Business Archives - Page 2 of 111 - Green Market Report

Sean HockingSean HockingApril 17, 2019
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13min671

If you wish to re-publish this story please do so with the following accreditation
AUTHOR: Rob Hendrix – Cannabis Consulting Nationwide LLC
PUBLISHER:  CANNABIS LAW REPORT

Washington State passed Initiative 502, the legalization of adult use Cannabis, in November of 2012.

In early 2013, Congress began work on the framework of the state’s regulatory system. One very important component of which was the regulations involving and governing traceability.

Traceability was and is the tracking of Cannabis and Cannabis-infused items and products from “seed to sale”, as directed to Washington and Colorado per the Cole Memo issued in August 2013.

In Washington State, a contract for traceability, such a critical part of Cannabis regulation, was awarded to BioTrack, a company already experienced across the US in tracking the movements of pharmaceutical products, seemingly a solid choice.

In July of 2014, the first retail stores opened in Washington State. My store, Cannabis Central, was in the third flight of stores to open in August of 2014. BioTrack showed itself, initially, in my opinion, to be a capable system.

It was a traceability system first and foremost and from my perspective, it was ok in this realm. In the first few months, as more stores opened and more and more business was taking place, the BioTrack imperfections and quirks began to show themselves.

For example, the State required barcodes on all packages and this barcode was obviously assigned to groups or “lots” of inventory. We would find that occasionally, a “lot” would disappear from the ready for sale portion of our cash register computers. We would scan a barcode on a package of cannabis and the computer would indicate zero available for sale when we knew there was product hanging on the pegs behind us.

In my simple, non-technical way, I’ll try to explain. Basically, what happened is that electronically at least the barcode or the “lot” we are discussing would in effect be pushed back into the “warehouse” and we would have to find it and bring it back up to the retail space and show it as ready for sale.

I always described BioTrack and these little idiosyncrasies as kind of like your first car; the right rear window didn’t work and the gas gauge showed 1/4 tank but it was really empty.

You learned to live with these little things and you made it work. And it forced me as an owner to roll up my sleeves and go to work to solve the problem(s). Things don’t always work flawlessly and BioTrack was no different but rather than complaining, we set about to dive in and learn as much as possible about BioTrack.

We became BioTrack experts compared to most other retail stores. And when we did need help, we called, talked respectfully and asked for help. Many of my cohorts would call and immediately begin the conversation by yelling and shouting obscenities at the person on the other end of the phone. Not the recommended way to ask for and actually expect help from the person on the receiving end of this call.

Over time, many licensees complained about BioTrack so the State in the calendar year 2016 decided to put the traceability contract for the fiscal year 2017 out to bid.

Subsequently, A company called Leaf won the new contract.

There is actually a huge back story here in that the State attempted, in a rather clumsy fashion, to communicate the problems and difficulties licensees were having with BioTrack in an attempt to encourage them to make changes in their approach so they could keep the contract. BioTrack did not respond well to the situation and in effect stopped trying to appease and correct and basically said to the State, “Go ahead and take Leaf. You will be sorry”. Not a very mature attitude to say the least but given the fact so many were so awful to BioTrack when problems arose, it is really no wonder they adopted this stance.

So, we soon had Leaf as our primary traceability Statewide contract holder. It did not take long for problems to begin.

The rollout and transition to Leaf were to have begun in October of 2017. However, due to a multitude of difficulties, this transition was not completed until February 2018. It was definitely an indication of difficulties to follow and they did. As for me, I have stuck with BioTrack in my individual store and my problems have been greatly minimized as compared to others.

The problems at the State level with Leaf are similar to those described earlier in this article except these blips and disappearances are at the State level and may have resulted in an inaccurate accounting of sales and therefore excise tax collected and income tax paid.

The fact that these happenings have occurred is beyond question. The potential under-reporting of sales may have resulted in an underpayment of excise taxes and sales taxes to the State Department of Revenue, and perhaps even underpayment of Federal income taxes.

We must remember cannabis cultivation, processing, and retail sale are all still technically violations of Federal law. If Leaf has not been effective in monitoring and accurately tracking all movement of all 502 licensees’ products at all times and under any and all circumstances, Washington State cannot claim to be following the letter and the spirit of the Cole Memo.

The fact is we don’t know all that we don’t know. Biotrack’s problems, while frustrating and programmatic to be sure, did not create difficulties outside the effected business. In other words, when we ran into a situation that needed to be remedied, the problem was not extended into the Statewide system. Cannabis Central could not retail what we did not own “electronically”, so the problem was stopped in it’s tracks until we fixed the issue. In the case of Leaf, since this IS now the Statewide system, the potential problems are much larger.

The State of Washington, 502 licensees, BioTrack and Leaf have all had a part in the creation of this potential fiasco.

Traceability is the very cornerstone of legal Cannabis at this time in the US. If the credibility and confidence in our system is in any way compromised, then our 502 system as a whole is in peril. There are literally millions of citizens who are at best uncomfortable with the legalization and normalization of Cannabis in our society.

We are trying desperately, with State legalization, to eradicate the illicit marijuana market; this is one of our major goals in the hope it will reduce access to minors. If this Leaf traceability system is as flawed as it appears to be, we cannot be sure product isn’t slipping “out the back door” and by extension, we will have difficulty convincing naysayers as to our credibility as an industry.

If the system cannot be trusted to absolutely guarantee Cannabis will be truly tracked and monitored from “seed to sale”, we cannot win over non believers. In fact, we will expose ourselves to greater scrutiny by the Feds or even be told to shut down until we can guarantee the system is reliable.

BioTrack was far from perfect, but Leaf has been a Statewide disappointment and it’s flaws and problems threaten our 502 system as a whole and none of us can tolerate that.

 

Sincerely,

Rob Hendrix, Owner

Cannabis Central LLC

Cannabis Consulting Nationwide LLC

Cell: 509.833.5556

Office: 509.201.1144

 

Editor’s Notes

BIOTRACK

Government Solutions

Business Solutions

 

LEAF

Leaf Data Systems: Cannabis Software for Regulators
Comprehensive track and trace marijuana software for regulators that supports a tightly controlled chain of custody model and helps prevent diversion and fraud. ( Google Search)

https://leafdatasystems.com/

We also received this interesting page alert – why would they do this ?

 

 


Sean HockingSean HockingApril 17, 2019
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13min641

If you wish to re-publish this story please do so with following accreditation
AUTHOR:  “Jordan Zoot.  “aBIZinaBOX Inc., CPA’s
PUBLISHER:  CANNABIS LAW REPORT

The key to the long-term success of every medical or adult-use cannabis business in California will be found in the management of tax liabilities. The usual reasons for long-term success in business – creativity, perseverance, experience, business acumen and connections – are important. The management of the direct and indirect impact of the multiple taxes to which California cannabis businesses are subject, and the preparation and maintenance of the financial records required for the management of these tax liabilities, will, however, prove to be the single most important factor in the success of a California cannabis business in the long-term.

 

Do not stop reading this article based on the premise the above statement does not apply to you because you are a well-established cultivator and the bulk of the taxes on cannabis apply to dispensaries and distributors. Taxes impact the amount a cultivator will receive. All of the money that various governmental agencies take out of California’s cannabis industry is not available to pay costs and to provide profits. Cultivators, distributors and dispensaries must split the money that is left after all of the taxes on cannabis are paid.

 

We are, of course, addressing the long-term success of fully-licensed, fully-compliant, fully tax-reporting California cannabis businesses. As anyone familiar with California’s cannabis industry is aware, most California cannabis businesses do not qualify as fully-licensed, compliant, tax-reporting businesses.

 

The majority of California cannabis businesses are wholly or partially non-compliant. Many California cannabis businesses are trying to be fully compliant taxpayers, but it is not an easy course.

This article was prepared to illustrate the impact of the total tax load on California’s commercial cannabis industry. This article utilizes a simple example to illustrate the totality of the taxes that are directly and indirectly imposed on the commercial movement of cannabis in California from a cultivator to consumers. The totality of the taxes imposed on California’s cannabis industry are: Cannabis Cultivation Tax (“CCT”); Cannabis Excise Tax (“CET); Sales Tax; City and County Cannabis Taxes; and not to be forgotten California and Federal Income Taxes.

As is noted above, even for those California cannabis businesses that do not appear to be impacted by most of the taxes imposed on cannabis, an understanding of the effect of these taxes is critical to success. Taxes dramatically impact the prices at which cannabis is transferred between segments of the industry even if the taxes are not directly imposed on a particular segment.

We have prepared three Pie Charts to illustrate the impact of taxes on California cannabis businesses. The illustrations below are based on the transfer of a pound of flower by a cultivator through a single distributor to a single dispensary that sells the flower to consumers.

The Pie Chart on the left (below)  reflects a division of dollars between taxes, dispensary, distributor and cultivator based on an arbitrary percentage of the total amount paid by the consumers. In this Pie Chart 40% of the total dollars collected from the consumers are allocated to taxes and the remaining 60% of the total dollars are divided equally between the Dispensary, the Distributor and the Cultivator.   In reality the percentage of the money collected from consumers from a sale of flower that will ultimately be paid over in taxes by a cannabis business will range from 30% to over 50%.

In all instances involving the commercial movement of cannabis from cultivator to consumer in California, the total taxes collected and paid over to governmental agencies in connection with a sale of flower will generally be around 40+% when all of the taxes are taken into account. Each of the Dispensary, Distributor and Cultivator will receive 15%-25% of the money that remains from a commercial sale of flower. In the Pie Chart on the left we divided the remaining 60% of the total dollars equally between the Dispensary, the Distributor and the Cultivator. We made the divisions between the four segments of the Pie Chart broad in order to illustrate that there will always be a range to the share of the total dollars that will be received by a particular segment in a particular instance.

The Pie Chart in the center illustrates the movement of flower from a cultivator to consumers with the dollar amounts we have attributed to these transactions in our example. The Pie Chart in the center does not take into account the estimated income taxes that will be incurred by the Dispensary, Distributor and Cultivator. The Pie Chart on the right takes into account the income taxes that we estimate will be incurred.

 

 

In the Pie Chart in the center the Cultivator sells one pound of flower to a Distributor for $852.00 and the Distributor assumes the $148.00 of CCT associated with the pound of flower. The Distributor processes the flower into retail packages. The Distributor marks up the pound of flower by $600.00, and sells the flower to the Dispensary for $1,600.00. The $1,600.00 price at which the pound of flower is transferred to the Dispensary includes the $148.00 of CCT. The Distributor also adds $384.00 of CET which is collected from the Dispensary. The Distributor receives $1,984.00 in payment from the Dispensary. The Distributor owes $532.00 to the California Department of Tax and Fee Administration (“CDTFA”) for CCT ($148.00) and CET ($384.00).

The Dispensary marks-up the flower by $960.00. This is the mark-up assumed in the computation of the CET that the Distributor collected from the Dispensary. The Dispensary sells the flower to Consumers for $2,560.00 plus $920.00 of taxes (CET, Local Taxes, and Sales Tax) which the Dispensary collects from the Consumers. The total amount collected by the dispensary for the pound of flower is $3,480.00. The total taxes the Dispensary collects of from the Consumers for the pound of flower of $920.00 consists of: CET, $384.00; Local Taxes of $256.00 (10% x $2,560.00); and Sales Tax of $280.00 (8.75% x $3,200.00).

The total taxes due CDTFA and local governments from this sale of cannabis flower are $1,068.00 ($920.00 + $148.00). This amount does not include the California and Federal Income Tax that will be incurred by the Dispensary, Distributor and Cultivator. The Pie Chart in the center reflects the division of the $3,480.00 among taxes, Dispensary, Distributor and Cultivator without consideration of income taxes. The percentage breakdown of the $3,480.00 illustrated in the Pie Chart in the center is: taxes, 30.8%, Dispensary, 27.6%, Distributor, 17.2% and Cultivator, 24.4%.

If we take into account the estimated income taxes that will be incurred by the Dispensary, Distributor and Cultivator, the percentage of the $3,480.00 that is lost to taxes moves significantly above 40%. If we assume the Dispensary will pay income tax at a 40% rate on the full amount of the Dispensary’s $960.00 mark-up because of Internal Revenue Code (“IRC”) §260E, the Dispensary will have an income tax liability of $384.00. If we assume the Dispensary has operating expenses of $384.00, the Dispensary will have an after-tax income of $192.00, which is a 20% after-tax profit.

For the purpose of illustrating the impact of income taxes on the Distributor and the Cultivator, we will assume each of these businesses is also subject to a 40% income tax rate and achieves a 20% after-tax profit. We will also assume IRC §280E has no application to the Distributor or the Cultivator. The Distributor will have an income tax liability of $80.00 and after-tax profit of $120.00 ($600.00 x 20%), if its operating expenses are $400.00 and the income tax rate is 40%. The Cultivator will have an after-tax profit of $170.40 ($852.00 x 20%) and an income tax liability of $113.60 ($284.00-$170.40 = $113.60) under the same set of assumptions if the Cultivator’s operating expenses are $568.00.

Based on the preceding assumptions, the total income taxes imposed on the Dispensary, Distributor and Cultivator will be $577.60 ($384.00 + $80.00 + $113.60). These assumptions regarding income taxes increase the total amount of taxes due various governmental agencies out of the $3,480.00 paid by the Consumers to $1,645.60. The total amount left to be divided among the Dispensary, Distributor and Cultivator after-taxes is $1,834.40. As the reader will immediately see, significantly more than 40% of the $3,480.00 paid by the Consumers for the pound of flower will be paid by one of the three cannabis businesses in taxes to various governmental agencies.

When income taxes are taken into account based on the preceding assumptions, the percentage of the $3,480.00 allocated to taxes is 47.3%. The percentage of the $3,480.00 retained by each of the cannabis businesses after all taxes are taken into account will be: Dispensary, 16.6%, Distributor, 14.90% and Cultivator, 21.2%. Each of these businesses must recover their costs and make their profit from these modest percentages of the total dollars collected from cannabis consumers. Of course, if a California cannabis business, other than a dispensary does not make a profit, income taxes are moot. However, a dispensary may have an income tax liability even if it loses money because of IRC §280E under the present state of the law.

Can anyone interested in the successful operation of a cannabis business in California doubt that the management of the collection, reporting and remittance of the many taxes imposed on California’s cannabis industry is critical to success?

We prepared the preceding as one of several articles we will publish to the significance of the impact of taxes on California cannabis businesses. The next article will be similar to the preceding. The next article will illustrate the impact of taxes on extracted cannabis oil.

Tax management demands professional expertise. Tax liabilities cannot be managed in the absence of financial record-keeping and tax reporting systems that are specifically designed for the industry and for the business function within the industry.


StaffStaffApril 17, 2019
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7min870

It’s time for your Daily Hit of cannabis financial news for April 16, 2019.

On The Site

Horizons

Horizons ETFs Management (Canada) Inc. said that it has filed its final prospectus to launch the Horizons US Marijuana Index ETF. Units of the exchange-traded fund have been conditionally approved for listing by the NEO Exchange and are slated to begin trading on April 18, 2019, under the ticker symbols HMUS (Canadian dollar units) and HMUS.U (U.S. dollar units).

The company said that HMUS will be the first ETF in the world that is solely focused on providing exposure to companies with significant business activities in, or significant exposure to, the United States marijuana or hemp industries. HMUS is an index  ETF, which seeks to replicate, to the extent possible, the performance of the US Marijuana Companies Index, net of expenses.

4/20

For the first time since Colorado legalized adult-use cannabis in 2014, the holiday 4/20 will fall on a Saturday. To celebrate the occasion, the cannabis data intelligence firm Headset has partnered with Nielsen to release a report detailing how consumers respond to the annual holiday.

“No matter how you participate in the cannabis industry, you should pay attention to 4/20,” reads the report. “It is consistently the single biggest day in cannabis each year, with at least double the sales of an average day.”

Influencers

Advertising in the cannabis industry is difficult. In most U.S. states where cannabis is legal, rules regarding cannabis advertising are complicated and extremely restrictive. For example, in California, businesses can only run ads in areas where “71.6 percent of the audience is reasonably expected to be 21 years of age or older.” The advertising landscape online is even far less forgiving. Most online ads platforms, such as Google Ads or Facebook Ads, explicitly prohibit the advertisement of cannabis products.

In the absence of reasonable advertising regulations for the cannabis industry, many business owners have turned to a new and rapidly growing form of advertisement: Social Media Influencers.

In Other News

NAC

National Access Cannabis Corp. (TSXV: META), the largest private retailer of recreational cannabis in Canada, today announced its financial results for the second quarter ended February 28, 2019. Q2-2019 total revenue of $16.2 million represents a 328% increase versus prior quarter total revenue. The company also delivered a net loss of $5.6 million for the quarter.

IIPR

Innovative Industrial Properties, Inc. (IIPR) closed on the acquisition of a five-property portfolio in southern California, which comprises approximately 102,000 square feet of industrial space. This acquisition marks IIPR’s second investment in California, following on IIP’s acquisition in Sacramento earlier this year.

The purchase price for the southern California portfolio was approximately $27.1 million in the aggregate. In addition to the purchase, IIPR entered into a long-term, triple-net lease at each property with a licensed operator, which intends to continue to operate the properties as licensed cannabis cultivation, manufacturing, processing and distribution facilities in accordance with California regulations.

Acreage

Acreage Holdings, Inc. (CSE: ACRG.U) and Form Factory, Inc. announced the closing of the merger that was previously announced on December 6, 2018 in which Acreage acquired all of the issued and outstanding shares of Form Factory.

According to the terms of the merger, Acreage issued 6.280 million subordinate voting shares at a deemed value of $25.00 per share.  The transaction brings Form Factory’s expertise as a one-stop-shop to develop, manufacture, and distribute cannabis products of any form factor to Acreage’s 19-state footprint of cannabis-based consumer and medical products. It sets the stage for Acreage to become the first national cannabis Consumer Packaged Goods (CPG) company, capable of creating and distributing predictable and scalable proprietary brands nationally, delivering those capabilities on a contract basis to other cannabis brands, and offering a turnkey cannabis industry solution to traditional non-cannabis CPG companies such as Nestle, Mars or Procter & Gamble.

iAnthus

iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCQX: ITHUF) announced that CBD For Life, a top-ranked, national CBD brand in the U.S. which the company agreed to acquire on March 29, 2019 has entered into an agreement with Urban Outfitters, a lifestyle-oriented general merchandise and consumer products store with 245 locations throughout the United States, Canada and Europe. The agreement places CBD For Life products in Urban Outfitters’ e-commerce platform and top 6 retail locations in the U.S. The CBD For Life products are expected to launch in the select Urban Outfitters stores later this month.

Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC) completed an all-cash acquisition of Spain-based licensed cannabis producer Cáñamo y Fibras Naturales, S.L. The acquisition lays the foundation for Canopy Growth to expand its European production footprint into one of the most ideal growing regions in the world, complementing the Company’s existing 430,000 square foot licensed production site in Odense, Denmark, as well as its world-class ISO 13485 internationally certified Storz and Bickel facility in Tütlingen, Germany.


StaffStaffApril 17, 2019
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10min2360

If you are lucky enough to live in a state that is fully legal, you may want to consider these products when heading to the dispensary to buy your party products.

CANNDESCENT’S STYLUS READY-TO-USE VAPE PEN

Canndescent just rolled out the latest product in their Stylus Series. Allow us to introduce to you the Stylus Ready-to-Use disposable vape pen in the brand’s five signature effects — Calm, Cruise, Create, Connect, and Charge. The pens are smaller and more compact, designed to be ultra-portable and easy to travel with. They also free you from the hassle of charging your device because they are designed to hold their charge for all 200 draws, equating to about 50 experiences. Stylus Ready-to-Use pens are perfect for tourists who do not want to invest in their own vape pen battery and separate oil cartridges. Retailing at $65, consumers can enjoy Canndescent’s ultra-premium oil for a little over $1 per psychoactive experience.

We suggest you try the Cruise effect on 4/20. This hybrid strain allows you to keep up the pace, relax your mind, and sail through the holiday without missing a beat.

 

 

MR. MOXEY’S MINTS

If you’ve ever been lucky enough to visit Seattle, then you already know about Mr. Moxey’s Mints. Tim Moxey hit a home run with this line of products. They are good enough to almost consider flying to Seattle just to be able to buy them. Thankfully, they have been able to expand beyond the state lines of Washington state.

Mr. Moxey’s Mints are natural, high-quality, cannabis-infused mints made with therapeutic herbs for wellbeing. Delectable and discreet, these microdosed mints have been the best-selling edible in Washington State for over a year, and enable you to choose just the right amount of cannabinoids to suit your system. The mints are crafted in small batches with pesticide-free cannabis to promote wellbeing in mind and body. Each pastille is formulated with herbal synergists tailored to elevate the cannabis experience. Perfect for the subtle 4/20 celebrators.

 

 

MOOD33’S CANNABIS-INFUSED TONICS

mood33 is a California-based cannabis beverage brand crafting natural and uplifting herbal tonics, currently with a line of three unique formulations including Joy, Passion and Calm. Each provides its own unique mood-based effect thanks to tailored cannabinoid ratios, natural tea and fruit ingredients, and signature terpene profiles inspired by the aromas and effects of the cannabis plant.

You can mix and match a 4-pack and pop open a few bottles with friends at the park. Cheers!

ORCHID ESSENTIAL’S TASTY TERPENE VAPES

Orchid Essentials is a California-based vape company that creates vape pens and oils with robust flavor profiles that feel as if you are enjoying a nightly glass of wine every time you take a puff. Orchid is unique in the cannabis market in that they do not use PEG, PPG, MCT, or coconut oil as a carrier for the cannabis oil. Instead, they use terpenes – fragrant, organic compounds found in the essential oils of all plants that give, for example, lavender and chamomile their relaxing aromas and citrus fruits their energizing punch. Vaping with terpenes is known to be healthier, and Orchid’s six strain options enable you to vary your vaping session to suit your mood or taste preferences.

 

CALIVA’S REEF LEAF STASH PACK

California’s most-trusted cannabis brand believes in wellness options that work for your lifestyle: motivating the mind, steadying the body, and inspiring creativity. As well as creating pre-rolled joints and some of California’s most popular vapes, they offer two types of classic cannabis flower: Premium Quality eighths, and “Reef Leaf” in a variety of indica, sativa and hybrid blends. Perfect for 4/20 the Reef Leaf Stash Pack kit has all you need for the perfect doobie including a Reef Leaf pouch (5g of pre-ground flower), king size rolling papers, white-tipped matches, and a glass crutch. Sometimes you can get exactly what you want in one convenient box.

 

SUM MICRODOSE SUBLINGUALS

Looking for fast relaxation without the high on 4/20? Known as the “anti-edible” SUM (Superior Uptake Microdose) are small, discreet sublingual tablet absorbs directly into the bloodstream via the membrane underneath the tongue. SUM has four tablet varieties currently available at select dispensaries in Colorado; Calm, Relief, Focus, and Energy.

 


Debra BorchardtDebra BorchardtApril 16, 2019
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14min2933

Horizons ETFs Management (Canada) Inc. said that it has filed its final prospectus to launch the Horizons US Marijuana Index ETF. Units of the exchange-traded fund have been conditionally approved for listing by the NEO Exchange and are slated to begin trading on April 18, 2019, under the ticker symbols HMUS (Canadian dollar units) and HMUS.U (U.S. dollar units).

“While marijuana remains federally illegal for medical and recreational usage in the United States, the number of legal cultivators and distributors at the U.S. state level continues to grow. Many of these companies have chosen Canadian stock exchanges to list their stocks in order to raise capital to meet growing investor demand,” said Steve Hawkins, President, and CEO of Horizons ETFs. “HMUS will be the first index ETF solution to focus solely on identifying and investing directly in, U.S. marijuana and hemp companies. As the U.S. continues to further liberalize its marijuana regulations, we anticipate that more investors will be looking to invest in companies with significant business operations in the U.S. market and HMUS will provide a diversified and liquid way to gain that exposure in one ETF.”

The company said that HMUS will be the first ETF in the world that is solely focused on providing exposure to companies with significant business activities in, or significant exposure to, the United States marijuana or hemp industries. HMUS is an index  ETF, which seeks to replicate, to the extent possible, the performance of the US Marijuana Companies Index, net of expenses.

The NEO Exchange is a Canadian stock exchange based in Toronto. According to Wikipedia, it is marketed as Canada’s New Stock Exchange, NEO aims to help companies, dealers, and investors by creating a better listing experience, eliminating predatory market behaviors such as high-frequency trading and implementing a unique market making program to ensure liquidity.

Companies In The Index

The top-20 constituents and weights of the Underlying Index as of April 15, 2019, are in the table below:

CONSTITUENT NAME

TICKER

WEIGHT

CURALEAF HOLDINGS INC

CURA :CSE

12.60%

CRESCO LABS, INC

CL :CSE

11.94%

CHARLOTTE’S WEB HOLDINGS, INC

CWEB :CSE

10.96%

MEDMEN ENTERPRISES INC

MMEN :CSE

8.68%

GREEN THUMB INDUSTRIES INC

GTII :CSE

7.61%

ACREAGE HOLDINGS INC

ACRG/U :CSE

5.16%

IANTHUS CAPITAL HOLDINGS, INC

IAN :CSE

4.96%

GREEN GROWTH BRANDS INC

GGB :CSE

3.85%

TERRASCEND CORP

TER :CSE

3.76%

CANNAROYALTY CORP

OH :CSE

3.68%

HARVEST HEALTH & RECREATION INC

HARV :CSE

3.64%

FLOWER ONE HOLDINGS INC

FONE :CSE

3.32%

SLANG WORLDWIDE INC

SLNG :CSE

2.60%

CANNABIS ONE HOLDINGS INC

CBIS :CSE

1.68%

LIBERTY HEALTH SCIENCES INC

LHS :CSE

1.62%

VALENS GROWORKS CORP

VGW :CSE

1.57%

CANNABIS STRATEGIES ACQ. CORP

CSA/a: NEO

1.48%

PLANET 13 HOLDINGS INC

PLTH :CSE

1.27%

TRULIEVE CANNABIS CORP

TRUL :CSE

1.05%

SUNNIVA INC.

SNN :CSE

0.99%

Horizons said in a statement that the companies in the index are selected from Canadian and U.S. exchanges. While some securities may be listed on major North American exchanges, the majority of the securities currently trade on North American exchanges that include but are not limited to the Canadian Securities Exchange and NEO.

The Underlying Index is market-capitalization-weighted, subject to a cap for each constituent issuer of a maximum of 10% of the net asset value of the Underlying Index at the time of any rebalancing. For a security to be eligible for the Underlying Index, the issuer will generally need to have a market capitalization of greater than $75 million.

“The Horizons Marijuana Life Sciences Index ETF was the first Marijuana ETF listed in the world. We launched that ETF shortly before cannabis was fully legalized in Canada,” said Mr. Hawkins. “We see a lot of similarities with the regulatory environment in the U.S. to what we saw in Canada, three years ago. If the U.S. were to enact any type of federal legalization, either medical or recreational, that would immediately make the U.S. the largest federally approved cannabis market in the world. HMUS will give investors direct diversified access to this early stage sector which has the potential of future U.S. regulatory change.”


William SumnerWilliam SumnerApril 16, 2019
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12min12892

Advertising in the cannabis industry is difficult. In most U.S. states where cannabis is legal, rules regarding cannabis advertising are complicated and extremely restrictive. For example, in California, businesses can only run ads in areas where “71.6 percent of the audience is reasonably expected to be 21 years of age or older.” The advertising landscape online is even far less forgiving. Most online ads platforms, such as Google Ads or Facebook Ads, explicitly prohibit the advertisement of cannabis products.

In the absence of reasonable advertising regulations for the cannabis industry, many business owners have turned to a new and rapidly growing form of advertisement: Social Media Influencers.

What is a Social Media Influencer?

A social media influencer is a person that uses their large social media following (which can range thousands to millions of followers) to promote certain products or services. Outside of the cannabis industry, one of the most successful social media influencers is Kylie Jenner, who companies will often pay hundreds of thousands of dollars for single social media post promoting their product.

Does Influencer Marketing Work?

While some may balk at the idea of paying a person thousands of dollars to promote a product on Instagram, the numbers do not lie – influencer marketing works. Approximately 49% of consumers depend on influencer recommendations. Companies that use influencer marketing earn on average $6.50 for every dollar spent.  By 2020, the influencer market is expected to grow to $10 billion.

Why Are Cannabis Companies Turning to Influencers?

As alluded to earlier, advertising in the cannabis industry is difficult. Not only are advertising regulations for cannabis complex, but also traditional means of advertisements are expensive. Buying ad space on television, radio, or a billboard can cost companies thousands of dollars with little guarantee of success. In contrast, influencer marketing is loosely regulated (for now) and less expensive.

It is also easier to target specific demographics by relying on influencers that appeal to your core audience. Cannabis business owners may not know who is going to view their highway billboard, but they do know what kind of person is going to visit Snoop Dogg’s Instagram page.

Who Are The Leading Cannabis Influencers?

The question of who the cannabis industry’s leading influencers are is a topic for debate. Unlike other industries where the practice more prevalent, influencer marketing in the cannabis industry is still relatively new. Consequently, it is difficult to say who is the “top cannabis influencer.” However, there are at least a few cannabis influencers that stand out from the pack. Here’s five cannabis influencer that have turned their social media following into big business:

Seth Rogen

Comedian Seth Rogen has built a career off of starring in stoner comedies like Pineapple Express and This Is The End, so it is only natural that he would use his talent and fame to spread the word about cannabis. With 6.6 million followers on Instagram, Rogen might not be the world’s most widely followed celebrity, but he has built up a strong and loyal social media following. Hoping to capitalize off of his reputation as a cannabis connoisseur, Rogen and his fried/business partner Evan Goldberg have teamed up with the world’s largest cannabis company, Canopy Growth, to launch a new hemp and cannabis company called Houseplant. Understanding the power of social media, Rogen announced the brand by leaving a cryptic message asking people to follow the Houseplant’s Instagram page.

Mike Tyson

Mike Tyson at Planet 13 Cannabis Entertainment Complex. (CNW Group/Planet 13 Holdings Inc.)

Not content to be the World Heavy Champion of Boxing, sports legend Mike Tyson has dived headfirst into the cannabis industry. Like Seth Rogen, Tyson has leveraged his fame to turn himself into one of the industry’s leading advocate. Tyson has partnered with the upscale cannabis dispensary Planet 13 to be the exclusive launch partner of his 40-acre cannabis resort, dubbed Tyson Ranch. In addition to Tyson’s 7.6 million Instagram followers, Tyson has a popular cannabis podcast called Hotboxin’ with Mike Tyson, which has close to 90,000 followers.

“Tyson Ranch, consists of a team with 100+ years of industry experience focusing on quality to make premium cannabis products. We are all about going the extra step to offer truly great cannabis. The Planet 13 Cannabis Entertainment Complex offers customers an ultra-premium cannabis experience that dovetails perfectly with Tyson Ranch’s belief that not all cannabis is created equally,” said Mike Tyson.

Dan Bilzerian

Dan Bilzerian, owner of the cannabis brand Ignite, is perhaps one of the biggest influencers in the cannabis industry. Often a polarizing figure within the industry, Bilzerian’s social media pages are filled with bikini-clad models in various states of undress, exotic locations, and more often than naught firearms. While some may characterize his social media presence as the epitome of toxic masculinity, with more than 26 million followers on Instagram, it’s hard to argue that he doesn’t have a strong following.

Bilzerian became one of the world’s most successful professional poker players, winning over $50 million in a single year. Despite not adhering to any social norms — and continuing to be unapologetically himself — he developed a reputation within the gambling community for always doing what he said he would do, a mindset that he’s carried with him into numerous investment opportunities, business ventures, and personal pursuits — creating an empire. Now, he’s dedicated to building a brand in the cannabis industry to live the Ignite lifestyle.

 

Big Mike

Michael Straumietis, also known as Big Mike, is the CEO of the cannabis fertilizer company Advanced Nutrients. Straumietis has built a career off of developing cannabis-specific nutrients and has leveraged that fame into an Instagram following of almost 3 million. Unlike Dan Bilzerian, Straumietis positions himself more as a cannabis thought leader than a globe-trotting playboy.

In 1996, BigMike took $25,000 he’d made from a small illegal grow in Temecula, California, snuck into Canada with a fake passport and built a growing organization 200 people strong. He then used his growing and business expertise to start his company, Advanced Nutrients. Today, Advanced Nutrients is the maker of the #1 selling cannabis-specific nutrient line in the world, with over $110 million a year in sales from 93 countries. Advanced Nutrients also lends seed money to individuals in developing countries who dream of starting a small business, but lack the means to do so. BigMike‘s charity Holiday Heroes feeds over 30 thousand people in need, each Thanksgiving and Christmas.

Charlo Greene

Charlo Greene is a former journalist turned cannabis entrepreneur that gained overnight fame after she announced live on television that she was quitting her job to pursue a career in cannabis. Greene is a somewhat controversial figure in the cannabis industry after running afoul of regulators in Alaska for launching eponymously named Alaska Cannabis Club. With approximately 214,000 followers on Instagram, Greene is what is called a “Micro-Influencer,” which is someone that has a small but dedicated social media following. Nevertheless, Greene has carved out a niche for herself in both the cannabis industry and the wider entrepreneurial community.

 

The world of cannabis influencers may still be new, but it is rapidly developing. Even if cannabis advertising regulations relax over the coming years, don’t expect cannabis influencers to go away. Influencer marketing is an incredibly powerful form of advertising, regardless of the industry.

 


William SumnerWilliam SumnerApril 16, 2019
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4min970

For the first time since Colorado legalized adult-use cannabis in 2014, the holiday 4/20 will fall on a Saturday. To celebrate the occasion, the cannabis data intelligence firm Headset has partnered with Nielsen to release a report detailing how consumers respond to the annual holiday.

“No matter how you participate in the cannabis industry, you should pay attention to 4/20,” reads the report. “It is consistently the single biggest day in cannabis each year, with at least double the sales of an average day.”

The report utilizes data gathered from retailers in four mature cannabis markets: Washington, California, Nevada, and Colorado. In order to develop a baseline, researchers examined sales figures on 4/20 and the four same days of the week before and after 4/20 in 2015, 2016, 2017, and 2018.

Researchers found that cannabis consumers respond much more strongly to 4/20 than alcohol drinkers do on similar holidays. For example, on the Fourth of July beer sales on average increase by 33%, whereas cannabis sales on 4/20 rise by approximately 111%. Although the Fourth of July is not a cannabis holiday, sales of the substance nonetheless increased by 5%.

Cannabis sales on 4/20 may fare better than alcohol sales on traditional holidays, but what about when compared to other cannabis holidays? To answer that question, researchers compared 4/20 sales to sales on Green Wednesday.

Taking place on the Wednesday before Thanksgiving, Green Wednesday is an emulation of Black Friday, where retailers offer deep discounts on products in the hopes of driving up sales. Although not quite as popular as 4/20, Green Wednesday brings in approximately $17.3 million and represents a 57% increase in sales. On the other hand, 4/20 brings in roughly $26.6 million.

When comparing 4/20 sales in different states, there seems to be little correlation between market maturity and sales increase. Overall, the state of Colorado saw the most significant increase in 4/20 sales with 128% ($9.1 million), followed by Nevada with 110% ($3.5 million). Rounding out the bottom two states were California with a 103% increase in sales ($6.9 million) and Washington with 100% ($7.1 million).

Given that there is little correlation between market maturity and the popularity of 4/20, researchers believe that the holiday’s popularity is due more to cannabis culture than the retail environment. Overall, retailers can expect to see their average sales increase by at least 100% on 4/20, little else is guaranteed.

While market maturity may not play a role in annual 4/20 sales growth, the actual day that the holiday falls on will play a significant role this year. On average, Friday and Saturday account for the most cannabis sales in a given week, garnering 18.8% and 16.6% of weekly sales, respectively. Bearing this mind, Headset expect this upcoming 4/20 is expected to be the biggest one yet

To read the full report, please click the following link.


StaffStaffApril 15, 2019
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6min1120

It’s time for your Daily Hit of cannabis financial news for April 15, 2019

On The Site

Aphria

Aphria Inc. (TSX: APHA(NYSE: APHA) reported its results, for the third quarter ending February 28, 2019. The company delivered net revenue of $73.6 million up 240% from the prior quarter and 617% from the prior year. Still, the company reported a net loss of $108 million versus last year’s net income of $12 million for the same time period.

The company issued a separate press release and said it continues to recommend that Aphria shareholders reject the Green Growth Brands (GGB) Offer and to not tender Aphria shares to the GGB Offer. Simon said, “We plan to use the $89.0 million in proceeds from the transaction to fund our strategic global expansion initiatives. On behalf of our Board of Directors and management team, we continue to recommend that Aphria shareholders reject the GGB offer and do not tender their Aphria shares to the GGB offer.”

Organigram

Organigram Holdings Inc. (TSX: OGI) (OTCQX: OGRMF) announced its results for the second quarter ending February 28, 2019, with net revenue of $26.9 million, a 693% increase over last year’s net income $3.3 million. The net loss from continuing operations was $6.4 million or $(0.05) per share on a diluted basis versus $1.2 million net income, or $0.01 per share on a diluted basis for the same time period in the previous year.

The adjusted EBITDA of $13.3 million or 49% (of net revenue) was positive for the third consecutive quarter and increased from an adjusted EBITDA loss of $0.3 million in Q2-2018 driven by exponentially higher unit sales.

420 Sales

With 10 states having legalized recreational cannabis and 33 states having legalized medical cannabis, the prospects for increased legal cannabis sales in America this April 20, the original cannabis holiday, are greater than ever.

According to a recent report from Flowhub, a Colorado-based provider of point-of-sale software for dispensaries, with April 20 falling on a Saturday and new consumers continually entering the legal market, this year’s holiday will be the biggest sales day for retailers in 420 history.

Flowhub came to this conclusion by examining the growth of 420 from 2017 to 2018, with cannabis sales on April 20, 2018, growing by more than 30% compared to April 20, 2017.

In Other News

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced unaudited systemwide revenue for its fiscal 2019 third quarter ended March 30, 2019. Across the Company’s operations in California, Nevada, New York, Arizona and Illinois, systemwide revenue was US$36.6 million (CA$48.8 million). This represents a 22% quarter-over-quarter increase over its fiscal 2019 second quarter ended December 29, 2018. Systemwide revenue, pro forma for pending acquisitions that have not yet closed, was US$54.9 million (CA$73.2 million) for the quarter. For the third quarter, gross margin across its retail operations was 51%1, compared to 53% in the previous quarter. The company is expected to post its fiscal 2019 third quarter results in May 2019.

Australis Capital Inc. (CSE: AUSA)(OTCQB: AUSAF) is pleased to announce the Company has been approved for DTC eligibility for its common shares traded on the OTCQB exchange under symbol “AUSAF”.

Marijuana Company of America Inc. (OTCQB: MCOA) announced its financial results for the year ended Dec. 31, 2018, as reported in its annual report on Form 10-K. Total revenues of hempSMART products were $252,135 for the year ended Dec. 31, 2018, as compared to $26,830 from the prior year, representing a significant 840% increase year over year. Net loss from operations decreased by 82% from $21,262,798 for the year ended Dec. 31, 2017, to $3,814,949 from the prior year.

INSYS Therapeutics (NASDAQ:INSY) President & CEO Saeed Motahari has resigned. CFO Andrew Long has been promoted to CEO effective immediately. Corporate Controller Andrece Housley has been promoted to CFO. Dr. Venkat Goskonda has been promoted to Chief Scientific Officer.

1933 Industries Inc. (CSE: TGIF) (OTCQX: TGIFF), a licensed cultivator and producer of cannabis flower and concentrates and manufacturer of hemp-derived CBD wellness products, has executed an exclusive licensing agreement between Gotti’s Gold Ex LLC and Alternative Medicine Association LC, for the launch of Gotti’s Gold in Nevada, a new line of branded cannabis products in partnership with legendary hip-hop artist Kurupt.


StaffStaffApril 15, 2019
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4min1210

The Fresh Toast reported that it has had 11 days of unprecedented traffic with Saturday setting another huge single-day record.   The company’s publisher JJ McKay said that he is expecting a 10-15% increase this month.   “We have rocketed on Alexa, Amazon’s digital tracking service, and surpassed High Times globally as well as maintaining our lead in the US.”

The company stressed that its traffic was organic and not purchased. Some cannabis websites have recently seen their page views plunge as paying for traffic became unsustainable.

PostMedia out of Canada said that The Fresh Toast was their number one cannabis content partner. McKay said that it was the largest mainstream voice in cannabis. “Weedmaps, Leafly and High Times all focus on the stoner/connoisseur – roughly 19% of the market and we have the other 81%,” he said.

Last month the cannabis media company launched an updated, fresh site. McKay said that the company had moved into the dominant consumer and medical marijuana media position in Canada and have laid the framework in the United States. “Once the new site “settled in, it started roaring with traffic,” McKay said, adding that the new platform allowed the company to enhance advertising income and, in April the company would begin posting sponsored content.  “With the updated site, we will be able to take advantage of Apple’s (AAPL) new focus.  Currently, we are a lead cannabis channel on Apple News,” McKay said.

The Fresh Toast stated that from its data sources it strongly appeals to 71% of the market and moderately appeals to another 10%.   “19% of the heavy cannabis users may read us for fun, but maybe not for knowledge,” said McKay. “The flip can be said for the more weed-centric sites like Weedmaps, Leafly, Herb, etc. with them appealing to 19-26% of the market.”

In addition to providing general cannabis news, The Fresh Toast has a partnership with physicians and medical professions and positions the website to be the “medical information source for mainstream physicians and doctor’s offices in the US and Canada” recommended by physicians in clinics and offices around the country.  The Fresh Toast also has a continuum of care for medical marijuana use overseen by a doctor, giving readers a journey from learning about cannabis and their illness, reading patient stories, and ending with how to use the product and where to purchase.

Capital Raise

With equity funding, we will be profitable within a year and highly profitable within two years.  Investors/champions include a former Dan Nordstrom, Carolyn Kelly (former president of the Seattle Times), Glenn Johnson (former EVP/ President Alaska Air Group), Denny Post, and a host of other blue-chip names.  Some investors have chosen to remain private.


Debra BorchardtDebra BorchardtApril 15, 2019
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6min1990

Aphria Inc. (TSX: APHA) (NYSE: APHA) reported its results, for the third quarter ending February 28, 2019. The company delivered net revenue of $73.6 million up 240% from the prior quarter and 617% from the prior year. Still, the company reported a net loss of $108 million versus last year’s net income of $12 million for the same time period.

Irwin D. Simon , Aphria’s Chairman, and Interim Chief Executive Officer said, “Our organization has experienced significant change in a very short period of time which was necessary to propel the Company forward.  Our Board of Directors and executive team will remain focused on the advancement of Aphria’s leadership position in the global cannabis industry and we are pleased to have announced today the appointment of two new independent directors.”

The Board appointed two new independent directors, effective today. Walter Robb and David Hopkinson will fill two of the three current director vacancies. Walter Robb was a former co-CEO of Whole Foods Market. David Hopkinson serves as Real Madrid Club de Futbol’s (“Real Madrid”) Global Head of Partnerships. He joined Real Madrid in August 2018 and brings his 25 years of professional sports sales, marketing and leadership experience to Aphria.

Green Growth Brands

The company issued a separate press release and said it continues to recommend that Aphria shareholders reject the Green Growth Brands (GGB) Offer and to not tender Aphria shares to the GGB Offer.

Simon said, “We plan to use the $89.0 million in proceeds from the transaction to fund our strategic global expansion initiatives. On behalf of our Board of Directors and management team, we continue to recommend that Aphria shareholders reject the GGB offer and do not tender their Aphria shares to the GGB offer.”

GGB has entered into a share purchase agreement with GA Opportunities Corp. (GAOC) pursuant to which GGB has agreed to purchase for cancellation 27.3 million shares held by GAOC, for an aggregate purchase price of $89.0 millionThe terms of the Share Purchase Agreement include, among other things, that GGB will pay in cash $50.0 million of the Purchase Price to GAOC within 30 days of the date hereof and will issue a promissory note to GAOC for $39.0 million due in six months from the Closing Date.

Aphria has entered into a shortened deposit period agreement with GGB to facilitate the acceleration of the expiry of GGB’s offer to purchase all of the issued and outstanding shares of Aphria. Aphria has agreed to reduce the initial deposit period of the bid to 92 days from January 23, 2019. GGB will be mailing a Notice of Variation providing that the GGB Offer will expire at 5:00 p.m. on April 25, 2019. Based on the closing price of $3.86 per GGB share on the Canadian Securities Exchange on April 12, 2019 , the implied consideration under the GGB Offer would be $6.07 per Aphria share, representing a significant 54.7% discount to Aphria’s closing price on the Toronto Stock Exchange of $13.41 per share on the same day.

Latin America Assets

The company had formed a Special Committee as per the Ontario Securities Commission request as part of a continuous disclosure review that the company performs an impairment test on its LATAM assets subsequent to the filing of the 2019 second quarter financial statements. The committee concluded the review and found that the acquisition of LATAM assets was within an acceptable range, albeit near the top of the range of observable valuation metrics; the company’s investment in LATAM assets is approximately $225 million , after recording the aforementioned non-cash impairment charge, which is approximately $30 million more than the original agreed purchase price of approximately $195 million.

Mr. Simon continued, “We continue to take decisive actions to increase efficiency, including investing additional capital in automation and packaging and adapting production to a new growing method. While this contributed to an increase in our costs, we expect higher future yields per square foot leading to stronger results as we start fiscal year 2020.”



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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