Virginia and Missouri Launch Medical Cannabis Sales, New York Governor Renews Adult-Use Legalization Push: Week in Review

Virginia and Missouri Launch Medical Cannabis Sales, New York Governor Renews Adult-Use Legalization Push: Week in Review

At $102 million, Intrinsic Capital Partners has closed a growth equity fund for investment in cannabis- and hemp-focused life science and technology businesses.

With an overall aim “to build and scale industry-leading companies that address unmet needs across the supply chain,” according to a press release, Intrinsic hopes to do just that here. A team of operating advisors will work to build and scale Intrinsic’s portfolio companies, which so far include ACT Laboratories, Treez, Hound Labs and Elemental Brands. The Pennsylvania-based firm has committed $65 million to these four companies and anticipates directing dollars from the fund to two or three more businesses.

Intrinsic lists four members of its advisory group in the release, all of whom have ties to Johnson & Johnson included in their credentials (as does Cornelius Merlini, one of Intrinsic’s three co-founders and partners). One advisor, Minnie Baylor-Henry, was formerly director of the U.S. Food and Drug Administration’s (FDA’s) Division of Drug Marketing, Advertising, and Communications (DDMAC), the precursor to the federal agency’s Office of Prescription Drug Promotion (OPDP).

Merlini, who before co-founding Intrinsic most recently worked at Endo Pharmaceuticals’ Healthtronics Lab Solutions division, said in the release, “[W]e built a top team of advisors who have scaled valuable businesses and are able to provide our portfolio companies with strategic advice, mentoring, operational support and regulatory know-how.”

Acknowledging that much of the capital invested in the cannabis space has gone to state-legal cultivators, dispensaries and adult-use brands, Intrinsic’s team is focused on investment in ancillary businesses that support the cannabis and hemp markets.

“This is a unique and opportune time for a fund with dry powder to invest in market segments where traditional capital providers and strategic corporations have largely stayed on the sideline, creating price dislocation, attractive private market valuations and ample exit strategies,” said founder and partner Gerald Stahlecker, former president of FS Investment Corporation and executive vice president of FS Investments.

The portfolio companies’ products and services vary, from Hound Labs’ cannabis breathalyzer to Treez’ point-of-sale (POS) system and ACT’s cannabis testing.

Intrinsic’s third partner and founder, Dr. Howard Goodwin, M.D., said the growth of the cannabis and hemp industries represent “a multi-decade secular trend” and “a rare opportunity to invest in a space where there’s tremendous underlying demand, a strong industry-wide growth profile and scarcity of capital.”

Published at Sat, 24 Oct 2020 12:30:00 +0000

Is M&A Going To Heat Up In The Cannabis Sector With U.S. Federal Legalization Right Around The Corner?

Is M&A Going To Heat Up In The Cannabis Sector With U.S. Federal Legalization Right Around The Corner?

During the last few years, there has been increased consolidation in the cannabis industry and we have identified trends over the course of this time period.

The first wave of acquisitions started in Canada and this trend lasted several years. This wave of acquisitions still ranks as some of the most expensive transactions and was highlighted by Aurora Cannabis Inc. (ACB.TO) (ACB) acquired two Licensed Producers for a combined price that was greater than $7 billion.

The second wave of acquisitions took place in 2018 and 2019 and was primarily related to US cannabis retailers. Since cannabis is illegal at the federal level in the US, these transactions took much long to complete (when compared to Canada) and many of the deals were scrapped due to plunging stock prices. The most significant failed acquisition in this vertical was MedMen Enterprises’ (MMEN.CN) (MMNNF) deal to purchase Pharmacann. After this transaction was called off, MedMen has come under considerable pressure and was assigned a $0 price target from Canaccord Genuity (CF.TO).

From an acquisition standpoint, 2020 has been a slower than normal year for the cannabis sector. Companies are being much more strategic when it comes to acquiring or investing in businesses that could be complementary or accretive in nature.

One of the more interested trends that we have identified with the cannabis M&A market is related to the types of businesses that are being purchased. Previously, cannabis companies were focused on acquiring assets that would increase production capacity, improve brand awareness, or expand into a different vertical.

In the current market environment, technology is playing a much larger role in M&A activity and we consider this to be the third wave of acquisitions. In this phase, we believe that companies are focused on purchasing businesses that can lead to margin expansion, positive cash flow generation, or improved profitability.

One of the best examples of this is the merger between Stem Holdings Inc. (STEM.CN) (STMH) and Driven Deliveries Inc. (DRVD). The companies operate completely different businesses and are levered to different parts of the cannabis value chain. We consider the merger to be strategic in nature and expect the combined company to record stronger revenue growth, margin expansion, and positive adjusted EBITDA.

Stem Holdings owns cannabis assets that are located in strategic US markets. Driven utilizes a state-of-the-art delivery platform to service the California cannabis market. The combined company can use Driven’s technology to capitalize on cannabis delivery opportunity in the markets that Stem is levered to and are bullish on the potential value that can be created through this strategy.

At current levels, the combined company is trading at a considerable discount to its peers and we believe that it has a compelling valuation. Due to the technology side of the business, the combined company should be valued at a higher multiple and we believe that the market is missing out on something significant with it.

If you look at the performance of other cannabis companies that have acquired tech assets, you will notice a positive trend after an initial period of weakness. We are not sure if this is the case with Stem Holdings and Driven but are bullish on the long-term opportunity that is associated with the combined company.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Fri, 23 Oct 2020 12:07:15 +0000

Oregon Liquor Control Commission Greenlights Solution for Streamlining License Applications

Oregon Liquor Control Commission Greenlights Solution for Streamlining License Applications

When Andreas Neumann joined Jushi Holdings as chief creative director in early 2020, he brought with him a professional background steeped in experiential brand development. He was new to the cannabis industry, but the cannabis industry itself is new to the vast commercial landscape in the U.S. When he arrived, the industry was moving headlong into a conversation about the importance of brand-building for the long haul.

jushi beyond hello

James Cryer/Jushi Holdings

 

“My vision of the future of branding and communication is really that the experience equals the brand,” Neumann said in recent interview with Cannabis Business Times and Cannabis Dispensary.

He had been working with Queens of the Stone Age on a possible cannabis brand—something to draw on the band’s long-tenured role as stewards of stoner rock—when he linked up with Jushi. The multi-state operator was planning to overhaul its digital experience, and Neumann’s perspective arrived just in time.

In April, shortly after the beginning of the coronavirus pandemic and the series of stay-at-home orders in the U.S., Jushi’s retail brand, BEYOND/HELLO relaunched its website to better accommodate the customer experience and the rise of online shopping. Nuemann said he wanted to blend the digital and physical, using data to understand what Jushi’s customers wanted—and where and when and why they wanted it.

What did he and his team learn right away? “Everybody wants to go to the menu,” he said, so Jushi foregrounded the menu on its relaunch. “And, ideally, they’re already making a decision about what they want to get in the store and where they’re going to get it.” Digital and physical.

Jushi is on the ground in four states, with eight retail storefronts in Pennsylvania, two in Illinois, one in California and one coming soon in Virginia.  

Among those customer bases, Neumann said that he noticed 85% of users were approaching the BEYOND/HELLO website from mobile platforms (and only 9% of users coming from a desktop computer).

Blatant statistics like that helped push Jushi’s creative team in the direction of a smartphone-friendly website that allows customers to quickly find what they’re looking for in a way that may match their digitally savvy lifestyle. 

“That’s the reality, so you’ve got to build for mobile,” Neumann said. “Overnight, it was an incredible success. I’ve never seen anything like it. People really want the product, and all you can do is support them and make the process as frictionless as possible.”

He suggests cannabis businesses gather as much data as they can about their operations. This can be customer sales trends, vendor purchase order trends and regulatory data already tracked by seed-to-sale software. The key is to put it all together and assemble a meaningful narrative that can then improve on the business-to-customer relationship.

“You’re looking at this digital environment today, and you’re facing all these silos of data,” Neumann said. “If you connect all that, you can create products for the people and focus on what they want.”

Jushi’s vice president of cultivation, Josh Malman, said that this has been an important narrative in the cannabis industry lately.

With more data available to businesses, it ends up being the customer that decides certain moves in product development and innovation. Even genetics selection is something that stems from consumer demand for downstream products like new concentrates or vape cartridges.

“Historically, the grower got to decide what they wanted to grow and they were picking what yielded the most, what was the easiest to grow and what they like to use,” Malman said. “Over the years, that decision-making process has been rolling up the manufacturing department and the retail department, because, at the end of the day, those are the groups that are utilizing this product for end users. Getting to understand what they need for their own processes has been really important.”

It’s this merger of front-end consumer data and back-end cultivation decisions that Neumann cited as the real power of harnessing all of this new information. He brought a creative lens through which Jushi could more carefully develop its suite of brands, but he pointed out that creativity is only as valuable as the return that a business sees on the bottom line.

Are all these ideas driving profits? It’s easy to overlook that simple necessity when a business is focused on honing its brand and telling its story to the marketplace. But, of course, sales matter.

“I think adding a team like [Neumann’s] and collecting the data directly from our POS systems and our trending of what the actual patient and customer wants [has been very important],” Malman said. “We continue to drive that progression of crop planning and production planning to a point where the grower is responsible for producing a high-quality output, but maybe has less input in terms of what they get to decide on growing. Some growers may not like that, but for the overall health and growth of the business it is absolutely the right way that we should go.”

Published at Fri, 23 Oct 2020 14:48:00 +0000

New Jersey Senate Judiciary Committee to Hold Oct. 22 Hearing on Legalization

New Jersey Senate Judiciary Committee to Hold Oct. 22 Hearing on Legalization

Thomas Hobbes famously stated that life can be “solitary, poor, nasty, brutish and short.” Hobbes could have well been predicting the state of the 21st century cannabis industry, with all its brutishness and nastiness. But we hope this article puts us in solidarity with you and other cannabis business owners, mitigating the solitude, and we hope our advice results in your experience in cannabis being neither poor nor short.

RELATED: 6 Cannabis Business Lessons We Learned Too Late

1. BUDGET FOR THE UNKNOWN

Do not forget to budget for the “Oops, we forgot about…” In our prior article we emphasized understanding the revenue and expense cycles of the particular verticals you operate within (grow, processing, retail, etc.) and to pull them together into a pro forma. Almost every significant expense line will have unanticipated situations come up.

Let’s say you are designing an indoor grow and you are ready to install all your lighting and air management equipment. Your electrician says you need to upgrade the electrical capacity to handle all the equipment you identified. This could easily be a $50,000 additional expense.

Or, as another common example, labor expenses are often underestimated and can drain your cashflow before you start monetizing your crop. If, for example, you are delayed in planting your crop or processing by only a few months, your payroll budget still needs to cover the people you already hired. When doing your pro forma, and before you give any rosy scenarios to investors, it is best to add an additional six months of payroll expense as a “contingent payroll cost” (aka cover your assets (CYA)).

Another consideration for extraction operations: You will be working with highly tuned pieces of equipment that do wear out. A failed compressor, pump or chiller can easily take your machine down for a day or two—which is precious processing time. Budget cash to purchase extra key components to keep on hand—items that may otherwise have to be ordered or reconditioned before you can again get up and running.

2. VERIFY ALL INPUTS INTO YOUR DECISION MAKING

In our prior article we warned against trusting experts; you can apply that idea to your actual decision making.

Everybody is eventually wrong at some point in their cannabis journey. We’d even go so far as to say everybody will be wrong in a very big way at least once. “Everybody” not only includes you, but less intuitively, this lesson includes everybody else internal and external to your core management team. Be very careful of internal and external sources of expertise that advise by assertions. Assertions are dangerous, because if they are delivered with a sense of certainty you may just believe them if you trust the person providing the assertion. People who operate by assertion usually know less than they assert (a term for this, coined by authors Peter Boghossian and James Lindsay in their book “How to Have Impossible conversations,” is the “Unread Library Effect).

All information going into your management team’s decision making needs to be verified and re-verified. One of your best management skills is that of a highly skilled journalist. Such journalists try to have more than one source for their information—they corroborate the information they receive.

3. DON’T AVOID BORING ADMINISTRIVE TASKS

engineered extracts

Engineered Extracts

 

Paperwork and administrative activities can become boring. It takes a special individual to be wired for the constant battle of fighting back against burial by paperwork. It is all boring until the moment there is a problem—then suddenly an existential crisis makes paperwork the opposite of boring. Crisis can include compliance issues around licensing, track-and-trace systems, accounting, payroll, insurance of all kinds, property taxes, payroll taxes, income taxes, warranties, standard operating procedures (SOPs), contracts of all kinds, on and on and on. 

When companies start out, they necessarily put paperwork related to some of those areas on the back burner. They say: “Why do we need SOPs? It is just me and my buddies. We’ll get to that later.” Or, “Insurance in cannabis is so expensive, we’ll probably never need it.” Well the fallacy of that position has again been cast in the spotlight given all the recent fires in the Western states. How many times have you heard someone say they are operating on a handshake deal? How many times do you think these deals work out? Answer: practically never.

One of the most valuable individual(s) you will add to your team is someone with administrative skills. These will be dedicated individuals or key management members who take on the admin duties. Consider them the frontline workers of your company. The company will not exist in the future if all the administrative stuff is not complete. Don’t let the avalanche of paperwork bury your business.

4. STOP ADVOCATING FOR FEDERAL LEGALIZATION RIGHT NOW

There is incessant talk about federal legalization needing to happen immediately.  But we believe that when federal legalization does come, the floodgates of competition will open. Especially if you are a small or mid-size cannabis company, you need as long a runway as possible to get on solid footing and to make yourself a survivor, either as a contender to buy other firms or as a target of a purchase. Each state has struggled with getting legalization correct. While you are dealing with these challenges, you don’t need an overlay of federal challenges to your survival. 

So, what do you advocate for? Advocate for decriminalization, not federal legalization. Advocate for the repeal of IRS Tax Code Section 280E.

Finally, we should all be advocating for the expungement of past criminal records related to cannabis on principle alone.  

5. WHAT KIND OF BUSINESS STRUCTURE SHOULD YOU BUILD?

This is the kind of question that can be hard to ask yourself, especially if you have your heart set on only being in retail or being “the best grower” ever or geeking out permanently with your buddies extracting oil and distillate and hoping to scale to stay in business.  Our admittedly biased opinion is that you have to build some kind of vertically integrated intrastate business.

We don’t have the perfect template, but we define a vertically integrated cannabis business as one in which you are in at least three verticals. For example, you have a grow, a processing division and a retail outlet. Or maybe you have a grow, a distribution business and an intellectual property licensing business. The idea is that each business has its own revenue cycle (see our previous article) and the whole is greater than the sum of its parts. With multiple opportunities to capture margin, why risk everything on one market segment?

Say you own a grow operation and you can wholesale your flower at $1,500 per pound. Let’s assume you don’t have any commission charges for distribution. Now, if you owned a retail shop, you can sell that same pound of flower, broken down into 1/8ths for double or triple the $1,500. You also could create and sell your own oil and distillate without the tolls charged by contracting such services.

We can go on and on with examples, but the important idea is to think through what the long term game plan is. As we noted above, we believe federal legalization will be an extinction event for most cannabis companies. By being vertically integrated and managed well you will become a target for purchase by a much larger firm; or you become a target for investment allowing you to scale your dream. Long-term, there will be standalone firms in each vertical, we grant that outcome. But the standalones will be so large they will basically be part of oligopolies in each vertical. They will serve their purpose, but they won’t create much diversified value. We believe more value will be created per dollar invested in a vertically integrated company than a vertical one only and vertical integration will increase your survival odds.

6. BE AWARE OF WHIZ BANG TECHNOLOGY

Automation, smart devices, artificial intelligence, sensors, remote controls, etc., are all great ideas, and in a perfect world you would have an unlimited budget to try out all these productivity- touting applications.  However, balancing the appeal and benefits of technology with your financial bandwidth is essential. As is exploring any technology’s long-term viability. Choose your initial equipment wisely.  Do your due diligence and talk to actual people who are running the equipment you are looking at to learn about benefits and any specific issues with the equipment.  

IN CONCLUSION

We offer these lessons as the result of our own learning curve. Cannabis is susceptible to the “shiny object syndrome” in that it is easy to get distracted by activities and business deals that are not core to your long-term success. This industry is a slog. The more the slog you endure, the stronger and deeper you build the foundation of your business and elevate your chances for success. As we noted in our prior article, we touched upon the concept that a chain of objective successes is the result of a multiplication of probabilities. And learning from others is the cheapest way to increase any and all of your objectives’ probability weightings.

Loren Picard is CEO at High Desert Flower Inc. in Oregon.

Andrew Olsson is vice president at High Desert Flower Inc. and is the co-founder of Engineered Extracts LLC, also in Oregon.

Published at Wed, 21 Oct 2020 17:24:00 +0000

Subversive Real Estate Acquisition REIT LP Aligns Shareholder Interests and Enhances Transaction with Grant of Rights to Holders of Non-Redeemed Restricted Voting Units

Subversive Real Estate Acquisition REIT LP Aligns Shareholder Interests and Enhances Transaction with Grant of Rights to Holders of Non-Redeemed Restricted Voting Units

Subversive Real Estate Acquisition REIT LP (NEO: SVX.U) (NEO: SVX.RT.U) (OTCBB: SBVRF) today announced that it has agreed to grant an aggregate of up to 24,116,750 million contingent rights to holders of restricted voting units that are not redeemed in connection with the REIT LP’s previously announced qualifying transaction and to holders of Restricted Voting Units that are issued in connection therewith, which Contingent Rights will be issued to holders of record on the day following the closing of the REIT LP’s qualifying transaction.

The Contingent Rights will be distributed to holders of Restricted Voting Units pro rata based on the number of Restricted Voting Units held by such holder.Accordingly, if there are no redemptions of Restricted Voting Units, each holder of record will receive one Contingent Right per Restricted Voting Unit held. To the extent there are redemptions of Restricted Voting Units, each Non-Redeeming Holder will receive more than one Contingent Right per Restricted Voting Unit held, depending upon the quantum of redemptions.

On the automatic exercise of the Contingent Rights, holders will be entitled to receive, for no additional consideration, one limited partnership unit for every five Contingent Rights held, which may be subject to adjustment. The Contingent Rights will automatically be exercised by the holders thereof upon the earlier of (a) the listing of the REIT LP units on a recognized major U.S. exchange, and (b) cannabis production and sale becoming federally legal in the United States . In support of the transaction, and in connection with the issuance of the Contingent Rights, the REIT LP’s founders will forfeit the equivalent of approximately four million Limited Partnerships Units in the form of proportionate voting units with a notional equity value of approximately US$40 million .

Michael Auerbach , Chief Executive Officer at Subversive Capital and Executive Chairman at the REIT LP stated, “The grant of the Contingent Rights shows the commitment of the REIT LP’s founders to the success of its Qualifying Transaction, and provides a significant benefit to investors upon a future U.S. listing or cannabis becoming federally legal in the United States . We continue to believe our diverse portfolio of 15 industrial and retail properties in strategic, high growth cannabis markets, which are leased to leading operators, presents an extremely attractive opportunity for investors as the second publicly traded cannabis REIT,  with a targeted 6.5% initial annualized cash distribution yield, paid monthly, as well as a substantial growth opportunity over time.”

The REIT LP has applied to list the Contingent Rights on the Neo Exchange Inc. under the symbol SVX.RT.C. The listing of the Contingent Rights is subject to the REIT LP fulfilling all of the requirements of the exchange.

The Contingent Rights will not possess any redemption or distribution rights. The Contingent Rights will expire and be worthless if they do not convert upon their terms prior to the 10 th anniversary of the Closing.

No fractional Contingent Rights will be issued. If a holder would be entitled to receive a fractional interest in a Contingent Rights, we will round down to the nearest whole number of Contingent Rights to be issued to such holder. The Contingent Rights will not be distributed if the REIT LP’s qualifying transaction does not close.

For more information, the Company has posted an investor presentation and preliminary long form prospectus to its website at www.subversivecapital.com/reit .

Additionally, the Company held a conference call to discuss the Qualifying Transaction on October 9, 2020 . A webcast replay of the conference call is available on the Company’s website.

About Subversive Real Estate Acquisition REIT LP

Subversive Real Estate Acquisition REIT LP is a limited partnership established under the Limited Partnerships Act ( Ontario ) formed for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the REIT LP that will qualify as its qualifying transaction for the purposes of the rules of the Neo Exchange Inc. (the ” Exchange “) The REIT LP is a special purpose acquisition corporation for the purposes of the rules of the Exchange. The REIT LP’s Restricted Voting Units and Contingent Rights are listed on the Exchange under the symbols “SVX.U” and “SVX.RT.U”, respectively.

Forward-Looking Statements

This press release may contain forward looking information within the meaning of applicable securities legislation, which reflects the REIT LP’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT LP’s control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. The REIT LP does not undertake any obligation to update such forward looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

SOURCE Subversive Real Estate Acquisition REIT LP

Published at Mon, 19 Oct 2020 12:37:26 +0000

NJ CAN 2020 Enlists Help of New Jersey Governor in Campaign’s Efforts to Support State’s Cannabis Referendum

NJ CAN 2020 Enlists Help of New Jersey Governor in Campaign’s Efforts to Support State’s Cannabis Referendum

New Jersey has grappled with the idea of adult-use cannabis legalization for a while now, especially since Gov. Phil Murphy took office in 2018 with the promise of cannabis policy reform.

When a legalization bill stalled in the legislature last year, lawmakers placed an adult-use legalization question on the state’s 2020 ballot.

With just over two weeks until Election Day, many are surely wondering how the election will shape cannabis policy in the U.S.

“I’m excited to see what happens in New Jersey,” Rachel Gillette, partner and chair of Greenspoon Marder’s Cannabis Law Practice, tells Cannabis Business Times and Cannabis Dispensary. “I’m also excited to see what happens in states like Arizona and to see how many more states choose to legalize cannabis in this election.”

RELATED: UPDATE: 5 States Voting on Cannabis Legalization This November

Here, Gillette offers her predictions on whether New Jersey’s adult-use referendum has the support it needs to pass on Election Day, as well as what comes next, from how the law will be implemented and its potential impact on existing medical cannabis businesses to how cannabis policy reform in New Jersey might affect neighboring states that have yet to legalize.

Melissa Schiller: How likely is it that New Jersey voters approve adult-use cannabis legalization this November?

Rachel Gillette: I haven’t seen any recent polling, so this is pure guessing, but my guess is that we’re going to see more and more states pass adult-use, either through ballot initiatives or through the legislative process, which just brings to the forefront the fact that the federal government is going to have to address the issue of federal legalization at some point. I’m relatively confident, given that New Jersey already has medical marijuana, that it will pass [adult-use]. I think that people have moved past this [idea] that marijuana is the devil’s weed and should be prohibited in the United States. I think generally, more people favor the legalization of it, having seen what has happened in other states like Colorado, California, the Northwest and other states that have chosen to legalize. It can be done in a very safe way and can lend itself to providing significant tax revenue for the state, and, also, the more states that legalize, the more the black market gets squashed. I think the only reason the black market survives is because of federal prohibition and other states that have chosen not to legalize cannabis.

MS: What are your predictions for how New Jersey will implement the referendum and regulate adult-use cannabis in the state? What key provisions do you expect to see in New Jersey’s cannabis law?

RG: The ballot question seems relatively basic. It [asks if voters] approve of amending the Constitution to legalize a controlled form of marijuana for adults at least over 21 years old, and there would be a state commission created to oversee the state’s medical program and the new personal-use cannabis market.

My hope is that a state like New Jersey will not follow other states like Florida [and] New York, [which are] what I call “competitive licensing” states, which create these, for lack of a better word, very limited marketplaces that don’t allow for free market competition. It’s this merit-based application system, which lends itself to corruption and, frankly, the state getting sued every time.

My hope is that New Jersey will follow states like Colorado, California, Oregon [and] Washington that have more opened-up licensing, allowing for local jurisdictions to have some input in the time, place and manner of cannabis businesses within their jurisdictions, but not having the state have the ultimate control to limit the number of licenses or have a select few compete for these licenses. Those types of systems just don’t work, first of all. It’s very arbitrary to basically say, “Oh, here’s what you have to put in the application. Now you have to compete and we’re going to grade you.” Then the businesses that lose by .001 or the first loser are going to end up suing the state because they think it was arbitrary and they should have been granted a license. Not only that, it leaves all of these smaller mom-and-pop models behind, and it doesn’t give real people an opportunity to get into this marketplace.

My hope is that it will be a better system that what we’ve seen in other states. We’re now seeing other states that have done this competitive or merit-based licensing being sued—Florida, Maryland, Arkansas, Illinois is now a complete mess [and] Missouri has a whole bunch of people upset. I just don’t think that those systems work, and I wish states would avoid it.

MS: How might adult-use legalization impact the state’s economy, especially in the wake of the COVID-19 pandemic?

RG: There’s no doubt that cannabis can contribute to the tax base. The problem is, you have to tax it in a way that diminishes the black market and allows the regulated market to thrive—more people [have] to go to the regulated market and get away from the black market. The idea of how much it should be taxed on the state and the local level is a really important question, and I think states and local jurisdictions have to get that right. Otherwise, it can go the wrong way. Certainly, we have seen record sales in states like Colorado, [with] a significant amount of revenue being generated not only by special sales taxes associated with cannabis, but also, the first $40 million of the excise taxes goes to the construction of schools. I think there’s a lot of potential that the tax revenue raised can positively impact the economy.

What I would really like to see is that the tax revenue go to communities that have been disproportionately impacted by the drug war, so there’s actually some thought into why we’re legalizing cannabis or why the voters have decided to legalize cannabis and reinvesting that into community programs and things more focused on social equity. I think that’s really important, that we don’t forget about the communities and the people that have been affected by the failed war on drugs.

MS: How might adult-use legalization impact New Jersey’s medical cannabis program? In many states, patient counts start to drop when adult-use comes online—do you anticipate that happening in New Jersey, as well?

RG: Probably, and the reason that happens is because people are using cannabis both for medical use and for recreational use. If it becomes relatively easy to purchase if you’re an adult over 21, you don’t have to go through the process, even if you are using it for medical use, of getting a doctor recommendation and getting on a registry and all of that. A lot of people prefer the ability and the ease of being able to just walk into a store and buy cannabis because they’re over 21, rather than having to get their name on some register somewhere.

I do anticipate that the patient count will probably be impacted to some extent, but I hope they give credibility and resources to the medical cannabis market and medical cannabis consumers. We cannot forget about patients, even in light of adult-use legalization. They have different needs than people who consume from a recreational perspective. They may need higher THC levels or other cannabinoids in their products.

For example, in Colorado, if you’re a medical patient, you can purchase more cannabis than if you are an [adult-use] consumer, or you can purchase products that come in a higher dosage of THC than if you’re an adult-use consumer. I think that’s an important consideration. People are legitimately using cannabis for medical reasons, and they should be able to continue to do so and those products should continue to be available for them in the marketplace.

MS: With all of that in mind, how should existing medical cannabis businesses prepare for adult-use legalization?

RG: Probably, medical cannabis businesses are going to be the first that will be able to sell to adult-use consumers. I hope that there are other opportunities in New Jersey for other potential businesses, that the state doesn’t just limit it so people can only get adult-use licenses if they’re currently medical. I think they’re going to have to think about what kind of products an adult-use consumer may be taking other than a medical consumer, and [they should be] able to serve both types of customers in their facility.

I think it does get to be a diminished market as far as medical versus adult-use, once you open it up to everybody over 21, meaning you may have the same number of medical patients, but you’re going to have a lot more consumers that are over 21. I think that’s just the natural progression of legalizing for adult-use, that proportionally, you’re going to have more people buying products that are over 21 than are medical patients, so you have to play into that.

MS: How might legalization in New Jersey impact cannabis policy in neighboring states such as New York and Pennsylvania, which have also been considering adult-use legalization in recent years?

RG: I think the local authorities and legislators are going to see a bunch of people driving across the border to buy cannabis legally, and they’re going to say, “Maybe it’s time we consider legalizing, as well,” because that’s just tax revenue going to another state. It’s sort of like when I lived in Connecticut. They didn’t allow beer or wine to be sold on Sundays, of all days, when football is being played, and people used to just drive over the border to buy it. I think the same thing is going to happen, and I think, just like eventually Connecticut realized that not selling beer or wine on Sunday was not a great idea, [New York will] probably figure out that not legalizing cannabis isn’t a great idea either. They’ve already got Massachusetts there, too, in that Northeast area where people are probably driving across the border into Massachusetts to buy cannabis.

The same thing happens at a smaller level, when a local jurisdiction decides not to allow cannabis businesses. So, I think eventually, it’s going to come to the tri-state area. It’s just a matter of when.

Editor’s Note: This interview has been edited for style, length and clarity.

Published at Fri, 16 Oct 2020 12:00:00 +0000

Michigan Governor Signs Expungement Bill Into Law, Illinois Collects More than $100 Million in Cannabis Tax Revenue: Week in Review

Michigan Governor Signs Expungement Bill Into Law, Illinois Collects More than $100 Million in Cannabis Tax Revenue: Week in Review

Multistate cannabis operator Cresco Labs is committed to being a responsible player in the rapidly growing industry, and has now set out to help other companies build brands the right way through the release of its Responsible Advertising and Marketing Standards (RAMS).

The advertising and marketing code, which was made public Oct. 8, includes a set of guiding principles to ensure that Cresco markets and promotes its brands and products responsibly. The standards include guidance on commercial communications to help prevent underage appeal and ensure companies make appropriate claims about cannabis’s benefits. The code also offers best practices for consumer-facing promotional events and merchandising.

Here, Cresco COO Greg Butler and SVP of Brand Marketing Cory Rothschild share why the company developed and published these standards, as well as how they will ultimately benefit the industry as it continues to grow.

Melissa Schiller: Why did Cresco develop these standards? What was the company’s overall goal in releasing these to the industry?

Photos courtesy of Cresco Labs

Cresco COO Greg Butler

Greg Butler: The reason why we wanted to publish this is, as we look to the end of this year and into next year, what we expect to see in the U.S. cannabis market is an increase in investment across all companies in building their brands. There are a couple key trends driving that. One is competition that continues to grow, so everyone is fighting to grow their brand with customers. The second is companies are strengthening their financial positions. They’re able to invest more in brands. And then the third is we’re also seeing more opportunities for cannabis brands to invest in marketing, so there are more ways they can spend money. With that, there are a lot of tailwinds that are driving toward more spend for brands in the space.

As we looked at it, as we’re competitive and we expect everyone to be competitive, we wanted to create some guidelines that set a series of best practices to ensure that we’re building brands the right way and that it’s always in service of what’s best for consumers.

Cory Rothschild: We obviously operate under different laws and regulations in every state that we compete in. Foundationally, we do believe that there are some standards that shouldn’t change or vary depending on where you’re talking about cannabis. Even in certain states that have more relaxed laws, there are certain things when it comes to conversations around promoting responsible consumption or avoiding underage-appealing imagery. Those don’t change, and we must commit to those as an industry, not even just as a company, if we’re going to build a category that not only reaches its potential, but does what is best for consumers along the way.

MS: What do Cresco’s Responsible Advertising and Marketing Standards entail? What are some key best practices that are outlined in these standards?

CR: If you look at our guidelines, in some ways, it’s just some things that shouldn’t even be up for debate, from [the fact that] you should never advertise to a minor to how [to] display pictures of people and images in your ads to the claims that you make, and then how do you run events to ensure we’re doing everything in our ability to operate in a way in which a young consumer wouldn’t see our marketing? So, the gambit of our code reaches everything from media through to experience.

MS: What was the overall process like for developing these standards?

CR: It started with developing our own internal standards and adhering to those in all the work that we do on an ongoing basis. Our company is founded on being professional and helping to normalize the industry, and what that [means] is holding ourselves to standards that are above what is being asked of us. So, we developed this set of norms to what we felt was appropriate and to what we believed was the right way to operate our business.

We did look to other codes and responsible use practices that exist in the broader CPG space, whether that’s in alcohol or pharmaceuticals, to look to how we could set our own industry standards above and beyond the regulations that are imposed on us currently to make sure that we are proactively building the right category.

MS: How will these standards help prevent underage consumption?

Cresco SVP of Brand Marketing Cory Rothschild

CR: I would hope that these standards are overwhelmingly a no-brainer for most people. We hope that people nod as they read them because they seem reasonable and responsible. So, to point to a few—one is that when we show individuals in our advertising, those people should be over the age of 21, and that should be made clear in the ways in which they’re shown. This is something that’s commonly practiced across other CPG categories where there are age restrictions around usage, and there’s no reason we shouldn’t be doing the same. There are examples within our industry where there are underage individuals being shown or at least seemingly underage individuals being shown in advertising that wouldn’t be appropriate.

The other piece is showing imagery that would be somehow juvenile, whether that’s a logo, an endorsement, [or] some sort of imagery or dress that connotates use or young culture. That’s not appropriate to connect to cannabis when you’re building and making advertising. That’s something that we believe is common sense, but it’s worth us committing to as a group because we know that this is a product that can have an appeal to underage individuals if frequently shown in advertising.

MS: How will these standards help Cresco and other cannabis advertisers make appropriate claims about cannabis’s benefits?

GB: One of the things that’s difficult in an industry like cannabis is you don’t have a lot of FCC guidelines or health and safety guidelines of what product claims you can or cannot make. There isn’t a lot of oversight for brands that are making claims. As you think of an industry that’s brand new with consumers, you don’t want to allow brands to make misleading statements that might cause confusion or even misuse of products. So, in a world where you’re not governed by bodies that ensure you’re using clinical trials, we want to encourage everyone to be responsible on how they make or allude to product claims associated with product.

MS: How do the standards help establish best practices for promotional events and merchandising?

CR: I think the part that is unclear at the local level is, how should companies interact with people who are under 21 with product? Of course, if you’re hosting an event in California that has a license to sell cannabis, that’s a 21-and-over event by definition and is obviously associated with ID checking and all kinds of age gating, but that’s not the case when you’re putting up a booth at a community fair or a booth at an arts festival. These are all things [where] anyone can have a booth or show up, and you have to make judgement calls around whether or not you’d like to participate in those events. Then, when individuals at the event want to approach your booth and have a conversation with your company, how do you make sure you’re having appropriate conversations with appropriate individuals?

A lot of the code is trying to fill in some of those gray spaces that we’ve run into as a company on a daily basis as we try to do different events in different states. These are meant to be a complement to existing regulation and law as opposed to either rewriting or stating the obvious.

An example of Cresco’s advertising for its Liquid Live Resin

MS: How will these standards be distributed, or how do you hope they will be adopted by the industry?

GB: Our hope by publishing them is that it’s somewhat of a call to action. We hope that everyone looks at their own business and maybe finetunes and creates their own [standards]. While we’re all building our brands, we all want to do it the right way, so we’ll make [our standards] publicly available on our website for anyone who wants to read [them], and our only real objective on this is that others read, understand and adapt to it or their own version.

CR: Just to build on that, we’ve gotten a great response from other businesses that are interested in partnering, and we’re just beginning to have some of those conversations. My hope is that this becomes bigger than just Cresco Labs, as Greg mentioned, and that it pushes us to work together as an industry to build what’s right for our category. We [want to] continue to open more and more opportunities with partners in the media space, vendors [and] agencies so that more people are able to participate in cannabis and we can have greater and better marketing overall.

Editor’s Note: This interview has been edited for style, length and clarity.

Published at Sat, 17 Oct 2020 12:30:00 +0000

Building Brands the Right Way: A Look at Cresco Labs’ Newly Released Cannabis Advertising and Marketing Standards

Building Brands the Right Way: A Look at Cresco Labs’ Newly Released Cannabis Advertising and Marketing Standards

Multistate cannabis operator Cresco Labs is committed to being a responsible player in the rapidly growing industry, and has now set out to help other companies build brands the right way through the release of its Responsible Advertising and Marketing Standards (RAMS).

The advertising and marketing code, which was made public Oct. 8, includes a set of guiding principles to ensure that Cresco markets and promotes its brands and products responsibly. The standards include guidance on commercial communications to help prevent underage appeal and ensure companies make appropriate claims about cannabis’s benefits. The code also offers best practices for consumer-facing promotional events and merchandising.

Here, Cresco COO Greg Butler and SVP of Brand Marketing Cory Rothschild share why the company developed and published these standards, as well as how they will ultimately benefit the industry as it continues to grow.

Melissa Schiller: Why did Cresco develop these standards? What was the company’s overall goal in releasing these to the industry?

Photos courtesy of Cresco Labs

Cresco COO Greg Butler

Greg Butler: The reason why we wanted to publish this is, as we look to the end of this year and into next year, what we expect to see in the U.S. cannabis market is an increase in investment across all companies in building their brands. There are a couple key trends driving that. One is competition that continues to grow, so everyone is fighting to grow their brand with customers. The second is companies are strengthening their financial positions. They’re able to invest more in brands. And then the third is we’re also seeing more opportunities for cannabis brands to invest in marketing, so there are more ways they can spend money. With that, there are a lot of tailwinds that are driving toward more spend for brands in the space.

As we looked at it, as we’re competitive and we expect everyone to be competitive, we wanted to create some guidelines that set a series of best practices to ensure that we’re building brands the right way and that it’s always in service of what’s best for consumers.

Cory Rothschild: We obviously operate under different laws and regulations in every state that we compete in. Foundationally, we do believe that there are some standards that shouldn’t change or vary depending on where you’re talking about cannabis. Even in certain states that have more relaxed laws, there are certain things when it comes to conversations around promoting responsible consumption or avoiding underage-appealing imagery. Those don’t change, and we must commit to those as an industry, not even just as a company, if we’re going to build a category that not only reaches its potential, but does what is best for consumers along the way.

MS: What do Cresco’s Responsible Advertising and Marketing Standards entail? What are some key best practices that are outlined in these standards?

CR: If you look at our guidelines, in some ways, it’s just some things that shouldn’t even be up for debate, from [the fact that] you should never advertise to a minor to how [to] display pictures of people and images in your ads to the claims that you make, and then how do you run events to ensure we’re doing everything in our ability to operate in a way in which a young consumer wouldn’t see our marketing? So, the gambit of our code reaches everything from media through to experience.

MS: What was the overall process like for developing these standards?

CR: It started with developing our own internal standards and adhering to those in all the work that we do on an ongoing basis. Our company is founded on being professional and helping to normalize the industry, and what that [means] is holding ourselves to standards that are above what is being asked of us. So, we developed this set of norms to what we felt was appropriate and to what we believed was the right way to operate our business.

We did look to other codes and responsible use practices that exist in the broader CPG space, whether that’s in alcohol or pharmaceuticals, to look to how we could set our own industry standards above and beyond the regulations that are imposed on us currently to make sure that we are proactively building the right category.

MS: How will these standards help prevent underage consumption?

Cresco SVP of Brand Marketing Cory Rothschild

CR: I would hope that these standards are overwhelmingly a no-brainer for most people. We hope that people nod as they read them because they seem reasonable and responsible. So, to point to a few—one is that when we show individuals in our advertising, those people should be over the age of 21, and that should be made clear in the ways in which they’re shown. This is something that’s commonly practiced across other CPG categories where there are age restrictions around usage, and there’s no reason we shouldn’t be doing the same. There are examples within our industry where there are underage individuals being shown or at least seemingly underage individuals being shown in advertising that wouldn’t be appropriate.

The other piece is showing imagery that would be somehow juvenile, whether that’s a logo, an endorsement, [or] some sort of imagery or dress that connotates use or young culture. That’s not appropriate to connect to cannabis when you’re building and making advertising. That’s something that we believe is common sense, but it’s worth us committing to as a group because we know that this is a product that can have an appeal to underage individuals if frequently shown in advertising.

MS: How will these standards help Cresco and other cannabis advertisers make appropriate claims about cannabis’s benefits?

GB: One of the things that’s difficult in an industry like cannabis is you don’t have a lot of FCC guidelines or health and safety guidelines of what product claims you can or cannot make. There isn’t a lot of oversight for brands that are making claims. As you think of an industry that’s brand new with consumers, you don’t want to allow brands to make misleading statements that might cause confusion or even misuse of products. So, in a world where you’re not governed by bodies that ensure you’re using clinical trials, we want to encourage everyone to be responsible on how they make or allude to product claims associated with product.

MS: How do the standards help establish best practices for promotional events and merchandising?

CR: I think the part that is unclear at the local level is, how should companies interact with people who are under 21 with product? Of course, if you’re hosting an event in California that has a license to sell cannabis, that’s a 21-and-over event by definition and is obviously associated with ID checking and all kinds of age gating, but that’s not the case when you’re putting up a booth at a community fair or a booth at an arts festival. These are all things [where] anyone can have a booth or show up, and you have to make judgement calls around whether or not you’d like to participate in those events. Then, when individuals at the event want to approach your booth and have a conversation with your company, how do you make sure you’re having appropriate conversations with appropriate individuals?

A lot of the code is trying to fill in some of those gray spaces that we’ve run into as a company on a daily basis as we try to do different events in different states. These are meant to be a complement to existing regulation and law as opposed to either rewriting or stating the obvious.

An example of Cresco’s advertising for its Liquid Live Resin

MS: How will these standards be distributed, or how do you hope they will be adopted by the industry?

GB: Our hope by publishing them is that it’s somewhat of a call to action. We hope that everyone looks at their own business and maybe finetunes and creates their own [standards]. While we’re all building our brands, we all want to do it the right way, so we’ll make [our standards] publicly available on our website for anyone who wants to read [them], and our only real objective on this is that others read, understand and adapt to it or their own version.

CR: Just to build on that, we’ve gotten a great response from other businesses that are interested in partnering, and we’re just beginning to have some of those conversations. My hope is that this becomes bigger than just Cresco Labs, as Greg mentioned, and that it pushes us to work together as an industry to build what’s right for our category. We [want to] continue to open more and more opportunities with partners in the media space, vendors [and] agencies so that more people are able to participate in cannabis and we can have greater and better marketing overall.

Editor’s Note: This interview has been edited for style, length and clarity.

Published at Fri, 16 Oct 2020 12:05:00 +0000

Cannabis Stocks React on Recent Polling Data (GTBIF, GRWG, SGMD, CRLBF)

Cannabis Stocks React on Recent Polling Data (GTBIF, GRWG, SGMD, CRLBF)

The Cannabis space has heated up in the wake of the vice-presidential debate, wherein Senator Kamala Harris, Joe Biden’s running mate, made crystal clear that the Biden administration, if it prevails, will pursue a course of marijuana decriminalization at the federal level.

“We will decriminalize marijuana and we will expunge the records of those who have been convicted of marijuana,” the Democratic vice-presidential nominee said. “Times have changed — marijuana should not be a crime. We need to start regulating marijuana and expunge marijuana convictions from the records of millions of Americans so they can get on with their lives. As marijuana becomes legal across the country, we must make sure everyone — especially communities of color that have been disproportionately impacted by the war on drugs — has a real opportunity to participate in this growing industry.”

It should also be noted that, at this stage, no challenger to an incumbent in a presidential campaign has ever held such a commanding lead in the polls this near the election. Hence, market participants may begin to act very much like assets should price according to a Biden presidency from here forward, which could mean a powerful jump in interest for cannabis stocks as we close in on the results.

With that in mind, we take a look at some of the more active and interesting names in the space, including: Green Thumb Industries Inc (OTCMKTS:GTBIF), GrowGeneration Corp (OTCMKTS:GRWG), Sugarmade Inc (OTCMKTS:SGMD), and Cresco Labs Inc (OTCMKTS:CRLBF).

Green Thumb Industries Inc (OTCMKTS:GTBIF) is a producer and distributor of cannabis products including flower, concentrates for dabbing and vaporizing, edibles, and topicals. The company markets its products through third party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name.

The company is a national cannabis cultivator, processor and dispensary operator, is dedicated to providing dignified access to safe and effective cannabis nationwide while giving back to the communities in which they serve.

Green Thumb Industries Inc (OTCMKTS:GTBIF) most recently announced the grand opening for adult-use cannabis sales at Rise Naperville (formerly 3C Compassionate Care Center) on October 8 which included a ribbon cutting ceremony with Naperville Mayor Steve Chirico. Profits from the first day of adult-use sales will benefit Loaves & Fishes, a local poverty-fighting and hunger relief nonprofit agency. Rise Naperville is the first store to offer adult-use cannabis sales in Naperville, the third most populous city in the state, and will remain the only store in the city to serve medical patients.

“We worked hard to offer adult-use cannabis sales in Naperville and are excited to meet new customers while continuing to serve our patients,” said Green Thumb Founder and Chief Executive Officer Ben Kovler. “We have been proud members of the Naperville community since 2016 and will remain good neighbors, creating jobs and tax revenue and making a positive impact through our corporate responsibility programs.”

And the stock has been acting well over recent days, up something like 19% in that time.

Green Thumb Industries Inc (OTCMKTS:GTBIF) generated sales of $165.8M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 20.1% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($113M against $181.8M, respectively).

GrowGeneration Corp (OTCMKTS:GRWG) is at the heart of the recent return of momentum in the cannabis stock space.

GRWG trumpets itself as a retail hydroponic and organic gardening play in the US market, with a clear ecommerce presence already in place. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.

GrowGeneration Corp (OTCMKTS:GRWG) just announced its acquisition of Hydroponics Depot, Phoenix’s largest indoor and outdoor garden center. With the addition of Hydroponics Depot, GrowGen’s portfolio of hydroponic garden centers now includes 29 stores across 11 states.

According to the release, GrowGen’s entry into the Arizona market comes as voters consider Prop 207, which would legalize limited possession, cultivation and use of marijuana for adults ages 21 years or older. If approved, it is estimated that Arizona’s cannabis market could grow from over $700 million market in 2020 into a $2 billion market, including both recreational and medical marijuana.

And the stock has been acting well over recent days, up something like 12% in that time. Shares of the stock have powered higher over the past month, rallying roughly 21% in that time on strong overall action.

GrowGeneration Corp (OTCMKTS:GRWG) pulled in sales of $43.5M in its last reported quarterly financials, representing top line growth of 123%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($14.8M against $18.8M, respectively).

Sugarmade Inc (OTCMKTS:SGMD) is an extremely interesting speculative prospect in the California cannabis marketplace, with a major interest in BudCars, one of the fastest growing vertically integrated cannabis delivery players in the space.

SGMD is a product and branding marketing company investing in operations and technologies with disruptive potential. Its Brand portfolio includes CarryOutsupplies.com, SugarRush™ and Budcars.com.

Sugarmade Inc (OTCMKTS:SGMD) just this morning provided shareholders with a preannouncement of BudCars performance for the three months ended September 30, 2020, which featured steadily strong gross margins, nearly $2M in Gross Receipts, and more than 60% growth in Net Sales, Customer Orders, and Gross Profits on a sequential quarterly basis.

“BudCars continues to perform, setting records in basically every key metric we track,” stated Jimmy Chan, CEO of Sugarmade. “It was a tremendous quarter, with a big jump in customers and regional market share and robust margins on every sale. That paints a very motivating picture as we gear up to significantly expand our service territory, with upcoming expansion into the North Bay and Wine Country areas as well as our upcoming grand opening of BudCars LA.”

According to the release, management notes that BudCars growth has continually tracked ahead of expectations. However, the Company believes that geographic expansion is the key to unlocking a further dramatic acceleration in growth. As announced in a recent Letter to Shareholders, the Company is expanding BudCars initially into the North San Francisco Bay Area and the Wine Country Counties. That will be followed by the grand opening of BudCars Los Angeles, which is anticipated to take place in November.

Sugarmade Inc (OTCMKTS:SGMD) also achieved an additional strategic goal during the quarter by securing rights to a property zoned for cannabis cultivation where it intends to establish a licensed cannabis cultivation facility, which presents the potential to widen profit margins further through vertical supply chain integration and the establishment of a branded line of cannabis products.

Cresco Labs Inc (OTCMKTS:CRLBF) trumpets itself as one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America.

Employing a consumer-packaged goods approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi, High Supply, Reserve, Good News and Mindy’s Chef Led Artisanal Edibles created by James Beard Award-winning chef Mindy Segal.

Cresco Labs Inc (OTCMKTS:CRLBF) just announced the approval and the location of its tenth Illinois dispensary in Naperville. The adult-use dispensary is located in one of the busiest shopping areas in Naperville, the 3rd largest city in Illinois with approximately 150,000 residents.

“We have been consistent in choosing locations for our dispensaries in Illinois, focusing on high traffic areas in traditional retail environments. Sunnyside Schaumburg, which is adjacent to Illinois’ busiest mall and our new Naperville dispensary, which shares a block with Costco, Walmart, and Starbucks, are great examples of this strategy,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder. “Our approach of meeting the consumer where they are and providing a normalized cannabis shopping experience is allowing our dispensaries in Illinois and all Sunnyside stores nationwide to outperform industry averages.”

And the stock has been acting well over recent days, up something like 21% in that time.

Cresco Labs Inc (OTCMKTS:CRLBF) pulled in sales of $130.6M in its last reported quarterly financials, representing top line growth of 226.5%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($100.6M against $222.5M, respectively).

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Published at Wed, 14 Oct 2020 12:24:39 +0000

Fluence Launches VYPR 3x and VYPR DUO 3×2 Featuring Diversified PhysioSpec Spectra and Unique Design Flexibility

Fluence Launches VYPR 3x and VYPR DUO 3×2 Featuring Diversified PhysioSpec Spectra and Unique Design Flexibility

While implementing proper airflow at an indoor cultivation facility isn’t necessarily complicated or overly expensive, Geoff Brown, VP of Technical Solutions for Quest, says it’s a necessary part of the grow environment that is often overlooked.

“Ductwork is not fun by any stretch of the imagination, but it’s an inexpensive and important way to make sure that your grow runs optimally,” he says.

Insufficient airflow in a grow room can lead to reduced yield, overheating or plant disease, among other issues, and is often the result of poor planning when installing equipment, Brown says.

For example, if the air supply and air return are both located above the canopy, the conditioned environment is far away from the crop, which leads to poor airflow around the plants.

“In my perfect world, we would see a mismatch between supply and return,” Brown says. “If you’re going to have a high supply, you’d want a return low so that you get good mixing, or vice versa—you could supply low and return high. But doing both at the same level means that it’s going to be very difficult to mix the air and not end up with a stratified air mass that’s not interacting with the plants the way you’d expect it to.”

Proper air supply and return  setups would have the supply ductwork either in or hung from the ceiling, he says, and return grills would be placed low on the walls to draw air through the canopy. Alternatively, air could be supplied at or below the tray level and drawn up through the canopy, over the lights and into high ceiling returns.

Another common problem, Brown says, is when air movers, such as fans, are installed to compensate for poor airflow in facilities where the air supply and return are located at the same level.

“I’ve been in a facility with high supply, high return—this was a 118-light room—and it had vertical air blowers blowing up, contributing to the stratification that exists in that room,” Brown says. “They thought they were solving the problem, but they were actually making it worse. I think people need to think more intuitively on how to get airflow where they want it to be and not end up with situations where you’ve got a stratified environment.”

The goal, he says, is to achieve a canopy velocity of 3 to 5 feet per second without using horizontal or air rotation fans in the space.

Engineered air devices, such as airflow nozzles, can be installed to push air through the space and achieve this level of movement in the plants, Brown says.

“You should have enough air coming out of your HVAC equipment to not need air rotation fans,” he says.

Cultivators should walk through their grow rooms, identify problem spots and place air rotation fans only in those areas.

“It’s very difficult to get airflow perfect in a space,” Brown says. “You may end up with an 8-foot square in a back section that’s not getting what it should, but nobody knows about it because nobody’s actually walked the room. If you walk the room, you can actually feel a 5- to 10-degree difference in that corner. Get to know the difference and apply air movers to fix the problem, not as the default.”

Proper airflow benefits the crop, as well as the business, he says. It helps maintain a steady temperature, which can boost yield and avoid plant disease, and can also help operations save on energy costs.

“You end up with equipment that’s operating optimally, that’s not overcooling part of the room and struggling to cool down another piece,” Brown says.

By decreasing the number of rotation fans to boost airflow, operations can save on not only the energy it takes to run the fans, but also on the cooling needed to remove the heat that the fans create in the grow, he adds.

Designing a 5,000-square-foot grow room with proper airflow can cost between $10,000 and $15,000, Brown says, but using the right equipment can help cultivators save 5% to 10% on energy costs over the life of the facility.

“What I don’t want to see and unfortunately see a lot of is people using the cheapest stuff available,” he says. “We see a lot of disposable ductwork in the space. It’s dirt cheap and the goal is to throw it out between every flower cycle, but you also don’t have any real air devices. You’re not getting good control over where the airflow goes. … I would say it’s the cheapest way that a facility can both save money and ensure a consistent crop, is just developing a good airflow plan.”

Published at Wed, 14 Oct 2020 18:14:00 +0000