California edition / April 18, 2020
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Due to a production error, last week we included a post about L.A.’s licensing system from last year. We regret the error.

1 BITE DOWN HARD

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This next part is going to hurt.

Far more people than ever are consuming cannabis, while the OGs of American canna business are going belly up. The wrongness of this picture could spur a western states weed pact.

Even the casual observer can see that COVID-19's arrival has exacerbated market-transition problems arising from 2018's REC legalization. For more than a quarter century, MED flourished, but two years of legalization has Cali's estimated 68,000 growers dealing with chaos and losses previously unimaginable.  
Cannabis Business Times/Washington Post

  • "We can't even get just a typical, normal small business loan," says advocate and lobbyist Hezekiah Allen.  "These types of events [like the current situation] are when those safety nets can be helpful: a low-cost bridge loan, operating capital loans, the SBA is making grants now for goodness sake, but none of that's available to us."
  • Colorado Rep. Ed Perlmutter says Oregon Senator Jeff Merkley has signed on to support his effort to include marijuana businesses in the next federal stimulus package. 
  • The impending consumer spending crisis is 2020's fundamental concern. Early unemployment numbers suggests a summer that will test Mary Jane's reputation for being recession proof.
  • Some California companies are struggling with social distancing, as their facilities weren't constructed for six-foot spacing. Facilities are being retooled and capacity reduced. Some of the workforce reportedly has been unwilling or unable to report to their jobs. 

Quick Hits

  1. This week Florida real estate is trying to make sense of Cannafornia CEO Paul King. The Golden State operator was running all over The Sunshine State calling himself The Cannabis King. In addition to presiding over defunct farms, King adds to his woes a lawsuit accusing him of raiding corporate funds to purchase luxury condos in Miami.
    The Real Deal
  2. On Monday, Los Angeles reporter Amanda Chicago Lewis posted a thread on bud smoking and the coronavirus that explored cannabinoids' anti-carcinogenic effects and linked to a medical peer-reviewed study.
    Twitter
  3. Here is the trailer for Dennis: The Man Who Legalized Cannabis, a Pax Labs-produced film about Dennis Peron. As with most 2020 event scheduling, its July screening date at the Roxie Theater is tentative.
    Bay Area Reporter
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Tips, comments and complaints to Donnell donny@weedweek.net.

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This week on the podcast
The LSD Story Dock Told Donny

In recognition of Bicycle Day — the April 19 LSD holiday — we explore the origins of major league pitcher Dock Ellis’s acid-fueled no-hitter. Donny is joined by author Dan Epstein, No-No: A Dockumentary producer Chris Cornell, and An LSD No-No co-producer Neille Ilel in discussing the legacy of this hallucination achievement, which turns 50 on June 12.

2 DAN MITCHELL MAPS OUR ROAD TO RECOVERY

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Planned expansions have been shelved, just like hiring. Investments, too, are delayed in this unimaginable time. What the legal weed industry will look like after the crisis passes is something we cannot know, Dan Mitchell observes. But one thing we do know is things are changing fast, beginning right now.  
WeedWeek

  • On deck is a more speedy consolidation of cannabis than the already eyebrow-raising consolidation that dominated 2019. Not only are more mergers and acquisitions on the way, so is the expansion of larger companies' market share.  
  • COVID-19's marijuana impact could be an 18-month ordeal, according to Michael Boniello, managing director of the San Francisco cannabis investment firm Poseidon Asset Management. Some, however, view 18 months as a high-side estimate. 
  • Cannabis may be recession-proof, but cannabis companies are not. Presently the over-leveraged industry is struggling with travel limitations, skittish investors and its ever-present banking issues. 
  • While all of this may sound daunting, being designated an essential industry provided legal weed with a watershed moment. Waiting on banking resolution and virus duration, investors remain poised to spend. One analyst observes that "demand for cannabis is relatively inelastic: It doesn’t fall, or doesn’t fall much, during economic downtimes. It might even rise, as liquor sales tend to do during recessions. "

    Quick Hit

  1. Torry Holistics co-owners Tony Hall and Doug Gans have donated more than 17,000 N95 face masks and hand sanitizer to various San Diego health centers and local organizations. In Nevada County, operator Jahlibyrd took their private-public cooperation even further, ordering roughly 40,000 KN95 masks and distributing at least 15,000 to Northern California fire and police departments, medical facilities and cannabis retailers.
    The Union (Nevada County, CA)/Cannabis Business Times

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3 UNDERLYING CONDITIONS COULD HURT ILLICIT WEED

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Unencumbered by taxes and regulations, the traditional cannabis market is riding high in this season of COVID-19. But a couple of recent developments may very well play havoc with illicit marijuana says KushCo CEO Nick Kovacevich.
Forbes

  • The end of 2019 saw a remarkable uptick in regulatory enforcement, with the government taking a more "top down" approach to regulation, investigating apps like Weedmaps, but also conducting raids and issuing fines.
  • Delivery systems have taken a step forward recently. The advent of kiosks in cities where storefront retail is not allowed, such as Anaheim, is empowering consumers to place orders and have products delivered directly. The kiosks "are a visible and painful reminder of tax dollars being lost by the cities that ban retail sales, incentivizing these cities to potentially issue more licenses and encourage more legal stores to open up."
  • Read WeedWeek's recent interview with Kovacevich.

4 A CLOSE LOOK AT DELIVERERS’ RISK

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From New York to Seattle, cannabis delivery professionals are burnishing their status as essential American workers, putting themselves at above-normal physical risk, and not getting the recognition now routinely handed out to our nation's cashiers.

Reading how delivery services around the nation are contending with safety issues at this unprecedented time is eye-opening. One California deliverer, however, drilled down on things often unsaid.
New York Times

  • Bud.com driver Curtis Gardner, 26, said the six-foot distancing rule often goes unfollowed. “I’d be lying if I said I thought that I would be 100 percent OK dealing with all of these people and going to their houses.”
  • Doorstep deliveries are the norm, but sometimes his texts go unanswered. In those doorway transactions, Gardner folds cash payments into a bag, with gloved hands. He hands his card terminal to the customer on card transactions, then turns over the product and removes his gloves.

5 SEEKING TO CUT ATM TRIPS, CALIVA DROPS EAZE

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Caliva is about to launch delivery service in San Francisco and Los Angeles. When the company went with Hypur banking for payments, that spelled the end of its relationship with delivery service Eaze, which remains unable to accept contactless mobile payments. The move spells a significant loss for Eaze.
TechCrunch

  • The move to Hypur banking cuts back on the number of ATM trips Caliva clients will have to make, an issue more critical than ever. The vertically integrating Caliva aims to grow its margins through our indeterminate period of sheltering in place. 
  • Caliva is seeking a new round of investment. Reporter Josh Constine writes, "Faster delivery and simpler payments could help. But enthusiasm for the industry has dwindled following the initial flood of entrants sought to exploit the end of prohibition. Is the Green Rush over?"
  • TechCrunch reported in January that Eaze was nearly out of cash. Just prior to coronavirus hitting, the company secured a $20M bridge loan. 

PRE-ORDER "THE CANNABIS DICTIONARY!

6 TO THOSE WHO QUESTION…

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(Photo by Chip Somodevilla/Getty Images)

To anyone who questions whether cannabis is medicine or the industry is essential, read these stories of humans benefiting from cannabis' ability to relieve pain and anxiety.

Suffering is pointless.
SF Weekly

  • Michael Cohen, 74, began using cannabis to cope with the severe nausea resulting from his use of the anti-AIDS drug AZT. Not only was he not sick to his stomach after using cannabis, the plant made him feel good. "It’s not a bad thing that medicine is pleasurable to use.”
  • Marine Corps vet Ryan Miller, 39, felt unmanageable guilt about his conduct in overseas wars. That led to excessive eating and drinking, until cannabis saved him. Now Miller is president of Educating Veterans About Cannabis (EVAC).

Quick Hit

  1. The Los Angeles Department of Cannabis Regulation can finally put last fall's Phase One licensing snafu behind it. On April 10, the city's audit of the process was posted.
    Los Angeles City Clerk

7 COMING SOON: ‘TIGER KING’ STRAINS

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a tiger is proud to have his crown on head

Moxie plans to release a limited run of 1,600 grams of Tiger's Blood and Cool Cats Cush [sic] concentrates, taking advantage of the popularity of the Netflix documentary series Tiger King. Get 'em before you forget the show was a thing.
VegNews

  • The release is set to coincide with the streaming channel's airing of an additional episode. Tessa Adams, Moxie's head of marketing, said, “We felt compelled to pair with the World Wildlife Fund for this project because our mission is to give back in whatever meaningful ways we can. We hope that people don’t forget about the animals, as they became our primary focus as the season went on.”
  • Moxie plans to donate a dollar to the Tiger Protection Fund for every unit sold.

8 BURNED HEMP GROWER SUES KERN FOR $1B

Last Friday, Apothio LLC filed a billion-dollar federal lawsuit accusing Kern County and its Sheriff's Office of civil rights violations in their seizure of Apothio hemp plants for what the company claims was unscientific testing followed by withholding of information from the public about the plants' destruction.
Bakersfield Californian

  • On Oct. 25, the 58-page suit alleges, county deputies destroyed Apothio hemp plants as part of its bulldozing of 500 illegal marijuana grows in the Arvin area. The company is described as an agricultural research organization working with Santa Monica-based Rand Corp., Cerro Coso Community College in Ridgecrest and the Kern Community College District.
  • Apothio says it kept Kern's agricultural commissioner, planning director, and officials from the community college district in the loop on their activities and that none objected to their plans. On Oct. 25, deputies arrived in "full tactical gear" and destroyed plants that Apothio says would have become medicine to treat seizures.
  • Named in the suit are Kern County, its Sheriff's Office, Sheriff Donny Youngblood, KCSO Sgt. Joshua Nicholson, the California Department of Fish and Wildlife and CDFW Director Charles Bonham.

 

9 THINK GROUP LOVE FOR 420

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With strangers giving us shotguns completely off the table, we might as well just watch Netflix and Google Hang while we're pretending to work on Monday. But if you insist on being a "part of something bigger," then you might want to blow that tree for charity.
KQED

10 SF RESCINDS ANNUAL 420 INVITE

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(Photo by Justin Sullivan/Getty Images)

In pre-Coronavirus America, volumes of cannabis devotees gathered in the part of Golden Gate Park called Robin Williams Meadow and smoke away the 20th day of April, exempt from the laws of man.

This year, cops will be patrolling that meadow and roads to it will be blocked. "We will not tolerate anyone coming to San Francisco for 4/20 this year," says Mayor London Breed. "We will cite people and, if necessary, arrest them."
SF Gate