WeedWeek edition / October 25, 2020
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This week in the People Mover: Hirings, Promotions and More: Fyllo.

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1 WHY DO SCHWAZZE’S DEALS KEEP COLLAPSING?

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In recent months, Schwazze, formerly Medicine Man Technologies, which aims to be a major vertically integrated player in Colorado's business-friendly REC market, has seen several announced deals fall through.
WeedWeek

  • The company turned heads in December 2019 when it tapped Justin Dye, a former Chief Administrative Officer of supermarket chain Albertsons, to lead its expansion. The thinking was he’d bring the rigor of a major business to an industry that sometimes lacks it.
  • But the company has seen a string of deals announced before Dye's tenure collapse.
  • The truncated deals include bids for retailer Strawberry Fields for $31M, concentrates maker Dabble Extracts ($3.75M), grower Los Suenos Farms ($11.9), Medically Correct, parent company of edibles brand Incredibles, ($17.25M) and retailer Colorado Harvest Company ($12.5M).
  • To close it's biggest acquisition so far, for 13 Star Buds shops and a grow, Schwazze needs to show proof of funds by Friday. 
  • Star Buds' owner didn't respond to requests for comment.

What's going on?

Quick Hit

  1. Multi-state operator Cresco Labs' CEO Charlie Bachtell discussed how the company has thrived through the pandemic.
    AP
  2. The IRS is creating a cannabis audit team to step up pot tax enforcement.
    Bloomberg Tax (Paywall)
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2 FIVE WEED-Y THINGS TO WATCH FOR ON ELECTION NIGHT

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(Getty Images)

Weed hasn't been a hot issue in the presidential election, but voting in November will have tremendous implications for the industry's next few years. At WeedWeek, Willis Jacobson digs into five stories to watch on Election night. They include several state ballot initiatives and the battle for the U.S. Senate.

More election developments:

3 EQUITY LAWSUIT ESCALATES TENSIONS IN L.A.

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(Photo by David McNew/Getty Images)

A new lawsuit is targeting L.A.'s new licensing rules which would limit delivery licenses to equity applicants until January 1, 2025.
WeedWeek

  • The case pits the city's so-called legacy operators who have been in business since before legal REC went on sale against equity applicants.
  • One equity applicant called the suit "tone-deaf" and a "slap in the face."
  • Adam Spiker, co-founder of the Southern California Coalition, a trade group that's one of the plaintiffs, suggested both sides should unite against the illegal market.
  • Though often called the world's largest cannabis market, MJBiz suggests regulations, delays and litigation are repelling L.A. operators.

Quick Hits

  1. With New Jersey poised to legalize on Election Day, New York REC legalization also looks to be on the fast track.
    WeedWeek
  2. In a first, San Diego sued Grizzly Peak Farms claiming the grower didn't pay the city's pot tax. The company's owner said it was an oversight. WW California has more.
    San Diego Union-Tribune
  3. Massachusetts regulators approved the issuing of delivery licenses over the objections of brick and mortar retailers.
    Boston Globe

4 SUBVERSIVE CAPITAL’S “BIG BET” ON REAL ESTATE

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WeedWeek talked to Michael Auerbach of Subversive Capital,  which has emerged as a major investor.

  • The company's real estate investment trust (REIT) aims to close on $183M in transactions by the end of this month.
  • Separately, a special purpose acquisition company, or SPAC, arranged by the company, raised about $575M in its IPO, the largest SPAC IPO in Canadian history.
  • “I actually predict that I’ll be only one of two or maybe three of the 10 SPACs [currently] out there for cannabis that will do cannabis,” Auerbach said. “I think most of my competitors will end up doing non-cannabis targets.”

"The time to buy is now," he says.

Quick Hits

  1. Meadow is launching a CRM service which aims to be the "Salesforce of cannabis."
    TechCrunch
  2. CBD company SC Botanicals is suing an estranged partner, which it accuses of stealing its trade secrets for THC remediation.
    WeedWeek
  3. Canna-tech workers are in demand, and probably will be for years to come.
    WeedWeek

5 CALIF. BIZ RESISTS LED PUSH

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They say where California goes the nation follows. Many California businesses are not happy about a rule that would require indoor grows to use LED lights by 2023.
WeedWeek

  • LEDs use far less energy than sodium halide bulbs and other traditional grow lights, but they're expensive. By one estimate, switching to LEDs would cost growers in the state $255M.
  • And some growers believe conventional lighting produces better product and the switch would create an opportunity for the illegal market.
  • The California Energy Commission will hold a workshop on the issue this week.

Quick Hit

  1. WeedWeek profiled Santa Barbara County, Calif. grower Autumn Brands which is thriving after it ditched pesticides, even organic ones.

6 THE PACKAGER’S DILEMMA

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MJBiz takes a look at one of the industry's abiding obsessions, packaging. In particular, it reports on how KushCo is developing childproof containers that are also accessible to seniors:

"100 adults 50-70 years old are tested individually. They’re given five minutes to open and, if it’s reclosable, properly close the child-resistant package. If they can’t open the child-resistant package in five minutes, they are screened to determine their ability to open and close two non-child-resistant packages in one minute. For packaging to pass the test, 90% of the adults tested must be able to open and properly close the package during both the five-minute and one-minute tests."

Read the whole thing.

Quick Hit

  1. Distributor Nabis wants to touch 25% of the legal pot in California. WW California has more.
    TechCrunch

7 POLICE IMMUNITY CAN “SHIELD COMPLETE LAWLESSNESS”

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(Photo by Justin Sullivan/Getty Images)

WeedWeek reporter Willis Jacobson looks into the legal battle waged by the owner of California grower Skunkworkx Pharms after he reported a robbery only to see police show up and allegedly destroy $700,000 in plants and equipment.

WeedWeek:

"Federal judges, through their interpretation of the Civil Rights Act, have broadly applied so-called qualified immunity to law enforcement officers as a way to prevent excess lawsuits brought against officers for carrying out their jobs. Several states have adopted similar provisions that protect local officers...

"Rondon’s attorney Arthur Angel said he felt the laws are too often misused to “shield complete lawlessness” on the behalf of law enforcement officers."

Read it all.

8 A “CAMBRIAN EXPLOSION” OF PSYCHEDELICS INNOVATION

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Mushroom Observer Alan Rockefeller https://mushroomobserver.org/image/show_image/6514

George Goldsmith, CEO of MED psilocybin company Compass Pathways "insists that he's not in the psychedelics business."
Business Insider (Paywall)

  • Firstly, the compound they're using is synthetic, not made from mushrooms.
  • He anticipates psychedelic therapies to be on the market by 2025 and predicts a "cambrian explosion of innovation" in the space.
  • The company, which has backers including Silicon Valley magnate Peter Thiel, recently went public and is now valued at around $1.2B.

9 “THE STONED AGE,” A TEEN’S VIEW

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Writing in The Chronicle, the newspaper at tony L.A. private school Harvard-Westlake, Sandra Koretz writes about how her peers are using cannabis in this unusual year:

“Before quarantine, I was smoking once or twice a week, and then once quarantine started, I would wake up and show up to class every single day high,” Robert said. “I know people that would smoke blunts on Zoom. The seniors didn’t care at the end of the year. I had a friend that showed up to class smoking a blunt, claiming it was a cigar, and the teacher did not care.”

There's more.

10 JAY-Z’S POT BRAND HAS LANDED

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Rapper and mogul Jay-Z's cannabis brand Monogram is launching in partnership with San Jose-based Caliva.
Los Angeles Times

  • "In the 15 months since joining forces with Carter, Caliva has launched a career training and mentorship program focusing on diversity and fair hiring practices in the cannabis industry.

Quick Hit

  1. These days, Seth Rogan smokes weed all day every day.
    CNN/@Chloe_Melas