Business Archives - Green Market Report

William SumnerWilliam SumnerJuly 19, 2019


Expenses are up, and revenue is down as Namaste Technologies Inc. (TSXV: N) (OTCMKTS: NXTTF) tries to put the troubles of the past few months behind it. Yesterday the company released its financial statements for the three and six month periods ending on May 31, 2019.

Revenue for the quarter was $3.99 million, compared to $4.06 million during the same period in the previous year. For the six month period, revenue was $8.5 million, down from $9.6 million. The net loss for the quarter was $8.6 million. For the six month period, the net loss was $18.91 million, representing a year-over-year increase of $7.47 million.

For the six month period, selling, general and administrative expenses rose from $14.71 million in the previous year to $21.57 million. A significant contributing factor to Namaste’s rising expenses and decreased revenue was a combination of toxic news and legal issues involving its former CEO, Sean Dollinger.

Last October, the company came under a short-seller attack by Citron Research, which among other accusations, claimed that Dollinger, who was then CEO of Namaste, lied to shareholders. Dollinger claimed to have sold Dollinger Enterprises US, a subsidiary of Namaste, to an arm’s length party, when in fact he had sold it to company insiders.

Consequently, Namaste hired a special investigator to examine Citron’s claims, which ultimately led to Dollinger’s ousting and a $1.9 million bill for the investigation. Further compounding the scandal was news that its auditor PricewaterhouseCoopers, LLP resigned as well as claims of “irregular advertising” by the Brazilian government. As a result of losing its auditor, the company was also late in filing its financial statements; placing the proverbial cherry on top of this scandal-ridden sundae.

Nevertheless, Namaste has endured and ended the second quarter with positive working capital of $63.3 million and was able to acquire a 49% stake in Calgary, AB-based Choklat Inc. and as well as increase its equity position in Pineapple Express Delivery Inc. to 49%.

In a statement, Namaste’s interim CEO Meni Morim expressed confidence in the company’s short-term outlook.

“We have improved the Company’s foundations to build the world’s most customer-focused cannabis marketplace,” said Morim. “From here, we are reprioritizing and refining our investments towards scalability, gaining market share and working capital management. We expect to see these results take shape over the next three to six months with a balanced approach between working capital optimization and the right investments to help the company grow.”

Video StaffVideo StaffJuly 19, 2019


This interview was recorded on June 25 at the MJ Link Micro Investor event in New York. 

GMR Editor Debra Borchardt:             Okay. Cannabis beverages are expected to be the next big thing in the industry. Joining me now is Province Brand’s CEO Dooma Wendschuh. We’ve heard so much about these beverages and your company is unique in that the beverages that you’re making are using literally every part of the hemp plant, correct?

Province Brands CEO Dooma Wendschuh:       We do make one beverage that uses every part of the hemp plant, but what makes it really cool, I think are most of the beverages we make are actually using every part of the marijuana plant, so they intoxicate using marijuana in place of alcohol. We have a diverse array of product offerings that we’re coming to market with. The one made from hemp, we keep the alcohol it and it intoxicants using the alcohol that comes from fermenting the hemp plant. The others are actually made from stock stems and roots of the marijuana plant, which is a waste material. It’s material that you can’t really throw in the garbage in Canada because it’s a controlled substance. You sure can’t incinerate it because you create marijuana smoke, you get the whole neighborhood high, nobody wants that.

And so there’s this industry of licensed disposal companies that will dispose of this material for a fee anywhere from $20,000 to $150,000 a month that the growers are paying to dispose of this waste. We collect it and actually use it as a starting material for brewing our beer. It’s part of what we call the circular economy. You’re called the Green Market Report. I assume green means marijuana, but there’s another meaning of green, which is protecting the environment and we’re actually keeping this material from the landfill, preventing all the carbon emissions associated with that and turn it into a premium beer that has a fantastic flavor and intoxicates using marijuana in place of alcohol.

Borchardt:             So when do you think these products especially are going to be available in Canada? Because we know that this type of product was not available in the beginning stages of the recreational legal market, and I’m hearing that it’s really going to be pushed even further back towards the end of this year. Is that correct?

Dooma Wendschuh:       Well, just in the second week of June, we received the regulations from Health Canada for marijuana edibles and beverages and those regulations state that on October 17th of 2019, anyone who wants to make an edible or a beverage, including us, of course, can to have that beverage sold throughout Canada. There’s about a 60-day approval process that they anticipate, could be a little longer for some people, won’t be shorter than that. So the earliest you’ll see a beverage for sale in Canada, marijuana beverage would be December 17th of 2019. So most of the companies are expecting early 2020 to really begin selling in earnest.

Borchardt:             We’re seeing a trend now of on the alcohol side, people wanting nonalcoholic drinks. This whole sober trend of wanting to be able to drink, but not getting drunk. Do you feel that your product kind of fits in there because people are not, other than the hemp beer, people are not really getting those alcoholic effects?

Dooma Wendschuh:       That is correct. And right now people are drinking less per capita in the developed world than ever before. And what we’re seeing is the millennials are drinking a lot less. Consumers want a healthier alternative, but the healthier alternatives to alcohol, they’re just not any fun, right? You can go buy a bottle of Seedlip, are you familiar with Seedlip?

It’s a non-alcoholic gin that’s just selling like gangbusters. I mean, it’s a huge, huge phenomenon, but it’s just flavored water and it’s a $60 bottle of flavored water, right? With our product, it’s a way that you can go to the barbecue, you can go to your friend’s house and have a beer and they can be drinking alcohol and you can still be intoxicated and have a fantastic time, but you don’t have to feel like you’re missing out and you don’t have to take an all those calories either, right?

A typical alcohol beer is very caloric. Ours are much, much lower, about 40 calories in a single bottle. You don’t have to take in gluten, right? When you drink alcohol and beer, it’s made some barley, there’s always gluten in it. In our product, there is no gluten and you can still be intoxicated. You can still have a wonderful night, enjoy time out with your friends, celebrate special occasions. And there is something about alcohol that you don’t normally get from marijuana, right? It’s not the same to be intoxicated using marijuana as it is to be intoxicated using alcohol. We are working on ways to make our beverage feel as much like that intoxication you get from alcohol as possible so you don’t have to feel like you’re missing out, right?

I understand there’s a sober culture. We’re not making products for sober people. We’re making products for people who want to enjoy special moments with friends, who want to have a psychoactive experience responsibly and don’t want to do it in a way that exposes them to eight different types of cancer and liver disease and heart failure and depression, obesity, all the myriad problems that are associated with our society’s use of alcohol.

Borchardt:             You mentioned roots and I’m hearing more and more about the benefits of the roots section of the plant, something that you kind of mentioned people have walked away from or just thrown away. What is it about the root that is so important?

Dooma Wendschuh:       There’s a lot of research on this showing recently that some of these phytocannabinoids that were thought not to be very abundant outside of the flower and are a bit more abundant in the roots of the plant. This is helpful for us because we are able to get our phytocannabinoids from the stock stems and roots of the plant, right? We don’t use the flower, we don’t really use the trim to make our own branded products. We’re using those parts of the plant and in this material, this is very little phytocannabinoids, but we use a lot of it to brew our beer. So the little amount adds up and we’re able to get six and a half milligrams of THC in each beer.

Borchardt:             Oh, that’s fantastic. So I’ve got to ask you, how does it taste?

Dooma Wendschuh:       The flavor of beer comes from primarily these esters that are produced when the yeast digests the sugar that is produced when you mash barley, right? Beer is typically made from barley. Sometimes they make it from rice, some people make it from sorghum, but it’s always some kind of starch, right? And you heat that starch, you create sugars when you heat it and the yeast digests those sugars and that is the number one flavor in a beer. And of course, we have that flavor because we’re turning the cannabis into sugar. And then the yeast is digesting the sugar that comes from the cannabis plant. The secondary flavor in the beer comes from the hops. Now I realize there’s a trend now to making beers without hops, but to me, those are really weird and they don’t taste like a beer at all. But assuming your beer has hops, that’s the second note that you pick up is this flavor of the hops.

And the third flavor is the flavor of the barley. And of course, we have the flavor. Our ingredients are cannabis, hops, water, and yeast, that’s it. We have the flavor that you get from the esters because the yeast will digest the sugars and create those same beautiful beer flavors. And we have the flavor from hops because we use premium hops in all of our beer. We don’t have the flavor of the barley, but what it’s replaced with is this equally complex flavor of the cannabis.

It just tastes amazing. Tastes sort of familiar, but also kind of new. People love it. It’s dry. It’s a lot less sweet than a typical beer because when you do that fermentation to make a beer, the yeast is not going to eat all the sugar that’s produced when you mash your barley.

So beer always has some residual sugar, but because of our process, we end up with so much less residual sugar than they would have in a typical beer. And that’s part of the reason why it’s much lower calories.

Borchardt:             And what’s your favorite?

Dooma Wendschuh:       Right now, my favorite is a product called Dagga and Imperial. And it’s actually made from cannabis stock stems and roots. And it’s … we’re calling it a Canadian cannabis lager, right? Because it’s sort of a lager style, even though it’s not really a pilsner, it’s something new. We’re creating in a new category and we can name it however we like.

Video StaffVideo StaffJuly 19, 2019


The big news this week was the announcement that Curaleaf was buying Grassroots in a deal valued at $875 million. Grassroots was one of the few remaining multi-states that was still private. This deal will give Curaleaf the midwest footprint that it lacked because of the company’s operations in Illinois and Pennsylvania. In May Curaleaf acquired Select, which will give the company its west coast market. Now with all three pieces of the puzzle-filled, Curaleaf is on course to challenge Acreage Holdings as the largest cannabis company in the country.

A few earnings were reported this week.

Organigram reported its third-quarter net revenue of $24.8 million but that fell sequentially by $2 million from the second-quarter net revenue of $26.9 million. The company blamed it on fewer reorders from British Columbia. The company also delivered a net loss of $10.2 million. The cost of cultivation increased sequentially as well as sending gross margins down. Organigram said it has gone back to its previous method of growing and is preparing for the edible and vape markets to launch in Canada later this year.

Valens GroWorks Corp. reported that its revenue increased to $8.8 million, a 296% increase over the first quarter of 2019. However, the net loss was a whopping $10.5 million.

Canopy Rivers Inc. reported its fourth quarter and year-end financial results for fiscal 2019. Operating income was C$6.08 million, down from C$19.5 million. Operating losses declined a great deal, but the company experienced a total comprehensive loss of $30.35 million for the year.

TILT Holdings Inc. said that it has signed a binding term sheet for a private placement of $125 million. The company said it would use part of that to retired a $20 million credit facility that had a fairly large interest rate of over 18%.

The Arcview Group announced that it has closed a $7.7 million Series A financing round. Leading the fundraise was Trivergance Investments in partnership with Cresco Capital Partners.

And finally, A decision by Israel’s Securities Authority last week opens the doors for cannabis companies from around the world to explore a public listing on the Tel Aviv Stock Exchange, even though recreational use is not legal in Israel.

Sean HockingSean HockingJuly 18, 2019

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Wake Up California Cannabis Growers It’s 2019  and the world you may have grown up and worked in since the late 1990s was changed forever on January 1, 2018, due to the passage of SB 94 [Proposition 64].

Just to digress for those that may have never seen a rigorous history, medical cannabis in California was legalized in 1996 with the passage of Proposition 215[1]. The rights of Californians to have access to cannabis for medical use is discussed in Keeping Proposition 215’s. Promise,   which points out that Proposition 215 also led to the lawsuit, People v. Kelly The Kelly case was decided on January 2010 by the California Supreme Court.  In the Kelly case, the Court held the state of California cannot, through the legislative process, impose a state limit on medical cannabis that is more restrictive than what is allowed under Proposition 215. The language that appeared on the ballot stated:

  • “Exempts patients and defined caregivers who possess or cultivate cannabis for medical treatment recommended by a physician from criminal laws which otherwise prohibit possession or cultivation of cannabis.
  • Provides that physicians who recommend the use of cannabis for medical treatment shall not be punished or denied any right or privilege for making such a recommendation.
  • Declares that the measure is not be construed to supersede prohibitions of conduct endangering others or to condone the diversion of cannabis for non-medical purposes.”

Also, Proposition 215 contains a severability clause. The exact language of Proposition 215 added §11362.5 to the Health & Safety Code.

The passage of SB 94 [Proposition 64[2]] represented a compromise…

The population of California received the ability to legally purchase cannabis for recreational or “adult-use” rather than be restricted to “medical use”.

The State of California seized an opportunity to generate substantial tax revenues through the creation of a Cannabis Cultivation and Excise Taxes [“CCT and CET”][3] in addition to expanding the existing sales tax to adult-use cannabis. The State of California also created three agencies to regulate the entire legal cannabis industry in California[4] retail dispensaries, distribution and testing labs, manufacturing and extraction, and cultivation[5]. As a consequence, the legal cannabis market went from being a “light touch” laissez-faire medical cannabis market to a highly regulated commercial market.

We have written extensively about the missteps, mistakes and outright failures that the California regulatory and tax agencies have made over the past eighteen months in their attempts to create licensing processes, promulgate regulations, and oversee the transition to a regulated commercial market[6]. The black market continues to thrive and may have even grown since MARCUSA became the law[7].

The MARCUSA legislation created what many call a system of “dual control” where cities, municipalities, and counties throughout California were granted and maintain the first rights over cannabis activity through land use [“zoning”] and permitting which has created a patchwork throughout California. The cities, counties, and municipalities maintained the right to tax cannabis activity within their jurisdictions.

The situation is further complicated by the existence of “delivery companies” that would appear to have the right to deliver cannabis product anywhere in California. Further, under Proposition 215 and People v. Kelly, may very well be a challenge brewing under the California Constitution over an individual’s right to receive medical cannabis anywhere in the State of California.

We believe that the description above provides a quite accurate and reasonably complete of the cannabis markets, regulatory and tax environment in California as of the date of this article. The environment is complex and changing rapidly in many dimensions.

Our view is that the State of California will not succeed in creating a viable legal commercial market unless it undertakes urgent steps to correct several problems of its own making that we have written about many times. There is another aspect that is equally as clear, and that is that there is absolutely no way that a Grower, Extractor, Distributor or Dispensary can reasonably expect to understand, interpret and comply with complexities of licensing and operation of a cannabis business in California without engaging attorneys, tax advisors, accountants, water quality consultants, etc. The changes in the rules make that both an unreasonable expectation and impossible.

As such when a grower both misunderstands the complexities of the commercial cannabis market as it presently exists in California, and then misconstrues the application of complex quotation such as President Theodore Roosevelt from a century ago when he stated:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Our view that the use of that quote in this context is a small-minded and short-sighted view. The current reality is that there would be no legal commercial cannabis industry if a plant-touching business owner were not growing, processing and selling cannabis flower and other products. However, the likelihood that those businesses would survive, let alone prosper without the existence of all of the ancillary non-plant touching business today is a BIG FAT ZERO. As such, every business in the ecosystem plant-touching or not need to understand the purpose of, and appreciate every other business in the legal cannabis ecosystem in California.


[1] See Background – California Cannabis Regulation and California Cannabis Cultivation – Qualification as Farming

[2] See Implementing Proposition 64: Cannabis Policy In California

[3] The taxes are administered by the California Dept. of Tax and Fee Administration [“CDTFA”]

[4] The legal cannabis industry in California is regulated by the Bureau of Cannabis Control [“BCC”], the parent agency of which is the California Dept. of Consumer Affairs [“DCA”]. BCC was given the “power, duty, purpose, responsibility, and jurisdiction to regulate commercial cannabis activity” in MAUCRSA. BCC has direct oversight responsibility for retail and transportation only dispensaries, distributors, and cannabis event organizers.

Cannabis manufacturing and extraction and testing laboratories fall under the jurisdiction of the Manufactured Cannabis Safety Branch [“MCSB”], the parent agency of which is the California Dept. of Public Health [“CDPH”]

Cannabis Cultivation is the responsibility of CalCannabis, the parent agency of which is the California Dept. of Food and Agriculture [“CDFA”]

[5] Indoor and outdoor cannabis cultivation by persons and entities licensed under this division shall be conducted in accordance with state and local laws related to land conversion, current building and fire standards, grading, electricity usage, water usage, water quality, woodland and riparian habitat protection, agricultural discharges, and similar matters. State agencies, including, but not limited to, the State Board of Forestry and Fire Protection, the Department of Fish and Wildlife, the State Water Resources Control Board, the California regional water quality control boards, and traditional state law enforcement agencies, shall address environmental impacts of cannabis cultivation and shall coordinate when appropriate with cities and counties and their law enforcement agencies in enforcement efforts.

[6] See our summary of articles in Quick Update – Posts, Keeping Cannabis Simple, and Colossal Cannabis Fiasco

[7] See Critical Changes, specifically for our comments on raid activity by various California agencies, including the California National Guard.

William SumnerWilliam SumnerJuly 18, 2019


It’s time for your Daily Hit of cannabis financial news for July 18, 2019.

On the Site

Aurora Cannabis

Italy has chosen Canadian-based Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) as the sole winner of the Italian government’s public tender to supply medical cannabis in Italy. The contract is expected to be signed in September 2019… It will be a two-year contract in which Aurora will provide 400 kg of medical marijuana from its Canadian facilities.

5 Ways To Fix The California Cannabis Market

While it would be wonderful to have the luxury of starting over again, rebooting is not an option for California. The past cannot be changed. Those who are interested in addressing the chaos in the regulation of California’s cannabis industry must go forward from where we are today.

 In Other News

Neptune Wellness Solutions

Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) announced that it has closed a private placement offering of 9,415,910 common shares of the company, at a price of $4.40 per share, for $41.4 million. The offering was led by Perceptive Advisors. The proceeds of the offering will go towards working capital, general corporate purposes, and the acquisition of the assets of SugarLeaf Labs LLC and Forest Remedies LLC. The SugarLeaf acquisition is expected to close on or around July 31, 2019.

MediPharm Labs

MediPharm Labs Corp. (TSXV: LABS) (OTCQX: MEDIF) announced that it has received conditional approval to trade it shares on the Toronto Venture Exchange and list its common shares on the TSX under the symbol “LABS”. “We are thrilled to have qualified to uplist to the TSX. This is an important step for the MediPharm Labs team and our shareholders,” said MediPharm Labs CEO, Patrick McCutcheon.

Origin House

Origin House (CSE: OH) (OTCQX: ORHOF) announced that its preliminary unaudited revenue for the second quarter, ending on June 30, 2019, was $21 million, representing an approximate gross margin, excluding fair value items, of 17%. The company plans on releasing its full financial results for the quarter during the second half of August. “Origin House has continued to gain momentum as our team leveraged the California-focused platform we have built over the past two years to drive another quarter of record revenue along with steady progress on gross margin. As expressed previously, we strongly believe that 2019 will mark an inflection point both for the California market and Origin House as a whole and the numbers are proving this out,” said Marc Lustig, Chairman and CEO of Origin House.

Akerna Corp.

Akerna Corp. (Nasdaq: KERN) announced today that it has partnered with Leafly to integrate its seed-to-sale compliance software, MJ Platform, with With the integration, MJ Platform users will be able to view their inventory and menus automatically update on Leafly. “MJ Platform is the cannabis industry’s first ERP software and through partnerships, such as the one with Leafly, we provide a leading compliance, technology platform across the entire supply chain that connects almost every data point,” said Akerna CEO, Jessica Billingsley. “The partnership with Leafly provides a seamless integration for MJ Platform users, which is good business practice as it eliminates manual updates and delayed information.”

Debra BorchardtDebra BorchardtJuly 18, 2019


Italy has chosen Canadian-based Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) as the sole winner of the Italian government’s public tender to supply medical cannabis in Italy. The contract is expected to be signed in September 2019.

Five companies entered the competition for the contract, but only Aurora emerged as the winner of three lots to supply the Italian market. It will be a two-year contract in which Aurora will provide 400 kg of medical marijuana from its Canadian facilities. The product will travel to Italy through Aurora’s wholly-owned subsidiary Aurora Deutschland.  Then the Agenzia Industrie Difesa will distribute it to local pharmacies.

Aurora was already sending medical marijuana to the country having won a separate contract back in 2018. The other competitors were rejected for being unable to meet Italy’s strict requirements.

“We’re committed to building a successful, long-term medical cannabis market in Italy,” said Neil Belot, Aurora’s Chief Global Business Development Officer. “We want to continue to build our connection with patients and pharmacies in the Italian market, who have come to know and appreciate our products over most of the past two years. I’m extremely proud of our team. This win reflects our ability to navigate complex international regulations and work with governments around the world to establish ourselves as a trusted partner.”

Cannabis Light

According to the National Farmers Association Coldiretti and The Independent, in 2016, the “cannabis light” Law 242/16 removed the need for authorization to plant certified cannabis seeds with levels of THC below 0.2%, while the detection of THC levels between 0.2% and 0.6% during field inspections is still considered acceptable, when it can be attributed to natural causes. The law also requires farmers to keep the certification receipts for up to one year, however, the use of cannabis leaves and inflorescences for edible products is still prohibited. The potential revenue from the sale of cannabis light in Italy is estimated to be more than 40 million euros, and by 2018 hundreds of new businesses started growing cannabis in several Regions.

Axel Gille, Managing Director of Aurora Deutschland GmbH, added, “The well-being of our patients is our top priority and we’re dedicated to ensuring they have access to a consistent supply of safe, high-quality medical cannabis. We look forward to expanding our presence in Italy and continuing to work with other international regulators to ensure patients around the world have access to our high-quality medical cannabis.”

Sean HockingSean HockingJuly 18, 2019


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Critical Changes – California’s cannabis regulatory agencies have failed miserably.

Every resident of California who bothers thinking about the topic recognizes this failure.

Every Californian from Governor Newsom to the small Humboldt County grower who gave up recognizes how badly these agencies have failed.

[See California government report finds regulators are unable to fully oversee the state’s marijuana market ] We will separately address this report.

Proposition 64 was an ill-conceived, poorly-drafted amendment to California’s Constitution. The black cloud of Proposition 64 has one serious silver lining. Proposition 64 preserved Proposition 215. [ Keeping Proposition 215’s Promise ]

Proposition 64 spawned the Medical and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”). [See MAUCRSA] In MAUCRSA the Legislature cobbled together a regulatory structure for commercial cannabis activity based on the ill-conceived mandate of Proposition 64. MAUCRSA created a Bureau of Cannabis Control (“BCC”) within the California Department of Consumer Affairs as the lead agency for the regulation of medical and adult-use cannabis industry. Implementation of cannabis regulation through MAUCRSA under the leadership of BCC has brought chaos rather than regulation. [See Chaos Will Continue! and California Chaos Causes ]

While it would be wonderful to have the luxury of starting over again, rebooting is not an option for California. The past cannot be changed. Those who are interested in addressing the chaos in the regulation of California’s cannabis industry must go forward from where we are today. We are writing this article for that reason.

We believe BCC can still establish an effective regulatory structure in California within the framework created by MAUCRSA through an exercise of foresight, judgment and forceful action. The following are five major changes BCC must cause to be made in the regulation of commercial cannabis activity in order to end the chaos and establish order in the industry. We consider all five of these changes to be critical even though we have ordered this list based on subjective opinions regarding relative importance.

Many will have a longer list of changes. We believe many items others may identify are best-considered details in the implementation of the five critical changes we have identified. Of course, we are fallible. We welcome the addition to our list of a sixth or a seventh critical change that BCC must immediately cause to be made.

“All California cannabis businesses must be immediately issued a California license upon completion of all local requirements for engagement in commercial cannabis activity”.

BCC failed to delegate down to local jurisdictions the details of the implementation of MAUCRSA. Issues relating to land use and public health and safety are inherent issues in which local jurisdictions have the determinative interest. MAUCRSA established a statewide regulatory system for cannabis. The proper role of BCC, and all of its subordinate agencies was to educate, guide, assist, and facilitate the implementation of cannabis regulation consistent with state law under the jurisdiction and control of, and with deference to, local governmental agencies. Proposition 64 mandated a two-tier system.  An effective two-tier regulatory system required guidance and assistance at the state-level for uniform state-wide cannabis regulation with complete deference to local requirements.

The critical issues of regulation mandated deference local jurisdictions to make policy determinations within the requirements of state law.   This combination required BCC and its subordinate agencies to provide guidance for the creation of uniform state-wide regulation under local control with respect to land use and public health and safety issues.

“Commerce a serious effort in coordination with local jurisdictions to pressure underground commercial cannabis businesses into withdrawing from business at the earliest possible time”.

Exercises such as the eradication in Anza Valley last month should never occur. Authorities seized 70 tons of pot worth $190 million. Then, they buried it at Beaumont landfill   California’s regulatory agencies, in coordination with local law enforcement, must discourage unlicensed commercial cannabis activity at the earliest possible date. Unlicensed commercial cannabis activity must not be allowed to continue for months, even years before action is taken. Conflicts exist between the interests of the State and the interests of local jurisdictions with respect to these issues. Coordination with local interests presents a difficult problem for BCC, but coordination of local interests with state-wide interests is critical to success in significantly reducing the underground industry.

The California Department of Tax and Fee Administration (“CDTFA”) can be invaluable to BCC in this regard. Nothing will cast a greater cloud over unlicensed commercial cannabis activity than a formal notice from CDTFA that it has noticed business is being conducted that appears to owe tax returns and very likely taxes. Such notice should include references to civil and criminal tax penalties as well as information on how easy it for a locally licensed cannabis business to secure a state license.

“Require CDTFA to overhaul its systems and processes for the collection, reporting, and remission of the two cannabis taxes established by Proposition 64, Cannabis Cultivation Tax (“CCT”) and Cannabis Excise Tax (“CET”), to create effective and readily verified procedures for the administration of these two taxes.”

We have written multiple articles on the extent to which CDTFA is responsible for the chaos in the regulation of California’s cannabis industry. [tax collection and reporting posts[ CDTFA through the Board of Equalization (“BOE”) and the Franchise Tax Board (“FTB”) is more efficient at collecting taxes than the Internal Revenue Service (“IRS”). MAUCRSA delegated responsibility for the administration of CCT and CET to CDTFA. CDTFA botched this task. CDTFA failed to recognize some subtle differences between CCT and CET, and all other taxes administered by CDTFA.

CDTFA has all of the administrative tools to correct the errors that it has made in the administration of CCT and CET. In this regard, it is of critical importance that CDTFA ties the administration of CCT and CET to Sales Tax reporting in order to facilitate electronic analysis. CDTFA could have made a tremendous contribution to the transition of California into a regulated cannabis industry.

Instead, CDTFA has contributed more than its fair share to the chaos. We could argue that CDTFA is more responsible for the chaos than any other single agency. However, we believe that honor falls to CalCannabis.

“Recognize and acknowledge the differences between adult-use cannabis under Proposition 64 and medical cannabis under Proposition 215”.

Proposition 64 [See Implementing Proposition 64- Cannabis Policy in California ] was to a substantial degree driven by the greed of those who saw the legalization of cannabis as an opportunity to make money as well as the greed of governmental agencies that saw legalization cannabis as an easy source of tax revenue. The forces that made California a leader in the legalization of medical cannabis over 20 years ago have faded into the background but medical cannabis will arise again from the ashes like a Phoenix.

There are still some involved in the industry who believe cannabis should be readily available as medicine – even as a self-prescribed medicine – but not available as a drug merely because the consumer has lived for 21 years. Medical cannabis in California will become significant once again as marketplace forces make the industry more competitive, and cultivators and consumers realize the savings that can be achieved in moving medical cannabis from cultivators to patients.

“Establish a rational regulatory pathway for the licensing of Cannabis Cooperative Associations (“CCAs”) upon organization such entities in order to provide small cannabis cultivators with a pathway to take advantage of the benefits the Legislature granted to them in MAUCRSA”.

BCC and CalCannabis completely missed the boat in connection with CCAs. CCAs were created by the Legislature to help small cannabis cultivators survive in a regulated industry. Neither BCC nor CalCannabis understood the enabling legislation for CCAs.

The legislation that enabled CCAs has not been utilized. Many small growers have retired or remained underground. BCC is ultimately responsible as the lead regulatory agency. CalCannabis is the immediately responsible agency. It was tasked with administering the portions of MAUCRSA relating to the cultivation of cannabis. A CCA is a collective of cultivators. CalCannabis’ errors relating to CCAs, however, pale in comparison to the fiasco of CalCannabis’ licensing of cultivators.

BCC was given the “power, duty, purpose, responsibility, and jurisdiction to regulate commercial cannabis activity” in MAUCRSA. BCC has not exercised the foresight and judgment required to carry out this mandate and to lead California into a regulated industry. Effective and forceful leadership from BCC is long over-due.

The preceding is our best summary of the five critical changes that must be made in order for California to successfully transition into a regulated cannabis industry. We welcome additions, elaborations, explanations, and even criticism.

If your mother told you life would be easy, she lied.

William SumnerWilliam SumnerJuly 17, 2019


It’s time for your Daily Hit of cannabis financial news for July 17, 2019.

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Supreme Cannabis

The Supreme Cannabis Company, Inc. (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) plans to acquire all of the shares of privately-held Toronto-based Truverra Inc. in a deal valued at $20 million. Truverra is known for its wholly-owned subsidiaries, Canadian Clinical Cannabinoids Inc. (CCC) and Truverra (Europe) B.V. The move is intended to boost Supreme’s extract offering for later this year when Canada’s market will open up to such products.

SOL Global

SOL Global Investments Corp. (CSE:SOL) (OTCPK:SOLCF) has invested $6.5 million in its portfolio company CannCure Investments Inc. The move is intended to fuel the growth of its position throughout the cannabis markets of Florida, Michigan, and California… CannCure is a majority-owned subsidiary of SOL Global that indirectly holds 100% of 3 Boys Farms,  a Florida cannabis company with a state license to cultivate, process and dispense medical marijuana and other diversified cannabis assets in various stages of investment.


Curaleaf Holdings Inc. (NURLF) stock popped almost 20% on the news it was acquiring privately-held multi-state operator Grassroots or GR Companies Inc. in a deal valued at $875 million. The deal will be made up of 108.8 million shares and $75 million at the closing which is expected in early 2020. If the deal is completed, Curaleaf’s footprint grows from 12 states to 19 states and putting it within reach of Acreage Holding’s (ACRG.U) size.

In Other News

Plus Products

Plus Products Inc. (CSE: PLUS) (OTCQB: PLPRF) announced revealed the rebranding of its line of low-dose cannabis edibles. Guiding the rebrand was research conducted by Henry J. Rak Associates and designed by Partners & Spade. “Cannabis can be confusing. We hope our new system will help reduce some of that confusion,” said Jake Heimark, Plus Products CEO and Co-founder. “We worked with experienced market researchers to find out why people use cannabis, then translated those findings into an easy-to-use system of cannabis. We are excited to help our customers Uplift their experiences, bring Balance to their everyday, and Unwind without getting unwound.”


The technology company PHILTER Labs, Inc. announced that it has raised $3 million in growth funding. The company specializes in crafting vaporizer products and accessories. Leading the fundraise was Bravos Capital, Explorer Equity, and an undisclosed cannabis-focused private equity firm. “The proprietary technology behind PHILTER made it a very attractive investment opportunity for us; the company’s future product roadmap clearly represents a revolutionary step forward in vape filtration technology, as opposed to the more incremental steps that most vape hardware companies are working on,” said Jeff Kendig, Managing Partner of Bravos Capital.

Debra BorchardtDebra BorchardtJuly 17, 2019


Curaleaf Holdings Inc. (NURLF) stock popped almost 20% on the news it was acquiring privately-held multi-state operator Grassroots or GR Companies Inc. in a deal valued at $875 million. The deal will be made up of 108.8 million shares and $75 million at the closing which is expected in early 2020.

If the deal is completed, Curaleaf’s footprint grows from 12 states to 19 states and putting it within reach of Acreage Holding’s (ACRG.U) size. The company currently has 48 operating dispensaries, which would increase to 68 and the number of dispensary licenses would move from 70 to 131. The deal would also boost the company’s presence in the Midwest, where Grassroots is strong with 20 locations in Illinois and Pennsylvania.

“With the acquisition of Grassroots and the pending acquisition of Select, Curaleaf is the world’s largest cannabis company by both revenue and operating presence,” said Joseph Lusardi, CEO of Curaleaf. “With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets. In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market-leading capabilities and expertise, we will continue to deliver value for our shareholders.”

Compass Point analyst Rommel Dionisio wrote, “Assuming the successful closing of this transaction as well as the recently announced agreement to acquire Select, Curaleaf would not only become the largest company in the U.S. cannabis industry, but also the largest player in the world by pro forma revenue.” His target price is $13 and the stock was lately trading at $7.74.

Select Aquisition

In May, Curaleaf said it was going to acquire Cura Partners, Inc. the owners of the Oregon-based Select brand, in an all-stock deal valued at C$1.27 billion or $948.8 million. The company said that the acquisition included Select’s manufacturing, processing, distribution, marketing, and retailing operations and all adult-use cannabis products marketed under the Select brand name, including all intellectual property. Select ‘s THC products are sold in more than 900 retailers, it is the leading cannabis brand in key Western states, including California, Arizona, Oregon, and Nevada. The combination of the two companies will provide immediate geographic diversification with Curaleaf’s footprint on the East Coast and Select’s brand strength on the West Coast.


Dionisio also noted that the two states where Grassroots has planted its flag, Pennsylvania and Illinois are two key growth markets. “We believe Illinois represents the most important growth opportunity in the U.S. cannabis market in 2020, as that state, the fifth most populous in the country, opens up to recreational use on Jan. 1,” he wrote. He also pointed out that Pennsylvania is one of the fastest-growing with over 100,000 medical patients signed up since Feb. 2018. He increased his estimates for 2020 revenue from $696 million to $861 million and EBITDA from $180 million to $248 million. The EPS estimate was moved to $0.21 from $0.20.

Mitch Kahn, co-founder and CEO of Grassroots, said, “Today’s announcement is a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest. This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator.”

Evan Eneman, CEO of MGO|ELLO Alliance, a cannabis finance, taxation, investment banking advisory and firm said, “This trend in M&A is an evolution in the cannabis industry, and as investors put serious capital into these deals, everyone is looking for guidance on who will be next.”



Debra BorchardtDebra BorchardtJuly 17, 2019


SOL Global Investments Corp. (CSE:SOL) (OTCPK:SOLCF) ) has invested $6.5 million in its portfolio company CannCure Investments Inc. The move is intended to fuel the growth of its position throughout the cannabis markets of Florida, Michigan, and California.

“SOL’s $6.5 million investment into CannCure is to continue strengthening our foundation and positioning the company as a leader in the dominant markets of Florida, Michigan, and California,” said Andy DeFrancesco, SOL Global’s Chairman, and Chief Investment Officer. “CannCure’s expansion is an integral part of SOL Global’s overall strategy and our goal to dominate all aspects of the legal cannabis, hemp and CBD markets here in North America and Europe.”

CannCure is a majority-owned subsidiary of SOL Global that indirectly holds 100% of 3 Boys Farms,  a Florida cannabis company with a state license to cultivate, process and dispense medical marijuana and other diversified cannabis assets in various stages of investment. The investment brings SOL Global’s ownership of CannCure to 97.8%.

CannCure said it will use the investment to complete the agreements it has in place for acquiring MCP Wellness, giving the company the rights to two Michigan cannabis cultivation licenses, a Michigan cannabis processing license, and three fully licensed cannabis provisioning centers in Michigan. It would also complete the Northern Emeralds deal and the Three Habitat Holdings acquisition.

Once these acquisitions are complete, Canncure will combine them into one multistate operator that will have operations in three of the top 10 state cannabis markets by revenue, with vertically integrated operations across all three states and approximately 46 retail locations in operation by the end of 2020.

In a statement, the company said that when CannCure completes the acquisitions in California and Michigan, as well as paying $80 million to the former owners of CannCure,  SOL Global expects to own approximately 20.5% of the resulting business.


About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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