WeedWeek edition / June 28, 2020
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1 SUMMER BUSINESS: CANNABIZ HOLDS UP, SO FAR

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For this week's summer business issue, we looked at how the industry is doing in our unpredictable times. The short answer seems to be: Pretty darn well, considering.

Quick Hit

  1. Pot stock analyst Alan Brochstein is increasingly bullish on the second half of 2020.
    New Cannabis Ventures
A note from the editor

Since 2015, WeedWeek has been the best way to keep up with the Green Rush. WeedWeek’s audience includes many of the most influential figures in cannabis because we are editorially independentAdvertisers have no influence on our editorial content.

We put out three free newsletters:

1) WeedWeek by founder Alex Halperin

2) WeedWeek California by Donnell Alexander

3) WeedWeek Canada by Jesse Staniforth

We also publish the WeedWeek Podcast and original reporting. The original WeedWeek newsletter has more than 8,000 subscribers and a weekly open rate above 25%.

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

To advertise contact Lisa Marie Dudenhoeffer lisamarie@weedweek.net

2 CANOPY/ACREAGE DEAL REVISED SHARPLY DOWNWARD

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Acreage's stock performance since it went public

In April 2019, Canadian giant Canopy Growth said it would acquire MSO Acreage Holdings for $3.4B, once U.S. law permitted. The deal, touted as the industry's biggest ever, has now been revised sharply downward to value Acreage at about $900M, according to Cowen analyst Vivien Azer.
MJBiz

  • A press release attributed the change to difficult economic conditions and volatile markets.
  • Depending on specifics, the deal does not necessarily require full federal U.S. legalization to close. Banking reform could be enough.
  • Canopy, which recently announced a $1B+ quarterly loss, says  layoffs, drinks, the U.S. market and CBD all factor into its turnaround plan.
    BNNBloomberg
  • As part of the new deal, Acreage CEO Kevin Murphy will step down.
  • Attorney David B. Feder looked at Acreage's delayed Q1 financials, "They're not pretty."
  • Here's my interview with Murphy from a year ago, when he was riding high.
    WeedWeek

One figure who has been notably silent is former U.S. Speaker of the House John Boehner (R) who joined the Acreage board in April 2018. Though he had never used cannabis, he stood to make $20M if the original deal went through. Acreage stock is way down since then.
Washington Post, N.Y. Times

WeedWeek Canada editor Jesse Staniforth and I discussed the Canopy/Acreage deal on this week's edition of the WeedWeek News Brief.

Quick Hit

  1. MSO iAnthus received a demand for debt repayment.
    MJBiz

3 AS STAKES RISE, EQUITY JOSTLING HEATS UP

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The City of Los Angeles appears poised to overhaul of its regulations to benefit long-suffering applicants for equity licenses. 🌴WW California has more.
AP

With some jurisdictions stepping up on "equity," tensions over what it means and who should benefit are heating up.

Quick Hit

  1. One entrepreneur thinks hemp could help restore Black farm ownership.
    Hemp Industry Daily

4 HAS TREEZ ANSWERED POT SHOPS PRAYERS?

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WeedWeek business columnist Dan Mitchell looks at a new program, from Oakland software company Treez, that could solve many pot shops' payment woes.

Mitchell writes:

Dispensaries have tried all kinds of workarounds, from rotating through merchant credit-card accounts until the banks pull the plug, to installing an ATM out front. Some hook up with payments companies that specialize in cannabis, but most of those are full of friction; for starters, each customer typically has to sign up with the same company, and the process can be burdensome. On top of that, most of those companies use “digital wallets,” which customers have to refill. 

Treez...thinks it has solved the problem with its new product, Treez Pay. Unlike most payment services, Treez Pay doesn’t make use of a digital wallet. There’s not even an app to download. 

But first, dispensaries have to qualify.

5 AG BARR TARGETED CANNABIS DEALS FOR SCRUTINY

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A career Justice Department employee testified that U.S. Attorney General William Barr improperly hounded cannabis companies because of his antipathy to the industry.
CNN

  • John Elias testified that 29% of the department's antitrust probes targeted cannabis. "The rationale for doing so centered not on an antitrust analysis, but because [Barr] did not like the nature of their underlying business." 
  • Two of the government's independent watchdogs are investigating.
    CNN
  • The Justice Department's misconduct office found that the department didn't act improperly in its probe of 10 cannabis mergers.
    Politico

Prominent cannabis attorney Hilary Bricken weighs in at Canna Law Blog, "Cannabis, Competition and a Constitutional Crisis."

Quick Hit

  1. Politico looks at the state legalization initiatives racing to make the November ballot.

6 POWER PLAYERS: MARIO GUZMAN A.K.A. MR SHERBINSKI

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Fifteen years ago, Mario Guzman, better known by his alter-ego Mr. Sherbinski, was a neophyte grower working out of his San Francisco garage. Then his strains, like Sunset Sherbert and Gelato, became the stuff of underground legend.

Today, Guzman’s brand, Sherbinskis, is one of the rarest things in cannabis: A crossover success from the legacy market. Late last year, it opened a store on Los Angeles’ trendy N. Fairfax Ave.

For this week’s Power Players interview, we discussed cannabis as a civil rights issue, the new markets Guzman is eyeing and what he has in common with the artist Banksy. For a longer conversation with Guzman, check out his appearance on the WeedWeek podcast.

On globe-conquering streetwear brand Supreme:

I think the biggest thing with Supreme and us is just the supply and demand. They only make 75 shirts. So when the kids are there in the line, it sells out before the line’s even done. It's not that I didn't want to supply the whole state, but even now [we sell out very quickly] because the California market is so insatiable.

On cannabis and social justice:

If you look at the people that I hire, they're very diverse. All these things have been a part of our brand. It's a civil rights issue, cannabis, like who you can marry, what kind of medicine you can use. I feel like this has always been our fight, what the brand represents.

Read the whole thing.

7 RICO SUITS COULD STILL THREATEN CANNABIZ

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Last month, a group of more than 200 Oregon cannabis companies managed a big win against a racketeering (RICO) lawsuit. Despite the legal tide seemingly moving in favor of cannabis, MJBiz looks at how businesses can fight similar suits in the future.

  • RICO, a law passed in 1970 to prosecute organized crime organizations, gives prosecutors exceptional powers, such as asset seizures, that make the cases difficult for defendants to fight.
  • To prepare, the story says businesses should build alliances in the industry and keep "airtight" records.
  • Observers say RICO suits can be used as an "organized attack" on the industry by legalization opponents.

Quick Hit

  1. Desperate for cash, more California cities are welcoming REC businesses.
    Politico

8 STREET DRUGS GAINING ATTENTION FOR MED VALUE

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Credible sources keep advancing interest in the medical value of illegal drugs:

  • NPR's Terry Gross spoke to psychiatrist Dr. Julie Holland on the potential to treat severe depression with psychedelics. 
  • "There are certain plant medicines in particular — things like psilocybin or ayahuasca — that really help people not only explore their personal trauma," Holland says, but also [experience] "this feeling of unity and connection. People really come away from these experiences having a new perspective."
  • The CDC's National Center for Injury Prevention and Control was deluged with comments on MED and the medical value of kratom, a plant indigenous to southeast Asia.
    Marijuana Moment
  • Cyclica, a Toronto start-up using AI to discover new psychedelics-based medicines, raised $17M.
    Business Insider
  • The U.S. Department of Defense (!) is investing $27M in psychedelic drug discovery.
    Marijuana Moment

On the other hand, a consortium of consumer groups asked lawmakers to reject calls to legalize CBD as a dietary supplement or ingredient in food products.

9 R.I.P. DR. LESTER GRINSPOON

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Harvard psychiatrist and pioneering cannabis activist Dr. Lester Grinspoon died at 92.

In the late 1960s, Grinspoon, a friend of celebrity astronomer and cannabis user Carl Sagan, set out to write a book on the dangers of marijuana.  As David Bienenstock explains in Leafly, it didn't work out that way:

Grinspoon sought to "compile an authoritatively researched argument against cannabis that would definitively demonstrate the medical and scientific basis for the plant’s prohibition.

But instead of encountering the hard data he’d expected, Grinspoon had an epiphany—he’d been “brainwashed about cannabis.”

Grinspoon's 1971 book Marihuana Reconsidered, was a bestseller, annoyed President Nixon and "savaged the U.S. government's case for keeping cannabis illegal." It also may have blocked him from ever obtaining a full professorship.
Boston Globe (2018)

10 WEED SUBSCRIPTION BOXES SOUND FUN

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The L.A. Times devotes a long review to cannabis subscription box Nugg Club:

The magical striped box I received on a sunny SoCal Sunday afternoon managed to deliver something that can’t exactly be tallied or quantified — and something I hadn’t realized was sorely missing in the era of legal weed: a sense of fun, wonderment and joyful discovery.

For cannabis enthusiasts of a certain era (those whose herb-smoking heyday was three to four decades ago), pot-purchasing was part-crap shoot and part-winning lottery ticket; Iowa road weed in a garbage bag one day, skunky green bud smuggled across Lake Champlain from Canada on a rubber raft the next. And, instead of brightly lit store fronts, the go-to was a network of like-minded friends that formed, for lack of a better word, a club.

The box, currently available in L.A. and Orange counties, is available to COVID-19 healthcare workers for $1 plus tax.