MjLink Cannabis Business News and Press

Capital raise activity exploded out of the blocks in the first half of 2021, buoyed by hopes that the new Democratic presidency and Senate majority would finally produce a legalization breakthrough.

Investors bid up cannabis stocks in Q1 2021 to levels that hadn’t been seen since early 2019, and equity issuance followed with Q1 becoming the highest equity raise quarter in cannabis history. COVID fears had started to dissipate as growing vaccination rates began to reduce hospitalizations and deaths. It seemed like economic life would return to some semblance of normality.

In cannabis land, however, the legalization buzz wore off and stocks began a steep 10-month decline that would leave them 51% below their peaks by year end, and equity issuance followed downward. The saving grace for cannabis capital was a newly invigorated debt market, fostered by the entrance of new institutional capital and riding on the improved profitability of the industry—at least in the U.S.

Capital Raise Activity

Capital Raise Transactions and Invested Capital Declines

We tracked 455 capital raises totaling $12.8 billion in 2021 representing an increase in the number of deals of 50.7% and a 195.4% increase in the dollar volume of deals vs. 2020.  The second half of 2021 was softer with declines of 29.6% in transaction numbers and 30.3% in capital raised vs. the first half of 2021.

Shift in Capital Allocation by Industry Sector

In October 2021, Canadian LP Canopy Growth Corporation announced its plan to acquire cannabis-infused edibles company Wana Brands for $297.5 million cash upfront, though the deal hinges upon federal permissibility of cannabis. But Wana is not waiting in the wings. The Colorado-based company, co-founded by CEO Nancy Whiteman, remains independent, has continued to launch new products and has intentions to expand beyond its footprint of 13 state markets.

In addition, Wana announced two pivotal hires on its executive team in March, most recently naming Sandy Li, who previously served as vice president of finance for multistate cannabis operator Parallel, as CFO. Earlier this month, the company announced Kelly Flores’ appointment as chief operating officer, a leadership role she previously had at the cannabis brand dosist.

Three women are now at the helm of one of the largest cannabis companies in an industry where men occupy a vast majority of leadership roles, and the C-suite announcements happened to be made during Women’s History Month. Cannabis Business Times caught up with Whiteman to get an update on what’s happened since the Canopy deal and how she has navigated more than a decade in the cannabis industry.

Editor’s note: This interview has been edited for length and clarity. An except of this interview also will appear in the April issue of CBT. 

Michelle Simakis: It has been more than six months since the Canopy Growth deal was announced. Though it’s not final, have there been changes at the company relative to that agreement?

Nancy Whiteman: Yes and no. I’m still running the company. I don’t think things feel especially different here than they did. On the other hand, one of the reasons we signed the deal with Canopy is that we really saw them as a valuable partner to us. They’re much larger than we are so they have a lot of resources that we don’t have. There are a number of things that we can do legally with them still as two separate companies where we can learn what it’s like to work with each other as partners before we’re working with each other as one entity.

MS: What does that look like?

NW: There are things that we can do now to think about how we are going to align for the future. Those are the kinds of discussions we are having now. How do we each continue to add value to each other in ways that make sense now, and how [do we] set up for the future? I can’t be super specific about that.

President Joe Biden is maintaining a ban on commercial adult-use cannabis sales in Washington, D.C., including what is known as the Harris Rider in his $5.8-billion budget proposal for 2023, according to the DCist.

District voters approved an adult-use cannabis legalization measure in the November 2014 election, but U.S. Rep. Andy Harris, R-Maryland, introduced a provision in the following year’s federal budget that has since blocked Washington officials from implementing commercial cannabis sales.

Biden included the Harris Rider in his proposed budget for 2022, DCist reported, and is now following suit this year.

The news comes after Congress passed a spending bill earlier this month that maintains the Harris Rider until at least September.

RELATED: D.C. Remains on Cannabis Sales Sideline in New Omnibus Bill

The market for hemp-derived delta-8 THC products has exploded over the past year. And while the legality of this cannabinoid (or lack thereof) continues to be a point of significant controversy, another issue creating waves recently is the reporting of several studies showing numerous delta-8 products on the market contain surprising and illegal levels of delta-9 THC.

A little background concerning the legal landscape of delta-8 is helpful. Passage of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), which legalized hemp at the federal level, opened the door for a variety of new consumer products to hit the market.

The definition of hemp in the 2018 Farm Bill was clearly intended to prohibit the development of hemp products that were intoxicating. In the final rule issued by USDA to implement the farm bill, USDA notes that delta-9 levels in hemp were regulated because delta-9 “is the primary intoxicating component of cannabis.”

Despite the farm bill’s attempt to precisely define what constitutes a “legal” hemp product, the plain language of the statute created ambiguities that appear to have undermined the purpose of the bill in the hands of the hemp marketplace.

For instance, commentators have noted that the farm bill’s use of a dry-weight basis limit of 0.3% delta-9 THC in hemp and hemp-derived products leads to puzzling results. For example, applying the 0.3% dry-weight standard on an edible gummy product could lead to a gummy that contains 10 mg of delta-9, but yet still remains under the 0.3% dry-weight threshold.

RELATED: Delta-9 in Edible Hemp Products: What’s a ‘Dry Weight Basis’ Anyway?

New Mexico’s governor has signed two intergovernmental agreements with the Pueblo of Pojoaque and the Pueblo of Picuris to support the tribes’ participation in the state’s legal cannabis industry.

The agreements, signed March 25 by New Mexico Gov. Michelle Lujan Grisham, Pueblo of Picuris Gov. Craig Quanchello and Pueblo of Pojoaque Gov. Jenelle Roybal, will “support the Pueblos taking part in the recreational cannabis industry, driving economic development and setting guidelines for the safe production and sale of cannabis while preventing federal enforcement on their tribal lands,” according to a press release from Lujan Grisham’s office.

The Cannabis Regulation Act, which Lujan Grisham signed into law in April 2021 to legalize adult-use cannabis in New Mexico, authorized intergovernmental agreements to enable the state’s tribal communities to participate in the market.

“The economic opportunities provided by the recreational and medical cannabis industries are truly game-changing, and sovereign tribal nations should benefit alongside the state,” Lujan Grisham said in a public statement. “With these agreements, the Pueblo of Pojoaque and the Pueblo of Picuris will benefit from this exciting new industry, which is projected to bring $300 million in sales annually and create 11,000 jobs in New Mexico.”

The intergovernmental agreements aim to support public health and safety while maximizing cross-jurisdiction market opportunities, according to the press release.

New Mexico regulators have issued a medical cannabis product recall after investigating a patient complaint.

The New Mexico Cannabis Control Division (CCD) issued the recall March 24 upon discovering that Sacred Garden, a licensed medical cannabis operator in the state, has been distributing products containing levels of mold above regulatory levels, according to a press release.

The contaminated products tested at 35,000 Colony Forming Units (CFUs) per gram, according to the press release, and 1,000 CFU is the maximum allowable level under state law.

Regulators have ordered Sacred Garden to cease and desist operations at its production and manufacturing site. The company also operates medical cannabis dispensaries in Albuquerque, Las Cruces, Ruidoso and Santa Fe.

The recalled products, including cannabis flower, pre-rolls and food products, are from cannabis cultivars named “Snow Cone” and “Protégé ’78” and were sold to patients at Sacred Garden’s dispensary locations over the past several weeks.

The House Rules Committee has postponed a hearing on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act until March 30, which could delay the possibility of a floor vote in the full chamber.

In addition, the legislation, House Bill 3617, has received five proposed amendments, ranging from topics of testing impaired drivers to penalizing individuals who sell cannabis to minors and funding studies related to the impacts of legalization. Three of those amendments were offered by Rep. Conor Lamb, D-Pa., who voted against a previous version of the bill in 2020.

The Rules Committee had originally scheduled a March 28 hearing for the legislation, which aims to remove cannabis from the U.S. Controlled Substance Act, before moving it back two days.

RELATED: MORE Act Vote on Deck in U.S. House, Again

Sponsored by U.S. House Judiciary Committee Chairman Jerry Nadler, D-N.Y., the bill was first introduced in July 2019 and was passed by the full lower chamber via a 228-164 vote in December 2020. That marked the first time a full body of Congress voted on a broad cannabis decriminalization measure.

When House lawmakers announced their intentions last week to move forward with further consideration of the current form of the bill, NORML Political Director Morgan Fox thanked political leaders who’ve advocated for and worked toward cannabis reform.

The Colorado House Business Affairs and Labor Committee rewrote—and then ultimately killed—legislation that would have prohibited employers from firing or refusing to hire an employee based on cannabis use.

As originally introduced by Reps. Edie Hooton and Brianna Titone, House Bill 1152 would have also required employers to let their workers consume medical cannabis on the job, except in dangerous fields or jobs that require the use of heavy machinery.

RELATED: New Legislation in Colorado Would Bar Employers From Firing Employees for Cannabis Use

The House Business Affairs and Labor Committee unanimously decided to rewrite the legislation March 24, replacing it with a proposal to create a task force that would study the use of medical cannabis in employment, according to a 9 News report.

The committee then voted, 12-1, to indefinitely postpone the bill, the news outlet reported.

Tori Cole, vice president of marketing at Cookies, knows the power of a good story. That sense of narrative connection between a brand and a customer is at the very heart of what Cookies has been building in California and across the U.S. cannabis market.

The success of a brand like Cookies, however, does not happen overnight. Nor does it happen without a willingness to listen to the marketplace.

Cole grew up in Hawaii in a traditional Japanese household. Her siblings got into the tech industry as adults, and she followed soon after—landing in the Bay Area scene and working at several companies like Intuit and Mesh Brands before cannabis called out to her.

While working as the Go-To-Market Leader at Mesh Brands, Cole met Cookies founder and CEO Berner, who was busy launching Lemonnade. A connection was forged, and Cole joined Cookies in April 2019.

RELATED: Sharing Knowledge and Empowering People In The Cannabis Industry: Q&A with Berner

“At the heart of everything we do, it's all about the quality genetics, and Berner is super actively involved,” she says. “He selects every cultivar and really sets our brand strategy. He’s even the creative director when it comes to our strain illustrations, which are like our own billboards on packaging. Everything that we do centers not only on the customer and their experience—but really on staying true to our roots.”

Kentucky lawmakers are projected to adjourn from their 2022 legislative session April 14 with medical cannabis legalization falling by the wayside for the third straight year.

House Bill 136, which aims to allow doctors to prescribe medical cannabis to patients for six qualifying conditions, cruised to passage, 59-34, in the House on March 17. Sponsored by Rep. Jason Nemes, an earlier version of the bill also passed the House via a 65-30 vote in 2020.

RELATED: Kentucky Medical Cannabis Reform Inches Closer With House Passage

But that same level of support has yet to be replicated in the Senate.

A week after the most recent House passage, Senate Majority Floor Leader Damon Thayer said the legislation appears to be dead for yet another session, the Lexington Herald-Leader reported.

“I have said all along I wouldn’t stand in its way if we had the votes, but we do not have the votes in the Senate,” Thayer said.

Tim James, a leading Republican gubernatorial candidate in Alabama, has expressed opposition to the state’s medical cannabis program, claiming that state officials want to create a “drug cartel,” according to an AL.com report.

“This is nothing but a bait and switch to desensitize and get recreational use started,” James said during a recent town hall forum, according to the news outlet. “Their dream is recreational pot and that is where they are going.”

James went on to also criticize the state’s medical cannabis program for not requiring stringent enough training for the doctors who will ultimately be able to recommend cannabis to their patients, AL.com reported.

James, a businessman and the son of former Alabama Gov. Fob James, is currently polling second behind incumbent Gov. Kay Ivey, according to the news outlet.

Ivey signed Alabama’s medical cannabis legislation into law in May 2021, and John McMillan, director of the Alabama Medical Cannabis Commission, and Sen. Tim Melson (R-Florence), who championed the state’s legalization bill, told AL.com that James’ claims are inaccurate.

Some of the roughly 400 municipalities in New Jersey that opted out of hosting the adult-use cannabis industry ahead of an August 2021 deadline to do so have since changed their minds.

RELATED: More Than 70% of New Jersey Municipalities Ban Adult-Use Cannabis Businesses

Roughly 29% of the state’s municipalities now allow some form of adult-use business to operate within their jurisdictions after 35 towns that had previously banned all types of cannabis businesses have since approved ordinances that allow at least one type of adult-use operation to set up shop, according to an app.com report.

Twenty-two municipalities that had previously opted out of hosting any form of adult-use cannabis business now allow dispensaries, the news outlet reported, while three other towns that had initially allowed other types of businesses—but not retailers—have since passed ordinances to allow adult-use cannabis retail.

In addition, 10 municipalities that previously banned all types of adult-use cannabis operations have since decided to host other forms of cannabis businesses, but not dispensaries, app.com reported.

Washington law enforcement officials issued warrants for a pair of teenagers in connection with a string of cannabis retail robberies, including one involving a fatal shooting at the World of Weed dispensary March 19 in Tacoma.

RELATED: Washington Dispensary Worker Fatally Shot During Robbery

The Tacoma Police Department identified 16-year-old and 15-year-old boys who are wanted in at least 10 armed robberies in Pierce and King counties, according to The News Tribune. As of March 26, neither teenager was in custody.

Specifically, Pierce County prosecutors charged one of the suspects with first-degree murder and second-degree unlawful possession of a firearm, according to the news outlet. The former charge is in connection to the March 19 fatal shooting of 29-year-old dispensary worker Jordan Brown, from Gig Harbor.  

That was the third fatal incident involving a dispensary robbery in less than a week in the western part of the state. The other two involved the deaths of suspected robbers—one killed by police, and the other by an armed dispensary ID checker.

Prosecutors expect to file additional charges against the two teenagers for four additional dispensary robberies in Tacoma and one in Pierce County.  The boys are also suspected in five robberies in King County, according to The News Tribune.

A bill that cleared the U.S. Senate March 24 would expand scientific and medical research on cannabis and its compounds, including CBD.

S. 253, titled the Cannabidiol and Marihuana Research Expansion Act, is sponsored by Sens. Dianne Feinstein (D-Calif.), Chuck Grassley (R-Iowa) and Brian Schatz (D-Hawaii) and cosponsored by Sens. Dick Durbin (D-Ill.), Amy Klobuchar (D-Minn.), Thom Tillis (R-N.C.), Tim Kaine (D-Va.), Joni Ernst (R-Iowa), Kevin Cramer (R-N.D.), Jon Tester (D-Mont.) and Lisa Murkowski (R-Alaska).

The bill aims “to ensure that research on CBD and other potentially beneficial marijuana-derived substances is based on sound science while simultaneously reducing the regulatory barriers associated with conducting research on marijuana,” according to an announcement from Feinstein’s office.

Because cannabis containing more than 0.3% THC remains classified as a Schedule I drug under federal law, strict regulations continue to govern medical cannabis research and few cannabis-derived products have received approval from the U.S. Food and Drug Administration (FDA).

“Current rules and regulations make it hard for researchers to study how marijuana and marijuana-derived medications can best be used to treat various conditions,” Feinstein said in a public statement. “This important legislation will cut the red tape around the research process, helping get FDA-approved, marijuana-derived medications safely to patients.”

TWINSBURG, Ohio, March 28, 2022 /PRNewswire/ -- PRESS RELEASE -- The HC Companies – a North American manufacturer of horticultural containers – has seen unprecedented demand for its products over the last few growing seasons. This is a direct result of the home-gardening revival, which surged in popularity during the spring of 2020.

"From our suburban neighborhoods to urban metropolises, more and more individuals realize the countless benefits gardening provides," says Bob Mayer, president and CEO of The HC Companies. "Beyond contributing to the overall health of our planet, gardening has united families and communities, improved people's mental and physical well-being, and provided freshly grown foods full of nutrition. These benefits and more are why gardening continues to remain popular today."

As interest in home gardening continues to thrive across North America, seasonal demand for plants and products is outpacing the available supply, compounded by challenges with overburdened shipping schedules and material sourcing. While horticulture is not the only industry plagued with supply chain issues due to extraordinary consumer demand, growers often have a narrow window for cultivation and rely on containers to increase their inventory.

"Like so many other organizations, we feel it is our responsibility to our customers to invest in solutions to help improve our manufacturing, and ultimately our supply chain, to get growing containers into the hands of growers and gardeners as quickly as possible," says Mayer. "This includes not only an investment in equipment and technologies but our team members as well."

Some of the ways HC is helping the horticulture industry satisfy the increased demands of gardeners include:

(Brewer, ME) March 28, 2022 – PRESS RELEASE – Cann Drying Systems, an industry leading provider of commercial-scale turnkey drying & curing systems for the cannabis and hemp industries, announced today a new distribution partnership with Omega Equipment & Supply, the leading full-service nationwide supply chain solution provider for the cannabis industry – serving cultivators, processors, manufacturers, dispensaries, distributors, and testing facilities. Omega also offers custom design build fabrication in addition to a full range of equipment and supplies for the cannabis industry. The partnership between cannabis industry leaders looks to bring a greater level of automation and efficiency to the industry’s post-harvest process.

The new partnership looks to bring Cann Systems’ CDS line of turnkey cannabis drying & curing chambers to a broader audience of cannabis operators, while adding another quality supplier to Omega’s offering as they look to greater expand their custom design build fabrication portion of their business.

“We have been seeking a partnership with an industry-specific equipment provider that shares our vision for advancing the overall efficiency of the cannabis industry,” said Ton Mathissen, CEO at Cann Drying Systems. “Omega shares the same dedication to innovation and further advancement of the industry that we do.”

“Our goal is to help our customers run their businesses more efficiently and profitably,” said Eric G. Myers, COO for Omega Equipment & Supply. “The Cann Drying Systems’ solution(s) effectively help to support this goal through automation and efficiency gains.”

The partnership between Omega Equipment & Supply and Cann Drying Systems comes as no surprise. As the cannabis industry continues to mature so does the need for process efficiencies and further automation throughout the post-harvest supply chain. With more cultivators increasing plant counts to capture greater market share, the need for scalable drying & curing solutions continues to be a challenge for operations of all sizes. This new partnership will give greater visibility and reach to the innovations Cann Systems is bringing to the industry as well as help Omega further establish themselves as the industry leading equipment supplier.

“Our equipment is designed to function at peak levels whether drying small amounts of flower for boutique cannabis operators or at scale for large MSOs,” Mathissen said. “Being able to perform consistently at scale is an industry problem we believe we’ve solved.”

The Pennsylvania Liquor Control Board has had second thoughts about allowing beer and wine licensees to sell CBD edibles.

The board announced March 23 that it would reverse a decision from last year that authorized the licensees to sell edible products containing the cannabinoid, according to the Associated Press.

Board members voted in June 2021 to allow all retail licensees, such as convenience stores, to sell edible CBD products, including gummies, non-alcoholic beverages and tinctures, in order for them to compete with a convenience store chain that had received permission to sell the items earlier that month, AP reported.

The Liquor Control Board then expanded the rule to allow beer distributors to also sell CBD edibles, according to the news outlet.

The Pennsylvania Department of Agriculture requested that the rule be reversed, AP reported, citing concerns that the sale of consumable CBD products is illegal under state law.

New Mexico will become the 13th state to launch commercial adult-use cannabis sales in the U.S. with an April 1 opening day for licensed retailers, but one operator isn’t so sure the timing it right.

Citing concerns over a possible supply shortage, Ultra Health CEO Duke Rodriguez said he anticipates challenges in meeting the state’s forthcoming demand, with those challenging lasting for perhaps as long as 18 months before market conditions stabilize, dual CBS/Fox-affiliate KRQE reported.

One of the state’s larger operators, Ultra Health has 28 medical cannabis dispensaries in New Mexico. As of Feb. 28, New Mexico had 131,931 patients actively enrolled in its medical cannabis program, according to the state’s Health Department.

“What we have today is what we’re going to serve the market with,” Rodriguez told KRQE. “Is it going to be enough to serve the complete market? The answer is no. On day one, it’s going to be a challenge, and it’s going to be a challenge for maybe as long as nine to 12, 18 months.” 

The planned retail launch comes nearly a year after Gov. Michelle Lujan Grisham signed adult-use legislation, House Bill 2, into law on April 12, 2021, following two days of a special legislative session.

Since several provisions of the law became effective on June 29, 2021, regulators and lawmakers have eyed certain changes to the program, such as an emergency rule that was enacted Jan. 13 to temporarily allow licensed producers to double their plant count to 20,000 mature plants in anticipation of launching adult-use sales.

More than 160 municipalities participating in Michigan’s adult-use cannabis program will be the beneficiaries of $42.2 million set aside in a fund under the state’s Regulation and Taxation of Marihuana Act (MRTMA).

That list includes 62 cities, 15 villages, 33 townships and 53 counties that will receive $56,453.44 for each retail store or microbusiness licensed within their jurisdictions, based on revenues collected in fiscal 2021, according to the Michigan Department of Treasury.

Overall, those municipalities had 748 licensees combined (with each license counting both toward a city, village or township, as well as a county). For example, Ann Arbor, which had 25 licensees for the year, will receive more than $1.4 million from the shared revenue fund, while Washtenaw County as a whole had 32 licensees (including Ann Arbor’s 25) and therefore will receive more than $1.8 million.

“The Michigan Department of Treasury will distribute these dollars as soon as practical to eligible local units of government,” state Treasurer Rachael Eubanks said in a statement. “The doubling of this year’s payment amounts will have a larger impact on local government budgets.”

The fiscal 2021 shared revenue amount is more than double the $28,000 municipalities received per license in fiscal 2020.

As part of the state’s revenue sharing program under 2018’s passage of MRTMA, tax revenue generated from the Michigan’s adult-use program are distributed as follows:

New Jersey’s cannabis regulators took one step forward and one step back at their March 24 meeting.

The Cannabis Regulatory Commission (CRC) approved 68 conditional adult-use cannabis cultivation and manufacturing licenses Thursday but delayed the approval of eight medical cannabis dispensaries that want to expand to serve the broader adult-use market, according to an NJ.com report.

Allowing the medical cannabis retailers to sell to adult-use consumers would allow New Jersey to launch its commercial adult-use market next month, whereas the conditional licensees—50 growers and 18 manufacturers—are not expected to launch operations until this fall.

CRC Executive Director Jeff Brown said that the decision to allow the medical dispensaries to expand was put on hold because commissioners want to see plans for how the retailers can accommodate both medical patients and adult-use customers at their locations, according to NJ.com.

Brown estimated that the medical cannabis dispensaries may be short by 100,000 pounds of product to meet both medical and adult-use demand.