WeedWeek edition / April 22, 2019
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This week on the podcast
Buck Angel: From Porn Star to “Tranpa”

1 CANOPY AGREES TO BUY ACREAGE FOR $3.4B, AFTER U.S. GOES REC

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Astrid Riecken/ Getty Images Speaker Boehner doesn't need drugs to have a good time.

Leading Canadian producer Canopy Growth, agreed to buy multi-state operator Acreage Holdings for $3.4B once the U.S. legalizes REC federally. The deal would create a multi-national juggernaurcompany with businesses on several continents and licenses in more than a dozen states.
cnbc

  • Acreage stockholders will receive $300M up front, and the balance upon legalization. Until the merger, the companies will continue to operate separately.
    Axios
  • Canopy CEO Bruce Linton anticipates his company generating $1B in revenue this year, but not achieving profitability. 🍁For more see WW Canada.
    bnn bloomber
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  • Acreage board members include former Republican Speaker of the House John Boehner, whose stock at current value, would be worth almost $19M when the deal closes.
  • Boehner opposed legalization while in office and has never tried marijuana. Acreage CEO Kevin Murphy has praised Boehner for having the "courage" to change his mind.
    financial times-paywall, the daily beast
  • Murphy predicts federal U.S. legalization within 12 months, "18 months on the far side."
  • "We believe that the timing of this deal was likely motivated by the re-introduction of the STATES Act, which both [companies] have said would be sufficient for Canopy to operate in the U.S.," Cowen analyst Vivian Azer wrote.If passed, the STATES Act, would allow states to determine their own marijuana laws, but it's not the same thing as full legalization.
  • Acreage also said it would acquire vertically integrated Nevada company Deep Roots for $120M.
    mjbiz daily
  • Acreage Board Member William Weld, a former Republican governor of Massachusetts, said he would challenge President Trump for the 2020 Republican nomination.
    cnbc

Vice asks 'Which countries will legalize next?' and predicts the U.S. goes REC in 2023.

Quick Hit

  1. San Francisco vaporizer company PAX Labs is in talks to raise more than $400M at a valuation around $1.3B, The Information reports. (Paywall)
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2 DEMOCRATS PUSH FOR REFORM

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Ethan Miller/ Getty Images

New Jersey Senator and presidential candidate Cory Booker (D) said he will only support REC legalization if the bill contains equity provisions for the communities most affected by the war on drugs. He is now working to include them in the STATES Act.

Booker sponsored the more liberal Marijuana Justice Act which would expunge past convictions and support investment in those communities.

He's throwing down the gauntlet as legalization becomes more central to the Democrat's agenda.

Also: Federal regulations to support businesses in struggling "opportunity zones" could benefit cannabis businesses.
n.y. times

Quick hit

  1. McGuireWoods is the latest powerful D.C. firm to join cannabis lobbying efforts.
    the recorder

3 BOSTON’S CONTENTIOUS EQUITY FIGHT

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The Boston Globe dives into a bitter contest between three men to win the first retail license in Mattapan, a majority black neighborhood. While all three candidates are black, one has formed a partnership with Sea Hunter Therapeutics, (part of TILT Holdings), and there are questions about how much control he would cede to the multi-state operator.

While activists say can cannabis can create "generational" wealth in low income communities, the story raises the possibility that partnerships between minority entrepreneurs and multi-state operators will look more like tokenism.

While the exact terms of these partnerships are unclear, one young, black entrepreneur who has partnered with Seahunter on an Oregon shop compared himself to a "franchisee," and described the agreement as fair.

  • While the Massachusetts law aims to support minority businesses, none of the 15 REC shops currently open in the state is minority owned.
  • I've written about sim for the Guardian and California Sunday.

On the west coast:

In L.A., the United Food and Commercial Workers union contributed to a report with recommendations for equity rules in the country's largest market. See the report here.

L.A. also became the first city to sue an unlicensed dispensary. The move is seen as an effort to help licensed businesses compete against the grey market. 🌴For lots more see WW California.
cannabis wire, l.a. time
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Quick Hit

  1. The MED business is booming in Puerto Rico.
    nbc

4 CAN MEDMEN CONQUER THE MARKET?

Rolling Stone published a skeptical feature on high profile L.A. retailer MedMen.

  • The retailer now has almost 40 stores and more than 2,200 employees. It lost $65M in Q4 2018 on $30M in revenue.
  • While the company claims to control 7% of California retail sales, the story argues its success depends on its future looking bets in New York and Florida.
  • CEO Adam Bierman and President Andrew Modlin deny charges, made in a lawsuit by former CFO James Parker, that they permitted casual bigotry.
  • The company also faces a class action suit from former employees claiming they worked unpaid hours. (MedMen has declined to comment.)

Quick hit

  1. Vitamin Shoppe is the latest big retailer to say it will stock CBD products.
    cnbc
 

5 MORE ACTION ON WALL STREET…

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Financial giant Bank of America initiated coverage of four Canadian cannabis stocks. Analyst Christopher Carey gives a buy rating to Canopy, Aurora and his all around favorite, Quebec-based HEXO. He gave Cronos Group an underperform rating. 🍁For more see WW Canada.

Quick Hit

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6 …BUT INSURERS KEEP THEIR DISTANCE

Numerous unanswered questions means insurers remain reluctant to cover cannabis businessesCannabis Wire reports.

  • Among other reasons, insurance companies are required to fill out suspicious activity reports and it’s not clear what cannabis-related activity should be considered suspicious.
  • It's also not known who is liable in various situations, such as when a cannabis-impaired driver gets into an cases
  • They’re also wary about insuring hemp businesses, even though hemp is now federally legal.

Quick Hits

  1. Many cannabis jobs, especially in production, could soon be done by robots. Israeli/American company Seedo has announced plans to open a fully automated cannabis grow in Israel.
    canna law blog
  1. This year, 420 went corporate with brands like Carls Jr. and Ben & Jerry's offering cannabis-themed promotions. 🌴For more see WW California
    a
    P
 

7 STUDY: CANNABIS USERS MAY REQUIRE MORE ANAESTHESIA

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A study of 250 Colorado patients undergoing minor surgery found cannabis users may require more anaesthesia than non-users. These included dosages of propofol, midazolam and the opioid fentanyl.

The study’s author said it raised questions about interactions between cannabis and other drugs.
reuters

9 HOW LEGALIZATION REALLY HAPPENED

Seattle alt-weekly The Stranger has a big story on the secret history of cannabis legalization.

It explains how billionaires George Soros, a Hungary-born financier, Peter Lewis, the CEO of Progressive Insurance, and John Sperling, founder of the University of Phoenix, contributed $70M dollars over 20 years to legalization efforts directed by Ethan Nadelmann, founder of the Drug Policy Alliance.

“Marijuana legalization is more or less unstoppable now, so that gives me a sense of tremendous pride,” Nadelmann said.

Quick Hits

  1. San Diego City Beat checks out the cannabis scene in Tijuana.
  2. Vanity Fair has a yarn about how the successful pastor John Lee Bishop got busted smuggling weed into the U.S.
 

10 420 ROUND-UP

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WaPo has the latest on cannabis cookbooks, which have become very ambitious:

You could make the tower of maple-cream canna-puffs in “The 420 Gourmet.” Or infused blueberry-lemon maracons — a confection that can be hard for regular cooks to master even without the weed — from “Edibles.” Having company over? “Bong Appetit” suggests you make an infused whole sea bream stuffed with cannabis leaves, or poach a four-pound octopus in infused cannabis oil.

Jen Doll advises against edibles on the third date.
longreads

The first "bong symphony" didn't go well.
merry jane

Hip-hop icon Fab 5 Freddy has a new cannabis documentary "Grass is Greener" on Netflix.
vanity fair

Vox explains the 420 holiday. 🌴At WW California, Donny asks what 420 means in the time of legalization.

Designer Jonathan Adler, who calls himself an "aesthetic libertine" has a new line of cannabis adjacent accessories. They look like ashtrays.
Refinery29

OKWhatever explains why you can't tell when you smell like weed.