WeedWeek edition / May 18, 2020
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1 HASH HOUSE BLAST ROCKS DOWNTOWN L.A.

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(Photo by Mario Tama/Getty Images)

State and local authorities launched a criminal probe after a massive explosion at Smoke Tokes, a headshop distribution warehouse in downtown Los Angeles. Officials are looking at whether chemicals stored on site were responsible for the blast.
Los Angeles Times

  • The Smoke Tokes web site advertises a variety of butanes for sale. Butane is a highly explosive chemical used as a solvent to make some cannabis concentrates. It is known for blowing up bootleg labs and leaving people dead or disfigured.
  • California issues licenses to companies for "volatile solvent" extraction.
    CDPH
  • The cause of the fire has not been determined. The L.A. Times couldn't reach Smoke Tokes' owners.
  • Firefighters received a call Saturday evening about a structural fire at the building near Skid Row and Little Tokyo in an area know as "bong row."
  • After they arrived on the scene there was "a significant explosion, very high, very wide, rumbling the entire area."
    L.A. Times
  • Another DTLA business called Smoke Tokes had a major fire in 2016. It's not clear if there's a connection.
  • Twelve firefighters were injured, several seriously. All are expected to survive.

Bottom line: No matter what details emerge, it's not a good look as the industry tries to capitalize on its "essential" status.

Quick Hit

  1. California will delay plans to combine its three cannabis regulatory agencies. 🌴WW California has more.
    MJBiz
This week on the podcast
Tammy Pettigrew Is Microdosing Toward Parenting Excellence

WeedWeek Council member Tammy Pettigrew is best known as Instagram educator @thecannabiscutie — one of the fresh voices out of Orange County weed. Alex and Donnell chat with Pettigrew about weed’s place post-quarantine, and how microdosing edibles has been a recent key to pleasant parenting.

 

  • An educator and cannabis advocate, Tammy Pettigrew also has a MBA.
  • Pettigrew, who first appeared on Episode 49 of this podcast, has taken her home classroom to her garden, to further de-stigmatize the  cannabis for her children.
  • She said weed should not be viewed as a remedy to the recent rise in domestic violence issues.

2 HOUSE DEMOCRATS PASS BANKING REFORM, AGAIN

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Senate Majority Leader Mitch McConnell is no fan of cannabis equity

The Democrat-controlled House of Representatives included cannabis banking reform in the $3 Trillion COVID-19 relief bill they passed on Friday.

The bill in its current form, called the HEROES Act, has little chance of passing the Senate. It faces "near unanimous opposition" from Republicans, and a veto threat from President Trump. However, Republicans' response to the bill suggests they are open to cannabis banking reform.
New York Times

  • Last year, the House passed the SAFE Banking Act which would allow federally illegal cannabis businesses to access mainstream financial services but it got hung up in the Senate Banking Committee, chaired by Mike Crapo (R-Id.)
    American Banker
  • Marijuana Moment did a close reading of Senate Majority Leader Mitch McConnell's (R-Ky.) response to the bill. McConnell mocked the Democrats for wanting to study diversity in who owns cannabis businesses, but didn't criticize the concept of banking access. 
  • McConnell and numerous other Republicans seized on the talking point that the bill uses the word "cannabis" more than the word jobs. Sen. Ted Cruz (R-Texas) and others made some very funny and original stoner jokes.
  • In the House, Marijuana Moment notes, no Republicans tried to strike the banking language before the vote.
  • Republican Senators who support banking access include Rand Paul (Ky.) and Cory Gardner (Colo.), who faces a tough reelection fight against former Gov. John Hickenlooper (D) who oversaw Colorado's legalization rollout.

Are you registered to vote?

A note from the editor

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Tips, comments and complaints to Alex alex@weedweek.net.

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3 WEEDWEEK NOW PUBLISHES DAILY

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WeedWeek is thrilled to welcome our new reporter Hilary Corrigan, who'll be publishing original reporting daily.

Here's some of what she was up to in her first week:

Got a story idea or tip? Hilary can be reached at hilary@weedweek.net.

And make sure to check WeedWeek daily for our latest reporting and analysis.

4 WHAT DO CONSUMERS WANT?

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WeedWeek business columnist Dan Mitchell looks at how consumer behavior is changing amid the pandemic:

"In general, consumers are making fewer purchases, but are buying more product with each one. And they’re buying on different days than before: Rather than the usual spike just before the weekend, some markets are reporting increases toward the beginning of the week. Such is life when the concept of the “weekend,” has been rendered meaningless for a lot of people."

Read the whole thing.

5 POWER PLAYERS: PR MAVEN SHAWNA SELDON MCGREGOR

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This week’s Power Players interview is with  Shawna Seldon McGregor, who started Maverick Public Relations in 2018, after years at agencies in New York and Denver.  We discussed how successful PR relationships work, what attracts her to a brand and her frustrations with the cannabis mediascape.

Shawna and I have been dealing with each other for about five years now. We haven’t always agreed on everything, but I have a lot of respect for her smarts and tenacity.

A few highlights:

On what she looks for in a client:

I look for clients who have something to say, they have a narrative, they have a real story, and are also disruptive. They’re providing something unique and different in the marketplace.

On Journalists:

The first thing is that you have to be honest and transparent and not try to hide anything. You need to know that they are people too. We're all human beings and this is a conversation. They're not the enemy.

On the Green Rush vs. the dot-com bust:

Good business is good business. Do you have a real company with a real consumer demand and are you financially healthy? Is your balance sheet healthy? Do you have good business ethics?

Read the whole thing.

6 HOW IS MSO HARVEST DOING? OBSERVERS DIFFER

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MJBiz takes a look at all the headlines Arizona-based MSO Harvest Health & Recreation has been racking up in recent months.

They include:

  • In a deal touted as worth $80M, this spring Harvest offloaded several dispensaries it acquired from Seattle-based Interurban Capital Group to High Times  Holding Corp. which is going into the retail business. Harvest also revealed it is involved in litigation with Interurban, which owns the Have A Heart dispensary chain, related to the deal.
    New York Post
  • Two former employees in Arizona are suing Harvest after they claimed it engaged in multiple violations of state MED laws. Harvest disputes the claims and says it will defend itself in court.
    Phoenix New Times, MJBiz
  • The company has also had licensing issues in Pennsylvania and Ohio.
    Philly Inquirer, Cincinnati Enquirer

Harvest owns or controls 35 retail storefronts and 11 cultivation or manufacturing facilities in eight states. CEO Steve White said the company will be prioritizing profitability this year.

Analysts disagree over whether Harvest is struggling or simply emblematic of the industry's broader problems.

  • “A lot of businesses, you might have just the ear or the trunk or the tail. Here, Harvest Health has the whole elephant of problems,” California attorney Joe Rogoway said.
  • “I think they’re struggling to keep up or stay in the same league as the darlings of the industry,” GreenWave Advisors founder Matt Karnes said. Companies he considers “darlings” include MSOs Green Thumb Industries, Cresco Labs and Curaleaf.

7 TILRAY CEO: BANKRUPTCIES ARE COMING

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Brendan Kennedy, CEO of Canadian MED company Tilray, says he expects at least a dozen cannabis companies to go bankrupt this year.
BNN Bloomberg

  • He seems to be referring largely to Canadian companies, since they have access to bankruptcy protection. U.S. cannabis companies do not.
  • “If companies haven't already strengthened their balance sheet, they've got a hard road ahead," Kennedy said.
  • Tilray stock is trading just below $8/share, down from almost $150 in fall 2018. It recently reported a larger than expected loss for the last quarter.

🍁For lots more on Canadian companies' travails, check out WeedWeek Canada.

8 POT FINANCE GETS CREATIVE

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Two guest contributors at Green Entrepreneur discuss the benefits of incorporating new financial structures into cannabis.

Quick Hit

  1. Green Entrepreneur also assembled a list of the 35 most influential women in weed.

9 CBD: “MIRACLE CURE OR MARKETING SCAM?”

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Elle magazine asks if CBD lives up to the hype:

At first glance, the science seems to make sense. In these self-obsessed days of health and wellness, the chemical’s claims of ‘fixing’ the numerous non-specific maladies many feel are ignored by the modern medical establishment – problem skin, insomnia, anxiety, stress, PMS and chronic pain – are more than just attractive, they’re miraculous. When women in particular feel their worries are usually dismissed by doctors, why bother pursuing conventional treatment, when there’s a ‘natural’ product available on the high street claiming to cure your ills?

Read the whole thing.

Quick Hit

  1. The New Yorker checks in on the secret lives of fungi.

10 HAPPY MUNKEY HAS GLOBAL AMBITIONS

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Over at Forbes, Warren Bobrow talked to Vladimir Bautista, proprietor of Happy Munkey. In 2018, the New York Post called it New York City's "hottest illegal weed speakeasy."

Bautista has big plans for the brand:

"Weʼre going to see Happy Munkey become a global consumption lounge franchise. Weʼd like to obtain a recreational dispensary and delivery license in New York City. As a business, Iʼd like to break the stigma. When people think “cannabis”, I want them to include “New York.”

Separately, New York City banned mandatory pre-employment pot tests, except in safety sensitive jobs.
NBC

Quick Hit

  1. Two-time Oscar-winning actress Jane Fonda is now a brand ambassador for CBD outfit Uncle Bud's.
    The Beet
  2. Canna Law Blog looks at cannabis policies in the big four professional sports leagues.