WeedWeek
BUSINESS
   
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Harborside Dealt Major Tax Court Blow

Hopes of reversing the federal tax law that restricts cannabis sellers from taking tax deductions and credits took a blow when a US Tax Court judge struck down Harborside's a challenge to Section 280E.
Leafly

  • Section 280E of the tax code blocks cannabis businesses from deducting their business expenses because they deal in a federally illegal drug.
  • As a result of the loss Harborside could be hit with an unpaid tax bill of up to $20M.
  • The ruling is an industry-wide loss. The standard tax rate for American business is 35% while marijuana businesses will continue to pay as much as 70%.
  • "We are prepared to pursue this case, legally and politically, for as many more years as it takes to achieve the justice that cannabis patients and practitioners deserve," said Harborside CEO Steve DeAngelo. According to DeAngelo, the IRS audited Harborside for six years prior to the trial's opening in June of 2016.

Quick Hits

  1. Two equity finance deals bring OG DNA Genetics $35 million.
  2. The story of delivery services is morphing from a business narrative into one about labor.
  3. Med Men is facing a class-action lawsuit by former employees.
CRIMINAL JUSTICE
   
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Counterfeit Product Thwarting
Vape Cartridge Makers

As if on cue, bootleggers have appeared on the commercial scene. Phony product distribution is taking off, with support from illegal dispensaries delivery services and Chinese online stores.
MJ Biz

  • Heavyhitters distributor Mammoth learned this fall that fake Heavy Hitters cartridges were being sold in illegal storefronts. The cartridges and their packaging are made in China.
  • “There are still hundreds of unlicensed shops and delivery services in the state, and that is where this issue is most pervasive,” said Hanna Fraser, Mammoth's chief marketing officer.
  • The counterfeit items are also being sold on sites such as Ali Baba. On the black market, fake cartridges arrive stateside, then get filled with oil and sold to off-the-books dispensaries.
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Photo by Drew Hays on Unsplash

Capitol Lab's Analysis Found Fraudulent

Sacramento's Sequoia Analytical Labs was discovered last month to be faking test results, falsifying reports on more than 700 of batches of flower worth million of dollars.
Leafly

  • Lab director Marc Foster's deception started on July 1, when state testing took effect. Foster was unable to make Sequoias analytic equipment function. The Bureau of Cannibis Control discovered discrepancies on Nov. 27.
  • "I faked it," Foster reportedly told his superior, immediately. “I just kept thinking I was going to figure it out the next day.”
  • Sequoia immediately surrendered its license.

Quick Hits

  1. A trade group is demanding solutions to the illicit dispensar problem.
  2. Florida’s THC penalties are stiffer than ours.

New Podcast Episode

WeedWeek Podcast
65. A Very Canadian Pot Scandal with Jesse Staniforth

Jesse Staniforth, Editor of WeedWeek Canada, updates Alex and Donnell on breaking Canadian stories. There is no lack of scandal: Cannabis giant Canopy Growth fired founder and CEO Bruce Linton and CannTrust, a major licensed producer, is estimated to lose C$350 Million for ignoring the law. New regulations limiting THC in edibles exacerbate the over-packaging crisis. The country continues to battle the illicit market which is now also available online and is known by the cool name "MOMS" (mail order marijuana sites). Plus, Alex and Donnell discuss Jay-Z's partnership with Caliva.

Subscribe on iTunes, Stitcher, or SoundCloud

POLITICS
   
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Photo by Matthew Fournier on Unsplash

Humboldt Residents Turn Back Hash Lab

A rural county's rejection of a hash production lab seems insignificant until one considers that the average Californian lives 60 miles from even a legal dispensary. For a range of reasons, citizens up and down the state won't tolerate pot.
Lost Coast Outpost

  • Humboldt County citizens packed the Eureka Board of Supervisors chambers on Tuesday and for almost three hours delivered passionate public protest against a proposed project along the Trinity River.
  • The agenda item was to address a bureaucratic zoning aspect of the nearly-approved Willow Creek Lab. One citizen after another took the podium and called the hash production project a governmental betrayal in a local tradition of tribal oppression and environmental exploitation.
  • Members of the Hoopa Valley and Yurok tribes accused the board of committing “environmental genocide” before the lab project manager withdrew his proposal.

Quick Hits

  1. Though not scheduled until next month, the state has released a draft of its industry rules.
  2. The Marijuana Policy Project has a high-profile new fundraiser.
CULTURE
   
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Our Weed is Bigger

With so much buzz surrounding the liberation of Canadian cannabis, it's actually possible to forget that California legalization is the most important story of 2018. Arcview and BDS Analytics project annual sales of $7.7 billion in 2022.
Fool

  • In the real world, style points count. Here is where artists and entertainers can cultivate their style and develop their brands in a 420-friendly environment, then blanket the world with their messages.
  • Canada Health regulates packaging and advertising of all products. No innovative billboards or wrappers, no (aboveground) brand promotion parties featuring the rapper du jour.
  • The schism between Canadian and American marijuana commerce is the stuff of profound debate.
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Courtesy of Big Gigantic

Emerald Cup Gets Fresh for its 15th

Never in American history been harder to impress with fine flower at the close of 2018. Next weekend the onus will be off the artisan farmers, who compete out of something more than pride, to impress the 20,000 enthusiasts at the Sonoma County Fairgrounds for the 15th annual Emerald Cup.

Blowing minds will be on the performers.
Leafly

  • Having said "peace" to it stringy-haired reggae band reputation, the festial has high-energy crowd-pleaser Big Giantic closing out on Saturday and punky human mash-up GogolBordello on Sunday. Both nights will be hosted by Ngaio Bealum and Doug Benson.
  • Willie Nelson is set to receive the Cup's newly-renamed lifetime achievement award, the Willie Nelson Award.
  • Next weekend's lecture component will be led by Jason Mewles and Kevin Smith, who happen to be stepping into the industry. They'll present as Jay and Silent Bob. One eye-catching session is titled, "Three Dudes Talk Prohibition & the Good Ole Days” with Tom Alexander, Je Lowenfels, and Benson.
  • Thinking of taking the trip? Here's a guide.
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Photo by Matthew Henry on Unsplash

Admit it, you’ve been wondering whether to give your dog marijuana

WeedWeek's Alex Halperin took on the issue of CBD for the canine set. As CBD for dogs is an "amazingly confusing industry,” Halperin's insights ought to be shared with any loving dog owner.
The Guardian

  • California law allowing veterinarians to recommend CBD for pets goes into effect on January 1.
  • An advisor to Phyto Animal Health predicts that more of the drug's compounds are to be made part of animal treatment. Marijuana has been tested on 24 species.
  • Despite lore, THC isn't toxic to dogs and has some medical use. (The Guardian)

Quick Hits

  1. On Monday, Canabiniers opens Dana's Place, the first cannabis speakeasy, inside the Las Vegas Releaf.
  2. Should you stop saying “marijuana” because it’s “racist”?