WeedWeek edition / March 02, 2020
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1 EAZE, MEDMEN TRY TO REBOOT

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Struggling west coast giants Eaze and MedMen discussed their plans to rebuild. They are two of the best known brands in California, if not the country.

  • Eaze said it had raised $35M to pivot from being a delivery technology company to a plant-touching retailer. The company says it has 600,000 registered customers. "Verticalization is Eaze's second act," CEO Ro Choy said. Tech Crunch
  • The company raised a *$15M bridge investment from existing investors Rose Capital and DCM and an additional $20M led by an entity called FoundersJT. (An Eaze spokesperson declined to say more about that backer.) The company didn't disclose the valuation.
  • Despite many publicized difficulties, Eaze's business appears to be growing.
  • On LinkedIn, attorney David Feder expressed skepticism about Eaze's plan. In the post, he imagines a conversation between a dispensary and Eaze:

"Dispensary: "Wait, but aren't you my competitor, selling your own cannabis products directly to customers? Why should I give you MY customer's name, contact info, location, basket sizes, shopping preferences and habits?"

"Eaze: "No no no. We're totally not trying to sell OUR cannabis products to YOUR customers. Trust us. We only want to sell our cannabis to other people's customers. Not yours. Basically, to everyone else except your customers."

 

On MedMen's quarterly earnings call, the retailer discussed its "retail-first" turnaround plan.
CNN

  • "We cannot continue to invest in assets that are not producing near-term cash returns," said Zeeshan Hyder, MedMen's CFO.
  • The company reported 2Q revenue of $44.1M, up 50% from a year earlier and a net loss of $40.6M, up from $18.7M.
  • As of Sunday, the stock was priced at 24 cents/share.
  • In a bearish analysis, investment site Grizzle says the company "remains in a liquidity crisis."

 

Quick Hit

  1. Entrepreneur Roger Obando, who lived through the dot-com crash, asked 'What will happen to green rush victims?' He recently appeared on the WeedWeek Podcast.
    Green Entrepreneur

And the Weedy goes to...

 

On February 28, WeedWeek hosted the first annual Weedy awards at the London Hotel in West Hollywood. Here are the honorees:

Female Run Company:

Kikoko

Grow:

Bloom Farms

Person of Color Run Company:

Viola

Consumption Device:

Puffco

Socially Responsible Company:

Eaze

Delivery Company:

SAVA

Environmentally Responsible Company:

Sana Packaging

Dispensary:

The High Note and Harborside (tie)

Edibles:

Kiva

Thanks again to our sponsors!

Jupiter Research, Armanino, Chil, Eaze, Dama Financial, Rove, Wana Brands, Weden, CrushCrush Promos, Stone Road, Futurola, MedMen, Cannabis Now, Simon & Schuster, Willow Industries, Pure Extracts, Social K, Kind Pen and Jeff The 420 Chef

 

And to Ellen Bollinger, John Bollinger and Catherine Eng for putting together a terrific event!

2 CORONAVIRUS FEARS, EARNINGS SINK POT STOCKS

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Amid fears of a global coronavirus pandemic, pot stocks weren't spared the worst week for markets since 2008. Barron's
A note from the editor

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To advertise contact Lisa Marie Dudenhoeffer lisamarie@weedweek.net

3 CORONAVIRUS VS. CANNABIZ

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MJBiz looks at the coronavirus fallout for the cannabis and hemp industries. The most likely fallout from the outbreak includes shortages of hardware manufactured in China, where the virus originated and of raw Chinese hemp which is exported to the U.S. for CBD products.
  • Potential silver linings include opportunities for U.S. manufacturers and hemp growers to fill those shortfalls.
This week on the podcast
Who Hurt Kristen Yoder?
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4 SEN. GARDNER: BANKING COULD HAPPEN IN “MONTHS”

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WASHINGTON, DC - MARCH 20: U.S. Sen. Cory Gardner (R-CO) speaks during the first day of Judge Neil Gorsuch's Supreme Court confirmation hearing before the Senate Judiciary Committee in the Hart Senate Office Building on Capitol Hill March 20, 2017 in Washington, DC. Gorsuch was nominated by President Donald Trump to fill the vacancy left on the court by the February 2016 death of Associate Justice Antonin Scalia. (Photo by Alex Wong/Getty Images)

Speaking at a credit union conference Sen. Cory Gardner (R-Colo.) said he believed a version of the Safe Banking Act could pass the Senate within months. Banking Dive

  • "Every day that Congress continues to ignore reality, unintended consequences pile up for legitimate businesses," Gardner said. "I believe that in a matter of months we can have a vote on a compromise version in the Senate that will have the support of 60-plus of my colleagues and of the House of Representatives."
  • Gardner's working on the bill with legalization supporter Sen. Jeff Merkley (D-Ore.) and Banking Committee Chair Mike Crapo (R-Id.) who opposes legalization but has shown some interest in the bill. However, Crapo has proposed potency caps that are non-starters for the industry. It's not clear what compromises Gardner has in mind.

 

Quick Hit

  1. The Democratic presidential candidates shared their views on legalization during their South Carolina debate. Former Vice President and Delaware Senator Joe Biden, one of two candidates who does not support legalization, won big in the South Carolina Primary, establishing himself as the most credible challenger to Sen. Bernie Sanders. Marijuana Moment, CNN

5 BAY STATE HAHD-BALL

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Boston NPR station WGBH dives into the common Massachusetts practice of host community agreements (HCAs) which allow towns to levy fees charitable contributions on their pot shops.
  • State Commissioner Shaleen Title called the process "essentially a shake down."
  • One industry lawyer compared HCAs to the practices of former Falls River, Mass. Mayor Jasiel Correia who has been federally charged with extorting more than $600,000 from cannabis businesses. He has denied any criminal activity.
  • More than three dozen cities, including Boston, have been subpoenaed in an investigation of whether these agreements comport with state law.
  • Amid this, the long wait for licenses is *crushing minority-owned businesses. WGBH

Also in Massachusetts, the United Food and Commercial Workers Union has accused MSO iAnthus Holdings of breaking state law by retaliating against pro-union workers.

Boston Globe
  • In a formal complaint, the union said iAnthus subsidiary Mayflower Medicinals excessively-disciplined two pro-union workers as part of an "illegal anti-union campaign."
  • iAnthus said employees "will have the opportunity to decide" whether they want to join a union.

Meanwhile: In California, Gov. Gavin Newsom (D) cancelled an appearance at an upcoming California Cannabis Industry Association (CCIA) conference after unions accused the 500-member group of distributing anti-union literature.

Los Angeles Times
  • CCIA has apologized.

6 CURE FOR SENIOR-ITIS

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A new study in the Journal of the American Medical Association found the number of U.S. seniors who use cannabis was up 75% between 2015 and 2018. The research confirms a trend reported on in many newspaper stories, largely with anecdotal evidence. MarketWatch
  • The study found the rise was significant among many demographic groups including women (up 93%) and racial and ethnic minorities (up 336%) in particular.
  • Diabetics who use cannabis increased 180%.

PRE-ORDER "THE CANNABIS DICTIONARY!

7 UN BODY QUESTIONS DRUG CONTROL TREATIES

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The president of the United Nations' narcotics enforcement agency, (INCB) questioned whether its decades old views are outdated given developments such as cannabis legalization. MJBiz

  • Next year marks the 60th anniversary of the Single Convention on Narcotic Drugs.
  • An expert on U.N. drug policy said “Having the head of the INCB suggesting that the conventions are not fit for the challenges of the 21st century is already breaking a strong taboo.”
  • This week another U.N. narcotics organization is meeting to discuss -- and appears likely to largely reject -- World Health Organization recommendations for narcotics reform. MJBiz

In other international news:

8 CANNABIS VS. SUPERBUGS

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A new study found the non-psychoactive cannabinoid cannabigerol (CBG) holds potentially valuable antibiotic properties. IFLScience
  • Scientists at McMaster University in Canada found CBG to be effective against drug-resistant "superbug" infections in mice. It appeared to work as well as a powerful anti-biotic.
  • However, scientists found CBG had toxic effects on the "good" host cells which could complicate its use as an anti-biotic.

9 BEYOND THE APPLE STORE

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Canadian site The Growth Op talks to some store owners trying to move past the "Apple Store of weed" paradigm.
  • “One of the biggest decisions we made from the get-go was to not have technology be the interface for customers,” [CEO Mimi Lam of upscale Toronto store Superette] says. She says screens aren't the best way for many people to learn about which product will suit their needs.
  • The piece also visits Canvas, another luxury Toronto dispensary.

10 DECRIMINALIZE GOOP

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Appearing on Jimmy Kimmel, Gwyneth Paltrow discussed the healing powers of psychedelics and a popular product on Goop called "This Smells Like My Vagina Candle." ($75)

 

Quick Hit

  1. Canna Law Blog looks at the initiative to decriminalize psylocybin that could be on the California ballot this year.