the state might be just the tonic needed to deal with the coronavirus crisis and a probable economic recession, according to industry officials. “As long as the state does things right and allows the industry to grow and replace the black market, it’s going to be a good market because of the limited licenses,” said Bob Wagener, vice president of business development at Colorado-based Canna Advisors, a consulting firm that helped clients with license applications in Illinois. Illinois is scheduled to issue: 1) 75 retail business licenses in May (47 within an hour’s drive of Chicago); 2) 40 craft grower licenses in July; and 3) 40 infuser/processor licenses in July. Read More (Marijuana Business Daily)

Michigan adult-use cannabis stores dealt supply setback. Recreational marijuana stores in Michigan could face a shortage of product after state regulators ruled that adult-use shops can no longer buy MJ from a network of caregiver growers. The Marijuana Regulatory Agency issued a bulletin reversing course that said only medical marijuana dispensaries can now buy and sell products from caregivers, the Detroit Free Press reported. “Effective April 8, 2020, the MRA will not permit caregiver-produced or derived product to enter the adult-use market,” according to the bulletin. That overturns an earlier decision in March, when the MRA ruled that caregivers could continue to supply both the medical and recreational side of the market until October 1. Read More (Marijuana Business Daily)

Forced store closures hit Massachusetts marijuana retailers to the tune of $2 million per day. Lost recreational marijuana sales in Massachusetts stemming from forced store closures already could amount to $40 million among the state’s cannabis retailers, underscoring business owners’ need to be strategic about their operations during the COVID-19 pandemic. Massachusetts adult-use marijuana retailers, which were forced to close on March 24 by the governor, might be missing out on nearly $2 million in daily sales. Data from the Massachusetts Cannabis Control Commission shows that during the period of December 30, 2019-March 8, 2020, weekly sales averaged $12.6 million, or $1.8 million per day. Sales began an upward trend on March 11, coinciding with general consumer stockpiling, with sales averaging $15.5 million over the next two weeks – a 19% increase over the December-March 8 average. That upswing came to an abrupt halt on March 24 after Gov. Charlie Baker’s emergency order to close recreational stores in response to the pandemic. Read More (Marijuana Business Daily)

Latest tax administration report raises questions for cannabis businesses. The Treasury Inspector General for Tax Administration published a March 30 report that shed light on pertinent changes for cannabis businesses. From the jump, no, IRS Code 280E isn’t going anywhere just yet. The report does lay out two important points that business owners should note in the midst of tax season. For one, cannabis business owners should expect renewed pressure for records and tax audits in the future. The report cites millions of dollars left on the table and a generally high rate of “noncompliance” with 280E among cannabis businesses on the West Coast. The second point is that the Tax Cuts and Jobs Act of 2017 may have opened the door to some tax relief for small cannabis businesses. Read More (Cannabis Business Times)

U.S. cannabis spot index down 0.5% to $1,352 per pound. May forward price unchanged at $1,400 per pound. The simple average (non-volume weighted) price decreased $16 to $1,540 per pound, with 68% of transactions (one standard deviation) in the $832 to $2,249 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $2.98 and the simple average price was $3.40. 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

 

Chart 8: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational Source: Intro-Blue, Cannabis Benchmarks

Chart 8: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational
Source: Intro-Blue, Cannabis Benchmarks

Quebec cannabis sales on pace to exceed CAD $300 million for fiscal year. Quebec’s government-run cannabis franchise reported revenue of CAD $110.8 million ($90 million) for the October-December period, bringing sales for the first three quarters of its fiscal year to CAD $219.5 million. That puts the Société québécoise du cannabis (SQDC) on pace to exceed CAD $300 million in sales for the year. The figures, released in a quarterly report, account for both online and in-store receipts. In the quarter ending January 4, SQDC booked a profit of CAD $11.6 million. That compares with a CAD $5 million loss one year earlier. Through three quarters, the retailer’s profit was CAD $18 million, according to the report. In-store sales continue to dominate over online revenue. Read More (Marijuana Business Daily)

As outdoor cannabis approvals grow in Canada, COVID-19 not expected to delay planting season. Health Canada approvals for outdoor cannabis cultivation have increased by more than 25% in the past few months, and growers are bullish for now despite the COVID-19 pandemic that’s encroaching into planting season. Canadian outdoor cannabis producers contacted by Marijuana Business Daily said they expect their open-air crops will proceed as usual this year. For example, Charles Vennat, CEO of 48North Cannabis (NCNNF), said he doesn’t anticipate any delays at his company’s Ontario outdoor facility. “We hope that the government will continue to consider us an essential service, an essential industry, and that they’ll take into account the fact that outdoor cultivation does allow for further social distancing than the indoor would,” Vennat said. Read More (Marijuana Business Daily)

Canada’s cannabis online sales on a new course. With the enactment of the Cannabis Act, provinces and territories were given the responsibility for determining how recreational cannabis would be distributed and sold in their jurisdictions. Each instituted a variety of regulatory frameworks, resulting in an industry structure composed of public, private, and hybrid systems for brick-and-mortar and online stores. In most cases, the provincial government controls the online sales channel of cannabis. Surprisingly, Canadian cannabis consumers have preferred purchasing their cannabis in stores rather than online from the comfort of their home. This has been evident in the correlation between the rapid increase in monthly sales and the establishment of new stores. Cannabis Benchmark estimates the total number of cannabis retail stores in Canada at 806 as of March 2020, an increase of 615 from the previous year. Read More (Cannabis Benchmarks)

Chart 9: Summary of the Structure Set in Each Canadian Province Source: Intro-Blue, Cannabis Benchmarks

Chart 9: Summary of the Structure Set in Each Canadian Province
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 10: Monthly Retail Sales from Online and Brick & Mortar Stores Source: Intro-Blue, Cannabis Benchmarks

Chart 10: Monthly Retail Sales from Online and Brick & Mortar Stores
Source: Intro-Blue, Cannabis Benchmarks

COMPANY NEWS

Canopy Growth exits cannabis cultivation on three continents in major international pullback. Canopy Growth (CGC) is ceasing more cannabis cultivation in Africa, Canada, Colombia and the U.S. in a bid to “improve efficiencies” in its global operations, the once high-flying marijuana giant said. The Smiths Falls, Ontario, company also said it is eliminating 85 full-time positions. Almost half the workforce reduction is coming from the company’s Colombian operations, Marijuana Business Daily has confirmed. The downsizing does not affect Europe, Christian Goertz, Canopy’s director of corporate communications in Europe, told MJBizDaily. Canopy’s international pullback comes after Canadian producers raked up collective net losses exceeding CAD $6 billion ($4.5 billion) in 2019, the first calendar year recreational cannabis products were allowed to be sold in Canada. Read More (Marijuana Business Daily)

Trulieve hiring hundreds of new workers in multiple states. With tough times sometimes come reasons for hope, and in the case of the largely stalled U.S. job market amid the coronavirus pandemic, some qualified candidates seeking positions in cannabis may be in luck. Some large multi-state operators are hiring, including Curaleaf (CURLF) and Trulieve (TCNNF). The latter is currently hiring for between 200 to 300 positions and has hired about 300 people since mid-March, Steven Ferrell, Trulieve’s director of human resources, said in an email. Out of these Trulieve positions, about 60% are in retail, 30% are in cultivation and production, and 10% are in call-center, corporate and all other positions, Ferrell said. About 75% of the positions are hourly, and the rest are salaried, he said. Read More (Cannabis Business Times)

Cease trade order issued by Ontario Securities Commission to CannTrust. CannTrust Holdings (CTST) announced that, after the close of markets on April 13, 2020, the company received a cease trade order issued by the Ontario Securities Commission (OSC) as a result of CannTrust’s failure to file the following periodic disclosure required by Ontario securities legislation: The company’s audited annual financial statements for the year ended December 31, 2019; Management’s discussion and analysis relating to the company’s audited annual financial statements for the year ended December 31, 2019, etc. The cease trade order, among other things, revokes the management cease trade order issued by the OSC on August 15, 2019 in respect to certain directors and officers of CannTrust, which prohibited those directors and officers from trading in the company’s securities until after the company cured its disclosure defaults. Read More (CannTrust)

Sundial announces operational adjustments to adapt to current market conditions and improve liquidity. Sundial Growers (SNDL) announced changes to its operations to improve liquidity and lower its cost structure, in response to current market conditions and the COVID-19 pandemic. These changes include a focus on accelerating the monetization of inventory, further reductions to its workforce and the temporary curtailment of cultivation and harvest activities, while maintaining current processing levels to meet anticipated demand. “We have taken significant actions to restructure our business over the last few months to drive operational efficiencies and adapt to current market conditions,” said Zach George, Sundial’s Chief Executive Officer. “Reducing our cultivation and harvest activities while drawing down inventory are strategic choices we are making to improve cash conversion and control our variable production costs. These actions are consistent with Sundial’s long-term goals of reaching sustainable profitability and optimizing our asset base.” Read More (PR Newswire)

Nevada’s Planet 13 cannabis firm ends $10 million deal to enter California. Nevada-based marijuana company Planet 13 (PLNHF) said it is terminating its $10 million acquisition of a cannabis sales license and lease in California, which would have served as the company’s entry into that key market. The stock and cash deal for Newtonian Principles, announced last June, was terminated “due to unmet conditions in the definitive agreement,” Planet 13 said in a news release. Larry Scheffler, co-CEO of Las Vegas-based Planet 13, did not elaborate on the unmet conditions to acquire the Santa Ana, California-based company. However, he said in a statement that Planet 13 “offered to renegotiate” the purchase “to fairly reflect the delays in closing the definitive agreement and the new macro environment.” Read More (Marijuana Business Daily)

Cresco Labs completes expansion of Illinois’ largest cannabis cultivation facility in Lincoln. Cresco Labs (CRLBF) has announced that it has completed the expansion of its cultivation facility in Lincoln, Illinois, the largest in the state, and the first phase of expansion at its Kankakee facility. These expansions add almost 180,000 square feet of additional indoor and greenhouse cultivation space, bringing the total cultivation space to 215,000 square feet across all three of its Illinois facilities. As the only operator in Illinois with three cultivation sites which are licensed to grow up to 630,000 square feet of flowering canopy, Cresco has a unique competitive advantage and is positioned to build on its already market-leading position. Read More (Cannabis Business Times)

MedMen creditor seeks to seize cannabis firm’s former execs’ homes. A MedMen Enterprises (MMNFF) creditor is claiming in a civil lawsuit that three men with ties to the California-based marijuana company – including former CEO Adam Bierman and ex-president Andrew Modlin – owe the deeds to their personal homes as part of an investment guaranty from late 2019. Alaska-based Milestone Investments filed the suit against MedMen chief strategy officer Christopher Ganan, Bierman and Modlin in California Superior Court in Los Angeles County. Bierman and Modlin stepped down from their MedMen leadership posts in January. But Bierman remains a member of the board of directors and Modlin is now the company’s chief brand officer, according to the company’s website. Read More (Marijuana Business Daily)

RavenQuest BioMed to lose final Health Canada license. It seems that it is all over for RavenQuest BioMed (RVVQF) as a licensed cannabis grower. The company issued a news release on April 13, indicating that due to not having access to the Markham, Ontario facility Health Canada would be revoking the license. The news of the license revocation follows the news last month that the company had lost its license at its Edmonton-based Alberta Green Biotech facility also due to losing access. The loss of access was the result of RavenQuest failing to pay its lease on the facility, which ultimately resulted in the landlord acquiring a court order to seize assets to cover debts owed. The company did not provide a specific timeline for the revocation of its Health Canada license, however it’s anticipated to be filed on April 17 with the agencies weekly license update. Read More (the deep dive)

Aleafia Health provides update on strategic growth initiatives. Aleafia Health (ALEAF) provides a comprehensive corporate update on strategic growth initiatives. “Aleafia Health’s focus on disciplined, sustainable and scalable growth is more important now than ever with the launch of two major initiatives to adapt to patients’ needs during COVID-19,” said Aleafia Health CEO Geoffrey Benic. “With investments made over the last two years in virtual clinic services, we have been able to quickly transition to completing 100 percent of physician-led patient consultations remotely following the temporary, voluntary closure of our physical clinic locations. Likewise, we have accelerated the launch of our last-mile home delivery to ensure patient access to medicine delivered directly to their own homes. “In the last week, we have commenced operations at our newly licensed Niagara Facility. At the same time, we are ready to begin the 2020 outdoor cultivation season and are preparing to commence operations in our Paris Facility’s Phase II expansion, the crown jewel of our production ecosystem.” Read More (GlobeNewswire)

Michigan Pure Med is using its hybrid greenhouse and lean manufacturing to go deep in its home state. Vertically integrated cannabis company Michigan Pure Med is establishing a deep presence in its home state before considering multi-state expansion. CEO Michael Elias spoke with New Cannabis Ventures about his company’s hybrid greenhouse, the Common Citizen brand and hiring during the COVID-19 pandemic. Michigan Pure Med strives to keep its executive team lean. The company’s cultivation and manufacturing operations in Marshall, Michigan can be scaled up to a total of 1.2 million square feet. Currently, approximately 200,000 square feet of the facility is built and operational–a total of five rooms growing high-quality flower. Michigan Pure Med’s retail footprint operates under the umbrella of the Common Citizen brand. Each retail location is designed to slow people down, provide a high level of education and normalize the consumption of cannabis. The COVID-19 pandemic has caused some fluctuation in demand, but Michigan Pure Med has developed curbside and delivery services and demand has largely normalized, according to Elias. Read More (New Cannabis Ventures)

EARNINGS

Aphria emerges as industry leader, reports fourth profitable quarter in a row. Ontario-based cannabis producer Aphria (APHA) reported its fourth consecutive quarter of positive adjusted EBITDA, separating itself from competitors that raked up collective net losses exceeding CAD $6 billion ($4.4 billion) in recent quarters. Aphria’s adjusted EBITDA – a measure of profitability – for the period ending February 29 rose to CAD $5.7 million, up substantially from its CAD $2 million in the previous quarter. The Leamington company also reported steady improvement in revenue. Net revenue rose 20% from the previous quarter to CAD $144 million. Aphria reported improved figures across the board. Kilograms sold doubled to 14,000 (30,865 pounds) for the December-February period. Cash and cash equivalents rose to CAD $515 million. Read More (Marijuana Business Daily)

Cannabis extractor Valens turns profit but warns of potential COVID-19 fallout. Canadian cannabis extractor The Valens Company (VGWCF) reported its fourth straight quarterly profit, a rarity in a sector that experienced rampant losses throughout 2019 – the first calendar year of legalization. The British Columbia company reported adjusted EBITDA of CAD $14 million ($10 million) for the December-February period – its first fiscal quarter of 2020. That’s lower than the CAD $17.7 million profit for the period ending in November. First-quarter revenue came in at CAD $32 million, up slightly from the previous quarter’s CAD $30.6 million. The company warned that it is unable to predict the full impact of the COVID-19 pandemic, despite surging retail demand for adult-use cannabis. Read More (Marijuana Business Daily)

Organigram misses Q2 expectations on higher costs despite Cannabis 2.0 launch​. Organigram Holdings’ (OGI) fiscal second-quarter results missed analyst expectations as the launch of Cannabis 2.0 products resulted in higher costs for the cannabis producer. The Moncton, N.B.-based pot producer said its second-quarter revenue was $23.2 million, down from $26.9 million in the same period a year earlier, and down sequentially from $25.2 million in the previous quarter. The decline in revenue was attributed to fewer sales of its traditional dried flower and oil products as well as lower prices amid increased competition in the Canadian recreational market. Analysts polled by Bloomberg expected the company to report $25.04 million in revenue and an adjusted EBITDA profit of $2.83 million. Read More (BNN Bloomberg)

Canopy Growth to book charge of up to $568 million as marijuana restructuring continues. Canopy Growth (CGC) said early it was halting a range of operations across three continents and expects its restructuring plans to result in a charge of up to CAD $800 million ($567.9 million) in the fiscal fourth quarter. Canopy said it was selling operations in Africa, curtailing cultivation of hemp in the U.S. and Columbia, and shutting down an indoor production facility in Canada. The announcement will result in 85 job cuts, the company said. Canopy’s restructuring announcement was expected by investors, Cowen analyst Vivien Azer wrote in a note to clients. Azer rates Canopy the equivalent of a buy, which she writes is the only such rating among Canadian weed stocks. Read More (Market Watch)

Planet 13 announces full year 2019 financial results and Q1 2020 revenue. Planet 13 Holdings (PLNHF) announced financial results for the three-month and twelve-month periods ended December 31, 2019. During 4Q19, compared to the quarter ended December 31, 2018: Revenues were $16.5 million as compared to $8.3 million, an increase of 99.8%; Gross profit before biological adjustments was $9.4 million or 57.1% as compared $4.2 million or 50.5%, an increase of 125.8%; and Net loss of $2.6 million as compared to a net loss of $3.1 million. In FY19, compared to the year ended December 31, 2018: revenues were $63.6 million as compared to $21.2 million, an increase of 200.4%; gross profit before biological adjustments was $36.5 million or 57.3% as compared $10.7 million or 50.4%, an increase of 242.0%. Read More (Newswire)

Eve & Co announces financial results for the year ended December 31, 2019. Eve & Co (EEVVF) provided the following highlights of its progress over the three months and year ended December 31, 2019 and subsequent events: 1) For the year ended December 31, 2019, the company generated revenue of $3,706,722, a 668% increase over the fourteen months ended December 31, 2018 of $482,663 due to the commencement of cannabis sales in December 2018; 2) For the three months ended December 31, 2019, the company reported revenue of $608,247, a 34% decrease from the three months ended September 30, 2019; and 3) The company reported a net loss and comprehensive loss for the three months and year ended December 31, 2019 of $3,115,693 and $5,706,489 respectively. Read More (GlobeNewswire)

CAPITAL MARKETS

As cannabis industry stays largely quiet on coronavirus, this CEO has been sounding the alarm. The “ah-ha!” moment for Organigram Holdings (OGI) chief executive Greg Engel came on March 9, when he was able to see a visible shift in the anxiety that Canadian authorities — including the Minister of Health — showed about the spread of COVID-19. You could see the level of concern across key people,” Engel said in a telephone interview, after the cannabis company detailed the early effects of the coronavirus on it business. “People’s anxiety level was increasing across the meetings of the day.” Organigram began monitoring the coronavirus in January as it ravaged China. Then, Engel said, he was concerned and taking steps to ensure the company’s supply of packaging and vaporizer pens was sufficient — the weed industry sources most of both from China. Organigram eventually became one of the first cannabis companies to start discussing and disclosing the coronavirus’ expected impact on its operations, publicly making changes to its operations in response to COVID-19 in February. Read More (Market Watch)

Did COVID-19 kill the cannabis industry’s merger and acquisition activity? According to new data, the week ending March 20, 2020 saw a nearly 67% decrease in merger and acquisition activity versus the same period in 2019. In 2019, there were over 290 merger and acquisition transactions in the cannabis industry. We’re now over 3 months into 2020 and there have been just 20 so far, leading many investors to questions whether or not the novel coronavirus has killed the marijuana industry’s M&A streak. With so many cannabis companies’ stock prices crushed down near 52-week and all-time lows, their cost of capital has greatly increased, making both capital raising and stock-based transactions far less feasible. Once characterized by its constant merger and acquisition activity, recent market volatility has put most of the marijuana industry’s M&A on freeze for the time being. That said, there are still some noteworthy pockets of activity. Read More (The Fresh Toast)

Cash dwindles, ‘extinction-level event’ looms. Several cannabis companies are set to run out of cash in the next few months as capital markets grind to a standstill. An analysis of 33 firms tracked by trade publication Marijuana Business Daily found that eight don’t have enough funding to last more than 10 months. It looked at the companies’ operating cash flow, cash on hand, unused credit facilities and new debt or equity and subtracted capital expenditures and debt due in 2020 to reach the conclusions, which were detailed in a presentation. “It’s going to be an extinction-level event for some companies,” said Craig Behnke, equity analyst at the trade publication commonly known as MJBiz Daily. “But it’s a healthy and necessary process for any industry to go through once it’s had a phase of absolute excess and exuberance.” Read More (Bloomberg)

Chart 11: Months of Cash Coverage – Running Low Source: Intro-Blue, Bloomberg, MJBiz Daily Investor Intelligence

Chart 11: Months of Cash Coverage – Running Low
Source: Intro-Blue, Bloomberg, MJBiz Daily Investor Intelligence

Aurora Cannabis increases $400 million at the market offering to $650 million, does reverse split to avoid NYSE delisting. Aurora Cannabis (ACB) will be increasing its recently completed $400 million at-the-market offering as the company previously indicated earlier last week. However, instead of the expected $350 million increase for the program, the company will only be increasing the figure by $250 million. It is unclear why Aurora elected to not utilize the full amount remaining in its previously filed prospectus to conducted a renewed ATM program. The company also said in a statement that it plans to consolidate all of its outstanding common shares on the basis of 1 common share for every 12 common shares currently outstanding effective on or about May 11, 2020. Aurora hopes that by doing a reverse split it can jack up the price per share in order to remain at the NYSE. Read More (the deep dive) and More (Green Market Report)

Toronto Stock Exchange to delist CannTrust shares May 6. Embattled Canadian cannabis producer CannTrust (CTST) shares will be delisted from the Toronto Stock Exchange on May 6 after market close, according to a TMX Group notice. TMX Group cited CannTrust’s “failure to meet continued listing requirements” as the reason for the action. CannTrust also disclosed the decision in an April 9 news release. In March, the New York Stock Exchange’s regulatory enforcement arm initiated the delisting process after concluding the producer “is no longer suitable for listing.” The NYSE said its decision was reached after the Ontario-based company obtained a creditor protection order from the province’s Superior Court of Justice. Read More (Marijuana Business Daily)

Cannabis technology firm Greenbits raises $23 million. California-based cannabis-technology firm Greenbits, which processes $3.7 billion in sales in more than 1,200 U.S. marijuana stores each year, raised $23 million in a financing round. Greenbits, based in San Jose, said it will use the Series B funding to accelerate sales, fund marketing, develop products, and expand into new markets. The company’s technology currently is used by recreational and medical marijuana stores in 13 states. Greenbits CEO Barry Saik said in a statement that, despite market volatility and the coronavirus pandemic, legal marijuana sales in the stores served by Greenbits have risen 25% year-over-year and are up almost 35% y/y in March. Read More (Marijuana Business Daily)

Sundial announces extension of credit facility waiver agreements. Sundial Growers (SNDL) announced that the company’s senior lenders have amended the terms of the March 30, 2020 waivers and agreements requiring completion of defined milestones by April 15, 2020 to require completion of those milestones by April 30, 2020. “These amendments illustrate the collaborative relationship between Sundial and its lenders,” said Zach George, Sundial CEO. “We appreciate the support of our lenders as we work to restructure our credit facilities, reduce costs and bring greater efficiency to operations.” Read More (Newswire)

James E. Wagner Cultivation cannabis assets up for grabs. The assets of Kitchener, Ontario-based cannabis cultivator James E. Wagner Cultivation (JWCAF) are up for sale for at least CAD $11.95 million ($8.61 million), the company said. The company, which recently entered creditor protection as part of a debtor-in-possession loan deal with cannabis sector lender Trichome Financial, saw its sales and investor-solicitation process plan approved by an Ontario court. The court also extended a stay of proceedings against JWC until June 26. Trichome Financial has been approved by the Ontario court as the stalking horse bidder in the sales and investor-solicitation process. Read More (Marijuana Business Daily)

Fire & Flower announces $25 million private placements. Fire & Flower (FFLWF) announced two proposed private placements for aggregate gross proceeds of up to $25 million. The offerings are comprised of (i) a non-brokered private placement of up to 19,800 8.0% secured $1,000 principal amount convertible debentures at a price of $1,000 per convertible debenture for aggregate gross proceeds of up to $19.8 million, and (ii) a non-brokered private placement of up to 5,200 subscription receipts at a price of $1,000 per subscription receipt for aggregate gross proceeds of up to $5.2 million. Each subscription receipt shall be automatically converted into one $1,000 principal amount convertible debenture upon the satisfaction of certain escrow release conditions. Read More (Newswire)

Hexo completes $46 million public offering. Hexo Corp. (HEXO) has completed its previously announced public offering, which has seen the company meet its obligations under current credit facilities. The firm managed to raise $46 million as a result of an over-allotted financing. The financing saw a total of 59,800,000 units sold at a price per share of $0.77, including 7,800,000 units associated with the over-allotment option. Each unit consists of one common share and one common share purchase warrant, with each warrant enabling having an exercise price of $0.96 and a term of five years. Funds from the financing are to be used towards working capital and general corporate purposes. Read More (the deep dive)

MEDICAL CANNABIS

InMed announces completion of initial Phase 1 clinical trial of INM-755 CBN cream in healthy subjects. InMed Pharmaceuticals (IMLFF), announced that all subjects participating in its 755-101-HV Phase 1 clinical trial have completed treatment and clinical evaluation. Study 755-101-HV is a randomized, vehicle controlled, double-blind, Phase 1 trial, examining the safety and tolerability of two strengths of INM-755 cream in 22 healthy adult volunteers over a 14-day treatment period. With treatment completed, InMed continues to anticipate reporting final study results in the second half of calendar 2020. “The end of the treatment phase is an exciting milestone and we now progress into sample analysis and data review,” said Alexandra Mancini, senior vice president of clinical and regulatory affairs. “The interim safety analysis of the blinded data from the first 16 subjects who had completed at least one week of treatment in this trial supported moving forward with activities to launch a second Phase 1 trial.” Read More (Extraction Magazine)

VA should let doctors ‘verbally’ recommend medical marijuana amid coronavirus, lawmakers say. Seven members of the Massachusetts congressional delegation are urging the head of the U.S. Department of Veterans Affairs (VA) to allow VA physicians to verbally recommend medical marijuana to military veterans amid the coronavirus pandemic. The letter, led by Sen. Elizabeth Warren (D-MA) and shared exclusively with Marijuana Moment, stresses that Massachusetts has shuttered recreational marijuana shops during the COVID-19 crisis, which has driven some to transition to the medical cannabis dispensaries that remain open as essential services under the governor’s order. Read More (Marijuana Moment)

Cannabis may ease opioid withdrawal symptoms, Johns Hopkins study finds. Researchers are calling for formal clinical trials into the efficacy of marijuana for treating opioid use disorder after a newly published study found that cannabis may ease many common symptoms of opioid withdrawal. The study, conducted by researchers at the Johns Hopkins University School of Medicine and published in the forthcoming issue of the Journal of Substance Abuse Treatment, asked 200 people with past-month opioid and marijuana use whether their symptoms of opioid withdrawal improved or worsened when they consumed cannabis. Of the 125 respondents who used marijuana to treat their withdrawal, nearly three-quarters (72 percent) said it eased their symptoms, while only 6.4 percent said it made them worse. Another 20 percent reported mixed results, and three people (2.4 percent) said cannabis didn’t seem to have an obvious effect either way. Read More (Marijuana Moment)

CBD/HEMP

CBD and COVID-19: How companies have evolved. As CBD companies navigate the COVID-19 outbreak one day at a time, they’re making changes large and small to keep their business afloat. From new purchasing methods to new products, companies are using COVID-19 to test the waters of a rapidly evolving landscape. Taking a note from cannabis dispensaries in legal states that are permitted to stay open, some CBD retailers, like Botanic Alternatives, have begun offering curbside and delivery services for their products. Some companies, like Cornbread Hemp, have gotten creative to meet customers where they are. With some of its retailers closed because of stay-at-home mandates, Cornbread Hemp has created new benefits for those buying directly from its website. Read More (Cannabis Business Times)

Florida hemp plan wins USDA approval in time for 2020 applications. Florida’s proposed hemp regulations have won federal approval, two weeks before the state plans to start taking applications for its first commercial hemp season. The U.S. Department of Agriculture signed off on Florida’s plan last week. Applications open April 27. Florida calls for hemp to be tested for total THC content in labs registered with the U.S. Drug Enforcement Administration. Florida also outlines hemp transportation rules. Those don’t need USDA clearance but include a requirement that hemp shippers stop at a state agriculture inspection station and show: a certificate of analysis on the material’s total THC content; a bill of sale including the place of origin; and a phytosanitary certificate for live plant material. Read More (Hemp Industry Daily)

Canada’s Canopy Growth to shutter New York growing operations. Canopy Growth (CGC), a global cannabis giant that muscled its way into the U.S. hemp market, has announced that it is shutting down its hemp-growing operation in New York state, citing a glut of hemp from last year. The Canada-based company will cease farming operations in Springfield, New York, but will continue using its hemp supply to produce hemp-derived CBD products for the U.S. market, the company said in a statement. The move is part of a shift in global strategy to optimize production and better align supply and demand in the current market, Canopy said. Read More (Hemp Industry Daily)

Virginia governor signs CBD food regulations into law. Virginia has joined other states in allowing CBD in food despite federal prohibitions. Gov. Ralph Northam recently signed the legislation that defines CBD as food and gives state regulators power to regulate the new industry. The Virginia Department of Agriculture and Consumers will be in charge of regulations and enforcement, including overseeing labeling requirements, identifying contaminants, and batch testing. The bill also establishes rules for facility conditions and requirements for producing hemp-derived products. Some hemp farmers like Charlotte Wright say the governor’s action “gives validity to the CBD industry.” Read More (Hemp Industry Daily)

Hemp’s legal status affords new agricultural labor options, but they come at a price. Farmers and businesses across the U.S. hemp supply chain can now access the same foreign guest worker labor that has long been available to other agricultural industries, offering new solutions for the labor-intensive crop. It’s a benefit that marijuana growers and businesses can’t yet tap into, as a federally illegal crop. But contrary to popular belief, accessing foreign labor isn’t cheap, and it’s not always easy to get. The H-2 guest worker program has long been essential to industries within the U.S., helping to boost the country’s economy and food security. Hemp farmers have not yet widely accessed agricultural guest worker programs because of the newly legal status of the crop. The coronavirus pandemic has made the national guest worker landscape touch-and-go. Using guest workers isn’t cheap, and it can be difficult to keep up with all of the bureaucracy involved, which is why many farmers use a professional service, agent or attorney to handle guest worker applications. Read More (Hemp Industry Daily)

Hemp salaries outgunning those for careers in mainstream agriculture. A survey gathering salaries for hemp farming positions from executive management to farm labor by HempStaff shows that careers in hemp farm management outpace pay for similar careers in traditional agriculture, based on farm salary data from the Bureau of Labor Statistics. Average annual pay for farmers, ranchers and other agricultural managers who manage traditional agricultural operations is just under $68,000. That compares to higher-level management positions at hemp farms, which top out at $150,000 per year for farm directors. Meanwhile, eight other hemp farm titles out-earn traditional farmers, ranchers and farm managers. Farm laborers earn less than half of the average salary for hemp cultivation workers, who make $52,000 annually, and hemp greenhouse technicians, who average out at $60,000 per year, the survey revealed. Read More (Hemp Industry Daily)

Chart 12: Salary Comparison – Hemp Farm Management vs. Mainstream Farm Management Source: Intro-Blue, Hemp Industry Daily, Bureau of Labor Statistics

Chart 12: Salary Comparison – Hemp Farm Management vs. Mainstream Farm Management
Source: Intro-Blue, Hemp Industry Daily, Bureau of Labor Statistics

Hemp salaries far outpace tobacco industry salaries. Salaries for employees at hemp companies are far outpacing those of their counterparts in the tobacco industry, according to an analysis by Hemp Industry Daily. At the top of the list, hemp CEOs are being paid an average of $255,000 annually, while CEOs in the tobacco industry earn $156,660. There’s also a large disparity between hemp and tobacco workers in lower-ranking jobs. For instance, a master of hemp extraction makes an average of $100,000 a year, while the extraction lead and the hemp extraction technician make $88,750 and $70,000 respectively. Meanwhile, the pressing and compacting machine setters at tobacco companies, along with operators and tenders, make an average of $42,110. A reason for the wage gap is that, unlike tobacco, hemp is an emerging market, which carries some risk and higher salaries are necessary to attract the top talent to leave Fortune 500 companies behind, according to Tom Siciliano, the Americas CEO for Elixinol, a global hemp-derived CBD brand. Read More (Hemp Industry Daily)

Chart 13: Salary Comparison – Hemp Executives vs. Tobacco Executives Source: Intro-Blue, Hemp Industry Daily, Bureau of Labor Statistics

Chart 13: Salary Comparison – Hemp Executives vs. Tobacco Executives
Source: Intro-Blue, Hemp Industry Daily, Bureau of Labor Statistics

Iowa manufacturer, Brazilian firm team up to deliver CBD products. Kemin Industries of Des Moines will act as the lead consultant for medical marijuana producer MedPharm Iowa, struck a deal in March with Brazilian distributor CBD Vida to deliver cannabinoid-containing products at pharmaceutical standards in Brazil, according to a statement from Kemin Industries. The products are due to be manufactured in Colorado and Michigan, the statement added. Terms of the partnership were not disclosed. Brazil recently changed its regulations on cannabis derivatives to allow patients with a prescription to buy products containing cannabidiol directly from pharmacies. Under the regulations, which took effect March 10, the bulk import of CBD and THC products is allowed by companies that have been granted a Sanitary Authorization by the Brazilian Health Regulatory Agency (Anvisa). Read More (Hemp Industry Daily)

Ohio deems CBD businesses nonessential. An Ohio agency focused on conflict management has decided which businesses in the state are essential during the coronavirus pandemic – and retailers selling CBD are reportedly not among them. The Ohio Commission on Dispute Resolution has decided that businesses selling CBD products are not essential, although state-licensed medical marijuana dispensaries are deemed essential businesses. Gov. Mike DeWine classified licensed medical marijuana cultivation facilities and dispensaries as essential businesses in a stay-home order he issued March 22. All decisions are effective within 48 hours and are said to be final; however, the commission’s members will meet periodically to address disputes, according to The Columbus Dispatch. Read More (Hemp Industry Daily)

Convenience stores adding CBD inventory despite pandemic. Convenience stores added CBD products to their inventories last month even as the coronavirus pandemic depressed sales, retailing analysts say. Convenience chains Circle K and Yesway added CBD products to shelves in March, according to CSP Daily News, which covers convenience store business. Circle K, a division of Laval, Quebec-based Alimentation Couche-Tard, started carrying CBD gummies, tinctures and topicals by Ignite International Brands in some 400 stores in North Carolina, South Carolina and Virginia, the news site reported. Read More (Hemp Industry Daily)

Kansas gets USDA nod, will take applications for 2020 until June 1. Kansas has won federal approval to oversee hemp production in 2020, saying farmers have until June 1 to submit applications for growing hemp this year. The state submitted a plan several months ago, and then resubmitted it in April to make suggested changes. Kansas’ updated regulations charge hemp farmers $100 to apply, plus an additional $1,200 per year for approved applicants. The state is putting no acreage limit or per-acre fees on top of the flat fees. The plan also includes: 1) THC tests to be carried out Kansas Department of Agriculture labs; 2) testing fees of $225 per sample, plus travel time and mileage for officers collecting samples; and a finding that growers with plants with more than 2% THC will be presumed more than negligent. Read More (Hemp Industry Daily)

RETAIL

COVID-19 sharpens focus on digital cannabis marketing in Canada. A captive audience in search of digital distraction, combined with boosted cannabis demand during the COVID-19 pandemic, means Canada’s marijuana businesses have an opportunity to fine-tune their online marketing and branding strategies, marketing experts say. A group of Canadian cannabis marketing leaders offered Marijuana Business Daily a list of tips for the nation’s cannabis firms, including: 1) Ensuring a digital media strategy is in place to start collecting consumer data; 2) Taking care to keep digital messaging relevant and appropriate; and 3) Stepping back to consider and communicate core brand values during an uncertain time. Read More (Marijuana Business Daily)

Alaska Marijuana Control Board approves emergency changes including curbside pickup. The Alaska Marijuana Control Board approved emergency changes to allow for curbside pickup of marijuana orders as well as a loosening of transportation rules during the COVID-19 pandemic. The emergency regulatory changes must first be approved by the governor’s office, and won’t be enacted until Lt. Governor Kevin Meyer signs off. During a special meeting, the Marijuana Control Board voted 3-2 in favor of allowing curbside pickup, and 4-1 in favor of changing regulations related to transportation. If approved, the regulations stay in place for 120 days, and can also be voided before the period ends if conditions permit. Alaska marijuana industry advocates argued that the regulations will reduce person-to-person contact in the course of retail marijuana sales. Read More (KTUU)

PRODUCTS

Molson Coors plans nonalcoholic CBD drinks in Colorado in new JV with Canadian marijuana company. Denver-based Molson Coors Beverage is partnering with a Canadian marijuana company to sell nonalcoholic hemp-derived CBD drinks, the companies announced April 14. Molson Coors and Hexo Corp. (HEXO) said the joint venture, called Truss CBD USA, will be established in Colorado and will be a stand-alone entity with its own board. It will be majority owned by Molson Coors. The venture is the latest partnership by the companies to enter the market of nonalcoholic beverages infused with THC or CBD. The companies have given no date for when the U.S. company’s beverages would hit shelves in Colorado. Read More (Hemp Industry Daily)

Cresco Labs launches new value brand, High Supply, for cannabis consumers on a budget. Multistate cannabis operator Cresco Labs (CRLBF) has launched a new value brand, High Supply, with the goal of offering quality products to consumers who want to spend less on cannabis and more on life experiences. The product portfolio includes vape pens, popcorn, shake and pre-rolls sold in bulk, single-serve packages. The products are produced from Cresco Labs-grown cannabis and are available at a lower price point than many of the company’s other offerings. The High Supply brand initially launched in Illinois in January and expanded to California earlier this month. Read More (Cannabis Business Times)

Cannabis infused beverages discover their own voice in legal cannabis for 2020. There is no category in the cannabis industry that has received more investment or positive speculation than infused beverages. However, the regulations and obstacles for growth within the sector are extremely restrictive. With all of this potential and increased frustration for infused beverage operators, a group of industry leaders from within the category came together to create an organization that can address all of the unique challenges that are faced on a daily basis. The Cannabis Beverage Association (CBA) announced their official formation as well as the founding board members and affiliated brands. Read More (Forbes)

SOCIAL

Frequent cannabis users are way too high … in their estimates of cannabinoids. Researchers surveyed nearly 500 Hash Bash attendees, asking them to fill out a 24-item questionnaire. Two-thirds of participants reported using cannabis every day, and most said it was for health or medical purposes. More than three-quarters of survey-takers said their knowledge of cannabis came from their own experiences. The study survey asked participants to fill in, in milligrams, the amounts they considered to be effective doses of THC and CBD. Participants could also check the box for “I don’t know.” Read More (Science Daily)

‘Cooked With Cannabis’ takes pot-infused cuisine to new highs. “There is a revolution taking the cooking world by storm and it’s all because of this star ingredient. Pot, weed, chronic, the sticky icky.” — Intro to “Cooked With Cannabis”. On each episode of the new reality/competition show “Cooked With Cannabis,” (on the heels of the 2018 Netflix series “Cooking on High”) three expert weed chefs raid the in-studio pantry stocked with CBD and THC and incorporate those two natural compounds into an appetizer, a main dish and a dessert — all prepared in a designated amount of time, and all to be consumed by the co-hosts and a guest panel of comics, ex-athletes and actors before one of the three competitors is awarded a $10,000 prize. Read More (Chicago Sun Times)

INTERNATIONAL

Danish health agency inspections on hold, including those for cannabis producers. Danish Medicines Agency inspections have been put on hold because of the COVID-19 pandemic. That means the country’s domestic medical cannabis businesses could face more delays in getting product to market as producers await certificates of compliance from the health agency. The agency announced the measure at the end of March. The Danish Medicines Agency issues certificates for cannabis-producing companies to confirm compliance with national regulations on the manufacture of marijuana in the pilot program. A certificate also confirms compliance with Good Manufacturing Practice for medicines, which is needed before a company can export medical marijuana products to other markets in the European Union. Read More (Marijuana Business Daily)

COVID-19 could be wake-up call for Mexican legislators to legalize marijuana, local experts say. Mexico is widely expected to miss the April 30 deadline to legalize cannabis, but local industry sources say the coronavirus outbreak might serve as a wake-up call for Mexican lawmakers to get the pending bill across the finish line. As the pandemic grabs the attention of policymakers around the world, cannabis-related draft laws and regulations are seeing delays – meaning businesses will have to wait to tap these opportunities. However, the fear of a looming recession could motivate lawmakers in Mexico to try to reap the economic benefits of a newly legalized cannabis industry, experts say. Read More (Marijuana Business Daily)

The Irish are trading cocaine for cannabis in lockdown: Police. Police predict cocaine use will drop while people are in lockdown at home. As for cannabis, which is also illegal, the source pointed out little change in demand. “Probably 60 percent to 70 percent of people who smoke weed do it at home watching television or walking the dog or fishing or whatever — that’s how they always smoked it, and that will continue,” the Garda source said. Here’s how the pandemic has had a significant impact on illegal trade and some long-standing gang feuds in these three areas in Ireland. As far as trading goes, the outbreak has put a stop to it. The demand for drugs hasn’t gone down, but it has dramatically changed. “Cocaine is on its knees now. It’s either not coming in or there is no demand for it as everyone isn’t out on a Saturday night. What is happening and this is just from chatting around the town, is that the demand for cannabis has increased significantly,” one source with knowledge of the drug trade in the town told MSN. Read More (The GrowthOp)

COVID-19 highlights need for domestic cannabis industry in the UK. The United Kingdom’s medical cannabis industry took great strides forward at the beginning of the year as the first cannabis clinics opened their doors to patients, but the global COVID-19 pandemic has caused supply chain challenges that highlight the need for a domestic cannabis industry, according to Mike Barnes, cannabis activist and founder of England-based Maple Tree Consultancy. The UK’s medical cannabis law took effect November 1, 2018, and allows medical specialists to prescribe cannabis to patients with any condition, although general practitioners and primary care doctors are not permitted to write medical cannabis prescriptions. Read More (Cannabis Business Times)

Australian cannabis company completes first export to UK. West Perth-based Little Green Pharma said it completed the first-ever commercial export of Australian-produced medical cannabis oil to the United Kingdom. The shipment moves Australia into competition with countries such as Canada and the Netherlands in the competitive – but so far unlucrative – medical cannabis export market. In March, the U.K. eased import restrictions for medical cannabis. Now, licensed wholesalers are able to import larger quantities of cannabis-based medicine and hold supplies for future distribution. Read More (Marijuana Business Daily)

The cannabis market in Oceania is estimated to reach value of $54.1 million in 2020, with Australia accounting for lion’s share. New Zealand should enjoy significant growth from the implementation of the Medical Cannabis Scheme in April 2020 onwards. The shift in reliance on imported products will mean that more revenue is generated from the industry in the coming five years than has been the case to date. That in turn will continue to encourage the laggard states and nations to consider the economic benefits of a fully legalized and regulated cannabis industry in the region. In 2024, the Oceania medicinal market will account for 38.7% of the total legal market with a total estimated value of $0.6 billion. Read More (Prohibition Partners)

Chart 14: Total Market Value of Oceania’s Cannabis Industry, by Geography, 2020 – 2024 Source: Intro-Blue, Prohibition Partners

Chart 14: Total Market Value of Oceania’s Cannabis Industry, by Geography, 2020 – 2024
Source: Intro-Blue, Prohibition Partners

 

Chart 15: Total Market Value of Oceania’s Cannabis Industry, by Segment, 2020 – 2024 Source: Intro-Blue, Prohibition Partners

Chart 15: Total Market Value of Oceania’s Cannabis Industry, by Segment, 2020 – 2024
Source: Intro-Blue, Prohibition Partners

*values here are less than $3 million, not an absolute figure of zero. The market value of the Oceania legal recreational market in 2020 is less than $3 million, which equates to 0.00 as a proportion of the total market overall for that year.

European cannabis: Key takeaways from global cannabis town hall. Per Europe specifically, New Frontier Data’s Chief Knowledge Officer John Kagia noted New Frontier Data’s estimates of European consumers’ annually spending €62.8 billion ($68.5 billion) on cannabis between the legal and illicit markets. That includes some 40 million regular consumers — representing approximately 6% of the adult population. More than one among three (37.6%) of European adults suffer from at least one condition that would qualify them for medicinal cannabis, representing about 320 million potential patients. April has seen more than 70% of Europe under some form of lockdown order — accounting for nearly 500 million European citizens. Kagia noted how especially impactful stay-at-home orders have been for nations which had just begun to establish legal markets, or that were in the process of building their legal markets’ foundations (e.g., Germany, Italy, and Switzerland). He reasoned that the current crisis will likely result in a loss of momentum for those affected nations. Read More (New Frontier Data)

Chart 16: Medicinal Cannabis Potential Source: Intro-Blue, New Frontier Data

Chart 16: Medicinal Cannabis Potential
Source: Intro-Blue, New Frontier Data

CANNA SCIENCE

Decontaminating medical cannabis in Israel: How to remove fungal pathogens. In Israel, the authorities of the Israel Medical Cannabis Agency and the Ministry of Health have been working to establish regulations that will set guidelines and standards for medical cannabis growers, including disease management protocols. In this study, researchers from Israel’s Agricultural Research Organization measured how three different sterilization methods (gamma irradiation, beta irradiation, and cold plasma) reduced fungal colony forming units (CFUs) in naturally infected commercial medical cannabis inflorescences. All the tested methods significantly reduced CFUs to those below regulated threshold levels permitted by the Israeli Medical Cannabis Agency of the Ministry of Health. Read More (Analytical Cannabis)

Could cannabis labs help with COVID-19 testing backlogs? The goal of Benjamin Orsburn’s, chief scientific officer at Proteomic and Genomic Sciences, little team is to build new instrument applications on the equipment that people already have. They work under the principle that any piece of analytical equipment, particularly mass spectrometers, can be refitted to do just about anything if you’re creative enough. COVID-19 is just a new challenge in the long line of those they have worked on. In this one, the stakes are just higher. In their study they propose this idea: ‘Hey – if you don’t have access to a COVID-19 testing kit, but you have access to a mass spectrometer, you could use it and here is the method you’d need for these five different brands of instrument.’ And the paper ends with an invitation to contact us for help. And people did. A day hasn’t gone by that he hasn’t been contacted by someone working on implementing these assays. The backlogs of testing are still horrendous. It doesn’t matter where you are today. Yes, there is reason for optimism from the new tests in the headlines and it’ll get better, but right now the lines are growing. Read More (Analytical Cannabis)

TECHNOLOGY

Online cannabis marketplace Dutchie now taking Visa, Mastercard payments in Canada. In an exclusive conversation online cannabis marketplace operator Dutchie revealed it has been quietly processing Visa and Mastercard payments in Canada since Thursday, April 9, enabled by a partnership with secure payment solutions provider Merrco. While cannabis is federally legal in Canada – unlike the U.S., implementing digital and/or contactless payment solutions continues to pose a challenge for most small businesses. Dutchie is among one of the first players in Canada to successfully launch Visa and Mastercard payments processing. Read More (Forbes)

The services and technologies connecting talent to cannabis companies. For business owners seeking consultants or temporary talent, new resources are making the search easier than ever. Companies like CannabizTEMP are offering employers a much-needed tool for sourcing skilled labor quickly and effectively. CEO and founder of CannabizTEMP Liesl Bernard shared how her team is able to effectively source qualified candidates for such a wide variety of positions: “We often find people from other industries, who can transition into the cannabis industry very easily, who have the necessary expertise. For instance, food, consumer packaging, wine and spirits; people who have dealt with regulated industries usually transition very well.” Read More (Green Entrepreneur)

Technologies helping keep cannabis productive. Throughout the COVID-19 quarantine, cannabis sales have been up, despite the interior of stores closing to limit contact. Online interfaces privately offered by many centers, such as Mankind in San Diego, have simplified the process so that customers only come by once their order is ready for pick up. Other companies, like Leafly and Weedmaps, offer online ordering through their websites for several cannabis centers. Cannabis delivery services throughout the world have also been servicing customers from the comfort of their own house, offering no contact delivery. Several of the online ordering platforms allow for delivery. This flexibility has proven to be a key feature in the survivability of the cannabis industry. Read More (Cannabis Tech)

LEGAL & IP

Kentucky farmers seek $69 million in suit charging RICO violations. A group of Kentucky farmers have filed a $69 million class action lawsuit in U.S. federal courts, alleging a processor who contracted to buy their 2019 hemp crops committed breach of contract and fraud. The petitioners say Bluegrass Bio-Extracts, Owensboro, Kentucky, and its owners, Gerald Edds and Bruce Peters, also engaged in “negligent misrepresentation,” “unjust enrichment,” and violations of the Racketeer Influenced Corrupt Organizations (RICO) Act, a federal law designed to combat organized crime in the U.S. The suit was filed in U.S. District Court in the Western District of Kentucky. Read More (Hemp Today)

$4 million award to El Salvador CBD business upheld in dispute with Florida company. A U.S. appeals court has upheld a $4 million judgment in favor of an El-Salvador based CBD oil supplier that accused its Florida distributors of breach of contract. The decision from the 11th Circuit Court of Appeals affirmed a decision from an arbitration panel the ruled in favor of Cromogen Biotechnology Corporation an all issues and awarded the $4 million judgment. Cromogen entered into a distribution agreement on June 2014 with Earth Science Tech, a company that distributes CBD-rich hemp oil throughout the U.S., according to the court. Read More (Hemp Industry Daily)

SUSTAINABILITY

Can cannabis save Florida’s waterways? When it comes to leeching pollutants out of the water, which plant is more voracious: toxic algae or cannabis? Or, more specifically, the kind of cannabis without the psychoactive THC – industrial hemp. The answer could be worth billions either way. The first leg of the challenge is progressing at two small lakes in Avon Park, on one of South Florida State College’s three campuses in central Florida. And if the experiment shakes down the way entrepreneur Steve Edmonds predicts, the outcome could solve a riddle no one has been able to figure out – how to clean up an ailing Lake Okeechobee. The fix could mitigate the scourge of red tide, and starve the karenia brevis algae that fouls Florida’s waterways. Read More (Herald Tribune)

CANNA FACTS

Chart 17: COVID-19 and Cannabis: Industry Outlook Source: Intro-Blue, New Frontier Data

Chart 17: COVID-19 and Cannabis: Industry Outlook
Source: Intro-Blue, New Frontier Data

CANNA CAPITAL MARKET TRENDS

Chart 18: Weekly Summary (April 6 – April 10, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 18: Weekly Summary (April 6 – April 10, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 18: Weekly Summary (April 6 – April 10, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 18: Weekly Summary (April 6 – April 10, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 19: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 19: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 20: Cannabis M&A Activity by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 20: Cannabis M&A Activity by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 21: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 21: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 21: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 22: U.S. Implied Forward Prices (Week Ending April 10, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 22: U.S. Implied Forward Prices (Week Ending April 10, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 23: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 23: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: WASHINGTON

Chart 24: Best-Selling Flower Brands and Products in Washington Source: Intro-Blue, Headset

Chart 24: Best-Selling Flower Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 25: Best-Selling Edibles Brands and Products in Washington Source: Intro-Blue, Headset

Chart 25: Best-Selling Edibles Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 26: Best-Selling Vapor Pens Brands and Products in Washington Source: Intro-Blue, Headset

Chart 26: Best-Selling Vapor Pens Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 27: Best-Selling Beverage Brands and Products in Washington Source: Intro-Blue, Headset

Chart 27: Best-Selling Beverage Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 28: Best-Selling Capsules Brands and Products in Washington Source: Intro-Blue, Headset

Chart 28: Best-Selling Capsules Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 29: Best-Selling Topical Brands and Products in Washington Source: Intro-Blue, Headset

Chart 29: Best-Selling Topical Brands and Products in Washington
Source: Intro-Blue, Headset

CANNA INDEX

Chart 34: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 34: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 35: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 35: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

Important Disclosures

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