RUSSELL 3000 REBALANCING SETS STAGE FOR GREATER INSTITUTIONAL OWNERSHIP OF CANNABIS NAMES

We believe the inclusion of GrowGeneration Corp. (GRWG) and Akerna (KERN) in the Russell 3000 index is indicative of the rising interest of institutional investors in the cannabis space. GrowGeneration, the largest chain of stand-alone specialty hydroponic and organic garden centers in the U.S., and Akerna, a leading provider of enterprise software solutions for the cannabis industry, are going to become a part of the Russell 3000 as part of the 2020 rebalancing. Their inclusion comes at a time when the cannabis industry’s essential status and ability to contribute tax dollars during a recession are driving share prices higher, a trend that is likely to gain further momentum as the latest reconstitution will result in improved awareness, liquidity, and appeal of marijuana stocks to institutional investors. We believe this rebalancing has the following implications for cannabis stocks and investors:

  1. Inclusion in benchmarks will boost liquidity of cannabis stocks and attract passive investors that manage assets worth ~$4.3 trillion. Inclusion in benchmarks leads to higher turnover, tighter spread, and high order depth for stocks, resulting in lower transaction costs and higher liquidity. During the June 2019 Russell 3000 reconstitution, Nasdaq said 1.279 billion shares representing $42.59 billion were executed in its “closing cross” in 1.14 seconds across Nasdaq listed stocks. Stock liquidity is one of the key investment criteria for U.S. passive investors who managed $4.27 trillion in assets last year. Therefore, the liquidity boost that cannabis stocks will receive from this inclusion will go a long way toward attracting passives and boost cannabis companies’ chances of becoming part of sector-focused and diversified ETFs.
  2. Institutional investors tracking these benchmarks will now start evaluating cannabis names – an important change in the cannabis investor profile and one that could boost market cap significantly. Russell indexes are widely used by investment managers and institutional investors as benchmarks for active investment strategies. Approximately $9 trillion in assets are benchmarked against Russell’s U.S. indexes. Trades made by passive funds have a direct impact (multiplier effect) on the moves of active participants, especially momentum investors and traders. The combination of these two factors will result in a change in cannabis investor profile from retail-oriented shareholders to institutions. This is significant since entry of institutions is typically associated with a surge in market cap for undervalued and under-owned stocks.
  3. At 85 bps, cannabis accounts for a small fraction of the institutional benchmark, but we believe there is significant room for both increased weight and multiple expansion, given the industry’s under-ownership and modest valuation despite the strong long-term outlook. Our analysis indicates that cannabis stocks (diversified + pure plays) account for 85 bps of the Russell 3000’s market cap, with pure plays accounting for just 2 bps. On the other hand, Healthcare and Consumer Staples – the two sectors most closely linked to cannabis – combine to account for more than 21% of the index, suggesting that cannabis stocks are severely under owned, a metric that we expect to change as the $50 billion illegal-to-legal value migration of the U.S. cannabis industry plays out. The correction in under ownership will mean that the valuation multiples of U.S. cannabis stocks – currently trading at a steep discount to their Canadian peers on EV/sales and EV/EBITDA metrics – will get an upward boost due to the influx of institutional money, creating a strong alpha-generation opportunity for investors.
Chart 1: Cannabis Stocks Account for 85 bps of the Russell 3000’s Market Cap   Source: Intro-Blue, Russell 3000, FactSet

Chart 1: Cannabis Stocks Account for 85 bps of the Russell 3000’s Market Cap  
Source: Intro-Blue, Russell 3000, FactSet

CANNA NEWS

COVID-19

Despite COVID-19, global cannabis sales to hit $20.4 billion in 2020. Legal cannabis sales continue to grow despite the strength of the illegal market. The new State of Legal Cannabis Markets report from The Arcview Group highlights the strengths of the industry going into 2020, while also acknowledging the challenges ahead. Arcview is forecasting that worldwide spending on legal cannabis will grow 38% to $20.4 billion in 2020. Despite this, the lion’s share of purchases occurs in illegal markets. The report estimates that in 2019 $214 billion was spent in illicit channels, while $14.8 billion was spent in the legal market. Read More (Green Market Report)

U.S. cannabis retailers take mixed approaches amid pandemic-fueled downturn, with some eyeing costs and others spending more. As the U.S. economy struggles to recover from a recession spurred by the coronavirus pandemic, some cannabis retailers are looking for ways to cut costs while others are ramping up spending on measures to keep their employees and customers safe. Cresco Labs (CRLBF) co-founder Joe Caltabiano, who stepped down from his role as president of the Chicago-based company in March and the company’s board of directors, pointed to three areas marijuana retailers can examine to contain costs: staffing, deliveries, and technology. To determine the optimum number of employees working at different times of day, it’s important for marijuana retailers to analyze their sales data to understand when they’re busiest and which specials elicit the greatest response from consumers. Read More (Marijuana Business Daily)

Cannabis sales return to pre-pandemic levels in the U.S. Sales of recreational marijuana in the U.S. have started to resume pre-pandemic levels, according to the cannabis market research firm BDSA. In states such as California and Colorado, cannabis businesses are now seeing regular sales peaks every weekend. According to BDSA, the Friday sales seen in California increased with every passing week in May. Revenue was 40 percent above average on May 1, then up by 41 percent on May 8, up by 43 percent on May 15, and 66 percent higher than average on May 22. This increasing trend was also seen in Colorado, although to a lesser extent; by May 22, Friday sales had peaked at 37 percent above average. The boom in revenue appears to have come from an influx of customers returning after lockdown measures were eased. Read More (Analytical Cannabis)

Racist cannabis arrests put Black Americans at higher risk of COVID-19. The U.S.’ war on drugs has plagued its communities of color for decades. As Michelle Alexander and Ta-Nehisi Coates have written, the program of drug enforcement and mandatory prison sentencing since the 1960s picked up where institutionalized racist practices such as Jim Crow and redlining left off. Jail sentences cut off access to basic freedom, and criminal records locked people of color out of opportunities for access to basic necessities, whether an education, a job, or an apartment lease. Now, as COVID-19 ravages overcrowded facilities unequipped to handle the pandemic, those jail sentences are increasingly becoming death sentences.  The New York Times has traced hundreds of thousands of cases, and seven of the top 10 coronavirus clusters it identified originated in prisons and jails. As of June 9, the Times counted at least 64,000 people infected in US jails and prisons, where at least 589 inmates and workers have died. Read More (Quartz)

Chart 2: Racial Disparities in U.S. Cannabis Arrests Source: Intro-Blue, Quartz

Chart 2: Racial Disparities in U.S. Cannabis Arrests
Source: Intro-Blue, Quartz

Federal legalization of cannabis to stimulate the economy. At the hands of the epidemic, the nation is now rapidly spiraling into the worst economic upset in generations. Local, state, and federal governments will now be searching for different sources of substantial income to replenish budgets and help to provide employment to innumerable amounts of civilians that are without work, as many businesses may be closed permanently due to the ongoing pandemic These unprecedented circumstances are reasonably comparable to that of the Great Depression, nearly 100 years ago. During that period of time, one viable solution was to abolish the prohibition of alcohol, which lasted 13 years. During the ongoing pandemic, almost all states with legal medical and recreational cannabis programs (except Massachusetts), deemed marijuana businesses to be essential, despite stay-at-home orders. Read More (The Weed Blog)

Cannabis and coronavirus: The new normal-ish. In California, the state’s projected 2020-2021 budget predicted a downturn for the post-pandemic legal cannabis industry, citing banking issues, competition from illegal vendors, and consumers hard hit by economic instability. The state offered some relief in the form of extensions on cannabis business license renewals. San Jose, California-based Airfield Supply Company, like other retail cannabis vendors, adjusted to the “new normal” in sales protocols by introducing contact-less sales in its store. California’s largest single-site dispensary teamed with point of sale (POS) technology platform Treez, to add the Treez Pay (powered by Stronghold) contact-less purchase option. The payment solution allows customers to order and pay via cellphone, which minimizes contact with cash and makes for speedier transactions. Read More (mg Magazine)

Lawsuit to challenge industry exclusion from SBA COVID-19 relief revving up. For many businesses struggling during the COVID-19 induced shutdown, assistance from the Small Business Administration (SBA) through the Paycheck Protection Program (PPP) is the difference between lifeline and economic ruin. But for thousands of professionals serving state-legal cannabis businesses, including non-profits like NCIA and innumerable small businesses alike, access to PPP money remains elusive. A group of lawyers is in the process of developing a legal challenge to this unjust treatment. The SBA Policy Notice on April 3, 2018 has prevented many firms from applying for PPP loans and casts doubt as to whether firms that received loans but have done work for cannabis clients will have their loans revoked. A coalition of law firms led by Yetter Coleman LLP is seeking to raise $150,000 for a legal defense fund to strike down the guidance. Read More (The National Cannabis Industry Association)

STATE AND REGULATORY NEWS

The four likeliest states to legalize marijuana in November. 1) New Jersey – Perhaps the state with the best chance of legalization is the Garden State. In December, New Jersey’s two legislative houses voted very decisively in favor of putting a constitutional amendment on the November ballot that would legalize recreational marijuana. 2) Arizona – Based on a new poll highlighted by Marijuana Moment, a whopping 65% of likely Arizona voters favor adult-use legalization, which is up considerably from the 54% support garnered last year in favor of legalization. 3) Mississippi – A survey conducted by Millsaps College and Chism Strategies earlier this year found that 67% of respondents favored the idea of legalizing access to medical cannabis, with just 24% opposed. 4) South Dakota – the Mount Rushmore State appears to have a really good shot at legalizing marijuana in some form. That’s because South Dakota is the first state to put a medical marijuana measure and a recreational initiative in front of voters at the same time. Read More (The Motley Fool)

Recreational pot sales topped $44 million in May, the most since weed was legalized in Illinois. Illinois dispensaries unloaded over $44 million in recreational weed in May, marking the most successful month of sales since the drug was fully legalized at the start of the year. Despite facing strict social distancing guidelines aimed at limiting the spread of COVID-19, pot shops tallied $44.3 million in total sales last month, according to figures released by the Illinois Department of Financial and Professional Regulation. Illinois residents bought up over $34 million in recreational pot products, while out-of-staters purchased the rest. The previous monthly high was recorded in January, when $39.2 million in recreational cannabis was sold as pot users flooded dispensaries to get their first taste of legal weed in Illinois. Read More (Chicago Sun Times)

Colorado marijuana sales dip in April after strong March. Colorado’s marijuana market took a hit in April – almost certainly the result of coronavirus-related restrictions – by nearly 8% combined for the state’s medical and recreational markets. Recreational sales in Colorado were down roughly 12% in April, clocking in at $112 million, while medical sales were actually up by 10%, at $36.5 million, according to Denver alt-weekly Westword. The total monthly sales haul for the state’s marijuana industry was $148.5 million – a 7.8% drop from March, when sales hit $161 million. That, as Westword noted, is an “unusually large decrease” for Colorado compared to previous sales records in a month that includes the unofficial cannabis holiday, 4/20. Read More (Marijuana Business Daily)

Nevada governor introduces measure to pardon tens of thousands with marijuana convictions. Tens of thousands of Nevada residents who’ve previously been convicted of low-level marijuana possession could receive blanket pardons under a new resolution the introduced by the governor. Gov. Steve Sisolak (D) announced the development June 11, stating that he placed the clemency resolution on the Board of Pardons Commissioners agenda for this week. Last year, the governor signed a bill providing people with cannabis convictions a means to petition the court for expungements, but this resolution would offer proactive pardons for anyone convicted of possession up to an ounce of marijuana. Read More (Marijuana Moment)

Arizona: Two-thirds of voters support proposed legalization initiative. Two-thirds of Arizona voters say that they are supportive of a proposed statewide ballot measure to legalize the adult use of cannabis and regulate its commercial production and sale, according to polling data compiled by the consulting group HighGround Incorporated. Just under 66 percent of those surveyed said that they would “definitely” or “probably” vote in November for the Smart and Safe Arizona Act. Advocates have been collecting signatures to place the Act before voters this November, but have yet to turn them over to state regulators for verification. The Act would permit those age 21 or older to possess up to one ounce of cannabis and would direct revenue from retail cannabis sales to fund various public education and safety programs. Read More (NORML)

Tax rates for wholesale cannabis in California to remain steady for remainder of 2020. In a year marked so far by incredible turbulence, at least one aspect of California’s legal cannabis industry will remain constant. The California Department of Tax and Fee Administration (CDTFA) recently announced that the mark-up rate used in the calculation of the 15% excise tax on retailers will remain at 80% for the remainder of 2020. CDTFA is tasked with determining adjustments to the mark-up rate every six months. Previously, CDTFA increased the mark-up rate from 60% in 2019 to 80% starting January 1, 2020. This resulted in an effective 12.5% increase in the tax burdens of retailers purchasing cannabis and other products wholesale from separate entities. Read More (Cannabis Benchmarks)

Marijuana’s popularity among American adults continues to rise due to its changing legalization status in many states. According to Gallup, 45% of Americans said they had tried marijuana in 2017. So, let’s look at how much Americans spend on cannabis products these days. According to Headset, most U.S. consumers spend between $25-$50 on each trip to the marijuana store. In the same year, the average amount each U.S. consumer spends on cannabis products is about $645 yearly. About 48% of those cannabis consumers spend between $500 to $2,500 per year. But, based on New Frontier Data in 2019, the amount U.S. consumers spend on marijuana products per month was estimated to amount to $5.8 billion. That’s roughly $206.5 million a day or $1.45 billion per week. Read More (Legal Reader)

Chart 3: Americans Who Say They Have Tried Marijuana at New High Source: Intro-Blue, Legal Reader, Gallup

Chart 3: Americans Who Say They Have Tried Marijuana at New High
Source: Intro-Blue, Legal Reader, Gallup

 

Chart 4: Cannabis Consumer Spending Growth (By Product Type, North America)  Source: Intro-Blue, Legal Reader, Gallup

Chart 4: Cannabis Consumer Spending Growth (By Product Type, North America) 
Source: Intro-Blue, Legal Reader, Gallup

A road map to recreational marijuana taxation. Legal recreational marijuana sales are ongoing in nine states, covering 27 percent of the U.S. population. In 2018, 10.5 percent of adult Americans had used marijuana products in the last 30 days. States have designed different excise tax systems for recreational marijuana. While most tax based on price, states also tax marijuana based on weight or THC content. An excise tax on recreational marijuana should target the externality and raise sufficient revenue to fund marijuana-related spending while simultaneously outcompeting illicit operators. Excise taxes should not be implemented in an effort to raise general fund revenue. Changes to federal law would have implications for the tax revenue in states with legalized marijuana. If businesses had better access to banking, federal tax deductions, or interstate trading, prices would most likely fall. Read More (Tax Foundation)

Chart 5: Recreational Marijuana Excise Tax Structure and Rate Source: Intro-Blue, Tax Foundation

Chart 5: Recreational Marijuana Excise Tax Structure and Rate
Source: Intro-Blue, Tax Foundation

Federal Reserve Bank highlights economic potential and health impact of marijuana legalization. A Federal Reserve Bank district recently published a short analysis outlining the potential benefits and consequences of state-level marijuana legalization, noting the economic impact of the policy change as well as the possibility that people will use cannabis as a substitute for alcohol. It’s a complicated issue for policymakers, an official with the St. Louis division of the central bank wrote, especially as it concerns taxation. Setting tax rates too high could reduce demand for legal marijuana products and send consumers to the unregulated market, but setting them too low could offset revenue to states, Charles S. Gascon, a regional economist and senior coordinator for the Fed, wrote. Read More (Marijuana Moment)

Chart 6: Medical Marijuana Overview - Illinois, Arkansas, and Missouri  Source: Intro-Blue, Marijuana Moment

Chart 6: Medical Marijuana Overview – Illinois, Arkansas, and Missouri 
Source: Intro-Blue, Marijuana Moment

U.S. Cannabis Spot Index down 2.3% to $1,369 per pound, July forward unchanged at $1,430 per pound. The simple average (non-volume weighted) price decreased $66 to $1,570 per pound, with 68% of transactions (one standard deviation) in the $846 to $2,293 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.02 and the simple average price was $3.46. The average reported forward deal size was 37 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 34%, and 18% of forward arrangements, respectively. Read More (Cannabis Benchmarks)

Chart 7: Cannabis Benchmarks U.S. Spot Index Source: Intro-Blue, Cannabis Benchmarks

Chart 7: Cannabis Benchmarks U.S. Spot Index
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 8: Cannabis Benchmarks U.S. Implied Forward Curve Source: Intro-Blue, Cannabis Benchmarks

Chart 8: Cannabis Benchmarks U.S. Implied Forward Curve
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 9: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational Source: Intro-Blue, Cannabis Benchmarks

Chart 9: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational
Source: Intro-Blue, Cannabis Benchmarks

Ontario Cannabis Store report shows Aurora leading flower sales, COVID-19 sales boost. New data released by the Ontario Cannabis Store (OCS) reveals key details about marijuana sales and consumer preferences in Canada’s largest province, including: Total provincial sales approached CAD $400 million ($297.6 million) for the OCS fiscal year; Recreational cannabis sales are dominated by dried flower and pre-rolls amid a limited early rollout of edibles, vapes and concentrates; Aurora Cannabis brands lead dried flower sales both online and in retail stores; and there was a remarkable spike in online sales at OCS.ca in March, coinciding with the COVID-19 pandemic. Read More (Marijuana Business Daily)

Chart 10: Ontario Online Cannabis Transactions – April 2019 to March 2020 Source: Intro-Blue, Marijuana Business Daily, Ontario Cannabis Store

Chart 10: Ontario Online Cannabis Transactions – April 2019 to March 2020
Source: Intro-Blue, Marijuana Business Daily, Ontario Cannabis Store

 

Chart 11: Top Selling Adult-Use Cannabis Products in Ontario – April 2019 to March 2020 Source: Intro-Blue, Marijuana Business Daily, Ontario Cannabis Store

Chart 11: Top Selling Adult-Use Cannabis Products in Ontario – April 2019 to March 2020
Source: Intro-Blue, Marijuana Business Daily, Ontario Cannabis Store

Ontarians spent $20 million on Cannabis 2.0 items in first three months of sales: OCS. Ontarians shelled out almost $20 million in the first three months that edibles and other products in Canada’s second wave of legalization were available for sale — and experts believe that number will only grow. Cannabis vapes, topicals, concentrates and edibles such as gummies and chocolates hit store shelves in January with beverages following in March, but roughly $19.3 million worth of those products were sold in Ontario in the 12 months ending at March 2020. The province’s distributor, the Ontario Cannabis Store, said vapes were the most popular products in the second wave of legalization, known as Cannabis 2.0. Read More (MSN)

OCS expects to gain legal marijuana market share in the coming years. One of the biggest challenges facing the Canadian cannabis sector is robust illegal operations and distribution. The OCS estimates that the legal market accounted for only 19% of total cannabis commerce in the province in Q4 2019. The lack of licensed retail infrastructure and higher prices in the legal sector helped keep the illegal markets very active. OCS expects that the legal market share will increase dramatically over the next couple of years, as the restructured licensing process accelerates the build out of retail locations. The current Ontario store count stands at 87. The establishment and build out of licensed retail stores have proven to be a key element in the growth of the legal market. Read More (Cannabis Benchmarks)

Chart 12: Ontario Legal vs. Illegal Market Source: Intro-Blue, Cannabis Benchmarks

Chart 12: Ontario Legal vs. Illegal Market
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 13: Ontario Sales Mix – April 1, 2019 to March 31, 2020 Source: Intro-Blue, Cannabis Benchmarks

Chart 13: Ontario Sales Mix – April 1, 2019 to March 31, 2020
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 14: Ontario Cannabis Sales Mix Source: Intro-Blue, Cannabis Benchmarks

Chart 14: Ontario Cannabis Sales Mix
Source: Intro-Blue, Cannabis Benchmarks

Canada exported record amount of dried cannabis in 2019, but mostly to one market. Canadian businesses exported more dried medical cannabis than ever last year, but that growth is expected to be challenged when the country’s main export destination – Germany – initiates local production later this year. In 2019, federally regulated producers in Canada exported roughly 3,740 kilograms (8,245 pounds) of dried cannabis for medical and scientific use, according to data Health Canada provided to Marijuana Business Daily. That’s 160% more than Canada’s 2018 exports, which amounted to 1,460 kilograms. Canada’s international cannabis shipments in 2019 likely made the country the second-largest exporter of dried medical cannabis in the world, after the Netherlands. Read More (Marijuana Business Daily)

 

Chart 15: Canadian Exports of Dried Medical Cannabis: 2015-2019 Source: Intro-Blue, Marijuana Business Daily, Health Canada

Chart 15: Canadian Exports of Dried Medical Cannabis: 2015-2019
Source: Intro-Blue, Marijuana Business Daily, Health Canada

Canadian cannabis exports to Israel set to rise with Organigram-Canndoc deal. New Brunswick-based cannabis producer Organigram Holdings (OGI) has signed a multiyear supply agreement with Israeli cannabis firm Canndoc. The deal would result in a significant increase in the amount of cannabis being shipped from Canada to Israel in the coming years, pending receipt of regulatory approvals from Health Canada and the Israeli Ministry of Health. According to the terms of the deal, the Canadian company will supply Canndoc with “a guaranteed 3,000 kg of high-quality, indoor-grown dried flower product” by December 31, 2021, the companies said in a news release. Read More (Marijuana Business Daily)

COMPANY NEWS

Charlotte’s Web acquires Abacus Health Products. Charlotte’s Web Holdings (CWBHF) and Abacus Health Products (ABCS-CA) announced that they have completed the previously-announced plan of arrangement. Pursuant to the arrangement, Charlotte’s Web acquired all the issued and outstanding subordinate voting shares of Abacus. All the outstanding proportionate voting shares of Abacus were converted into Abacus shares prior to closing of the arrangement. Pursuant to the arrangement, holders of Abacus shares received 0.85 of a common share of Charlotte’s Web for each Abacus share held at the time of closing. Read More (New Cannabis Ventures)

Acreage pulls out of Iowa medical marijuana market. Acreage Holdings (ACRGF) relinquished its medical cannabis manufacturing license in Iowa, two months after halting operations at the facility. The move is a hit to the small, heavily regulated market, which now has only one medical marijuana manufacturer, MedPharm in Des Moines. The withdrawal from the market of Acreage’s Iowa Relief is a “big blow” to the program, MedPharm General Manager Lucas Nelson told The Gazette in Cedar Rapids. “We can’t quite seem to get our footing in this program.” Howard Schacter, Acreage’s vice president of communications, told Marijuana Business Daily that the decision to pull out of Iowa “is in keeping with our recent announcement that our focus going forward will be on those markets with the greatest potential for growth.” Read More (Marijuana Business Daily)

GrowGeneration set to join Russell 3000 Index. GrowGeneration (GRWG) announced that it is set to join the broad-market Russell 3000 Index. GrowGeneration’s inclusion in the Russell 3000 Index will take place at the conclusion of the 2020 Russell indexes annual reconstitution, effective after the U.S. market opens on June 29, according to a preliminary list of additions posted June 5. “We believe our Russell 3000 listing will increase long-term shareholder value by improving awareness, liquidity and appeal to institutional investors,” said Darren Lampert, CEO of GrowGeneration. Read More (New Cannabis Ventures)

Akerna to join Russell Small-Cap Index. Akerna (KERN) is set to join the small cap Russell 2000 Index and the broad-market Russell 3000 Index at the conclusion of this year’s reconstitution of the Russell stock indexes, effective after the U.S. stock market opens on Monday, June 29, 2020, according to a preliminary list of additions posted June 5, 2020. “Inclusion in the Russell Indexes is an important milestone and will increase the overall awareness and exposure of our stock within the investment community.” said John Fowle, chief financial officer, Akerna. Read More (New Cannabis Ventures)

Cresco Labs adds first person of color to board. Cresco Labs (CRLBF) appointed Michele Roberts to its board of directors, making the executive director of the NBA players union the first person of color on the board. The Cresco board currently consists of eight white men. The announcement comes a few days after Cresco’s co-founder and former president, Joe Caltabiano, resigned from the board, thus cutting all executive ties with the company he helped found in 2013. Roberts, a longtime trial lawyer, arrives at the company at a time when protests across the U.S. have prompted calls for companies to do more by way of social equity. Read More (Marijuana Business Daily)

Vireo Health parts ways with marijuana industry veteran Bruce Linton. Vireo Health International (VREO-CA) terminated former executive chair Bruce Linton, effective immediately and “on an entirely without-cause basis,” the company announced in a news release. Linton’s exit comes roughly seven months after his November hiring, and Vireo said it does not expect to hire a new executive chair. Linton will remain on the board of directors until his term expires July 15. Vireo CEO Kyle Kingsley said in the release that the Minneapolis company will remain focused on expanding its footprint in the U.S. markets of Arizona, Maryland, Minnesota, New Mexico, New York and Pennsylvania. Read More (Marijuana Business Daily)

Valens and BRNT launch new disposable vape line. The Valens Company (VGWCF) announced June 8 the launch of the vape line “Made By” in partnership with BRNT Group. Additionally, the company made public a strategic amendment to its existing custom manufacturing agreement with BRNT, a cannabis product design company. The new Made By line will include three disposable vape pens designed in collaboration with Canadian artists. The line of vape pens will be available both online and at select retailers in Alberta later this month. In the coming weeks, the pens are expected to hit shelves in British Columbia, in addition to both online and in select stores in Ontario. All three of the pens are high THC, low CBD blends called Headband, White Rhino and Critical Kali Mist. Read More (Cannabis Business Times)

iAnthus says it likely will default on interest payments again. iAnthus (ITHUF) said it expects to default on interest payments due June 30 and likely will delay its quarterly earnings past an extended June 15 deadline – a move that could result in a stock trading suspension. The New company, which has partly blamed the coronavirus crisis on filing delays, also said in a news release that, although its previously announced strategic review is ongoing, the firm can’t assure that any alternatives pursued will provide value to stockholders. As of June 11, the company’s debt totaled $159.1 million, including $97.5 million of 13.0% senior secured convertible debentures, $60 million of 8.0% unsecured convertible debentures and $1.6 million of other debt obligations. Read More (Marijuana Business Daily)

Canopy Growth doubles CEO salary amid mass layoffs, mounting losses. Canopy Growth (CGC) has given its CEO position a generous salary bump this year, according to recent filings with the U.S. Securities and Exchange Commission, even as the company laid off a large chunk of its workforce and struggled to contain losses. The filings show that an employment offer was made to current CEO David Klein on December 6 with a base salary in U.S. dollars of $975,000, which amounted to approximately CAD $1.3 million at the time. Mark Zekulin, who filled in as CEO on an interim basis after Bruce Linton was shown the door last year, earned an annual salary less than half of Klein’s. Linton’s last disclosed salary as co-CEO was CAD $318,000 annually. But base salary is a fraction of overall compensation for the executives. Read More (Marijuana Business Daily)

Chart 16: Salary of CEO at Canopy Growth: 2015-2020 Source: Intro-Blue, Marijuana Business Daily

Chart 16: Salary of CEO at Canopy Growth: 2015-2020
Source: Intro-Blue, Marijuana Business Daily

EARNINGS

Hexo posts improved third quarter with CAD $19.5 million loss. Hexo Corp. (HEXO) posted a net loss of CAD $19.5 million ($14.5 million) for the quarter ended April 30 as recreational sales grew and operating expenses shrank from the previous quarter. Hexo’s net loss decreased by 93% from the second quarter, which was marked by a major impairment charge for disposing of its former Newstrike facility. Net revenue increased by 30% on a quarterly basis to CAD $22.1 million as recreational grams sold increased by 42% over the previous quarter. Hexo’s adjusted EBIDTA loss for the third quarter was CAD $4.3 million. Read More (Marijuana Business Daily)

WeedMD reports full year 2019 revenue of CAD $20.8 million thanks to strong sales in adult-use and medical markets. WeedMD (WDDMF) reported revenue of CAD $20.8 million during its fiscal 2019, driven largely by strength in adult-use and medical cannabis sales. The medical-grade cannabis producer’s 2019 revenue figures represented a 162% increase over 2018 levels, which came in at CAD $8 million. During its fourth quarter ended December 31, 2019, the company saw its total revenue hit nearly CAD $2.9 million, derived entirely from consumer sales. The cannabis company harvested 17,988 kilograms in 2019, a 921% increase compared with 2018 which includes 8,950 kilograms attributable to the WeedMD’s harvest of outdoor crops. Read More (Proactive Investors) and More (GlobeNewswire)

Namaste Technologies sees highest quarterly revenue in two years as strategy shift starts to bear fruit. Namaste Technologies (NXTTF) has said the strategy shift it made in 2019 is starting to pay off as the cannabis-focused online platform posted its highest quarterly revenue figure for two years. Net revenue for the three months to February 29, 2020, came in at CAD $5.3 million, which was 16% up on the same period in 2019, the company said. The group’s core growth engine, e-commerce subsidiary CannMart, saw its revenue lifted by an impressive 798% to CAD $1.3 million, excluding excise tax, compared to the same period last year. The group’s loss for the quarter was reduced to CAD $7.4 million compared to a loss of CAD $10.3 million in 2019, reflecting the restructuring efforts and improvements made, it added. Read More (Proactive Investors) and More (Newswire)

TILT Holdings Q4 revenue declines sequentially by 28% to $33.4 million. TILT Holdings (SVVTF) reported financial results for its fiscal fourth quarter and year ended December 31, 2019. The company reported record annual revenue of $152.9 million for full year 2019. Following its acquisition in January 2019, Jupiter Research generated $116.7 million of TILT’s 2019 overall full year net revenue. Customized devices represented over 60% of Jupiter 2019 sales. In Q4 2019, TILT revenue stood at $33.4 million, down from $46.1 million in Q3 2019. This revenue decline was primarily driven by marketplace concerns and headlines related to illegal unregulated vape products which affected sales at Jupiter. Read More (New Cannabis Ventures)

CAPITAL MARKETS

GrowGeneration announces $35 million follow-on public offering. GrowGeneration (GRWG) announced that it has publicly filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to a proposed follow-on public offering raising $35,000,000. In connection with the offering, GrowGen expects to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares of common stock offered in the public offering. Oppenheimer & Co. is acting as the sole book-running manager for the proposed offering. Ladenburg Thalmann & Co. and Lake Street Capital Markets are acting as co-managers for the offering. Read More (GrowGeneration)

Hexo dropped by S&P/TSX Composite Index. The S&P Dow Jones Indices announced the latest changes to the S&P/TSX Composite Index, and chief among the changes is the dropping of both Hexo Corp. (HEXO). The dropping of the firm by the composite comes as no surprise given the firm’s sharp fall in share price over that of 2020. The fund currently owns 0.24% of the total outstanding shares of the company, representing a position of $680,243. Read More (the deep dive)

Sundial announces successful amendments with senior lenders, CAD $18 million convertible notes issuance and close of Bridge Farm sale. Sundial Growers (SNDL) announced that it has completed four transactions as a part of its broader financial restructuring. Sundial believes these transactions position it for future success with reduced leverage, added flexibility and improved liquidity. Sundial issued CAD $18 million in senior unsecured subordinated convertible notes with accompanying warrants to institutional investors for proceeds, net of original issue discount, placement agent’s fees and other expenses. Read More (Newswire)

Akerna raises $15 million from two institutional investors. Akerna (KERN) has closed a $17 million debt financing with two institutional investors. Proceeds from the financing will be used to support Akerna’s ongoing growth initiatives, continued investment in technology infrastructure and general corporate purposes. “This financing further strengthens our balance sheet and gives us the ability to capitalize on the significant opportunities,” said CEO Jessica Billingsley. Read More (New Cannabis Ventures)

Aphria starts trading on Nasdaq. Aphria (APHA) announced that June 8 will be its first day of trading on the Nasdaq Global Select Market as announced on May 26, 2020, and will continue to be listed under the ticker symbol “APHA.” The Ontario-based company sells cannabis in Canada and internationally, and operates the Solei, RIFF, Good Supply and Broken Coast brands. Trading on the Nadaq will not impact Aphria’s primary listing on the Toronto Stock Exchange. Read More (Marijuana Retail Report)

MediPharm Labs raises CAD $37.8 million through private placement of debt convertible at CAD $2.28 with warrants. MediPharm Labs (MEDIF) announced that it has closed a private placement with an institutional investor, for aggregate gross proceeds of CAD $37,822,500. CAD $18,911,250 of the offering is related to the placement of a CAD $20.5 million unsecured convertible note and a warrant to purchase up to 3,601,427 common shares of the company. The company intends to use the net proceeds from the offering for general corporate purposes, including building on the launch of its Cannabis 2.0 offerings with new product formats and expanding its product and Active Pharmaceutical Ingredient exports. Read More (New Cannabis Ventures)

As marijuana class action lawsuits surge, experts stress accurate, forthright disclosures. Class action lawsuits against cannabis companies are rising, driven by industry growth, stock price volatility, regulatory uncertainties and preventable mistakes by the companies themselves. The trend shows little sign of abating in the short term, but marijuana companies can reduce their exposure by being more transparent and forthright when disclosing their financials, potential of their products, value of their transactions and other relevant information, legal experts say. It pays to be cautious in advance: Merely defending against a class action claim can cost hundreds of thousands of dollars in legal fees – and a lot more if the case goes to discovery. “Plaintiffs’ firms are always out there and monitoring the markets,” said Michael Jones, a partner in the Boston-based Goodwin law firm’s cannabis practice. Read More (Marijuana Business Daily)

Chart 17: Class Action Securities Lawsuits in the U.S. Source: Intro-Blue, Marijuana Business Daily, Goodwin and Cornerstone Research

Chart 17: Class Action Securities Lawsuits in the U.S.
Source: Intro-Blue, Marijuana Business Daily, Goodwin and Cornerstone Research

Elixinol says capital raising sets stage for overhauled strategy. Coming off a year of challenges, Elixinol Global (ELLXF) said a recent capital raising and asset sales sets the stage for execution of a strategy focused on delivering branded CBD nutraceuticals worldwide. “This is an exciting time for Elixinol despite the challenging global environment to which we all need to adapt,” said Elixinol founder Paul Benhaim, who has re-engaged with the company as Chairman of the board of directors. “We are rapidly broadening our customer reach and extending our Elixinol brand portfolio, signaling a new phase of growth for our now more focused business,” Benhaim, said. Read More (Hemp Today)

MEDICAL CANNABIS

Ohio OKs another medical cannabis qualifying condition, rejects 2 others. Ohio regulators have recommended adding cachexia, or wasting syndrome, to the list of conditions that qualify for medical marijuana recommendations, which could slightly increase sales for the state’s MMJ dispensaries. The state medical board committee proposed adding that condition but rejected adding autism and anxiety to the list, according to The (Cincinnati) Enquirer. The board is expected to finalize its decision during a meeting in July. Cachexia causes severe weight loss and can be associated with chronic conditions such as cancer and HIV or AIDS. Read More (Marijuana Business Daily)

Medical marijuana sales in Oklahoma near $300 million in first five months of 2020. Already one of the largest and fastest-growing markets in the country, Oklahoma’s medical marijuana industry broke sales records in both April and May as consumers stocked up on products amid the coronavirus pandemic. In April, sales in Oklahoma shot up to $61.5 million, a 21% increase from March. Sales rose again in May to reach nearly $74 million – a monthly figure that far exceeds that of adult-use markets in Illinois, Massachusetts, Michigan and Nevada. With more than $275 million in MMJ sales in 2020 to date, Oklahoma’s market could easily eclipse $700 million by the end of the year – in the same ballpark as more populous states such as Arizona and Florida. Patients continued to enroll in Oklahoma’s medical cannabis program throughout the COVID-19 crisis – rising from roughly 272,000 in March to 297,000 by the end of May – though the recent monthly sales gains were driven by additional spending from existing patients. Read More (Marijuana Business Daily)

Chart 18: Oklahoma Medical Cannabis Market Overview – Monthly MMJ Sales & Average Per-Patient Spending on MMJ Source: Intro-Blue, Marijuana Business Daily

Chart 18: Oklahoma Medical Cannabis Market Overview – Monthly MMJ Sales & Average Per-Patient Spending on MMJ
Source: Intro-Blue, Marijuana Business Daily

Medical patients will benefit from Montana’s ‘untethering’ of program, according to dispensary managers, advocacy groups. than one dispensary, industry stakeholders say patient access is improving in the state. In the roughly one week since untethering went into effect June 2, Keva Aguirre, manager of Collective Elevation’s storefront in Helena, said she has seen more patients come in the door and more variety in the types of products those patients have been buying. “I think the biggest thing for the cannabis movement in general over here with untethering is that if there is something that a patient needs that a certain dispensary can’t provide, maybe another dispensary elsewhere can provide it because it’s still a growing industry, and not everybody is on top of everything at the moment,” Aguirre said. Read More (Cannabis Business Times)

Cannabis temporarily relieves PTSD symptoms, study suggests. People suffering from post-traumatic distress disorder report that cannabis reduces the severity of their symptoms by more than half, at least in the short term, according to a recent study led by Carrie Cuttler, a Washington State University assistant professor of psychology. Cuttler and her colleagues analyzed data of more than 400 people who tracked changes in their PTSD symptoms before and after cannabis use with Strainprint. The study, recently published in Journal of Affective Disorders, shows cannabis reduced the severity of intrusions, returning thoughts of a traumatic event, by about 62%; flashbacks by 51%, irritability by 67%, and anxiety by 57%. The symptom reductions were not permanent, however. Read More (Science Daily)

CBD/HEMP

CBD liver study to inform FDA regulation gains support for deployment next month. A third-party consumer research study looking at CBD’s effects on humans, meant to help gather liver safety data that the U.S. Food and Drug Administration needs to move forward with regulation, is set to begin in July. The protocol for the study, sponsored and led by ValidCare, a Colorado-based firm that conducts clinical and market intelligence research for the hemp and healthcare industries, was developed with significant feedback from the FDA’s working group focused on CBD. The CBD liver-toxicity study, originally slated to begin in March but delayed by the coronavirus pandemic, will aggregate data from approximately 1,000 people from July through September. Read More (Hemp Industry Daily)

The turn towards hemp fiber: A growing trend. America’s hemp cultivators and producers remain focused for the most part on growing hemp for cannabidiol (CBD) production. However, overproduction of CBD-rich hemp biomass and flower during the 2019 season has drastically lowered prices for such plant material, as well as for extracted forms of CBD. Consequently, there has been a pivot away from hemp-derived CBD by some farmers and processors, with a growing emphasis instead on hemp fiber and grain. As noted in latest Hemp Benchmarks Spot Price Index report, regulators in Montana – a top hemp-producing state in 2019 – had approved 11,000 acres for hemp cultivation for the 2020 growing season by the end of May. Of those 11,000 acres, about 85% was being licensed for fiber and grain production, according to state officials. This is a reversal from 2019, when most of Montana’s hemp crop was grown for CBD. Read More (Hemp Benchmarks)

Michigan grew nearly 4,000 acres of hemp in first year of pilot program. Farmers grew nearly 4,000 acres of industrial hemp across 58 Michigan counties in 2019 as part of the state’s inaugural year of a pilot program to test the viability of the crop here. The Michigan Department of Agriculture and Rural Development released a report on the first year of the pilot program, based on a state survey of 514 licensees for growing and processing hemp. About 59 percent of survey respondents said they plan to grow hemp again this year, with the total acreage for outdoor growing expected to more than double. Another 20 percent of licensees were undecided. “With such a significant increase in the projected amount of hemp planted outdoors in the 2020 season, 97 of the respondents reported that they anticipate the need to hire migrant farm workers,” the report says. Read More (MiBiz)

How American consumers are learning about CBD. CBD has been experiencing a dramatic rise in consumer use and awareness over the past few years. As recently reported by New Frontier Data, an overwhelming majority (86%) of Americans are familiar with CBD. It is worth noting that their awareness is not based on media coverage and advertising; much of the information people have gleaned about CBD comes from their own social networks. Across all survey respondents, 73% reported having had a conversation about CBD, with nearly two-thirds (63%) of those indicating positive views. For CBD consumers, the numbers were even higher, with 96% reporting conversations about CBD (and 87% of them being positive). Regardless of whether people have used CBD, the cannabinoid appears to enjoy high levels of both name recognition and overall positivity. Read More (New Frontier Data)

Chart 19: How American Consumers Are Learning About CBD Source: Intro-Blue, New Frontier Data

Chart 19: How American Consumers Are Learning About CBD
Source: Intro-Blue, New Frontier Data

More U.S. states allowing sales of hemp-derived products in marijuana dispensaries for first time. Colorado and Illinois are joining the ranks of nearly a dozen states where CBD and other hemp-derived products can be sold at marijuana dispensaries for the first time, opening a new sales outlet for the growing industry. In the absence of guidance from the U.S. Food and Drug Administration, states are taking their own approaches as to how to regulate the sale of hemp in medical and recreational dispensaries. Colorado’s change takes effect July 1. “I think it’s positive for the CBD industry, because the market is struggling right now,” said Shawn Hauser, a partner at the Vicente Sederberg law firm, which specializes in cannabis. Read More (Hemp Industry Daily)

Kentucky sees number of hemp licenses dip slightly. The number of hemp licenses granted in the U.S. state of Kentucky has dropped to 960 going into this year’s planting season, down from 978 last year, state agriculture officials announced. And while the state said those licenses could translate to 32,000 acres under hemp in 2020, according to the Kentucky Department of Agriculture (KDA), 157 stakeholders applied for licenses only to store hemp left over from last year’s harvest, as the current oversupply of biomass destined for CBD production – in the U.S. and worldwide – takes its toll on Kentucky stakeholders. More than 90% of Kentucky hemp farmers grew for CBD in 2019. Read More (Hemp Today)

RETAIL

SQDC: Montreal will have same-day delivery of legal weed by July. Montrealers can expect same-day delivery of legal pot by July. The SQDC has reached an agreement with a delivery company and is in the implementation phase of the plan, which will be tested in Montreal before expanding to the rest of the province during the next six months, according to SQDC president and CEO Jean-François Bergeron. Current scenarios involve offering customers two cutoff times: for example, order before noon for delivery the same afternoon, or before 5 p.m. for delivery the same evening. “It will be something like that,” Bergeron said. “We’re willing to adapt our logistics. This is Phase 1, a prototype.” Read More (Montreal Gazette)

Schwazze signs definitive agreement to buy 14 Star Buds Colorado cannabis stores for $118 million in cash and stock. Schwazze, formerly operating as Medicine Man Technologies (MDCL), announced that it has signed definitive acquisition agreements for 14 Star Buds locations in the state of Colorado as part of the company’s pending acquisitions. The acquisition of the 14 Star Buds locations is represented by 13 different ownership groups and agreements. Based on the consolidated, unaudited 2019 results the company received from Star Buds, these acquisitions collectively earned approximately $50 million in revenue with a strong EBITDA margin. The company has submitted change of ownership applications with the Colorado Marijuana Enforcement Division for the 14 Star Buds locations and the transactions are expected to close in the third quarter of 2020. Read More (New Cannabis Ventures)

High Times to add two NorCal dispensaries to growing retail presence. Hightimes Holding, the owner of High Times, announced that it has entered into definitive agreements to acquire two Northern California cannabis dispensaries, including the 11-year-old community cornerstone 530 Collective in Shasta Lake. The mostly stock transaction is expected to close within 60 days. The acquisitions, which also includes the Redding store operated by J@G Enterprises, known as Synergy, will retain the 43 employees staffed and continue the operations of the two active dispensaries. The stores, which also operate a multi-region delivery business, will be rebranded as High Times properties upon closing. Read More (Marijuana Retail Report)

PRODUCTS

Cannabis beverage market to hit $1.82 billion by year’s end. Prohibition Partners has released a new report indicating that all segments of the beverage industry are now embracing cannabis-infused drinks, with  a clear potential for a growing consumer base as 16% of people who have not yet consumed cannabis-infused drinks say they will probably do so within the next 12 months. They estimate the global cannabis drinks market will be worth $1.82 billion by the end of 2020 and that number will be infused by those looking for relief from the current COVID-19 pandemic. Consumer demand is strong; the report finds that one in four consumers or would-be consumers of other cannabinoid-based products would be willing to try cannabis-infused drinks, and 28% of people who have already tried infused beverage consumers say they intend to buy more infused consumer goods in the coming three months. Read More (Green Market Report)

Massachusetts regulators developing cannabis product catalog. Massachusetts marijuana overseers are taking a new approach to tracking industry inventory – a statewide product catalog listing all the various edibles, pre-rolls, tinctures and more that manufacturers and retailers have to offer customers. The catalog, under development by the Massachusetts Cannabis Control Commission, is a way for regulators to get a better handle on what the legal market is producing and what the illicit market might be responsible for, the State House News Service reported. Read More (Marijuana Business Daily)

Alberta reports Canada’s first cannabis beverage recall. Alberta’s provincial cannabis regulator is recalling multiple lots of cannabis beverages from Ontario-based AgMedica Bioscience’s Vertical brand in what appears to be the first-ever recall of a regulated marijuana beverage in Canada. The products are being recalled because of labeling errors. The voluntary recall covers four lots of AgMedica’s 55-milliliter Vertical Pomegranate Blueberry beverage, with the following lot numbers: EXPE-18-20073B1, EXPE-18-20074B1, EXPE-18-20105B1, and EXPE-18-20106B1. Read More (Marijuana Business Daily)

Consumer interest growing for Cannabis 2.0 products. While non-flower related cannabis products only made up 11% of sales by volume in Ontario, from April 1, 2019 to March 31, 2020, interest in Cannabis 2.0 products has been increasing exponentially since their release in December 2019. In a report released by the Ontario Cannabis Store, it shows that sales for these products has been increasing steadily each month, especially as Licensed Producers come out with more options for consumers to try. The newest addition to Cannabis 2.0 products, cannabis beverages, nearly tripled in sales between February and March of this year, going from $82,100 to nearly $242,600. Read More (Cannabis Retailer)

SOCIAL

Hiring trends turn back toward strategic roles, even during an ongoing economic crisis. David Belsky is busier than ever. As the CEO and founder of Flowerhire, a recruitment and staffing agency in the cannabis space, he says that the spring of 2020 has been a windfall for companies seeking talent—following a sudden mid-March dip in hiring across the board, of course. “I think more and more people are thinking about the industry than ever before,” he says. While the cannabis industry hasn’t been immune to the great economic crisis unfolding this year, the fact that many states deemed cannabis businesses “essential” left a tremendous impact. Read More (Cannabis Business Times)

From Mercedes-Benz, BMW to cannabis: Seasoned execs launch weed branding agency. For the most part, seeing executives from major mainstream companies migrate into the cannabis industry is no longer a novelty. Javier Hasse, senior contributor in Forbes, had become quite obsessed with this trend in previous years, reporting on “The Migration Saga” extensively on Forbes. However, the creation of Ethereal, a cannabis-focused creative agency founded by former senior creatives who have worked with massive luxury brands like BMW Motorcycles and Richemont, caught Hasse’s eye. Read More (Forbes)

INTERNATIONAL

Israeli government announces plan to advance cannabis legalization reforms. The two biggest parties making up the new government said they would push for increased legalization of cannabis use, a week after the police minister backed easing enforcement of existing laws. Prime Minister Benjamin Netanyahu’s Likud and Defense Minister Benny Gantz’s Blue and White said in a joint statement that they would advance legislation “to resolve the issue of decriminalization and legalization,” apparently referring to recreational cannabis use. The statement noted that the sides had also decided to push medical cannabis reforms in order to make it easier for patients to get access to treatment and for growers to get a license. Read More (The Times of Israel)

Netherlands apparently limiting number of German cannabis clients. The Dutch government agency responsible for exporting medical cannabis exports is reportedly limiting, for now, the number of German wholesalers it ships to. Berlin-based AMP German Cannabis Group said in a news release the Dutch Office of Medicinal Cannabis (OMC) “has postponed selling EU-(Good Manufacturing Practice) medical cannabis to additional importers, including AMP, until further notice.” AMP said it “placed its first order to import two Bedrocan International-branded products from OMC, which subsequently confirmed receipt of AMP’s order.” But the German company did not directly state whether the order was shipped. Read More (Marijuana Business Daily)

Chart 20: Destination of Medical Cannabis Sold by the Dutch Office of Medical Cannabis Source: Intro-Blue, Marijuana Business Daily

Chart 20: Destination of Medical Cannabis Sold by the Dutch Office of Medical Cannabis
Source: Intro-Blue, Marijuana Business Daily

Hemp in Portugal to be regulated by four state agencies. Hemp farmers in Portugal may soon face a quartet of regulators to inspect and verify their crops, according to local media. Citing a draft amendment to Portugal’s medical cannabis legislation, the Lusa news agency reported that the cultivation of EU-certified industrial hemp could soon be regulated by four state agencies: The Agriculture and Fisheries Financing Institute, the Judiciary Police, the National Republican Guard, and the Public Security Police. Under the draft regulation, authorization to grow industrial hemp must be requested from Portugal’s phytosanitory authorities at the General Directorate of Food and Veterinary Affairs (DGAV). Read More (Hemp Industry Daily)

Germany faces potential temporary supply shortage of cannabis flower. The Dutch government agency responsible for exporting medical cannabis sent an email to its German customers informing of a delay of up to six weeks in the next shipment of medical cannabis. “Due to additional testing needed to release the batches for export, we are momentarily out of stock,” the Dutch Office of Medicinal Cannabis (OMC) said in the message to German importers. The email was viewed by Marijuana Business Daily. MJBizDaily’s European medical cannabis report estimated that in 2019 the OMC was responsible for the supply of almost 40% of Germany’s total flower imports for pharmacy dispensing. Read More (Marijuana Business Daily)

Cannabis consumption and perceptions vary regionally in Europe. Fewer than 4 in 10 (38%) among Europeans claim to have consumed cannabis at least once or twice, though averages fluctuate considerably across regions. In The EU CBD Consumer Report: 2019 Overview, New Frontier Data outlines eight distinct regions intended to contrast individual yet clustered countries or with similar markets. The regions respectively include: France; Germany; Italy; Belgium, Netherlands and Luxembourg (Benelux); Spain and Portugal (Sp/Port); Sweden and Denmark (Swe/Den); Switzerland & Austria (Ch/Aus); United Kingdom and Ireland (UK/Ire). Cannabis consumption rates vary considerably across markets. More than half (54%) of respondents from the Switzerland & Austria claimed to have consumed cannabis, while among Germans — in a country with a relatively nascent medical market—fewer than 3 in 10 (29%) said likewise. Of the included regions, France was the least likely for reported cannabis consumption, as nearly a quarter of its residents 24%) claimed to have consumed cannabis. Read More (New Frontier Data)

Chart 21: European Regional Cannabis Consumption Source: Intro-Blue, New Frontier Data

Chart 21: European Regional Cannabis Consumption
Source: Intro-Blue, New Frontier Data

CANNA SCIENCE

What are eutectic solvents? While there are a handful of modes of extraction, ‘green’ methods are increasingly being focused on, and the use of deep eutectic solvents (DESs) as extraction solvents for phytocannabinoids has recently been investigated. Extraction methods separate compounds in cannabis trichomes from plant matter thereby creating extracts or concentrates containing arrays of cannabinoids and terpenes. But certain extraction methods run the risk of toxic residual solvents being left behind, like butane. Eutectic solvents, instead, may potentially produce safer products while also posing minimal risk to environmental and human health. Read More (Extraction Magazine)

TECHNOLOGY

Cannabis growers use technology and automation to cut costs and promote safety amid downturn, pandemic. Cannabis cultivators are turning to technology and automation to help achieve efficiencies, cut costs and keep workers safe during the coronavirus pandemic and the current economic downturn. Growers report technology and automation solutions that include: Automated irrigation, fertigation and HVAC systems to limit the amount of labor needed in the operation; Robots to place early stage plants in growing media and on cultivation trays; Machines to fill and roll pre-rolls; and Mold and microbial remediation systems. Read More (Marijuana Business Daily)

Desert Aire launches climate control system for cannabis drying rooms. Desert Aire announced June 10 the launch of the latest in its GrowAire Series of products for the indoor cannabis cultivation market: the DriCure system, a climate control system for cannabis drying rooms. DriCure is a single unit solution designed for a production-level drying facility and is designed for year-round operation. “Desert Aire designed GrowAire DriCure specifically for cannabis drying room applications,” said Paul Stewart, vice president of sales for Desert Aire. “It is an extension of the GrowAire Series product line that helps cultivators ensure they optimize the final step to their cultivation process.” Read More (Cannabis Business Times)

LEGAL & IP

The rise of cannabis litigation against foreign entities – Where will you litigate? As the cannabis industry continues to evolve, Jihee Ahn of Harris Bricken Law Firm has seen a rise in inquiries relating to litigation between domestic parties and international parties. By the simple fact that a dispute involves a foreign party, a host of special considerations come into play – one of which is, where will this be litigated? Often, in an attempt to have the home court advantage, we are confronted with the situation that both sides have initiated lawsuits in their respective courts. Unfortunately, where the parties ultimately end up litigating is not a simple matter of who got to their courthouse first. Read More (Marijuana Retail Report)

Charlotte’s Web strain battle heats up. The Stanley Brothers in Colorado made their name by targeting a strain called Charlotte’s Web (CWBHF) that had greater amounts of CBD than THC in order to treat a young girl with a rare form of epilepsy. The girl, Charlotte Figi, suffered from Dravet Syndrome that caused her to have multiple seizures in a single day. The company called the strain Charlotte’s Web in her honor and even changed its name to Charlotte’s Web Holding. Then the company attempted to trademark the name Charlotte’s Web, but was rejected. In October 2019, the U.S. Patent & Trademark Office rejected the trademark application for “Charlotte’s Web” in a nonfinal Office Action.  Read More (Green Market Report)

Oklahoma medical cannabis dispensary settles trademark dispute. Dank of Oklahoma, a medical marijuana dispensary in Tulsa, resolved a trademark suit by agreeing to drop its name, hexagonal logo and other marks likely to cause confusion with those used by the Bank of Oklahoma. According to a federal judge’s consent judgment, Dank of Oklahoma and Bank of Oklahoma “agreed to amicably” resolve the suit, which the bank filed in March. The case reflects the importance of cannabis companies conducting trademark searches before developing their business names and logos as well as the costly risk of playing off other company names to promote their business. Read More (Marijuana Business Daily)

Columbia Care sued for $50 million over Florida MED license. A $50 million lawsuit alleges Columbia Care (COLXF) interfered in a joint venture to obtain a hard-to-get Florida MED license. MCBD alleges Columbia Care engaged in a “wrongful and fraudulent scheme to strip MCBD of its ownership” of a Florida MED license worth tens of millions of dollars. According to the suit, Columbia induced MCBD’s joint venture partner, Sun Bulb Company, to breach its obligations to MCBD. Gary Santo Jr., vice president of investor relations for Columbia Care, said it’s the company’s policy not to comment on pending or active litigation. But the company would provide a defense “as soon as we’re able.” He noted that the court has not yet docketed the electronic filing and that courts have been closed due to COVID. Read More (WeedWeek)

SUSTAINABILITY

The cannabis equity failure. The pioneering cannabis activist turned capitalist Steve DeAngelo often says things like, “If all that we do with this is create a new industry, shame on us.” Cannabis, he says, should grow into “a new kind of industry,” one that reflects what he considers the values embodied by the plant. But, several years into legalization, the cannabis world has not displayed the will or inclination to address its racial disparities. Like most U.S. industries, the cannabis industry’s upper ranks and ownership are overwhelmingly white. But cannabis bears a historical burden that other fields do not: The state experiments with this (still federally illegal) industry, owe their existence to the ongoing racial injustices of prohibition. Read More (WeedWeek)

Denver cannabis companies mostly white-owned, lacking social equity. A study by Denver regulators highlighted that marijuana company ownership in the city and county is predominantly white, spurring a debate over the value of the analysis itself and how to improve local business opportunities for people of color. Among respondents, 75% of Denver cannabis business owners were white and only 6% of both cannabis business owners and employees were African American. Hispanic, Latino or Spanish respondents represented about 13% of owners and 12% of employees. Read More (Marijuana Business Daily)

CANNA FACTS

Chart 22: Cannabis Use Is More Common in Western and Northeastern States Source: Intro-Blue, Tax Foundation

Chart 22: Cannabis Use Is More Common in Western and Northeastern States
Source: Intro-Blue, Tax Foundation

CANNA CAPITAL MARKET TRENDS

Chart 23: Weekly Summary (June 1 – June 5, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 23: Weekly Summary (June 1 – June 5, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 23: Weekly Summary (June 1 – June 5, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 23: Weekly Summary (June 1 – June 5, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 24: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 24: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 25: Cannabis M&A by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 25: Cannabis M&A by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 26: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 26: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 26: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 27: U.S. Implied Forward Prices (Week Ending June 12, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 27: U.S. Implied Forward Prices (Week Ending June 12, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 28: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 28: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: WASHINGTON

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

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

 

Chart 30: Best-Selling Edibles Brands and Products in Washington Source: Intro-Blue, Headset

Chart 30: Best-Selling Edibles Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 31: Best-Selling Vapor Pen Brands and Products in Washington Source: Intro-Blue, Headset

Chart 31: Best-Selling Vapor Pen Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 32: Best-Selling Beverage Brands and Products in Washington Source: Intro-Blue, Headset

Chart 32: Best-Selling Beverage Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 33: Best-Selling Capsule Brands and Products in Washington Source: Intro-Blue, Headset

Chart 33: Best-Selling Capsule Brands and Products in Washington
Source: Intro-Blue, Headset

 

Chart 34: Best-Selling Topical Brands and Products in Washington Source: Intro-Blue, Headset

Chart 34: Best-Selling Topical Brands and Products in Washington
Source: Intro-Blue, Headset

CANNA INDEX

Chart 39: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 39: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 40: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 40: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Important Disclosures

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