WeedWeek edition / September 20, 2020
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1 CANNATECH INVESTING HEATS UP

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In recent months, investors have been 🔒rushing into canna-tech start-ups like Dutchie, an e-commerce platform for dispensaries, ($35M, Series B), marketing tech company Fyllo, ($10M on top of a previous $16M Series A) and marketing platform Springbig ($11.5M, Series B).
Business Insider

  • Overall, however, cannabis VC investing is way down from 2019.
  • Business Insider spoke to six prominent cannabis VCs about 🔒what they're looking for in deals. The short version, they're shifting to larger companies with proven track records.
  • MJResearchCO founder Mike Regan said companies with specific plans for the money they want to raise will have much more success.
    MJBiz
  • Canna Law Blog looks at what the SEC's new rules for accredited investors mean for cannabis.

Quick Hits

  1. A judge ruled against MSO Columbia Care in an IP dispute, part of ongoing litigation involving a contested Florida MED license.
    WeedWeek
  2. MedMen received another $20M loan with tough terms attached.
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2 HOUSE POSTPONES LEGALIZATION VOTE

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The Democrat-controlled House of Representatives postponed a vote on the MORE Act, which would legalize cannabis nationwide and enact several equity measures.
Marijuana Moment

  • Democrats initially though support for legalization made it an easy win but they got cold feet after being bludgeoned by Republicans over pushing the bill instead of coronavirus relief. (House Democrats passed a relief bill but it is too expensive for Republicans.)
    Politico
  • The bill stood little chance of passing the Republican-controlled Senate.

Industry insiders say November's election is unlikely to accelerate legalization, though they tend to describe Democrats winning the presidency and control of the Senate as the best scenario for the industry.
WeedWeek

3 IRS OKAYS 280E TAX LOOPHOLE

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In a rare boost for cannabis from the IRS, the tax agency greenlit cannabis companies to use of Tax Code Section 471 to offset the burden of hated rule 280E.
WeedWeek

  • 280E severely limits the expenses cannabis companies can deduct on their taxes. Section 471, which passed in the 2018 tax law, allows businesses with less than $25M in revenue to deduct more of their expenses.
  • Until the IRS's announcement this month, it wasn't clear whether 471 applied to cannabis businesses.
    WeedWeek
  • The IRS may have been motivated because it missed out on nearly $250B in revenue from improperly deducted expenses.

In another story, WeedWeek's terrific new reporter Willis Jacobson looks at the heavy hitting cannabis coalition pushing the U.S. Supreme Court to accelerate legalization.

4 THE SEASON OF “HICKORY KUSH”

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Until a few weeks ago, 2020 was the best year in a long time for Emerald Triangle pot farmers. Now the wildfires have changed life in the heart of California's celebrated growing region.

Chris Roberts reports for Forbes:

According to multiple sources, hundreds of licensed cannabis growers in Humboldt and Mendocino counties have had to evacuate their farms over the past several days.

Damage estimates won’t be available for a few days more, but key growing regions in southern Humboldt and in the Bell Springs area in Mendocino are blanketed in smoke or threatened by flames, and in the crucial weeks ahead of the fall harvest.

🌴WeedWeek California has lots more on the season of "hickory kush."

In his Rolling Stoned newsletter, Zack Ruskin reflects on a few very bad weeks.

5 CBD POISED FOR “DRAMATIC GROWTH”

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Dmitry_Tishchenko, Getty Images

A report from New Frontier Data projects dramatic growth for the CBD. But big questions remain about how to govern the industry.
WeedWeek

IN EXCITING WEEDWEEK NEWS: We're about to launch Goodie Lane, a product review site for CBD products and cannabis accessories. We'll unveil it soon, but in the meantime, Digiday wrote it up.

6 ILLINOIS GOV. UNDER FIRE FOR LICENSING PROCESS

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Illinois cannabis regulators face a flood of criticism and litigation over applicants who feel they were unjustly blocked from obtaining licenses.
WeedWeek

  • At issue is a state lottery for 75 dispensary licenses. Twenty-one businesses qualified for the lottery out of 900 applicants. (Finalists can win more than one license.)
  • “I’m honestly surprised that the state of Illinois hasn’t just willingly suspended the process, because at this point, they should recognize that they messed up – really bad,” unsuccessful applicant turned litigant Naomi Williams said. “They should be embarrassed by how bad they messed up.”
  • Under fire, Gov. J.B. Pritzker (D) said he would meet with stakeholders about the not yet scheduled lottery.
    Chicago Tribune

Separately, in Missouri, a memo prepared by state House Democrats found "credible allegations" that Gov. Mike Parsons (R) interfered in their investigation of the state's MED program.
St. Louis Post-Dispatch

Quick Hit

  1. The Boston Globe found Massachusetts has some of the country's most expensive legal REC.

7 ACCUSATIONS OF CULTURAL MISAPPROPRIATION SINK BRAND

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The Los Angeles Times has a messy story of accused cultural misappropriation.

  • The California brand La Chingona "the badass woman" launched with the story of three Mexican sisters, but it turned out they were invented by businessman Michael Kaiser, a white guy with a Mexican grandmother.
  • The business was inevitably outed as white-owned on social media. Bitter recriminations and an Instagram-powered boycott followed.

Read the whole thing.

8 OAKLAND INITIATIVE SEEKS TO LOWER BARRIERS TO ENTRY

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Amber Senter, third from left, is shown with other members of the advocacy group Supernova Women.

A novel equity initiative supported by the city of Oakland, Calif. and California's Bureau of Cannabis Control seeks to reduce the costs of starting an infused products company.
WeedWeek

  • EquityWorks! Incubator, a shared manufacturing kitchen, started by entrepreneur and activist Amber Senter and the Oakland Cannabis Kitchen, are offering entrepreneurs space to produce product as well as help with access to dispensaries, data analysis and help with marketing costs and other expenses. 
  • Senter said EquityWorks! would be able to support five entrepreneurs.

In another collaboration, Viola Brands, run by former NBA star Al Harrington, and Ball Family Farms, are teaming up to benefit criminal justice non-profit Root & Rebound.
WeedWeek

  • Proceeds from the sale of a strain called Reign will benefit the group. The Prince estate blocked it from being called Purple Reign.

In San Francisco, equity applicants are still struggling to open businesses.
S.F. Weekly

9 UC BERKELEY CREATES PSYCHEDELIC RESEARCH CENTER

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The University of California Berkeley has created a center for researching psychedelics.
Bay City News

  • Director Michael Silver, a neuroscientist, cited three reasons for researching the drug category: 1) They may help people suffering from mental illness "Psychedelics shake up the snow globe." 2) They may help researchers better understand how the brain works. 3) They can offer people profound mystical and spiritual experiences.

🌴WW California has more.

10 PANDEMIC DEVASTATES LIVE MUSIC VENUES

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Live music venues "might be the most screwed businesses of the pandemic," according to Slate. The story follows the travails of Washington D.C.'s U Street Music Hall as it tries to survive.

  • They're hoping for a bailout from Congress, which makes U Hall's owner feel like "a shipwrecked sailor at sea, waiting for aid that may never come."
  • Boulder, Colo.-based Terrapin Care Station donated $30,000 to preserving the city's concert venues.
  • According to Yelp, at least 300 U.S. venues, and probably many more, have shuttered permanently since March.

Quick Hit

  1. Kendall Jenner came out as a "stoner."