WeedWeek edition / April 27, 2020
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1 CONGRESS STIFFS CANNABIZ ON STIMULUS

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This week lawmakers passed, and President Trump signed, a $480B stimulus package, which replenishes coffers for the small business paycheck protection program (PPP). While most cannabis companies are small businesses, they will not be eligible for federal relief.
Vox

Many WeedWeek readers will be unsurprised to learn many Americans are spending their $1,200 stimulus checks on weed.
Green Entrepreneur

A note from the editor

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2 CALIFORNIA: “THE BRINK OF COLLAPSE”

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Lobbyist Jackie McGowan said the pandemic has pushed the California cannabis industry to "the brink of collapsing."
Sacramento Bee

Separately, in the latest twist on Los Angeles' licensing, a social equity-minded group is suing the city over its retail license application process. The suit comes weeks after an audit found the city took "reasonable and appropriate" steps to prevent bias. Canna Law Blog has more.
L.A. Times

🌴WW California has lots more.

Quick Hit

  1. In California, testing costs account for 10% of wholesale product costs, according to a UCDavis study.

PRE-ORDER "THE CANNABIS DICTIONARY!

3 POWER PLAYERS: ELLO CAPITAL’S HERSHEL GERSON IS “VERY BULLISH”

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For this week’s Power Player’s interview, I spoke to Hershel Gerson, managing director at cannabis-investment bank Ello. Gerson joined the green rush last year after years in accounting and corporate finance. 

In our wide ranging conversation, Gerson discussed his favorite retail strategy, why he thinks the pandemic will accelerate U.S. legalization and several reasons he’s "very bullish" on the weed industry.

A few highlights:

On cash strapped states turning to cannabis:

They had the same issue in 2008 and they took to regional gaming. I anticipate a similar effect with cannabis where the tax revenues are just going to be too attractive for states not to adopt positive legislation, especially when neighboring states are going to have a REC program.

On why he's bullish:

With the new markets and new consumers coming in, we anticipate 20% plus growth available to the industry. So you're looking at a very attractive investment opportunity.

On his preferred retail strategy:

Guys who focused on single states to get density and positive cashflow are in an advantageous state compared to companies that went  broad to try to get beachheads in multiple states and felt capital would just be there in perpetuity.

Read the whole thing.

4 “REPREHENSIBLE:” CBD BIZ PUSHES BACK AT BOGUS CLAIMS

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Ex-NFL Player Turned CBD Advocate Kyle Turley (Getty Images)

In his WeedWeek column, Dan Mitchell finds the CBD business is up and arms about the bogus Covid-19 related claims some purveyors are making. And the FDA is on the case.

The CBD industry is filled with fly-by-night operators trying to exploit the product’s popularity, which  began in earnest right around when states began legalizing cannabis. Besides making unfounded or shaky health claims, some of them sell products labelled CBD, which don’t contain CBD. Some dub products “organic,” even when they don’t adhere to organic standards — which is against the law. Some CBD products have been found adulterated with potentially harmful ingredients. 

Read the whole thing.

This week on the podcast
Swapcast Consummation with The Wondering Jews

In this episode, we reciprocate our podcast swap with Portland’s Wondering Jews. In our turn, Alex and Donny quiz the WoJews’ Roy and Josh on how they came to effortlessly blend Talmudic study and cannabis love. Plus: The Man Who Legalized Cannabis.

5 “SELECTIVE CONSOLIDATION”

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An Amoeba
David J. Patterson -- https://www.inaturalist.org/observations/33599605

At New Cannabis Ventures, Alan Brochstein writes "selective consolidation" is coming for the industry:

"We anticipate a wave of mergers and acquisitions ahead, but we believe the focus will be divestitures by multi-state operators (MSOs) rather than mergers of entire companies, which are challenging due to the complexity of regulations by state. Florida, for example, permits a company to own only one license, which would make acquiring MedMen or iAnthus difficult for any company already operating in the state. Nevada has locked down license transfers, making asset sales in that state very challenging, for now."

Canadian regulators temporarily halted trading of iAnthus stock.
MJBiz

Quick Hit

  1. Canna Law Blog visits the cannabis company structure hall of shame. It's illustrated.

6 HUNDREDS OF PA MED JOBS UNFILLED

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Despite the staggering number of Americans who've lost their jobs in the past month, hundreds of Pennsylvania MED jobs are unfilled due to delays on mandatory FBI criminal background checks and drug tests.
Washington Post/Philadelphia Inquirer

  • “It’s just so unbelievably frustrating,” said Harrisburg lawyer Judith Cassel, who represents several medical marijuana businesses. “I have five clients with over 100 openings. And there are likely hundreds more that are waiting. These are good-paying jobs, many of which come with health-care benefits.”

8 A NEW USE FOR EMPTY GROWS

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Not that long ago, Canadian cultivators bragged about their size of their grows. Today it looks a lot like they overestimated their needs. Now Canadians may turn some of those desolate facilities into indoor food farms:
Financial Post

"The COVID-19 fallout has sparked a renewed interest in the issue of domestic food security, particularly as to whether Canada has enough capacity to grow its own food in a doomsday scenario where the country could no longer rely on imports.

"Some food experts say greenhouses, including those currently mothballed by the struggling cannabis industry, could play an increasingly important role in being prepared for such an eventuality."

🍁WW Canada has lots more on why those grows are empty.

9 IN MEXICO, ETHICAL WEED

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Vice visits cartel-ravaged Sinaloa, Mexico where a population of independent farmers is growing "blood-free" cannabis.

  • None of the farmers who spoke to VICE had to ask permission from the cartels to go it alone. “We’re independent and doing it for ourselves,” Lazaro, a farmer, said.
  • "There are pros and cons to the cartel-free business. Without the help of drug trafficking organizations, producers can’t rely on their infrastructure and have to create their own logistical networks, making contact with dealers and then getting their produce to them in cities around Mexico."

In Mexico, the pandemic has pushed back anticipated REC legalization once again.
MJBiz

🌴WW California has more.

10 420 BRAND SHOUT OUTS: DEL TACO TO H&R BLOCK

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Marijuana Moment has a fun round up of how some mainstream brands played 4/20.

  • Ben & Jerry's made a full-throated call for equity.
  • BarkBox released a series of pot-themed pet toys, including a joint and a bong.
    Mashable
  • Other brands that felt compelled to participate included Del Taco and Insomnia Cookies, but also Tidal, Netflix, Impossible Foods and, in Canada, H&R Block and Turbo Tax.

Separately, I wasn't able to immediately determine if the quest to set a world record for most cannabis consumers on one video chat was successful. It also wasn't clear if there was a previous record to break. Hope it was fun!

Quick Hit

  1. Children's book "It's Just a Plant," celebrated its 15th anniversary.
    High Times