CLEVER LEAVES: GLOBAL CANNABIS LEADER IN THE MAKING

Favorable growing conditions and low production cost position Colombia as a key cannabis-exporting nation. Annual cannabis exports from the country are expected to grow >20x to $2.3 billion in a decade. Colombia’s location near the equator provides an even 12-hour day and night cycle, quality soil, abundant water, and warm weather. This allows for year-round cultivation without the need for light supplementation while high elevation leads to improved pest mitigation, resulting in better quality supply. A favorable cost structure further enhances Colombia’s appeal as a cannabis-growing nation. Abundant availability of skilled and cheap labor – minimum wage in Colombia ($1.12/hour) is considerably lower than the Canadian average of $8-to-$12/hour – means that per gram cannabis production cost is significantly lower in Colombia than in other countries. According to Crop America, a gram of cannabis flower costs between $0.50 and $0.80 to produce in Colombia compared to $1.50 to $2.00 in Canada and $2.20 to $2.50 in The Netherlands. Colombia’s cannabis production cost is even lower than other Latin American countries with Bolivia ranging between $0.70 and $0.90, and Peru averaging $1.80 per gram. The combination of these factors will drive the growth in Colombian cannabis exports from $109 million in 2020 to $2.3 billion in 2030, according to Fedesarrollo.

Clever Leaves’ unmatched scale and low-cost advantage make it the standout cannabis operator not just in Colombia but in the world. The Colombian market has more than 160 players, including Khiron (KHRNF) and PharmaCielo (PCLOF). However, Clever Leaves stands out because of its scale – the company’s greenhouse cultivation capacity is by far the biggest in Latin America. Clever Leaves is currently cultivating 1.9 million square feet of greenhouses (2x Khiron and ~1.5x and PharmaCielo) and its goal is to expand capacity from its current 15 hectares to 100 hectares by 2023. The company is also building a ~700 hectare outdoor cannabis cultivation facility – Project Apollo – which has the potential to be ~6x larger than the top nine Canadian LPs combined (~119 hectares) and will establish Clever Leaves as one of the biggest cannabis cultivators in the world. Its presence in Colombia, coupled with scale, means Clever Leaves can produce cannabis at $0.20/gram – this is one-seventh of the Canadian average and is also lower than the Colombian average. At $4.00/sq. ft, capex cost for the company is much lower than peers in Canada ($124/sq. ft.) and the U.S. ($205/sq. ft.). This firmly establishes Clever Leaves as one of the lowest cost cannabis producers in the world and will help the company maintain its gross margin at an industry-leading 75% and drive EBITDA margin to a best-in-class ~40% by 2024.

A growing international presence – Clever Leaves is a true Multi-National Cannabis Operator (MNO) – and a strong regulatory track record further differentiate the company from peers, making its impending U.S. listing one of the biggest in the cannabis space in 2020. Apart from its home market of Colombia, Clever Leaves has strategically built a global footprint through operations and investments in Canada, Germany, Portugal, and the U.S. Most notably, it acquired a 9mn sq. ft. cultivation facility in Portugal from KKR last year – the move allows Clever Leaves to enter the flower market (Colombia’s regulatory set-up is oriented toward value-added medical cannabis products and extracts) and opens the door to the $130bn+ European cannabis opportunity. In addition, the company has a demonstrated a regulatory track record in geographies (Colombia and EU) where regulations are tough to navigate and act as a key barrier to entry. Clever Leaves is the first Colombian company authorized to export cannabis into Canada and the company’s 13-ton quota to cultivate and extract high THC flower is >1.4x the ~9-ton quota of Khiron. The company has also been granted the Good Agricultural and Collecting Practices (GACP) Certification for quality and consistency in the cultivation and harvest of medical cannabis, and is expecting EU GMP approval for its Colombia operations later this year – this will establish Clever Leaves as one of only three cannabis extract producers with an EU GMP certification. Clever Leaves recently signed a merger agreement with Schultze Special Purpose Acquisition Corp. (SAMA) and the combined entity is expected to list on the NASDAQ in 3Q20. The deal will give Clever Leaves access to $130 million+ in growth capital and will offer investors the chance to own the leading vertically integrated multi-national cannabis operator (MNO) earlier than previously expected.

Chart 1: Clever Leaves Is the Leading Low-Cost Cannabis Producer in the World Source: Intro-Blue, Company. Canada Capex Average = Average of capex estimates for Aphria, Aurora, CannTrust, Canopy, HEXO, OrganiGram, and Tilray. U.S. Capex Average = Average of capex estimates for Green Thumb Industires, iAnthus, and MedMen.

Chart 1: Clever Leaves Is the Leading Low-Cost Cannabis Producer in the World Source: Intro-Blue, Company. Canada Capex Average = Average of capex estimates for Aphria, Aurora, CannTrust, Canopy, HEXO, OrganiGram, and Tilray. U.S. Capex Average = Average of capex estimates for Green Thumb Industires, iAnthus, and MedMen.

Chart 1: Clever Leaves Is the Leading Low-Cost Cannabis Producer in the World
Source: Intro-Blue, Company. Canada Capex Average = Average of capex estimates for Aphria, Aurora, CannTrust, Canopy, HEXO, OrganiGram, and Tilray. U.S. Capex Average = Average of capex estimates for Green Thumb Industires, iAnthus, and MedMen.

CANNA NEWS

COVID-19

Nearly two-thirds of cannabis cultivators say COVID-19 has impacted their businesses. According to Cannabis Business Times’ 2020 State of the Industry Report, 63% of participants reported that the pandemic has affected their companies, with the following ramifications: “decreased sales” (23%), “staff reduction/hours cut” (22%), “suspension of some operations” (21%) and “suspension of all operations” (4%). However, cannabis cultivation operations and dispensaries, deemed essential in most places, could continue operations during state shutdowns, which may have explained some of the positive outcomes for some during what was a difficult time for many. Nearly a fifth of participants (18%) reported increased sales, and 5% said the increased staff/hours. Another 35% said the pandemic had no impact on business. Read More (Cannabis Business Times)

Chart 2: In What Ways, If Any, Has the COVID-19 Outbreak Impacted Your Cannabis Operation? Source: Intro-Blue, Cannabis Business Times 2020 State of the Industry Report

Chart 2: In What Ways, If Any, Has the COVID-19 Outbreak Impacted Your Cannabis Operation?
Source: Intro-Blue, Cannabis Business Times 2020 State of the Industry Report

COVID-19 highlights critical flaws in cannabis supply chain. The recent surge in consumer spending has resulted in an artificial sales boost, and dispensaries cannot expect this influx of profits to last. In good times when businesses are profitable, many leaders avoid making difficult managerial choices. In bad times, leaders have no choice but to finally address these inefficiencies – with labor costs as the most prominent example. In the coming weeks, cultivators will experience shortages in essential and non-essential supplies – primarily those manufactured in China, including pots, trays, and grow lights. In the second week of June, over six million people filed for unemployment. In the cannabis world, this means smaller suppliers and retailers, who operate on razor-thin margins by competing exclusively on price, will not survive. Read More (Cannabis & Tech Today)

Struggling through the pandemic: Cannabis social equity during COVID-19. In April 2020, the Drug Enforcement and Policy Center conducted a survey asking patients/consumers and cannabis industry professionals about the challenges they were experiencing and government responses. Hoping to fill a gap in early discussions of the impact of the COVID-19 crisis, they were especially interested in the impact on cannabis industry participants designated as social equity businesses. The results indicate that the COVID-19 pandemic has both introduced tremendous new challenges for the cannabis industry and exacerbated long-standing difficulties for businesses in this arena. If small, minority-owned and social equity businesses are to survive, they need to be treated by the system like any other regular small business venture. Read More (SSRN)

Tepid adult-use cannabis sales in Massachusetts for first week of reopening. Recreational marijuana stores reopened in Massachusetts in late May after a state-mandated, two-month shutdown in response to the coronavirus, but sales during the first week were lukewarm. Retailers across the state generated $13.6 million for the week of May 25, up about 60% from the same week in 2019. By comparison, through the first 12 weeks of 2020, adult-use sales were up by an average of 200% from the previous year. Pent-up demand after the reopening of stores apparently was not strong enough to sustain the pre-crisis sales-growth rate. Read More (Marijuana Business Daily)

Chart 3: Massachusetts Adult-Use Cannabis Sales by Week in 2020: Percent Change vs. Same Week in 2019   Source: Intro-Blue, Marijuana Business Daily, Massachusetts Cannabis Control Commission

Chart 3: Massachusetts Adult-Use Cannabis Sales by Week in 2020: Percent Change vs. Same Week in 2019  
Source: Intro-Blue, Marijuana Business Daily, Massachusetts Cannabis Control Commission

STATE AND REGULATORY NEWS

World Health Organization recommends reclassifying marijuana under international treaties. Global health experts at the United Nations are recommending that marijuana and its key components be formally rescheduled under international drug treaties. The World Health Organization (WHO) is calling for whole-plant marijuana, as well as cannabis resin, to be removed from Schedule IV—the most restrictive category of a 1961 drug convention signed by countries from around the world. The body also wants delta-9-tetrahydrocannabinol (THC) and its isomers to be completely removed from a separate 1971 drug treaty and instead added to Schedule I of the 1961 convention, according to a WHO document that has not yet been formally released but was circulated by cannabis reform advocates. Read More (Forbes)

April pot sales in U.S. show resilience amid shutdown. U.S. cannabis sales stayed strong in April even as broader retail sales fell by double digits, indicating that the March increase in demand was more than just pantry loading. Total U.S. retail sales fell 21.6% in April from the year prior, yet pot sales in several states posted significant year-over-year gains — in some cases, even bigger than in March when demand spiked ahead of Covid-related shutdowns, according to data firm BDS Analytics. Many legal states declared cannabis an essential service during the pandemic, allowing for delivery and curbside pickup. In states that have legalized recreational marijuana, Oregon stood out with 40% sales growth in April versus 31% in March and 19% in January, according to BDS. Jurisdictions where medical use is legal but recreational isn’t showed even stronger gains, with Maryland sales doubling and Arizona jumping nearly 50%. Read More (Bloomberg)

Chart 4: April Pot Sales Strong in Most Markets; Nevada Falls Due to Lack of Tourism Source: Intro-Blue, Bloomberg, BDS Analytics

Chart 4: April Pot Sales Strong in Most Markets; Nevada Falls Due to Lack of Tourism
Source: Intro-Blue, Bloomberg, BDS Analytics

The three “R’s” of why federal cannabis legalization could happen now. After so much time, why could we finally be close to federal legalization? It’s a culmination of three “R’s”: regulation, revenue, and reform. Regulation – We believe that the cannabis industry needs to be legalized, regulated, and taxed for the safety of the general public and as an economic driver of the communities that cannabis businesses serve. Revenue – States need money and, if the federal government is going to bail them out, cannabis legalization would provide an excellent funding source. The need for revenue will be a defining factor in legalization, driving the government’s decisions over the next few years. Reform – Today’s discussions of criminal justice reform parallel the conversation around cannabis legalization. Read More (Cannabis & Tech Today)

Why more states could legalize cannabis in 2021. Amid recession and social unrest, the cannabis industry sees its moment. Actions by states to reduce criminal penalties for marijuana use and possession are fueling momentum for the broader movement to legalize cannabis and have it serve as an economic engine for cash-strapped coffers, industry members and policy experts say. “I expect a record number of states to legalize marijuana in 2021, in part due to the financial pressures, along with the racial injustice imperative to reduce unnecessary police-civilian interactions,” said Karen O’Keefe, director of state policies for the Marijuana Policy Project, the lobbying organization behind many state cannabis policies in place today. Read More (CNN Business)

Colorado releases new average market rates. The Colorado Department of Revenue (CDOR) released the Average Market Rates (AMR) for retail marijuana effective July 1, 2020 until September 30, 2020. Five of the seven AMR categories decreased this quarter, specifically bud ($1,000), trim ($300), bud allocated for extraction ($599), trim allocated for extraction ($202) and seed ($4). The immature plant rate ($9) and whole, wet plant rate ($176) stayed the same. The July 1 AMR was calculated based on retail marijuana transactions from March 1, 2020 through May 31, 2020 in MED’s marijuana inventory tracking system. AMR is an estimate of the typical prices of each category of unprocessed retail marijuana that is sold or transferred from marijuana grows to product manufacturers or stores. Read More (Cannabis Business Times)

California’s new organic certification plan could help cannabis growers’ bottom line. A plan to roll out a novel organic marijuana certification in California could generate more business opportunities for brands looking to differentiate themselves by charging health-conscious consumers a premium for their products. With cannabis illegal under federal law, marijuana businesses cannot call products organic under the U.S. Department of Agriculture’s certification program. So California has proposed its own “comparable-to-organic cannabis standards.” State regulators are accepting public comment until July 7 on the proposed regulations, which were first reported by Cannabis Wire. Read More (Marijuana Business Daily)

Los Angeles looks to boost ailing legal marijuana market. A Los Angeles City Council committee approved a series of changes to reset the city’s troubled legal marijuana market, including bolstering programs intended to help operators who suffered during the nation’s long-running war on drugs. Los Angeles was once seen as a potential showcase for the industry, but that has never squared with the reality on the street: illegal shops continue to flourish, while licensed companies complain that just about everything costs too much and takes too long when dealing with City Hall. Meanwhile, one of the expected pillars of the city’s legal system — programs to assist those working in the business who were arrested or imprisoned during the war on drugs, including many people of color— has been slow to take shape. Read More (Marijuana Retail Report)

Catching cannabis coming and going: How law enforcement profits from illicit and legalized marijuana businesses alike. U.S. Code §280E can result in up to a 70% effective tax rate for cannabis businesses, or 2x what other legal businesses pay. Between 2000-2013, state and local law enforcement received $4.7 billion from the Department of Justice via its Equitable Sharing Program. The federal government annually spends $33 billion to prosecute the war on drugs, with state governments spending another $30 billion. Lack of reliable banking access increases cash-intensive cannabis businesses’ risk for theft:  In 2019, approximately 180 credit unions (3.3% among 5,442 in the U.S.) and 559 banks (10.8% among 5,177 nationwide) served the legal cannabis industry. Read More and More (New Frontier Data)

Chart 5: Combined U.S. DOJ And Treasury Deposits to Federal Forfeiture Funds (by Fiscal Year) Source: Intro-Blue, New Frontier Data

Chart 5: Combined U.S. DOJ And Treasury Deposits to Federal Forfeiture Funds (by Fiscal Year)
Source: Intro-Blue, New Frontier Data

Number of banks reporting marijuana business clients declines, federal report shows. The number of banks and credit unions servicing marijuana businesses dipped in the last fiscal quarter, according to new federal data. In the quarter ending in March 2020, there were 710 banks and credit unions that reported servicing marijuana businesses, according to the update by FinCEN, a part of the Treasury Department. The previous quarter’s data showed 739 instances of financial institutions working with the industry as of December 2019. In both of those reports, analysts identified instances where banks were filing suspicious activity reports, or SARs, for companies that only dealt with legal hemp and excluded them from the updates. Read More (Marijuana Moment)

Chart 6: Number of Depository Institutions Actively Banking Marijuana-Related Businesses in the U.S. (Reported in SARs) Source: Intro-Blue, Marijuana Moment

Chart 6: Number of Depository Institutions Actively Banking Marijuana-Related Businesses in the U.S. (Reported in SARs)
Source: Intro-Blue, Marijuana Moment

 

Chart 7: Depository Institutions Providing Banking Services to Marijuana-Related Businesses (SARs Filed Through 03/31/20) Source: Intro-Blue, Marijuana Moment

Chart 7: Depository Institutions Providing Banking Services to Marijuana-Related Businesses (SARs Filed Through 03/31/20)
Source: Intro-Blue, Marijuana Moment

U.S. cannabis spot index up 1.1% to $1,386 per pound, July forward closes down $15 at $1,415 per pound. The simple average (non-volume weighted) price increased $6 to $1,552 per pound, with 68% of transactions (one standard deviation) in the $831 to $2,273 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.06 and the simple average price was $3.42. The average reported forward deal size was 35 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 48%, 33%, and 19% of forward arrangements, respectively. Read More (Cannabis Benchmarks)

Chart 8: Cannabis Benchmarks U.S. Spot Index Source: Intro-Blue, Cannabis Benchmarks

Chart 8: Cannabis Benchmarks U.S. Spot Index
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 9: Cannabis Benchmarks U.S. Implied Forward Curve Source: Intro-Blue, Cannabis Benchmarks

Chart 9: Cannabis Benchmarks U.S. Implied Forward Curve
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 10: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational Source: Intro-Blue, Cannabis Benchmarks

Chart 10: Cannabis Benchmarks U.S. Spot Price by Medical or Recreational
Source: Intro-Blue, Cannabis Benchmarks

April retail sales in Canada stay steady. Canadian retail cannabis sales decreased slightly in April over March, when people were stocking up due to the COVID-19 crisis. April sales were just over $180 million, down 0.57% from March. Ontario continued to lead the country’s sales at $42.8 million, but suffered a 9.6% reduction in sales as Ontario’s 53 stores were forced to close early April after having been cut from the province’s list of essential businesses. Then four days later they were temporarily allowed to offer curbside pick-up and delivery and that was extended throughout April. Alberta remained in second place at $42.2 million and showed a 4.7% increase in retail sales. As of April 30th, Alberta still had the highest number of stores with 451 shops in operation. Read More (Cannabis Retailer)

Ontario cannabis market surpasses 100 retail store authorizations. Canada’s largest market for adult-use cannabis products saw its 100th retail store authorization this month, Alcohol and Gaming Commission of Ontario (AGCO) records show, though not all the stores are open as they complete the regulatory process. The public data from the AGCO shows the province has increased the pace of new store authorizations despite the ongoing pandemic. Fourteen new stores were granted a Retail Store Authorization (RSA) in February, falling to 11 in March before rebounding to 18 and 26 in April and May, respectively. That puts Ontario on pace to reach – and likely surpass – the original target laid out by the previous Liberal government to open 150 stores in 2020. (The current government adopted a private-store model but had been slow to authorize new stores.) Read More (Marijuana Business Daily)

Chart 11: Ontario Cannabis Store: March 2019 – March 2020 Source: Intro-Blue, Marijuana Business Daily

Chart 11: Ontario Cannabis Store: March 2019 – March 2020
Source: Intro-Blue, Marijuana Business Daily

Canada’s discount cannabis segment heats up with competing value brands. High prices were a regular consumer complaint when Canada legalized recreational cannabis in October 2018. Only a year and a half later, Canada’s market for affordable cannabis flower is growing rapidly, with large cannabis producers introducing competitive value brands at lower prices. “I would say that the value segment is the most hotly contested product segment in cannabis today, with most major (licensed producers) racing towards 3½-gram options in the range of CAD $19 to, let’s say, CAD $25,” ($14-$18.44) said Raj Grover, CEO of Alberta-based retailer High Tide (HITI-CA). Read More (Marijuana Business Daily)

DOJ whistleblower: Attorney General Barr’s treatment of cannabis industry tantamount to ‘harassment.’ A career U.S. Justice Department attorney testified that antitrust investigations of 10 cannabis mergers since March 2019 were “not even close to meeting established criteria” for such reviews and agreed they amounted to industry “harassment” by Attorney General William Barr. John Elias told a U.S. House Judiciary Committee hearing that antitrust employees were told at an all-staff meeting in September 2019 that cannabis was unpopular “on the fifth floor,” a reference to Barr. The resulting investigations represented a significant chunk of the antitrust division’s cases and drew in staff from other DOJ sections to assist in the probes, according to Elias. Read More (Marijuana Business Daily)

Canadian provincial retail cannabis sales slightly moderated in April but still remain high year-on-year. Sales have been steadily growing across Canada, and the COVID-19 pandemic has led to elevated demand as consumers stockpiled cannabis along with other essential products. In the back half of March, as work-from-home and social distancing became a reality, provincial online sales and in-store retail sales grew rapidly across the country. Those strong sales continued into at least the first half of April. April sales settled at CAD $180 million for the month, which was slightly below March, but higher by CAD $106 million year-over-year. On a daily basis, April actually saw higher sales than March. While average daily sales nationwide expanded by 2.7%, they varied significantly at the provincial level. Daily sales in most major provinces, other than Ontario, increased from March to April. Read More (Cannabis Benchmarks)

Chart 12: Retail Cannabis Sales by Province (CAD $ Million) Source: Intro-Blue, Cannabis Benchmarks

Chart 12: Retail Cannabis Sales by Province (CAD $ Million)
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 13: Daily Cannabis Sales Growth from Previous Month (%) Source: Intro-Blue, Cannabis Benchmarks

Chart 13: Daily Cannabis Sales Growth from Previous Month (%)
Source: Intro-Blue, Cannabis Benchmarks

BC amends cannabis retail regulations. In an effort to be more flexible and better support cannabis workers, the BC Liquor and Cannabis Regulation Branch (LCRB) has made some amendments to regulations for cannabis retailers after hearing their feedback. 1) New training required – Anyone involved in selling cannabis, which includes “non-medical cannabis retail licensees, marketing licensees and workers who sell or supervise the sale of non-medical cannabis in either private cannabis retail or government cannabis stores,” are required to complete an online training program called Selling it Right. 2) Windows no longer need to be non-transparent – Additionally, the LCRB has removed the requirement for retail stores to stay behind non-transparent walls as long as products, packages and labels can’t be seen from outside the store. This will allow retailers to provide a more open, welcoming environment while still operating within federal guidelines. Read More (Cannabis Retailer)

COMPANY NEWS

Canopy, Acreage ink major changes in acquisition deal with price tag slashed. Canadian cannabis producer Canopy Growth (CGC) reached an agreement to significantly amend its conditional deal to acquire cash-strapped, U.S. multistate operator Acreage Holdings (ACRGF). The original deal was valued at approximately $3.4 billion, making it the priciest M&A transaction in the cannabis industry at the time. All told, the new deal announced could value Acreage’s equity at about $900 million, Cowen analyst Vivien Azer wrote in a research note. The lower price reflects the slump in cannabis industry stocks and Acreage’s current financial troubles. The deal’s consummation continues to be conditioned on federal legalization of marijuana in the U.S. Read More (Marijuana Business Daily)

Canopy maps out turnaround built on layoffs, drinks, U.S. CBD. Canopy Growth (CGC) is doubling down on its cannabis-infused vapes and drinks, as well as upcoming U.S. CBD products, while continuing to cut costs as it looks to rebuild investors’ trust. Canopy executives, including chief executive officer David Klein, walked through the company’s efforts to bounce back following several disappointing quarters, including last month when it reported a net loss of $1.3 billion for its fiscal fourth quarter. Canopy has about 15 percent of the Canadian recreational pot market, down from about 20 percent from the beginning of the year, analysts estimate. “While we have seen softening of market share performance in recent months, notably in Ontario and Alberta, we’re taking positive active steps to address those challenges,” said Rade Kovacevic, chief product officer at Canopy, during the presentation. Read More (BNN Bloomberg)

Curaleaf amends deal to acquire cannabis multistate operator Grassroots. Curaleaf Holdings (CURLF) revised its deal to acquire privately owned multistate operator Grassroots Cannabis. The stock and cash transaction was originally announced in July 2019 with a price tag of $875 million. But since then cannabis stock prices have fallen. In a note, Stifel GMP analysts Robert Fagan and Andrew Partheniou said the amended deal should be worth a total of approximately $700 million based on Curaleaf’s current share price. Massachusetts-based, publicly traded Curaleaf said in a news release that the amended deal for Chicago-based Grassroots: 1) Eliminates the $75 million cash component of the original agreement, and 2) Increases the Curaleaf share consideration from $40 million to $90.1 million. Read More (Marijuana Business Daily)

U.K. down-schedules Epidyolex to lowest level for controlled drugs. The U.K. has down-scheduled Epidyolex to the lowest level of control for drugs, greatly easing restrictions on the cannabidiol medicine and reducing administrative processes for companies wanting to supply it. The U.K. said the new provisions – made through the Misuse of Drugs (Amendment) (England, Wales and Scotland) Regulations 2020 – came into force June 24. “By placing Epidyolex in Schedule 5 to the 2001 Regulations, it is no longer subject to the prohibition on importation, exportation and possession under the 1971 Act,” according to the government’s circular announcing the change. “This will reduce administrative processes for companies wanting to supply Epidyolex to patients with severe epilepsy.” Epidyolex is the trade name in Europe for Epidiolex. Read More (Marijuana Business Daily)

Aurora Cannabis to close five facilities, lay off 700 staff as part of restructuring. Aurora Cannabis (ACB) is shutting down five smaller production facilities and cutting roughly 700 employees as part of a corporate transformation plan over its next two quarters, with the goal of centralizing production and manufacturing at “larger-scale and highly efficient sites.” Aurora’s decision is the latest in a trend that has seen large Canadian producers mothballing excess facilities. The affected facilities are: Aurora Prairie in Saskatoon, Saskatchewan; Aurora Mountain in Mountain View County, Alberta; Aurora Ridge in Markham, Ontario; Aurora Eau in Lachute, Quebec; and Aurora Vie in Pointe-Claire, Quebec. Aurora said parts of the Aurora Vie facility “will remain operational to allow for the manufacturing of certain higher-margin products.” Read More (Marijuana Business Daily)

Cresco Labs announces retirement of Ken Amann and appointment of Dennis Olis as CFO. Cresco Labs (CRLBF) announced that Ken Amann, who has been the company’s chief financial officer (CFO) since 2015, is retiring effective December 31, 2020. As part of a planned transition, the company also appointed Dennis Olis to replace Mr. Amann as CFO, effective July 1, 2020. Mr. Olis joins Cresco Labs after previously serving as CFO for Allscripts Healthcare Solutions. Mr. Olis brings an extensive background in operations, financial planning and analysis, accounting, financial reporting, tax, internal audit, treasury and mergers and acquisitions at Allscripts and previously at Motorola. Mr. Amann will remain in an advisory role through the remainder of 2020 to ensure a smooth transition of responsibilities. Read More (Business Wire)

Jushi Holdings buys Vireo grow facility in Pennsylvania for $37 million. Florida-based Jushi Holdings (JUSHF), a multistate marijuana and hemp company, agreed to purchase Vireo Health International’s (VREO-CA) grower-processor operations in Pennsylvania for $37 million. To fund the purchase, Jushi secured $15.25 million in debt financing that was led by insiders and existing shareholders. The acquisition involves the purchase of Pennsylvania Medical Solutions (PAMS), a licensed medical marijuana grower-processor in Scranton owned by Vireo, an MSO based in Minneapolis. PAMS manufactures cannabis-based products in a 90,000-square-foot, co-located cultivation and processing facility. According to a news release, Jushi will: 1) Pay $16.3 million in cash, 2) Pay a $3.8 million seller note at 8% interest maturing in four years, and 3) Assume a $17 million facility associated with a long-term lease obligation. No equity is involved in the transaction. Read More (Marijuana Business Daily)

Initial closing of $61.5 million Harvest-High Times cannabis retail deal completed. Harvest Health & Recreation (HRVSF) finalized a deal to sell eight California retail stores to Los Angeles-based High Times Holding. Under terms of the recently updated agreement, Harvest has sold a portfolio of equity and assets of eight operational and planned dispensaries in California for a total of $61.5 million, including up to $1.5 million in cash and $60 million in stock. In a second closing, subject to various conditions and regulatory approvals, High Times could acquire two more planned dispensaries in California from Harvest for $6 million in additional shares of High Times. The deal means the majority of the entities changed hands from Have a Heart founder Ryan Kunkel to Harvest to High Times in a matter of months. Read More (Marijuana Business Daily)

VIVO enters into two agreements with Medical Cannabis by Shoppers. VIVO Cannabis (VVCIF) and its subsidiaries have entered into both a product supply agreement and a clinic services agreement with Medical Cannabis by Shoppers. Under the terms of the supply agreement, the company’s licensed producers will offer a broad portfolio of Canna Farms and Beacon Medical branded medical cannabis products through the Medical Cannabis by Shoppers online sales platform, including its latest 2.0 offerings such as chocolates and extracts. VIVO-branded products will be accessible to Medical Cannabis by Shoppers patients across Canada. Read More (Newswire)

Aphria, Emblem, Aleafia settle dispute over cancelled supply agreement. Aphria (APHA) has reached a deal worth $29.1 million to settle a dispute with Emblem Cannabis and Aleafia Health (ALEAF). The settlement ends a disagreement the companies had over Aleafia’s decision in 2019 to cancel a supply agreement it had with Aphria. Aphria CEO Irwin Simon says the deal allows the companies to avoid the distraction and the potential expense of prolonged litigation. Under the agreement, Emblem, which was acquired by Aleafia in 2019, will receive $15 million in cash, $10 million in Aphria shares and a waiver of claimed receivables. Read More (BNN Bloomberg)

Khiron Life Sciences announces German cannabis distribution deal. Khiron Life Sciences (KHRNF) has signed a German distribution deal with that of Nimbus Health for its medical cannabis products. Nimbus is a leading distributor of medical cannabis products within Germany. Under the terms of the arrangement, Khiron will see the first import and sale of its branded EU GMP medical cannabis products within the third quarter of 2020. The product will be available for prescription by doctors, which will then be dispensed by pharmacies within Nimbus’ network. Read More (the deep dive)

EARNINGS

Acreage Holdings’ Q1 revenue increases 15% sequentially to $24.2 million. Acreage Holdings (ACRGF) reported its first quarter revenues, reporting revenues of $24.2 million, an increase of 15% on a quarter over quarter basis. Net loss attributable to Acreage for the quarter came in at an outstanding $172 million. Losses were pushed high due to non-cash pre-tax charges of $196.0 million as a result of the company refocusing operations within certain states. Notably, this is nearly double the estimate provided by the company last month of $80 to $100 million in non-cash charges as a result of the company failing to understand current fair market values of its assets in certain states. Read More (GlobeNewswire)

TILT Holdings’ Q1 revenue increases 23% to $42.4 million. TILT Holdings (SVVTF) reported financial results for its fiscal first quarter 2020. The company’s revenue during the quarter stood at $42.4 million, up 27% quarter-on-quarter (Q/Q) and 23% over Q1 2019 along with positive adjusted EBITDA of $1.7 million and $4.2 million cash flow from operations. TILT continued to drive down costs to maximize operational efficiency: $1.7 million (13%) sequential decrease in firm operating expenses excluding non-cash stock compensation and depreciation and amortization, $1.3 million of the $1.7 million total sequential decline from a 21% Q/Q decrease in compensation and benefits expense, partially driven by headcount decreases related to realignment of Blackbird businesses. Read More (TILT Holdings)

The Flowr Corp. generates CAD $1 million in revenue from premium product BC Pink Kush in its first quarter. Flowr (FLWPF) released its first quarter 2020 results that showed the company generated CAD $1 million in revenue from its premium cannabis strain BC Pink Kush. The flagship strain was sold at an average price per gram of $6.93, positioning the product firmly in the top-class flower segment. Flowr also revealed that demand for BC Pink Kush outstripped supply. The company sold 123 kilograms of the strain and did not have enough supply during the quarter. Product availability has “substantially improved” in the second quarter, according to a statement, and net revenues are projected to top CAD $2 million during the second-quater, Flowr told investors. Read More (Proactive Investors) and More (GlobeNewswire)

Liberty Health Sciences generates CAD $17.8 million revenue in fiscal Q4. Liberty Health Sciences (LHSIF) announced its financial results for fiscal year 2020 ending February 29, 2020. Consolidated net sales for fiscal year-end February 29, 2020 were $50,075,579, compared with $10,002,538 for fiscal year-end February 28, 2019. Liberty’s aggregate operating expenses decreased from $25,588,038 for fiscal year 2019 to $25,184,000 for fiscal year 2020 ending February 29, 2020. The company recorded net income for the fiscal year-end February 29, 2020 of $22,266,322, which includes the gain on the sale of a property of $14,266,807, compared with a net loss of $22,293,815 for the fiscal year-end February 28, 2019. The significant year-over-year increase in revenue was driven by the company’s introduction of more than 200 new products. Read More (New Cannabis Ventures)

Nova Scotia reports 113% sales increase. The Nova Scotia Liquor Corporation (NSLC) revealed that in the first full year of selling cannabis, sales increased by 113% in the year ending March 31st. The NSLC reported an overall increase in sales of 4.2% and cited cannabis as one of the key factors involved in its growth. According to the report, Cannabis 2.0 products drove a lot of traffic into stores, as well as pandemic induced panic-buying. In total, the NSLC brought in $726 million in sales, $71 million of which came from the 2 million cannabis enthusiasts in that province. The average transaction size for cannabis sales was $34.74 down from $38.29 the previous year. Local Nova Scotia grown cannabis made up 18.3% of those sales. The NSLC currently has 12 stores selling cannabis across Nova Scotia and mentioned plans to expand the cannabis store network. Read More (Cannabis Retailer)

CAPITAL MARKETS

MedMen’s failure is everything wrong with legal cannabis (and is only the first company to implode). The long and slow dumpster fire that is the immolation of MedMen (MMNFF), once the largest and the most valuable cannabis company in the U.S. (on paper, anyway), is burning down to the last ashes. All that’s left is the fight over the scraps, MedMen’s desiccated and then charred hulk—and identifying both the villain and the moral of this cautionary tale. The analysis is not something most cannabis companies and cannabis investors will want to hear. The hubris that both floated and sank MedMen runs absolutely rampant in legal weed. MedMen was the first, the loudest, the brashest and the most ridiculous, but it won’t be the last. There are too many other companies built in its mold. “MedMen is both the logical outcome and the confluence of two major themes in the cannabis industry,” said San Francisco-based attorney Matt Kumin, an industry observer with clients throughout the commercial space. The themes, he added, are crime and capitalism. Read More (Forbes)

High Times’ cannabis retail bid complicated by web of owners, social equity partners. The owner of pioneering High Times magazine is scrambling to close a marijuana retail acquisition in California that includes a tangle of owners and entities, several social equity partners and properties not yet built out. Los Angeles-based High Times Holding is trying to complete the $67.5 million deal with Harvest Health & Recreation by putting in just $1.5 million in cash. Most of the remainder would be stock in High Times, which has been attempting for two years to raise money through a small-investor Regulation A stock offering. If the High Times deal goes through, the majority of the entities will have changed hands from Have a Heart founder Ryan Kunkel to Harvest to High Times in a matter of months. Read More (Marijuana Business Daily)

Chart 14: Ownership of High Times’ Acquisition Targets Source: Intro-Blue, Marijuana Business Daily

Chart 14: Ownership of High Times’ Acquisition Targets
Source: Intro-Blue, Marijuana Business Daily

Flower One successfully closes CAD $8.2 million non-brokered private placement. Flower One (FLOOF) announced that it has closed its previously announced non-brokered private placement, raising gross proceeds of CAD $8.2 million ($6.1 million). In connection with the private placement, the company issued a total of 16,102,018 units comprised of one common share in the capital of the company and one-half common share purchase warrant. The company intends to use the net proceeds for general working capital purposes. Read More (Yahoo! Finance)

Cannabis companies’ use of adjusted EBITDA is a ruse. Adjusted earnings before interest, taxes, depreciation, and amortization, a/k/a EBITDA, has emerged as the favored metric of cannabis company CEOs and CFOs. Cannabis executives claim “Adjusted EBITDA” is the best way to track financial progress of their cannabis company. Company officials generally note that their adjusted EBITDA does not conform to either GAAP of IFRS accounting. In reality, Adjusted EBITDA is a fatally flawed metric fraught with problems. Blind allegiance to this metric has contributed immensely to shareholder losses within the industry. Read More (Seeking Alpha)

Canadian firm raises $3.3 million to develop hemp cleaning wipes. Bast Fibre Technologies of Canada said it has sold $3.3 million (CAD $4.5 million) worth of equity to Natural Products Canada (NPC) to finance trials and start production of hemp-based, compostable cleaning wipes. Bast Fibre’s Chairman and CEO Noel Hall said the company hopes to capitalize on the trend toward elimination of single-use plastics and address the environmental problems caused by non-biodegradable synthetic wipes. Hall said the long-term goal is to source bast plant material in Canada and the U.S., and produce wipes at facilities in North America. Read More (Hemp Today)

Sunniva reports cease trade order issued by the British Columbia and Ontario Securities Commissions. Sunniva (SNNVF) announced that, after the close of markets on June 22, 2020, the company received a cease trade order issued by the British Columbia and Ontario Securities Commissions as a result of Sunniva’s failure to file the following periodic disclosure required by British Columbia and Ontario securities legislation: 1) The company’s audited annual financial statements for the year ended December 31, 2019; 2) Management’s Discussion and Analysis relating to the company’s audited annual financial statements for the year ended December 31, 2019; 3) Certification of the foregoing filings by the company as required by National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Read More (PRNewswire)

MEDICAL CANNABIS

Arizona medical cannabis patient count rises nearly 20% since this time last year. The Arizona Department of Health Services (ADHS) recently released its monthly report on the state’s medical cannabis program for April 2020. As of April, Arizona’s medical cannabis program counted 235,999 patients on its rolls. That figure is up by 2.5% from the 230,317 patients registered in the program at the end of March. The rate of growth in the state’s patient count is larger than it has been in prior months, when it typically was between about 1.5% and 2%. The number of registered patients in Arizona in April 2020 is also up by 19.8% year-over-year, from 197,025 in April 2019. Read More (Cannabis Benchmarks)

New Jersey medical marijuana dispensaries can now deliver. New Jersey’s 11 medical marijuana dispensaries are now allowed to deliver products to patients at home, provided they fill out a state waiver. According to NJ.com, the state department of health has issued paperwork for MMJ shops to fill out so their employees can begin performing home deliveries. That options may well result in a sales uptick for dispensaries, since many patients are staying at home to avoid the coronavirus. There are caveats. Among others, only dispensary employees can perform deliveries and any vehicle performing deliveries must be outfitted with a GPS tracking device, additional security and a lock box. Read More (Marijuana Business Daily)

Oklahoma cannabis firms sue state over residency, zoning laws. A group of medical marijuana businesses in Oklahoma have sued the state in efforts to prevent regulators from enforcing new definitions to a 1,000-foot school buffer zone and a stricter two-year residency requirement. The disputes threaten to upset a fast-growing, free-wheeling market, and the school buffer rules are an especially thorny issue. The medical marijuana businesses, which filed the lawsuit in Oklahoma County District Court, say the new buffer rules could affect “hundreds if not thousands” of licensed dispensaries, according to The Oklahoman. Oklahoma cannabis attorney Sarah Lee Parrish told Marijuana Business Daily that the 1,000-foot buffer rule from a school has been in effect for some time. Read More (Marijuana Business Daily)

CBD/HEMP

Louisiana bans smoking hemp in all forms except rolling papers. Louisiana Gov. John Bel Edwards (D) signed a bill into law on containing regulations for the state’s industrial hemp and CBD industry. The bill, ACT 344/HB 843, includes language that bans all smokable hemp products — except for rolling papers. The legislation gives a distinct outline of the industry including licensing requirements, application/permit fees, regulations for the labeling and testing of CBD products, as well as regulations for other industrial hemp-based products. The ban on inhalable hemp products is likely a preemptive crutch for law enforcement agencies, which often have trouble discerning between illicit, THC-rich cannabis products and federally legal, CBD-rich hemp flower. Read More (Marijuana Retail Report)

CBD biomass’ aggregate assessed price grew month-on-month in June. The most notable development in June is that Hemp Benchmarks’ aggregate assessed price for CBD Biomass experienced an uptick for the first time since they began reporting prices in April 2019. The increase was due mainly to rises in rates for smaller-volume deals, while larger transactions essentially held steady from May. Smokable CBD flower also saw its assessed price rise this month. June’s price movement suggests that the U.S. hemp industry may have seen the current market bottom for CBD plant material. However, many growers are still sitting on 2019’s production. At this point, it increasingly appears that unsold or unmoved biomass generated last year will be a loss in most cases, with a new crop underway and 2020’s harvest only a few months off. Read More (Hemp Benchmarks)

Chart 15: Analysis of Hemp Transportation Costs – June 2020 Source: Intro-Blue, Hemp Benchmarks

Chart 15: Analysis of Hemp Transportation Costs – June 2020
Source: Intro-Blue, Hemp Benchmarks

Michigan to increase 2020 hemp production, but 53% of 2019 crop is still unsold. State agriculture officials in Michigan are seeing more interest in hemp production this year, despite more than half of growers failing to find a market for their 2019 crops and many reporting crop failures and heavy pest and weed pressure. Authorities tell Hemp Industry Daily that the state has licensed 13,225 outdoor acres and 11 million square feet of indoor hemp production in 2020, a significant increase over production numbers in 2019, the state’s first year allowing the new crop. As of June 11, the Michigan Department of Agriculture and Rural Development had registered 553 growers who have identified 806 outdoor growing locations and 350 indoor growing locations, state hemp director Gina Alessandri told Hemp Industry Daily. In 2019, there were more than 600 growers licensed to produce hemp. Michigan has also licensed 447 processor handlers for 2020, Alessandri said. Read More (Hemp Industry Daily)

Chart 16: Ownership of High Times’ Acquisition Targets Source: Intro-Blue, Hemp Industry Daily, Michigan Department of Agriculture and Rural Development

Chart 16: Ownership of High Times’ Acquisition Targets
Source: Intro-Blue, Hemp Industry Daily, Michigan Department of Agriculture and Rural Development

How hemp-hangups hamper hegemony. In the wake of the global economic slowdown caused by COVID-19, cannabis has presented countries with respectively unique opportunities to supplement massive shortfalls in tax revenues. In the U.S., many states have declared cannabis dispensaries as essential businesses and therefore not subject to some of the lockdown measures which have shuttered other retail businesses to prevent spread of the virus. Meanwhile in Europe, increased cannabis demand has driven increased traffic to unregulated markets. While the pandemic may hamper legalization efforts across Europe, the European Industrial Hemp Association (EIHA) sees the current crisis as an opportunity to highlight hemp’s positive economic and environmental externalities. Read More (New Frontier Data)

Chart 17: Hemp Applications Across Market Sectors Source: Intro-Blue, New Frontier Data

Chart 17: Hemp Applications Across Market Sectors
Source: Intro-Blue, New Frontier Data

Texas hemp extractor acquires CBD skin care and wellness company. Houston-based hemp processor and extractor Bayou City Hemp has purchased a retail company that makes hemp-derived CBD skin care, cosmetics and wellness products. Bayou City Hemp, which applied for a Texas license in March and was busy setting up operations in Houston this spring, announced that the completed acquisition of Dallas-based LeafLife Wellness is part of its “aggressive growth plan” to become a vertically integrated CBD business. The purchase price was not disclosed. “The addition of a retail line that has the same emphasis on high-quality clean CBD and other key ingredients in its products made for a strategic fit within our organization,” said Scott Weldon, Vice President of Sales & Marketing of Bayou City Hemp in a statement. Read More (Hemp Industry Daily)

Entoura acquires hemp biotech firm Atalo. Entoura, a vertically integrated, USDA certified organic and cGMP-certified hemp oil producer, announced the acquisition of Atalo Holdings. Atalo is a Kentucky-based agriculture and biotechnology firm specializing in research, development and production of industrial hemp. Terms of the acquisition were not disclosed. Located in the heart of America’s hemp country, Atalo boasts a rich history in hemp cultivation and genetics, dating back to the 1800s. The company’s ability to produce farmer focused food-grade hemp products further augments Entoura’s robust supply chain. Entoura plans to leverage Atalo’s existing brands and product scope to enhance its product suite and to offer private label services, including industrial hemp genetics, flower and hemp oil extraction. Entoura plans to combine its advanced genetics and distillation capability with Atalo’s hemp seed oil for integrated and differentiated product development. Read More (Cannabis Business Times)

U.S. consumer groups warn against ‘rushed decisions’ on CBD. Four leading U.S. consumer groups are calling on federal lawmakers to reject efforts that would speed up the process of legalizing CBD for use in supplements and food products, warning that “forcing the FDA (U.S. Food & Drug Administration) into rushed decisions and to prematurely implement major regulatory changes would result in an unsafe CBD market.” The consumer groups said FDA should request scientific evidence regarding the safety of CBD in food, take steps to monitor adverse effects in users, and establish quality controls. “This would incentivize serious study by the food industry of the risks and safe use of CBD products, and would require better quality controls in the supply chain,” the groups wrote. “Such a process might identify doses and/or particular conditions of sale for CBD that would be legal to market.” Read More (Hemp Today)

RETAIL

BC Cannabis Store plans 24 new stores. Two weeks earlier marked the opening of the 17th BC Cannabis Store, which is the government-run retailer in BC, and according to Viviana Zanocco, Manager of Corporate Communications for BC Liquor Distribution Branch (BCLDB), the plans for growth don’t stop there. The public retailer has plans for three more stores to open in July, and then approximately one new store each month until the end of the year. Zanocco says that stores are planned for Nanaimo, Chilliwack, New Westminster, Port Coquitlam, Prince George, and Mission, just to name a few. At the moment, there are 18 stores that have been approved by land use agencies and are beginning construction, and a further six applications are still going through the municipal approval process. Read More (Cannabis Retailer)

Spiritleaf celebrates 50 stores coast to coast. Spiritleaf’s 50th cannabis store opened in St. John’s, Newfoundland making Spiritleaf the largest cannabis retailer in Canada. The Topsail Road store is St. John’s first store and is owned and operated by Newfoundland’s own Atlantic Cultivation, a local cannabis company that is obsessed with quality cannabis and their community. The company’s dream is to develop a vibrant, well-educated, legitimate cannabis company in Newfoundland. The interior design is a truly Newfoundland experience, proudly displaying imagery of Gros Morne and the Long Range Mountains. The Spiritleaf retail cannabis store network includes franchised and corporate-owned stores operating in British Columbia, Alberta, Saskatchewan, Ontario and Newfoundland. As of June 27th, the breakdown by province is as follows: Alberta – 39, British Columbia – 6, Saskatchewan – 1,  Ontario – 6, and Newfoundland and Labrador – 1. Read More (Cannabis Retailer)

PRODUCTS

Oregon mulls banning additives in marijuana vaping products. The Oregon Liquor Control Commission, which regulates marijuana in the state, took its first step toward adopting rules that would ban non-cannabis additives from inhalable products containing THC, though MJ-derived terpenes will be allowed. Although much of the evidence for the vaping illness outbreak that began in the summer of 2019 points to illicit-market products, two people in Oregon died with lung-related illnesses and more than 20 fell ill from vaping. According to a release from the OLCC, the move to ban the additives arose from product safety concerns. “Non-cannabis additives are not necessary to make a vape product work with vaping technology,” the release notes. Read More (Marijuana Business Daily)

Oklahoma expands recall of medical marijuana products. The Oklahoma Medical Marijuana Authority (OMMA) is expanding the recall that was first initiated on May 15, 2020 of Batch 158 to include batches 154 and 19-0001. The Oklahoma Medical Marijuana Authority (OMMA) is requesting an immediate recall of certain products processed by Moon Mix, LLC, a medical marijuana processor in the Oklahoma County area. The products being recalled are vape cartridges and possibly other products processed by Moon Mix that show Batch Numbers 154 and 19-0001 on the labeling. Read More (Cannabis Business Times)

SOCIAL

Why cannabis and CBD brands need influencers. Courtney Wu, CEO, and co-founder of AMNESIA, an influencer marketing platform powered by Compliance AI explicitly for the CBD and cannabis sectors, describes influencer marketing as “product placement but on steroids.” It is a powerful component, useful in addition to the traditional ad distribution approach to marketing. Influencers are thought leaders and represent the values of highly specialized communities. Often, if brands want to break into these communities, they need to work with the people who set the tempo and drive the culture. Cannabis and CBD Influencer marketing is a crucial strategy to humanize and legitimize a brand in the eyes of the consumer. Read More (Cannabis Tech)

INTERNATIONAL

Cannabis legalization bill clears first hurdle in Israel. A bill to legalize cannabis use was approved by the Ministerial Committee for Legislation, passing its first hurdle on the way to becoming law. The legislation will decriminalize the possession of up to 50 grams of marijuana while fully legalizing the possession and consumption of up to 15 grams by individuals above the age of 21. If the bill becomes law, selling and purchasing marijuana for personal use will be legal for those above 21 and authorized shops will be allowed to sell cannabis product, through growing marijuana at home will still be illegal. The legislation also outlined medical cannabis reform. Read More (The Times of Israel)

Blood, sweat, and fears: U.K.’s CBD marketplace at the intersection of Brexit, pandemic, and bureaucracy. While general retail stores have been shuttered due to the pandemic, online retail sales have surged, as consumers have shifted to delivery services. According to the Office of National Statistics, online sales grew to 30% of all retail sales in April, a record high. The strong shift to online sales is noteworthy, because most U.K. CBD consumers were already purchasing from online sources. According to New Frontier Data’s survey of European CBD consumers, more than half (54%) of U.K. CBD purchasers cited online sources (either specialty store or major retailers) as their primary channel for obtaining CBD. Another 27% cite friends and family as their primary source while only 8% principally use a drugstore or pharmacy. Read More (New Frontier Data)

Chart 18: Primary Source for CBD Consumers in the U.K. Source: Intro-Blue, New Frontier Data

Chart 18: Primary Source for CBD Consumers in the U.K.
Source: Intro-Blue, New Frontier Data

Czech extraction facility gets green light to export full-spectrum extract to Spain. Health officials in the Czech Republic have allowed a local extraction facility to export full-spectrum hemp-derived cannabis extract to a Spanish pharmaceutical ingredient manufacturer. Prague-based PharmaCan s.r.o. was granted an export authorization from the Czech Ministry of Health to send 500 grams of extract to Spain, the company’s subsidiary CBDepot said in a statement on its website. The extract is being sent to Worldpharma Biotech S.L., a Spanish company that manufactures active pharmaceutical ingredients from vegetable sources. The delivery is expected to take place early next month, “as soon as flight connections to Valencia resume,” CBDepot Chief Sales Officer Boris Banas was quoted as saying. Read More (Hemp Industry Daily)

7,000 sign up for Europe’s largest medical cannabis trial. Over 7,000 people have now signed up to a two-year-long medical cannabis research project in the UK. Dubbed Project 21, the initiative intends to be Europe’s largest medical cannabis experiment. Launched in November of last year by the group Drug Science, Project 21 aims to assess medical cannabis’ effectiveness at treating a range of conditions, including chronic pain, epilepsy, multiple sclerosis, post-traumatic stress disorder, Tourette’s syndrome, and anxiety disorder. “The 21 basically stands for the idea that we might get 20,000 patients through this registry by the end of 2021,” explained Professor David Nutt, the project’s lead, during his presentation at Prohibition Partners Live on June 23. Read More (Analytical Cannabis)

New Australian law looks to boost hemp exports after COVID-19 threat passes. Australia has amended its narcotics law to put hemp exporters in a position to “come out firing” after the COVID-19 crisis eases, the country’s agriculture minister said. The change aims to facilitate trade and growth of export markets for low-THC hemp and medicinal cannabis industries by certifying their export. It will allow certification for legitimate export of narcotic goods and support emerging agricultural exporters in gaining access to export markets and provide certification to pursue lucrative export opportunities, according to a government statement. “The amendments will remove unnecessary and unintended regulatory barriers imposed on Australia’s exports,” Agriculture Minister David Littleproud said, according to the statement. Read More (Hemp Industry Daily)

Australia reviewing ‘unlawful’ medical cannabis advertising. The regulatory body for therapeutic goods in Australia is reviewing complaints involving the noncompliant advertising of medical cannabis products. The Therapeutic Goods Administration (TGA) says it “has written to a number of entities in relation to noncompliance with the law with instruction to cease unlawful behaviour.” “The majority of respondents have brought themselves into compliance. For those that have not, we are considering appropriate action,” the regulator said in a statement. Criminal offences and civil penalties may apply to breaches of the Narcotic Drugs Act and the Therapeutic Goods Act, the TGA said. Read More (Marijuana Business Daily)

CANNA SCIENCE

The science behind the entourage effect. Thanks to their efficacy and popularity, THC and CBD have become well-known acronyms among medical professionals and patients alike. Research into their medicinal effects has revealed their usefulness for an ever-expanding list of health issues. But pure THC and CBD extracts may not offer the best possible therapeutic results. A growing number of researchers believe these substances produce superior results when administered in a more natural form, either together or in combination with other chemical compounds found in cannabis plants like the minor cannabinoids, terpenes, and flavonoids. Such compounds are often referred to as whole-plant or full-spectrum products. Read More (Cannabis Tech)

What is CBM? A cannabinoid extracted from hemp that could be the next big thing. A cannabinoid called Cannabimovone (CBM) was recently discovered in a hemp plant known as Carmagnola and has been recognized as a cannabinoid with some unique benefits to offer. These benefits could include advances in the treatment of diabetes, eating, and metabolic disorders. It was discovered in research carried out by a group of Italian research centers and universities. Their findings published in March 2020 in Molecules, a research journal claims that this cannabinoid works differently from THC and CBD though its biological structure is similar to that of CBD. Research also indicated that CBM might be able to boost metabolism and suitable insulin levels in the body. They were also able to achieve the synthesis of both cannabimovone and anhydrocannabimovone cannabinoids. Read More (Cannabis.net)

Understanding newly discovered cannabinoids: THCP & CBDP. In December 2019, a group of Italian researchers discovered not only two new cannabinoids, but an entirely new family of cannabinoid analogs that they dubbed Phorol. This new category of phytocannabinoid features a unique molecular structure involving an alkyl side chain populated by seven carbon atoms. The researchers named the new phytocannabinoids cannabidiphorol (CBDP) and tetrahydrocannabiphorol (THCP). In the weeks following the publication of the research paper, many media outlets reported on the study with a focus on a single line from the 13-page report: “The biological results obtained in the in vitro binding assay indicated an affinity for CB1 receptor [by THCP that is] more than thirty-fold higher compared to the one reported for THC in the literature.” THCP, for example, was shown to feature a receptor binding affinity 33 times greater than THC and a whopping 63 times greater than its varin analog, THCV. Read More (LinkedIn)

Canadian and Spanish hemp companies team up to distribute CBG in Canada. A Canadian biotechnology hemp company is entering an agreement with a Spanish company to produce and distribute a THC-free, high -CBG variety of the plant in Canada. Ottawa-based Cannabis Orchards’ partnership with Hemp Trading to get the hemp variety, called Panakeia, into the Canadian market comes after “successful distribution” of it in the U.S., the company told Hemp Industry Daily. CBG is part of a group of novel or minor cannabinoids, which also include CBN, CBD-V and others. They’re in high demand because few growers are producing them. Like CBD, minor cannabinoids are nonintoxicating and can be used in topicals, edibles, beverages and even smokable flower. Read More (Hemp Industry Daily)

Denver awards MedPharm medical marijuana research and development license for Alzheimer’s study. MedPharm, a Colorado-based cannabis research and formulation development company, has received a Medical Marijuana Research and Development License from the City of Denver, the last piece in the licensing puzzle for the company’s study on how cannabis-based medication might impact Alzheimer’s disease and other forms of dementia. MedPharm received a state research license over a year ago, according to the company’s Director of Chemistry Dr. Tyrell Towle, and the local permit now allows the company to launch its research, which will initially be a small study with 30 participants. MedPharm is working with a local neurologist to recruit dementia patients for the study. Read More (Cannabis Business Times)

The art of cloning cannabis plants. Today, cannabis growers have the potential to copy their favorite plants and grow them the same way as the original. The process, known as “cloning,” involves various techniques to replicate a similar marijuana plant with the same characteristics. For forward-thinking producers with a strong brand — or a highly successful cultivar they wish to sell on the same level of quality — cloning can be an effective, easy-to-implement solution if done well. For busy producers in quest of quality harvest and high yields with little effort, cloning their best performing cultivars present them with a myriad of benefits – speed, quality, and inexpensive. There are different cloning methods — or rooting mediums — for marijuana producers to achieve outstanding, high-quality clones: the water method, the soil method, and the Rockwool method. Read More (Cannabis Tech)

TECHNOLOGY

Cannatech: 10 of the most promising European cannabis tech startups. In the last few years, Europe has been witnessing a shift regarding the legalization, cultivation, and trade of medical cannabis, urging startups and entrepreneurs to fully capitalize on this new opportunity. Not surprisingly, some have already started gaining a foothold in this emerging market. In addition, with most of Europe quarantined inside during the past few months, home delivery e-commerce options for CBD have received more attention.  From stress-relief chewing gum, to CBD-infused tampons for pain relief, here are 10 European-born startups founded in the past few years that are changing the cannabis landscape of Europe: Blossom Genetics, Cannamedical Pharma, Demecan, Grass & Co, Cannaray, Rainbow, NOBL Group, Alphagreen, Sanity Group, and Daye. Read More (EU-Startups)

What to know about banking and payments challenges in the budding legal cannabis industry. The legal cannabis industry has experienced immense growth in recent years, as an increasing number of states opt to decriminalize or legalize cannabis. But due to federal regulation, banks are largely unwilling to work with cannabis companies, leaving them underbanked. Companies with banking access still face challenges revolving around payments, as brand name card networks won’t work with them. There are some emerging solutions from innovative companies that are involved in the legal cannabis space. Even so, the highly regulated nature of the industry and associated payments challenges makes it critical for financial institutions, payments companies, and cannabis companies to remain informed of ongoing regulations. Read More (PaymentsJournal)

Top three automated grow machines for 2020. Growing cannabis at home can be a great way to save money. Automated systems make home growing easier, more discrete, and they remove a lot of guesswork from the growing process. Home growing is also an opportunity to learn more about cannabis and grow plants without pesticides, herbicides, or unknown contaminants. There are many options for your automated home grow. These systems vary in price depending on the level of automation they offer. Some systems communicate with your phone, showing real-time footage of your grow. Some offer automatic pH testing, auto nutrient dispersion, and even automatic light adjustment based on the stage of growth. These are: the SpinnerXP Modular Grow System, the Cloudponics GroBox, and the Leaf Automated Grow System. Read More (Cannabis & Tech Today)

LEGAL & IP

How cannabis growers can strategize to fight off costly RICO lawsuits. The recent racketeering lawsuit targeting more than 200 Oregon marijuana businesses and their executives resulted in a key victory for the cannabis industry in what could be a long-running fight. That victory also offers lessons for cannabis industry growers, processors and other business who also could be forced to confront future Racketeer Influenced and Corrupt Organizations Act (RICO) cases. Industry attorneys and business owners advise that cannabis growers looking to strengthen their defense against a possible RICO case should consider: 1) Building a strong network of fellow cannabis business owners to defray legal costs, 2) Joining a marijuana trade association to share resources, and 3) Keeping airtight business records. Read More (Marijuana Business Daily)

$10 million lawsuit claims Cura’s select vape oil fell short on THC. Cura Cannabis, the Portland company acquired in a deal worth nearly $400 million in February, is facing its second class-action lawsuit this year. The lawsuit against Cura CS LLC, one of the company’s entities, was filed in May in Multnomah County Circuit Court. It alleges Cura’s Select Elite vape oils did not contain as much THC as promised. The plaintiffs are seeking compensatory damages “in excess of $10 million.” It follows a January suit, in the same court, related to mislabeling products that contained non-cannabis ingredients, mistakes Cura said were unintentional but that resulted in $110,000 in fines by Oregon regulators. The parties in that lawsuit have agreed to “make an attempt at an early resolution” through an independent mediator, according to Michael Fuller, lawyer for the plaintiffs. He said the talks could begin in August. Read More (Marijuana Retail Report)

SUSTAINABILITY

Los Angeles City Council backs major changes to marijuana licensing, social equity. The Los Angeles City Council gave its initial approval to sweeping changes to the city’s marijuana business licensing and social equity program, ending months of delays that had held up the permitting process and sparked widespread frustration among stakeholders. The proposals – which range from minor tweaks to major changes such as awarding retail licenses only to social equity applicants until 2025 – were championed by the L.A. Department of Cannabis Regulation (DCR), which sent the recommendations to the City Council two weeks ago. The Council voted on the changes on June 24. It must approve them once more, and then the mayor must sign off before the changes are implemented. Read More (Marijuana Business Daily)

CANNA FACTS

Chart 19: Dried Flower Production Costs by Grow Type Source: Intro-Blue, Cannabis Business Times’ 2020 State of the Industry Report

Chart 19: Dried Flower Production Costs by Grow Type
Source: Intro-Blue, Cannabis Business Times’ 2020 State of the Industry Report

CANNA CAPITAL MARKET TRENDS

Chart 20: Weekly Summary (June 15 - June 19, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 20: Weekly Summary (June 15 - June 19, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 20: Weekly Summary (June 15 - June 19, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 20: Weekly Summary (June 15 – June 19, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 21: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 21: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 22: Cannabis M&A by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 22: Cannabis M&A by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 23: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 23: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 23: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 24: U.S. Implied Forward Prices (Week Ending June 26, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 24: U.S. Implied Forward Prices (Week Ending June 26, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 25: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 25: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: NEVADA

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

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

 

Chart 27: Best-Selling Edibles Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 27: Best-Selling Edibles Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 28: Best-Selling Vapor Pen Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 28: Best-Selling Vapor Pen Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 29: Best-Selling Beverage Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 29: Best-Selling Beverage Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 30: Best-Selling Capsule Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 30: Best-Selling Capsule Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 31: Best-Selling Topical Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 31: Best-Selling Topical Brands and Products in Nevada
Source: Intro-Blue, Headset

CANNA INDEX

Chart 36: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 36: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 37: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 37: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

Important Disclosures

Analyst Certification

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