Private Archives - Green Market Report

Debra BorchardtSeptember 12, 2022
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3min320

PharmaCann, one of the nation’s largest privately held, vertically integrated cannabis companies, is buying all four locations of The Clinic, a group of boutique Colorado marijuana dispensaries. The amount paid was not disclosed.

The planned acquisition will likely see all The Clinic locations rebranded to the popular LivWell brand.  Upon completion of the acquisition, LivWell, the state’s leading cannabis brand, will enjoy the largest presence in Colorado with 26 dispensaries in the Centennial State.

The Clinic’s dispensary locations are within the Denver metro area and offer award-winning cannabis products and accessories to both recreational customers and medical patients.

“PharmaCann’s acquisition of The Clinic’s dispensaries expands our presence in Colorado, bolstering the LivWell brand’s prominence as a locally renowned cannabis brand in the state with strong ties to local communities,” said Brett Novey, CEO of PharmaCann. “We look forward to continuing to bring our world-class cannabis products to the patients and customers of Colorado’s largest dispensary footprint.”

Upon completion of the planned acquisition, PharmaCann’s operations will include 26 LivWell dispensaries in Colorado.  PharmaCann currently operates 55 dispensaries and nine cultivation and production facilities across eight states.

“When we started LivWell 13 years ago this October, we never imagined becoming part of one of the largest and most admired cannabis companies in Colorado, let alone the nation,” said Chris Mapson, PharmaCann’s Vice President of Marketing. “Joining the PharmaCann family and continuing to grow the LivWell brand through acquisitions solidifies LivWell as the largest brand in Colorado and one of the most recognizable and respected brands in the U.S.”

The closing of the transaction is subject to state and local regulatory approvals.


Dave HodesAugust 15, 2022
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11min190

Before any clinical trials for psychedelics are begun, there is a standard but critical vetting process. A hopeful participant can get excluded from a trial because of uncontrolled hypertension; a history of additional risk factors such as heart failure; evidence or history of significant medical disorders; symptomatic liver disease; or because they are abusing illegal drugs. 

Other exclusion criteria can include any potential participant who is suffering from schizophrenia, a psychotic disorder, or epilepsy.  

MDMA

And there is almost always a vetted participant in a psychedelic clinical trial that just can’t handle the experience—even if they have been given a placebo. For example, two participants, both randomized to the placebo group for the MDMA Phase III clinical trial for PTSD by MAPS, reported three serious adverse events during the trial. One participant in the placebo group reported two adverse events of suicidal behavior during the trial, and another participant in the placebo group reported one event of suicidal ideation that led to self-hospitalization. 

Five participants in the placebo group and three participants in the MDMA group reported adverse events of special interest (AESIs) of suicidal ideation, suicidal behavior, or self-harm in the context of suicidal ideation.

Psilocybin

Another study by researchers at Johns Hopkins Medicine found that the participants liked the psilocybin experience so much, that they would do it again—called the “motivation to use.” Researchers recorded nine subjective effects related to the motivation to use psilocybin: liking visual effects, positive mood, insight, positive social effects, increased awareness of beauty (both visual and music), awe/amazement, meaningfulness, and mystical experience. 

These clinical trial drop-out events, and these motivation to use events, are something that researchers have to factor into psychedelic drug development, as well as the psychedelics industry going forward into mainstream medicine.

Humans appear to generally be OK with psychedelics. There is the ancient history of psychedelics to consider as these clinical trials continue, according to another study discussing hominin evolution. Psychedelics have been used by humans for thousands of years and there is little evidence that they caused any negative consequences. In fact, the opposite is true.

Psychedelics use occurred in an ever-changing, and at times quickly changing, environmental landscape and entailed advancement into a socio-cognitive niche, such as the development of a socially interdependent lifeway based on reasoning, cooperative communication, and social learning. In this context, psychedelics’ effects in enhancing sociality, imagination, eloquence, and suggestibility may have increased adaptability and fitness. 

Patient Safety

But there are still questions to explore about the human psychedelic experience, and steps to take to provide safety for participants and, in the future, provide safety and efficacy for patients.

“Before making such drugs widely available as medicines, it is important to know why people have regularly taken these drugs for hundreds of years, so we can predict factors that might lead to future problematic nonmedical use,” said Roland Griffiths, the Oliver Lee McCabe III professor in the Neuropsychopharmacology of Consciousness at the Johns Hopkins University School of Medicine, and director of the Johns Hopkins Center for Psychedelic and Consciousness Research.

Among all of the positive psychedelic experiences people have during clinical trials are good trips with a certain downside to them, according to Mike Arnold, director of Silo Wellness, a mushroom company that also stages psychedelic retreats in Jamaica (for psilocybin) and Oregon (for ketamine, but mushrooms will follow as soon as they are legal).

One of the risk factors he reported in an article is that there are people experiencing psychedelics who think they are not only communing with God, but have some sort of special relationship with the divine, like the ancient Gnostics, he said, adding that their grandiose notions can lead them to believe they now possess the secrets of the universe. He concluded that sort of thinking can be dangerous.

So what is going on here? Why do some people embrace all the good in psychedelics, and some drop out of studies because of seemingly random bad experiences? It may be simple genetics.

A study published in the American Chemical Society Chemical Neuroscience journal reported that serotonin (5-hydroxytryptamine; 5-HT) 2A receptor (5-HT2AR), which is essential for the actions of classical psychedelic drugs, had sequence variations in its gene that affected the hallucinogenic signaling of four commonly used psychedelic drugs.

It was discovered that there were statistically significant effects on the efficacy and potency of the four therapeutically relevant psychedelics— psilocin, mescaline, 5-MeO-DMT and LSD.

The gene variants that a team of researchers from the Department of Pharmacology at the University of North Carolina (UNC) identified coded for different variants of the serotonin 5-HT2A receptor. This is the key receptor that psychedelics bind to—psilocin, the active metabolite that makes magic mushrooms “magic”, is chemically near-identical to serotonin. 

Working in vitro with human cells, the team used various investigative procedures to assess how the different gene forms of the 5-HT2A receptor behaved when binding to the four relevant psychedelics. “Once 5-HT2A is activated by a drug, it has several options on what to do next,” said UNC researcher Gavin Schmitz. “Two procedures were used to test those pathways independently, which means that we can see how much the 5-HT2A prefers one pathway over another and how that balance changes with different drugs over time.”

The team found that, with certain combinations of drug and receptor type, there were significant differences in the drug’s potency—for example, one particular receptor showed a nine-fold increase in potency in response to mescaline. 

 “Clinical studies have found a wide variety of responses to psychedelic drugs, with some patients seeing huge benefits after treatment and some seeing no benefits at all. Our study suggests that genes matter in determining how sensitive we are to the effects of psychedelics,” said Schmitz. “We chose to start with the 5HT2A receptor due to research showing it to be crucial in mediating the psychoactive effects of psychedelics. As other important receptor targets are identified, I would be greatly interested in exploring them too.”

Could the set of genes we are born with also affect how psychedelic hallucinations alter our reality? “I think this is absolutely possible,” concludes Schmitz. “We are all a little bit different from each other and those differences matter especially when it comes to deeply personal experiences.”

UNC study lead researcher Bryan Roth, who also leads the National Institutes of Health (NIH) Psychotropic Drug Screening Program, said that, based on the study, they expected patients with different genetic variations to react differently to psychedelic-assisted treatments. “We think physicians should consider the genetics of a patient’s serotonin receptors to identify which psychedelic compound is likely to be the most effective treatment in future clinical trials,” Roth said. “This is another piece of the puzzle we must know when deciding to prescribe any therapeutic with such dramatic effect aside from the therapeutic effect. Further research will help us continue to find the best ways to help individual patients.”


Debra BorchardtAugust 10, 2022
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6min180

Parallel Cannabis, also known as Surterra Wellness, had hoped to get its investor lawsuit dismissed, but the investors say not so fast. The latest chapter in the ongoing case has the defendants TradeInvest Asset Management Company (BVI) Ltd., First Ocean Enterprises SA, and Techview Investments Ltd. understandably opposing the request to dismiss the case. 

Surterra Holdings which is also known as Parallel Cannabis filed a motion to dismiss and the hearing for this is scheduled on September 9, 2022. It wasn’t until August 5, that the TradeInvest group pushed back on the request to dismiss. In their response, they wrote, “Defendants claim they have a “get out of jail free” card. The excerpts from the documents they cite, according to Defendants, actually allowed them to make multiple, material misrepresentations to the SAFE Plaintiffs—which were critical to their decision to invest—with no liability for lying.” The investors also claim in their court filing that Surterra can’t fall back on the disclaimer of forward-looking statements language. The investors wrote,  “They argue that certain representations are protected, forward-looking statements—but concede that protection does not apply where the speaker knows the statement is false (and/or is using it to aid in fraud).”

Original Complaint

Green Market Report has covered this case extensively. In March, GMR wrote that the investors alleged that chewing gum heir Beau Wrigley (the former Surterra CEO) convinced the plaintiffs to invest in a Simple Agreement for Future Equity or SAFE. A SAFE is a relatively new type of security in which an investor’s cash investment generally converts to equity in the issuing company under conditions specified in the SAFE. They are often issued to provide a company with bridge financing until it can complete an additional capital raise or a sale of the company, and will often convert to equity upon the occurrence of that future, specified event.  They say they sent the money to the company on September 27, 2021. Although much is redacted, it does allege that the investors were misled and had they been told the truth would likely not have made the SAFE investment. 

They say they weren’t aware that the company was in financial trouble, having defaulted on some debt already. They also claim that their investment money wouldn’t be tapped until Wrigley matched the investment with his own money. Instead, they allege their investment money was used to pay off other debts causing them to claim it was a Ponzi scheme

Lawyers Leaving

Also happening in the background of this case, the lawyers for the investors are apparently trying to get off of the case. They wrote to the judge on August 2, “Mr. and Mrs. Morgan are partners in a large law firm. Given the substantial costs and time associated with prosecuting this action, and the fact that only a subset of holders of Senior Notes had joined and agreed to bear such expenses, on July 7, 2022, Mr. Morgan notified Quinn Emanuel that they no longer wish to be represented by us and that they were accordingly releasing the firm.” The legal firm went on to say in a letter to the judge, “We had understood that the Morgans would either be representing themselves or continue appearing through their law firm, which Mr. Morgan advised me has over 800 lawyers.”

John and Ultima Morgan are part of the TradeInvest group. However, the firm Quinn Emanuel also stated they hadn’t been given any instructions for new counsel and they remain on the case for now. Indeed, the latest court filing arguing against dismissing the case was filed by Quinn Emanuel’s lawyers.

Parallel Moves Forward

Despite the financial troubles with its debt, Parallel continues to operate and move forward. In June, the company announced opening its third dispensary in Miami Florida. “As Surterra continues to expand its dispensary locations across Florida, we’re excited to increase our presence in the sunny home to hundreds of thousands of Miami residents who seek high-quality medical marijuana products, which we’re proud to provide,” said Parallel CEO James Whitcomb. Whitcomb replaced Wrigley as the lawsuit laid bare issues with repayment of the company’s debt.  The company said it has 45 Medical Marijuana Treatment Centers in the state of Florida, with more planned to open in 2022.

 


StaffAugust 2, 2022
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5min190

Pelorus Equity Group closed on a $15.8 million debt financing agreement with TransCanna Holdings Inc. The company said in a statement that the proceeds would be used to refinance and develop TransCanna’s California facility, as well as for construction costs, and the payment of interest on existing debt.

TransCanna was founded by industry pioneer and advocate Bob Blink – with one lamp and a couple of plants 25 years ago. Following medical cannabis legalization in 1996, he was one of the first Cultivator/Distributors on the legal market in California. He converted his operation to serve the recreational cannabis market in 2016, forming Lyfted Farms, Inc. TransCanna Holdings acquired Lyfted Farms in 2019, and now the parent and subsidiary companies are working in tandem to build the enterprise into the largest and most operationally diverse and agile business of its kind in California.

“Successfully sourcing exciting investment opportunities with the cannabis industry’s leading companies is what sets Pelorus apart,” said Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund. “I am thrilled to partner with TransCanna to scale their cultivation capabilities and improve the availability of their award-winning products for the California market. I look forward to continuing to work with some of the largest players in the industry and seeing our many partners continue to flourish in this growing market.”

Terms

The $15.8 million debt facility accrues interest at 14% per annum. If certain requirements are met after 18 months, the interest rate will be reduced to 12% per annum. In connection with the loan, Pelorus issued warrants to purchase up to 51,208,682 common shares of the company. No common shares may be issued on exercise of the Loan Warrants if the issue of such shares would cause the holder (and any person acting jointly and in concert with the holder) from holding beneficial ownership or having control or direction over greater than 9.9% of the outstanding common shares. The Loan Warrants are subject to the company’s standard Put/Call Structure.

“In a rapidly evolving industry with many strict regulations and requirements, Pelorus has been influential in providing the capital necessary for continued development,” said Bob Blink, CEO of TransCanna. “We are extremely excited to partner with the Pelorus team as well as to fuel our growth in California.”


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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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