WeedWeek edition / November 01, 2020
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Reminder: Tomorrow, Tuesday November 3, is Election Day. If you have any questions about voting, go here.

1 IRS TARGETS POTCO’S WITH AUDIT SQUADS

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(Photo Illustration by Scott Olson/Getty Images)

Seemingly annoyed by some potco's failure to pay taxes, the IRS is creating specialized cannabis audit teams.
WeedWeek

  • While it's not entirely clear what these teams will do or how they will operate, an IRS official said they aimed to bring “consistency of application of the tax law within the scope of the cannabis industry.”
  • Even if it leads to be a spike in enforcement, James Mann, the cannabis tax lawyer who represents Harborside in its 280E case, described the announcement as something cannabiz operators should welcome. As he sees it, enforcement will help normalize and standardize cannabis tax practices. “There needs to be a uniform set of audit guidelines and those guidelines should be known by everyone,” he said.
  • Cannabis companies are already facing an uptick in 280E audits (paywalled).
    Business Insider

Also in WeedWeek:

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2 THE GREEN ELECTION

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Five states will be voting on MED and/or REC legalization tomorrow.

Campaigns to legalize outraised their opponents 36-1.
MJBiz

Meanwhile the industry is closely watching the race to control the Senate. Here are the five big stories to watch on Election Night.
WeedWeek

Got any questions about voting?

Quick Hit

  1. New Zealand's national REC legalization vote fell short. Newly re-elected Prime Minister Jacinda Ardern didn't reveal her support for the measure until after it failed, annoying its backers.
    New York Times

3 …THE DAY AFTER ELECTION DAY

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WeedWeek reporter Willis Jacobson talked to legalization activists about their ambitious plans for after the vote:

If Democrats were to maintain control in the House and re-take a majority in the Senate, for example, advocates would train their focus on federal legalization as soon as possible, said MPP Executive Director Steve Hawkins. Conversely, if Republicans keep power in the Senate and maintain the presidency, there would likely be more of a grassroots push in states to affect change.

“For advocates of cannabis reform, this is probably going to be the busiest time that we’ve ever seen,” Hawkins said Friday. “But also a time that’s probably giving us the greatest opportunity that we’ve realized to this moment.”

  • MPP, however, is losing its centrality as a destination for political contributions, and lobbying. “I’m accused of being a shill for the industry, but I don’t actually have any money from the industry,” MPP deputy director Matt Schweich said.
    MJBiz

Cowen stock analyst Vivien Azer predicted a "Biden blue wave" (paywalled) would boost the industry. Wall Street analysts picked six pot stocks to bet on (paywalled) if the Democrats win big.
Business Insider

Quick Hit

  1. In these trying times, Cannabitch Jackie Bryant wrote about mutual aid and support in the cannabis world.

4 SPLASHY DEALS PILE UP

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(Photo by Pascal Le Segretain/Getty Images)

A slew of celebrities including Rebel Wilson, Gwyneth Paltrow and Darren Criss invested in California THC beverage brand Cann. Terms of the deal were not disclosed.
TechCrunch

Some other high-profile deals were announced as well:

Meanwhile, several big public companies will be reporting earnings this month.
New Cannabis Ventures

Quick Hit

  1. In Canada, manufacturing and distribution challenges are hampering the much-hyped cannabis beverage market.
    Reuters

5 MEDMEN CAN’T CATCH A BREAK

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IG @SHOPMEDMEN

Beleaguered retailer MedMen sued Pasadena, Calif. after the city rejected its license application.
Pasadena Star News

  • The city rejected MedMen's application after determining that all the company's executives had been replaced since the application was filed in January 2019.
  • MedMen calls the decision "arbitrary, capricious and unlawful" and wants it reversed.
  • Technical420 revisits MedMen's journey "from cannabis industry hero to $0."

WW California takes a look at another prominent California retailer: Cookies.

6 LAWMAKERS PUSH BACK AT DEA’S CBD RULE

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COURTESY OF GETTY IMAGES

A new DEA rule which takes a hard line on "hot hemp," has alarmed the CBD industry. Now a bipartisan group of nine House members has written to the agency expressing concern. The rule considers anything containing more than 0.3% THC to be federally illegal and subject to prosecution under the Controlled Substances Act. 
WeedWeek/Canna Law Blog

  • It's controversial because manufacturing CBD products often creates "intermediate hemp" substances which concentrate THC at higher levels. This theoretically leaves operators vulnerable even if they dilute the product before it reaches consumers.
  • The lawmakers ask that the rule be revised to be less ambiguous and more supportive of the industry.

Separately, in California, a hemp grower is suing the DEA alleging the agency destroyed $3.5M in legal product.
WeedWeek

7 KUSHY PUNCH SUED FOR WRONGFUL DEATH

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Edibles brand Kushy Punch, who's parent company is accused of running an unlicensed SoCal gummie factory, is now facing a wrongful death lawsuit. The parents of a 28-year old flight attendant claim she died hours after consuming a Kushy Punch gummy.  
WeedWeek/Insurance Journal

  • According to the suit, the woman experienced "psychological and physiological symptoms after consuming a gummy, including trouble breathing, uncontrollable movements, increased heart rate, uncharacteristic behavior and panic attacks." The plaintiff's lawyer accuses the company of negligence, product liability and misrepresentation.
  • As WeedWeek readers know, vanishingly few if any deaths have been directly caused by cannabis consumption.
  • Kushy Punch did not immediately respond to requests for comment.

Related: Comparing the situation to e-cigarettes, Bloomberg asks whether infused candy companies are taking proper precautions regarding youth use.

  • A former director of dietary supplements at the FDA asked, “Have you taken the steps someone would expect a reasonable corporate citizen to take?”

Quick Hit

  1. The Massachusetts Supreme Court ruled that insurance companies are not obliged to reimburse patients for MED.
    WeedWeek
  2. A California judge threw out a racketeering (RICO) case against a grower that was brought by another grower.
    WeedWeek

8 DODGY DOINGS IN SOCAL

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A testing lab applicant has sued Los Angeles suburb Maywood accusing the city's mayor of conspiring with other officials to reject his application after he refused to pay a $350,000 bribe.
WeedWeek

The suit alleges:

It was in early September 2019... that “to [the plaintiff's] astonishment” he was approached while performing yardwork in front of his home by an unknown man who told him, “We need $350,000 to move your project forward.”

“The man indicated by pointing toward a black Honda Accord without plates across the street,” the suit states. “The tinted window of the car rolled down and Mendoza recognized the face of [the] Mayor.”

  • The mayor and other city officials strongly rebuked the allegations.

In other California stories:

9 HAS COVID CHANGED ATTITUDES ABOUT DRUGS?

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The New York Times suggests Oregon's upcoming ballot initiatives to decriminalize all drugs and allow psilocybin therapy are emblematic of society revisiting old assumptions and stigmas about illegal drugs:

“The pandemic has only highlighted and intensified the need for new options,” said Sam Chapman, the campaign manager for [the psilocybin initiative]...“We all know someone who is suffering,” Mr. Chapman said.

Read the whole thing.

Quick Hit

  1. A UCSD study found more seniors are using MED to treat common ailments. WW California has more.

10 GHOSTS AT DENVER’S MARIJUANA MANSION ARE LONELY

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@mjmansion

Westword visits Denver's "marijuana mansion." The possibly haunted Victorian pile was once occupied by cannabis law firm Vicente Sederberg and is now a laboriously restored space in search of a purpose. Events seem likely once prevailing conditions allow.

  • “I always loved that house,” recalls Christian Sederberg, a founding partner of Vicente Sederberg with Brian Vicente. “I was walking back from lunch one day, saw them putting up a For Rent sign, and thought, ‘This is the spot.’ I love old houses, love Denver history. Being from Denver, I knew it was a special place, with the gargoyle, every detail. I hoped it would become a wonderful place to live and work, and it was.

Experience it.

Quick Hits

  1. The Onion mocked of Jay-Z's new cannabis brand.
  2. Nas is narrating a new documentary on cannabis and the Black American experience.
    Variety