CBN: THE MINOR CANNABINOID READY FOR THE MAJOR LEAGUE

In our January 15 Stash report, we identified Cannabigerol (CBG) as the next big cannabinoid after THC and CBD thanks to its non-psychoactive nature and therapeutic properties which include 1) the ability to help regulate mood, 2) cancer fighting properties, 3) antibacterial properties, 4) potential ability to combat Huntington’s disease, 5) the ability to help treat glaucoma, and 6) effectiveness in decreasing inflammation in irritable bowel disorder (IBD). The latest data from the Brightfield Group validates our thesis and suggests that minor cannabinoid awareness is on the rise among cannabis consumers both in Canada and the U.S. According to the Brightfield Group’s Canadian consumer survey, CBG awareness among cannabis consumers stood at 9.2% in 2Q20, up from 8.2% in 1Q20, with awareness among medical users nearly double the overall average. Further, 29% of consumers who are aware of CBG indicated that they are likely to buy CBG products, with disproportionately strong interest among medical patients. The situation is even better in the U.S. with 13% of cannabis consumers aware of CBG and 78% of them saying that are likely or very likely to purchase it. Like in Canada, potential CBG consumers are much more likely to be medical cannabis users than the average cannabis population (66% vs. 48%). To take advantage of this growing awareness, cannabis companies have already started launching CBG products, including MedTerra’s CBG+CBD formulas and Kush Queen’s RX Bliss CBG+CBD gummies. With competition in the cannabis industry intensifying and companies looking to differentiate themselves based on novel products, we expect CBG adoption to rise further in the near future, and also drive interest in other minor cannabinoids like CBN.

We believe Cannabinol (CBN) is likely to follow CBG on the cannabinoid adoption curve, led by its use as a sleep aid. CBN was the first cannabinoid to be identified and isolated from cannabis. CBN comes from the oxidation and decomposition of THC from a hemp plant, meaning that when THC is heated and exposed to CO2, it converts to CBN. The quantity of CBN in cannabis increases as the plant matter ages. The compound has a mild psychoactive response, slightly more so than CBD but much less than THC, and it can enhance the effects of THC and other terpenes. It can be used effectively as a sleep aid or sedative – this is important as according to the Centers for Disease Control and Prevention, one-third of adults in the U.S. do not get enough sleep, implying a huge target market for CBN products. Cannabinol has also been shown to help regulate the immune system and relieve the pain and inflammation caused by several conditions, including arthritis and Crohn’s disease. Some studies show that CBN can be used to reduce the intraocular eye pressure caused by glaucoma while others have found that it can be used to increase appetite. This cannabinoid also acts as an anticonvulsant so it is beneficial to patients suffering from seizure disorders including epilepsy. Given its medicinal benefits and use in broad spectrum CBD products – including blended tinctures, beverages, powders, tablets, capsules, topicals, edibles, smokable products, vaporizer extracts, and personal care products – we expect CBN to follow CBG as a commonly used cannabinoid.

Initial signs of CBN’s growing popularity are already visible. According to the Brightfield Group, 11.6% of Canadian cannabis consumers were aware of CBN in 2Q20, up from 10.1% in 1Q20, with awareness among consumers with insomnia rising from 13.7% to 15.1%. In the U.S., 11% of CBD consumers are aware of CBN and 50% of these consumers are very likely to purchase it. Nearly half of CBD consumers use it to deal with insomnia and sleep issues, and CBN’s ability to combat sleep deprivation means that this target segment is ripe for disruption by CBN products. These include the likes of Somnus’ CBN-based tinctures and gummies, Kiva Confections’ Midnight Blueberry gummies, CBD American Shaman’s CBNight Water Soluble CBN Oil, and Mary’s Medicinal’s The Remedy CBN:CBD tincture. This makes CBN the next cannabinoid after THC, CBD, and CBG, to offer strong revenue potential.

Chart 1: Google Search Trend Confirms the Rising Popularity of Cannabinol (CBN) Source: Intro-Blue, Google Trends

Chart 1: Google Search Trend Confirms the Rising Popularity of Cannabinol (CBN)
Source: Intro-Blue, Google Trends

CANNA NEWS

COVID-19

California marijuana tax revenues stall in wake of pandemic, job losses. California took in a record $208 million in excise, sales and cultivation taxes from the cannabis industry in the second quarter of 2020, but growth stalled at 2.5% over the previous quarter – the lowest rate of increase since marijuana tax collections in the state started in 2018. Cannabis sales taxes were the bright spot with 12.1% quarter-over-quarter growth; excise and cultivation tax revenue fell 5.6% and 4%, respectively. The state raised tax rates in January to adjust for inflation, setting the new cultivation rates at $9.65 per ounce of flower, $2.89 per ounce of trim and $1.35 per ounce of fresh cannabis plant. The tax on retail purchases remained at 15%. Read More (Marijuana Business Daily)

Chart 2: California Cannabis Tax Revenue Growth Slows Source: Intro-Blue, Marijuana Business Daily

Chart 2: California Cannabis Tax Revenue Growth Slows
Source: Intro-Blue, Marijuana Business Daily

The legal cannabis industry is creating a new workforce amidst the pandemic. The legal cannabis industry is looking towards the future and “new normal” with expanding, legitimized workforces that have kept the industry alive during a national economic downturn. According to Marijuana Business Daily’s Annual Marijuana Business Factbook, U.S. medical and adult-use cannabis sales will reach at least $15 billion in 2020, an almost 40% increase from last year. It also predicts industry employment could reach almost 300,000 full-time jobs this year, a 50% increase from 2019. To put those figures in perspective, the number of jobs in the cannabis industry would be about the same as the beverage industry and computer programming. It’s important to keep in mind, only 11 states have completely legal adult-use markets. As cannabis becomes legalized in all 50 states, it’s easy to see its employment surpassing other, more established industries. Read More (Forbes)

STATE AND REGULATORY NEWS

U.S. House to delay marijuana legalization vote until after election. A bill to remove marijuana from the Controlled Substances Act and thereby legalize the plant federally won’t be voted on by the U.S. House this week as planned or before the November 3 election. “House Dems have punted a vote on a marijuana legalization bill to the lame duck (session),” tweeted Sarah Ferris, a congressional reporter for Politico. She wrote that “many moderates were furious that the House would vote on weed before taking up a COVID bill, though other Dems called it a social justice imperative.” According to Politico, Congress will return after the election for a lame duck session, and lawmakers and aides have said a vote will occur on the legislation then. In a statement, House Majority Leader Steny Hoyer confirmed such a timetable, saying: “The MORE Act remains a critical component of House Democrats’ plan for addressing systemic racism and advancing criminal justice reform, and we are committed to bringing it to the Floor for a vote before the end of the year.” Read More (Marijuana Business Daily)

States plow forward with pot, with or without Congress. Roughly 1 in 3 Americans could have access to legal recreational marijuana if voters approve state ballot initiatives this November. While a planned House vote on legalizing weed at the federal level is scheduled for later, the real action remains in the states. That’s because even if the House measure passes, there’s zero chance the Republican-controlled Senate will take up the bill, which would eliminate federal criminal penalties and erase some past marijuana convictions. But with the federal government continuing to take a hands-off approach when it comes to cracking down on state-legal markets, five more states could make it legal to buy weed for medical or recreational purposes. Read More (Politico)

Cannabis industry growth potential for 2021. In 2019, about a dozen states were poised to put some form of cannabis-legalization initiative on their ballot referendums. Due to the COVID-19 pandemic and stymied petitioner campaigns, though, that number is now down to five states. Still, if these ballot referendums pass, the cannabis industry could see the expansion of existing markets and the opening of new ones in 2021. The market value of the U.S. cannabis industry is projected to reach $30 billion annually by 2025, according to New Frontier Data. The cannabis industry is diverse and comprises a wide range of businesses. Entrepreneurs need to consider their existing skill set and how they can enter the cannabis industry with expertise under their belt. Cannabis businesses face a lot of challenges, but entrepreneurs can overcome them by forming their company with these challenges in mind and creating the right plan and partnerships. Read More (Business News Daily)

Americans will spend $60 billion on illicit marijuana this year, report says. Studies estimate that between 12% to 14% of adult Americans enjoy cannabis. That’s a massive group of consumers—and they spend billions of dollars every year on marijuana. Unfortunately, according to a new report, more than 71% of that spending goes to the illicit market, due to various forms of cannabis prohibition enforced in 39 states. A new report by the website GrowCola, using data from New Frontier Data’s U.S. Cannabis Report, notes that the American illicit market encompasses roughly $60 billion in annual sales. That compares to around $23 billion in legal medical and adult-use cannabis sales. (State-legal cannabis sales figures are often disputed, as there is no government tally of the federally-prohibited products. Leafly’s 2020 jobs report estimated the size of the legal American cannabis market at around $14 billion). Read More (Leafly) and More (GrowCola)

Chart 3: American Illicit Market Encompasses Roughly $60 Billion in Annual Sales Source: Intro-Blue, Leafly, GrowCola

Chart 3: American Illicit Market Encompasses Roughly $60 Billion in Annual Sales
Source: Intro-Blue, Leafly, GrowCola

 

Chart 4: States Without Medical and Recreational Use Legalization That Generate the Highest Percent of Illicit Cannabis Sales Revenue Source: Intro-Blue, Leafly, GrowCola

Chart 4: States Without Medical and Recreational Use Legalization That Generate the Highest Percent of Illicit Cannabis Sales Revenue
Source: Intro-Blue, Leafly, GrowCola

Vermont lawmakers set to legalize recreational cannabis sales. Vermont could become the second state in the nation to legalize adult-use marijuana sales through its legislature if a compromise measure hammered out by lawmakers passes both chambers and is signed into law in coming weeks. While the legislation has yet to be formally approved by the Vermont Senate and House of Representatives, the Marijuana Policy Project (MPP) expects the bill, S. 54, to pass both chambers. In Vermont, the big question mark is what Republican Gov. Phil Scott will do, MPP spokesman Matt Simon said. “Nobody has a clue” what Scott’s position is on the bill, Simon said. “It’s not a hard no. It’s not a hard yes. It’s a, ‘I’m going to wait and see what they put on my desk.’” Read More (Marijuana Business Daily)

Maine licenses first recreational marijuana manufacturing facility. Maine regulators licensed the state’s first recreational marijuana manufacturing facility along with two adult-use cannabis stores to begin sales when the market launches October 9. According to the Portland Press Herald, Sea Smoke Extracts in Auburn will supply extracted products to South Portland retail store Seaweed Co. as part of the state’s only vertically integrated recreational cannabis business. The Sea Smoke Extracts facility currently extracts cannabis for the Maine medical marijuana market but will now also supply recreational retailers in the state. Read More (Marijuana Business Daily)

Colorado, Illinois, Ohio set records for monthly marijuana sales. Colorado set a record in July, for the first time exceeding $200 million in one month. The Denver Post reported recreational and medical marijuana stores combined for $226.4 million in revenue, up 13.8% from June. Sales are at more than $1.2 billion for the year. In Illinois, recreational cannabis stores sold almost $64 million during August, surpassing the record set in July by more than $3 million, according to the Chicago Tribune. Adult-use cannabis stores have sold more than $360 million since the state began legal recreational sales this January. Ohio set a record for medical marijuana sales at around $21 million for July, the most MMJ sold in one month since January 2019 though much lower than other comparable MMJ programs such as Maryland’s, according to Crain’s Cleveland Business. The state has recorded $120.1 million in total marijuana sales so far in 2020, surpassing the approximately $56 million in total sales in all of 2019. Read More (Marijuana Business Daily)

August marijuana sales in Massachusetts reach new peak. Sales momentum in Massachusetts (MA) that began in July continued in August, with retail revenues in the adult-use sector reaching a new record high for the second consecutive month. The recent surge in sales after retailers were forced to close from late March through late May has pushed up wholesale flower prices in the state. MA’s spot closed August at what was at the time a year-to-date peak. In August, adult-use retailers in MA generated over $78.6 million in revenue, up by 8% compared to July’s over $72.9 million in sales. Average daily sales in August spiked to over $2.53 million, up by 8% from July and also surpassing the previous record high mean daily sales figure of $2.35 million documented in that month. Similar to July, August’s adult-use revenues may also have been boosted by increased out-of-state visitors to MA as the severity of the coronavirus pandemic in the northeastern U.S. subsided. Read More (Cannabis Benchmarks)

California’s revised cannabis sales tax revenues lift gloom of market’s early performance. California released revised cannabis tax revenues which showed significantly higher revenues earned by the state’s legal cannabis industry. The revised numbers indicate that the market performed much better than expected, especially in 2018 – the first year of operation – when the consensus deemed the market’s performance as far below expectations. The revised figures saw 2018’s sales tax revenues up 36% (from $125 million to $169 million); 2019’s revised numbers were up 14% (from $209 million to $239 million), and the first two quarters of 2020 increased by 16% (from $134 million to $155 million). Over the two-and-a-half-year period, the state now reports sales tax revenues of $563 million, up 20% from the initially reported $468 million. Read More (New Frontier Data)

Chart 5: California Revised Sales Revenue Estimates Source: Intro-Blue, New Frontier Data

Chart 5: California Revised Sales Revenue Estimates
Source: Intro-Blue, New Frontier Data

Cannabis demand leading to land rush for growers in many areas. The legal cannabis industry set sales records across the U.S. and Canada over the past six months, according to New Frontier Data, which partially attributed the market’s growth to the COVID-19 outbreak. That lucrative revenue stream has caught the eye of cash-strapped local and state officials, but the surge in interest in cannabis has farmers and land experts worried about competition for the land needed to grow the plant. In recent years, leasable farmland has been harder to come by “because cannabis farmers could pay so much more,” said Maud Powell, an associate professor in the Small Farms Program at Oregon State University. “It’s like a land grab … the green rush, they call it,” she told the Thomson Reuters Foundation. Read More (Greenhouse Grower)

Massive August Complex Fire threatening Northern California ‘Emerald Triangle’ marijuana growing area. The massive August Complex Fire — the largest wildfire outbreak in state history at 794,801 acres and still growing — has advanced toward Northern California’s ‘Emerald Triangle’ of legal and illegal marijuana grows. The fire, burning in rural Mendocino, Humboldt, Del Norte, and Trinity counties, was 30 percent contained with at least 26 structures destroyed. The area is mostly rural, heavily-wooded and has historically been the sources of millions of pounds of legal and illegal marijuana every growing season. Officials said the flames have already burned around the community of Kettenpom in southern Trinity County. It was threatening to push toward Alder Point in Humboldt County and has burned into the ridges outside Covelo in northern Mendocino County. Read More (CBS SF BayArea)

Many of California’s cannabis growers are uninsured and in the line of fire. As the fires burn, cannabis cultivators across the California are racing to finish and harvest their crops. But the fires can be disastrous for this process, in some cases even destroying plants that are spared by the flames. While industry insiders report that these difficulties are unlikely to affect consumers, they could be a nightmare for the businesses that supply them. Growers are being hurt worse than most other businesses hit by fire: Cannabis crops are more difficult to insure because growing the plant is still illegal under federal law. Some cannabis businesses have already suffered because of the fires, such as Sweet Creek Farms in Sonoma County, which sustained building damage and lost the majority of its cannabis crop in August during the Walbridge Fire. The company estimates about $150,000 in losses from the crop, which wasn’t insured. Read More (SFGate)

Pritzker’s team to meet with critics of marijuana licensing process. Amid a flurry of complaints that the marijuana licensing process is flawed, Gov. J.B. Pritzker’s office announced that his team will meet with those affected to address the issue. “The Governor’s office is currently working to schedule meetings with interested stakeholders, however, meeting dates and times have not been finalized,” Pritzker’s press office wrote in response to a Tribune inquiry. “The goal of the Governor and the administration is to take time to ensure that the process is fair and equitable.” Just 21 of some 700 applicants qualified for a lottery to determine who will get 75 new recreational marijuana retail licenses. Since the finalists were revealed early this month, state regulators said they have indefinitely delayed the lottery to review objections. Read More (Chicago Tribune)

U.S. cannabis spot index up 1.4% to $1,570 per pound, October forward assessed up $35 to $1,495 per pound. The simple average (non-volume weighted) price increased $3 to $1,796 per pound, with 68% of transactions (one standard deviation) in the $953 to $2,638 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the spot price was $3.46 and the simple average price was $3.96. The average reported forward deal size was 27 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 38%, 37%, and 25% 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

Canada’s recreational marijuana sales grow to record CAD $231 million. Retail sales of adult-use cannabis in Canada grew yet again in July, increasing by 15.2% over June’s record to another high of CAD $231.6 million ($175.6 million). The July sales imply an annual Canadian marijuana market worth nearly CAD $2.8 billion. Monthly sales of regulated recreational cannabis increased across all Canadian provinces, Statistics Canada reported. Ontario, the largest province by population, saw monthly sales increase by 23.5% to CAD $60.3 million. The growth came after Ontario’s cannabis store license count surpassed 100 in June, a start to addressing the province’s deficiency in cannabis retail outlets. Read More (Marijuana Business Daily)

Chart 9: Adult-Use Cannabis Sales by Month in Canada Source: Intro-Blue, Marijuana Business Daily

Chart 9: Adult-Use Cannabis Sales by Month in Canada
Source: Intro-Blue, Marijuana Business Daily

Alberta cannabis new store openings expected to grow at a slower pace through 2020. Alberta is the fourth most populous province with 10% of the country’s population, but it is home to 515 cannabis stores as of August 31, or 48% of all physical retailers nationwide. The number of new stores opening in Alberta each month has slowed as major cities like Calgary and Edmonton are becoming saturated. Cannabis Benchmarks (CB) expect new store openings to continue to grow at a slower pace through the end of the year, resulting in a total of 600 stores by the beginning of 2021. CB’s latest forecast for Alberta has sales growing, but at a reduced pace due to the slowdown in new store openings and overall saturation. It projects December sales to reach CAD $51.3 million and total Alberta sales for 2020 to reach CAD $540 million. Based on this forecast, sales in 2020 will amount to more than double those in 2019. This is a positive sign for regulators and market participants who are looking for the legal cannabis system to take a bigger chunk out of the illicit trade. Read More (Cannabis Benchmarks)

Chart 10: Alberta Cannabis Store Count Source: Intro-Blue, Cannabis Benchmarks

Chart 10: Alberta Cannabis Store Count
Source: Intro-Blue, Cannabis Benchmarks

 

Chart 11: Monthly Alberta Legal Cannabis Sales Source: Intro-Blue, Cannabis Benchmarks

Chart 11: Monthly Alberta Legal Cannabis Sales
Source: Intro-Blue, Cannabis Benchmarks

COMPANY NEWS

Cresco Labs bolsters leadership team with three senior promotions. Cresco Labs (CRLBF) has announced it has expanded its leadership team with the promotions of David Gacom, Melissa Wagamon and Sean McAlister to regionally focused president positions. These dynamic individuals, who bring a depth of experience in operations, marketing and sales through previous leadership roles at top CPG companies like MillerCoors, PepsiCo and The Kraft Heinz Company, will be focused on accelerating growth across the company’s geographic footprint. As the organization continues to scale, they will be accountable for driving the company’s strategic agenda across its nine states, delivering top-line growth and finding new ways to drive cost synergies in regional operations. In addition, these individuals will serve as the face of Cresco Labs amongst key state and local community leaders to ensure the company is investing in what matters most to its stakeholders. Read More (Cannabis Business Times)

Curaleaf appoints Talley Wettlaufer senior vice president of retail. Curaleaf (CURLF) announced that Talley Wettlaufer has been appointed to the role of senior vice president, Retail for Curaleaf effective immediately, succeeding Chris Melillo, who has left the company. “As Curaleaf continues on its growth trajectory, we are extremely pleased to appoint Talley to lead our retail customer experience and position our brands for future success. With an impressive track record for building high performing retail operations at Grassroots Cannabis, Talley brings seasoned industry leadership as well a deep expertise driving growth and perfecting the customer experience at some of the most well-known consumer retail brands. On behalf of the entire Curaleaf team I’d like to congratulate Talley on her new role,” said Joe Bayern, president of Curaleaf. Read More (Newswire)

Trulieve enters fifth state with two acquisitions in Pennsylvania, creating a vertically integrated operation. Trulieve (TCNNF) announced that it has entered into definitive agreements pursuant to which Trulieve has agreed to acquire cultivator and producer PurePenn LLC and Pioneer Leasing & Consulting LLC as well as dispensary operator Keystone Relief Centers LLC, doing business as Solevo Wellness. Key transaction benefits: 1) Delivers an accretive transaction on an EBITDA basis; 2) Broadens Trulieve’s multi-state footprint to Pennsylvania, the fifth most populated and limited-license state, adding to Trulieve’s existing operations in Florida, California, Massachusetts, and Connecticut; 3) Expands Trulieve’s cultivation footprint with the addition of one of Pennsylvania’s leading cultivators and producers with 35,000 square feet of existing cultivation, with planned expansion to 90,000 square feet by Q1 2021. Read More (Newswire)

Hexo announces fourth chief financial officer in two years. The chief financial officer carousel is turning once again at cannabis producer Hexo Corp. (HEXO). The Ontario, Canada-headquartered company said Trent MacDonald will take over as the company’s next CFO. That is expected to happen “in the coming months” after the successful completion of Health Canada’s key personnel change and security clearance processes, according to the company’s announcement. MacDonald will succeed Stephen Burwash, who will remain as CFO through the transition. MacDonald will be Hexo’s fourth CFO in the past two years – the fifth if you consider that Burwash served as CFO twice, including once in an interim capacity. Read More (Marijuana Business Daily)

Inner Spirit Holdings announces additional strategic investment to fund Spiritleaf corporate store expansion across Canada. Inner Spirit (INSHF) announced a third meaningful investment by an existing institutional shareholder. The company has closed a private placement offering for aggregate gross proceeds of $720,000, issuing 6,000,000 common shares of the company at $0.12 per share to a UK-based independent private equity firm. The common shares are subject to a four-month hold period in accordance with applicable securities laws. This is the third private placement financing completed with the UK-based firm, which now holds 9.7% of the issued and outstanding common shares, bringing the firm’s total investment in the company to $2.4 million. Read More (Newswire)

Canopy Rivers to write down $32.7 million PharmHouse equity investment and provide DIP financing. Canopy Rivers (CNPOF) announced that PharmHouse, the company’s 49%-owned joint venture in Leamington, Ontario, has obtained an order from the Ontario Superior Court of Justice granting PharmHouse creditor protection under the Companies’ Creditors Arrangement Act (CCAA). Ernst & Young has been appointed by the court to act as the monitor of PharmHouse in the CCAA proceedings while PharmHouse explores a restructuring of its business and operations. Canopy Rivers views PharmHouse’s decision to seek creditor protection as an important step forward in addressing its liquidity and capital resource concerns, determining the most effective way to conduct business going forward, and maximizing value for its stakeholders. Read More (New Cannabis Ventures)

EARNINGS

Fire & Flower’s revenue spikes 158% Y/Y in fiscal Q2 2020. Fire & Flower Holdings (FFLWF) reported a 158% Y/Y revenue increase to $28.6 million in the second quarter of fiscal 2020. Moreover, it posted a negative adjusted EBITDA of $300,000 versus a $4.8 million loss in the same quarter last year. Chief executive Trevor Fencott said the company continues to “drive towards delivering positive adjusted EBITDA,” adding that they have made “meaningful progress towards this critical goal during the quarter.” Fire & Flower posted that its total expenses amounted to $12.5 million. Loss from operations was $2.56 million. Over the quarter, the Edmonton, Alberta-based company managed to repay debt worth $28.2 million. Read More (Newswire)

High Tide posts sequential revenue growth. High Tide (HITI-CA) reported revenue of CAD $23.2 million ($17.6 million) for the quarter ended July 31, an 18.6% increase over the previous quarter’s revenue. Three-quarters of High Tide’s income for the quarter was earned in Canada, where the company currently operates 37 cannabis retailers in Ontario, Alberta and Saskatchewan under the Canna Cabana and KushBar banners. Twenty-three percent of High Tide’s quarterly revenue came from the U.S., where it operates e-commerce platforms Grasscity.com and CBDcity.com, as well as cannabis accessory distributors Famous Brandz and RGR. The Calgary, Alberta-based company reported net income of nearly CAD $4.3 million for the quarter. Read More (Marijuana Business Daily)

Meta Growth reports 1.8% Q/Q sales growth in the May quarter. Meta Growth reported recreational revenue of roughly CAD $13.7 million ($10.4 million) for the quarter ended May 31, an increase of 1.8% over the previous quarter. Meta Growth’s net loss for the quarter was nearly CAD $23.2 million, including a CAD $22.1 million impairment loss related to stores in Alberta, Manitoba and Saskatchewan. The company divested its medical cannabis assets in the quarter and acquired two new recreational stores in Ontario. As of May 31, Toronto-based Meta operated 23 stores in Alberta, one in Saskatchewan and eight in Manitoba, including three in partnership with First Nations. Read More (Newswire)

CAPITAL MARKETS

Capital raising in cannabis falls 67%. Raising capital in the cannabis industry has declined by 67% in 2020, according to the most recent data from Viridian Capital Advisors. The company tracks capital raising within the industry — both public and private. For the first six months ending in June, Viridian found that there were 166 capital raises for $2.6 billion, a big drop from 2019’s first six months raise of $5.5 billion and 230 transactions. The largest deals that happened during the first half of 2020 included the Curaleaf/Select (CURLF) acquisition and the Cresco/Origin House (CRLBF). Curaleaf did a debt deal valued at $300 million and Innovative Industrial Properties (IIPR) was second on the list with an equity raise of $250 million. Public companies accounted for 89.2% of the capital raises and 67.5% of the total capital raised. Just 32 private companies managed to raise money in the first half of 2020. This pales in comparison to 2019 when 109 private companies raised capital. Read More (Real Money TheStreet)

Cannabis companies with specific plans for new funding find success at raising capital. Capital markets remain very tight, but they started to open up again for marijuana companies in the third quarter of 2020, as shown in Viridian Capital Advisors’ deal tracker. Yet demand remains much greater than the supply of available funding, driven by the capital intensity of the industry and the limited participation by most institutional investors because of continued federal illegality of marijuana in the U.S. So what are the common characteristics of companies that have been able to raise equity capital? In a nutshell: the ability to articulate a high-return specific use for the new capital raised. Broadly for the industry, strong second-quarter results in the face of COVID-19 have proved that cannabis companies have viable business models, which is driving increased investment interest. Read More (Marijuana Business Daily)

The FANGification of cannabis stocks. We’ve long spoken about the FANGification of U.S. cannabis and the emergence of a modern-day four horsemen. Most of us still remember how Intel, Dell, Microsoft and Cisco drove the dot-com era, only to be replaced by Facebook, Amazon, Netflix and Google in Tech 2.0. Or how Canopy Growth (CGC), Aurora Cannabis (ACB), Aphria (APHA) and MedReleaf were the main attractions in Cannabis 1.0 (Canadian cultivation). With the release of second quarter earnings last month, we’ve gained further clarity on U.S cannabis’ Fab Four. They are, in no particular order: Curaleaf (CURLF) ($165.4 million pro-forma revenues; $28 million adjusted EBITDA), Green Thumb Industries (GTBIF) ($119.6 million revenues; $35.4 million adjusted EBITDA), Trulieve (TCNNF) ($120.8 million in revenues; $60.5 million adjusted EBITDA), and Cresco (CRLBF) ($94.3 million revenues; $16.5 million adjusted EBITDA). To be sure, there are other quality U.S operators— Terrascend (TRSSF), Columbia Care (COLXF) and 4Front Ventures (CNXXF), among others, come to mind—and with an estimated $85 billion TAM by 2030 (per Cowen Research), there will be plenty of opportunities to go around. Read More (Investopedia)

Chart 12: Canopy Growth, Aurora Cannabis, and Aphria – % Price Change  Source: Intro-Blue, Investopedia, YCharts

Chart 12: Canopy Growth, Aurora Cannabis, and Aphria – % Price Change 
Source: Intro-Blue, Investopedia, YCharts

 

Chart 13: Curaleaf, Green Thumb Industries, Trulieve, and Cresco Labs – % Price Change Source: Intro-Blue, Investopedia, YCharts

Chart 13: Curaleaf, Green Thumb Industries, Trulieve, and Cresco Labs – % Price Change
Source: Intro-Blue, Investopedia, YCharts

What matters for cannabis investors heading into the November elections? U.S. senator Chuck Schumer highlighted what many following the cannabis trade already knew: Cannabis is a bipartisan issue that will be a pivotal election issue with votes attached to all political supporters. Cannabis investors also know there are two reasons why leading cannabis companies in the U.S. are outperforming even the manic market moves of Apple and Amazon over the last six months: opportunity and execution. So, who should be more excited about embracing this generational movement, investors or politicians?  And with so much hope around the November election, will the politicians seize the cannabis moment or kill the buzz? After years of playing second fiddle to Canadian cannabis companies who were able to list on U.S. stock exchanges and raise money from U.S. investors while they could only do this in Canada (or anywhere not in the U.S.), U.S. cannabis companies have recently stepped to the front of the pack. And after more than two years of promise with no delivery, the cannabis industry is finally delivering profitability. Read More (CNBC)

Coin shortage lays bare cannabis industry’s payments problem. With the coronavirus crippling economic activity in the U.S., the circulation of coins has dropped off significantly. “We still can’t operate like other businesses, unfortunately,” says Jerry Millen, owner of the Greenhouse of Walled Lake, a fully licensed medical and recreational cannabis dispensary in Michigan. Seeing the coin shortage affect his bottom line, Millen took note of how other local businesses were responding to the crisis. Some were simply encouraging customers to pay with exact change or with credit cards or debit cards, he says, while others were turning the crisis into a marketing opportunity. Other dispensaries across the country have been navigating the coin shortage reasonably well. Aaron Varney, director at Dockside Cannabis in Seattle, said the crisis made day-to-day transactions more complicated for several weeks but has not severely impacted operations. One reason is that cannabis customers have become accustomed to a cash-payment experience, and the coin shortage is just another minor inconvenience, Varney says. Read More (Cannabis Business Times)

New wave of multistate marijuana operators hope they have the ‘secret sauce’ to succeed. Marijuana Business Daily identified four MSOs to watch in the next year, but many others are expanding operations in multiple markets as well. The four – New York-based Ascend Wellness Holdings (AWH), Maryland-based Holistic Industries, Florida-based Jushi Holdings (JUSHF) and Atlanta-based Parallel – have a few factors in common: Strong financial backing or the ability to secure funding via capital markets that are beginning to loosen up, an expanding footprint in new or existing markets through build-outs or targeted acquisitions, and a strategy focused on markets that have high-growth potential and limit the number of available licenses. Lee Dorkin, founder of Colorado-based Emprouen Advisors, a cannabis management and consulting firm, said he is still seeing too many MSOs with a strategy based on how quickly they can expand their geographic footprints, acquire assets and exit at a profit. “That’s putting the cart before the horse. It’s a compression of the realistic time needed (to perform) due diligence, acquire and integrate companies, streamline operations, stabilize leadership, and benefit from the roll-up (of assets).” Read More (Marijuana Business Daily)

Chart 14: Multistate Operators to Watch Source: Intro-Blue, Marijuana Business Daily

Chart 14: Multistate Operators to Watch
Source: Intro-Blue, Marijuana Business Daily

MedMen inks financing commitments near $20 million. MedMen Enterprises (MMNFF) has raised roughly $20 million of financing, with $11.7 million committed now, in a series of complex transactions with existing lenders and institutional investors. The Los Angeles-based company said in a news release that the financing package is a “reflection of the commitment the company has made to strengthen the balance sheet, accelerate its path to profitability and sustainability and focus on its core retail business.” How well MedMen is doing in terms of that refocus will become more apparent when the company releases its full fiscal year results on September 28. MedMen slashed its workforce and other operating expenses in late 2019 and has undergone leadership changes in efforts to strengthen its financial position. Read More (Marijuana Business Daily)

Trulieve raises CAD $100.45 million selling shares at CAD $24.50. Trulieve (TCNNF) announced that it has entered into an agreement with Canaccord Genuity, pursuant to which the underwriter has agreed to purchase, on an underwritten basis, 4,100,000 subordinate voting shares of the company at a price of CAD $24.50 per offered security, for aggregate gross proceeds to Trulieve of CAD $100,450,000. The offered securities will be offered in each of the provinces of Canada, other than Québec, pursuant to a prospectus supplement to the company’s base shelf prospectus dated May 14, 2019 and in the U.S. on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended. The offered securities may also be offered elsewhere on a private placement basis. Read More (New Cannabis Ventures)

Holistic Industries raises $35 million. Holistic Industries, a Maryland-based multistate cannabis operator, said it raised $35 million in debt financing to fund cultivation and processing build-outs as well as new licensing and distressed asset opportunities. The funding round was led by Virginia-based specialty financing company Altmore Capital. The financing comes as marijuana capital markets begin to loosen some. Holistic also recently raised $6.2 million from the sale and leaseback of a marijuana cultivation, processing and retail facility in a Detroit suburb. Read More (Marijuana Business Daily)

VIVO Cannabis restructures $27 million convertible debt. VIVO Cannabis (VVCIF) announced that the holders of its 6% unsecured convertible debentures dated February 28, 2018, due on February 28, 2021, have approved certain amendments to the debentures by way of extraordinary resolution of the holders. As a result of these amendments, the company will have $6.6 million in outstanding 6% convertible debentures, due September 15, 2022, compared to $27.1 million prior to the amendments. The amendments are expected to become effective on or about September 17, 2020. Concurrent with the prepayment of the debentures, the company intends to repay the $3,500,000 principal amount outstanding on its 7% unsecured convertible debentures due December 21, 2020. Read More (New Cannabis Ventures)

Lift & Co. files for bankruptcy. Lift & Co. (LFCOF), a Toronto-based cannabis events and marketing firm, has filed for bankruptcy. The announcement comes after Lift failed to sell off its consumer and trade marketing divisions, along with its CannSell training program and other assets, according to the company. Lift said that it had been “negotiating a significant equity investment in its events division by a global strategic investor” before the COVID-19 pandemic hit. The proceeds of that deal would have used been used to grow its marketing operations. “The onset of the pandemic resulted in that potential transaction being aborted and also in cash flow from the events division essentially ceasing,” said Lift. Although Lift said it was “on the cusp” of selling its marketing division to an interested buyer, it was unable to reach an agreement on the deal with holders of its secured convertible debentures, worth CAD $3.5 million ($2.7 million). Those debentures matured on September 10, and Lift lacked the capital to repay them “or to continue carrying on its business.” Read More (Marijuana Business Daily)

Medical cannabis companies cleared for London stock market but recreational cannabis stocks still remain banned. Medicinal cannabis companies have been cleared by the UK’s financial regulator to float on the London Stock Exchange but firms that sell marijuana to recreational users will still be banned. The Financial Conduct Authority said businesses that grow and sell recreational cannabis, even in countries such as Canada where it is legal, cannot list in London because of the Proceeds of Crime Act. Income from the sale of cannabis and cannabis oil outside the UK could constitute “criminal property” under the act, because it covers conduct abroad that would constitute a crime if it happened in the UK. But the regulator said UK medical cannabis firms could float in London, as could overseas firms, although they would have to satisfy the regulator that they should be allowed to do so because of the more nuanced legal position. Read More (The Guardian)

German CBD maker secures undisclosed investment after €5 million valuation. A German CBD extractor has secured funding of an undisclosed amount from an independent investor in Hamburg who valued the company at €5 million ($5.9 million). Signature Products GmbH did not disclose the size of the investment but said in a statement that the investor’s appraisal makes it the youngest cannabis startup with the highest valuation in Europe. Signature Products also did not say whether the investor acquired an ownership stake. Founded in June 2019, Signature Products oversees its own hemp supply chain and offers services in biomass trade, distillation and extraction, bottling, white labelling, market research and consulting. “Unfortunately, we are not allowed to say who our investor is,” Signature Products co-founder and CEO Florian Pichlmaier told Hemp Industry Daily. “This will be kept confidential for strategic reasons until [official] registration.” Read More (Hemp Industry Daily)

MEDICAL CANNABIS

In strange twist, Iowa is actually doing something right on marijuana reform. Iowa is one of the worst states in the U.S. for common-sense marijuana reform but now the state’s cannabis regulators plan to seek an exemption from the federal Controlled Substances Act, they said at a meeting this month. Iowa could be the first state to receive such an exemption, earning federal legal status a long list of tangible benefits to the state government, businesses and patients. Iowa passed a law this year that tinkers with the cannabis program, including a section directing staff to “request guarantees” that schools and long-term care facilities won’t lose federal funding if they administer medical CBD. The way to secure funding is to ask the federal government to exempt Iowa’s program from marijuana prohibition, leaders said at the Iowa Medical Cannabidiol Board meeting. Carl Olsen, a top medical marijuana advocate in Iowa, has lobbied state government officials for more than a year to seek compliance with federal law through a federal exemption. Read More (The Gazette)

Iowa awards two additional medical cannabis dispensary licenses. Iowa regulators awarded medical marijuana dispensary licenses to operators in Iowa City and Council Bluffs to replace two outlets that closed in March. The licenses will bring the state back up to five dispensaries, according to The (Cedar Rapids) Gazette. The dispensary licenses were awarded to Iowa Cannabis Company East in Iowa City and Cannabis Patient Network in Council Bluffs. Should the firms not accept the licenses, regulators have other applicants from which to choose. The state’s three other licensed dispensaries are in Waterloo, Sioux City and Windsor Heights. Read More (Marijuana Business Daily)

Arkansas medical marijuana sales reach $143 million. Arkansas medical marijuana stores have sold $143 million worth of medical cannabis since sales began in May 2019. Another way to put it: Arkansas dispensaries have sold 22,350 pounds of medical marijuana in about a year and a half. According to the Arkansas Medical Marijuana Commission (AMMC), the 80,000-plus registered MMJ patients in the state are collectively spending $600,000 a day. “With 29 dispensaries in operation, this is an average of $20,689 spent daily at each dispensary,” Scott Hardin, commission spokesperson, wrote in an email to Marijuana Business Daily. Read More (Marijuana Business Daily)

Michigan medical marijuana market could reach $3 billion in sales. Andrew Brisbo, executive director of the Michigan Marijuana Regulatory Agency, says Michigan’s cannabis sales could reach $1 billion in 2020. Whether it gets that high this year or not  (it had already pushed past $200 million in July), he projects the market could reach as high as $3 billion in the coming years. Brisbo based his projection on numbers he has seen since the coronavirus pandemic hit the U.S. in March. Marijuana sales skyrocketed, setting records for five weeks in a row for both medical and adult-use cannabis. “Overall, the industry has been going like gangbusters during the pandemic,” Brisbo said in an interview with Benzinga. “There’s been a tremendous interest in cannabis in Michigan. I think a lot of people are using it for self-medication, easing of the mind, and stress reduction.” Read More (Green Entrepreneur)

New Jersey adding more medical cannabis dispensaries. New Jersey, currently home to only 11 medical marijuana dispensaries, got its 12th on September 17 – in advance of even more opening in the coming months. Garden State Dispensary is set to open its third location, in Eatontown, NJ.com reported. The company already operates dispensaries in Union and Woodbridge. In addition, TerrAscend (TRSSF), MPX NJ (MPXOF) and Harmony plan to open more dispensaries, in Phillipsburg, Atlantic City and Hoboken, respectively. On top of that, Curaleaf (CURLF) announced it will open its second New Jersey dispensary in early 2021, in Bordentown, NJ.com reported. Those openings will bring the state’s MMJ dispensary total to 16, two short of the currently allowable total of 18. Read More (Marijuana Business Daily)

Missouri sends $2.1 million in medical marijuana revenue to military veterans health programs. The first-ever transfer of cannabis revenue to a state veterans fund just place, with more than $2.1 million routed from the Department of Health and Senior Services (DHSS) to the Missouri Veterans Commission (MVC), where it will fund health services for those who have served in the military. The payment comes just ahead of the opening of Missouri’s first medical cannabis dispensaries, which regulators said are expected to begin business later this month. A provision in the state’s medical marijuana law that was passed by voters in 2018 routes all state cannabis revenue after expenses to the veterans commission. While taxes won’t begin flowing until sales begin—a 4 percent tax will be taken at dispensaries—the state has already collected millions in license and registration fees from businesses and patients. Read More (Marijuana Moment)

CBD/HEMP

FDA action on CBD remains TBD as producers bide time. The CBD industry is struggling: Amid disruption by the COVID-19 outbreak and supply-chain shortages, the industry also finds itself mired in regulatory uncertainty due to a ponderous attitude by the U.S. FDA in regulating CBD. At the heart of the issue for the FDA is whether CBD should be allowed as a dietary supplement or limited as a pharmaceutical ingredient. For its part, the FDA finds itself between a rock and a hard place. On the one hand, there is already massive consumer interest in CBD. On the other hand, the FDA is concerned about the safety of CBD. As the FDA continues to grapple with CBD, a key point of consideration will be how people are currently using it. While discussions about CBD concern the substance’s medical effects, the fact is most consumers do not use CBD for medical reasons. According to the U.S. CBD Consumer Report: Archetypes and Preferences, Volume 1, approximately 91% of CBD users report using it primarily for nonmedical purposes, including pain management and general relaxation. Read More (New Frontier Data)

Chart 15: Primary Reason for Using CBD  Source: Intro-Blue, New Frontier Data

Chart 15: Primary Reason for Using CBD 
Source: Intro-Blue, New Frontier Data

Federal hemp underreporting is a huge problem for the industry – but there’s still time. While markets such as wheat, corn and soybeans reacted to initial projections and published data in both the cash and futures markets, the hemp industry currently stands at a juncture of wondering how the landscape can change so dramatically on a yearly basis. The latest federal report of approximately 62,000 planted acres of hemp is not only a significant deviation from last year, when 146,650 acres were counted, but also a stark realization that the hemp industry probably doesn’t have the whole picture. The total number of reported acres is far lower than industry expectations and appears to be underreported – a troubling sign that could hurt the industry as a whole. Fortunately, the FSA is giving hemp producers more time to submit their reports. Read More (Hemp Industry Daily)

CBD, infused-product markets poised for ‘dramatic growth’: Report. Operators in the CBD and infused cannabis products markets have tremendous opportunities for growth, particularly those that understand and cater to an evolving consumer base, according to a new industry report titled “Cannabis-Infused Products: Navigating the Complexities to Market, Vol. 2,” published by New Frontier Data. Twelve percent of all cannabis products sold in the U.S. from January to September were infused products, according to the report. That percentage is the third-highest product category, following flower (41%) and vape products (29%). In legal U.S. markets, sales of high-THC infused products were on track to account for about $2.2 billion in sales this year, a 37% increase over 2019, according to the findings. Further, the report found, about one in six U.S. adults reported purchasing at least one CBD product, “suggesting a nascent but fast-growing market.” Read More (WeedWeek)

Bulk hemp flower & pre-packaged hemp flower pricing trend: CannTrends. The current price CBD hemp flower stands at $165 per pound, while pre-packaged CBD hemp flower is selling at $214 per pound. There is still a considerable price gap of 29.6%, but compared with CannTrade’s original benchmark price trends in May, the price gap has decreased by 11.65% from the initial 41.25% price trend difference between bulk and pre-packaged hemp flower. The overall price difference between bulk CBD flower and pre-packaged CBD flower has decreased considerably in the middle of the second quarter, from May through July. Respectively each product has also seen a decrease in price since May, at 22.67% price decrease for bulk hemp flower and a 44.12 % price decrease for pre-packaged hemp flower, a collective 33.4% price drop since May 2020. These decrease for bulk and pre-packaged hemp flower is likely related to many factors but the most notable is the 2020 hemp harvest seasons which has also caused a steady decline in hemp biomass, crude, distillate and isolate pricing. Read More (CannTrade)

Chart 16: Bulk Hemp Flower Pricing Trend (2020) (per lbs.) Source: Intro-Blue, CannTrade

Chart 16: Bulk Hemp Flower Pricing Trend (2020) (per lbs.)
Source: Intro-Blue, CannTrade

 

Chart 17: Hemp Flower – Bulk vs Prepackaged Price Trends (2020) (per Gram) Source: Intro-Blue, CannTrade

Chart 17: Hemp Flower – Bulk vs Prepackaged Price Trends (2020) (per Gram)
Source: Intro-Blue, CannTrade

 

Chart 18: Hemp Flower – Bulk vs Prepackaged Price Trends (2020) (per lbs.) Source: Intro-Blue, CannTrade

Chart 18: Hemp Flower – Bulk vs Prepackaged Price Trends (2020) (per lbs.)
Source: Intro-Blue, CannTrade

 

Chart 19: Texas Hemp Licenses August 2020 Source: Intro-Blue, CannTrade

Chart 19: Texas Hemp Licenses August 2020
Source: Intro-Blue, CannTrade

Wildfires destroying hemp crops in California, Oregon. Massive wildfires burning up and down California and Oregon are ravaging hemp farms, destroying an untold number of properties and causing millions of dollars in losses. The fires are engulfing farms as hemp harvest begins in some places, destroying the investments of some farmers for whom 2020 was their first year cultivating. Twenty-eight active, major fires in California have scorched 4,375 square miles, The Associated Press reported. In Oregon, over a million acres have burned during the second week of September, Gov. Kate Brown said. About 500,000 acres (781 square miles) usually burn each year, she said. There was no immediate word how many hemp acres may have been damaged or destroyed. Oregon and California are among the 10 biggest hemp producers in terms of acres, according to Hemp Industry Daily’s 2020 Hemp Harvest Outlook. Read More (Hemp Industry Daily)

NY hemp producers want Cuomo to issue rules for extracts before temp regulations expire. New York hemp growers and processors want Gov. Andrew Cuomo to issue guidelines from a bill last year to regulate the sale of extracts from the plant, like CBD, before 2014 Farm Bill pilot provisions expire on October 31. The bill Cuomo signed last year would regulate CBD-infused products like tinctures, lotions and salves, but the law doesn’t cover CBD in food and drinks, Syracuse.com reported. NY has some 700 hemp growers, producing thousands of pounds for more than 100 in-state processing facilities this fall, according to Hemp Industry Daily‘s 2020 U.S. Hemp Harvest Outlook. “It’s going to be a disaster if they have to sit on this much hemp,” said Allan Gandelman, a Cortland hemp grower and processor who is also president of the New York Cannabis Growers and Processors Association. “We need these regulations now.” Read More (Hemp Industry Daily)

Judge blocks Texas ban on smokable hemp until trial on matter ends. A Texas judge is blocking authorities from enforcing the state’s smokable hemp ban until a trial resolves the dispute between hemp producers and the health department. Travis County Judge Lora Livingston said in a ruling that the group of hemp producers suing state health authorities who enacted the ban “have demonstrated a probable right to relief” sufficient to warrant a temporary injunction. The injunction will be in place until the conclusion of a trial scheduled set for February 1. The order from Judge Livingston prevents the Texas Department of State Health Services from enforcing its ban on the manufacture, processing, distribution, or retail sale of consumable hemp products for smoking, which took effect August 2. Read More (Hemp Industry Daily)

CBD market sizing: The art and science. Market size estimates help companies understand the expected sales trajectory of a given product. This in turn helps businesses outside the industry decide whether or not to enter the market. CBD can be found in an increasing array of infused products typically found in the mainstream consumer packaged goods (CPG) market. However, accurately projecting the true size of the CBD market is complicated by factors not usually seen in CPG categories. Traditional market research providers like Nielsen, IRI, NPD, and others have a wealth of inputs at hand when building models to size and forecast a category. However, CBD is a rapidly developing market in an ever-changing industry. Not only are product formats exploding, sales and distribution channels continue to proliferate. Read More (Cannabis Business Executive)

Chart 20: U.S. CBD Market Size Estimations Source: Intro-Blue, Cannabis Business Executive

Chart 20: U.S. CBD Market Size Estimations
Source: Intro-Blue, Cannabis Business Executive

Iconic Playboy brand launches new CBD intimacy product line. American publishing icon Playboy has entered the CBD market with a line of products that aims to enhance intimacy and sexual wellness. CBD by Playboy includes an arousal spray retailing for $45, intimacy warming gel for $47 and a bath bomb for $15, according to AdAge. Playboy has partnered with online class platform Allbodies to develop a three-part education course to accompany its products. Customers can buy the CBD products, along with other goods, and sign up for the courses on Playboy’s new website, Pleasure For All. “Our ambition at Playboy is to help everybody and everybody explore and pursue pleasure,” Anita Little, sex and culture editor at Playboy, said in a statement. Read More (Hemp Industry Daily)

CBD could spark booming market in Canada if it’s legalized for health products. CBD has “significant potential for growth” in Canada if the government were to allow the cannabinoid in natural health products, a think-tank predicts. A report released by the Canadian Health Food Association estimated the CBD market in Canada at CAD $1.9 billion ($1.44 million), with immense potential for exporting CBD to other countries. Currently it is illegal to bring non-prescription CBD health products into Canada’s marketplace. But if the country were to do so, the Institute of Fiscal Studies and Democracy estimates that Canada could get a huge windfall. The group projected that legal changes allowing CBD in Canada would lead to a market worth CAD $2.45 billion ($1.86 billion) by 2023. Read More (Hemp Industry Daily)

RETAIL

Manitoba considering on-site consumption licenses. The Liquor, Gaming and Cannabis Authority of Manitoba (LGCA) launched public consultations to determine the level of entrepreneurial and consumer demand for a potential new type of cannabis license. This license would authorize on-site service and consumption of edible or ingestible cannabis products. For example, this could allow for cafés serving cannabis edibles, or for spas applying topical cannabis products as part of their services. “We are seeking the input of Manitobans to better understand their level of comfort with edible and ingestible cannabis products, licensed consumption spaces, and whether there is a desire for these types of businesses or services,” says Kristianne Dechant, executive director and CEO of the LGCA. Read More (Cannabis Retailer)

Province moving its Ontario Cannabis Store distribution center to Guelph. Guelph will soon be home to the provincial distribution centre for legal cannabis. The Ontario Cannabis Store (OCS) distribution center is relocating to Guelph from its Oakville location as the cannabis industry rapidly grows. “We have begun the process and we are looking to have the Guelph facility operational in early October,” said Daffyd Roderick, senior director of communications and social responsibility for OCS. “It will be running the exact same service. It’s just a much larger facility.” Exact location and size of the facility were not revealed. OCS communications manager Joanna Hui said the number of employees at the new location is not known, but that it “will definitely grow beyond the current 100.” Read More (Guelph Today)

PRODUCTS

Marijuana vape firms say one year after vaping crisis, customers turning to legal suppliers over illicit market. A year after the vaping health crisis upended the cannabis industry, marijuana vape companies report that sales have rebounded as consumers grasp the danger of consuming illicit-market vaporizers and switch to legal suppliers. The outbreak of e-cigarette or vaping product use-associated lung injury (EVALI) in the summer of 2019 slowed the growth of some companies and stifled sales toward the end of the year. “We believe the bigger lesson here is that the data clearly indicate that there were fewer cases of lung illnesses and injury in states where legal, regulated cannabis products were available,” said Steve Fox, strategic adviser to the Cannabis Trade Federation. “In fact, the lowest rates of incidence were in Colorado, Washington and Alaska – three of the first four legal states – with Oregon and Nevada close behind.” Read More (Marijuana Business Daily)

Chart 21: States Where Cannabis is Legal Had Fewer EVALI Cases Source: Intro-Blue, Marijuana Business Daily, Headset

Chart 21: States Where Cannabis is Legal Had Fewer EVALI Cases
Source: Intro-Blue, Marijuana Business Daily, Headset

 

Chart 22: Monthly Vape Sales and Market Share Source: Intro-Blue, Marijuana Business Daily, Headset

Chart 22: Monthly Vape Sales and Market Share
Source: Intro-Blue, Marijuana Business Daily, Headset

Consumer awareness biggest hurdle for cannabis beverage makers. While the cannabis-infused beverage category is expanding rapidly, product awareness and brand awareness lag behind, according to a survey of 1,000 U.S. cannabis consumers fielded July 2nd through July 16th, 2020 by consumer insights firm SoapBoxSample. Results revealed that the top reason cited for not having tried cannabis beverage products is that 45% of consumers simply did not know they existed. Meanwhile, those who have tried it are likely to try it again. The most popular types of beverages consumers have tried and say they will have again are juice or fruit punch (68%), hot chocolate (61%) and non-alcoholic wine (60%). Certain categories of cannabis-infused beverages have even become a part of some consumers’ weekly routines including coffee (42%), tea (42%) and juice or fruit punch (41%). Read More (SoapBoxSample)

Washington state marijuana vaping lawsuit dismissed. A state judge dismissed a lawsuit against Everett, Washington-based marijuana vaporizer company Canna Brand Solutions for allegedly causing a vaping-related lung illness. Pierce County Superior Court Judge Michael Schwartz wrote in his ruling that the claims “shall be voluntarily dismissed without prejudice and without costs or fees to any of the parties to this litigation.” Charles Wilcoxen, a Puyallup Tribal Police officer, sued six cannabis companies in Washington state in September 2019, claiming marijuana vape products caused him to contract lipoid pneumonia. Wilcoxen alleged the vaporizer that made him sick was made by CCell, a Chinese corporation, and distributed by Canna Brand. Read More (Marijuana Business Daily)

SOCIAL

Millennials or boomers? A new study tells which one uses marijuana more frequently. One subject on which the generations definitely agree, however, is their mutual appreciation for and enthusiastic use of cannabis, according to a new study by U.K.-based Verilife. The study surveyed 1,000 millennials ages 24 to 39 and 1,000 boomers ages 56 to 74, from late May through early June. Among its more findings: 1) 49 percent of millennials consume for recreational purposes versus 28 percent of boomers. Boomers however are twice as likely to use marijuana solely for medical reasons. 2) In the medical category, uses have age distinctions. Millennials’ main purposes are to combat chronic pain migraines and nausea while boomers use medical marijuana for arthritis, chronic pain and cancer. 3) In the recreational category, relaxation, anxiety and social reasons are the motivations cited by both groups. Read More (Green Entrepreneur)

Marijuana use is on the rise in older adults. Marijuana use is on the rise among baby boomers in the U.S., especially men, according to a study published in the Annals of Internal Medicine. The study looked at three years of survey data, collected from 2016 to 2018, on cannabis use in 171,507 adults ages 55 and up from 19 states and two territories. Men ages 60 to 64 reported the highest rates of marijuana use, with 12.6 percent of those surveyed saying they used the drug in the past 30 days in 2018, up from 8.9 percent in 2016. Over the same time period, use also nearly doubled among men ages 65 to 69 (rising from 4.3 percent in 2016 to 8.2 percent in 2018) and among men ages 70 to 74 (from 3.2 percent to 6 percent). There was less change in the use among women. Read More (NBC News)

UFC and E-Sports fans consume more cannabis than other sports fans. Ultimate Fighting Championship (UFC) and E-Sports fans consume more cannabis than those of other sports, according to a Morning Consult poll. 35% of fans of both sports surveyed indicated they used cannabis “often or sometimes.” F1 fans were the third-largest cohort to consume cannabis (31%), followed by MotoGP and tennis fans (30% each); Major League Soccer fans (29%); Women’s National Basketball Association fans (29%); NASCAR fans (25%); National Basketball Association fans (25%); IndyCar and National Hockey League fans (23% each); National Football League and golf fans (22% each); and Major League Baseball fans (20%). Read More (Ganjapreneur) and More (Morning Consult)

Chart 23: Esports, UFC Fans Most Likely Among U.S. Sports Fans to Use Marijuana Source: Intro-Blue, Ganjapreneur, Morning Consult

Chart 23: Esports, UFC Fans Most Likely Among U.S. Sports Fans to Use Marijuana
Source: Intro-Blue, Ganjapreneur, Morning Consult

Akerna says Labor Day cannabis sales jump, but not that much. Akerna (KERN) reported that cannabis sales over the Labor Day weekend (September 4-7) exceeded a quarter billion dollars, however, the increase was lower than previous years. Purchases jumped year-over-year by 23% to $245 million. Akerna said this included both medicinal and adult-use sales. Separately, adult-use sales increased by 35% over the holiday weekend. Friday (September 4) saw the biggest sales day, representing a year-over-year increase of 36%. Likewise, Saturday saw a 36% increase in sales, while Sunday saw the biggest uptick with a 43% increase. Labor Day itself, however, saw an 8% decrease in sales from the previous year. It should be noted that Massachusetts does not allow sales on holidays and dispensaries in the state were closed for the day. Read More (Green Market Report)

INTERNATIONAL

French government urged to speed up medical cannabis trials. French deputies urged President Emmanuel Macron’s government to stop dragging its feet over testing cannabis for medical use, saying its tardiness compared to other European countries was “worrying”. Presenting its interim report on the controversial question of legalizing the therapeutic use of cannabis, a parliamentary committee said France should consider state-controlled production of the plant, which is currently banned in France. “It’s time that France emerged from the dark ages concerning cannabis, which is a drug but can also be a medicine,” said Jean-Baptiste Moreau, the chief author of the report. “For patients today, it is unbearable to have to wait a little longer,” he said. The government had failed “to act in a sufficiently pro-active way”, the committee’s president, Robin Reda, added. Read More (IBTimes) and More (Marijuana Business Daily)

Germany: Insured medicinal cannabis sales worth €75 million in the first half of 2020. The GKV has just released its data on the number and type of cannabis medication sales for Q2 of 2020. As Prohibition Partners reported earlier, the market saw a bumper sales month in March, likely owing to stock-piling efforts in the face of the COVID-19 lockdown. Following this, we now see a return to pre-COVID-19 levels of sales, with overall sales 40% higher than H1 of 2019. The likely reasons for growth include the increasing numbers of doctors and patients willing to leverage cannabinoid medications for a range of conditions, including pain and multiple sclerosis. This trend is likely to continue into the near future as more patients become educated on the benefits of cannabis medications and as their use becomes further normalized. On top of this, medical practitioners can rely on an increasingly secure supply of medications as well as a more established consensus on the medical benefits of cannabinoids. Read More (Prohibition Partners)

Chart 24: Germany: Insurance-Covered Cannabinoid Sales Source: Intro-Blue, Prohibition Partners

Chart 24: Germany: Insurance-Covered Cannabinoid Sales
Source: Intro-Blue, Prohibition Partners

Czech medical cannabis sales show timid growth despite insurance coverage. Medical cannabis sales in the Czech Republic remain largely insignificant despite health insurance coverage being in place since January 2020, new data shows. Since the beginning of the year, an average of only 5 kilograms (11 pounds) of flower has been sold per month via prescription. June and July were record months with 6 kilograms of total sales on average. With total sales in 2020 below 40 kilograms as of the end of August, the Czech Republic will likely end this year with a total market of less than 75 kilograms – unless the current linear growth trend drastically changes in the coming quarter. The country continues to be a minor player in the European cannabis industry, and expectations that insurance coverage would prompt significant growth have not yet materialized. Read More (Marijuana Business Daily)

Chart 25: Medical Cannabis in the Czech Republic: Patient Count and Grams Sold Source: Intro-Blue, Marijuana Business Daily

Chart 25: Medical Cannabis in the Czech Republic: Patient Count and Grams Sold
Source: Intro-Blue, Marijuana Business Daily

Reputation, revenue at stake as Brazil weighs legalization of cannabis cultivation. Brazil has fast-tracked a draft law that would legalize the cultivation of medicinal cannabis and industrial hemp, and the stakes are high. South America’s largest economy leads the world in several commodities markets, and some politicians say its farmers are keen to expand into hemp. Several other Latin American countries – Uruguay and Paraguay in particular – have scrambled ahead on cannabis legislation and exports, and hemp industry players feel Brazil risks losing market share if it doesn’t move forward with hemp cultivation and processing soon. Read More (Hemp Industry Daily)

In Colombia, companies race to create hempseed suited for tropical climates. Colombia, with its diverse geography and tropical climate, has become an ideal location not only to look for an elusive cultivar, but also to breed seeds that can resist fungal diseases caused by humidity and seeds that will never exceed the low-THC thresholds set by the countries that have legalized hemp. What Colombia is doing is unlike other breeding efforts in the hemp industry, at a time when worldwide there’s a lack of quality seeds in large volumes and more Latin American countries are legalizing the plant, or considering it. Until now, most hemp cultivation for CBD has occurred in North America, Europe, and China, in latitudes with long summer days and short summer nights. “Breeding plants for the tropics is unique. It will also offer a tremendous benefit to countries that legalize cannabis cultivation in similar latitudes as Colombia, since they won’t have to start from scratch,” said Ryan Douglas, who was master grower for Canadian-based Canopy Growth (CGC) when it launched in 2013. Read More (Hemp Industry Daily)

Israel to increase import requirements, limiting cannabis export opportunities. The Israeli Ministry of Health informed domestic licensed producers that it is strengthening the quality requirements for medical cannabis imports. In an email addressed to “importers,” Tal Lavy of the pharmaceutical division of the Ministry of Health – the competent national authority under the international drug control treaties – said Israeli authorities will start reviewing the quality certificates of suppliers intending to export to Israel “in the coming days.” In addition to verifying that foreign producers are licensed by their respective national authorities, the email says quality certificates will be required. These include EU-GMP approval or equivalent for the post-harvesting facility, as well as for the manufacture of finished products. Because not all companies currently exporting flower to Israel have the certification, the move could have a significant impact. It could make it more challenging to export to the country, which became the No. 1 flower importer in the world this year. Read More (Marijuana Business Daily)

Cannabis, hemp, CBD: The Japanese cannabis landscape. Cannabis has a long history in Japan, dating back to its pre-historical period. Throughout history, hemp was a widely cultivated crop and played a significant role in Japanese people’s lives. However, usage of cannabis was lost when Japan was defeated in World War II. Under the command of General MacArthur, the American occupation army ordered the Japanese government to ban cannabis sativa L. Presently, this antiquated 72-year-old law is what dictates the current situation in Japan with regards to cannabis/hemp. Cultivation of hemp is still possible today and does happen under strict control by the government. On the medical cannabis front, there is no access whatsoever. Read More (Health Europa)

Australia cannabis sales near AUD $100 million as consolidation looms. Australia’s market for medical cannabis is expected to triple this year to about AUD $95 million ($70 million) in product sales, according to a new report published by North Sydney-based data firm FreshLeaf Analytics. However, FreshLeaf said it analyzed 37 companies vying for less than 100,000 prescriptions, concluding that “the Australian cannabis market is saturated and that the current product growth trajectory is unsustainable.” “It would be reasonable to conclude that in the next 12-18 months we will begin to see a reversal in growth of prescription product numbers and consolidation in the number of players.” Read More (Marijuana Business Daily)

Chart 26: New Medical Cannabis Approvals in Australia by Month: September 2019 – August 2020 Source: Intro-Blue, Marijuana Business Daily

Chart 26: New Medical Cannabis Approvals in Australia by Month: September 2019 – August 2020
Source: Intro-Blue, Marijuana Business Daily

CANNA SCIENCE

Amyris scales first fermentation-based cannabinoid. Amyris announced that it has successfully scaled up the commercial production of cannabigerol (CBG) leveraging its industrial fermentation process capability. Amyris expects to deliver about one ton of high purity CBG through fermentation as an alternative to the traditional production method of extraction from the Cannabis sativa L. plant. First commercial revenue from the sale of this molecule is anticipated this year as an ingredient in applications that are excluded from Amyris’s current collaboration agreements. Product margins are anticipated to operate above the current industry average realized by existing publicly traded CBD suppliers. Read More (Extraction Magazine)

Ethanol recovery with ExtractCraft. Enthusiasts in the past who wanted to make their own solvent-derived concentrates risked causing an explosion or injuring themselves as the process can incorporate flammable solvents such as butane or ethanol to liberate cannabinoids like THC from the plant material. One needed an adequately outfitted laboratory to create concentrates quickly and safely – until now. ExtractCraft is a company that specializes in small-scale ethanol recovery appliances geared towards providing a safer way to create plant extractions at home. In states where cannabis is legal, consumers can use ExtractCraft’s devices to create cannabis concentrates. In states where cannabis is not legal, consumers make different kinds botanical extractions. Read More (Extraction Magazine)

Anticipating growth in outdoor hemp farming, U.S. developer releases new seed. U.S. seed developer New West Genetics has released ABOUND, a line of dioecious hemp seeds for row crop farming, suggesting that conventional outdoor growing offers a path to scalability, dual-cropping of CBD and grain, and a stable supply chain. “The costly manual labor required for feminized-only hemp seed production is not a scalable option,” the company’s president, Wendy Mosher, said in a press release. “We saw this in the 2019 season when many farmers ended up upside down financially.” Read More (Hemp Today)

CBD for bees? Polish research at the Uniwersytet Marii Curie-Skłodowskiej revealed hemp oil could save bees. As the USDA reports, pesticides may be a significant contributor to colony collapse disorder. News that bees treated with hemp oil may be able to resist pesticides comes as marvelous news. The research was done on 5,000 caged bees, and next year the team will study bees living in apiaries. After this research, if the team is successful, they will bring a hemp oil product to market meant to promote bee immunity to pesticides. The researchers have already filed a patent for their hemp oil. Read More (Cannabis Tech)

TECHNOLOGY

The future of cannabis technology. Here is a short list of a few technologies that should exist for cannabis: 1) Self-contained tissue culture laboratory – The main advantages of tissue culture versus alternative current practices is that one can literally store millions of cultures in a relatively small space with minimal environmental control. 2) Cannabinoid and terpene content meter – The industry needs to develop a very precise and accurate method to easily measure both cannabinoid and terpene levels. 3) Large scale HEPA filtration for air intake (and exhaust) – Greenhouse and indoor growers would benefit from such an air filtration system that both filters and sterilizes for specific cannabis pests and diseases. Read More (Cannabis Business Times)

LEGAL & IP

Pot producers including Canopy sued for $500 million over supply dispute. A dispute over cannabis supply contracts has spilled over to an Ontario courtroom, with a group of cannabis producers including Canopy Growth (CGC) being sued for $500 million in damages by a group of shareholders behind a Leamington, Ont.-based greenhouse facility. The lawsuit alleges that CGC, the firm’s venture arm Canopy Rivers (CNPOF), as well as TerrAscend (TRSSF) and its Canadian subsidiary, have committed “bad faith, fraud, civil conspiracy, breach of the duty of honesty and good faith in contractual obligations, and breach of fiduciary duty,” according to court documents. Read More (BNN Bloomberg)

$20 million transatlantic joint-venture fall-out leads to high court CBD battle. Two former joint venture partners in an Eastern European CBD extraction facility are heading to the UK High Court in a $20 million dispute over its ownership. The $2 million facility in Romania was built by joint venture partners Dragonfly Biosciences of London and Borganic Consulting – which was subsequently purchased by Canadian firm Stillcanna. However, both parties are now claiming ownership of the facility and the matter looks like it will be settled by the UK High Court. Read More (Business CANN)

SUSTAINABILITY

D.C. legalized marijuana, but one thing didn’t change: Almost everyone arrested on pot charges is Black. Police in D.C. are far more likely to arrest Blacks than Whites for marijuana-related offenses, five years after the city enacted reforms that proponents hoped would end racial disparities in enforcement. Although marijuana arrests have declined by more than half, African Americans still account for just under 90 percent of those arrested on all pot-related charges, according to a Washington Post analysis, even as they make up 45 percent of the city’s population. And while studies show that marijuana use is equally prevalent among Blacks and Whites, 84 percent of more than 900 people arrested for public consumption in the nation’s capital were African American in the four years after legalization. Read More (The Washington Post)

CANNA FACTS

Chart 27: Cannabis Cultivation & Retail Sector Acquisitions vs Cannabis Stock Index Source: Intro-Blue, Viridian Capital Advisors

Chart 27: Cannabis Cultivation & Retail Sector Acquisitions vs Cannabis Stock Index
Source: Intro-Blue, Viridian Capital Advisors

CANNA CAPITAL MARKET TRENDS

Chart 28: Weekly Summary (September 7 – September 11, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 28: Weekly Summary (September 7 – September 11, 2020) Source: Intro-Blue, Viridian Capital Advisors Chart 28: Weekly Summary (September 7 – September 11, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 28: Weekly Summary (September 7 – September 11, 2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 28: Weekly Summary (September 7 – September 11, 2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 29: Cannabis Capital Raises by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 29: Cannabis Capital Raises by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 30: Cannabis M&A by Week (2020) Source: Intro-Blue, Viridian Capital Advisors

Chart 30: Cannabis M&A by Week (2020)
Source: Intro-Blue, Viridian Capital Advisors

 

Chart 31: Capital Raises by Sector (2020 vs. 2019) Source: Intro-Blue, Viridian Capital Advisors

Chart 31: Capital Raises by Sector (2020 vs. 2019)
Source: Intro-Blue, Viridian Capital Advisors

CANNA PRICES – WEEKLY TREND

Chart 32: U.S. Cannabis Market Prices Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 32: U.S. Cannabis Market Prices
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 33: U.S. Implied Forward Prices (Week Ending September 18, 2020) Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 33: U.S. Implied Forward Prices (Week Ending September 18, 2020)
Source: Intro-Blue, Cannabis Benchmarks Price Index

 

Chart 34: Canada Cannabis Spot Index Source: Intro-Blue, Cannabis Benchmarks Price Index

Chart 34: Canada Cannabis Spot Index
Source: Intro-Blue, Cannabis Benchmarks Price Index

CANNA BRANDS AND PRODUCTS RANKING – STATE IN FOCUS: NEVADA

Chart 35: Best-Selling Flower Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 35: Best-Selling Flower Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 36: Best-Selling Edibles Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 36: Best-Selling Edibles Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 37: Best-Selling Vapor Pen Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 37: Best-Selling Vapor Pen Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 38: Best-Selling Beverage Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 38: Best-Selling Beverage Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 39: Best-Selling Capsule Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 39: Best-Selling Capsule Brands and Products in Nevada
Source: Intro-Blue, Headset

 

Chart 40: Best-Selling Topical Brands and Products in Nevada Source: Intro-Blue, Headset

Chart 40: Best-Selling Topical Brands and Products in Nevada
Source: Intro-Blue, Headset

CANNA INDEX

Chart 45: U.S Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 45: U.S Cannabis Index
Source: Intro-Blue, The Marijuana Index

 

Chart 46: Canada Cannabis Index Source: Intro-Blue, The Marijuana Index

Chart 46: Canada Cannabis Index
Source: Intro-Blue, The Marijuana Index

Important Disclosures

Analyst Certification

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