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Category Archives: Medical Marijuana

Iowa Lawmakers Block Study Committee on New Medical Marijuana Bill

Iowa Lawmakers Block Study Committee on New Medical Marijuana Bill

Going back more than 20 years, Kyle Kazan has syndicated private equity real estate and launched 23 funds. He knows his way around property management and real estate analysis, which are vital tools for the California cannabis entrepreneur.

He took an interest in advocating for cannabis reform over those earlier years and then, seeing an opportunity, leapt into the nascent California cannabis market. Kazan started four funds that consolidated into California Cannabis Enterprises in 2016; the company’s portfolio includes Glass House Farms, Glass House Brands, Roam Escapes, The Pottery and Bud & Bloom.

On July 9, CCE announced the appointment of Derrek Higgins as its CFO. Higgins previously worked as the CFO of FLRish Inc., the parent company of Harborside. While there, he closed a $19.65-million capital raise prior to Harborside’s public listing on the Canadian Securities Exchange.

With that big hire on the books, we took a moment to ask Kazan how the market is evolving in California (answer: rapidly) and what it takes to build a team around an internal culture.

Cannabis Business Times: What’s the impact of Derrek’s background on the company—and specifically on the CFO role?

Kyle Kazan: From 30,000 feet, what makes CCE special are the people. Graham [Farrar] is the president of Glass House [Farms], which is a wholly owned subsidiary of CCE, and he does an amazing job. We’ve got some great assets, and we’ve got some great people. And now, as we’re rolling all these private equity funds and all these assets into one—and we’ve been in contemplating the public markets now for over a year—we decided now it’s time to build a C-suite with the best talent. I interviewed—and when I say ‘interviewed,’ I spent over three hours with—13 different people, and I’m absolutely determined that we have a culture fit and we have talent. And I kept calling the CFO position the ‘unicorn,’ and Derrek’s the unicorn. That’s somebody who has solid accounting experience, M&A experience and then public market experience. The unicorn was cannabis, too.

Not only does he fit our culture, he’s a hard worker, he’s humble, he just gets in there and gets after it. He has extensive market knowledge in cannabis, so that he can help us on all the M&A because he understands what the different markers are. He’s very good at saying, ‘Look, this is how we structure the deals, and this is how they’ll be looked favorably by institutional investors.’

CBT: When you’re in those lengthy interview settings, and you’re talking to these folks, how have you gone about identifying the culture of CCE and then looking for those fits, especially in the C-suite?

KK: One thing that I learned pretty quickly was: Find the right people and put them in the right seats. And for me, as the CEO of the company, it’s: Make sure that that our interests are aligned financially, but also that we see the world the same way. When you’re building a company, there’s friction, there’s pressure, there’s problems. So, the method of my madness that I’ve come up with running companies for over 20 years is every single CFO candidate met me at my house on a weekend or maybe a Friday morning, and I would take them on a hike. When I say hike, it was a three-hour hike—ups and downs—and from my law enforcement background I’m pretty good at asking the same question four different ways over the course of a hike.

Over the course of a long hike, you’re getting a little bit tired, you don’t know where the hike ends, you just start answering questions, and then you get a real feel for somebody. And I encourage them to ask me questions. And also feel free to meet Graham [Farrar, CEO of Glass House Farms], go visit our properties, do an audit on us—because I can’t afford to get the CFO position wrong. I can’t afford to get the COO position wrong. Graham and I started working together in 2016, so we’ve gotten into our own cadence, and we work really well together. And I didn’t want to screw that up. And so, to that end, every two months we get together, we have a four-hour meeting, and the spouses go to a spa, so that they can do some team-building too. You know what it’s like in this industry: We’re working in dog years right now. So, there has to be a buy-in, this has to become a family. And this needs to be a team.

CBT: Once you’ve got the team, how do you maintain that culture?

KK: We pay probably lower than almost every other cannabis company when it comes to salary. I basically put a cap at $250,000, including me. We just got valued at $380 million, conservative value. So, $380-million company, C-suite, a guy with Derrek’s role, I said, ‘Look, the whole reason we’re here is to build equity—not just for the investors, but for us.’ We align ourselves with the investors, we’re here to make millions. We’re not here to make it in salary, because that is not aligning our interest with investors.

CBT: How does your real estate background figure into the company’s goals?

KK: I look for capital dislocations. I always try and buy during a financial crisis; I cut my teeth during the RTC fiasco with all the S&Ls blowing up in the late ‘80s and early ‘90s. As an investor, that’s how I got out of a police car [and left a career in law enforcement], was by investing my own account. For many years, I had to analyze deals, and mainly these are apartment or commercial properties.

The people that came to me and said, ‘Hey, would you invest [in cannabis]?’ Back in 2011 and 2012 in Los Angeles? I said, ‘No. Hell no.’ But as I stayed in the battle to help these folks by trying to speak out about legalization, to try and help turn public opinion and do my share, all of a sudden I started looking at this going, ‘Oh my god, there’s a massive capital dislocation. There’s going to be a massive industry here. There’s the biggest capital dislocation I have ever seen.’

CBT: How is 2019 stacking up, as opposed to 2018? What are some of the questions guiding you now that might be different from one year ago?

KK: It’s a much better day in that far less people are being arrested for cannabis. And I can’t tell you how much of a big deal that is to me. In California, there’s a good new day for a lot of people. I’m super excited about that. On the business end, I would have told you in 2016 that by 2019 we would see major compression in the pricing of the ag segment—Glass House—of our business. You know, I’ve invested in in some big pecan farms just south of Macon, Ga., for a number of years. So, I know what it’s like to be in a mature ag business and how difficult that is. We’ve been preparing to get ahead by taking our COGS down and making sure we have no debt, so that when the compression comes not only will we be a survivor, but we will thrive. To the contrary: Marijuana in California is the highest regulated ag product in any state. Because we are well capitalized and came into this with the idea that we are going to make as high quality as we could with the lowest COGS, using technology and our scale, we’ve been in a great position where we have good product consistency. And we pass tests. So, we’ve had no issues. For others, each time [the state adds] in heavy metals [to the testing regulations], testing wipes out a bunch of people. And licensing is difficult around the state; it’s hard to get new businesses up. So, because of that, we’ve raised our prices three times this year, and we have a line out the door for trim.

CBT: How does brand-building fit into this?

KK: Our COO was the CFO of Nissin Foods. Nissin Foods is Cup Noodles. Before that, he worked at Nestle. What he basically said was, ‘Kyle, you’re going from silos to horizontal.’ Just like Nestle. You care about all your COGS—going from the genetics to the consumer. For our measurables, we’re going to be pushing those brands, because that’s where we’re going to get our margin—through the brands. That’s why our manufacturing facility—which will be finished in the fourth quarter this year—it’s in a zero-tax area. If I’m selling all that through my retail, I can stack a lot of the cost in the zero-tax, and tax is a big deal here. I’m in ‘Taxifornia.’ Every penny is going to count; we take it seriously now. You can get away with being sloppy now, because of the margins, but you will not be able to do that at some point in the future.

We have a board, an internal board that shows demographics by age and what the product does. We look at: This one has flower, this one’s a vape pen, this one is an edible. We are looking to make sure that our suite of brands doesn’t hit the same exact consumer; we’re targeting for different people. Our hope is at the end of the day, when we go up to Hall of Flowers in September, we will likely have the largest suite of brands of anybody in California.

CBT: That’s an interesting point of distinction between other acquisition strategies that are more focused on just getting feet on the ground in as many states as possible.

KK: We’ve been offered a Florida license that we could buy for $60 million. We’ve been offered—no cash, just stock—dispensaries in other states. And I’ve considered them. And I’m not saying that I wouldn’t consider, you know, Vegas. But, number one, my advantage right now with California is that, as the walls come down and when we can start delivering out of state, my COGS are going to be the cheapest in this state—and I think in the country. I’ve got the California reputation and the appellation. The other thing is that I only have to know my state’s laws. I don’t have to know Ohio’s. At the end of the day, if we get retail right here and we branded it correctly, then we can always manage, we can always franchise and we can always figure that out. But to me, I’m good just focusing in California. And we’re already talking to some of the MSOs about licensing our brands; I can get my brands out there. And my goal, quite frankly, is by this time next year we’ll be all over Florida. And if New York ever gets its act together we will be in New York.

I feel very, very comfortable that the road we’re taking with the team we have and the assets that we purchased and how they’re structured—we’re going to be very, very hard to compete with.

Editor’s Note: The interview has been edited for length and clarity.

Published at Fri, 12 Jul 2019 14:03:00 +0000

U.S. Rep. Ilhan Omar Calls for Federal Legalization, Montana and Arkansas Launch Adult-Use Ballot Initiatives: Week in Review

U.S. Rep. Ilhan Omar Calls for Federal Legalization, Montana and Arkansas Launch Adult-Use Ballot Initiatives: Week in Review

Going back more than 20 years, Kyle Kazan has syndicated private equity real estate and launched 23 funds. He knows his way around property management and real estate analysis, which are vital tools for the California cannabis entrepreneur.

He took an interest in advocating for cannabis reform over those earlier years and then, seeing an opportunity, leapt into the nascent California cannabis market. Kazan started four funds that consolidated into California Cannabis Enterprises in 2016; the company’s portfolio includes Glass House Farms, Glass House Brands, Roam Escapes, The Pottery and Bud & Bloom.

On July 9, CCE announced the appointment of Derrek Higgins as its CFO. Higgins previously worked as the CFO of FLRish Inc., the parent company of Harborside. While there, he closed a $19.65-million capital raise prior to Harborside’s public listing on the Canadian Securities Exchange.

With that big hire on the books, we took a moment to ask Kazan how the market is evolving in California (answer: rapidly) and what it takes to build a team around an internal culture.

Cannabis Business Times: What’s the impact of Derrek’s background on the company—and specifically on the CFO role?

Kyle Kazan: From 30,000 feet, what makes CCE special are the people. Graham [Farrar] is the president of Glass House [Farms], which is a wholly owned subsidiary of CCE, and he does an amazing job. We’ve got some great assets, and we’ve got some great people. And now, as we’re rolling all these private equity funds and all these assets into one—and we’ve been in contemplating the public markets now for over a year—we decided now it’s time to build a C-suite with the best talent. I interviewed—and when I say ‘interviewed,’ I spent over three hours with—13 different people, and I’m absolutely determined that we have a culture fit and we have talent. And I kept calling the CFO position the ‘unicorn,’ and Derrek’s the unicorn. That’s somebody who has solid accounting experience, M&A experience and then public market experience. The unicorn was cannabis, too.

Not only does he fit our culture, he’s a hard worker, he’s humble, he just gets in there and gets after it. He has extensive market knowledge in cannabis, so that he can help us on all the M&A because he understands what the different markers are. He’s very good at saying, ‘Look, this is how we structure the deals, and this is how they’ll be looked favorably by institutional investors.’

CBT: When you’re in those lengthy interview settings, and you’re talking to these folks, how have you gone about identifying the culture of CCE and then looking for those fits, especially in the C-suite?

KK: One thing that I learned pretty quickly was: Find the right people and put them in the right seats. And for me, as the CEO of the company, it’s: Make sure that that our interests are aligned financially, but also that we see the world the same way. When you’re building a company, there’s friction, there’s pressure, there’s problems. So, the method of my madness that I’ve come up with running companies for over 20 years is every single CFO candidate met me at my house on a weekend or maybe a Friday morning, and I would take them on a hike. When I say hike, it was a three-hour hike—ups and downs—and from my law enforcement background I’m pretty good at asking the same question four different ways over the course of a hike.

Over the course of a long hike, you’re getting a little bit tired, you don’t know where the hike ends, you just start answering questions, and then you get a real feel for somebody. And I encourage them to ask me questions. And also feel free to meet Graham [Farrar, CEO of Glass House Farms], go visit our properties, do an audit on us—because I can’t afford to get the CFO position wrong. I can’t afford to get the COO position wrong. Graham and I started working together in 2016, so we’ve gotten into our own cadence, and we work really well together. And I didn’t want to screw that up. And so, to that end, every two months we get together, we have a four-hour meeting, and the spouses go to a spa, so that they can do some team-building too. You know what it’s like in this industry: We’re working in dog years right now. So, there has to be a buy-in, this has to become a family. And this needs to be a team.

CBT: Once you’ve got the team, how do you maintain that culture?

KK: We pay probably lower than almost every other cannabis company when it comes to salary. I basically put a cap at $250,000, including me. We just got valued at $380 million, conservative value. So, $380-million company, C-suite, a guy with Derrek’s role, I said, ‘Look, the whole reason we’re here is to build equity—not just for the investors, but for us.’ We align ourselves with the investors, we’re here to make millions. We’re not here to make it in salary, because that is not aligning our interest with investors.

CBT: How does your real estate background figure into the company’s goals?

KK: I look for capital dislocations. I always try and buy during a financial crisis; I cut my teeth during the RTC fiasco with all the S&Ls blowing up in the late ‘80s and early ‘90s. As an investor, that’s how I got out of a police car [and left a career in law enforcement], was by investing my own account. For many years, I had to analyze deals, and mainly these are apartment or commercial properties.

The people that came to me and said, ‘Hey, would you invest [in cannabis]?’ Back in 2011 and 2012 in Los Angeles? I said, ‘No. Hell no.’ But as I stayed in the battle to help these folks by trying to speak out about legalization, to try and help turn public opinion and do my share, all of a sudden I started looking at this going, ‘Oh my god, there’s a massive capital dislocation. There’s going to be a massive industry here. There’s the biggest capital dislocation I have ever seen.’

CBT: How is 2019 stacking up, as opposed to 2018? What are some of the questions guiding you now that might be different from one year ago?

KK: It’s a much better day in that far less people are being arrested for cannabis. And I can’t tell you how much of a big deal that is to me. In California, there’s a good new day for a lot of people. I’m super excited about that. On the business end, I would have told you in 2016 that by 2019 we would see major compression in the pricing of the ag segment—Glass House—of our business. You know, I’ve invested in in some big pecan farms just south of Macon, Ga., for a number of years. So, I know what it’s like to be in a mature ag business and how difficult that is. We’ve been preparing to get ahead by taking our COGS down and making sure we have no debt, so that when the compression comes not only will we be a survivor, but we will thrive. To the contrary: Marijuana in California is the highest regulated ag product in any state. Because we are well capitalized and came into this with the idea that we are going to make as high quality as we could with the lowest COGS, using technology and our scale, we’ve been in a great position where we have good product consistency. And we pass tests. So, we’ve had no issues. For others, each time [the state adds] in heavy metals [to the testing regulations], testing wipes out a bunch of people. And licensing is difficult around the state; it’s hard to get new businesses up. So, because of that, we’ve raised our prices three times this year, and we have a line out the door for trim.

CBT: How does brand-building fit into this?

KK: Our COO was the CFO of Nissin Foods. Nissin Foods is Cup Noodles. Before that, he worked at Nestle. What he basically said was, ‘Kyle, you’re going from silos to horizontal.’ Just like Nestle. You care about all your COGS—going from the genetics to the consumer. For our measurables, we’re going to be pushing those brands, because that’s where we’re going to get our margin—through the brands. That’s why our manufacturing facility—which will be finished in the fourth quarter this year—it’s in a zero-tax area. If I’m selling all that through my retail, I can stack a lot of the cost in the zero-tax, and tax is a big deal here. I’m in ‘Taxifornia.’ Every penny is going to count; we take it seriously now. You can get away with being sloppy now, because of the margins, but you will not be able to do that at some point in the future.

We have a board, an internal board that shows demographics by age and what the product does. We look at: This one has flower, this one’s a vape pen, this one is an edible. We are looking to make sure that our suite of brands doesn’t hit the same exact consumer; we’re targeting for different people. Our hope is at the end of the day, when we go up to Hall of Flowers in September, we will likely have the largest suite of brands of anybody in California.

CBT: That’s an interesting point of distinction between other acquisition strategies that are more focused on just getting feet on the ground in as many states as possible.

KK: We’ve been offered a Florida license that we could buy for $60 million. We’ve been offered—no cash, just stock—dispensaries in other states. And I’ve considered them. And I’m not saying that I wouldn’t consider, you know, Vegas. But, number one, my advantage right now with California is that, as the walls come down and when we can start delivering out of state, my COGS are going to be the cheapest in this state—and I think in the country. I’ve got the California reputation and the appellation. The other thing is that I only have to know my state’s laws. I don’t have to know Ohio’s. At the end of the day, if we get retail right here and we branded it correctly, then we can always manage, we can always franchise and we can always figure that out. But to me, I’m good just focusing in California. And we’re already talking to some of the MSOs about licensing our brands; I can get my brands out there. And my goal, quite frankly, is by this time next year we’ll be all over Florida. And if New York ever gets its act together we will be in New York.

I feel very, very comfortable that the road we’re taking with the team we have and the assets that we purchased and how they’re structured—we’re going to be very, very hard to compete with.

Editor’s Note: The interview has been edited for length and clarity.

Published at Sat, 13 Jul 2019 13:00:00 +0000

1933 Industries Inc (OTCMKTS:TGIFF) Reaches Expansion Milestone With Over 800 Retail Outlets

1933 Industries Inc (OTCMKTS:TGIFF) Reaches Expansion Milestone With Over 800 Retail Outlets

1933 Industries Inc
(OTCMKTS:TGIFF)
recently celebrated a key expansion milestone in the U.S
after opening more than 800 retail outlets for its cannabis brands.

The achievement highlights the company’s commitment to
expanding its business into more areas as part of its strategy to expand its CBD
Brand Distribution. So far the impressive number of retail outlets allow 1933
Industries to achieve coast-to-coast distribution in the U.S. Although it has
impressive figures, the company intends to continue expanding in line with its
plan to provide customers more access to its Canna Hemp™ brand.

“We have been extremely successful at building our own
distribution channels across the country, which is now one of the largest
networks of CBD and a key differentiator of our Company,” stated 1933
Industries president, Ms. Ester Vigil.

Vigil also pointed out that her company’s integrated market
approach might attract third-party partners. This is particularly because TGIFF
basically controls all the processes from cultivation, extraction, marketing,
manufacturing, and sales. It also handles the branding, as well as
distribution. It also plans to commence CBD processing before the end of 2019.

The Canna Hemp brand consists of more than 70 agricultural
hemp-based, high-quality products infused with CBD. The products also focus on
a wide variety of effects. Market analysts and researchers forecast that CBD
sales will reach $20 billion in the U.S market alone by 2024.

1933 Industries
receives permanent occupancy permit for Las Vegas facility

1933 Industries recently announced that it was awarded a
permanent residency permit for a facility located in Las Vegas, Nevada. The
facility is important for the company’s operations in Las Vegas, especially as
far as its expansion plans in the state are concerned.

TGIFF CEO Chris Rebentisch stated that his company was
pleased about moving into the new facility, as well as commencing operations.
The firm expects the facility to increase its flower cultivation by five-fold
and this will also boost the growth of its AMA branded products. The facility will
therefore be accretive to the company’s revenues in the future and even help it
to attract more business partners in the future.

Published at Wed, 10 Jul 2019 12:01:58 +0000

#6B Accudata Ionic – Like Buying Cannabis Stocks In 2016

#6B Accudata Ionic – Like Buying Cannabis Stocks In 2016


Like Buying Cannabis Stocks In 2016


This upstart company is making big moves in the cannabis industry.

 ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

The Seed Investor

Dear reader,
 
What you are about to see is perhaps the most exciting cannabis opportunity for 2019.
 
An upstart company is making big moves in the cannabis industry.
 
Its rapid expansion may be unparalleled in cannabis history.
 
However, most investors just don’t see the potential here…
 
At least not yet anyways.
 
They will eventually.
 
And when they do the big gains will be had.
 
But you can get in before its shares potentially explode.
 
Follow this link to see what has the cannabis industry buzzing right now.
 
You’re looking at a true ground floor opportunity in cannabis.
 
It’s as close as you can get to buying into cannabis back in 2016 when the cannabis boom was just getting started.
 
Take a few minutes and see for yourself here.
 
High profits,
 
 
The Seed Investor
 
 
Please see full disclaimers at www.TheSeedInvestor.com applicable to all content provided by TSI, wherever published or re-published: http://theseedinvestor.com/about/disclaimer.

This news release/advertorial is a commercial advertisement and is for general information purposes only. The information provided by TSI through this website or other means does not constitute an offer or solicitation to buy or sell any securities or individualized investment advice. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. It is possible that a viewer’s entire investment may be lost or impaired due to the speculative nature of the companies profiled. Remember, never invest in any security of a company profiled or discussed on this website unless you can afford to lose your entire investment. Also, investing in small-cap and micro-cap securities is highly speculative and carries an extremely high degree of risk. This website makes no recommendation that the securities of the companies profiled or discussed on this website should be purchased, sold or held by viewers that learn of the profiled companies through our website. The Seed Investor and/or entities related to The Seed Investor hold shares in (CSE: CHOO; OTCQB: CHOOF) (Ionic CSE: IONC) and intend to sell those shares. Please review all investment decisions with a licensed investment advisor.

 
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Published at Sun, 14 Jul 2019 16:14:04 +0000

Cannabis plants don’t have to fall prey to mold, powdery mildew

Cannabis plants don’t have to fall prey to mold, powdery mildew

Danny Murr-Sloat, founder of AlpinStash, monitors plants for microbial growth at the company’s cannabis grow in Lafayette, Colorado. (Photo courtesy of AlpinStash)

(This is an abridged version of a story that appears in the July issue of Marijuana Business Magazine.)

Microbials such as powdery mildew and mold can be devastating for a cannabis grow and lead to decimated plants, lost time and money and even total eradication of the crop.

There are steps vigilant growers can take, however, to ensure that microbials don’t overrun their cannabis plants.

“The best prevention is preventative,” said Mark Krytiuk, president of Toronto-based Nabis Holdings, a vertically integrated cannabis firm. “If you have a clean facility with good HVAC, you’re 95% there.”

Krytiuk and other cultivation experts offered Marijuana Business Magazine some tips for growers to fight off microbials, including:

Published at Sat, 13 Jul 2019 14:00:47 +0000

Should This Marijuana Stock Have Your Attention

Should This Marijuana Stock Have Your Attention

Ever since marijuana was legalized in various states around the US and the whole of Canada, it has quickly become one of the fastest-growing industries. Consequently, a number of companies have emerged and their stocks have grown impressively over the past year. However, amidst all that, many investors may have failed to notice that another company in the marijuana space is making big moves in the hemp CBD market and hence, many experts believe that Charlotte’s Web Holdings (CSE:CWEB) (OTCQX:CWBHF) could prove to be an excellent investment.

Production Operations

In this regard, it is first important to note that unlike cannabis, hemp is legal all across the United States and Charlotte’s Web does not have to deal with the sort of uncertainty that is common with the cannabis industry. Additionally, it can set up its production operations in any state in the country and moreover, it can ship its products with ease as well. The lack of barriers with regards to hemp has made it a fairly attractive company for many analysts. However, the reasons go far beyond that. Charlotte’s has assiduously grown its network of retail outlets over the years and currently, there are as many as 6000 retail outlets that stock the different products that are produced by the company.

Solid Earnings

However, one of the most important factors in favor of this marijuana stock is the fact that it has posted profits in each of the last four quarters and seems primed to continue to do so as it consolidates its position in the hemp market. At this point in time, its profit margin stands at 14% and none of the profit includes any non-operating items, which is another positive aspect of its recent profit surge. It goes without saying that Charlotte’s has managed to build up a viable business that is able to churn out consistent profits in a high growth industry. Although hemp cannot generate as high margins as marijuana, there is a lot of positives about Charlotte’s Web Holdings.

Shares of Charlotte’s Web have outperformed the broader cannabis sector in the past one month as this marijuana stock has soared 55% since June 14. However, the stock is still 30% off from its 52-week high of $25.25 on the OTC market.

Published at Fri, 12 Jul 2019 19:28:19 +0000

This Week in Cannabis Investing, July 12th

This Week in Cannabis Investing, July 12th

It was another very eventful week for cannabis, the cannabis industry, and cannabis investing.

There is the emerging story of a major Canadian producer that has being caught using licensed growrooms in its licensed cannabis cultivation facility in Ontario. There are significant new cannabis industry numbers from (respectively) the leading U.S. state and leading Canadian province in terms of the legal cannabis industry.

There was important regulatory news, nothing less than the beginning-of-the-end of cannabis Prohibition in the United States. Parallel to that, The Seed Investor looked at how cannabis consumption is becoming a consumer tradition. And, as always, there was lots of news from individual cannabis companies – in both the United States and Canada.

Monday, Aphria Inc announced its Plant Positivity “social impact platform”. BevCanna Enterprises reported its entry into Canada’s imminent cannabis-infused beverage market. CannTrust Holdings rocked the Canadian cannabis sector with news that the company had been cultivating cannabis in unlicensed growrooms in its licensed Pelham, Ontario cultivation facility. Harvest Health & Recreation Inc acquired an Arizona medical cannabis dispensary. Trulieve Cannabis Corp began selling SLANG Worldwide’s vaporizer cartridges in its Florida retail operations. Body and Mind Inc. has been added to Horizon’s US Marijuana Index ETF. SOL Global completed a $50 million debenture financing. NewLeaf Brands Inc announced a new Tennessee distribution deal.

The Seed Investor also reported on important news regarding the positive effects of cannabis legalization: a reduction in teenage usage of cannabis. And in a TSI Exclusive, we offered our views on why we see cannabis-infused beverages “outperforming” versus other classes of cannabis products. Hint: it’s part of our ongoing theme – the importance of cannabis as an alcohol-substitute.

Tuesday, Phivida Holdings reported that it was now distributing and selling its cannabis products in Colorado and California. Planet 13 Holdings announced its store traffic levels for June at its Las Vegas “Superstore”. 48 North Cannabis Corp reported that it will be converting a Brantford, Ontario indoor cultivation facility into a manufacturing facility. Green Growth Brands Inc announced the acquisition of MXY Holdings (Moxie). The Cannabis ETF began trading on the NYSE, sponsored by Innovation Shares LLC. Organigram Holdings Inc announced its own cannabis-infused beverage plans. AgraFlora Organics International updated investors on a Phase 1 development program as it prepares to enter the infused beverage market.

The Seed Investor looked at some interesting news: how cannabis is starting to replace alcohol as Americans celebrate the 4th of July. Overall, there are $100’s of billions of revenue dollars potentially on the table here. For investors wondering how to capitalize on this trend, we also published a handy infographic showing how legal cannabis spending is increasing and where it is increasing.

We also asked the question: is the media feeding frenzy regarding the cultivation infraction by CannTrust an “over-reaction”? The point is this, more than 70% of Canadian cannabis consumption this year is expected to come from (unlicensed) black market sources. In comparison, the pot seized from these unlicensed growrooms is a drop in the bucket.

Wednesday, MedMen Enterprises Inc announced an increased financial commitment from Gotham Green Partners. Canopy Rivers Inc announced five new cannabis retail licenses from the AGLC (Alberta). Then the big news of the week: Congress commencing a hearing explicitly concerned with (finally) putting an end to cannabis Prohibition in the United States at the federal level.

Thursday, Green Growth Brands was in the news again: a distribution deal with American Eagle Outfitters. iAnthus Capital Holdings Inc announced that its CBD health products are now for sale in 265 Dillard’s Department Stores. HEXO Corp reported that it will be graduating to a full NYSE listing. Cronos Group Inc. announced the acquisition of a fermentation and manufacturing facility in Winnipeg, Manitoba. Village Farms International reported a “full run-rate” at its 1.1 million square foot Delta, B.C. cultivation facility. Aleafia Health Inc announced it had been added to The Cannabis ETF (NYSE: THCX). Lexaria Bioscience Corp. reported a deal with Nic’s Beverage Ltd to produce CBD-based beverages in the U.S. Tilray Inc. reported the first imports of its medical cannabis oral solutions into Ireland.

The Seed Investor spent some time connecting the dots on the surge in cannabis retail spending for 4th of July celebrations. In a TSI Exclusive, we pointed out how cannabis is becoming “an American consumer tradition” – and how this trend will largely come at the expense of the alcohol industry.

Wrapping up the week on Friday, 1933 Industries Inc announced the expansion of cannabis expansion capacity. CannTrust announced a full hold on Ontario sales and the formation of an independent committee to investigate its cultivation lapse. Harvest Health & Recreation reported a new medicinal cannabis dispensary in North Dakota.

Then The Seed Investor shone our spotlight on the state of Colorado. In a TSI Exclusive, we illustrated how that state (alone) has gotten it right in legalizing cannabis. Finally, we looked north of the Border, to the province of Alberta, Canada’s parallel to Colorado in how to quickly and effectively roll out cannabis legalization. The province has already registered more than $30 million in cannabis taxes in the first six months since legalization.

As we near the midpoint of summer, there is no indication of things cooling off in the cannabis space.

Published at Fri, 12 Jul 2019 21:34:25 +0000

Cresco Labs Inc (OTCMKTS:CRLBF) Provides Illinois Expansion Update

Cresco Labs Inc (OTCMKTS:CRLBF) Provides Illinois Expansion Update

Cresco Labs Inc
(OTCMKTS:CRLBF),
one of the major cannabis operators in the U.S issued an
update about its market expansion efforts in Illinois on June 25 after adult
use was legalized in the state.

Governor JB Pritzker of Illinois passed a bill that allowed
cannabis to secure legal status for adult use in the state as of January 2020.
This prompted cannabis operator Cresco Labs to release an update about its
expansion plans in the state so that it can serve the recreational adult
consumers.

“The legalization of adult-use cannabis and the recent expansion of the state’s medical-use program are expected to dramatically increase the consumer base in Illinois,” stated Cresco Labs CEO, Charlie Bachtell.

The CEO also added that the legalization will provide a
noteworthy annual revenue that will range from $2 billion to $4 billion as the
market approaches maturity. Bachtell also noted that Cresco Labs has been
making significant strides in its efforts to serve the widening consumer base
while maintaining its lead in Illinois. The company plans to open five new
cannabis dispensaries in the state next year so that it can double down on the
sale of recreational cannabis.

Aside from the cannabis dispensaries, Cresco Labs also
operates 3 cultivation facilities within Illinois. It also plans to expand its
cultivation facility which is located in Lincoln. The latter will be expanded
to 170,000 square feet and should be ready in Q4 2019.

Cresco Labs launches
social equity program for the legalized cannabis market

Cresto Labs recently unveiled a new social equity and educational
program through which it plans to promote equity, community engagement, and
inclusion in the legalized cannabis industry. The cannabis industry will soon
become one of the leading employers in the country courtesy of all the jobs
that it will create. The program aims to help facilitate diversity and
workplace balance in the cannabis industry.

The program also aims to make sure that the worker will have
the right skills for the industry. Cresto Labs is already working together with
universities through the social equity program to develop cannabis-based
courses and also to host events that will spur more interest in cannabis
industry jobs.

Published at Fri, 12 Jul 2019 12:01:11 +0000

Testimony in Nevada Cannabis Licensing Case Turns to Application Wording

Testimony in Nevada Cannabis Licensing Case Turns to Application Wording

Jay-Z is the new chief brand strategist for Caliva, a vertically integrated cannabis business in the Bay Area. He’s not the first celebrity to join forces with a cannabis company, and he certainly won’t be the last. These strategic partnerships between growing cannabis businesses (especially larger companies on the West Coast) and intrigued celebrity influencers are part of a broader trend that’s swept up the entire consumer packaged goods market for years.

“There’s just a lot of celebrity involvement in the brand universe and in CPG these days,” Josh Wand, CEO of HerbForce, says. “We’ve been seeing it happen in the bev/alc space, which is pretty closely related to cannabis.”

Think George Cloony’s Casamigos tequila brand, a drink that consumers may order by invoking Clooney’s name and giving power to the celebrity-brand connection, and you’ll get a sense of the power that a popular voice can bring to a product.

Cannabis companies are in a pattern of constantly raising capital to fuel the growth of their brands. And this is only becoming more pronounced as the wave of legalization continues to wash across more parts of the U.S. The industry is becoming normalized, and more mainstream sources of capital (among high-net-worth individuals) are bringing those cannabis companies in close contact with celebrities: actors, athletes and musicians who are interested in using their money to further an idea, a vision.

RELATED: 10 Questions With Caliva CEO Dennis O’Malley 

“What we see brands doing now with a lot of these celebrities is saying, ‘We’re not just going to give you shares to post on social media,” Wand says. “’We want you to be meaningfully involved, we want you to invest in really having your voices heard, we want to make sure that as we develop this brand strategy it’s in sync with the way you connect authentically with your community of followers and your fans.’”

The key, Wand points out, is that strategy. Rather that scoring photos of celebrities holding your product, the key is to bring in people who want to help promote your business and your corporate values.

“Just signing up 20 celebrities and hoping they’re going to figure it out can be a lot less effective than really having a strategy and making sure you bring in people that, one, you like them as human and, two, you’re aligned in mission and vision and values and, three, expectations are set up front,” Wand says. “When all of that aligns, magic can happen.”

This is something that the industry will be seeing more frequently as the climate evolves. U.S. markets may be fragmented now, but they won’t always be like this. And while licensed businesses are restricted by state boundaries, brands can move freely among segments of the U.S. cannabis marketplace.

Brands are where the consumer will look to understand the industry.

“You’re just going to see more and more of this [in cannabis],” Wand says. “These celebrities can come in as creative officers or brand officers that actually have a stake in the business in a meaningful way. That can really help with the trajectory and the growth and the brand positioning, and it’s a super exciting time.”

Published at Thu, 11 Jul 2019 21:08:00 +0000

From ‘the Demon Weed’ to an American Consumer Tradition

From ‘the Demon Weed’ to an American Consumer Tradition

As “American as apple pie.” As American as the 4th of July. As American as cannabis?

Ask any reader which of these statements does not belong with the others and no one would break a sweat. It’s the third one.

But how long until that statement no longer looks out of place? It’s not as preposterous as it sounds.

Cannabis is going mainstream in the United States.

It can be seen in terms of the explosive growth of the cannabis industry. It can be seen at the political/regulatory level through not only the increasing speed of cannabis legalization but an end in sight to cannabis Prohibition at the federal level. And it can be seen by the rapid and dramatic shifts in pro-cannabis attitudes by Americans as both consumers and voters.

How cannabis spending is becoming a consumer tradition

Nothing is more “American” than fireworks for 4th of July celebrations. U.S. consumers spend approximately $1 billion per year on 4th of July fireworks.

This year, Americans also spent $400 million on legal cannabis as part of their 4th of July spending. This is despite the fact that only ¼ of U.S. consumers live in cannabis-legal states.

Obviously, these numbers will go way up as the legalization wave continues to spread. Not only will 4th of July spending on cannabis soon exceed spending on fireworks.

Spending on cannabis will eventually exceed total spending on alcohol as well – becoming the #1 expenditure by Americans as they celebrate the ultimate U.S. tradition.

However, it’s not just on the 4th of July that cannabis consumption has a growing place as a holiday tradition among American consumers. A recent comment on Reddit’s “Weedstocks” forum illustrates this.
 

The last time I got drunk with my family (Christmas) everyone got loud, old half ass sleights or grudges came out and in the morning we all felt like shit.

Had we passed around a vape pen or had an edible Christmas cake I probably would be going back again this year.

From the same article:
 

I quit drinking almost completely when I started smoking. And that was after drinking nearly daily for the last 5 years. 2-3 beers in the evening was replaced by a couple bowl rips. It’s helped my life tremendously.

…and:
 

It helped my job performance in the mornings because there was never that ‘slightly hungover’ feeling. It helped my workouts- I’ve been in the gym for several years and really have plateaued (which is fine for me). I found 1-2 hits from a one hitter prior to my workout made my gym time not only more enjoyable, but I would be sore in the morning from a better work out.
 
I’m a pretty high strung and over-worked person, smoking helped calm me down tremendously. That led to better interactions out in the world and most noticeably improved my relationship with my gf.

I lost about 15-20lbs. I attribute this to no drinking right before bed.

Sex is better

Food is better

Why will cannabis become an American consumer tradition? Pick your reasons.

This tectonic shift in pro-cannabis attitudes extends to voting patterns as well. Support for full cannabis legalization among U.S. voters continues to hit new all-time highs.

The latest numbers show:
 

  • 4 out of 5 Democrats (80%) now support legalization
  • Only 37% of Republicans continue to oppose legalization

Overall, more than two-thirds of the population (68%) now support full cannabis legalization.

For once, the politicians seem to be paying attention. At both the state and federal level, cannabis legalization is now seen as a priority.

The end of Prohibition in sight

The end of U.S. cannabis Prohibition? Only a few years ago, that line would still have seemed like a joke or a misprint. No longer.

Now it is an imminent reality.

Congress is currently holding a hearing to discuss ending cannabis Prohibition. Not talking about “if” to end it, only how and when.

With a number of competing proposals currently tabled, it may take some time to narrow this down to a single initiative that can be put to a vote. But that vote is coming.

It’s coming (among other reasons) because there have been a string of other recent breakthroughs in normalizing cannabis commerce in the U.S.: liberalizing banking laws to help finance the industry, blocking enforcement of federal laws in cannabis-legal states, introducing a bill into Congress to allow state-to-state cannabis trade (among legal states), and (at the state level) passing a law to allow interstate cannabis exports.

Illinois recently became the 11th state to fully legalize cannabis. It has passed the nation’s most progressive cannabis normalization legislation.

New York’s state government received considerable criticism both from inside and outside the state for (once again) failing to fully legalize cannabis.

Once upon a time, a vote to legalize cannabis in the U.S. was considered to be a surprise. Now, in most jurisdictions, approval is expected and it’s a negative vote for legalization that is the surprise.

Then there is the industry perspective.

An exponential growth opportunity

The cannabis industry has already been identified as the fastest-growing industry in the U.S. Now it’s also been touted as the one of the fastest-growing job creators as well.

As cannabis becomes a mainstream consumer tradition, it is rapidly becoming a more important industry for the U.S. economy as well. This is where an emerging consumer tradition translates into investor profits.

In BDS Analytics’ latest Cannabis Insights (June 2019), it released some bullish numbers for the cannabis industry:
 

– Revenues from cannabis retailing are expected to rise from $9.8 billion to $30 billion by 2024, representing a CAGR of 20%

However, as The Seed Investor will explain, there are many reasons to regard this growth number as a very conservative projection.

Demographics:

As noted above, only ¼ of Americans currently live in cannabis-legal states (both legal medicinal and recreational markets). Full legalization is where the vast majority of revenue dollars lie for the cannabis industry.

This represents a potential quadrupling for the industry. However, even in fully legal states, on average the black market continues to take in the majority of revenue dollars. That means the potential for an additional doubling of revenue dollars from current levels.

This projects to cannabis industry revenues increasing by a factor of eight in the U.S., even if individual cannabis consumers don’t choose to increase their consumption. However, as an alcohol-substitute alone, there are $100’s of billions of additional cannabis revenue dollars on the table.

As an alcohol-substitute:

As The Seed Investor has reported previously, there is a strong desire among consumers to migrate away from alcohol use to cannabis because of the growing health issues associated with alcohol. In contrast, cannabis is non-toxic and non-addictive and presents no known serious long-term health issues.

Globally, alcohol is a $1 trillion per year industry.

If just 15% of that spending went to cannabis, that represents an additional $150 billion per year in cannabis revenues. In the fully-legal state of California, that would translate into an additional $4.2 billion per year (based on national U.S. consumption figures).

Those extra dollars are achievable in the near term. Over the long term, cannabis is a threat (if not a certainty) to claim most of this market share. But it will claim much more market share on its own merits.

For better health:

Cannabis is a safe, natural substance. Cannabinoids, the active ingredients, are produced naturally in the human body. They are passed to infants in mother’s milk to promote infant health.

Cannabis has already been used as a medicinal therapy in the treatment of literally thousands of medical conditions. Formal pharmaceutical research to produce dozens of cannabis-based licensed and approved drugs is already underway.

Cannabis has similar potential to keep us healthier as a food additive or a nutritional supplement. It’s equally useful as an additive for cosmetics and other topicals.

These are additional industries with multi-billion dollar potential in the U.S. Additional important markets where cannabis can (and will) also become a U.S. consumer tradition.

Cannabis is becoming a mainstream industry in the United States.

It’s becoming a consumer tradition among Americans.

And as these mega-trends translate into corporate profits, cannabis investments will become an increasingly important component of investor portfolios.
 

Published at Thu, 11 Jul 2019 21:36:47 +0000