CANNABIS 2.0 IS HERE AND COVID-19 IS ACCELERATING THE TRANSITION

Market share gains for marijuana products like edibles and vapor pens in Canada suggest that the transition from Cannabis 1.0 to Cannabis 2.0 is happening at a rapid pace, with stay-at-home restrictions imposed due to COVID-19 acting as an additional catalyst. The launch of cannabis products was widely expected to be the key growth driver for Canadian cannabis sales which are expected to climb from $1.6 billion in 2019 to $3 billion+ this year, according to various estimates. And initial trends suggest that consumer demand and preference for such products is rising rapidly. According to sales data from Alberta (AB), British Colombia (BC), and Ontario (ON) collected by Headset, the combined share of edibles and vapor pens has risen from less than 5% in December (when products were launched) to nearly 19% in April. On the other hand, flower and pre-rolls have seen their share drop from a combined 87.2% to 71.8% in the same time frame. Vapor pens are the biggest gainers, suggesting that health concerns surrounding these products have eased and consumers now feel comfortable buying them to satisfy their cannabis needs. Pre-rolls are the biggest losers as health concerns and social distancing protocols due to coronavirus mean that sharing/passing a joint is no longer a viable option. In addition, using pre-rolls, at least for regular consumers, often requires many little trips to the store, which is what everyone is trying to avoid right now. Overall, COVID-19 is accelerating the transition from Cannabis 1.0 to Cannabis 2.0, a trend that seems here to stay as customers get used to consuming cannabis in formats different from flower and pre-roll.

The same trend is visible in the U.S. with growth in sales of edibles outpacing all other formats, and pre-rolls experiencing a decline.  Headset data from key cannabis consuming states – California, Colorado, Nevada, and Washington – shows that average daily sales of edibles through March rose 28% between the pre-COVID time frame (Jan 1 to March 6) and COVID time frame (March 7 to March 30). Brand sales data points to the same trend as average daily sales of Kiva (leading edibles brand in CA) grew 35% after the onset of COVID with one of its top sellers, Camino Wild Cherry Gummies 20-Pack (100mg), experiencing a 115% increase in average daily sales compared to the pre-COVID period. In Washington state, sales are led by the Craft Elixirs brand which has seen its sales grow 67% since the beginning of COVID-19. Pre-rolls are the losers here as their average daily sales declined 13% in the comparable time frame, implying that the shift away from pre-rolls toward high-margin products is underway in the U.S. as well.

Canopy Growth (CGC) and The Valens Company (VLNCF) are the two names favorably positioned to benefit from these trends. As we discussed in our Stash report last week, Canopy has taken the lead in developing a portfolio of brands – Tweed, Tokyo Smoke, DNA Genetics, First&Free, This Works, Houseplant, etc. – that are aimed at the edibles, beverage, and vaping segments. Its edibles portfolio includes craft chocolate produced in collaboration with award-winning chocolate maker, Hummingbird Chocolate, while its vape pen portfolio boasts of products like Tokyo Smoke Luma, JUJU Power, and Juju Joints – all of which will have the UL 8139 safety certification and are aimed at enhancing user experience. This, coupled with improving fundamentals, make CGC the licensed producer (LP) that is best positioned to grow its market share as penetration of cannabis products increases. Valens provides extraction, testing, formulation, and white-label product development services to LPs like CGC, HEXO, Organigram, and Tilray that are expected to lead the rollout of cannabis products. Its extraction capacity is the highest among its peers and its agreements with LPs are typically for two or more years. This provides significant revenue and cash flow visibility to Valens, resulting in strong fundamentals, a theme we discussed in our February 19 Stash report and one that assumes even more significance in light of the sales data above, making Valens the best extraction play on the Cannabis 2.0 market.

Chart 1: Edibles and Vapor Pens Are Rapidly Taking Market Share Away from Flower and Pre-Rolls in Canada  Source: Intro-Blue, Headset

Chart 1: Edibles and Vapor Pens Are Rapidly Taking Market Share Away from Flower and Pre-Rolls in Canada
Source: Intro-Blue, Headset

CANNA NEWS

COVID-19

Cannabis banking included in House Democrats’ $3 trillion coronavirus stimulus bill. A provision that would permit banks to serve state-legal marijuana businesses without fear of federal reprisal is part of a $3 trillion coronavirus stimulus bill announced by U.S. House Democrats. The SAFE Banking Act, which the U.S. House overwhelmingly approved in September, is included in its entirety in the 1,815-page bill. A vote on the bill could come later this week. “The inclusion of the SAFE Banking Act is recognition that cannabis businesses have been classified as essential. Prohibiting these businesses from banking and forcing cash-only transactions in the middle of a global health crisis is irresponsible and wrong,” said Oregon Rep. Earl Blumenauer. Read More (Cannabis Wire) And More (Marijuana Business Daily)

Cannabis in high demand amid coronavirus pandemic. According to cannabis industry analytics firm Headset, pot sales in the U.S. spiked in mid-March, with sales growth peaking at 64% in the week ended March 16 — the highest growth rate since at least the beginning of 2019. But after people had apparently replenished their stockpiles for fear dispensaries might be closed amid virus shutdowns, sales decelerated during the last two weeks of the month to the “mid- to high-single-digit range,” the Headset analysts said. Stephen Murphy, founder of Prohibition Partners, says moves by state governments to keep pot stores open show how deeply the cannabis industry is already rooted in the U.S. economy. Read More (DW)

How COVID-19 is changing cannabis. Since the COVID-19 pandemic took hold of the U.S. last month, the legal cannabis industry has transformed the crisis into an opportunity to demonstrate maturity, dismantle biases, and solidify its role in the economy, communities, and people’s lives. While challenges persist, the last six weeks have represented a major leap forward for the sector that will help position it for long-term success in several ways. The cannabis industry immediately notched a significant victory when states announcing shutdowns almost unanimously declared medical cannabis businesses “essential” during the pandemic, allowing them to stay open. Read More (Forbes)

Five ways quarantine has changed the cannabis industry forever. For certain consumers, cannabis—once likely considered a discretionary purchase—has also been added to that list, fueling an unprecedented green rush with record-breaking sales since lockdown went into force in March. “Stocking up is the new norm,” said Roy Bingham, co-founder and CEO of analytics firm BDSA, with Brightfield Group finding that 57% of cannabis consumers say they have already stocked up, or plan to do just that. Though the surge is welcome news for the industry, it doesn’t solve some of cannabis’ endemic problems. Heavily taxed but still federally illegal, weed businesses aren’t currently receiving any government-backed bailouts or pay protection in the small business stimulus package (though lobbyists and a few legislators are trying to change that for future rounds of pandemic relief). Read More (Adweek)

Coronavirus: The tide is coming for medicinal cannabis. Cannabis researchers in Canada say the plant-based drug may provide resistance to SARS-CoV-2. Their preliminary findings are part of broader research into the use of medicinal cannabis in treating cancer. If the study, which is not yet peer reviewed, can be verified, it would appear that cannabis works in a similar way to nicotine. “The results on COVID-19 came from our studies on arthritis, Crohn’s disease, cancer and others,” says Dr. Igor Kovalchuck, a professor of Biological Sciences at the University of Lethbridge, in an email to DW. Read More (DW)

Could economic slide lead to more California cannabis industry opportunities? Some industry experts say yes. The economic downturn stemming from the COVID-19 crisis is going to leave government officials at all levels scrambling for fiscal stimulation nearly anywhere they can find it to offset lost tax revenues and jobs. As a consequence, some in the California cannabis industry see a window to expand marijuana businesses’ footprints around the state. “A lot of the cities … are concerned about revenue streams when we come out of this pandemic. We know unemployment is going to be sky-high,” noted Daniel Yi, chief communications officer at Shryne Group, a large vertically integrated California marijuana company. Read More (Marijuana Business Daily)

Local cannabis companies face extinction; Recreational marijuana businesses plead with Massachusetts lawmakers for state loan program amid pandemic. It took almost two years for Massachusetts marijuana company T. Bear to receive approval to commence operations, which finally came down on March 20, recounted owner and CEO Angela Brown. That approval authorized the East Wareham company to start operations on March 24, which happened to end up being the day an order from the governor shut down businesses deemed non-essential, including marijuana companies. “Just one day before we were able to make our first sale, we were shut down,” said Brown, testifying before state lawmakers in support of a bill that would offer a Massachusetts version of the federal Paycheck Protection Program, or PPP, amid the COVID-19 pandemic. Read More (Masslive)

Nevada OKs resumption of in-store sales for some marijuana retailers. Approved recreational cannabis retailers in Nevada will be allowed to conduct in-store sales starting May 9 as part of the governor’s broader plan to open up the state amid the COVID-19 pandemic. Nevada regulators had softened rules for marijuana stores as the coronavirus outbreak developed, at first only allowing delivery and then permitting curbside sales. Now, effective May 9, retailers can resume selling marijuana in stores after submitting a plan and receiving approval from the state’s Marijuana Enforcement Division. Read More (Marijuana Business Daily)

How cannabis growers are handling labor and safety challenges during COVID-19. Marijuana cultivators are finding new ways to manage labor to meet the challenges caused by the coronavirus pandemic. This is yet another sector in the cannabis industry to adapt its operations in response to COVID-19, similar to retailers, for example, who have been using drive-thru and curbside pickup to keep customers and employees safe. In some states, growers are experiencing increased demand for cannabis from retailers and developing staffing solutions to account for the uptick. Others have avoided furloughing the cultivation crew or reducing hours by shifting work schedules. Read More (Marijuana Business Daily)

Adult-use cannabis markets see uneven impact in April from coronavirus crisis. According to point-of-sale data provided by Seattle-based Headset, April 2020 recreational marijuana sales in Washington state eclipsed $106 million, a record for the state. Adult-use cannabis sales in California still rose in April 2020 compared to April 2019, but the gain was substantially less compared to monthly sales growth before the pandemic. In Colorado and Nevada, monthly sales declined on a year-over-year basis for the second consecutive month. The data provides some evidence that demand for cannabis holds strong – and perhaps even increases – during times of significant financial duress. Read More (Marijuana Business Daily)

Chart 2: Adult-Use Cannabis Sales by Month and Market in 2020 – Percent Change vs. Same Month in 2019  Source: Intro-Blue, Marijuana Business Daily, Headset

Chart 2: Adult-Use Cannabis Sales by Month and Market in 2020 – Percent Change vs. Same Month in 2019
Source: Intro-Blue, Marijuana Business Daily, Headset

Most California marijuana industry legislative priorities likely dead for the year due to COVID-19. Count the California marijuana industry’s legislative agenda among the victims of the coronavirus. Although the state Assembly reconvened on May 4 after the entire legislative session was suspended in mid-March because of the pandemic, the state Senate won’t return until May 11. And it’s clear there is only one major priority for Assembly members: handling the COVID-19 fallout. That’s left cannabis industry advocates confronting the political reality that they’re unlikely to make much headway – if any – this year, especially with a pared-back schedule for lawmakers and a tight time frame for passing legislation in the coming weeks. Read More (Marijuana Business Daily)

Ontario extends curbside pickup and delivery for cannabis stores. The Ontario government has extended an emergency order temporarily allowing privately owned cannabis stores to offer curbside pickup and home delivery. The order proved to be a short-term lifeline for Ontario’s adult-use stores, which were initially included on the government’s list of essential services as the province grappled with the COVID-19 pandemic, before they were removed from the list and ordered to close last month. Outside Ontario, most privately owned cannabis stores in Canada are barred from offering home delivery, hampering their ability to serve customers and compete with illicit sellers. Read More (Marijuana Business Daily)

STATE AND REGULATORY NEWS

Oklahoma cannabis industry smashes record monthly sales number in April. Oklahomans rushed to purchase another product in record volume last month, as medical marijuana dispensaries logged enough sales to spike tax collections by more than 25%. According to the Oklahoma Tax Commission, dispensaries remitted almost $9.8 million in state taxes during April. That includes traditional sales taxes and the 7% medical marijuana levy. The tally smashes the previous record of $7.8 million set in March, and is the highest month-to-month increase since last summer. An analysis of tax collections shows Oklahomans spent about $61.4 million on medical marijuana last month, or nearly $217 per licensed patient. Read More (The Oklahoman)

Illinois recreational marijuana sales exceed $37 million in April. Preliminary numbers for Illinois recreational marijuana sales in April totaled $37,260,497.89, the Illinois Department of Financial and Professional Regulation announced May 4. The IDFPR says 818,954 items were sold over the 30-day period, with Illinois residents spending $29,735,650.41 and out-of-state sales totaled $7,524,847.47. Both sides of the cannabis industry were included as essential businesses during the governor’s stay-at-home order amid the novel coronavirus pandemic to ensure the cannabis supplier industry protects medical cannabis patients during the COVID-19 pandemic, according to a release by the IDFPR. Read More (Week)

Massachusetts regulators say recreational cannabis shops can reopen safely. Massachusetts cannabis regulators said on May 7 that they believe recreational marijuana retailers closed by an emergency order issued in light of the ongoing coronavirus pandemic can safely reopen when Gov. Charlie Baker rescinds the declaration. Baker issued the order in March, directing adult-use cannabis shops to close along with other nonessential businesses to help contain the spread of the virus. Medical marijuana dispensaries retailers were deemed essential services and permitted to remain open. Read More (High Times)

90% of California cannabis licenses reside in 10 counties. California’s fabled Emerald Triangle (i.e., Humboldt, Mendocino, and Trinity counties) accounts for half of California’s cannabis licenses, affirming the region’s longstanding reputation as the nation’s top-producing cannabis region. The licensing distribution widens the north-south divide in the state’s cannabis cultivation, with those plus Sonoma, Lake, and Yolo counties anchoring northern production while Santa Barbara, Los Angeles, and Monterey counties lead production to the south. While most companies hold fewer than 10 licenses, nearly one-fifth (18%) among more than 5,000 issued cultivation licenses are held by just 20 companies, signaling early consolidation in the space. Read More (New Frontier Data)

Chart 3: Top 10 California Counties for Cannabis Cultivation Licenses  Source: Intro-Blue, New Frontier Data

Chart 3: Top 10 California Counties for Cannabis Cultivation Licenses
Source: Intro-Blue, New Frontier Data

Los Angeles marijuana market remains chaotic as entrepreneurs wait for Mayor, City Council to act. The Los Angeles cannabis industry has proved to be one of the most unruly and chaotic to govern according to industry experts, and over two years into its licensing process the market remains plagued by frustration, delays and hundreds of thousands of dollars wasted by marijuana entrepreneurs. The city’s latest licensing round – for 100 social equity retail permits – has been on hold since October 2019 and will remain so until Mayor Eric Garcetti tells the L.A. Department of Cannabis Regulation (DCR) to restart the process. That means it’s unclear when those shops can open. Read More (Marijuana Business Daily)

Arizona activists continue efforts to qualify cannabis ballot initiative: Legalization Watch. Smart and Safe Arizona has already collected more than the minimum number of signatures required to qualify its adult-use cannabis legalization measure for the state’s 2020 ballot, but the campaign is continuing its efforts in spite of the COVID-19 pandemic to ensure it has enough valid signatures to get the issue before voters this fall. The statutory measure would allow adults 21 and older to purchase and possess up to one ounce of cannabis, as well as grow up to six plants at home for personal use. The Arizona Department of Health, which already regulates the state’s medical cannabis program, would oversee the adult-use industry, which would launch by June 1, 2021, under the initiative. Read More (Cannabis Business Times)

Michigan’s cannabis industry grapples with new regulations surrounding caregiver products. On April 8, the Michigan Marijuana Regulatory Agency (MRA) issued an advisory bulletin saying that the state’s adult-use cannabis retailers can no longer purchase products produced by caregivers, who have been cultivating cannabis for patients since Michigan legalized medical cannabis in 2008. Under the new regulations, only medical dispensaries can continue sourcing cannabis from caregivers. This is a sudden shift from a plan that MRA outlined in a March 1 bulletin, which immediately barred licensed dispensaries from purchasing cannabis concentrates, vape cartridges and other infused products from the state’s caregivers, but which allowed retailers to continue sourcing flower from caregivers until October 1. Read More (Cannabis Business Times)

Montana marijuana activists will begin signature gathering for legalization measure with new safety protocols. Montana activists announced that they will proceed with a signature gathering drive for a marijuana legalization initiative, and they laid out multiple internal policies that will be in place to protect circulators and the public during the coronavirus pandemic. New Approach Montana is behind two proposed ballot measures: one statutory initiative to establish a regulated cannabis market for adult use as well as a constitutional amendment stipulating that only those 21 and older can participate in the market. Read More (Marijuana Moment)

Florida high court considers marijuana vertical integration, adult-use vote. The Florida Supreme Court heard arguments via teleconference on two issues that could significantly alter the state’s marijuana industry. One case is a longstanding issue of whether the vertically integrated structure of the Florida’s medical marijuana industry violates the state constitution. So far, lower courts have agreed with the assertion by the plaintiff, Tampa-based firm Florigrown, that the state law requiring vertical companies runs counter to a voter-approved constitutional amendment that legalized MMJ in 2016. The other case before the Florida high court deals with whether a recreational marijuana ballot proposal can go before voters. Read More (Marijuana Business Daily)

Top Minnesota lawmaker unveils long-delayed ‘best’ marijuana legalization bill in the country. As states begin taking steps toward normalcy, Minnesota House Majority Leader Ryan Winkler (DFL) has finally revealed the promised bill, introduced on May 5 with 33 cosponsors. “Our current priority is responding to the COVID-19 pandemic,” he said after filing the legislation, “but after the town halls and discussions around this issue, we still wanted to put a strong bill forward. As we look to come out of this crisis as a better, stronger Minnesota, we need to continue working toward legalizing cannabis for responsible adult use.” Read More (Marijuana Moment)

U.S. cannabis spot index up 0.6% to $1,342 per pound, June forward unchanged at $1,425 per pound. The simple average (non-volume weighted) price increased $21 to $1,568 per pound, with 68% of transactions (one standard deviation) in the $815 to $2,320 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.96 and the simple average price was $3.46. The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. Read More (Cannabis Benchmarks)

Chart 4: Cannabis Benchmarks U.S. Spot Index   Source: Intro-Blue, Cannabis Benchmarks

Chart 4: Cannabis Benchmarks U.S. Spot Index
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 5: Cannabis Benchmarks U.S. Implied Forward Curve  Source: Intro-Blue, Cannabis Benchmarks

Chart 5: Cannabis Benchmarks U.S. Implied Forward Curve
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 6: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational  Source: Intro-Blue, Cannabis Benchmarks

Chart 6: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational
Source: Intro-Blue, Cannabis Benchmarks

Five reasons cannabis 2.0 sales will disappoint in Canada. 1) Ontario’s inadequate retail footprint – Despite 38% of Canada’s residents living in Ontario, only a little over four dozen dispensaries were open, as of March 2020. By comparison, this is a province that could comfortably house 1,000 retail locations. 2) Another problem stemming from the spread of the coronavirus is that it’s closed dispensaries to in-store traffic. 3) Alberta, Quebec, and Newfoundland & Labrador ban vapes. 4) Some part of the blame for a weak Cannabis 2.0 launch likely lies with licensed producers whose balance sheets are an absolute mess. 5) Consumers are less willing to go out when it’s cold, wet, or snowing outside, making it likely that we see some initial weakness in Cannabis 2.0 sales as a result of the timing of when these products were launched. Read More (The Motley Fool)

Cannabis Benchmarks expects medical use to fall in Ontario, resulting in an overall drop in Canada’s medical use. Sales of medical cannabis products in Canada have dropped significantly since the opening of the recreational market. Health Canada data from between October 2018 and September 2019 shows a strong negative correlation between medical and recreational cannabis sales, which indicates that existing medical patients are switching to the recreational market. Cannabis Benchmarks has modeled consumption for medical use between October 2019 and February 2020, with an average of 1,232 kg per month. Currently, Ontario makes up 47% of total medical market consumption. With the opening of more retail locations for recreational cannabis in the province, we expect medical usage to decline in Ontario, leading to an overall drop in the medical use category, as shown below. Read More (Cannabis Benchmarks)

Chart 7: Scatterplot of Dry Cannabis Consumption by Medical and Recreational Consumers – Canada  Source: Intro-Blue, Cannabis Benchmarks

Chart 7: Scatterplot of Dry Cannabis Consumption by Medical and Recreational Consumers – Canada
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 8: Dry Cannabis Consumption by Medical Patients in Canada (Kilograms)  Source: Intro-Blue, Cannabis Benchmarks

Chart 8: Dry Cannabis Consumption by Medical Patients in Canada (Kilograms)
Source: Intro-Blue, Cannabis Benchmarks

COMPANY NEWS

Curaleaf powers through pandemic with major acquisitions and brand integration. Curaleaf (CURLF) has continued to expand its U.S. footprint through a combination of strategic acquisitions and organic growth. CEO Joe Lusardi last spoke with New Cannabis Ventures in September 2019, and he touched base to talk about additions to the leadership team. At the end of 2019, Joseph Bayern stepped into the role of president. Previously the CEO of VOSS Water, Bayern brings CPG expertise to the team. Lusardi also offered updates on the company’s pending and recently completed acquisitions. The company has cleared federal hurdles in the Grassroots transaction, according to Lusardi. Now, it is working with state regulators to get the necessary approvals to close the deal. Read More (New Cannabis Ventures)

Aphria sheds staff, including marketing boss, amid strategic shift. Aphria (APHA) has laid off roughly a dozen employees, including its chief marketing officer, as the pot giant looks to streamline some of its operations ahead of its next fiscal year, the company’s chief executive said.  Aphria CEO Irwin Simon told BNN Bloomberg that the company recently let “less than one percent” of its staff go after deciding to combine some of its marketing and sales teams. The Leamington, Ont.-based company has about 1,200 employees globally, a spokesperson said. “I’m strategically changing our business and doing some consolidation,” Simon said in a phone interview. “I’ve run businesses for 25 years and there are times when you look at how you strategically align your businesses.” Read More (BNN Bloomberg)

Aphria announces receipt of EU GMP certification for subsidiary ASG Pharma and liquidation of promissory note. Aphria (APHA) announced that its subsidiary, ASG Pharma, has received its European Union Good Manufacturing Practices (EU GMP) certification from the Malta Medicines Authority (MMA) in respect of production of cannabis for medicinal and research purposes. The company also announced the liquidation of its CAD $39 million promissory note from GA Opportunities Corp. for proceeds of approximately CAD $26 million. Read More (Newswire)

Cresco Labs completes expansion of cultivation and manufacturing facility in Pennsylvania. Cresco Labs (CRLBF) has announced that it has completed the expansion project for its cultivation and manufacturing facility located in Brookville, Pa. The expansion project provides an additional 66,000 square feet of indoor and greenhouse cultivation area, bringing the total cultivation space in the facility to 88,000 square feet. The Brookville site supplies Cresco’s house of brands to 100% of the licensed dispensaries in Pennsylvania and the company currently maintains one of the largest wholesale market shares. Read More (Cannabis Business Times)

MediPharm Labs Australia inks deal to supply New Zealand with medical cannabis. MediPharm Labs Australia (MEDIF) agreed to supply a company in New Zealand with white label medical cannabis oil products. New Zealand’s medical cannabis scheme commenced in April. But until the country’s domestic producers are licensed and fully operational, New Zealand will rely on imports to meet demand. New Zealand company Cannasouth will have exclusive rights to the formulation and dosage forms set out in the two-year deal. Per the white label arrangement, MediPharm will supply the products with Cannasouth’s branding. Read More (Marijuana Business Daily)

MedMen temporarily shutters five medical cannabis outlets in Florida. Los Angeles-based MedMen Enterprises (MMNFF) temporarily closed five of its eight Florida medical marijuana dispensaries on May 3, according to the company’s website. A spokesperson for the multistate marijuana operator didn’t offer much clarity on the closures, which were first reported by Florida Politics. “We cannot provide comment at this time, but as soon as plans are confirmed, we will be in touch,” the spokesperson wrote in an email to Marijuana Business Daily. MedMen has been struggling financially and recently announced it had hired a management advisory firm, SierraConstellation Partners, to help develop a turnaround plan. Read More (Marijuana Business Daily)

The Green Organic Dutchman receives Health Canada license amendment for Valleyfield hybrid greenhouse. The Green Organic Dutchman (TGODF) has announced that it has received Health Canada’s approval for the totality of its main Valleyfield hybrid greenhouse. With all 24 zones now licensed, TGODF has the flexibility to quickly expand its operations at Valleyfield as the market develops. The company also plans to leverage parts of the newly licensed space to shift a portion of its processing activities currently being handled at Ancaster or intended to be outsourced to third parties in order to optimize costs and production timelines of its 2.0 products. Read More (Cannabis Business Times)

Khiron imports first product to U.K., receives first European prescriptions. Khiron Life Sciences (KHRNF) has officially entered the U.K.’s medical cannabis market, announcing this morning the receipt of its first prescriptions for patients within the country. The prescriptions are via Project Twenty21, Europe’s first and largest medical cannabis registry study. The first import of EU GMP medical cannabis products has now been completed, and the first prescriptions under the supply agreement now received. Twenty21 has also secured a strategic partnership with a fully certified fulfillment partner whom can provide home delivery to patients for Khiron’s medical cannabis products. Read More (the deep dive)

High Times hires third CEO in one year. CEO Stormy Simon is out at Hightimes Holding after just four months. Former Green Growth Brands (GGBXF) Peter Horvath is in. This is the third CEO for the iconic publisher High Times in just 13 months as the company pivots away from events and news and instead heads towards the dispensary side of the industry. “We are pleased to welcome Peter to the High Times family, and to be able to tap into his wealth of experience capitalizing on major consumer brands. There are few executives with his retail experience in the mainstream world and, up to this point, none in the cannabis world with such an accomplished background,” Hightimes Holding executive chairman Adam Levin said. Read More (Green Market Report)

How SoRSE Technology is formulating CBD products in a pandemic. In Seattle, technicians at a SoRSE Technology lab are staggering the times they come in and out of the office to get raw materials or spreading their hours over multiple shifts. Some of the company’s chefs have shifted to making prototypes in their home kitchens to continue developing CBD products as interest in infused food and drink increases during the pandemic. A recent report from New Frontier Data predicted there could be almost $3 billion in U.S. cannabis product sales in 2020 as consumers quarantine. To take advantage of this growing market, SoRSE Technology is changing up its typical methods with its lab work and partnerships. Read More (Food Dive)

TerrAscend strengthens partnership with Precision Extraction Solutions. TerrAscend (TRSSF) announced an expanded partnership with Precision Extraction Solutions. Through a newly signed agreement, Precision, a Detroit-based company with an extensive portfolio of cannabis extraction, refinement, and processing technologies, will provide state-of-the-art equipment for TerrAscend’s current and future product lines. Precision is designing a multi-solvent lab in TerrAscend’s New Jersey facility, currently under construction in Boonton Township. Read More (Newswire)

Profitable Cannabis NB outperforming some companies bidding to take it over. The New Brunswick government has restarted a review of proposals by private operators to take over cannabis retailing in the province, even as Cannabis NB has turned its first profit and some of its potential replacements pile up financial losses of their own. Still, at least one industry analyst believes those developments are not a reason for the province to back down from its plan to unload the Crown corporation. “The government has made this commitment. I think the smartest thing would be for them to go ahead with it unless of course the proposals are wholly inadequate. We don’t have any visibility there,” said Brad Poulos, an instructor in the Ted Rogers School of Management at Ryerson University in Toronto. Read More (CBC)

EARNINGS

Epidiolex growth fuels GW Pharma revenue above expectations to $120.6 million. GW Pharmaceuticals (GWPH) announced financial results for the first quarter ended March 31, 2020. Total revenue for the quarter ended March 31, 2020 was $120.6 million compared to $39.2 million for the quarter ended March 31, 2019. Net loss for the quarter ended March 31, 2020 was $8.0 million compared to a net loss of $50.1 million for the quarter ended March 31, 2019. Cash and cash equivalents at March 31, 2020 were $500.9 million compared to $536.9 million as of December 31, 2019. U.S. Epidiolex Q1 net product sales of $106.1 million. Successful commercial launches in Germany and UK. Important pricing & reimbursement progress in Germany & Italy. Commercial launches in France, Spain, and Italy on track for later this year. Read More (New Cannabis Ventures)

Tilray Q1 cannabis revenue grows 9% sequentially to $30.8 million. Tilray (TLRY) announced financial results for the first quarter ended March 31, 2020. Quarterly revenue Increased 126% to $52.1 Million (CAD $70.7 Million) compared to the 1Q19 and 11% sequentially from 4Q19. International medical cannabis sales exceeded Canada medical sales by 43% in the quarter. Implemented cost reductions designed to achieve approximately $40 Million annualized savings. Reduced net loss by $35 million, or 16%, compared to the 4Q19. Adjusted EBITDA was a loss of $19.7 million compared to a loss of $15.3 million in the first quarter of 2019. The moderate increase in Adjusted EBITDA loss was largely the result of increased costs in general and administrative expenses related to commercial growth initiatives and increased operating costs related to our cultivation efforts. Read More (New Cannabis Ventures)

Cronos books only $165,000 in overseas revenue for first quarter of 2020. Canadian cannabis producer Cronos Group (CRON) reported $165,000 in net revenue from customers outside Canada and the U.S. in its latest quarter. Potential revenues of cannabis products overseas – especially in Europe – underpin valuations for many Canadian marijuana firms. So far, those sales have not materialized, with most marijuana publicly traded companies reporting negligible global revenues. In Cronos’ disclosure, it said its cannabis facility in Israel “continues to move closer to operational readiness and is expected to become a growth driver for the company in the back half of 2020 and onward.” Read More (Marijuana Business Daily)

Cannabis REIT triples revenue in Q1 to $21.1 million. Innovative Industrial Properties (IIPR) announced the results for the quarter ended March 31, 2020. IIPR generated total revenues of approximately $21.1 million in the quarter, representing a 210% increase from the prior year’s first quarter. IIPR recorded net income available to common stockholders of approximately $11.5 million for the quarter, or $0.72 per diluted share, and adjusted funds from operations (AFFO) of approximately $17.8 million, or $1.12 per diluted share. Net income available to common stockholders and AFFO increased by 249% and 236% from the prior year’s first quarter, respectively. IIPR paid a quarterly dividend of $1.00 per share on April 15, 2020 to common stockholders of record as of March 31, 2020, representing an approximately 122% increase over the first quarter 2019’s dividend. Read More (New Cannabis Ventures)

Scotts Miracle-Gro’s Hawthorne division grows Q2 revenue 60% to $230 million. Scotts Miracle-Gro (SMG) announced company-wide sales increased 16 percent in its fiscal second quarter driven by strong volume growth in both major business segments. For the fiscal second quarter, the company reported sales of $1.38 billion, up 16 percent from $1.19 billion a year earlier. U.S. Consumer segment sales increased 11 percent to $1.10 billion. Sales for the Hawthorne segment increased 60 percent to $230.0 million. The company-wide gross margin rate was 39.8 percent on a GAAP basis and 40.0 percent on a non-GAAP adjusted basis compared with a rate of 39.7 percent and 39.8 percent respectively a year ago. The quarter benefited from the timing of $20 million of higher roundup commission, related to the company’s role as marketing agent and consistent with changes in the revised agency agreement signed with Bayer in 2019. Read More (New Cannabis Ventures)

Coronavirus, absence of rules cause CV Sciences to ‘right-size’ as Q1 sales suffer. Amid the coronavirus pandemic, CV Sciences (CVSI), a hemp CBD manufacturer based in San Diego, reported revenue of $8.3 million for the first quarter ended March 31, down 45% from the same period a year ago. For the first three months of the 2020 fiscal year, sales were $8.2 million, down 45% from the prior year. The company reported a loss of 5 cents a share and an operating loss of $5.3 million in the first quarter of 2020, down from a loss of $9.4 million the prior year. CV Sciences CEO Joseph Dowling blamed the results on increased market competition, the uncertain regulatory environment for CBD and the impact of the coronavirus pandemic, despite increasing its retail store count to 5,799 stores nationwide, up from 3,308 stores in March 2019. Read More (Hemp Industry Daily)

Delta 9 expects revenue to be in the range of $11.3 million to $11.9 million in Q1 2020. Delta 9 (VRNDF) provide guidance on select financial results for the first quarter of 2020 based on preliminary results. The company anticipates revenues for the three-month period ending March 31, 2020 to be between $11.3 million and $11.9 million compared with $5.6 million for the first quarter of 2019 and $10.6 million sequentially for the fourth quarter of 2019. The company anticipates direct cannabis production cost per gram of $0.98 and total cost per gram of $1.10 for the first quarter 2020, compared with $0.91 and $1.04 respectively for the fourth quarter of 2019. Read More (GlobeNewswire)

Edibles manufacturer Plus Products generates $13.9 million in 2019. Plus Products (PLPRF) released its audited financial and operational results for the three and twelve months ended December 31, 2019. The company’s net revenues climbed to $13.9 million in 2019, representing a 66% year-over-year growth as compared to 2018 net revenues of $8.4 million while the Q4 2019 revenue reached $3.5 million, representing a 4% year-over-year growth as compared to Q4 2018 net revenues of $3.4 million. Gross profits grew to $2.8 million in 2019 compared to $1.1 million in 2018. Gross profit margin in 2019 was 20%, up from 13% in 2018. Gross profits increased to $0.9 million in Q4 2019 compared to $0.4 million in Q4 2018. Gross profit margin in Q4 2019 grew to 26%, up from 13% in Q4 2018. Read More (New Cannabis Ventures)

CAPITAL MARKETS

Aphria repurchases CAD $127.5 million convertible notes. Aphria (APHA) announced that it entered into privately negotiated agreements with a limited number of holders outside of Canada of its convertible senior notes to repurchase an aggregate of approximately CAD $127.5 million ($90.8 million) principal amount of notes for approximately 18.7 million of common shares and approximately CAD $2.9 million ($2.1 million) in cash for accrued and unpaid interest. Effectively, the company agreed to repurchase a portion of its notes at a 25% discount to their face value, using shares issued at a 31% premium to Aphria’s most recent closing market price (which is equivalent to a conversion price of $4.84 per share). The purpose of the transaction was to reduce the company’s debt and eliminate CAD $6.7 million ($4.8 million) in annual cash interest costs. Read More (New Cannabis Ventures)

Ethos Cannabis buys seven medical marijuana dispensaries from 4Front Ventures. Multistate operator Ethos Cannabis said it reached a deal with a competing MSO, 4Front Ventures (CNXXF), to purchase the rights to seven medical marijuana dispensaries in Maryland and Pennsylvania. Terms of the deal were not disclosed. But the acquisition comes on the heels of Arizona-based 4Front’s announcement that it netted $18 million from the sale of its stake in cannabis retail licenses in Maryland and Pennsylvania. In addition, Pennsylvania-based Ethos recently closed a $35.25 million capital raise, according to a company news release. Read More (Marijuana Business Daily)

Inside the deal between paper giant Georgia-Pacific and the Canadian firm partnering to make hemp-derived products. Paper manufacturer Georgia-Pacific and a Canadian company that makes natural nonwoven fibers formed a partnership in February – born from a mutual interest in hemp – that could add those items to store shelves. Looking for alternatives to single-use nonwoven products, the companies saw they could team up to achieve that goal: Atlanta-based Georgia-Pacific, which makes Brawny paper towels and Quilted Northern toilet paper, has patents for a variety of bast fiber products; Victoria, British Columbia-based Bast Fibre Technologies, meanwhile, has a wealth of experience working with bast fiber. Read More (Hemp Industry Daily)

MEDICAL CANNABIS

Medical cannabis industry booming in Maine despite COVID-19. Despite the major impact the COVID-19 outbreak has had on the economy in general, and especially the cannabis industry in the absence of federal loans, the medical cannabis industry in Maine claims that business is still booming. Those involved in medical cannabis in the state claim that customers are purchasing more than they did before the pandemic. “On average it’s about twice as much,” claims Charlie Langston, general manager at the Wellness Connection of Maine in Portland.  This could simply be due to seasonal sales, as Langston claims those tend to trend upward in the warmer months, but it could also be from additional stress from the crisis. Those who use cannabis to help keep stress levels down are likely going through more than their usual doses. Read More (High Times)

Medical marijuana telehealth gets green light during COVID pandemic. As virtual visits during the coronavirus pandemic have been financially supported by the federal government and insurers, states are also endorsing them for an emerging and still controversial therapy: medical marijuana. More than two dozen states have temporarily permitted prescribing medical cannabis via telemedicine — most for the first time — boosting patient volume for providers hurt by the pandemic, providing care to hundreds of patients, and leading to calls for making the model permanent. While some worry about patient safety and the long-term consequences, others have embraced the new model. Read More (MedPage Today)

Louisiana state congress considering two new medical marijuana bills. Louisiana lawmakers advanced a pair of bills on May 7 that would significantly expand the state’s medical marijuana program. The separate legislation was passed out of a Louisiana state House committee will now head to the full House chamber for a debate and vote. One bill aims to broaden the potential pool of eligible medical cannabis patients by permitting a physician to prescribe such a treatment to someone suffering from what the doctor “considers debilitating.” Read More (High Times)

Arkansas medical marijuana sales increase, possibly due to pandemic. Almost one year since the opening of the first dispensary in the state, Arkansans are continuing to buy medical marijuana, with some dispensaries reporting record sales over the past few weeks. According to the Arkansas Department of Finance and Administration, approximately 11,000 pounds have been sold in total. Those sales amount to $73 million. Scott Hardin, director of communications for the department, says purchasing habits of medical marijuana have changed since the beginning of the coronavirus pandemic. Since March 11, the day Gov. Asa Hutchinson signed an executive order declaring a public health emergency, Arkansans have spent $24.37 million on medical marijuana. That amount equals 33% or roughly one third of total sales since last May. Read More (UALR Public Radio)

Medical marijuana leads to less hospitalizations for IBS patients. Irritable Bowel Syndrome (IBS) is a frustrating and isolating illness for many patients. One study estimates that up to 20% of Americans experience IBS, which is considered a chronic disease. Now, researchers at Rutgers University suggest in a new study that marijuana can help ease the suffering of patients with severe IBS symptoms. Researchers analyzed 2016 data of Nationwide Readmissions Database from the Agency for Healthcare Research and Quality, comparing IBS patients who were cannabis users vs. non-cannabis users. Among non-cannabis users, all-cause 30-day readmission rates were 12.7%. In cannabis users, that figure was only 8.1%. The study also found cannabis use correlated with shorter hospital stays and overall lower hospitalization charges.  Read More (The Fresh Toast)

San Francisco cannabis dispensary tries dry fog technology to kill COVID-19. A San Francisco cannabis dispensary is trying a new technique to keep the novel coronavirus away. MediThrive in the city’s Mission District had its store sprayed down with a solution sold by a company called My Pure Environment. “While we were doing Clorox wipes, gloves and face masks, anything above and beyond that is great,” said MediThrive’s founder and CEO, Misha Breyburg. The company says this treatment is good for 90 days. “We fill any given space up with a fog. The fog is made out of hydrogen peroxide and parasitic acid and that is known and recognized by the CDC and the EPA to eradicate the coronavirus,” said Anatoly Nazarov, a manager at My Pure Environment. “The second stage is a silicon-based antimicrobial. What it does is it molecularly binds to the surfaces and we warranty that for 90 days,” Nazarov explained. “As we go, it kills the virus.” Read More (abc7 News)

CBD/HEMP

Expectations for the 2020 hemp growing season shift on tough market conditions, COVID-19 impact. Some positive news in light of COVID-19 is that hemp cultivation has been considered an essential business by virtue of its status as federally-legal agriculture. Registrations to grow see slowdown in some states but may be offset by enthusiasm in new programs. Some farmers report that sluggish sales are causing them to rethink prior plans for 2020. Nearly 70% of survey respondents reported that their sales as of April were below expectations due specifically to COVID-19. Some also emphasized that moving their production – whether hemp plant material or extracted CBD – was quite difficult even before the pandemic. Read More (Hemp Benchmarks)

Chart 9: Has There Been a Notable Increase or Decrease in Sales of Your Products Due Specifically to COVID-19 and Accompanying Official Actions?  Source: Intro-Blue, Hemp Benchmarks

Chart 9: Has There Been a Notable Increase or Decrease in Sales of Your Products Due Specifically to COVID-19 and Accompanying Official Actions?
Source: Intro-Blue, Hemp Benchmarks

What to do with last year’s hemp inventory is the ‘billion-dollar question’ for growers, processors. The options are limited because the demand for flower and biomass is still low, there is still an oversupply of hemp on the market and the bottleneck at the processor level exists, said Casey Flippo, CEO of Little Rock, Arkansas-based hemp extraction firm Natvana LLC. However, a few things farmers should consider when deciding what to do with their current inventory include: 1) Contract tolling – an option for farmers who don’t have the minimum potency level that processors are looking for due to crop degradation; 2) Processing product to a preserved point; and 3) THC-free processing to add value. Read More (Hemp Industry Daily)

USDA releases guidelines for federal hemp business loans. The U.S. Department of Agriculture has released guidelines for hemp companies to apply for and receive federal loans, Marijuana Moment reports. The guidelines, which were detailed in a memo issued last month, are part of the USDA‘s aim to align the federal hemp industry with other agricultural commodities — one piece of that effort is establishing the framework for hemp farmers to acquire federal loans. The memo lists the requirements that a hemp business must meet in order to qualify for a federal loan, which includes being licensed under a USDA-approved state or tribal hemp program and strict guidelines for reporting to the agency about any potential issues that arise with one’s hemp crop. Read More (Ganjapreneur)

Delaware, Nebraska, Texas win USDA hemp approval. Delaware, Nebraska and Texas are the latest states to win federal approval for their plans to regulate hemp in 2020. Four American Indian tribes also were greenlighted by the U.S. Department of Agriculture (USDA). The states join Louisiana, Ohio and New Jersey with federal permission to take the lead in overseeing hemp in 2020. The American Indian tribes granted federal approval by the U.S. Department of Agriculture (USDA) were Colorado River Indian Tribes in Arizona and California, Fort Belknap Indian Community in Montana, Iowa Tribe of Kansas and Nebraska, and Yurok Tribe in Northern California. Read More (Hemp Industry Daily)

Texas proposes rules for edible hemp production and sales. Texas has proposed a slate of rules for consumable hemp products and asked the public to make suggestions on them. The Department of State Health Services rules published May 8 address oversight and licensing for manufacturers, processors and distributors. The rules would also require $150 annual registrations for retailers to sell CBD. Public comments are due in 31 days; the final rules are expected to take effect in July. The proposed rules also address product testing and labeling requirements to be sold in Texas. Labeling requirements for CBD products would include QR codes and manufacturers’ phone numbers and email addresses. Read More (Hemp Industry Daily)

Colombian hemp seeds being exported to Denver. A Toronto-based biopharmaceutical cannabinoid company is exporting 100,000 hemp seeds to Denver from Colombia through a subsidiary there. The first seeds were exported on May 7, according to Avicanna CEO Aras Azadian. Avicanna develops, manufactures and sells plant-derived cannabanoid-based products. Exporting all the seeds will be completed in the next two weeks. The Colombian government said that Santa Marta Golden Hemp, Avicanna’s subsidiary, had completed all the necessary requirements for exporting. Read More (Hemp Industry Daily)

Medterra CBD launches new benefit-focused gummies. Furthering Medterra’s commitment to wellness and bettering the lives of its consumers, the CBD brand announced its line of functional CBD Gummies, the latest addition to the company’s expansive line of CBD products. Medterra is delivering three kinds of easily accessible, benefit-focused gummies meant to enhance daily routine. As the highest potent gummy offering on the market, the gummies combine 25mg of Medterra’s pure CBD with premium ingredients, and are intentionally crafted to assist in three different areas – helping stay focused, relaxed, or getting a restful night’s sleep: Stay Alert Gummy, Keep Calm Gummy, and Sleep Tight Gummy. Read More (BXP Magazine)

Colorado, Swiss firms partner to bring high-CBG strain to U.S. Colorado-based HighGrade Hemp Seed (HGH) is producing and distributing a newly developed high-CBG boutique European hemp strain in the U.S. The strain, dubbed “Matterhorn,” was developed by breeder Matthias Ghidossi, founder of Swiss Cannabinoid, Ticino, Switzerland, who worked with a team of European geneticists and a pharmaceutical company in developing the cultivar. Matterhorn is registered in the U.S. under Phylos Galaxy, a crop science company based in Portland, Oregon. Read More (Hemp Today)

HempWood maker in deals with cabinet, flooring specialists. U.S.-based Fibonacci LLC, maker of “HempWood,” has announced deals with Canadian and American partners who will make cabinets and flooring from the material. Eastland Group based in New Brunswick, Canada, said it is adding cabinets from HempWood to its product lineup. The cabinetmaker, which dates back more than a half century, said sustainability considerations were behind its decision to work with the material. Read More (Hemp Today)

RETAIL

Fire & Flower rearranging retail stores. Fire & Flower (FFLWF) will be closing three retail storefronts in Alberta in order to maximize its retail profits. That announcement came along with the company reporting a loss of $32.6 million on revenue of $51.1 million for its fiscal year ending February 1, 2020. The company had 45 stores open in Alberta, Saskatchewan, Manitoba, Ontario, and the Yukon at that time. Fire & Flower’s chief financial officer Nadia Vattovaz says that the closing of the Alberta stores is par for the course for retail businesses, but it’s particularly important for cannabis retailers. Read More (Cannabis Retailer)

Weed wars: The CPG of cannabis? In 2014, brands began referring to themselves as The Google of Cannabis. It framed the business as innovative, disruptive, and anything but stoney. The nom de guerre’s expiration date made way for the latest catchphrase, The CPG of Cannabis. A business struggling to coax investors will gravitate towards this safe word, but I question the trend – here’s why. CPG is populist and conjures specific imagery. Miles of aisles; cereal boxes, canned goods, frozen pizza, and 27 kinds of shampoo. Unlimited points of distribution, and maintaining the status quo. CPG stands for predictability, but is that the roadmap for the rise of cannabis brands? Without question creating a national marque is a game-changer, but federal legalization remains years away. As an agricultural commodity, we have to proceed carefully and not jump the gun. Read More (LinkedIn)

Three new studies show marijuana branding is a myth, so what can you do to sell your brand? How do you distinguish your cannabis products from a million other similar cannabis products all claiming to do the exact same thing? That is the $100 million question.  If a consumer just cares about how much they have paid and if they get high or relaxed, how can you raise prices and get your brand noticed? 1) Shelf Space – Just like grocery stores and end-cap space on aisles, cannabis dispensaries are now beginning to make a nice income by charging brands for premium shelf space. 2) Cut Margins, Cut Pricing – If 82% of consumers are price conscious, attack them on what they care about, pricing.  Cannabis is a commodity, so win the race to the bottom. 3) Reward Programs – Don’t recreate the wheel here, look at credit card companies. Read More (The Fresh Toast)

PRODUCTS

Tobacco-cannabis crossover product could soon hit the market. A private company by the name of Thought Leaders has invested $1 million in an emerging vape company that looks to be the first tobacco and cannabis crossover that doesn’t use an oil cartridge. Cannabis Technology House, or CTH, has created a unique product called QUB (pronounced like cube) that heats cannabis flower or tobacco leaf instead of burning it. And it could give added competition to tobacco companies, such as Philip Morris (PM), who provide high-tech tobacco heating systems. Read More (Real Money)

World’s first cannabis wafer available in Australia. Australia has launched the world’s first medicinal cannabis wafer that offers a simplified solution compared to other cannabis products. The product, dubbed Xativa, is in the form of a tablet and is capable of dissolving under the tongue. According to research, it can ease pain, nausea, and some motor diseases. The product is a brainchild of a Queensland, Brisbane-based company iX Biopharma. According to the producer, the tablet solves three main problems in the delivery system of medical cannabis: the absence of fixed dosages, erratic bioavailability, and incoherent absorption. The company could also use the technology to benefit other medications. Read More (Growcola)

Why this successful Canadian brewer put cannabis beverage plans on ice. When Waterloo Brewing started laying the groundwork to enter the cannabis-infused beverage market, it touted a potential beverage segment in Canada worth upwards of CAD $1.5 billion ($1.07 billion). Now, more than two years later, one of Canada’s most successful craft brewers is shelving the plans. What happened? “When we got to the spot where we said, ‘Let’s make sure the business case works over an extended period of time,’ it actually didn’t. The money wasn’t there,” CEO George Croft told Marijuana Business Daily. Waterloo Brewing halted its cannabis plans after concluding “the size of the prize” did not warrant the investment. Read More (Marijuana Business Daily)

SOCIAL

Data indicates people of color still targeted for cannabis during traffic stops. The research was conducted by folks affiliated with Stanford University and New York University, and the data comes primarily from Colorado and Washington following legalization laws. The data shows that African Americans and Hispanic people are subject to vehicle searches more often than their white peers. Throughout the country, their vehicles are searched about twice as often as those belonging to white people. “We found that white drivers faced consistently higher search thresholds than minority drivers, both before and after marijuana legalization,” the team wrote. “The data thus suggest that, although overall search rates dropped in Washington and Colorado, black and Hispanic drivers still faced discrimination in search decisions.” Read More (High Times)

INTERNATIONAL

Cannabis legalization will be a likely response to the U.K.’s upcoming desperation for tax revenue, with concomitant opportunities for investors. By putting much of the U.K. economy on hold and subsidizing a good portion of the rest, the government’s own tax income from economic activity looks set to plummet. Anyone with half an ounce of common sense in the Treasury will be looking around for new sources of potential revenues, and particularly ones that will be easy, and possibly even popular. That last factor isn’t one that generally applies to new taxation, but the narrative framework around legalizing cannabis could quite easily run along those lines. Rather than a revenue-raising exercise, a blanket legalization could be spun as a government looking to rationalize an aspect of the criminal justice system that clearly isn’t working, whilst also dispensing with an outdated image of itself as overbearing and disapproving of peoples’ desires to have a good time. Read More (Proactive Investors)

European cannabis market, rich with potential, worth €240 million in 2019. The European cannabis market was valued at €230 million-250 million in 2019 with Germany “unchallenged.” Germany continues to be the largest European medical cannabis market, with Marijuana Business Daily estimating annual sales in 2019 of at least €170 million ($185.4 million). Italy was a distant second with an estimated retail value of €20 million. Several other markets also reported medical cannabis sales. Austria, the Netherlands and Switzerland had sales of just above €10 million apiece. In the cases of Austria and Switzerland, most of that was attributable to dronabinol. Germany not only remains the largest market, but it’s also growing faster than the other major European markets. Read More (Marijuana Business Daily)

Chart 10: Share of Retail Cannabis Sales in Europe in 2019 (includes all product categories)  Source: Intro-Blue, Marijuana Business Daily

Chart 10: Share of Retail Cannabis Sales in Europe in 2019 (includes all product categories)
Source: Intro-Blue, Marijuana Business Daily

Hemp groups pool resources to ensure path to CBD market in Europe. With time ticking down for CBD manufacturers to meet the U.K.’s deadline for having a validated EU novel food application in hand, two European hemp associations are pooling resources to meet the application’s requirements. The assistance on offer from the European Industrial Hemp Association in Germany and the Association for the Cannabinoid Industry in the U.K. highlights the urgency with which suppliers and processors need to move if they hope to be selling cannabidiol supplements and foodstuffs on the British market early next year. Read More (Hemp Industry Daily)

Many Europeans stockpiled illicit cannabis as COVID-19 set in, report suggests. Regular cannabis users in Europe might have stocked up on illegal products as the COVID-19 pandemic started to sweep over the continent earlier this year, according to a new analysis of darknet transactions. The report paints the clearest picture yet of Europe’s unregulated cannabis market in February and March – when the coronavirus started to take hold – though its authors warn that conclusions “are tentative and should be interpreted with caution.” The report analyzed three relatively large darknet markets. Cannazon, a market devoted to cannabis products, was one of them. Cannazon sales reached approximately €4.3 million ($4.6 million) in February and March, with volume of 1.6 tons (3,200 pounds). Read More (Marijuana Business Daily)

Chart 11: Illicit Cannabis Sales in Europe via Cannazon, January–March 2020  Source: Intro-Blue, Marijuana Business Daily, European Monitoring Centre for Drugs and Drug Addiction

Chart 11: Illicit Cannabis Sales in Europe via Cannazon, January–March 2020
Source: Intro-Blue, Marijuana Business Daily, European Monitoring Centre for Drugs and Drug Addiction

U.K. marketing challenges persist for CBD. While advertising cannabis-derived products in the U.K. is a challenge, more and more CBD companies are pushing their brands into the public consciousness using various media channels. Today’s most desirable mode of advertising is via digital platforms, though not necessarily for CBD products. Most of the best-known platforms do not allow cannabis-derived products to be advertised. Nevertheless, many companies make attempts, with mixed results. Ads put up whether on Facebook, Amazon, or Google will likely be quickly removed. At longest, such an ad might stay up for a couple of days, with luck. Some companies will try to get around such bans by being creative in their respective product descriptions. One might refer to “hemp oil” while making no mention of CBD. Another might promote an aromatherapy product, not for human consumption. Such options are not viable practices for any serious company seeking to establish a reputable brand. Read More (New Frontier Data)

Chart 12: CBD Consumer Archetypes in the U.K.  Source: Intro-Blue, New Frontier Data

Chart 12: CBD Consumer Archetypes in the U.K.
Source: Intro-Blue, New Frontier Data

Australia medical cannabis approvals steady as COVID-19 grips country. Approvals of medical cannabis prescriptions in Australia held steady as the country hunkered down for its battle with the COVID-19 pandemic, new data shows. The Therapeutic Goods Administration approved more than 7,300 Special Access Scheme Category B (SAS B) cumulative applications in March and April. That compares with approximately 6,700 total approvals for January and February – before the pandemic slammed the global economy. Jurisdictions in Australia started to declare public health emergencies in mid-March in an effort to slow the spread of the new coronavirus. However, that does not seem to have had a major impact on medical marijuana approvals. March saw 3,926 approvals, an increase of 10% from the previous month. February’s approvals fell slightly to 3,378. Read More (Marijuana Business Daily)

Chart 13: New Medical Cannabis Approvals in Australia by Month, April 2019 – April 2020  Source: Intro-Blue, Marijuana Business Daily

Chart 13: New Medical Cannabis Approvals in Australia by Month, April 2019 – April 2020
Source: Intro-Blue, Marijuana Business Daily

Quality requirements a challenge for companies seeking to register medical cannabis products in Brazil. Brazil had no pending applications to register medical marijuana products as of the end of April, an indication that companies might be struggling to meet new pharmaceutical-level requirements introduced last December. “So far, only one application for Sanitary Authorization has been received, and it was already published (approved) on April 22, 2020,” a spokesperson for National Sanitary Surveillance Agency (ANVISA) wrote in an email to Marijuana Business Daily. Read More (Marijuana Business Daily)

CANNA SCIENCE

Understanding flavonoids. The cannabis herb produces more than 400 chemical compounds. The most noted and understood of these molecules are cannabinoids and terpenes. Within this cacophony of cannabis chemistry lurks the redheaded stepchild of herbal enhancement: Flavonoids. These molecules share many traits with terpenes, including their availability in thousands of plants and fungi other than cannabis. The flavonoids found exclusively in cannabis are called cannaflavins. Roughly 20 flavonoids are found within the cannabis genome (not all of which are exclusive to this herb that is also categorized as a vegetable). The roles played by flavonoids extend beyond aroma, flavor, and pigment. Like terpenes, flavonoids have been shown to provide significant and wide-ranging medicinal value. Although scant research is available, it appears that flavonoids may deliver great health value, especially the cannaflavins found only in cannabis. Read More (Stainprint)

‘Largest ever cannabis research grant’ will fund study testing whole-plant CBD against single-extract CBD. A $9 million donation will help fund studies that compare how full-spectrum cannabis products differ to those made from a single extracted compound. The grant, reportedly the largest ever for cannabis research, was gifted to the Harvard Medical School and the Massachusetts Institute of Technology (MIT) last year. The researchers hope the study will help inform consumers and clinicians on the effectiveness of popular CBD products. Read More (Analytical Cannabis)

CannaSafe to open new labs in Oregon, Florida, and Illinois. The analytical services of CannaSafe, one of California’s larger cannabis testing lab companies, will soon be available in three more U.S. states. The company’s three new facilities will open in Oregon, Florida, and Illinois later this year. In addition to its multi-state expansion, CannaSafe also announced its headquarters will soon move to a new, 25,000-square-foot lab in Van Nuys, California. Speaking to Analytical Cannabis back in March, Riley described the cleanliness and social distancing measures CannaSafe had adopted in the wake of the coronavirus pandemic. Read More (Analytical Cannabis)

TECHNOLOGY

Liquor-focused Massachusetts firm launches marijuana delivery platform. The entrepreneurs behind Boston-based Drizly, which has long specialized in distributing alcohol to consumers, are branching out into cannabis home deliveries through a new company called Lantern. The new service could give its marijuana retail partners an even bigger boost in sales, particularly during the coronavirus pandemic. According to Masslive.com, Lantern was started by the founders of Drizly but is a separate business entity. The company will roll out deliveries beginning with medical cannabis patients in Boston before expanding throughout the rest of the state. The company hopes to eventually expand its delivery platform beyond Massachusetts into other marijuana markets. Read More (Marijuana Business Daily)

New crop management system provides canopy level data. From monitoring the effects of climate change on California’s redwoods to measuring the microclimates within fields of hemp, Adam Wolf of Arable has made quite the career transition. But it was his work within the canopy of the towering redwoods that led him to develop the suite of products at Arable. Now, with the launch of the Mark 2 in partnership with legendary industrial designer Fred Bould (Nest, GoPro, Roku, Fitbit), the company has set out to take over cannabis crop analytics. The Mark 2 is a “sensor-packed internet-of-things device” with more than 40 observation streams explicitly developed for monitoring fields of food crops. But, as Wolf, Arable’s Chief Scientist explains, there are direct applications for the cannabis and hemp industries as well. Read More (Cannabis Tech)

High-efficiency gas piping for cannabis cultivation. Parker-Hannifin has created a scalable aluminum piping system called Transair, which it markets through dealers like Exotic Automation & Supply. The company advertises Transair as “the most advanced air, inert gas, and vacuum aluminum air piping system available on the market.” It is this innovative and highly efficient air transportation system that is arousing the interest of cannabis growers and cultivators in Michigan and elsewhere. As Mike Chapman explains, the Transair aluminum piping system offers notable cost advantages over traditional piping systems. Read More (Cannabis Tech)

CANNA FACTS

Chart 14: Cannabis Spending Surges as Consumers Stockpile “Essential” Cannabis Products  Source: Intro-Blue, New Frontier Data

Chart 14: Cannabis Spending Surges as Consumers Stockpile “Essential” Cannabis Products
Source: Intro-Blue, New Frontier Data

CANNA CAPITAL MARKET TRENDS

Chart 15: Weekly Summary (April 27 – May 1, 2020)  Source: Intro-Blue, Viridian Capital Advisors Chart 15: Weekly Summary (April 27 – May 1, 2020)  Source: Intro-Blue, Viridian Capital Advisors

Chart 15: Weekly Summary (April 27 – May 1, 2020)  Source: Intro-Blue, Viridian Capital Advisors

Chart 15: Weekly Summary (April 27 – May 1, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 16: Cannabis Capital Raises by Week (2020)  Source: Intro-Blue, Viridian Capital Advisors

Chart 16: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 17: Cannabis M&A Activity by Week (2020)  Source: Intro-Blue, Viridian Capital Advisors

Chart 17: Cannabis M&A Activity by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 18: U.S. Cannabis Market Prices  Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 18: U.S. Cannabis Market Prices  Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 18: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 19: U.S. Implied Forward Prices (Week Ending May 8, 2020)  Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 19: U.S. Implied Forward Prices (Week Ending May 8, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 20: Canada Cannabis Spot Index  Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 20: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: NEVADA

Chart 21: Best-Selling Flower Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 21: Best-Selling Flower Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 22: Best-Selling Edibles Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 22: Best-Selling Edibles Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 23: Best-Selling Vapor Pen Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 23: Best-Selling Vapor Pen Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 24: Best-Selling Beverage Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 24: Best-Selling Beverage Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 25: Best-Selling Capsule Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 25: Best-Selling Capsule Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 26: Best-Selling Topical Brands and Products in Nevada  Source: Intro-Blue, Headset

Chart 26: Best-Selling Topical Brands and Products in Nevada
Source: Intro-Blue, Headset

CANNA INDEX

Chart 31: U.S Cannabis Index  Source: Intro-Blue, The Marijuana Index

Chart 31: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 32: Canada Cannabis Index  Source: Intro-Blue, The Marijuana Index

Chart 32: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

Important Disclosures

Analyst Certification

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