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1

Vape Crisis Keeps Getting Bigger

Vape sales continued to drop as fallout from the vaping related illness rippled across the cannabis industry and beyond. Doctors have not yet identified a cause of the pulmonary condition which has sickened more than 800 Americans and killed at least 12, but investigators are increasingly focussed on cartridges containing THC.
AP, Business Insider

Cannabis industry leaders and lobbyists are scrambling to associate the disease with hardware and chemicals used by unlicensed manufacturers rather than THC. Some are circulating this NBC News story in which journalists commissioned tests of three licensed California cartridges and 15 unlicensed cartridges at testing lab CannaSafe.

Of the three legal cartridges, none contained vitamin E oil, the substance most mentioned in association with the illness. Of the unlicensed carts, 13 out of 15 contained vitamin E.

  • The lab also tested 10 of the illegal carts for pesticides and found all 10 tested positive for myclobutanil, a fungicide which can become highly toxic hydrogen cyanide when heated.
  • In a fascinating and deeply reported story, Leafly tracks vape carts from China to the wholesale market in downtown L.A. to a patient who nearly died in New York City. The story makes clear that worrisome hardware and chemicals are finding their way into legal supply chains.
  • According to the CDC, no single product or substance has been linked to all the cases though 77% of patients acknowledged using THC vapes and only 16% said they only used nicotine vapes.
  • The illness does not yet have an official name, though some are calling the condition Vaping Associated Pulmonary Illness, or VAPI.
  • Data firm Headset (a WeedWeek advertiser) says vapes' share of the cannabis market dropped from roughly 25% to 20% between early August and late September across four Western REC states.
  • I wrote a short piece on the situation for the Guardian.

Thus far no licensed brand has been officially linked to the disease. But a Washington state lawsuit filed by a recovering VAPI patient has names a distributor of Chinese made pens and batteries and five cartridge manufacturers.
Seattle Times

As Siva Enterprises CEO Avis Bulbulyan said at WeedWeek Recharge, product safety issues, and not just for vapes, could dog the cannabis industry for the foreseeable future.

E-cigarette market leader Juul's products have not been connected to the illness, but CEO Kevin Burns is out amid the possibility of a nationwide ban on many Juul products. Tobacco giants Altria and Philip Morris International also called off merger talks. Altria has a 35% stake in Juul.
WSJ

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2

Cannabiz Pushes Back on State, Regional Vape Bans

Several large states and metropolitan areas are considering or have implemented bans on vape products, moves Cannabiz leaders say could devastate the industry.

In the toughest crackdown so far, Massachusetts Gov. Charlie Baker (R) announced a four-month ban on sales of all vape products.

A proposed yearlong-ban on cannabis vape sales in Los Angeles, "could quite possibly represent the death of the regulated industry," Kenny Morrison, president of the California Cannabis Manufacturers Association told MJBiz Daily.

  • “It will represent such poor judgment that it’ll have a chilling effect that goes far beyond vape companies," Morrison said.
  • It's not clear if the bill, introduced by L.A. City Councilman Paul Krekorian (D), has the support to pass.

Elsewhere Washington state, Michigan and New York have moved to ban vapes in kid-friendly flavors and President Trump has suggested doing the same nationally.
ABC, NBC, Time

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3

Banking Bill Passes House

Despite the vape crisis, the Democrat-controlled House of Representatives easily passed the Safe Banking Act which would protect banks serving state-legal cannabis businesses. All but one Democrat voted for the bill, while 91 Republicans voted for and 102 voted against. Legalization supporters have been pushing for banking reform for six years.
MarketWatch, Marijuana Moment

  • President Trump reportedly supports the measure, but passing the Senate is not assured. Sen. Mike Crapo (R-Idaho), chair of the Senate Banking Committee has said he wants to hold a committee vote on cannabis banking by the end of the year but details remain vague. The bill which passed the House has been "sweetened for Republicans" but Senate Majority leader Mitch McConnell (R) appears to remain opposed.
    Politico
  • In support of the bill, Rep. Denny Heck (D-Wash.) spoke of a dispensary security guard who was killed on the job. “You can be agnostic on the underlying policy of whether or not cannabis should be legal for either adult recreational use or to treat seizures, but you cannot be agnostic on the need to improve safety in this area,” he said.

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4

N.Y., CT to Coordinate REC Legalization

In another step forward for the industry, three northeastern governors announced their intentions to move forward with REC legalization.
Cannabis Wire

  • New York Gov. Andrew Cuomo (D) and Connecticut Gov. Ned Lamont (D) said they would work together on a "regional approach" to REC legalization on a "timely basis," perhaps in coordination with New Jersey, Rhode Island and other states.
  • “It makes no sense to pass one set of rules when they can just drive across the border to Connecticut to have a different set of rules and vice versa,” Cuomo said.
  • They announced a gubernatorial summit for October 17.
  • Also in the Cannabis Wire story, Pennsylvania Gov. Tom Wolf announced he supports legal REC.
  • As the industry does, he argued that the vape crisis is a reason to legalize since a legal market will be safer.

Also, Massachusetts regulators approved cannabis delivery, to begin next year.
Boston Globe

Quick Hit

  1. A Maryland judge blocked regulators from issuing more MED licenses over concerns about the application process.
    Baltimore Sun

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5

Cannabis Mergers are Big Business (For Banks)

In 2018, there were 300 strategic acquisitions in cannabis worth a total of $8.4B, up from $54M in 2013, according to accounting and advisory firm MGO|Ello.

Many of those deals happened to recently to to judge on their outcome. But this week Business Insider looks at the Top 10 investment banks raking in fees for these mergers. The big winners tend to be boutique and midsize Canadian shops which have been involved in cannabis for a few years.

Quick Hit

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6

MedMen CEO Talks Where He Wants to Be

New Cannabis Ventures published an interview with MedMen co-founder and CEO Adam Bierman. While it doesn't go into the company's legal issues, or lackluster stock performance, there are some interesting nuggets about what's perhaps the country's best known cannabis brand, retail or otherwise.

  • “We have not been playing the game of chasing how many states we can brag about being in,” Bierman said. “Not all states are created equal.”

Separately, South Park mocked MedMen again.
The Growth Op

Also in New Cannabis Ventures, Alan Brochstein says get ready for a capital crunch. (It's not just the vape crisis.)

But maybe not in Europe? There's an interview with Roderick Stephan, partner at Altitude Investment Management which is raising a $150M fund with an eye on the continent. Altitude's impressive U.S. portfolio includes upscale California brand Canndescent, Privateer Holdings and (WeedWeek advertiser) BDS Analytics.

7

The First Hemp Patent, Explained

Earlier in September, Charlotte's Web Holdings, the company owned by the famous Stanley Brothers, received what some have called the first ever patent for a hemp plant. Cannabis intellectual property is a tremendously fraught and complex area but Canna Law Blog explains what's going on.
Leafly

Dr. Sanjay Gupta, the CNN journalist who made the Stanley Brothers famous, is out with his latest MED documentary Weed 5: The CBD Craze.

8

Raphael Mechoulam is Back with a New Discovery

Raphael Mechoulam, the Israeli organic chemist regarded as the father of cannabis science, announced a new discovery at the CannaMed conference in Pasadena.

NBC reports:

"They have developed a process for creating synthetic, stable acids that are found within the plant, and that the synthetic acids, which include acid versions of CBD and THC, are now available for licensing to companies for drug development.

"The discovery paves the way for drug companies to potentially develop new drugs based on the acids for a variety of health issues such as psoriasis, arthritis, anxiety and inflammatory bowel disease."

The research was produced by a start up called EPM.

9

WSJ Meets Stoned Gym Rats

The Wall Street Journal is the latest publication to examine cannabis users' affinity for going to the gym. Despite their assertions, there's little evidence cannabis improves workouts and it has been known to cause exercise related injuries.

Former athletes argue "that many stoners have it wrong: Weed doesn’t provide a sporting edge...[it aides] pain relief and rest.”

It also mentions a Brazilian jiu jitsu tournament circuit called “High Rollerz BJJ.” "The organization requires opponents to smoke a joint together before the start of each match. The tournament prize is a brick of pot. The audience is encouraged to light up, too."

10

Canberra (Australia's Capital) Legalizes Weed

They're so high

Australian capital Canberra became the first city in the country to legalize REC. Residents will be able to carry a small amount for personal use and grow a few plants at home.
The Independent

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