The Daily Hit: January 14, 2019

It’s time for your Daily Hit of cannabis financial news for January 14, 2019.

On The Site

Aurora Cannabis Inc.  (TSX: ACB) (NYSE: ACB)  entered into a letter of intent to acquireall the issued and outstanding shares of privately held Whistler Medical Marijuana Corporation in an all-stock deal valued at up to approximately $175 million, including certain milestone payments.

Whistler has developed one of Canada’s organic certified BC bud. The acquisition is sure to set the company up to compete with The Green Organic Dutchman (CSE: TGOD) by providing Aurora with a premium organic certified product suite. Whistler said it has differentiated large-scale cold-water extraction technology and processes, creating a full suite of organic certified oil products (including THCA, CBG, and high CBD oils).

Taxes

A dispensary is a fiduciary to some degree with respect to 20%-35% of the total amount it collects from a cannabis consumer.  The money a dispensary collects for taxes is not the dispensary’s money.  This money belongs to the taxing agencies that imposed the taxes.

The most common group of errors made by dispensaries flow from the inadequacies of the point of sale [“POS”] software dispensaries used in front end retail operations. A dispensary operator would do well to compare the tax rate and calculations in the POS software with the software it uses to maintain its back-end records and prepare and to file its quarterly Sales and Cannabis tax returns.  If the POS system does not generate accurate tax calculation and generate proper receipts, difficulties are inevitable.

In Other News

Surterra Wellness and Massachusetts-based cannabis company New England Treatment Access (NETA) announced a definitive agreement for Surterra to acquire NETA. The partnership adds a fourth significant cannabis market to Surterra’s rapidly growing national footprint, which also includes Florida, Texas, and Nevada. The company claims that the cash and stock transaction is one of the largest acquisitions to date in the U.S. cannabis industry, although since no dollar amount was posted on the transaction and NETA only has retail licenses in two towns in Massachusetts, that seems hard to believe.

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) has been granted a license by New York State to process and produce hemp. Canopy Growth will establish within the Hemp Industrial Park large-scale production capabilities focused on hemp extraction and product manufacturing within the United States.

Depending on Board approval of a specific site, Canopy Growth intends to invest between $100 million USD and $150 million USD in its New York operations, capable of producing tons of hemp extract on an annual basis. The project is another example of the strategic advantage Canopy Growth has earned with the recently-closed $4 billion USD strategic investment made by Constellation Brands, a New York-based beverage alcohol leader and Fortune 500 company.

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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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