THE STASH – A LOOK BACK AT OUR FIRST YEAR & AHEAD TO WHAT THE FUTURE HOLDS

As The Stash completes its first year in circulation, we look back at some of the highlights from the past 12 months to see if they have met our goal of making The Stash the best source of information and analysis for cannabis investors. We hope you have enjoyed reading this newsletter as much as we have enjoyed putting it together. Thank you for your continued readership and engagement. If you have any feedback or suggestions, please let us know – we are listening.

Calls we got right

  • GW Pharmaceuticals (GWPH): In our August 14 piece, we said GWPH is best positioned to lead the medical cannabis market, driven by strong sales of Epidiolex in the U.S. and EU, and a robust clinical pipeline. The company’s fundamental performance continues to be strong and its stock has outperformed the benchmark – ETFMG Alternative Harvest ETF (MJ) – by ~35 percentage points (pps) in the last twelve months.
  • GrowGeneration Corp. (GRWG): We picked cannabis hydroponics leader GRWG as one of the best ancillary plays in our December 4 Stash report. The company also emerged as a front-runner in our April 29 analysis of the fast-growing Oklahoma market, thanks to its rising market share, ability to build and acquire assets at a favorable cost/valuation, and best-in-class sales growth and margins. These strengths are reflected in GRWG’s stock which is one of the biggest outperformers, up more than 78% in the last year vs. a ~52% fall in MJ. We retain our bullish stance.
  • Innovative Industrial Properties (IIPR): In our December 2 report, we discussed how consistent earnings growth, best-in-class dividend yield, and rising sale-leaseback transactions make IIPR one of the best non plant-touching plays. The ongoing capital crunch has validated our thesis and the IIPR stock is outperforming the benchmark. We remain bullish on the stock and the cannabis REITs space, and are also closely monitoring some exciting pre-IPO names in this industry.
  • Trulieve Cannabis (TCNNF): Rapidly growing sales and market share made us pick TCNNF as the state leader in Florida in our September 4 Stash report and the company’s fundamentals have only strengthened since. Trulieve now commands a 53.6% share of the state market, and its market share gains are complemented by strong operating performance and financial discipline (free cash generation and best-in-class profitability). The company fits the bill of a capital-efficient SSO and its stock is up ~53% in the last year, hugely outperforming the benchmark. We remain bullish on both the theme and the stock.
  • Capital crunch: In our 2019 year-ending piece, we said that balance sheet strength will matter more than ever in 2020 as the funding environment tightens and deals dry up. This trend has played out per our expectations as equity fundraising is set to decline ~60% y/y with cannabis operators that have stretched balance sheets struggling to manage growth and profitability.

Calls where we retain our faith even though they are taking longer than expected to play out

  • NY adult-use legalization: A combination of rising fiscal deficit, growing marijuana usage, and a pick-up in legalization efforts on the East Coast had put NY on track to become the 12th U.S. state to legalize recreational marijuana. However, COVID-19 disrupted the momentum and 2020 is unlikely to see NY legalize adult-use cannabis. Still, we remain confident about the legalization prospects, albeit with a delay, given the supportive stance of Governor Cuomo and the need to raise tax revenue.
  • Flower One (FLOOF): A strong focus on free cash generation and leadership in Nevada make FLOOF a standout performer. COVID-related lockdown hurt 1H20 performance but the company is set up for a strong 2H20 with key brand launches lined up. Management continues to impress with flawless execution of focused growth strategy, and the stock is at an inflection point.

Multi-year megatrend where we are most bullish

  • Federal legalization: Cannabis legalization – through state-specific measures and positive movement on acts like SAFE Banking, STATES, and MORE – continues to move forward. And while COVID-19 might push out some state timelines, it has likely accelerated the federal legalization timeline due to a combination of growing fiscal deficit, falling tax revenue, and the emergence of cannabis as an “essential” industry. We believe federal legalization could now be a reality in the next year or two, in what will be a watershed moment for the industry and will boost valuations of U.S. cannabis companies vs. their peers in Canada and other parts of the world.
Chart 1: LTM Price Performance – Cannabis Stocks Covered in The Stash vs. Benchmark Source: Intro-Blue, Yahoo! Finance

Chart 1: LTM Price Performance – Cannabis Stocks Covered in The Stash vs. Benchmark
Source: Intro-Blue, Yahoo! Finance

CANNA NEWS

COVID-19

Federal marijuana legalization is the cure the COVID-ravaged U.S. economy needs. A federal measure legalizing marijuana nationwide would go a long way toward making up the shortfalls in state and federal tax revenue caused by the pandemic, resulting in marginal fiscal improvement in the short-term while in the long run stimulating local businesses and creating jobs. Even before the pandemic, marijuana represented a massive untapped revenue stream for governments. Drawing on the most recent available data from a 2018 Cato Institute study, Dwight Blake of AmericanMarijuana.org estimated that the fiscal windfall that would be achieved through drug legalization could amount to $53.23 billion dollars – enough money to cover the cost of treatment for 37,354,386 coronavirus patients or the purchase of 357,248,332 twelve-ounce bottles of hand sanitizer or 2,681,500,000 face masks – in annual budgetary gains for federal, state, and local governments. Read More (National Review)

You know what else has sold well during the pandemic? Weed edibles. When the Apothecarium, an upscale dispensary with locations in California and Nevada, moved from in-store retail to curbside pickup in March, Cali Manzello, the general manager of its San Francisco flagship, noticed a change in the size of orders. “One of the first orders that printed out from the pickup machine said 25 packages of this gummy on it,” she said. “People were ordering, you know, up to the legal limit, which can be up to 80 edibles in some cases.” Ms. Manzello said that the company’s edible sales are up 16 percent, while vape sales have fallen by 19 percent. “Edibles every year have been taking up a bigger slice of the pie,” said Alex Levine, an owner and joint CEO of Green Dragon, a dispensary that operates 15 locations in Colorado. “Right before corona hit, edibles were basically at 20 percent of our sales. That was a huge increase over the past couple of years.” Read More (The New York Times)

New Jersey governor touts benefits of marijuana legalization amid recession. New Jersey Gov. Phil Murphy has long planned to legalize adult-use marijuana in his state, but now he’s adopted a new line of reasoning: Doing so could help the economy. During a radio talk-show appearance, Murphy said legalizing recreational cannabis would be “an incredibly smart thing to do,” NJ.com reported. Murphy acknowledged that New Jersey – like every other state – is facing a serious budget shortfall because of the coronavirus crisis and the resulting recession, but the Democrat said legalizing marijuana could help bridge the financial gap. Though Murphy tried to persuade state lawmakers to legalize rec marijuana, the Legislature couldn’t agree on a plan and punted to the voters. So, adult-use marijuana will be on the ballot in New Jersey in November. Read More (Marijuana Business Daily)

How has COVID changed cannabis purchasing and consumption? Neither Cannabis 2.0 nor COVID have had a notable impact on cannabis trial in Canada according to a recent survey of consumers conducted by Cannatrack. There is no evidence that there are new consumers, or ‘intenders’ who are joining the market. However, although the total number of consumers is stagnant, active participation is up. The proportion of Canadians who replied in May that they consumed cannabis over the past four weeks increased 1.2%, which equates to an increase of over 365,000 people nationally. That increase indicated that past/lapsed consumers are returning to the category, or that very infrequent consumers are now consuming more often. Read More (Cannabis Retailer)

STATE AND REGULATORY NEWS

Congress will legalize marijuana in 2021 despite Biden opposition, Democratic senator says. A Democratic U.S. senator says that if his party reclaims the Senate and White House in November, lawmakers will “move very quickly” to legalize marijuana regardless of where presumptive Democratic presidential nominee Joe Biden stands on the issue. Sen. Ed Markey (D-MA) was asked about a variety of cannabis-related issues during an interview, and he said Democrats are positioned to advance marijuana reform as soon as they have a majority in both chambers of Congress. While Biden remains opposed to adult-use legalization, the senator said supporters will have the votes to pass it in any case. Read More (Marijuana Moment)

The three “R’s” of why federal cannabis legalization could happen now. 1) 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. 2) 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. 3) Reform – many consider former marijuana convictions for possession or small-time dealing unnecessarily harsh or culturally motivated. However, some lawmakers are supportive of criminal justice reform and not of cannabis, or vice versa, which could create a hang-up in federal taxing and permitting. Read More (Cannabis & Tech Today)

Multiple states continue to post record-breaking cannabis sales numbers. Colorado, Illinois, and Oregon have all maintained record-breaking sales numbers in recent months despite the coronavirus and the recession. In Colorado, marijuana shops sold more than $192 million in May. That’s up from $148 million the month prior. In Illinois, the state’s cannabis stores sold $47.6 million worth of marijuana in June, another record for the nascent recreational cannabis market, according to the Daily Herald of Arlington Heights. That was up from a high of $44 million in May. In Oregon, marijuana sales totals hit $103 million in May, topping the $100 million mark for the first time, the Portland Business Journal reported. Read More (Marijuana Business Daily)

Colorado’s cannabis crushing it in sales. According to the state Department of Revenue data, Colorado’s cannabis dispensaries sold almost $192.2 million worth of marijuana products in May. the state reported $42.9 million in medical marijuana sales and $149.1 million adult-use cannabis sales. Sales shot up 23% over April, which is typically the biggest month for sales due to the 420 holiday. That’s an 11% increase over the all-time high of $173.2 million, set in August of 2019. Denver County alone accounted for $43.9 million in sales. So far, the state has collected $167 million in tax revenue in 2020 from January to June. If the tax collection remains consistent, the state could end up collecting roughly $334 million in taxes for 2020. This would also top 2019’s tax collection of $302 million. Read More (Green Market Report)

Chart 2: Colorado – Marijuana Sales Trend Source: Intro-Blue, Green Market Report

Chart 2: Colorado – Marijuana Sales Trend
Source: Intro-Blue, Green Market Report

 

Chart 3: Colorado – Marijuana Tax Revenue Trend Source: Intro-Blue, Green Market Report

Chart 3: Colorado – Marijuana Tax Revenue Trend
Source: Intro-Blue, Green Market Report

Fast-growing Michigan recreational cannabis market faces tight supply, few municipals opt-ins. Michigan’s 7-month-old recreational marijuana market is growing quickly, with sales up from nearly $7 million in the first month of sales last December to more than $39 million in May. The Marijuana Business Factbook estimates Michigan’s 2020 adult-use sales will total between $400 million and $475 million, growing to $1.9 billion-$2.4 billion by 2024. But Michigan’s recreational market has challenges to overcome as it grows, according to local industry officials. Those challenges include a mismatch between supply and demand that could take years to clear up, as well as limited municipal opt-ins for adult-use marijuana businesses exacerbated by the COVID-19 pandemic. Read More (Marijuana Business Daily)

Michigan bill would raise hemp fees, require total THC testing. The Michigan Legislature passed a bill to largely align the state’s hemp industry with federal standards, including total THC testing. The measure also raises licensing fees more than 10 times. The bill has been waiting on action from Gov. Gretchen Whitmer since July 2, according to the Grand Rapids Business Journal. Michigan hemp farmers are currently operating as research pilots under the 2014 Farm Bill. But if the bill is signed into law and the federal government approves the state’s plan, Michigan would join 14 tribal governments and 12 states that can license their own hemp growers and processors. Read More (Hemp Industry Daily)

Illinois marijuana sales continue to rise with record breaking revenue. The Illinois Department of Financial and Professional Regulation (IDFPR) published adult-use sales figures for May earlier last week. In a June 11 press release, IDFPR announced that adult-use cannabis retailers in the state generated over $44.3 million in gross revenue in May. May’s sales are up 18.9% from April’s over $37.2 million. The month-over-month uptick is a stark departure from rises of less than 4% recorded in prior months. May’s adult-use sales also represent a new record for that sector of the market in Illinois, and are the first time that revenue has topped the total seen in January, when the state’s recreational market first opened. Including May’s medical cannabis sales of about $32 million, analyzed in July first week’s report, total retail cannabis revenues in Illinois reached over $76.3 million last month, a record high for the state. Read More (Cannabis Benchmarks)

Chart 4: Average Daily Adult-Use Sales (Retail) – Trailing 3 Months Source: Intro-Blue, Cannabis Benchmarks

Chart 4: Average Daily Adult-Use Sales (Retail) – Trailing 3 Months
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 5: Items Sold & Average Price per Item (Retail) – Trailing 3 Months Source: Intro-Blue, Cannabis Benchmarks

Chart 5: Items Sold & Average Price per Item (Retail) – Trailing 3 Months
Source: Intro-Blue, Cannabis Benchmarks

After unsuccessful 2020 signature campaign to legalize adult-use cannabis in Missouri, group looks to 2022. Missourians for a New Approach’s 2020 ballot initiative to pass adult-use cannabis legalization in the state ended because of the coronavirus pandemic that has swept the nation. Now, the group is looking ahead to the 2022 ballot. Dan Viets, an attorney who chairs the group’s advisory board and is both secretary of the National Organization for the Reform of Marijuana Laws (NORML), noted a recent Gallup poll showed that 70% of Americans consider smoking cannabis to be morally acceptable. “By November of 2022, I think—I’ll just speak for myself on this point—but I think we will probably be approaching the same support we had for medical in 2018, and that was 66%,” he said. Read More (Cannabis Business Times)

State cannabis board levies $800,000 in fines on three Central Massachusetts companies. The Cannabis Control Commission levied $800,000 in fines to three companies – Garden Remedies; Healthy Pharms; and Acreage Holdings (ACRGF) – each of which either operate in Central Massachusetts or are owned by companies who operate in the region. Garden Remedies, which operates a recreational and medical dispensary in Marlboro, was fined $200,000 for using pesticides and trying to cover up their use by falsifying invoices. Healthy Pharms failed to immediately report test results showing the use of pesticides; unintentionally submitted false information; and incorrectly entered information into the Seed-to-Sale tracking program Metrc. Acreage Holdings was fined $250,000 for going forward with applications for licensure while trying to own or have a controlling interest in more than the allowed maximum of three stores. Read More (Telegram)

Contract cannabis farming gaining popularity in California, but practice draws lawsuits. To get around the enormous barriers to entry for California’s legal marijuana industry, a growing number of small farmers are increasingly turning to a practice mainstream agriculture has used for generations: so-called “contract farming.” It’s a different business model from regular employment by a cultivation company, and the types of contracts can vary widely. In short, landowners obtain local and state cultivation permits and then bring on experienced marijuana growers to do the actual farming, with the promise of splitting profits from the crop. Read More (Marijuana Business Daily)

California authorities raid illegal cannabis ‘farmers market.’ An illicit gathering of marijuana buyers and sellers in Fresno, California, was broken up by the state’s Bureau of Cannabis Control and the city’s police department. The action might have been the first of many raids on so-called “smoke sessions” that typically function as underground cannabis farmers markets. “That’s how it was described to me as well,” Alex Traverso, the BCC’s communications chief, said when asked if it the gathering was akin to a farmer’s market. He confirmed that at least seven different vendors were identified during the July 14 raid. In addition, authorities seized almost 40 pounds of marijuana flower, nearly 94 pounds of cannabis concentrates, a little over $2,000 in cash and six illegal firearms. Read More (Marijuana Business Daily)

U.S. cannabis spot index up 4.2% to $1,501 per pound, August forward unchanged at $1,430 per pound. The simple average (non-volume weighted) price increased $91 to $1,745 per pound, with 68% of transactions (one standard deviation) in the $938 to $2,552 per pound range. The average reported deal size remained nominally unchanged at 2.1 pounds. In grams, the spot price was $3.31 and the simple average price was $3.85. 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 6: Cannabis Benchmarks U.S. Spot Index Source: Intro-Blue, Cannabis Benchmarks

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

 

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

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

 

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

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

Cannabis gives British Columbia farm sales CAD $300 million boost in 2019. Farm cash receipts in British Columbia hit a record high in 2019, boosted by an increase of nearly CAD $300 million ($221 million) in cannabis sales. The annual growth in cannabis cash receipts in British Columbia far outpaced growth in other agricultural sectors such as dairy (CAD $47 million), beef (CAD $25 million) and field vegetables (CAD $17.5 million), reports the provincial government. Total farm cash receipts for the province in 2019 reached CAD $3.9 billion, an increase of CAD $462 million over 2018. Read More (Marijuana Business Daily)

Canada’s Northwest Territories cuts cannabis prices to fight illegal market. Cannabis regulators in Canada’s Northwest Territories (NWT) reduced prices of legal marijuana products by 10% in an effort to eliminate illicit marijuana sales. The price cuts, which took effect July 2, apply to all cannabis products sold by the Northwest Territories Liquor and Cannabis Commission (NTLCC), the NWT government said. “With close to two years of legal sales, NTLCC has a better understanding of the operating costs associated with the distribution and sale of cannabis and is confident that it can reduce the price of these products while continuing to maintain a safe and secure retail regime,” the agency noted. Read More (Marijuana Business Daily)

Licensed cannabis stores in Canada begin to proliferate in June after slumping in April and May. Nationwide, the licensing of new stores has slowed due to COVID-19 and accompanying lockdowns. After slumping in April and May, new stores begin to proliferate more quickly once again. At the end of June, there were 962 stores across Canada, with 59 stores added since May, and an increase of 672 stores from the same time last year. During the first half of 2020, the average number of new stores that opened monthly was 49. This took place under the specter of COVID-19. With COVID-related restrictions loosening, Cannabis Benchmarks expect the number of new stores to increase at an even faster pace in the second half of the year. We could also soon see an explosion of new cannabis retailers if a plan to pair them with convenience stores proceeds fruitfully. Read More (Cannabis Benchmarks)

Chart 9:  No. of Cannabis Stores Added in Canada by Month Source: Intro-Blue, Cannabis Benchmarks

Chart 9:  No. of Cannabis Stores Added in Canada by Month
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 10:  Couche-Tard’s Network Includes 14,471 Sites in Three Markets Source: Intro-Blue, Cannabis Benchmarks

Chart 10:  Couche-Tard’s Network Includes 14,471 Sites in Three Markets
Source: Intro-Blue, Cannabis Benchmarks

 

COMPANY NEWS

Canopy Growth targets new market with cannabis beverage strategy. Canopy Growth (CGC) is betting that the secret to finding new marijuana consumers comes in a can. The company’s emerging cannabis drinks are part of a strategy to attract new cannabis consumers with next-generation products, in this case by offering a substitute for alcoholic beverages. While Canopy’s early sales of beverages look strong, whether they’ll succeed in attracting and retaining new cannabis consumers – something not seen yet in mature U.S. markets – remains to be seen. Cannabis drinks “represent a fundamentally different business proposition” from most other marijuana products, according to John Fowler, former president and CEO of Supreme Cannabis and now a marijuana licensing and commercialization consultant through his Toronto firm Blaise Ventures. Read More (Marijuana Business Daily)

Canopy Growth lays off 30 employees in Smiths Falls. More than two dozen employees have been laid off at Canopy Growth (CGC) in Smiths Falls. “We can confirm that Canopy Growth made the difficult decision to let go 30 staff members that work out of our Smiths Falls facility yesterday (July 8) as part of our ongoing strategic review of the business,” Jordan Sinclair, communications manager, told the Record News on July 9. “This decision was made as we continue to adjust the business to match market demands.” In April, the company let 200 workers go in three countries, including 44 in Smiths Falls (Canada, the UK and the U.S.). Read More (InsideOttawaValley)

Aphria, Aurora Cannabis explored merger in recent talks. Aphria (APHA) and Aurora Cannabis (ACB) recently held advanced talks to merge the two Canadian pot producers in what would have been a blockbuster deal, but those discussions broke down on late second week of July, according to two people familiar with the matter. The two companies opted to step back from merger discussions that took place over several weeks after failing to agree on board composition and compensation for some senior executives, the people told BNN Bloomberg under the condition of anonymity. It is not known if the two companies will revisit merger talks in the future, the people said. The negotiations have not previously been reported. Michelle Lefler, vice-president of communications at Aurora, told BNN Bloomberg in an email that the company’s practice is “not to comment on rumours or speculation.” Read More (BNN Bloomberg)

Innovative Industrial Properties acquires New Jersey property and enters into long-term lease with Curaleaf. Innovative Industrial Properties (IIPR) announced that it closed on the acquisition of a property in Blue Anchor, New Jersey, which comprises approximately 111,000 square feet of industrial space. The purchase price for the property was $5.5 million (excluding transaction costs). Concurrent with the closing of the purchase, IIPR entered into a long-term, triple-net lease agreement for the property with a subsidiary of Curaleaf Holdings (CURLF), which intends to operate the property as a regulated medical cannabis cultivation and processing facility. Curaleaf is expected to complete additional tenant improvements for the property, for which IIPR has agreed to provide reimbursement of up to $29.5 million. Assuming full reimbursement for the tenant improvements, IIPR’s total investment in the property will be $35.0 million. Read More (Business Wire)

Curaleaf sees Grassroots shareholders approve transaction. Curaleaf Holdings (CURLF) announced that the shareholders of GR Companies, known as Grassroots, have approved of the transaction that will see the firm vend into the public company. It was stated that over 87% of existing shareholders approved of the transaction. Further, Mitchell Kahn, whom is the co-founder and CEO of Grassroots, indicated that zero “no” votes were received from the shareholders of the company, indicating a high rate of approval to go forward with the transaction. Read More (the deep dive)

iAnthus announces execution of support agreement for a recapitalization transaction. iAnthus Capital Holdings (ITHUF) announced that it has entered into a restructuring support agreement with 100% of its secured lenders and over 91% of the unsecured debenture holders to effect a proposed recapitalization transaction, as well as provide interim financing of $14 million. The recapitalization transaction is expected to significantly reduce the company’s outstanding indebtedness and annual interest costs, improve its capital structure and liquidity, and result in an enhanced financial foundation for the company. Read More (PR Newswire)

EARNINGS

The Valens Company sees fiscal 2Q revenue double driven by custom manufacturing and white label business. The Valens Company (VGWCF) reported fiscal second-quarter results revealing growing profits and revenue that had doubled driven by its custom manufacturing, co-packing and white label cannabis operations. For the period ended May 31, 2020, the Kelowna, British Columbia-based manufacturer of cannabinoid-based products, reported revenue of $17.6 million, a 100.3% jump, compared to revenue of $8.8 million in the fiscal second quarter of 2019. Gross profit increased to $6.3 million, good for 35.8% of revenue, up from $5.1 million a year ago. The Valens Company boss said that during the quarter, the company saw “increased demand” from provincial suppliers with the expansion of the company’s customers’ cannabis 2.0 product lines. Read More (Proactive Investors)

Flower One reports 52% quarterly growth to $8.8 million in Q1 2020. Flower One Holdings (FLOOF) reported its financial and operating results for the first quarter ended March 31, 2020. The company delivered revenue of $8.8 million, representing sequential quarterly growth of 52%; achieved record monthly sales in March of $3.9 million; maintained industry-leading cultivation performance levels with an average harvested cash cost of $0.49 per gram; and, received Nevada state approval to launch three vape brands, including The Clear, Old Pal, and Heavy Hitters. Flower One continues to expect revenue of approximately $3.8 million for Q2 2020, ahead of the original company guidance of $3.25 million to $3.75 million for the quarter. Read More (Newswire)

WeedMD posts record revenue of CAD $12.2 million in first quarter as it sees benefit of Starseed deal. WeedMD (WDDMF) posted record revenue in its first quarter as the company benefits from its combination with medical cannabis group Starseed Medicinal and continues to see its brands gaining recognition. In the three months to March 31, the cannabis producer and distributor posted net revenue of CAD $12.2 million, which was 327% higher than the CAD $2.9 million seen in 4Q, 2019 and 265% more than the CAD $3.3 million generated in 1Q last year. Gross profit before changes in fair value was CAD $1.4 million, leading to an 11% gross margin compared to a gross loss of 70% in the previous quarter, mainly down to the sale of dried cannabis and revenue generated during the full quarter post the Starseed acquisition in December last year, the firm said. Read More (Proactive Investors)

4Front Ventures Q1 revenue increases 8% sequentially to $17.0 million. 4Front Ventures (CNXXF) announced its financial results for the Q1 2020. The systemwide pro forma sales stood at $23.7 million, an increase of 36% over Q4 2019. The company said that the robust consumer demand continues across all operating markets despite COVID-19. The company reached final resolution with the Massachusetts Cannabis Control Commission with respect to legacy regulatory issues. It expects the agreement will clear the path for recreational licensing of its Massachusetts locations. The company remains on pace to be cash flow positive in 2H 2020 and poised to show significant operating leverage in 2021. Read More (New Cannabis Ventures)

CAPITAL MARKETS

Trulieve to transition to domestic issuer status in U.S. effective January 1, 2021. Trulieve Cannabis (TCNNF) announced that since more than 50% of the company’s issued and outstanding subordinate voting shares were directly or indirectly owned by shareholders of record domiciled in the U.S. on June 30, 2020, Trulieve no longer meets the definition of a “foreign private issuer” under U.S. securities laws. As a result, the company will be deemed a U.S. domestic issuer under U.S. securities laws and will be subject to SEC reporting requirements applicable to U.S. domestic companies no later than January 1, 2021. Read More (Newswire)

U.S. cannabis stocks: A good investment in a bad economy. For investors looking for a relatively safe investment during what could be a prolonged recession or depression, cannabis stocks may be one of the smarter plays in the market today. This is not to say that all American cannabis companies are without risk, as well publicized troubles plaguing industry giants MedMen (MMNFF) and Acreage Holdings (ACRGF) have made clear. Investors should pay close attention to management teams and operating fundamentals in deciding where to park their capital. But recent industry trends should be viewed positively, as cannabis companies by in large have shifted their strategies and made adjustments that favor traditional business fundamentals over the stock promotion, license aggregating, and hype that dominated the cannabis stock boom of 2017– 2019, burning many investors. Read More (Forbes)

Up in smoke: COVID-19’s impacts on hemp & cannabis M&A. First, there has been an overall “precipitous decline in hemp and cannabis M&A,” as recently stated by Scott Greiper, president of Viridian Capital Partners (VCA). According to VCA, there were 94 hemp and cannabis M&A deals in the first quarter of 2019, and there were 19 such deals in the first quarter of 2020, representing approximately 80% fewer deals on a quarter-by-quarter comparison. Second, while the impacts of the COVID-19 global pandemic are pronounced with regards to pure M&A activity, the cannabis capital raising space has not gone unscathed. Third, there has been an overall decline in market valuations. Adam Pope, an associate in the Business Development department of Canopy Rivers (CNPOF), said: “We have seen an adjustment to round sizes and overall valuations. Valuations are decreasing and we’ve heard during pitches that smaller round sizes is not only an effect of current conditions in the capital markets, but an effort from startups to close more quickly and ensure they have enough cash to weather the current storm.” Read More (The National Law Review)

Neptune Wellness Solutions to sell $12 million in shares for operating capital. A Canadian health and wellness company is selling off more than 4.7 million common shares at an offering of $2.65 per share to raise some $12.65 million. Neptune Wellness Solutions (NEPT), a hemp extractor and product manufacturer based in Laval, Quebec, said in a company statement that it expects to use the net proceeds from this stock offering for working capital and general corporate purposes. The purchasers were eHealthCare-focused institutional investors. Read More (Hemp Industry Daily)

Jushi Holdings raises $17.4 million through 10% debt offering. Jushi Holdings (JUSHF) provided an update regarding its previously announced $15.25 million debt financing. To date, Jushi has received cash proceeds of $16.325 million and additional binding subscriptions, for a pro forma total issuance of $17.425 million of 10% senior secured notes and warrants to acquire subordinate voting share. The company also received non-binding indications of interest for up to an additional $10 million of financing. All notes will mature on January 15, 2023 and will bear interest of 10.0% per annum payable in cash quarterly. Jushi intends to use the proceeds from the offering to fund the cash portion of a previously announced Pennsylvania grower-processor permit holder transaction. Read More (New Cannabis Ventures)

MEDICAL CANNABIS

New Jersey lowers medical cannabis sales tax. The New Jersey Treasury Division of Taxation announced that, effective July 1, sales tax on medical marijuana is reduced to 4% from the previous 6.625% sales tax rate (the rate imposed under the state’s Sales and Use Tax Act). The tax reduction is the first of three scheduled tax reductions designed to eliminate the sales tax on medical cannabis sales in the Garden State. The 4% sales tax rate will apply through June 30, 2021, when the tax rate will be reduced to 2% until June 30, 2022. Then, effective July 1, 2022, medical marijuana sales will not be taxed. The tax reductions resulted from the passage of the Jake Honig Compassionate Use Medical [Marijuana] Cannabis Act, named after the late Jake Honig, “a 7-year-old from Howell for whom medical marijuana provided the only relief from an inoperable brain tumor,” according to a recent New Jersey Herald article. Read More (Cannabis Business Times)

Virginia medical cannabis sales set to commence within two months. Virginia’s Board of Pharmacy awarded five cannabis processing licenses in late 2018, and three of the recipients are expected to begin dispensing cannabis products to patients within the next two months. Pharmacann, which received the processing license for HSA I, an area that includes Charlottesville, transferred it to MedMen (MMNFF). In June, the Board of Pharmacy rescinded the approval due to MedMen not developing its operations in a timely manner. It plans to open a Request for Application later this year. HSA II in Northern Virginia (the counties of Arlington, Fairfax and Prince William) will be served by Jushi Holdings (JUSHF). Locally owned Dharma Pharmaceuticals, which built its processing center in a vacant portion of the Bristol Mall, is serving HSA III in SW Virginia. Green Leaf Medical has built an 82,000 sq. ft facility in Manchester, adjacent to the capital city of Richmond, where it will serve patients in 27 counties that comprise HSA IV. Columbia Care (COLXF) will serve HSA V, which includes several of the state’s largest cities. Read More (New Cannabis Ventures)

Hawaii medical cannabis sales poised for lift as edibles bill passes. Hawaii lawmakers passed a bill allowing medical marijuana edibles, a move that could significantly boost the roughly $16 million-$20 million-a-year market. The legislation has been sent to the desk of Gov. David Ige, a Democrat, who has been resistant to some cannabis policy reforms. The bill enjoyed strong support in the Legislature. The Hawaii Cannabis Industry Association (HCIA) praised the Legislature’s action, which came in a session shortened by the coronavirus pandemic. “Medical cannabis patients have been asking for alternative ways to take their medication other than inhalation since the first dispensary opened their doors,” according to a Facebook post by the HCIA. “This is especially important in a COVID-19 world where lung and overall health are on the forefront of our minds.” Read More (Marijuana Business Daily)

Medical cannabis delivery is coming to NJ. Here are the dispensaries that plan to offer it. Four of the nine operational medical cannabis companies in New Jersey could soon begin delivering marijuana to patients, finally heeding the calls of patients to ease access to their medicine. While the waiver marks a step forward, it will take time before delivery can become a quick and convenient solution, both due to the lack of dispensaries in the state and potential kinks in the system. But Rise Paterson filed its delivery plan with the health department, said Devra Karlebach, the CEO of GTI New Jersey. And a Curaleaf (CURLF) spokeswoman said the company has “been hard at work developing a thoughtful and safe plan that will best serve our patients and protect our team members,” and is working with the health department to receive approval. Harmony Dispensary of Secaucus, too, wants to offer delivery. Brian Sickora, the New Jersey manager of Acreage Holdings (ACRGF), which recently acquired Compassionate Care Foundation, said the company is not immediately pursuing home delivery, but will re-evaluate later this summer. Read More (NJ.com)

Study suggests more chronic pain patients are turning to cannabis. New data from the journal of Advances in Therapy shows that more people now than in the past are using cannabis to treat and cope with chronic pain—and that those who are using it as treatment report favorable results. The study, which came from Harvard Medical School, looked at cannabis use trends in pain patients starting in 2011 and ending in 2015. Currently, chronic pain is the most commonly reported qualifying condition by medical cannabis patients who report data back to their state medical programs regarding why and how they consume cannabis. The reported average age of chronic pain patients who use cannabis were 45 years old, and most reported users were lower on the socio-economic scale, showing that it could be seen as a more affordable source of pain medication for some who suffer from chronic pain. Read More (High Times)

Arkansas medical marijuana growers sue to keep others from entering market. Five Arkansas companies with permits to grow medical cannabis are suing to stop three more cultivation licenses from being issued. The lawsuit claims the three licenses that were issued in June violate language in the law that stipulated new licenses would be granted only if the existing growers couldn’t meet dispensary demand, according to the Arkansas Times. The plaintiffs – Bold Team, Natural State Medicinals Cultivation, Natural State Wellness Enterprises, Osage Creek Cultivation and Delta Medical Cannabis – are suing: The Arkansas Finance and Administration Department, the state’s Alcoholic Beverage Control Division, the Medical Marijuana Commission, the three new cultivation licensees: Carpenter Farms Medical Group, New Day Cultivation and River Valley Relief Cultivation. Read More (Marijuana Business Daily)

Cannabis could be a promising treatment for sickle cell disease, clinical trial concludes. For the thousands of people around the world living with sickle cell disease (SCD), acute and chronic pain can be constant companions. These painful symptoms are often treated with prescription opioids. But a new clinical trial has found that cannabis could be a promising, and safer, substitute. Conducted at the University of California, San Francisco, the study first sourced 90 participants – only 23 of which went on to complete the trial – who all had SCD and prior experience smoking cannabis. The volunteers then inhaled either vaporized cannabis or a placebo at regular intervals and, after a few interims, completed a set of standard pain questionnaires. Read More (Analytical Cannabis)

CBD/HEMP

Elixinol CEO offers insight into Europe strategy, supply-chain restructuring. Elixinol (ELLXF) CEO Oliver Horn said that they have partnered with the European Industrial Hemp Association and joined their consortium to have a joint novel food application that will be submitted in time for the regulatory deadline, so that they can keep on trading. The company is firmly committed to the European market and believe the UK and Germany are their priority markets, holding a huge prospect after the novel food regulation comes in. They already see that players are extracting themselves out of Europe. But they have a pathway and a partner and the ability to submit this novel food application – restructuring their supply chain to support that – and when it comes to next year, and again believe they will have all accreditation and certificates that is needed to trade and have a very good route to market in Europe. Read More (Hemp Industry Daily)

USDA approves hemp plan for Minnesota, Tennessee and Puerto Rico. The U.S. Department of Agriculture (USDA) approved hemp regulatory plans from Minnesota, Tennessee and Puerto Rico. “We thank USDA for their work on this new federal hemp program, and we are grateful they have approved Minnesota’s plan,” Minnesota Agriculture Commissioner Thom Petersen said. “While this is a major step forward, there are still concerns over some the regulations imposed on states and tribal governments, such as testing requirements. We look forward to continuing our dialog with USDA so we can ensure Minnesota’s hemp growers and processors are successful in this fledging industry.” This latest development brings the total number of approved plans across states, territories and Indian tribes to 53. Read More (Marijuana Moment)

Hawaii wants ban on smokable hemp with new rules sent to Governor. The Hawaii Legislature has approved a bill that aligns its hemp testing with federal law and joins other states in banning smokable hemp and CBD-infused edibles. Lawmakers sent the bill to Democratic Gov. David Ige. The bill also prohibits hemp from being processed with 500 feet “of a pre-existing playground, school, state park, state recreation area, residential neighborhood, hospital, or daycare facility.” Federal law governing hemp cultivation doesn’t include setbacks for where to grow the plant. Read More (Hemp Industry Daily)

Mixed projections for 2020 hemp production. As Hemp Benchmarks reported previously, last year’s difficult season resulted in many hemp cultivators withdrawing from the market. While many entered the hemp sector with expectations of lucrative returns, expectations have been adjusted in the wake of significant overproduction in 2019, which pushed down wholesale prices and has left many farmers sitting on unsold harvests. “You can’t tell farmers they’ll make the same money as last year or the year before,” Wendy Mosher, president and CEO of New West Genetics, a Colorado-based hemp seed producer, said in a late May interview with Natural Products Insider. “You can’t afford to get in unless you’re vertically integrated. You’ve got maybe $8,000 – $12,000 per acre in spending [when farming hemp for CBD].” Read More (Hemp Benchmarks)

FDA reports on purity of commercially available CBD products. Fewer than half of the commercially available hemp/CBD products tested this year by the U.S. FDA contain percentages of cannabidiol that are consistent with the products’ labelling, according to data provided by the agency in a recently released report to Congress. According to the report, the FDA tested 147 CBD-specific products marketed for sale online, including tinctures, capsules, gummies, and beverages. One hundred and two of those products provided information on the label indicating the specific percentages of CBD present in them. Read More (NORML)

69% of people concerned with FDA CBD ruling. The future of the CBD market hinges on how U.S. authorities ultimately regulate the substance. While some industry observers bemoan the U.S. Food and Drug Administration (FDA)’s slow bureaucratic response to CBD, Steve Groff, founder of the physician-focused industrial hemp processor Groff North America, held a more nuanced perspective. “They are caught in a regulatory web — and I’m not here to defend the FDA — but clearly the leadership wants to find a way to approve it,” he commiserated. “Part of the challenge is that Epidiolex has been approved as a pharmaceutical drug, and the second thing is that there is just complete lack of medical literature about CBD. Unfortunately for the people who work at the FDA, that’s what they live by.” Read More (New Frontier Data)

Chart 11: The Future of CBD-Infused Products Source: Intro-Blue, New Frontier Data

Chart 11: The Future of CBD-Infused Products
Source: Intro-Blue, New Frontier Data

CBN, CBG more alluring to hemp farmers as CBD prices drop? With the majority of new hemp farmers growing the plant for CBD extraction and not fiber use, prices for unrefined CBD dropped as much as 83 percent from 2015 to 2020, according to a recent market report from New Frontier Data, while nationwide acreage devoted to hemp farming more than doubled. Farmers and botanists have been selectively breeding and growing hemp plants for high CBD content for the better part of the last decade, but New Frontier’s market report suggests that switching lanes to lesser-known cannabinoids such as CBN or CBG could help struggling hemp farmers reduce obstacles going forward. CBN and CBG have shown potential in wellness areas such as fighting inflammation, pain, nausea and potentially even certain cancer cells. Read More (Westword)

California is wrong about hemp, and it’s costing the state millions. California remains at a competitive disadvantage during a time when economic relief is needed more than ever. California’s challenge stems from public guidance issued by the California Department of Public Health a few years ago. The agency argued that the retail sale of CBD as a dietary supplement or food additive was illegal. While the hemp industry disagrees with that interpretation, the damage has been done. The unfortunate guidance has chilled commerce and has even led to local enforcement actions taken against state hemp retailers and manufacturers. Regulatory uncertainty has caused confusion among consumers, and it has stalled growth in hemp products across the board. Moreover, it has kept California on the sideline of a burgeoning industry, ultimately giving a foothold, and potential lock, of the booming market to the growing number of states —such as Ohio, Texas, and Florida. Read More (Green Entrepreneur)

Vertical Wellness, GenCanna expand partnership with new biomass tolling, drying deal. Two large-scale Kentucky hemp companies have expanded their strategic alliance by adding a toll processing and drying technology swap to the deal. GenCanna Acquisition, formerly GenCanna Global, a seed-to-sale hemp and CBD company based in Winchester, Kentucky, and Vertical Wellness, a Cadiz, Kentucky-based vertically integrated hemp and cannabinoid health and wellness brand firm, said in a joint news release that they have entered a biomass tolling agreement. The deal states that GenCanna will deliver more than 10 million pounds of hemp biomass grown by its network of farmers to Vertical Wellness for processing. Read More (Hemp Industry Daily)

RETAIL

Ontario cannabis stores see delivery, curbside pickup extended to July 29. The Ontario government lengthened an emergency order allowing licensed cannabis stores to offer curbside pickup and delivery, giving marijuana retailers an extra week during the ongoing COVID-19 pandemic. The emergency order had been scheduled to end on July 22. However, the Ontario government said it was extending that emergency order and others until July 29. Earlier this month, Ontario cannabis store operators expressed disappointment that the government would allow the order to expire. Such a move, they argued, would leave the government-operated Ontario Cannabis Store (OCS) online retailer as the province’s only legal recreational marijuana source permitted to deliver product to customers’ homes. Read More (Marijuana Business Daily)

Cannabis retail brands branching out. Two retailers have been in the news the past few weeks for maneuvering and innovating to adjust to the changing retail landscape. Alberta-based retailer Fire & Flower (FFLWF) announced the fruit of their partnership with Alimentation Couche-Tard: cannabis shops next to convenience stores. According to the release, they hope to be able to utilize the high traffic of Circle K stores while also providing convenience and accessibility to their customers. Aegis Brands, the parent company of Second Cup and Bridgehead Coffee, announced the opening of their first foray into the cannabis world with Hemisphere Cannabis, a brand “inspired by the idea of navigation” and “built around the idea of offering wayfinding for Canadians in their cannabis purchase journey. Read More (Cannabis Retailer)

Who is buying recreational cannabis? After collecting information from over 30,000 respondents over two years, Brightfield created four distinct cannabis buyer personas: 1) Typical stoner – a legacy cannabis user who just wants some good bud at a good price and are not fussy about flashy labels. 2) Stressed-out millennials – similar to the first in that they want quality and a good price, however, millennials can be willing to shell out a little more cash to a brand whose values and ethics line up with theirs. 3) Newbies – The key to engaging new cannabis users is making entry as easy as possible. 4) Microdosing mamas – a lot of Microdosing Mamas are looking for reassurance that it’s okay to take a little nibble of an edible before playing with your kids, or taking a few hits off of a vape for stress relief. Read More (Cannabis Retailer)

PRODUCTS

Mike Tyson will print (yes, print) cannabis beverages. The Ranch Companies, founded by Mike Tyson, has acquired a global license to print (yes, you read right, print) cannabis products. But what does this even mean? Well, there’s where Tyson’s new partner, Smart Cups, comes in. The company, responsible for creating the world’s first printed beverage, will license its IP to The Ranch Companies, for it to print ingestible cannabis products with accurate and consistent dosing. What Smart Cups does is print active and flavor ingredients from diverse natural products on the surface of substrates, thus eliminating all of the liquid from a beverage – consequently reducing transportation costs and carbon footprints. In order to achieve this, the company uses micro-encapsulation printing technology to infuse its plant-based products into the substrate, which is then embedded in a bioplastic cup. Read More (Forbes)

INTERNATIONAL

First product registrations in Peru signal potential revenue-generating opportunities. Toronto-headquartered Ramm Pharma, a company with medical cannabis manufacturing operations in Uruguay, said the Peruvian Ministry of Health approved its Epifractán 5% CBD product “for sale in pharmacies throughout the country for various indications as prescribed by a medical doctor.” The news underscores the limited but increasing Latin American intraregional medical cannabis trade, independent from North American cannabis production. Ramm Pharma “entered into an agreement with CannFarm Peru S.A.C. to distribute its products throughout Peru,” the company said in a news release. Read More (Marijuana Business Daily)

Argentina to allow cannabis sales and home grows. Argentina will now allow home cultivation of cannabis and the sale of cannabis oils and topicals in pharmacies, which has not been included under the legal cannabis laws so far. Cannabis patients will also now have access to their medicine free of charge. This new regulation was drafted by the Argentinian Health Minister and other key stakeholders, and represents a huge step forward for cannabis in Argentina. Facundo Garreton, director of YVY Life Sciences, a medical cannabis company from the neighboring country of Uruguay, said that this is huge for the country, which until now has been overlooked as a cannabis hotspot. Read More (High Times)

European challenges in advertising CBD: Poland. In the food industry, including the dietary supplements market, there is a wide range of CBD products available. In Poland (where B2R Law is based and practices), while there is no legislation that specifically regulates trading or advertising such products, entities operating in the space are not entirely at liberty to operate at will. A general rule of advertising is that it must not mislead the customer or unduly influence his/her decision to buy a good or service. Otherwise, such conduct would be an act of unfair competition which, in some cases, may rise to the level of a criminal offense. Read More (New Frontier Data)

Chart 12: Most Commonly Used CBD Products by Age (Among EU CBD Consumers) Source: Intro-Blue, New Frontier Data

Chart 12: Most Commonly Used CBD Products by Age (Among EU CBD Consumers)
Source: Intro-Blue, New Frontier Data

CBD in the UK: Predictions for 2021. The UK’s CBD market is currently worth £300 million, with over 8 million people in the UK using the substance for its plethora of wellness benefits. Yet, for all this excitement, the truth is the UK’s CBD industry is facing a bit of a roadblock. The only way the UK will be able to fully harness the potential of CBD is to create an independent industry that not only helps consumers but contributes to the wider economy through jobs, skills, and investment. The development of a UK industry should involve the creation of a new regulatory system specifically designed for cannabis products and preferably for a new regulatory body, similar to the Office of Medicinal Cannabis in the Netherlands, to oversee all cannabis regulation, licensing, importation and approvals. As Britons become better informed about CBD products, and as the market matures, demand will certainly increase. Read More (Analytical Cannabis)

Netherlands clarifies application process to grow adult-use cannabis. The Dutch government wants to clear up several issues regarding the application process to grow legal recreational marijuana. The process is part of an experiment in the Netherlands to legalize for the first time – though it’s limited in scope and time – the production of marijuana destined to be sold in coffee shops. Only applicants that demonstrate the capability to cultivate at a large scale – a minimum of 6,500 kilograms (14,330 pounds) per year – will be considered. But the government’s newly released FAQ specifies that the winners won’t necessarily have to grow that amount. Up to 10 growers will be selected to supply roughly 80 coffee shops in 10 municipalities during a period of at least four years. Read More (Marijuana Business Daily)

Cannabis culture: A Latin American perspective. Trilingual writer and entrepreneur Simon Espinosa is the founder and CEO of En Volá Cannabis HUB, a Chile-based media and product development company which aims to promote informed consumption and connect producers with consumers at each stage of the cannabis value chain. Regarding how he sees cannabis legislation evolving in Latin America in the next few years, Espinosa said: “Independently, it is expected that the priorities of most countries in Latin America will shift towards tax revenue eventually: the cannabis consumer base is wide. Chile, for example, is one of the world’s top five cannabis consumers; and the cannabis industry in Latin America as a whole is expected to reach a value of $28.07 billion by 2024.” Read More (Health Europa)

CANNA SCIENCE

THC can reduce sociability in mice, study finds. While cannabis is often associated with social settings, new research has found that exposure to the drug can increase social isolation – at least, in mice. Published in Nature, the study found that, when injected with THC, the mice became less sociable with their fellow rodents. This effect could be reversed, however, with a separate injection of lactate – a natural byproduct of respiration. The researchers say the study is the first to show a decline in sociability from cannabis consumption as a result of altered glucose metabolism in the brain. Read More (Analytical Cannabis)

More potent than CBD, THC: Dr. Raphael Mechoulam explains his latest discovery. Professor Raphael Mechoulam, also known as the “father of cannabis research,” revealed his latest discovery, cannabidiolic acid methyl ester (EPM301), only a few months ago. The introduction of this new, patented compound (synthetic, fully stable acid-based cannabinoid molecules) caused a wave of excitement around the future of medicinal cannabis. Mechoulam’s recent revelation stems from the development of a method that allows to modify the acids in a way that keeps them stable enough to allow for their large-scale use. This opens the door for further pharmaceutical experiments, the professor explained. Read More (Forbes) and And More (Hemp Today)

ABSTRAX develops new terpene-infused rolling papers, cones, wraps, blunts in bulk; retail ready for established, growing brands. ABSTRAX has officially released its new terpene infused product line including custom rolling papers, cones, flat wraps, and blunts offering brands a way for consumers to enjoy cannabis terpene profiles and flavors worldwide. “We’ve made it easier than ever for brands to take powerful, terpene-driven flavors and experiences to global markets, by eliminating their out-of-pocket spend for research, development, and manufacturing,” says Max Koby, founding partner and chief executive officer of ABSTRAX. Each offering within the custom terpene infused catalog boasts of ABSTRAX’s one-of-a-kind terpene formulations developed to create unforgettable sensorial experiences and inspire unparalleled “functional” mind/body benefits. Read More (Extraction Magazine)

TECHNOLOGY

Cannabis and technology: Critical functions, opportunities, and gaps. There are a number of critical functions and areas in which technology can give businesses the leg up that they need while arguing that education for budtenders is one area where better-leveraged technology can help the industry add more value for customers and drive more sales. Curbside, in-store pickup and delivery make up a new ordering standard that most consumers now not only expect but also demand. To meet these needs, cannabis companies can incorporate scalable, quick-to-implement technology to help streamline a lot of the heavy lifting, so business owners can instead focus on keeping both their customers and staff safe while providing modern online shopping options that customers now expect. Technology is also a critical component for lending and wholesale distribution. Online platforms can help cannabis retailers streamline ordering, reporting, fulfillment, and more. Read More (Forbes)

Enlighten is making the cannabis industry smarter. Specializing in retail and marketing technology, Enlighten has become the largest cannabis technology company in the U.S. This feat is especially impressive, given the fact that Jacobs and McKenzie only launched Enlighten in June 2018. During its reign as the cannabis industry’s preeminent technology enterprise, Enlighten has become known for its innovative and proactive approach to problem-solving. On its retail side, Enlighten creates state-of-the-art digital menus for in-store display screens, e-commerce sites, and self-service kiosks. On its marketing side, Enlighten creates original programming for dispensaries that feature traditional ads, as well as, brand videos, instructional videos, trivia challenges, educational presentations, interactive social media displays, and other information-packed audio and visual presentations that sell specific products along with the benefits of cannabis as a whole. Read More (Cannabis Tech)

LEGAL & IP

Metrc fights for right to charge fees to Missouri medical cannabis operators. Marijuana track-and-trace company Metrc continues its legal tangle with Missouri state officials over the right to charge “tag fees” to medical cannabis dispensaries. In the latest development, Metrc wants a Missouri appellate court to overturn a lower court’s decision that would prevent the Florida-based company from charging fees for radio-frequency identification (RFID) tags, Law360 reported. The dispute dates to 2019, shortly after Metrc was awarded a $5 million contract by the state after a competitive bidding process. Almost immediately, a rival protested to the state that Missouri’s deal with Metrc could contain hidden costs. State regulators rejected the notion, saying Metrc’s contract did not allow the company to charge tag fees to MMJ licensees. Read More (Marijuana Business Daily)

California cannabis industry strives for geographic branding, just like wine. California’s legal cannabis industry, not yet 4 years old, yearns for the same system of tying plants to the soil perfected by the French over centuries and a key to the marketing success of the state’s premium wine grape growers. Tended for decades in legal darkness before voters ended the prohibition on cannabis in 2016, the intoxicating crop from Northern California in particular earned a global reputation for delivering euphoria as well as relief from various maladies. Now, the burgeoning multibillion-dollar industry wants to stamp its products with geographic identifiers, just like France’s famed burgundies and Alexander Valley’s cabernet sauvignon. Read More (The Press Democrat)

Veritas trademark suit claims ‘customer confusion.’ Colorado company Veritas Fine Cannabis has sued hemp oil maker Veritas Farms (SSWH) in federal court over its name and the use of a “V” logo. The plaintiff complains “a competitor’s bad faith use of nearly identical and confusingly similar trademarks, create[s] and cause[s] actual confusion in the marketplace.” The case highlights trademark issues in the cannabis sector. The federal government does not always recognize industry intellectual property because its products remain federally illegal. According to the suit, filed July 10 at U.S. District Court in Colorado, the defendant “intentionally selected the Stylized V Mark in order to create consumer confusion with Plaintiff’s V Design Mark, particularly based on its use in combination with VERITAS FARMS.” It says social media posts have mistakenly used a hashtag with the name Veritas Farms when referring to Veritas Fine Cannabis. Read More (WeedWeek)

Charlotte’s Web’s request to register ‘CW’ trademark is rejected. U.S. trademark authorities have rejected an application from CBD maker Charlotte’s Web (CWBHF) to register the trademark “CW,” saying it would violate the Food, Drug & Cosmetics Act (FDCA). “The record shows that Applicant’s goods contain cannabidiol (CBD), an extract of the cannabis plant, that is regulated under the Food, Drug & Cosmetics Act (FDCA) as a drug,” the Trademark Trial and Appeal Board (TTAB) said in a recently issued opinion rejecting the application. TTAB said that while the Industrial Hemp Provision of the 2018 Farm Bill permits authorized entities to “grow or cultivate industrial hemp” under certain circumstances, it does not permit the distribution or sale of CBD in food while the substance is the subject of ongoing clinical investigation. Read More (Hemp Today)

SUSTAINABILITY

Social equity in cannabis. Social Equity Programs (SEPs) are focused initiatives designed to address inequality in the national cannabis market. A reported 70% of Americans believe smoking cannabis to be “morally acceptable.” In 2018, 663,367 people were arrested for marijuana violations — about one per every 48 seconds. Black people are 3.6x more likely than are whites to be arrested for marijuana possession. Read More (New Frontier Data)

Chart 13: Racial and Ethnic Differences in Ownership and Employment (Denver 2019) Source: Intro-Blue, New Frontier Data

Chart 13: Racial and Ethnic Differences in Ownership and Employment (Denver 2019)
Source: Intro-Blue, New Frontier Data

Promoting sustainability. As more cannabis products become available and the legal marketplace grows more vibrant, alternative form factors and methods of consumption are becoming readily available to consumers. These are exciting times for cannabis retailers, who can finally offer a wide variety of smokeless products that consumers are looking for. Along with the wider availability of cannabis edible, vapes, and topicals comes new considerations for retailers. Manufactured products with multiple ingredients mean buyers have more factors to consider when stocking their shelves, including the sustainability of their inputs. Instead of just looking at energy usage during the grow cycle or packaging, retailers must now consider several other factors as well. Read More (Cannabis Retailer)

Black cannabis business executives suggest solutions to address racism and create a more inclusive industry. MJBizDaily asked several Black cannabis business owners and executives for their thoughts on how companies and other executives could help move the industry in that direction. Jeff Gray, CEO of SC Labs based in Santa Cruz, California, said that: “Economic equality is critically important in this industry.” He added: “I see three ways we can help create an inclusive cannabis industry: Raise minority ownership stakes through cannabis licensing; change our response to the traditional market; and vote with our dollars.” Linda Mercado Greene, CEO and owner of Anacostia Organics in Washington DC, said: “The owners and executives of these [marijuana] companies need to have extensive diversity training, which will filter down to the various staff levels.” Read More (Marijuana Business Daily)

How systemic racism and wealth inequality limit diversity in the cannabis industry. Racial disparities in legal prosecutions and through inequity in wealth serve as barriers to many Black and Brown entrepreneurs. Between 2010-2018, despite comparable usage rates Black people were 3.64 times more likely than White people to be arrested for marijuana possession. In 2015, more than 643,000 people were arrested for cannabis violations; 89% were charged only with possession. Over the past decade, 15.7 million people have been arrested for marijuana offenses. In some states, cannabis arrests preclude participation in the legal industry. In 2016, the average wealth of White families was more than $700,000 higher than that of Black or Hispanic families. In 2017, 81% of business owners/founders in the cannabis industry were White; approximately 4% were Black, and fewer than 6% were Hispanic/Latino. Read More (New Frontier Data)

Chart 14: Median Family Wealth by Race and Ethnicity, 1963-2016 Source: Intro-Blue, New Frontier Data

Chart 14: Median Family Wealth by Race and Ethnicity, 1963-2016
Source: Intro-Blue, New Frontier Data

Michigan social equity regulations help cannabis applicants get started but lack continued support. Michigan’s marijuana social equity provisions lower the barrier to entry for recreational cannabis business applicants, but some industry insiders say the state needs to do more to help keep such companies running. Regulators also appear to be relying on municipalities to develop their own rules for social equity in the absence of detailed guidance at the state level. Discounts for licensing based on social equity criteria can total 75% off of application and license fees, with criteria including: Residency in a disproportionately impacted community for at least five cumulative years within the past 10 years: 25% fee reduction; conviction of a marijuana-related offense. Misdemeanor convictions: 25% fee reduction. Felony convictions: 40% fee reduction; and registration as a primary caregiver under the Michigan Medical Marihuana Act for at least two years between 2008 and 2017: 10% fee reduction. Read More (Marijuana Business Daily)

CANNA FACTS

Chart 15: Retail Cannabis Sales Surpass NBA Revenue, Approach Prescription Pain Meds Source: Intro-Blue, Marijuana Business Factbook

Chart 15: Retail Cannabis Sales Surpass NBA Revenue, Approach Prescription Pain Meds
Source: Intro-Blue, Marijuana Business Factbook

CANNA CAPITAL MARKET TRENDS

Chart 16: Weekly Summary (July 6 – July 10, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 16: Weekly Summary (July 6 – July 10, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 16: Weekly Summary (July 6 – July 10, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 16: Weekly Summary (July 6 – July 10, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 16: Weekly Summary (July 6 – July 10, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 17: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 17: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 18: Cannabis M&A by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 18: Cannabis M&A by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 19: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 19: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 19: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 20: U.S. Implied Forward Prices (Week Ending July 17, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 20: U.S. Implied Forward Prices (Week Ending July 17, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 21: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 21: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: CALIFORNIA

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

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

 

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

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

 

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

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

 

Chart 25: Best-Selling Beverage Brands and Products in California Source: Intro-Blue, Headset

Chart 25: Best-Selling Beverage Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 26: Best-Selling Capsule Brands and Products in California Source: Intro-Blue, Headset

Chart 26: Best-Selling Capsule Brands and Products in California
Source: Intro-Blue, Headset

 

Chart 27: Best-Selling Topical Brands and Products in California Source: Intro-Blue, Headset

Chart 27: Best-Selling Topical Brands and Products in California
Source: Intro-Blue, Headset

 

CANNA INDEX

Chart 32: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 32: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 33: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 33: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Important Disclosures

Analyst Certification

I, Peter Wright, certify that the views expressed in the research report accurately reflect my personal views about the subject securities or issues. I also do not receive direct or indirect compensation based on my recommendations or views.

 

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