MjLink Cannabis Business News and Press

The unofficial end of summer saw a crackdown on illegal cannabis operations in Oregon and California this past week.

Over Labor Day weekend, law enforcement seized $50 million worth of cannabis at a large-scale facility in Oregon that was disguised as a legal hemp operation and confiscated 1,335 pounds of cannabis from an illegal grow in San Bernardino County, Calif.

California’s legal cannabis market, on the other hand, has provided $2.8 billion in tax revenue since adult-use sales launched in 2018. Read more

Maine’s adult-use market is also booming, with August sales surpassing $10 million—a nearly 50% increase from June. Read more

Elsewhere, Illinois regulators admitted a “clerical oversight” error on data entry that wrongfully excluded applicants from the state’s three-part lottery process that awarded 185 cannabis retail licenses in July and August. The state will now conduct a corrective lottery to award additional adult-use cannabis dispensary licenses. Read more

California’s 1911 recall law means a governor who wins 49.9% of the vote in a recall election can be replaced by someone who gets 20% or even less.

That is what’s at stake for Democratic Gov. Gavin Newsom, who is up against a Republican-backed attempt to oust him from office during a California gubernatorial recall election Sept. 14.

In the two-part ballot process, should a simple majority of votes on the recall question answer “yes,” Newsom will be removed from office and succeeded by a candidate receiving the highest number of votes on the latter question for a replacement candidate. The current recall candidate frontrunner is Republican Larry Elder, whom some polls show drawing upward of 30% of the likely voters in a 46-candidate race.

The replacement rules require only a plurality, meaning Elder only needs to finish ahead of the other 45 candidates to win and serve out the remainder of Newsom’s four-year term—which ends Jan. 2, 2023—should Newsom be recalled. Elder will not go head-to-head against Newsom.

A conservative talk radio host, Elder would mean trouble for the state’s cannabis industry, said Jared Schwass, who practices law in the cannabis space as the founder of California-based Schwass Law Firm. Schwass was born and raised in Mendocino County.

“Larry Elder has stated that he wants to tax and regulate cannabis, which already faces overtaxation and regulation, and increase the number of cannabis-related arrests,” Schwass said. “The changes proposed by Elder would stifle growth in the cannabis industry, continue to squeeze out small businesses, which are already struggling in the industry, and return to a ‘war on drugs’ type of police enforcement.”

Maine’s adult-use cannabis sales had a record-breaking month in August, surpassing $10 million in sales.

Data released from the Maine Office of Marijuana Policy shows the state had 133,969 total transactions in August, which generated over $10.2 million in revenue and more than $1.2 million in sales tax revenue.

August sales saw an 8.5% increase from July, which reported roughly $9.4 million in sales. Although sales didn’t increase drastically from July to August, the state had nearly a 50% increase from June, which reported over $6.4 million in sales.

Flower, concentrates and infused products made up most of Maine’s August sales. Flower products were the most popular amongst consumers, generating over $6 million in sales. Following behind was concentrates, which sold $5.8 million in sales, and then infused products at $4.9 million, according to the data.

The state’s adult-use market has reported about $26.1 million in total sales from June to August and has shown a steady month-over-month increase since it launched in October 2020.

When the team at Eastcoasterdam Gardens set out to secure funding to construct a cannabis cultivation facility in Massachusetts, Joseph Lupo, the company’s co-founder and director of cultivation, found many of the deals from potential investors demoralizing.

“They were gross,” he said. “I don’t know any other word to describe them other than gross.”

Then the COVID-19 pandemic hit and cut off the team’s in-person networking opportunities. Lupo said the only channel the company had left was its social media platforms.

“We’ve always had a presence on social media and because of that, Mainvest was really the best route for us to use what we thought was one of our best weapons: social media,” he said. “It’s an online platform, and it’s more in-tune with that type of investor—the common person.”

Mainvest launched in 2018 as a crowdfunding platform to allow small businesses to raise capital from their local communities. It launched its first cannabis offering a few weeks ago with Eastcoasterdam after realizing that the industry is plagued with predatory investors—and after seeing building momentum toward federal legalization.

Sept. 1 marked the deadline for public comment on the preliminary draft of the Cannabis Administration and Opportunity Act (CAOA) and industry stakeholders made sure their voices were heard.

RELATED: Senate Trio Unveils Federal Cannabis Legalization Draft With Provisions to Deschedule, Tax and Regulate

“You’re seeing a lot of comments, which is good, trying to protect people on both sides of interests,” Adam Fayne, partner and co-chair of the cannabis practice at Saul Ewing Arnstein & Lehr, told Cannabis Business Times and Cannabis Dispensary. “I think everyone is behind social reformation and all the causes around expungement and decriminalization and so forth. I don’t think there’s any issue with that. I think people just have different ideas on the best path to get there.”

The U.S. Cannabis Council (USCC) and the Marijuana Policy Project (MPP) submitted similar feedback on the draft legislation, which would remove cannabis from the Controlled Substances Act, tax and regulate cannabis at the federal level, and allow states to keep or administer their own oversight programs.

RELATED: Industry Experts, Stakeholders Offer Their Takes on Cannabis Administration and Opportunity Act

After the Nebraska Supreme Court struck down the group’s medical cannabis legalization measure before the 2020 election, Nebraskans for Medical Marijuana has carefully crafted two new medical cannabis initiatives that it hopes to qualify for the state’s 2022 ballot.

The group filed language for the two initiatives Sept. 8, the Lincoln Journal-Star reported, and it expects to start circulating both petitions later this month. Nebraskans for Medical Marijuana must gather 250,000 signatures by July 7, 2022, to qualify both measures for next year’s ballot.

RELATED: Advocates Try Again to Place Medical Cannabis Legalization Measure on Nebraska’s Ballot

Opponents of the group’s 2020 ballot measure argued that it included more than one question, thus violating the single-subject rule outlined in the Nebraska Constitution. After the Supreme Court overturned the initiative, Nebraskans for Medical Marijuana filed a single-sentence constitutional initiative for the 2022 ballot before again retooling its efforts and splitting the issue into two complementary initiatives.

The first would require the Nebraska Legislature to enact laws to protect doctors who recommend cannabis to their patients, as well as the patients who possess and use medical cannabis, from criminal penalty, the Lincoln Journal-Star reported.

The Montana Department of Revenue has revised its proposed advertising regulations for medical cannabis businesses after reviewing public comment it received on the draft rules.

The department released proposed regulations in July to implement House Bill 249, a law passed earlier this year to allow medical cannabis businesses to engage in some forms of electronic advertising that were previously off limits.

Many of Montana’s licensed medical cannabis providers criticized the Department of Revenue’s proposed rules, KTVH reported, arguing that the regulations were too restrictive and would ultimately limit their ability to grow their businesses.

The department announced Sept. 8 that it would amend its draft rules to clarify that a medical cannabis provider “may promote its business and market its brand but may not advertise marijuana or marijuana products except in electronic advertising,” according to KTVH.

The revised regulations would also remove several provisions that were included in the original proposal, including one that would have restricted the size of outdoor signs and required them to include disclaimers about the risks associated with cannabis use, KTVH reported. Under the updated rules, cities and counties would be responsible for regulating outdoor signage, although medical cannabis businesses would be barred from advertising on billboards.

There’s a new bill in the U.S. Senate to legalize cannabis at the federal level, called the Cannabis Administration and Opportunity Act (CAOA), introduced by U.S. Sens. Cory Booker (D-NJ), Ron Wyden (D-OR), and Senate Majority Leader Chuck Schumer (D-NY). This bill wouldn’t merely legalize cannabis. It would also begin to repair the injustices of the drug war by investing tax revenue into communities most affected by decades of anti-drug enforcement, especially communities of color.

The CAOA—and a comparable bill in the House, the Marijuana Opportunity Reinvestment and Expungement Act (MORE) Act—make a lot of sense, and its sponsors deserve credit for getting them this far. The MORE Act already passed the House last year, on a bipartisan vote of 228 to 164.

But here’s the cold reality: these bills have no chance of passing without 60 votes in the Senate. And no matter how you count, there just aren’t 10 Senate Republicans willing to acknowledge the damage done by the drug war upon communities of color. That sad fact basically dooms these bills from reaching the president’s desk. 

For all the credit these senators deserve for raising awareness of cannabis legalization as an issue worth prioritizing, that might be all these bills accomplish. Trying to pass cannabis reform through a standalone bill is a fool’s errand in a dysfunctional Congress. 

Despite the widespread popularity of cannabis legalization, the prohibition establishment just has too many levers to pull in a Senate dominated by old white men. But that’s OK, because the next opportunity to legalize cannabis is just around the corner. If done correctly, it will be much more difficult to stop. 

Here is how to legalize cannabis in one (relatively) easy step. 

The largest legal cannabis market in the world just had the best quarter on record.

California’s adult-use industry reported nearly $1.4 billion in taxable cannabis sales and $333.2 million in total program tax revenue, according to the California Department of Tax and Fee Administration (CDTFA). Those record figures represent a 91-day period from April, May and June.

Yes, the legal market appears to be picking up steam, said Graham Farrar, the co-founder and president of Glass House Brands. His Santa Barbara-based operation encompasses more than a half a million square feet of sustainably grown, craft-at-scale cannabis.

And, yes, there are more and more legal cannabis consumers participating in California, he said.

Since the state launched its first adult-use sales in January 2018, the cannabis industry has provided a total program revenue of $2.8 billion, which includes $1.4 billion in cannabis excise tax, $347.4 million in cultivation tax and $1 billion in state sales tax during the course of the past 3 1/2 years.

But are the taxes too high? The answer to that is also yes, Farrar said.

Two New Mexico medical cannabis producers speculate that there could be a cannabis shortage crisis when recreational sales begin in the state next year.

The speculation comes after the New Mexico Regulation and Licensing Department (RLD) and the Cannabis Control Division (CCD) stopped approving new cannabis facilities until further regulations were finalized later this year, the NM Political Report reported.

According to the news outlet, the CCD is prohibited from accepting new applications on or after June 29, 2021 and it will not process any applications until the state finalizes regulations for similar license types.

Some producers believe that putting a pause on expanding the number of production facilities will worsen the state’s shortage issue—an issue some rural areas in New Mexico have already experienced due to a cap on the number of plants cultivators can grow, the news outlet reported.

Duke Rodriguez, the president and CEO of Ultra Health, a medical cannabis company, told the NM Political Report that data compiled from his company determined that the state could run out of cannabis days after adult-use sales launch on April 1, 2022. He said allowing existing medical cannabis producers to expand operations could only fix part of the problem.

RELATED: New Mexico Prepares For April Launch of Adult-Use Cannabis Sales

NEW YORK, Sept. 07, 2021 (GLOBE NEWSWIRE) -- PRESS RELEASE -- Acreage Holdings, Inc., a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., has announced that Hurricane Ida caused extensive damage to its cultivation center located in Sewell, N.J., which was nearing the completion of its construction.

“The damage will significantly delay the opening of the Sewell cultivation center,” said Steve Goertz, Acreage’s chief financial officer. “Based on currently available information, we do not expect the damage to our operations from these events to have a material impact on our current financial condition. Production at our Sewell facility, however, is unlikely to commence in the first quarter of 2022 as previously expected."

VANCOUVER, British Columbia, September 8, 2021 - PRESS RELEASE - New Leaf Ventures Inc., a management and investment organization dedicated to evaluating, investing and accelerating advanced stage operations in the North American Cannabis sector, wishes to advise that its wholly-owned subsidiary, New Leaf USA, Inc., is pleased to announce it has entered into an exclusive Washington State commercial packaging, licensing and distribution agreement with Long Play Inc., a Colorado Corporation and licensors of renowned cannabis brand "WILLIE'S RESERVE."

The agreement, which was previously introduced in a news release on June 29, was executed and came into effect Aug. 31. The licensing encompasses exclusive rights to source, manufacture, distribute and market Willie's Reserve and Harvest products in Washington State. The agreement includes several USPTO registered trademarks and licensed products including,

New Leaf Services, LLC, a Washington limited liability company, on behalf of itself and its direct wholly-owned subsidiaries and any sublicensees (collectively the "Licensee"), has entered into an exclusive, nontransferable license to use the Licensed Property in connection with the processing, production, distribution and sale of the Licensed Products in the State of Washington, and which License may sublicense to New Leaf Enterprises, Inc., (NLE) as bound by the same terms and conditions under this agreement as Licensee.

In concordance with standard commercial agreements regarding the use of trademarks, packaging, permits and intellectual property, NLE will be responsible for acquiring all cannabis source materials, including dried flower and other products containing cannabis, and upon receipt of a purchase order, will source the necessary Cannabis Materials and undertake production and distribution of the Licensed Products within Washington State. Full details of the agreement are subject to commercial protection and are withheld for proprietary reasons.

Co-founded by renowned singer-songwriter and cannabis pioneer Willie Nelson in 2015, the Willies Reserve brand has become widely recognized for its commitment to celebrating what is possible when enthusiasts and experts join forces to collaborate. The brand embraces the natural diversity of the plant, the range of cultivation methods, and the spectrum of effects cannabis creates.

Boris Gorodnitsky, New Leaf USA president & New Leaf Ventures Inc. director comments, "This is an exciting announcement for the entire New Leaf team today. We have worked hard to secure this agreement, and we intend to maximize the relationship to ensure our mutual success in Washington and hopefully beyond. This agreement is the result of an intelligent and considered business-focused approach to growth. Everything we have done since our initial public listing has been aimed at delivering results. Incremental growth, smart investments, and partnerships are shifting the New Leaf brand family into high gear. We are delighted to be working with the team at Willie's Reserve and look forward to growing our footprint throughout the marketplace."

In August, more than a dozen of the top cannabis companies reported their earnings for the second quarter. And while product sales this year remain brisk—with states like Michigan and Illinois reaching billion-dollar industry valuations—questions remain about the true viability of legislative change and the ability of legal providers to compete with legacy markets.

Cannabis Business Times and Cannabis Dispensary spoke to several executives at prominent U.S. firms to get their thoughts on performance this year, the prospects of banking reform, social equity and the future of American cannabis after a record-setting first half of 2021.

Growth Persists Despite Legal Uncertainty

Despite an ongoing pandemic and economic uncertainty, American cannabis remains hot. Curaleaf, a leading U.S. multi-state operator (MSO) with more than 100 dispensaries across 23 states, reported a scorching 166% year-over-year increase in revenue for Q2. The company is on track to break $1 billion in sales revenue for the 2021 fiscal year. 

Leadership identified the company’s multi-state presence and focus on product quality as drivers of growth.

“Our focus on delivering high quality products that meet the needs and wants of our patients and customers is one of our biggest priorities as Curaleaf continues to scale,” said CEO Joe Bayern in an email to CBT and CD. “We are investing in new form factors based on consumer needs, including new innovations within the vape, concentrate or oral, ready-to-drink beverage and topical categories.”

Smaller firms did just as well. Arizona-based TILT Holdings saw a 33% year-over-year increase in revenue, while Illinois wholesale leader Cresco Labs broke $100 million in quarterly retail sales, a 157.6% increase year-over-year.

Twelve people linked toillegal cannabis grows in San Bernardino County, Calif., were arrested andcited over the weekend.

Deputies discovered theillegal grows during week one of the county’s “Operation Hammer Strike,” aninvestigation to attack the existing unlawful cannabis cultivation in SanBernardino County.

According to Police 1, 13 search warrants were issued for week one of theinvestigation, and the deputies served at four California cities: Hesperia,Piñon Hills, Phelan and Landers.

Deputies from multiple patrolstations and members of the Marijuana Enforcement Team at the San BernardinoCounty Sheriff's Department conducted the raids Monday through Thursday,according to Police 1. The investigation came after lawenforcement received multiple complaints from residents about outdoor cannabiscultivations in those specific areas.

According to the news outlet,authorities discovered over 10,000 cannabis plants, approximately 1,335 poundsof processed cannabis, more than $30,000 in cash, one electrical bypass, and 39greenhouses.

Officials arrested and cited12 individuals for “suspicion of cultivation of cannabis over California'ssix-plant maximum,” Police 1 reported.

The Douglas County Sheriff’sOffice and Douglas Interagency Narcotics Team (DINT) issued a search warrant toinvestigate a large-scale illegal cannabis grow in Douglas County, Ore., afterreceiving several tips from citizens.

According to Kezi 9 News, the DINT discovered an estimated $50 millionworth of illegal cannabis at a facility operating under the disguise of a legalhemp operation.

Law enforcement did not findany hemp plants on the property but uncovered approximately 150 greenhousescontaining nearly 50,000 cannabis plants, the news outlet reported.

Several vehicles, tents, twoRV’s and two swimming pools were found on the premises. The pools were used tohold water tanks, which were being fed by water pumps from a nearbycreek, Kezi 9 News reported. The property was also reportedto be filled with trash, containers, fertilizers and even human waste.

Upon the arrival of theinvestigation, several workers fled the location, but the operation"manager" was quickly identified, Kezi 9 News reported.The 44-year-old man was charged with Unlawful Possession and UnlawfulManufacture of Marijuana and placed in the Douglas County jail. 

At this time, theinvestigation is ongoing and additional charges may be pending, accordingto Kezi 9 News.

Illinois will conduct a corrective lottery to award additional adult-use cannabis retail licenses, state officials announced Sept. 3.

The decision aims to rectify a “clerical oversight” slipup on data entry that wrongfully excluded applicants from a three-part lottery process that awarded 185 retail licenses—110 social equity licenses were allocated between a pair of lotteries held July 29 and Aug. 5, while 75 licenses for businesses with the top application scores was held Aug. 19.

Unless nullified in court, the results from those original three lotteries are final, according to a statement the Illinois Department of Financial and Professional Regulation (IDFPR) released Sept. 3.

“Any such licenses [from a corrective lottery] will be in addition to any licenses awarded based on the original lotteries,” the IDFPR release stated. “Thus, unless a court rules otherwise, the department does not intend to alter or change the results of the original lotteries when it conducts the corrective lotteries, but instead intends to award additional licenses where necessary to redress errors that resulted in the improper exclusion of applicant entries in the three original lotteries.”

Nonetheless, IDFPR cannot issue those 185 licenses unless Cook County Circuit Judge Moshe Jacobius lifts a standing court order blocking the rollout. During an Aug. 16 hearing, Jacobius said there was a possibility the state would have to redo its entire lottery process.

Also in that hearing, Jacobius ruled that WAH Group LLC was one of the unfairly excluded applicants from the first lottery held July 29. WAH Group originally filed a suit with HAAAYY LCC, but those two applicants now intend to file amended complaints that represent their separate allegations against the lottery process, according to the Chicago Sun Times.

The Zimbabwe Investment and Development Agency (ZIDA) has issued 57 cannabis cultivation licenses, according to a Bloomberg report.

“We have licensed 57 investors for medicinal cannabis production from Germany, Switzerland, Canada and as well some local players,” the agency told the news outlet. “Companies have been licensed for cultivation and processing of medicinal cannabis and they own 100% of their investment.”

ZIDA indicated that cannabis production has launched at some of the licensed farms already, according to Bloomberg. The agency is working with the Ministry of Lands and the Medicines Control Authority of Zimbabwe to ensure quality in seed imports.

Zimbabwe legalized medical cannabis in 2018, and the Treasury forecasts that cannabis sales will reach $1.25 billion this year, Bloomberg reported.

We’ve reported on the wave of medical and adult-use legalization moving across the U.S., particularly in the past 12 months, but it’s important to recognize the progress sweeping across the globe, as well. This week, Panama became the first country in Central America to legalize medical cannabis. This is a major step forward.

At the same time, as Marijuana Moment reported, the Mexican legislature plans to address the recurring question of cannabis legalization in that country—one that holds the potential for the world’s largest cannabis market.

In both cases, the promise is real. This means big business—and, more importantly, great reforms in civil rights and criminal justice.

These headlines also serve as a reminder that cannabis won’t remain a series of fragmented markets for too much longer. U.S. legalization is being bandied about, of course, and business owners will one day need to reckon with the broader supply and demand curves outside their relatively small corner of the global industry.

What does that mean?

It’s hard to say, but it does mean that everyone in the business should keep an eye on the horizon. The cannabis industry is only getting bigger. There’s plenty of room for everyone who feels a calling to this plant, and it will surely remain an industry in which the important of listening to one another cannot be overstated.

Washington State Gov. Jay Inslee has reactivated specific cannabis-related allowances due to the recent rise in COVID-19 cases across the state.

The Washington State Liquor and Cannabis Board (LCB) stated in a press release that the governor has reinstated these allowances for health and safety reasons.

According to the press release, allowances reactivated for cannabis retailers include curbside services, retail walk-up windows and the distribution of hand sanitizers and masks in-store.

The LCB is also temporarily relaxing its current restrictions on minors and is allowing children under 16 years old to be on licensed premises under three specific conditions:

All allowances are effective immediately until Oct. 31, and LCB plans to revisit all regulations at the end of October to determine if they need to be extended.

A hands-on cannabis college focused on industry education, training, career placement, medical cannabis and more has expanded to central Florida.

Learn Sativa University's (SATU) hands-on program has been in operation for roughly four years. The university started in a 1,000-square-foot building, but has recently expanded to a 5-acre cannabis farm and training facility in Apopka, Fla., said Patrick O'Brien, SATU founder and CEO.

The primary purpose of the college is pretty "straightforward," O'Brien said. 

"We aim towards two paths, and we're looking for two types of individuals: either ones looking to land rewarding careers in the industry, or individuals looking to start businesses. Whether it be in cultivation, dispensary, or anything along those lines, we can assist with business plans, curriculum and everything from top to bottom," he said.

He said that the campus features an indoor climate-controlled grow and a 50,000-square-feet outdoor greenhouse where students can learn through hands-on training. The college also offers online training for those who cannot attend in person.

SATU's hands-on and online courses include Marijuana Cookbook, Marijuana Laws, Marijuana Careers, Marijuana History, Marijuana Growing and Dispensary Management.