Business Archives - Green Market Report

Kaitlin DomangueKaitlin DomangueJanuary 29, 2020
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2min170

US-based company, EcoGen Labs, is continuing to expand and grow as it successfully closes on a $40 financing arrangement through private placement. 

EcoGen Labs is a vertically-integrated, seed-to-sale manufacturer and supplier of specialty hemp-derived ingredients and proprietary formulas in the United States. The company also produces private-label finished product, as well as providing unique genetics.

Since its launch in 2016, the company has expanded rapidly, producing over $80 million in revenue last year. EcoGen supplies nearly 70% of the ingredients used in various retailers across the US, including Whole Foods, Sephora, and CVS Health Corp.

Alexis Korybut, the Co-Founder of EcoGen says “We are very encouraged by the strong support we’ve received from the institutional marketplace. This investment is an important step forward that will allow us to further grow and expand our business.”

EcoGen has a solid strategy for the utilization of this transaction, the plans include supporting the further development of its facilities, focusing on its research and development, and the expansion of marketing and sales divisions. Advancing the company’s seed and genetics, the expansion of private-label finished goods, and new technologies are also on the agenda for EcoGen.

“With engineering as a passion and also my background, the prospect of new innovation is what led me to this industry,” says Joseph Nunez, Co-Founder of EcoGen. “When we first started, we were on a mission to create a state-of-the-art process to produce exceptionally pure CBD that set the standard for the industry. We’re proud to say that goal was quickly achieved and this capital raise will allow us to expand that success into other verticals of the business.”

EcoGen also has plans to develop their new national headquarters on a nearly-20 acre property located in Grand Junction, Colorado. When development is complete it will include everything from seed production to the making of CBD products.


Gretchen GaileyGretchen GaileyJanuary 29, 2020
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3min400

Governor Andrew Cuomo (NY) announced his plans to legalize cannabis for adult use in his state budget speech last week. He made the announcement with such enthusiasm some think legalization is an actual possibility this year. A major stumbling block in 2019 was sorting out the social and criminal justice issues that come with cannabis legalization, it will be so again this year.

Can the Empire State overcome the usual pitfalls and set up a market that will finally address those disproportionately affected by the War on Drugs?  Unlikely.

If we look closely at the Cuomo cannabis plan there are red flags. According to Cuomo’s budget, “the program will limit the number of producers and retail dispensaries to guard against a market collapse.” 

That may sound good but time and again states that have limited licensing markets face serious product shortages, increased consumer cost, and greater startup expenses that ultimately keep illicit markets going. 

Fewer licenses at higher costs mean fewer entrepreneurs. In many markets the initial capital requirements are so high minority entrepreneurs can’t compete. 

Cuomo says that he wants to “encourage equity through craft growers and cooperatives, and provide training and incubators to ensure meaningful and sustained participation by communities disproportionately harmed by cannabis prohibition.” If you read between the lines, that means the minorities who cannot meet the state’s high standards for a license will be thrown a bone and be allowed into a collective of other potential unworthy license holders who won’t be able to compete with the deep pockets of more established brands. None the less, come election day, it may seem to some that the Governor kept his promise for social and criminal justice.

The budget also says, “the Office of Cannabis Management will administer social equity licensing opportunities, implement an egalitarian adult-use market structure….” 

The fastest way to develop an egalitarian cannabis model is unlimited licensing, low barriers to entry, access to capital, ending “grandfathering” of medical market license holders, and a strict government agency that ensures access to minority entrepreneurs and polices abuse like shell companies scooping up licenses. 

While a truly free market is the American way, that free market needs to be tempered with reasonable regulation.  However, that regulation should not limit the number of licenses, or make licenses inaccessible to less established entrepreneurs.


Julie AitchesonJulie AitchesonJanuary 29, 2020
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4min720

Just over a year from the date when the 2018 Farm Bill removed hemp from the list of controlled substances and legalized it for industrial growth, issues plaguing hemp producers in 2019 are coming to light. The most dominant pitfalls include a glutted market, unpredictable climate, problems with mold and pests, and a chronic shortage of adequate drying facilities.

Seasoned farmers are no strangers to these types of problems, but industrial hemp poses a new challenge: how to bring a crop in under the .3% THC limit mandated by the federal government.

In an October article by Chuck Abbot at www.agriculture.com, analysts at agricultural lender CoBank forecasted that changing federal regulations would make it difficult for growers to keep up with guidelines for testing plants for excess THC. The National Law Review published a piece on Jan. 19, 2020 entitled “Key Takeaways From USDA Final Interim Rules for Domestic Hemp Production”. (These interim rules are set to expire in 2021 and will be replaced by finalized regulations.)

The scope of the rules includes conditions for growing, processing and/or selling hemp, and requires an approved testing and sampling procedure to ensure that no plant exceeds .3% THC content. Unfortunately, the currently approved method focuses solely on identifying the THC content of the plant rather than its genetic profile (which can definitively identify the plant as hemp). Testing only for THC content leaves this undetermined.

A hemp plant can “go hot” (aka experience a spike in THC levels) due to using a new seed variety, environmental factors, or a plant left to flower for too long. This can lead to what the National Law Review article describes as “excessive non-compliance and crop destruction”, not to mention devastating financial losses for growers. Writing for local Denver publication Westword, Mathew Van Deventer reports that fourth-generation farmer Randy Taylor was forced to destroy eighty acres under hemp production when that hemp tested at .47% THC by the Colorado Department of Agriculture. The CDA is attempting to address this conundrum by approving and overseeing the development of industrial hemp seeds specifically engineered for low THC/high CBD content.

Theresa Bennett’s Q&A with Vote Hemp President Eric Steenstra at www.hempgrower.com  provides further insight into the issue. Steenstra shares that there has been almost a 500% increase in the number of people growing hemp nationwide over last year. These new growers are largely unfamiliar with the complexities of the genetic seed make-up required to keep THC in crops from spiking. As a result, buyers are favoring larger-scale operations with tested seed stock and reliable facilities, which edges new growers out of the market before they gain a foothold.

Despite the obstacle that regulations regarding THC content pose for unseasoned producers, industrial hemp still shows a profit margin generous enough to lure those willing to educate themselves and keep abreast of the changing guidelines into the industry. Hopefully, the lessons of 2019 will make for a less perilous and more profitable learning curve for aspiring hemp entrepreneurs in 2020.


Kaitlin DomangueKaitlin DomangueJanuary 28, 2020
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2min760

Its time for your Daily Hit of cannabis financial news for January 28th, 2020. 

 

On the Site

 

Emerald Using Shares to Pay Bills

Canadian cannabis company Emerald Health Therapeutics (TSXV: EMH; OTCQX: EMHTF) had entered into a shares for debt transaction with Emerald Health Sciences, a control person for the former company. Presently, Emerald carries an aggregate debt of $2,816,963. The company will settle $794,182 owed to Sciences, as well as $2,022,781 owed pursuant to trades payable. Emerald Health Therapeutics will also issue 9,713,666 common shares of Emerald to Sciences at $0.29 per share.

 

TerrAscend Names Ackerman as Interim CEO, Ends Gravitas Deal 

TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF) has named the company’s Executive Chairman Jason Ackerman as the interim CEO, replacing the current CEO Michael Nashat.

Just yesterday, TerrAscend terminated its decision to acquire Gravitas Nevada Ltd. which operates a retail cannabis dispensary in Las Vegas, Nevada under the trade name “The Apothecarium.”

 

2020 Promises Greener Pastures for Cannabis Legislation

More than 75% of the United States of America have legalized (and decriminalized) Cannabis use. Whether that use is in the form of CBD, restricted to medicinal use, or completely without consequence, America’s legislation is changing rapidly.

The new decade started with Illinois celebrating its June 2019 legalization victory and now, New Mexico is following suit. New Mexico’s governor is currently pushing legalization. US News reported on the turn of the decade, there is strong legislative evidence five more states are rolling toward legalization before 2020 comes to a close.

 

In Other News

Vireo Health Expands Partnership With Leaf Trade

Physician-led, science focused cannabis company Vireo Health (CNSX: VREO, OTCQX: VREOF) announced the expansion of the company’s partnership with Leaf Trade. The partnership will provide a wholesale order and fulfillment management platform in four states where Vireo operates.


Kaitlin DomangueKaitlin DomangueJanuary 28, 2020
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2min1890

Emerald Health Therapeutics (TSXV: EMH; OTCQX: EMHTF), referred to as “Emerald” for clarity, is a Canadian cannabis company offering wellness-oriented and recreational cannabis products. Emerald provided an update yesterday on their recently announced a shares for debt transaction with Emerald Health Sciences, (“Sciences”) a control person for Emerald. 

Presently, Emerald carries an aggregate debt of $2,816,963. Per a previously disclosed loan agreement between both parties, Emerald will settle $794,182 owed to Sciences, as well as $2,022,781 owed to Sciences pursuant to trades payable. Emerald Health Therapeutics will also issue 9,713,666 common shares of Emerald to Sciences at $0.29 per share in order to fulfill the debt.

Currently, Sciences holds roughly 29,687,942 of Emerald’s issued shares and upon the completion of the debt settlement, Sciences will hold approximately 23.1% of the issued and outstanding shares of Emerald, on an undiluted basis.

Due to Sciences being a control person of Emerald, the settlement is considered to be a “related party transaction”, meaning the companies had a pre-existing connection prior to the transaction.

Emerald is not the only company in a cash crunch, and relying on selling common shares to stay above water. MedMen has also been making the headlines for a similar situation. The company recently sent out emails to their vendors stating they cannot pay them, and are offering shares in their company instead.

Green Market Report talked to Adam Bierman, the CEO of MedMen, about their circumstances. Bierman tells us, “We’ve been very forthright with the public, and with our investment community at large about the fact that at the end of last year we entered into a restructuring in the business, exiting the hyper-growth stage of the business, and getting into sustainability, and with that, there’s a lot of pain. And that pain starts at the employees that were on this mission with us, building this platform with us that we had to part ways with.”


Debra BorchardtDebra BorchardtJanuary 28, 2020
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4min1020

TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF) has named the company’s Executive Chairman Jason Ackerman as the interim CEO, replacing the current CEO Michael Nashat. Nashat will continue to serve as a member of the Board of Directors and act as a strategic advisor to the company.

Gravitas Acquisition Is Over

Just yesterday, TerrAscend terminated its decision to acquire Gravitas Nevada Ltd. which operates a retail cannabis dispensary in Las Vegas, Nevada under the trade name “The Apothecarium.”  The transaction, for $33.5 million in cash and 625 proportionate voting shares in the equity of TerrAscend equivalent to 625,000 common shares of the Company, was originally announced on February 11, 2019. TerrAscend has paid a $3mm reverse termination fee to the sellers, which had been placed in escrow in June of 2019.

As part of the termination, the Company is no longer liable for the remaining $30.5 million and proportionate voting shares in the equity of TerrAscend equivalent to 625,000 common shares of the Company. TerrAscend has agreed to continue licensing The Apothecarium, State Flower and Valhalla names and related intellectual property to Gravitas and its related operations in Nevada, pursuant to such final terms as will be mutually agreed by the parties.

Comments

“While it was a difficult decision, I believe given TerrAscend’s premier operating assets in the United States, it is now time for me to step into an advisory role and let new U.S.-based management guide TerrAscend as they expand and scale,” said Michael Nashat. “Jason’s experience in omnichannel retail, distribution, and operations are skills that TerrAscend will lean on as it enters this new growth phase. In my time working alongside Jason, it is clear that he is the right person to take on this role, and as a large shareholder, I believe this is what is best for securing TerrAscend’s future. I look forward to continuing to advise the Company in my board position and as a strategic advisor.”

“We are grateful for the hard work and perseverance that Michael Nashat has demonstrated during his tenure as CEO and Co-Founder of TerrAscend,” said Jason Ackerman. “We will continue to value Michael’s technical expertise, commitment to research and pharmaceutical knowledge, as he shifts to a strategic advisory role. We remain committed to driving shareholder value and focusing on the areas of our business that are generating rapid growth and greater margins, particularly in our valuable CaliforniaPennsylvania, and New Jersey markets. I look forward to building upon the foundation that Michael has laid, and leading the TerrAscend team forward in this next exciting phase.”


Colette TozerColette TozerJanuary 28, 2020
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5min1180

Editors Note: You can follow all cannabis legislation for free under the Legislation tab found here.

2020 started with legislation siding entirely in favor of Cannabis throughout twelve states US (and the District of Columbia). Aside from full legalization, more than 75% of the United States of America have legalized (and decriminalized) Cannabis use. Whether that use is in the form of CBD, restricted to medicinal use, or completely without consequence, America’s legislation is changing rapidly.

The legalization of Cannabis has been a slow, agonizing, and long-overdue struggle that has finally started to see some quantifiable traction. Finally, the taboo haze that has encircled the use of Cannabis is lifted. For the first time in a long time, lawmakers are representing what the people want and what science supports concerning benefits and safety.

Fortunately, it is apparent from rising trends that the new decade is going to be immersed in a wave of green, as more states loosen the reigns that have been unnecessarily stifling the Cannabis industry for generations.

Legalization is Sweeping the Nation

The new decade started with Illinois celebrating its June 2019 legalization victory and now, New Mexico is following suit. New Mexico’s governor, Gov. Michelle Lujan Grisham, is currently pushing legalization.

Furthermore, US News reported on the turn of the decade, that there is strong legislative evidence five more states are rolling toward legalization before 2020 comes to a close.

While there are still some obvious hurtles throughout the different states, that include political as well as practical issues, legalization seems to be rising high throughout the country.

Entrepreneurial Success Supports Legalization

While people tend to steer clear of the monetary gain Cannabis legalization offers, the entrepreneurial crowd is not shy about the benefits. Statista claims that by 2020, the total number of jobs created by legalizing Cannabis is projected to exceed 283,422. This includes not only the production and sales of Cannabis but the marketing, economical predictions, influencer, and other niche job creation that would accompany any other industry.

This is especially true for women. According to Fashion Magazine, women are thriving in the cannabis industry, as they make up 36% of those in executive positions. This is more than double what any other industry has to offer businesswomen.

Legalization is Giving People the Help they Need

The change in Cannabis laws has helped to promote the abundance of benefits Cannabis holds for people of all ages. Cannabis use has helped 71% of surveyed consumers as of 2018 either reduce (53%) or stop (18%) their over-the-counter pain treatment. This, especially for the older generation is an extremely positive statistic; giving those with chronic pain a healthier alternative to OTC pain medication.

Plus, for the younger generation, the survey concluded that 60% of participants have reduced (52%) or stopped (7%) their alcohol consumption.

Both statistics deliver major blows to pharmaceutical companies and the alcohol industry. These two industries collectively cost the U.S. economy over $600 billion every year due to addiction. Cutting down the number of people who partake or the amount they partake in these dangerous habits are not only a benefit to the individual but our whole society.

All this, in addition to the mounting public support, proves that 2020 promises greener pastures for Cannabis legislation.

 


Kaitlin DomangueKaitlin DomangueJanuary 27, 2020
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4min1230

Its time for your Daily Hit of cannabis financial news for January 27th, 2020. 

On the Site

Troubles Continue For Sunniva, Company Announces Ceasing Operations Of Full-Scale Distributors, LLC

Sunniva (OTCMKTS: SNNVF), a Canadian cannabis company announced the closing of wholly-owned subsidiary Full Scale Distributors, LLC set to take place in February 2020. “The closing of FSD is a necessary step that will eliminate the cash outlay required to operate that business,” said Dr. Anthony Holler, Chairman & CEO of Sunniva Inc. “We continue to focus on the preservation of our available funds to allow us to actively defend Sunniva’s rights under the previously disclosed dispute related to the Build to Suit Lease of the Cathedral City Glasshouse.” The company cannot file for bankruptcy because of cannabis’s federally illegal status. 

The Year Ahead for CBD

Farmers experiencing demand and profit surges since converting their land for hemp cultivation were profiled in a CNN report in April that projected sales of hemp products to be over 2.2 billion dollars by 2022. Despite these positive projections, the hemp industry has experienced its share of problems, as outlined in an October article by Iris Dorbian for Forbes.com. These issues include a lack of widespread, scientifically sound information about the legality and benefits of CBD products, which often deters retailers from carrying hemp products. 

Though projections may vary, there do appear to be strong commonalities that provide a clarified, if not completely clear, view of what 2020 holds for the CBD/hemp industry.

Airvape X Review: A Modern Multi-function Device

The few minor flaws (battery life and chamber size) with the Airvape X are greatly outweighed by the many positive aspects of the vaporizer. The change from smoking to purely vaporizing has a noticeable impact on the health of your lungs. Strong rips, easy to clean, does not take long to charge, and we are happy campers over here.

When our own Airvape X unit dies out from our daily use then we plan to replace it with another considering how great it has been to have.

In Other News

Indiana’s Smokeable Hemp Ban Moves to Federal Appeals Court

Indiana initially passed the ban on smokeable hemp in July, but it was put on hold by a federal judge. The state is attempting to revive it and The Midwest Hemp Council and seven Indiana hemp wholesalers are challenging the state’s action. 


Kaitlin DomangueKaitlin DomangueJanuary 27, 2020
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3min3910

Sunniva (OTCMKTS: SNNVF), a Canadian cannabis company announced the closing of wholly-owned subsidiary Full-Scale Distributors, LLC set to take place in February 2020. 

“The closing of FSD is a necessary step that will eliminate the cash outlay required to operate that business,” said Dr. Anthony Holler, Chairman & CEO of Sunniva Inc. “We continue to focus on the preservation of our available funds to allow us to actively defend Sunniva’s rights under the previously disclosed dispute related to the Build to Suit Lease of the Cathedral City Glasshouse.”

Cannabis companies that are strapped for cash not have the option of filing for bankruptcy. According to bankrupt stock expert, Rick Szambel, “Currently under U.S. Bankruptcy Law companies that are engaged in a business or product not legal under Federal Law may not use the U.S. Bankruptcy Code for protection in reorganizing their debt or centralize their assets for sale. Federal Law considers marijuana an illegal substance and U.S. Trustee who is part of the Department of Justice has aggressively blocked companies in the marijuana industry, employees, and even landlords from filing Chapter 7 or 11, often forcing companies to wind down at a state level.”

This is not the first time the company has been in hot water. Last year, the company and one of its subsidiaries were named in a lawsuit for failure to repay a loan. Green Market Report previously reported “Sunniva, through its subsidiary 116, entered into a $3.4 million mortgage to finance the purchase of land for the greenhouse facility in Okanagan Falls, British Columbia,” according to the company’s November financial statement. Also included in the statement was the acknowledgment the company had paid $400,000 of their loan as of September 30th, 2019 but they were in default on the remaining balance. The company’s stock also fell significantly in November following the resignation of its CFO and president.


Julie AitchesonJulie AitchesonJanuary 27, 2020
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4min1550

To say that 2019 was a boom year for the CBD industry would be a massive understatement, and 2020 is primed to top the record sales and product innovation that have come to characterize this surging market.

On December 20, 2018, President Trump signed the Farm Bill into law, a move which removed hemp from the government’s controlled drug category and spurred farmers across the country to repurpose agricultural land previously used to grow feed and food crops such as corn and alfalfa for hemp varieties with high CBD and low THC (.3% or less) content. Farmers experiencing demand and profit surges since converting their land for hemp cultivation were profiled in a CNN report in April that projected sales of hemp products to be over 2.2 billion dollars by 2022.

Market activity in 2020 will go a long way towards determining whether or not hemp’s profitability can sustain its robust trajectory. Alexi Korybut, CEO of EcoGen Laboratories (one of the largest hemp manufacturers and suppliers in the U.S.) predicts that CBD consumers will skew increasingly Baby Boomer and become more conscientious about the quality and safety of the products they buy. Korybut also projects a greater focus on other cannabinoids such as CBG and CBN as their specialized effects become more widely known.

A 2020 forecast by Rich Maturo of information, data and measurement firm Nielsen predicts that cannabinoid education efforts, especially those targeted towards health care providers, will greatly increase in 2020. (Nielsen data shows that primary health care providers do more than any other demographic to drive brand loyalty and customer usage in the CBD market.) In addition, Maturo projects that CBD prices will fall while the number of hemp farmers entering the industry will continue to rise, as will the percentage of current farmers increasing acreage dedicated to hemp cultivation.

Despite these positive projections, the hemp industry has experienced its share of problems, as outlined in an October article by Iris Dorbian for Forbes.com. These issues include a lack of widespread, scientifically sound information about the legality and benefits of CBD products, which often deters retailers from carrying hemp products. In addition, changing regulations make it difficult for manufacturers and retailers to keep up as new data emerges about drug interactions and the viable use of CBD as a food additive.

The quality and efficacy of products vary greatly as consistent industry-wide standards are still in process. Dorbian cites a press release from CEO of ValidCare Patrick McCarthy, who echoes Alexis Korybut’s predictions of a growing emphasis on safety and quality, escalating Baby Boomer consumption, and interest in CBG and CBN as features of the hemp industry’s growth in 2020.

Though projections may vary, there do appear to be strong commonalities that provide a clarified, if not completely clear, view of what 2020 holds for the CBD/hemp industry.  What is clear is that the impact of hemp-derived cannabinoids will be felt in the health care industry, agricultural system, and consumer market far beyond the coming year.

 



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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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