MjLink Cannabis Business News and Press

With social distancing and stay-at-home orders still in effect, cannabis events and enthusiasts are turning to an online format for celebrating the 4/20 cannabis holiday later this month.

In light of the ongoing COVID-19 crisis, major cannabis events and festivals have announced online 4/20 celebrations where cannabis enthusiasts can come together from all over to celebrate the cannabis holiday while still honoring social distance and active stay-at-home orders.

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Graham Abbott ~ Ganjapreneur.com ~ 

Researchers are calling for formal clinical trials into the efficacy of marijuana for treating opioid use disorder after a newly published study found that cannabis may ease many common symptoms of opioid withdrawal.

The study, conducted by researchers at the Johns Hopkins University School of Medicine and published in the forthcoming issue of the Journal of Substance Abuse Treatment, asked 200 people with past-month opioid and marijuana use whether their symptoms of opioid withdrawal improved or worsened when they consumed cannabis.

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Ben Aldin ~ MarijuanaMoment.net ~ 

California is the largest cannabis market in the U.S., but it also is the state market that arguably has grappled with the greatest challenges since adult-use legalization rolled out there Jan. 1, 2018.

With a many-decades-long history of cannabis cultivation and a largely unregulated medical cannabis market that thrived for nearly a quarter-century since the passage of Proposition 215 (also called the Compassionate Use Act of 1996), California had become home to more than 68,000 cannabis farmers, as Cannabis Business Times reported in 2018. The state’s cannabis market was predominantly comprised of smaller, family-run cannabis farms and dispensaries, and it began crumbling under the weight of the adult-use regulatory structure and accompanying costs (licensing and testing fees, and exorbitant taxes). 

Not unrelated, the state’s illicit market continues to dominate cannabis sales by the billions of dollars. In late 2019, The Motley Fool reported on estimates that projected legal cannabis sales would fall $5.6 billion short of illicit-market sales that year. 

Now, more than two years into the state’s adult-use program, the struggle continues, and unless things change, the future of the state’s legal market is grim, says Hezekiah Allen, a former cannabis grower who has an extensive history in the California market.

Allen is perhaps most well-known for his work as executive director of the California Growers Association (CGA) from 2015-2018, where he advocated and lobbied for legislation that protected the state’s extensive cannabis heritage, including its smaller, family-run farms. He had formed HDA Public Affairs in 2010 to separate and protect himself and his then-gray-market grow from his lobbying and advocacy work.    

Today, in addition to still operating HDA Public Affairs, Allen spends the bulk of his time working with Emerald Grown, a corporation of California cannabis cooperatives whose “goal is to get the farmers’ products to market and maximize the returns to the farmer,” he says. The organization has agreements with about 45 growers, Allen adds. 

So far in 2020, there has reportedly been $157 million in reported marijuana sales in the state.

A cannabis industry market research company on Tuesday predicted that the marijuana market in Massachusetts will reach $1.35 billion in 2024.

However that estimate comes before anyone can know what impact will be seen from the halt of adult-use operations during the COVID-19 pandemic.

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Melissa Hanson ~ Masslive.com ~

Dr. Sue Sisley is leading the next generation of cannabis medical science, taking the fight directly to the FDA and DEA to help cut through the red tape that hinders research.

In order for a drug to get FDA approval, the data on said drug’s effects must be reviewed by the Center for Drug Evaluation & Research (CDER) and the drug must be determined to provide benefits that outweigh its known and potential risks.

Now, what if research is impeded by a variety of governmental red tape? That is exactly the case with cannabis. And this is where Dr. Sue Sisley comes in. 

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Alex Moersen ~ CannaTechToday.com ~ 

Three lawsuits allege a cannabis entrepreneur defrauded investors by failing to pay back $1.2 million in loans.

Solace Holdings LLLP, Aether Gardens and Telloni Holdings Limited filed the lawsuits against entrepreneur Case Mandel and his companies Cannadips LLC and Trinidad Consulting LLC in the U.S. District Court for the District of Nevada, and state courts in Nevada and California.

The lawsuits allege that Telloni provided Mandel and Trinidad a loan of $500,000 in July 2018 and, in early 2019, increased the loan amount to Mandel and his businesses to $1 million. Then, around July 2019, the plaintiffs offered the defendants a “Bridge Loan” of $200,000.

“Under the terms of the Bridge Loan, the parties agreed that the $200,000.00 would be paid-back-in-full after three months with all accrued and unpaid interest,” the lawsuit filed in California reads.

Paul D. Turner, an attorney representing the plaintiffs, said the borrowed money with interest was due in October 2019, but his side didn’t file its first lawsuit until February 2020.

“We were trying to explore a possibility of figuring out what had gone so horribly wrong [before we filed the lawsuit]. Is there a fix, can we get paid, can we protect this multimillion-dollar investment? We went into that phase,” Turner said. “Obviously, we filed not one, not two, but three lawsuits under various contracts because we came to the conclusion that this investment could just fall apart, and we would be left holding a bag with nothing in it.”

Oregon senators: “SBA loans would be especially helpful to cannabis small businesses because they would fill gaps left by the private sector.” DISTRICT OF COLUMBIA: U.S. Sens. Ron Wyden and Jeff Merkley today announced they are requesting that the Small Business Administration (SBA) be prohibited from denying loan applications to cannabis small businesses in states Read the full article...

OREGON: The Oregon Liquor Control Commission will allow alcohol and marijuana licensees to accept expired Oregon driver licenses or identification cards that expired, on or after March 8, 2020, as an acceptable form of identification. This decision aligns with the Oregon Department of Motor Vehicles and law enforcement position, as DMV offices are closed because Read the full article...

VANCOUVER, BRITISH COLUMBIA – April 6, 2020 -- Rubicon Organics Inc. has announced that it has completed the sale of its 40,000 sq. ft. hybrid greenhouse in Ferndale, Wash., for US$8.5 million to a group of real estate investors. Proceeds from the sale will strengthen the company’s balance sheet, providing working capital to ramp-up production and sales across Canada.

“The sale of the Washington greenhouse is an important step in focusing the company on our core strength of bringing super-premium certified organic cannabis to the Canadian market,” said Bryan Disher, Chairman of the Board. “This transaction creates tremendous value for our shareholders by achieving a clean and timely exit from the U.S., while accelerating our timeline to profitability through focusing exclusively on our high-return Canadian operations.”

Rubicon Organics will continue to sell its remaining U.S. assets, which consists of a 3-acre land parcel in Greenfield, Calif., and certain cannabis extraction equipment. The company expects to complete the dispositions of all cannabis-related U.S. assets in the coming months.

The buyers are led by the cannabis license holder who has leased the facility from Rubicon Organics since November 2018 and includes Jesse McConnell, Rubicon Organics’ CEO, who also holds a minority interest in the buyer entity. In accordance with good corporate governance practices, Rubicon Organics formed a Special Committee, comprised entirely of independent directors, who supervised the negotiation of the transaction and recommended the transaction for approval to the full Board.

As part of the transaction, Rubicon Organics settled the US$3.0 million secured debt on the facility.

While many U.S. states have issued guidance to address the COVID-19 pandemic, Dr. Anthony Fauci, the nation’s top infectious disease expert, told CNN last week that the governors who have not issued statewide stay-at-home orders “really should” take action to slow the spread of the virus.

President Donald Trump, on the other hand, has largely advocated for each state to take its own approach, but Fauci’s message could indicate the inevitability of a federal stay-at-home order as the public health crisis evolves.

Should federal guidance come into play, what would this mean for cannabis businesses operating in a federally illegal industry?

First and foremost is the question of whether the federal government can legally issue a stay-at-home order in the first place.

“I think there’s still a question [of] if the federal government has the authority to issue a shutdown order,” Karen O’Keefe, director of state policies for The Marijuana Policy Project (MPP) and the MPP Foundation, tells Cannabis Business Times. “I saw that there are some general classifications of what constitutes an essential service and what does not for the federal government, and at least one state that was relying on that used those definitions to include medical cannabis as something that could stay open because pharmaceutical and medical facilities can stay open. … Certainly, my hope and expectation would be … a general mandate to keep open businesses that provide medications, and then that would include medical cannabis.”

Once limited to just plant or butter form, the recreational market has opened up products like tinctures, vape pens, topicals, and much more.

If you’re new to cannabis, or live in an illegal state, that alone may be news to you.

But there’s even more innovation going on in the cannabis industry, beyond the typical products. So we’ve rounded up product picks of some unusual forms of cannabis consumption.

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Meg Hartley ~ Leafly.com ~ 

Cannabis use hit an all-time high in March as lockdown measures spread across the U.S., giving people more free time with less to do.

A March survey of 2,500 consumers by Cowen & Co. found that 33% had tried cannabis at some point in their lives, a record high.

For the past month, 12.8% of respondents said they’d used pot, above the 12.5% average in 2019.

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Kristine Owram ~ Bloomberg.com ~ 

Ontario’s cannabis retailers are allowed to reopen with delivery and in-store pickup services under an April 7 emergency order, according to a BNN Bloomberg report.

This is welcome news for dispensaries that were told last week that they had been removed from the province’s list of essential businesses, which effectively shut the stores down until further notice.

Following advice from its Chief Medical Officer of Health, Ontario updated its list of essential businesses April 3, omitting cannabis retailers from the roster of businesses that could remain operational during the province’s COVID-19 response.

Prior to the updated emergency order, cannabis retailers had been operating as essential businesses, but the change left the Ontario Cannabis Store, the province’s government-owned online retailer, as the only outlet authorized to serve Ontario’s patients and consumers.

“Ontario and Alberta are both similar and a little bit unique in that the only legal online retailers are owned by the government,” John Carle, executive director for the Alberta Cannabis Council, told Cannabis Business Times. “Their regulator and our regulator both own an online cannabis retail website, and they’re the only ones allowed to sell it online. They’re the only ones that are allowed to deliver product to homes. So, people [could] still get their cannabis—they just [had] to do it through the government website.”

Indiana University researchers have presented data that suggest cases of electronic cigarette or vaping-associated lung injury (EVALI) are more prevalent in states that do not have adult-use dispensaries.

The study was published in JAMA: The Journal of the American Medical Association on April 6 by researchers from Indiana University’s School of Medicine and O’Neill School of Public and Environmental Affairs. It is titled “Association of State Marijuana Legalization Policies for Medical and Recreational Use With Vaping-Associated Lung Disease.”

“The data suggest that EVALI cases were concentrated in states where consumers do not have legal access to recreational marijuana dispensaries,” the study reads. “This association was not driven by state-level differences in e-cigarette use, and EVALI case rates were not associated with state-level prevalence of e-cigarette use. One possible inference from our results is that the presence of legal markets for marijuana has helped mitigate or may be protective against EVALI.”

The researchers analyzed data from all 50 states and Washington, D.C. This included data on reported EVALI cases from 2019 from the Centers for Disease Control and Prevention (CDC); population data from 2017 from the Surveillance, Epidemiology, and End Results database; and estimates of e-cigarette use in 2017 from the Behavioral Risk Factor Surveillance System, according to the study.

States with adult-use programs had 1.7 EVALI cases per million people, while states with medical programs had 8.8 cases per million and states with prohibition in full effect had 8.1 cases per million, according to the study.

The study also asserts the following: “A test of the difference in mean case rates implies that recreational marijuana states have 7.1 … fewer cases per million than medical marijuana states … and 6.4 … fewer cases per million than prohibition states. … The difference in the EVALI case rate between medical and prohibition states was not statistically significant.”

Last month, Canadian cannabis operators were outraged when Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) initially said that the industry would not qualify for business loans and other assistance aimed at boosting the economy during the COVID-19 crisis.

Since that time, the BDC has worked with the industry to amend its policies and has officially clarified its stance.

In an April 6 statement, the BDC said that all legal businesses will be eligible for the Business Credit Availability Program (BCAP), which includes access to the Canada Emergency Business Account and the SME Loan and Guarantee Program.

“When the policy was originally written, cannabis was not included as an industry that would qualify for it,” John Carle, executive director for the Alberta Cannabis Council, told Cannabis Business Times. “In our conversations with the government and the BDC, it wasn’t a specific exclusion, it was just that the policies and exclusions were written before our industry existed. It took us about two or three weeks to get them to adjust the policy to address our sector. … [Then] they didn’t specify industries, they just [allowed] everybody [to qualify], which was a really good thing for everybody.”

“We were very excited about BDC,” added Nathan Mison, VP of Government, Media & Stakeholder Relations for Fire & Flower, which operates dispensaries across the country. “I think it was really important to have the cannabis sector to be treated like every other business in Canada, so we were glad that all the other instruments provided to every other business were made available to the cannabis sector.”

Figi, 13, was the namesake for Charlotte’s Web products. Her story changed the way the public sees marijuana.

Charlotte Figi, the Colorado Springs girl who, as a gleeful and fragile child, launched a movement that led to sweeping changes in marijuana laws across the globe, has died from complications related to the new coronavirus. She was 13.

Charlotte’s death was announced by a family friend Tuesday night on the Facebook page of her mother, Paige Figi.

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John Ingold ~ The Colorado Sun ~

Prior to the domestic outbreak of COVID-19, the U.S. cannabis industry was in the midst of a liquidity crunch. Publicly traded companies experienced falling stock prices in multiple phases throughout 2019 and Q1 2020. Companies depleted available operating cash faster than could be replenished, with ever fewer capital sources to reload. Existing capital providers largely pivoted from equity to expensive, and often onerous, debt structures. Some companies took proactive and timely steps to conserve cash, consolidate operations and monetize assets like real estate through sale-leaseback arrangements before there was a hint of an oncoming pandemic. Others did not or could not.

Many companies expanded too quickly and thinly across geographies without growing their existing businesses with a focus on internal capitalization, making a shakeout in the industry inevitable. Following this pandemic, hopefully, a more mature industry will emerge with more efficient companies focused on organic growth and accretive deal-making.

COVID-19 has affected every person and every business in the U.S. in some small or tragically large way. Further, the virus is likely to upend efforts in several states looking to legalize cannabis through ballot measures in the 2020 election cycle by hindering signature gathering and diverting focus away from this issue.

But not all of the effects on the cannabis industry are negative. Most medical and adult-use cannabis businesses have initially been deemed “essential businesses” by states with regulated cannabis programs that have also issued emergency orders. In addition, demand for cannabis shows signs of being inelastic, suggesting that the industry may be resilient to economic downturns. The pandemic will exacerbate existing liquidity issues as investors go into safety mode.

Concurrently, the downturn may accelerate the demise of some companies, while creating opportunities for stronger companies and risk-loving private investors. Unfortunately, those small to mid-sized private companies who saw institutional-level capital availability on the horizon will be competing with 20-40% discounted blue-chip stocks with 3-6% dividend yields for attention in the eventually rebounding capital markets. Repriced former line-leaders whose previous valuations set the bar for private companies, will now be used to a comparative detriment to those raising capital in a pinch.

Cannabis Businesses Deemed Essential 

Charlotte Figi, the young girl whose medical condition inspired the Stanley Brothers to develop the low-THC strain Charlotte’s Web, has died due to COVID-19. She was 13.

According to KRDO, multiple members of her family have tested positive for the disease. 

“Charlotte is no longer suffering,” photographer Nichole Montanez wrote on behalf of the Figi family. “She is seizure-free forever. Thank you so much for all of your love.”

In 2013, the first installment of CNN’s Weed documentary shined a bright light on Figi’s story. When she was only a few months old, Figi began experiencing terrible seizures. By 2, she was diagnosed with Dravet Syndrome, a rare form of intractable epilepsy. Her prescription medications added up, both financially and physiologically; the toll on her body was severe.

By 5, Figi was suffering through 300 grand mal seizures each week.

This was in 2012, and by that point medical cannabis was not fully accepted by American physicians. The Figi family was told to continue on with other medication, but soon her father found a video of a young boy in California with Dravet Syndrome. He was being treated with cannabis. It seemed to work.

Hemp businesses will have access to the U.S. federal government’s new small business loan packages, the Paycheck Protection Program and the Economic Injury Disaster Loan Program. Each loan structure offers different things at different rates. Check out our guide to the new federal stimulus funding here.

But eligibility is one thing. Along the way, hemp business owners would do well to keep in mind the learning curve that their industry presents. Hemp (and all of its attendant supply chain links and chemical compounds) is a new crop in the eyes of the law. Regulated banks and even commercial lenders, no doubt, will be extra cautious in working with the industry.

“The industry will need to educate many of these lenders, many of these bankers,” said Scott Moskol, partner and co-chair of the Cannabis Business & Law Advisory group at Burns Levinson, which ran a webinar on this topic with the team at Vicente Sederberg April 3.  (Watch the full webinar below.)

Hemp growers will need to explain in detail what their particular license type allows them to do. Even terms like “isolate” and “biomass” may need to be spelled out.

The same hurdle that law enforcement agencies are jumping is in play here, too: Hemp and state-licensed cannabis plants (“marijuana,” in some terminology) are both Cannabis sativa L., a Schedule-I substance. Hemp, of course, becomes hemp when the plant’s THC content hits 0.3% or lower. This may seem like the sort of elementary facts that each grower must know before they decide to get into the space, but bankers and lenders may not be as familiar.

When maintaining your records, be as clear as possible.

A coalition of U.S. Senators sent a letter to leadership March 26, asking that the Small Business Administration (SBA) extend economic assistance to the cannabis industry.

Last month, President Trump instructed the SBA to allocate $50 billion to low-interest loans to help small businesses during the COVID-19 pandemic, but cannabis businesses were excluded from these relief efforts.

“Because federal law prohibits the sale and distribution of cannabis, the SBA does not provide financial assistance to businesses that are illegal under federal law,” Carol Chastang, SBA public affairs specialist, told Cannabis Business Times at that time. “Businesses that aren’t eligible include marijuana growers and dispensers, businesses that sell cannabis products, etc., even if the business is legal under local or state law.”

In their letter, Michael Bennett (D-CO), Cory Booker (D-NJ), Tammy Duckworth (D-IL), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), Edward Markey (D-MA), Robert Menendez (D-NJ), Jeffrey Merkley (D-OR), Jacky Rosen (D-NV), Bernie Sanders (I/D-VT) and Ron Wyden (D-OR) urged their fellow lawmakers to allow state-legal cannabis businesses to access loans and other forms of economic assistance from the SBA.

Specifically, the senators requested that lawmakers include language in the forthcoming appropriations bill that prohibits the SBA from denying loan applications from licensed cannabis businesses for the 7(a) Loan Guarantee Program, Disaster Assistance Program, Microloan Program and 504/Certified Development Company program.