doomed
1 day ago
Bunk weed just got a 70% augmentation.
That will help get rid of bunk!
Watch nsrr5 splurge next wed.
MEDICAL CANNABIS NEWS
Lawmakers make it official: Annual fees for Medical pot businesses will jump 70%
Posted August 23, 2024 on South Dakota Searchlight
ImageLawmakers make it official: Annual fees for Medical pot businesses will jump 70%
Health department says price hike is meant in part to address future needs.
Lawmakers voted 4-1 on Tuesday to finalize a nearly 70% hike to the price of a medical marijuana business license.
Sen. Red Dawn Foster, D-Pine Ridge, was the lone member on the Legislature’s Rules Review Committee to oppose the increase. The price change was made possible by a bill passed this winter at the urging of the state Department of Health, which administers the state’s medical marijuana program.
The current fee is capped at $5,310, an inflation-adjusted figure to the original $5,000 annual fee set by lawmakers in 2021, the year after voters opted to endorse a medical pot program for the state.
The change puts the annual price at $9,000.
Emily Kerr, the program’s administrator, told the committee that the price change is meant to cover the program’s administrative costs. The health department has three new employees who oversee the program, doing things like processing marijuana card applications, inspecting dispensaries and grow operations, and investigating complaints.
“The program has grown and been utilized at a rate that was much faster than initially projected,” Kerr said.
The state is averaging about 13,000 cardholders at any given time, Kerr said. She also told lawmakers that there are 68 dispensaries in the state, 38 cultivation sites, 18 manufacturing sites and two independent testing facilities.
“Those require thorough review of initial annual renewal applications, providing technical guidance and customer service, as well as our inspection program to investigate complaints, to make sure that we’re getting in there at least annually, if not more,” Kerr said.
Sen. Jim Mehlhaff, R-Pierre, moved to finalize the rule change with the higher fee.
“The industry is supportive of the fee increase,” Mehlhaff said. “Not necessarily loving it, but understanding it.”
The change is expected to return $346,860 in increased revenue in the first, partial year, and $490,770 a year in increased revenue after that.
‘New money’
Kerr also spoke on Monday about the fee increase during a meeting of the state’s Medical Marijuana Oversight Committee, on that day offering more details on the work of the program’s employees as she explained the increase.
“We feel this is necessary to sustain the operations of the program, because we are funded completely by fees through cardholders and establishments,” Kerr said.
Cardholder fees will not be increased through the rule change.
Marijuana industry lobbyist Jeremiah Murphy told the committee that the industry understands the setup and appreciates the help the three new employees offer, “but my client paid for those.”
A 70% jump in fees, he said, is higher than South Dakotans might expect in other areas.
“That’s really quite a jump in an anti-tax, anti-overregulation state like South Dakota, but that was our commitment, because they wrote that law to say that it will be fully self-funding,” Murphy said.
Murphy also said the program is a significant source of sales tax revenue in a market that wasn’t paying them before. Murphy cited statistics from the U.S. Department of Health and Human Services that put the number of marijuana users in South Dakota at 93,000 or more. Some of those users are served by tribal programs – Murphy guessed around 19,000 – with another 13,000 in the state program. Those buying on the illicit market aren’t paying sales tax, he said.
The oversight committee also learned that marijuana card applications have leveled off and even declined after an initial spike – something industry leaders attribute to the growth in the market for hemp-derived marijuana alternatives.
Patient advocate Brad Jurgenson asked on Monday why the program would increase fees if it hadn’t lost money in the prior year. Kerr replied that the price needs to go up to keep pace with ongoing costs and to make sure health department employees can process applications and manage inspections efficiently.
During Tuesday’s rules hearing, Sen. Foster sounded a similar note, asking Kerr if the permit fee increase was based on calculations or “arbitrary.”
Kerr told Foster that the department calculated its needs, but also said the fee increase was designed to be high enough to help the department avoid annual visits to the rules committee.
“While this is a big jump, we don’t necessarily want to go before the Legislature to talk about fluctuations,” Kerr said.
doomed
4 days ago
Legacy growers have traction while Tilray’s stuck in a nsrr5 muddy Florida swamp.
RECREATIONAL MARIJUANA NEWS MARIJUANA POLITICS MARIJUANA BUSINESS NEWS CANNABIS JOBS
Cheech and Chong’s Cannabis Company Selects DogHouse Farms as Exclusive Oregon Partner
Posted August 20, 2024 on BDT Online
ImageCheech and Chong’s Cannabis Company Selects DogHouse Farms as Exclusive Oregon Partner
Cheech & Chong's Cannabis Brand Debuts in Oregon with DogHouse Farms Partnership.
It's not a flashback. Cheech & ChongTM have landed at a dispensary near you, and they're bringing some of Oregon's best cannabis. Cheech Marin and Tommy Chong, comedic icons and cannabis culture OGs for 50-plus years have selected local cultivator DogHouse Farms as the exclusive cultivator for the launch of Cheech and Chong's Cannabis Company in Oregon.
Cheech & Chong Products Now Available in Oregon
When it comes to cannabis culture, no one has deeper roots than Cheech & Chong. Their brand brings the joy and fun back into cannabis, a culture they helped shape. By partnering with the best local heavy hitters in the industry, they stay true to their roots and support the communities they have always been part of.
"Selecting a partner for Cheech and Chong's Cannabis is about more than just quality; it's about aligning with those who share our values and passion for the plant," said Jonathan Black, CEO of Cheech and Chong's Cannabis Company. "DogHouse Farms stood out for their exceptional dedication to quality and their deep-rooted commitment to the cannabis community."
DogHouse Farms was founded by Jon Hudnall, an award-winning cannabis cultivator with operations in Oregon, Michigan, Washington, and Florida. Hudnall began his career learning from the Northwest's best growers, eventually gaining an international following for the exceptional quality, flavor, and appearance of his cannabis flower. Hudnall stated, "Doghouse Farms is thrilled to be working with Cheech & Chong. I grew up watching all their films and so I'm having a ‘pinch me' moment. It's mind-boggling to consider the enormous impact they've had on the cannabis community and culture for more than 50 years. We're honored to be recognized for our skills by our OG heroes and excited to bring Oregon the highest-quality cannabis with icons who are so passionate about supporting and investing in our community."
For more information about Cheech and Chong's Cannabis Company product availability through Doghouse Farms in Oregon, visit doghouse420.com.
About Cheech and Chong's Cannabis Company:
Cheech and Chong's Cannabis Company is a leading cannabis lifestyle brand built on over 50 years of advocacy, entertainment, and education. Its mission is to provide high-quality, safe, and reliable cannabis products to consumers while promoting the benefits and positive impact of the plant. At Cheech and Chong's Cannabis Company, cannabis is more than just a plant - it is a lifestyle that brings people together and promotes well-being. The company's history and legacy are rooted in humor and activism, and it continues to honor those values today.
About Jon Hudnall and DogHouse Farms:
Doghouse Farms™ is the flavor obsessed™ cultivator of premium cannabis with operations in Detroit, Michigan, Salem, Oregon, and Vancouver, Washington. Our premium products are prized by connoisseurs and retailers within the world's most competitive markets and regarded as one of the West Coast's most sought-after names in cannabis. Founded by Jon Hudnall in 2015, DogHouse Farms™ exclusive, award-winning genetics are cultivated in pursuit of a rich, flavor-packed experience. The Doghouse Farms™ brands are expanding into the Florida market, slated for launch in 2024.)
doomed
5 days ago
Canada’s wholesale Cannabis market shifting from buyers’ to sellers’
August 19, 2024 on Strat Cann
Doomed
Cannabis Market in Canada Shifts from Surplus bunk to Shortage as Demand Surges for High-Quality Flower.
While the beginning of cannabis legalization in Canada was characterized by a surplus of product, many in the industry now say that trend has been shifting to a shortage in recent months.
This is good news for cannabis growers, as it means having more leverage on the market, putting brokers and third-party processors in a less-than-ideal position for potentially the first time.
Jacquie Trombley, director of sales, marketing, and product development at Agmedica Bioscience Inc. in Ontario, says she has seen a significant shift in 2024 from a buyer’s market to a seller’s market.
Agmedica sells in Canada’s medical and non-medical markets, both under their own brands and in the B2B market, and exports to international markets.
“Historically, we would usually have at least some inventory in our vaults, but right now the majority of the requests we receive for product go unfilled,” explains Trombley. “We get asked for product pretty much every day, and we cannot meet the demand.”
This is in part because of the bunk cannabis recalls she says, but it’s also the result of the number of cannabis producers closing up shop. Some struggling producers who might have been desperate to move products at a discounted rate are now out of the market, and, over time, this benefits those who have been able to stick it out.
This is reflected by the increase in price for top-quality flower, which generally aren’t making their way to the international markets.
Another big turn, says Trombley, is payment terms for growers who are selling to processors, something that is arguably more impactful than the price increase, Where various consignment deals and terms have been common for growers in the first few years of legalization, meaning full payment might not have been provided for some time after product had sold in a provincial market.
“We are no longer offering terms to B2B domestic buyers because you just might not get your money,” she continues. “There’s been a significant shift to 100% cash up front and we’re getting it! Before the product leaves our facility.”
This is a big deal for small growers who are struggling to keep the lights on.
“Right now, I think some of those smaller companies absolutely can demand cash up front right now, or at least improved payment terms.”
Steve Clark, founder of the Canadian Cannabis Exchange, says the issue is something many in the industry have been discussing this year.
“We are seeing domestic supply shrinking in a number of ways,” says Clark. “The closures of growing facilities and reduction and square footage of Canopy in Canada. The companies who were producing for their own internal supply in these facilities have flipped from net sellers to net buyers, (further taking supply off the market), and the pull from export into intensive markets is reducing overall flower availability.”
??Michael Gorenstein, president and CEO of the Cronos Group, another cannabis company that sells domestically and in international markets, made similar comments on a recent quarterly report earnings call.
“We’ve really seen a huge shift in the supply dynamics where we’ve had significant oversupply in the past,” said Gorenstien.
Although he says he still believes there is a large supply of low-quality cannabis flower in the market, this isn’t necessarily a product with much market demand. Quality cannabis, he says, is a different story.
“As we said in the past, there’s a difference between available cannabis inventory and available inventory that’s sellable as quality flower,” continued Gorenstien. “While there’s plenty of the former, there is now a shortage of high quality desirable flower that is sellable to consumers in Canada.” Big bulk buyers and daily users purchase grey market.
The company’s most recent quarterly report also noted: “We are anticipating shortages in raw materials and may be unable to obtain adequate supplies of raw materials in a timely manner and at commercially reasonable prices.”
When we have supply, it is usually bunk.
doomed
5 days ago
Tilray cannot give away it’s bunk weed… not a problem, they will sell alcool.
But, but, but alcool is a cancer agent…
Not to worry… Tilray/Maga customers are ignorant.
Cannabis company to buy Texas' Revolver Brewing from MillerCoors
Doomed
August 19, 2024
ImageCannabis company to buy Texas' Revolver Brewing from MillerCoors
Tilray Brands is closing in on a few other breweries, too.
Visit any Texas supermarket or beverage emporium and one is bound to stumble upon cans of beer from Revolver Brewing. The brand founded in Granbury, about 40 miles southwest of Fort Worth, is one of the state's most successful names in beer, and it now is likely to have a new owner.
Tilray Brands announced Aug. 13 that it has come to a definitive agreement to purchase Revolver and three other well-known beer brands from Molson Coors Beverage Company. The other brands are Atwater Brewery out of Detroit; Hop Valley Brewing Company in Eugene, Ore.; and Terrapin Beer Co. of Athens, Ga. Terms of the deal are unknown, and the transaction is likely to close by the end of August.
Since its founding in 2013, Tilray has specialized in cultivating and distributing BUNK medical cannabis products, but in recent years, it has shown interest in craft beer. After the transaction closes, Tilray will own 20 U.S. breweries, making them the fourth-largest craft brewing company in the country.
"Tilray Brands is proud to be driving the most compelling and unique growth story in the craft beer industry. With the acquisition of these four craft breweries from Molson Coors, we are marking another strategic milestone in Tilray Brands’ growth plan," Tilray Chairman and CEO Irwin D. Simon said in a press release. "Our team's expertise in operational excellence will enable us to unlock the full potential of these brands and businesses."
Revolver was founded in 2012 by University of Texas alumnus Rhett Keisler and longtime brewer Grant Wood, with the aim of creating balanced beers with "drinkability," according to an interview CraftBeerAustin after the brewery's opening. From the onset, Revolver's golden ale Blood and Honey, made with blood orange peel and Texas honey, received high praise across the craft beer community.
In 2016, MillerCoors, through its Tenth and Blake Beer Company division of "craft" brews, purchased Revolver from Keisler and Wood. Four years later the co-founders stepped down.
For MillerCoors, the sale of Revolver comes at a time when the massive beverage conglomerate is moving on from "craft" and turning its focus back to national macro-brewed brands.
It's unlikely Revolver, which distributes product to about 12,000 locations across Louisiana, Oklahoma and Texas, will go anywhere with this potential purchase; in fact, Simon of Tilray said his company is excited about doing even more business in the Lone Star State.
"As we move forward, we will leverage our extensive expertise in product innovation and distribution to unlock the full potential of these brands, strengthen their sales and operations, and expand their reach into key markets across the U.S.," Simon said.
doomed
5 days ago
California hemp fight signals long-term struggle with marijuana
Chris Roberts, Reporter
August 19, 2024
The scene at Total Wine & More in Corte Madera, California, reflects a growing trend nationwide.
Gummies infused with 100 milligrams of THC are sold in one corner of the store, while cans of Cantrip root beer infused with 10 milligrams of hemp-derived THC are displayed in another.
Both are being sold at a mainstream retailer – outside of the state’s strict regulations for marijuana products – and both are ostensibly legal under the 2018 federal Farm Bill.
What’s less typical is who lives nearby: California Gov. Gavin Newsom and his four school-age children, the oldest of whom is an incoming high school freshman.
The governor’s physical proximity to one example of the poorly regulated market for intoxicating hemp-derived products – and his concern that youth under 21 can access them – help explain Newsom’s involvement in a last-ditch effort to regulate hemp products under the state Department of Cannabis Control (DCC), several sources in the state capital told MJBizDaily.
‘Hemp should be regulated like cannabis’
Newsom spokesperson Izzy Gardon did not address that question directly in a statement to MJBizDaily.
But Gardon did note that Newsom “is actively exploring further action to close loopholes, increase enforcement and prevent children from accessing unsafe hemp and cannabis products.”
“They should be subject to reasonable health and safety regulations,” he continued, “just like similar cannabis products.”
California lawmakers’ failure to rein in hemp products during an Aug. 15 hearing – and hemp advocates’ subsequent celebration – are the latest indicators that the current status quo is untenable for government and public-health regulators as well as the marijuana and hemp industries.
At some point, most observers agree, hemp and marijuana will be subject to the same regulations.
But when that that will occur and what those regulations will be is another question.
Setback for hemp regulation
Last Thursday, a state Senate committee declined to call Assembly Bill 2223 for a hearing.
That meant the bill’s proposal to regulate hemp products under the DCC – and subject them to the same product-safety regulations and taxes – is shelved for now.
It also means hemp advocates are celebrating, as the setback maintains the status quo for intoxicating hemp-based cannabinoids in California, as evidenced at the Total Wine in Marin County.
The now-defunct bill addressed two related but distinct quandaries, said Ross Gordon, policy director with the Origins Council, a Mendocino County-based advocacy organization for small cannabis farmers.
“Hemp products sold at gas stations and liquor stores” such as Total Wine “is one issue,” Gordon told MJBizDaily.
“Whether and how to integrate hemp into the cannabis supply chain is a different issue.”
Observers believe both issues will haunt state and federal lawmakers and regulators until they’re answered.
Inevitable hemp integration?
The Origins Council staunchly opposed an earlier version of AB 2223, in part because it would have allowed hemp-derived cannabinoids into the state’s DCC framework for marijuana.
That would mean “first-time” competition from out-of-state hemp cultivators for marijuana farmers, whose struggles under heavy taxes and onerous regulations are well-documented and having a notable impact: Sales have declined 16% across the board since 2021, according to one analysis.
Notably, that same proposal was supported in part by the California Cannabis Industry Association (CCIA), a Sacramento-based lobby for large cannabis companies.
Some CCIA members would like to follow the leads of marijuana multistate operators such as New York-based Curaleaf Holdings, which has launched hemp-derived product lines to complement its regulated marijuana products, the agency said earlier this month.
In an Aug. 9 letter in support of the bill, the CCIA noted that AB 2223 “fulfills a longstanding commitment to allow for the integration of hemp cannabinoids into the regulated cannabis supply chain.”
“This will provide an opportunity to substantially enhance consumer access to safe and high-quality products while reducing costs for legal cannabis businesses,” CCIA board President Caren Woodson wrote, in part.
That letter claims that “integration is already a well-established trend across the country” and identifies 18 states where marijuana and hemp products are sold under the same regulatory framework.
Those states include Minnesota, where low-THC beverages derived from hemp are expressly allowed, as well as New York, where critics say hemp-derived products are widely sold outside of age-gated supply chains – a sign of how much work needs to be done to reconcile hemp and marijuana laws.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
Hemp at the gas station
With more than four months left, 2024 might yet deliver stricter rules for hemp companies.
Newsom could attach elements of AB 2223 to budget-trailer legislation due at the end of August.
But until a regulatory framework appears that reduces the burden on every seller of THC, regardless of its origin, the fight between marijuana and hemp is likely to continue.
One obvious consequence is preservation of the status quo on display at Total Wine, along with dissatisfaction among power brokers such as Newsom.
The Origins Council’s Gordon noted: “If the focus (of AB 2223) had been narrowed on what to do about hemp at the gas station, it would have had most people agreeing.”
doomed
1 week ago
Large cannabis corporation are great at growing bunk!
‘Unprecedented’: Second massive Missouri Cannabis recall leaves some companies scrambling
August 16, 2024 on My Courier Tribune
ImageSecond massive Missouri cannabis recall leaves some companies scrambling
Missouri Cannabis Recalls Double in Scope, Affecting Over 135,000 Products Statewide.
State regulators issued fifty two cannabis recall notices last week involving 135,000 marijuana products — more than double Missouri’s first massive cannabis product recall exactly one year ago.
“I’ve never seen recalls of this magnitude in any other state,” said Nick Rinella, CEO of Hippos Cannabis. “This is kind of unprecedented.”
Since the announcement, Rinella and facility owners around the state have scrambled to quarantine thousands of vapes, edibles and pre-rolled joints in their secure vaults. Now they’ll wait until state regulators tell them what to do with those products.
Problem is, some of them are still holding products from last year’s recall, which centered around Robertsville-based manufacturer Delta Extraction, because that recall is still being challenged. However, others opted to work with the state to destroy those products.
That’s where “the stress comes from,” said Mark Hendren, president of Flora Farms cannabis company.
If a dispensary or facility has a small vault, he said, “and you have product that you have to quarantine, it makes it difficult space wise for you to bring in other inventory to keep the business moving.”
The first recall notice came on the night of Aug. 6, stating the Division of Cannabis Regulation was working “in partnership” with Marceline-based cultivation facility NGWMO LLC to “alert to patients and consumers about a mandatory product recall.”
The grow facility is run by Nature’s Grace and Wellness, which founded a family-owned farm in Vermont, Ill., in 2014 after the state passed medical marijuana. Tim O’Hern, COO and general counsel of Nature’s Grace, is listed as the designated contact for the facility.
This recall involves 2,650 products and has to do with the products being tested too soon in the process.
“The recalled marijuana products were not compliantly tested prior to being sold to patients and consumers,” the notice states. “The recalled marijuana product was tested at the unprocessed bud/flower stage rather than being tested at the final marijuana product stage…”
The second notice came two days later for the Springfield-based manufacturing facility C&C Manufacturing LLC. Notably, it didn’t include the “in partnership” language.
It lists about 133,000 products, which regulators said were not properly tracked in the state’s “seed to sale” tracing system called Metrc.
“Therefore,” the notice states, “DCR cannot verify compliance with health and safety requirements.”
However, the division emphasized that no adverse reactions involving recalled products have been reported.
Matt Cummins, CEO of GOAT Extracts, is listed as the designated contact for the facility and a number of GOAT products are on the list.
The Independent reached out to both companies for comment and did not receive a response.
Adrienne Scales-Williams, owner of St. Louis dispensary Luxury Leaf, agreed that storage space for the recalled products is challenging. And while there’s uncertainty on how long the products will need to be contained, she said she trusts the state is doing their due diligence to investigate the issue.
“We’ve been through this before,” Scales-Williams said. “When it’s not your first ride in the rodeo, you just handle it.”
The impact
The recall for the Springfield manufacturer is so widespread because the company specializes in making distillate, or THC concentrate that produces a high in edibles and vape pens.
Other manufacturers statewide bought the distillate and used it to make numerous brands of vapes, edibles or pre-rolled joints, including Rove, Zen and Packarillos.
The recall time frame is also quite wide. It goes back to last year when companies were trying to ramp up for recreational marijuana sales, Rinella said.
Rinella bought some of C&C’s distillate in October when Hippos’ own supply was low at its grow and manufacturing facilities, he said.
But he emphasized that this recall is not because of lack of testing. Once Rinella and other manufacturers got the distillate and made products with it, those were “properly tested” before they went on the shelves, he said.
“We can feel confident that those products were safe,” he said. “They passed all the tests, and we have some of the most stringent tests in the country.”
The division lists the recalled products in two Excel sheets. One is “product recall list,” which includes the identifiers that the manufacturers use to track products. The division also posted a “consumer recall list” that includes numbers that customers are more likely to see on their products.
The division advises patients and consumers to stop using the products and return them to the dispensary. “Returned products will not count toward a patient’s purchase limit,” it states.
Also any adverse reactions should be reported to the division of cannabis by email or through an online complaint form.
Delta Extraction
Just like C&C Manufacturing, the state’s first recall on Aug. 2, 2023 centered around a distillate that was sold to numerous other manufacturers.
Also similarly, Delta Extraction’s products were recalled due to the state’s inability to track the ingredients to make the distillate on Metrc, which starts tracking marijuana plants from the moment they’re planted in Missouri.
In that case, Delta was selling a distillate that was mostly made up of hemp-derived THC, using hemp that wasn’t grown in Missouri and couldn’t be tracked.
Delta mixed it with a small amount of THC from marijuana grown in Missouri. It’s much less expensive to make distillate from out-state hemp than Missouri-grown marijuana, but Delta’s consumers still paid marijuana prices.
Hemp isn’t a controlled substance and can legally cross state lines, unlike marijuana.
The company appealed both the recall and the revocation of their cannabis business license before the Administrative Hearing Commission, challenging whether or not the state has the authority to regulate hemp products.
In March, Commissioner Carol Illes heard three days of testimony and evidence and has yet to release her decision.
Days before the two recent recalls, Gov. Mike Parson signed an executive order banning intoxicating hemp products and threatening penalties to any establishment with a Missouri liquor license or that sells food products for selling them.
According to the order, licensed cannabis dispensaries can’t sell these products either because the hemp used to make them has to be grown in Missouri and tracked through Metrc. Nearly all of these products currently on the market — and the ones that Delta used — are made from hemp grown in other states.
doomed
1 week ago
It is not working… they cannot give it away …😂
Rescheduling alone wouldn’t solve the marijuana industry’s banking problem
By Russell Rosendal, Guest Columnist
August 16, 2024
The federal government’s proposed rescheduling of marijuana is a positive and necessary step forward, to be sure.
And while rescheduling would alleviate certain burdens associated with operating in the cannabis industry, it would do little to address banking difficulties that have long stifled and frustrated this sector.
Despite significant strides in marijuana legalization and regulatory clarity, most financial institutions will continue to be wary of the cannabis industry.
Short of full federal legalization, legislative reform that specifically addresses cannabis banking is the only way to ensure that state-regulated marijuana businesses can access the same financial services as other legitimate businesses.
History of cannabis banking
When adult-use marijuana passed in my home state of Washington in 2012 with 56% of the vote, it marked the start of a new era.
Initiative 502 legalized limited possession and private use of marijuana as well as adult-use sales.
Those of us working in the financial sector with an interest in the benefits of cannabis were excited.
We also were motivated by the prospect of servicing Washington state clients in this burgeoning industry with considerable growth potential.
The voters’ support was a clear mandate, but beyond that, officials needed to address a host of regulatory and safety concerns before an actual market could exist.
Starting from scratch, financial institutions formed dedicated teams to explore opportunities within the new industry.
We worked closely with officials to establish a banking framework that complied with Washington state’s commercial cannabis regulatory structure.
This included efforts to address safety concerns associated with handling large amounts of cash and cash transactions, which were – and continue to be – a direct result of federal illegality.
While the Cole Memo outlined the federal government’s intentions to refrain from intervening in state-regulated marijuana markets that took measures to effectively prevent criminal involvement, underage sales and illegal diversion to other states, its protections were far from comprehensive.
Sadly, the threat of federal raids led by the Drug Enforcement Administration in Washington state and other regulated markets such as California kept most financial institutions from getting anywhere near the industry.
Rescheduling’s impact on cannabis banking
The U.S. Department of Justice’s proposal in May to move marijuana from Schedule 1 to Schedule 3 under the Controlled Substances Act is monumental, no doubt.
For starters, rescheduling would address the burden of Section 280E of the Internal Revenue Code, which originated to curb organized crime.
Under 280E, businesses that “traffic” Schedule 1 or 2 substances can’t deduct ordinary business expenses.
This has saddled state-regulated marijuana businesses with higher taxes than businesses in other industries.
Moving marijuana to Schedule 3 would finally enable cannabis businesses to deduct their expenses like any other legal enterprise.
This would be a huge financial boon and significantly improve the prospects of profitability in this sector.
From a banking standpoint, however, rescheduling offers little relief.
Gaps in rescheduling
While Schedule 3 substances are permitted for medical use under federal law, they are heavily regulated and typically must be prescribed by licensed medical professionals and dispensed to patients through authorized pharmacies.
Moving marijuana to Schedule 3 wouldn’t change the federal government’s stance on the blanket illegality of recreational cannabis sales and use.
It also wouldn’t align state-legal medical marijuana markets – which typically rely on a dispensary infrastructure – with the federal government’s regulations for Schedule 3 substances.
Because state-licensed marijuana operations don’t comply with federal rules governing the sale of Schedule 3 substances, such businesses still would be considered illegal under federal law and most financial institutions would continue to refrain from serving clients in this sector.
Regardless of rescheduling, the cannabis industry still needs the federal government to recognize and respond to the critical nature of banking access for state-licensed cannabis businesses.
Cannabis industry struggles
The absence of efficient payment systems, which has long plagued cannabis retailers, has created a host of logistical headaches and operational disadvantages for the industry.
Cash-only businesses are forced to rely on workaround solutions that fall short of standard retail practices.
This not only creates friction in the customer experience and increases security risks, but it also opens the door to higher chances of currency fraud and inaccurate bookkeeping as well as driving up the cost of financial services to those lucky enough to secure a banking relationship.
Social equity is another area impacted by the industry’s lack of access to banking and financial instruments.
The difficulty cannabis entrepreneurs face in accessing capital is a major reason why initiatives aimed at benefiting groups disproportionately impacted by failed drug-war policies have fallen short.
It’s all well and good to grant licensing priority to those most impacted by the war on drugs, but without the proper financial backing, it’s incredibly difficult to start a cannabis business – let alone one with profitability potential.
Why SAFER Banking matters
One legislative effort that holds promise for finally resolving the cannabis industry’s banking obstacles is the Secure and Fair Enforcement Regulation Banking Act, commonly known as the SAFER Banking Act, which has repeatedly stalled in the U.S. Senate despite several iterations passing the House.
This proposed legislation would do far more to improve banking conditions for the cannabis industry than rescheduling would.
Despite the road bumps thus far, I remain cautiously optimistic about the SAFER Banking Act’s chances for success.
SAFER made it out of the Senate Banking Committee in September 2023, and Senate Majority Leader Chuck Schumer, a New York Democrat, has pointed to cannabis banking reform as one of the chamber’s priorities in 2024.
Banking advocacy is essential
The cannabis industry’s banking challenges are multifaceted and deeply entrenched.
Financial institutions can play an important role in supporting this dynamic industry, but they require a new legal framework to effectively do so without exposing themselves to untenable risk.
While rescheduling marijuana is a step in the right direction, it wouldn’t move the needle on access to banking services.
We stand at a critical juncture – closer than ever to achieving meaningful reform but still on shaky and uncertain ground.
The path forward requires a concerted effort to address the banking challenges that continue to hinder growth.
The more that cannabis business owners and industry stakeholders can sustain and ramp up their advocacy efforts, the more likely it is that we’ll see legislative reform come to pass.
This includes talking to congressional representatives, joining industry advocacy organizations and participating in efforts to reform banking regulations.
By advocating for legislative reform and fostering a more unified approach to cannabis banking, we can pave the way for the stable and prosperous future the industry.
Next week paper : Bunk cannabis is not cutting it.
doomed
1 week ago
Cash strapped is a result of bunk offering no traction…
Home / Finance
Marijuana MSOs set up high-risk fight with IRS over 280E of tax code
Chris Roberts, Reporter
August 15, 2024
Tens of millions of dollars in tax savings and a quick increase in available cash are some of the immediate short-term benefits for the five major marijuana multistate operators that have declared their freedom from Section 280E of the Internal Revenue Code.
But in the long run, Ascend Wellness Holdings, Cresco Labs, Curaleaf Holdings, TerrAscend Corp. and Trulieve Cannabis Corp. are all but guaranteed a lengthy and costly fight with the IRS – the outcome of which could include millions of dollars in penalties on top of existing tax bills, according to tax attorneys and risk experts who spoke with MJBizDaily.
“If something sounds too good to be true, it usually is,” said San Francisco-based tax attorney Henry Wykowski, who has argued several prominent 280E-related cases before federal tax judges.
“We think this more aggressive strategy is reckless and is going to come back to haunt the people who are using them.”
MSOs flee from 280E
The first company to declare independence from 280E was Tallahassee, Florida-headquartered Trulieve, which staked out its bold position last fall and claims to have received substantial refunds.
Companies that followed include:
Ascend Wellness, a New York-based operator that made its own announcement the quarter after Trulieve that it also had filed amended returns seeking refunds as far back as 2020 and would file for 2023 as a “normal corporate taxpayer.”
TerrAscend, a Canadian-headquartered company with U.S. assets that staked out its position in March.
Curaleaf, a New York-based MSO whose chair reiterated in August that 280E no longer applies.
ADVERTISEMENT
The latest company to risk the gambit, Chicago-based Cresco Labs, told shareholders of the plan during its recent quarterly earnings call.
“Regarding taxes, we intend to file as a normal business in 2023 and beyond,” said Dennis Olis, Cresco’s chief financial officer, who boasted of $65 million in subsequent “estimated tax savings” for 2024.
Tax deductions prohibited
Section 280E says “no deduction or credit shall be allowed” for costs incurred during the “trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act).”
The upshot is billions in “excess taxes” levied on American marijuana companies that otherwise would not apply, according to an estimate from Oregon-based economist Beau Whitney.
Freedom from 280E is one of the main advantages of rescheduling, and companies large and small are expected to enjoy significant windfalls once the Biden administration’s proposal to move marijuana to Schedule 3 is finalized.
Until then, however, the IRS has made its position crystal clear.
“Taxpayers seeking a refund of taxes paid related to Internal Revenue Code Section 280E by filing amended returns are not entitled to a refund or payment,” the IRS said in June.
“Although the law has not changed, some taxpayers are filing amended returns,” the agency added.
“The grounds for filing such claims vary, but these claims are not valid.
“The IRS is taking steps to address these claims.”
Tax reasoning
Exactly what justifications the major MSOs are using is still a closely guarded secret – and it is likely to remain secret until they are challenged in a public forum such as federal district court or tax court.
The companies that responded to MJBizDaily‘s requests for comment merely pointed to their most recent earnings statement sand investor calls.
Cresco Labs
Cresco said in quarterly filings that it “worked closely with expert advisors to be incredibly thoughtful with our read on Section 280E and its implications.”
In its most recent filings with the Canadian Securities Exchange, Cresco said, “beginning in 2024, the Company is taking an uncertain tax position that its operations are not subject to IRC 280E and therefore intends to deduct such expenses with a related uncertain tax liability offsetting such deductions.”
The company reduced its quarterly tax liability by $3.7 million, or 26.5%, compared to the same time last year. But it also increased its “tax receivable agreement liability” by $61 million.
Curaleaf Holdings
In its quarterly statements, Curaleaf said only that, starting in the second quarter of 2024, it had “adopted a new federal and state income tax position, asserting that the restrictions of Section 280E of the Internal Revenue Code (“Section 280E”) do not apply to the Company’s cannabis operations.”
So far for 2024, the company’s provision for future income taxes is $71.8 million.
Beyond that, Curaleaf wrote that it “intends to file for a refund for tax year 2022 … and to report as a non-Section 280E taxpayer for tax year 2023 and going forward.”
“The decision to adopt this position is supported by legal interpretations that challenge the Company’s tax liability as determined pursuant to Section 280E,” the company added, while also noting that “there is a great likelihood” that the IRS will conduct an audit.
Trulieve Cannabis
Trulieve said it had realized a “$169.8 million impact from the Company’s position that it does not owe taxes attributable to the application of Section 280E,” with only $4.5 million out of $174 million in claimed refunds rejected, according to filings.
The benefits of such positions are obvious.
“Without the effect of 280E, first and second quarter net income would have been positive,” Trulieve noted in its filings.
Ascend Wellness
Ascend noted in SEC filings it had $112 million in “uncertain tax positions … based on legal interpretations that challenge the Company’s tax liability under IRC Section 280E.”
However, the risk might be even greater, experts said.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
Fighting the IRS
Preparing for a long siege with the federal tax agency could be a way for marijuana companies to buy time before realizing the financial benefits of major reforms such as rescheduling or potential adult-use legalization in markets such as Florida.
Making an independence declaration from 280E also improves balance sheets, potentially making the companies more attractive to investors.
But all this might come with a price: a showdown with the IRS.
While solving “a short-term problem” with cash flow, “they’re inviting a fight” with the IRS, said Dotan Melech, who worked for decades as a court-appointed receiver and federal bankruptcy trustee and is now CEO of Dallas-based CTrust, a credit-rating and risk-monitoring agency for the cannabis industry.
In Ascend’s case, a dispute with the IRS might already be happening: According to quarterly filings, the company has been “selected for examination of its amended tax return.”
An audit fight that results in relief might prove worthwhile for a well-capitalized, publicly traded MSO, provided investors and the company’s board have set aside resources for what is guaranteed to be a multiyear court battle, Melech noted.
“Maybe they have enough firepower to see this fight through – but nevertheless, it’s a fight,” he said, adding that the MSOs have some chance of winning, however slim.
“I commend them for taking the lead and maybe setting a precedent that could benefit many more.”
Other observers were less sanguine.
“This just isn’t going to work,” said Wykowski, who counts among his 280E cases the 2007 decision that a plant-touching business could deduct expenses not directly related to the sale of cannabis.
Wykowski said several companies, which he declined to identify, approached his firm to present a legal position relieving them from 280E.
“We just said no,” he told MJBizDaily.
“This is just not solid. We’re not going to support it because we know what could go wrong here.”
Among the risks is a 20% penalty the IRS could impose on a company seeking a refund that’s ultimately rejected – that’s 20% on top of the taxes the IRS determines the business owes, plus the cost of paying litigators, he said.
“I don’t know that these people have fully considered and appreciated what the consequences are,” Wykowski said.
“And they’re much more severe than people realize.”
doomed
1 week ago
Alcool is a known cancer agent.
Alcool sales are down… so Tilray cops more alcool companies…
Simon is marketing savant!
Tilray Brands to Acquire Four Craft Beer Breweries from Molson Coors Beverage Company
Tilray Brands, Inc.
Tue, Aug 15, 2024
Tilray’s Strategic Acquisition Will Strengthen its Craft Beer Leadership in the U.S. and Solidify Tilray Beverages as the #1 Craft Brewer in the Pacific Northwest and #1 in Georgia; Anchors Tilray in Key Markets, Texas and Michigan
Tilray’s Beverage Division Projected to Grow New Beer Accounts by 30%
NEW YORK, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Tilray Brands, Inc. (“Tilray”, “our”, “we” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a global lifestyle consumer packaged goods company elevating lives through moments of connection, today announced that the Company has entered into a definitive agreement to acquire four craft breweries from Molson Coors Beverage Company (“Molson Coors”) (NYSE: TAP). The acquisition includes Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing, and Atwater Brewery.
Tilray's beverage business is poised for even greater success with the latest addition of sought-after craft beer brands, known for their unique portfolio of beers. With the pending acquisition of these breweries, Tilray’s portfolio will expand across key beer markets adding 30% new beer buying accounts. The Tilray Beverages portfolio boasts a range of leading craft beer, spirits and non-alcohol beverages including SweetWater Brewing Company, Montauk Brewing Company, Alpine Beer Company, Green Flash Brewing Company, Shock Top, Breckenridge Brewery, Breckenridge Distillery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewing Company, Widmer Brothers Brewing, Square Mile Cider Company, HiBall Energy, and Happy Flower CBD sparkling cocktails. This strategic acquisition is expected to position Tilray for continued growth and expansion in the beverage industry.
Irwin D. Simon, Chairman and Chief Executive Officer, Tilray Brands, said, “Tilray Brands is proud to be driving the most compelling and unique growth story in the craft beer industry. With the acquisition of these four craft breweries from Molson Coors, we are marking another strategic milestone in Tilray Brands’ growth plan. Our team’s expertise in operational excellence will enable us to unlock the full potential of these brands and businesses. We are confident in our ability to drive revenue, generate cost synergies, and expand national distribution reinforcing our leadership position in craft beer resulting in tremendous growth opportunities for our global beverage business.”
Mr. Simon added, "Tilray Brands plans to continue to invest in the future of these craft breweries, accelerating their growth and capturing a wide range of new market opportunities. Tilray Brands is a beacon for craft brands, and we are committed to driving their growth and success within our portfolio. Our proven track record of integrating acquisitions and driving profitable growth gives us the confidence to deliver incredible value for our shareholders."
Molson Coors Chief Commercial Officer Michelle St. Jacques added how the transaction supports their long-term strategic ambitions, as well. “Last fall we set a clear portfolio premiumization ambition, and achieving it is going to require tighter focus on the segments we believe have the highest growth potential for our business,” St. Jacques said. “While we love these craft breweries and the people behind them, this move allows us to do exactly that – focus our time, energy and resources behind the initiatives we believe will best help us meaningfully grow our U.S. above premium portfolio in beer and beyond beer.”
Ty Gilmore, President, Tilray Beverages, North America, stated, "We are excited to welcome the employees and distributors behind these craft beer brands which will play a pivotal role in the growth of Tilray Beverages. Through this acquisition, our beer business is expected to grow to 15 million cases annually, cementing Tilray Beverages as the #1 craft brewer in the Pacific Northwest, #1 in Georgia and anchors Tilray’s craft brands in two key beer states, Texas and Michigan. As we move forward, we will leverage our extensive expertise in product innovation and distribution to unlock the full potential of these brands, strengthen their sales and operations, and expand their reach into key markets across the U.S."
Craft Brands with a Loyal Consumer Base:
Hop Valley Brewing Company is a craft brewery based in Eugene, Oregon, that was founded in 2009. They are known for crafting beers that reflect the flavors and spirit of the Pacific Northwest, Hop Valley includes one brewery and two taprooms. The brand is currently sold in 12 states with core markets including Oregon, Washington, Idaho, Arizona, Northern California, Nevada, Wisconsin and Minnesota and it has c. 43,000 points of distribution.
Terrapin Beer Company is a craft brewery based in Athens, Georgia. Founded in 2002, Terrapin is committed to brewing unique, flavorful beers that push the boundaries of traditional brewing techniques. With a passion for experimentation, Terrapin has become one of the most respected and sought-after breweries in the region. Terrapin includes one brewery and one taproom and is currently sold in 13 states with c. 47,000 points of distribution. Core markets for Terrapin include Georgia, Florida, Wisconsin, North Carolina, South Carolina, Tennessee, and Alabama.
Revolver Brewing is a craft brewery in Granbury, Texas. Established in 2012, Revolver is committed to producing high-quality, handcrafted beers using traditional brewing techniques and innovative brewing methods. From their flagship Blood & Honey American Ale to their seasonal offerings, Revolver's beers are known for their bold flavors and unique character. Revolver Brewing includes one brewery and one taproom and c. 12,000 points of distribution across Texas, Oklahoma, and Louisiana.
Atwater Brewery is a craft brewery based in Detroit, Michigan. Founded in 1997, Atwater is dedicated to brewing high-quality, handcrafted beers using traditional brewing techniques and innovative brewing methods. From their flagship Dirty Blonde Ale to their seasonal offerings, Atwater's beers are known for their bold flavors and unique character. Atwater includes one brewery and three taprooms. The brand is sold in c. 10,000 points of distribution across six states including Michigan, Wisconsin, Illinois, Indiana, Ohio, and Kentucky.
Advisors
TD Securities acted as financial advisor, and DLA Piper LLP (US) acted as external legal counsel to Tilray Brands.
About Tilray Brands
Tilray Brands, Inc. (“Tilray”) (Nasdaq: TLRY; TSX: TLRY), is a leading global lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is leading as a transformative force at the nexus of cannabis, beverage, wellness, and entertainment, elevating lives through moments of connection. Tilray’s mission is to be a leading premium lifestyle company with a house of brands and innovative products that inspire joy, wellness and create memorable experiences. Tilray’s unprecedented platform supports over 40 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.
For more information on how we are elevating lives through moments of connection, visit Tilray.com and follow @Tilray on all social platforms.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this communication that are not historical facts constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under U.S. and Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections, or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the timing and certainty of closing the acquisition; expected sales, distribution and market share growth, revenue generation, synergies and accretion related to the acquisition; Tilray’s ability to expand upon distribution and sales of alcohol products in the U.S.; Tilray’s ability to enhance the value of its brand portfolio; and Tilray’s anticipated investments in particular businesses, including craft beer. Many factors could cause actual results, performance, or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to Tilray or that Tilray deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed Annual Report on Form 10-K (and other periodic reports filed with the SEC) of Tilray made with the SEC and available on EDGAR and in Tilray’s Canadian securities filings. The forward-looking statements included in this communication are made as of the date of this communication, and, while Tilray believes that information provides a reasonable basis for these statements, these statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. You should not rely upon forward-looking statements or forward-looking information as predictions of future events and Tilray does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws
doomed
2 weeks ago
Cannabis partakers are not stupid… bunk not popular… overpriced moldy bunk sales down…
Most innovative Pot companies are giving up on the legal market
Posted August 13, 2024 on SF Gate
ImageMost innovative Pot companies are giving up on the legal market
California Cannabis Entrepreneurs Pivot to Hemp Amid Regulatory Challenges.
Kim Howard has spent the past six years trying to keep her cannabis cosmetics company alive in California’s legal marijuana market, selling her cannabis-infused eye creams and skin serums at dispensaries across the state. But late last year, she finally gave up. She returned her state marijuana license and pulled her Green Bee Botanicals products from the state’s dispensaries.
Yet, in an ironic twist, she’s never been more optimistic about her company’s future. She thinks quitting the recreational market could be the best thing that’s ever happened to Green Bee Botanicals.
That’s because she’s joined a wave of California entrepreneurs who have pivoted to the hemp industry, turning their backs on California’s embattled marijuana market in favor of the federally legal version of cannabis called hemp. Howard said pivoting to hemp has meant lower taxes, cheaper regulations and the ability to sell in 30 states across the country instead of just in California.
“Rather than the thorny obstacles we’ve had to crawl through [in California’s marijuana industry], it’s like being in a regular market,” Howard told SFGATE. “Now we’re going to be able to have an e-commerce site online and sell to every state that allows CBD.”
With the legal marijuana market imploding, some of California’s most innovative pot companies are bypassing the state’s regulated marijuana system entirely in favor of recategorizing their products as hemp. Green Bee Botanicals transitioned its award-winning cannabis skin care line to hemp this summer, following other companies like Wyld, the top edible brand in California, which now sells THC-rich edibles through the hemp market. The San Francisco company Rose, which partners with some of the best chefs in the world on exclusive weed edibles, told SFGATE in November that demand has skyrocketed since it shifted to hemp. Even the Truffle Man, perhaps San Francisco’s most iconic marijuana figure in the past decade, has fled the marijuana market to sell his famous confections in the hemp industry (the company said on its website it sold out almost as soon as it opened its hemp business).
The exodus is sending shock waves through the industry, bleeding an already troubled marijuana market of needed businesses — and the customers who would shop there. It’s also befuddling regulators, who are unsure of what to do as intoxicating hemp products are sold outside the protection of state regulations.
What actually is hemp?
California’s shift toward hemp was set in motion six years ago, when an oversight in Congress accidentally set off a boom in this long-overlooked side of cannabis. For decades, federal law didn’t differentiate hemp from marijuana; they were grouped together under the word “marihuana” on the list of Schedule I substances, the most restrictive class of illegal drugs in the country.
In 2018, Congress decided to legalize hemp by removing it from the federal definition of marijuana. Separating the two pot categories is very difficult, however, as they are the same exact species: cannabis sativa l. Scientists still actively debate how to differentiate hemp from marijuana, but nearly everyone agrees that Congress wrote an incredibly sloppy definition. Federal lawmakers decided that any cannabis plant that contains less than 0.3% delta-9-THC by weight was hemp, and everything else was marijuana.
Here’s the problem: Hundreds of active chemicals are in pot, and delta-9-THC is just one. Many of these other cannabis compounds can get you high. Congress apparently didn’t realize this, so lawmakers inadvertently legalized hundreds of different cannabis drugs like delta-8-THC, a slightly different version of the more familiar delta-9-THC.
This has allowed a proliferation of hemp drugs that look nearly identical to the marijuana sold at state-regulated dispensaries. For example, Cookies, the most famous San Francisco pot brand, sells “THCa hemp flower” online, which the company says is “not a huge amount” different from regular THC but is “convenient, easy, and safe thanks to its legal standing.” It looks nearly identical to the high-THC marijuana flower pot sold at Cookies’ marijuana dispensaries. It didn’t take long for the cannabis industry to find even more loopholes in the law, which have allowed them to sell delta-9-THC openly too: Rose and Wyld sell hemp edibles that contain 10 milligrams of delta-9-THC, just as strong as THC edibles found at a legal dispensary.
These loopholes are a nightmare for state lawmakers and public health advocates, who worry that intoxicating drugs are being sold online and at gas stations in easy reach of children (Congress legalized hemp drugs like delta-8-THC without establishing a federal minimum age for purchasing them). These hemp products also face almost none of the product safety regulations that legal marijuana must pass through.
Yet officials have been unable to shut down the growing hemp industry. Instead, it has become a multibillion-dollar market that’s flashing like a lighthouse for troubled marijuana operators, who are looking for a reprieve from the rough waters of California’s regulated marijuana industry.
‘Like night and day’
Bridget May, Howard’s business partner at Green Bee Botanicals, said the difference between running a hemp business and running a marijuana business is “like night and day” when it comes to dealing with regulations. It can take years to get a marijuana license and millions of dollars in fees, but May said when it came to running a hemp business, “There’s pretty much nothing to deal with.”
Teddy Cabugos, the president of Sunstone Winery, shared a similar story after his company pivoted its cannabis-infused drink from California’s recreational market to the hemp industry.
“It’s two different worlds of permitting,” Cabugos said. “One is going to cost you a s—t ton of money and a lot of time, and the other is going to cost you no money and almost no time.”
There are practical considerations when companies make the transition. They must reformulate their products with hemp sources instead of marijuana. For farmers, that means just growing different plants, but for manufacturers like Sunstone or Green Bee Botanicals, that process can take many different routes, especially regarding how much THC is in their final products. Sunstone’s new hemp drinks contain 5 milligrams of delta-9-THC, the same dose it had in its marijuana products. Kalon Baird, the co-founder of Splash Nano which worked with Sunstone to formulate the product, said the drink does not violate federal law because it still contains less than 0.3% of delta-9-THC based on the weight of the product. May said Green Bee Botanicals has updated its recipes to contain only minimal amounts of THC — below 1 milligram per serving — a change from its marijuana cosmetics, which contained larger amounts of the compound.
Once the transition is made, hemp offers many things companies that operate in the legal marijuana industry can only dream of. Hemp companies can sell their products online directly to customers and ship products in the mail; that is illegal for marijuana products, due to their continuing status as a federally controlled substance. Hemp companies can also sell products across the country, instead of being limited to selling only through the over 1,200 legal dispensaries within the state of California.
To make hemp even more enticing, companies no longer will be required to charge their customers California’s cannabis taxes, which Howard estimated will make Green Bee Botanicals’ products cost 30% less.
These benefits have made the hemp industry irresistible to marijuana entrepreneurs and farmers, according to Andrew DeAngelo, a cannabis consultant with two decades of experience in California’s cannabis industry.
“If I’m a legacy [marijuana] grower ... I’m going to spend half a million getting a [marijuana] license. Well, I can save hundreds of thousands of dollars, build the same goddamn thing and grow hemp. So of course people are going to do that,” DeAngelo said.
The growing battle over hemp
With the hemp industry surging, there’s now a growing war between hemp and marijuana, with dozens of states passing laws to crack down on hemp sales. California lawmakers are jumping into the fray, proposing a law that has erupted into controversy. Too little too late. Large legal producers are doomed.
Opposition to hemp has united strange bedfellows, bringing together the marijuana industry with public health advocates who have spent years attacking pot. Licensed marijuana companies are angry the hemp industry can sell nearly identical products without paying steep licensing and other regulatory costs. Public health officials are concerned underage youth have access to hemp products sold online without age verification.
California lawmakers tried to regulate the hemp market with a 2021 law that banned inhalable hemp products but allowed foods to be infused with hemp compounds. The hemp industry has only grown since then, so the state is now considering a law that would make it illegal to buy any hemp product in California outside a pot dispensary if that product contains anything more than 1 milligram of THC. If approved, the proposal could shut down sales at some of these new hemp companies, just as they pivot away from marijuana.
May, of Green Bee Botanicals, said she and Howard believe their products will still be compliant even if the law passes, because they contain only small amounts of THC. Either way, pivoting to hemp still seems to her like the only way for her company to survive, thanks to what she calls the “broken system” of California’s marijuana regulations.
“It just seemed like California could have done so much better to set this industry up for success,” May said. “It’s sad when you know all of our friends are out of business, except the ones who switched to hemp.”
doomed
2 weeks ago
Bunk is not good for you.
Home / Legal
Nonpayment is No. 1 reason marijuana firms fail: Q&A with collection expert Brett Gelfand
author profile pictureBy Kate Lavin, Editorial Director
August 8, 2024
SHARE
Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.
Image of Brett Gelfand
Brett Gelfand (Photo courtesy of Cannabiz Collects)
Michigan isn’t just competing with California for regulated recreational marijuana sales.
Operators in Michigan’s regulated adult-use market also rival those in California for most unpaid invoices, according to Brett Gelfand, managing partner at St. Petersburg, Florida-based Cannabiz Collects and founder of the Cannabiz Credit Association.
ADVERTISEMENT
“Michigan is becoming one of the worst we’re seeing,” Gelfand said.
“Oregon and Colorado used to be pretty significant states for us when it came to collection activity.
“So many of these companies got weeded out, and to be honest, we don’t get a lot of volume anymore in Colorado and Oregon.
“But in some new markets, like Michigan, it’s becoming a bigger problem.”
How big of a problem?
Delinquent payments in the regulated U.S. cannabis industry are likely to surpass $4 billion in 2024, according to Whitney Economics, an Oregon-headquartered cannabis data and research company.
MJBizDaily spoke with Gelfand about how plant-touching companies can implement best practices for accounts receivable and break the cycle of debt.
What is the main factor leading cannabis companies to not pay on invoices?
Banking and capital access.
If you’re not able to get a credit card, and you’re not able to get regular access to capital like a non-cannabis business … you’re going to try to get trade credit versus operating capital.
All these cannabis companies – without any formal training on what a bank would do – are now acting like banks.
The minute you give somebody net-15- or net-30-day terms, you’re acting like a bank.
What would a bank do if someone asks them for a loan?
They’re going to get your credit profile; they’re probably going to have a lien; they’re probably going to have a personal guarantee.
ADVERTISEMENT
They’re going to have all this recourse in case you don’t pay – and in cannabis, it’s a free-for-all.
Cannabis companies feel like they have to extend credit to get the sale, and if not, customers are going to find somebody else.
So, they’re basically getting bullied into giving out credit terms because there have been no guardrails or transparency around who the bad actors are in the cannabis industry.
Are certain sectors of the industry suffering more from the nonpayment epidemic?
Retailers have been the most notorious for nonpayment, and it starts a cycle.
What happens is, the retailers owe money to the producers and the brands.
Then, (those companies) will be very late on paying their testing-lab vendors.
Some larger ancillary companies are tighter on the way they do things.
Grow-supply companies, lighting companies, they’ve been around the block.
They are not just going to freely extend credit.
Besides cash on delivery, what best practices do you recommend for accounts receivable?
No. 1, you have to have someone who is responsible for collecting cash.
Have a policy and procedure; write it down.
Then, make sure you have a way to analyze a company if you’re extending credit.
Have an onboarding agreement with your customer that a lawyer reviews and that has default language if they don’t pay you.
If you’re giving a significant amount of credit, where your customer really needs it, get a personal guarantee.
That’s the best thing that you can do to protect yourself.
With a lot of these retail chains going under, vendors are lucky to get a penny at the end of the day.
Why aren’t cannabis operators reporting default accounts to collections?
A lot of my clients have outstanding accounts that they haven’t submitted to collections because they’re nervous about their reputation; they don’t want to be known as a jerk in the industry for sending somebody to collections.
This needs to change.
People need to realize that if you’re working with a company, and you made a deal and they’re not abiding by that deal, you’re not the bad guy.
If you’re not paying your bills on time, you’re the culprit.
You’re the one that made a deal and didn’t stand by it.
And if you do that, then other people are going to lose their homes.
People are going to lose their businesses because of your behavior.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
What is something you wish cannabis operators knew?
There is so much risk with Facebook groups and WhatsApp groups (dedicated to exposing delinquent companies).
They’re basically nice people who got burned and want to help the community.
But there are serious laws around antitrust, and if there was a sophisticated debtor that owed money and was on this list and saw people saying, “Do not sell to this person,” you could get in a lot of trouble.
So, it’s really important for the industry to be aware that, yes, they’re trying to do the right thing, but you have to be careful.
If you’re going to share information, you have to do it in a regulated way.
This interview has been edited for length and clarity.
doomed
2 weeks ago
Problem is you cannot get it together, alike Tilray.
Growing mold will get you nowhere fast.
Just saying…
Legalizing duds is not working. Never will.
We are lucky to have BC Bud.
Home / Cultivation
Colorado marijuana complaint highlights industry’s ongoing testing scandal
author profile pictureBy Chris Casacchia, Staff Writer
August 13, 2024
SHARE
Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.
Image of golden cannabis distillate wax
(Photo by Fukume/stock.adobe.com)
Colorado’s largest marijuana cultivator filed a lawsuit against Bonanza Cannabis Co., claiming the licensed operator knowingly infused products with hemp-derived THC, manufactured gummies and vapes using harmful chemicals and sold them to consumers.
According to court documents obtained by MJBizDaily, Mammoth Management and its affiliates – Mammoth Farms and Mammoth Manufacturing – allege Bonanza “engaged in deceptive trade practices by possessing, distributing and selling illicit hemp-derived synthetic THC in its vape cartridge products” and failed to properly disclose their contents.
ADVERTISEMENT
Under Colorado statutes, it is unlawful for any individual or entity to “distribute, dispense, manufacture, display for sale, offer for sale, attempt to sell, or sell” any product containing synthetic cannabinoids.
The complaint, filed in the District Court of Saguache County, further claims Centennial-headquartered Bonanza purchased and infused products with distillate from other parties and failed to disclose that information.
Mammoth, a vertically integrated marijuana operator based in Denver, is seeking financial restitution from Bonanza for lost sales, court fees and related legal expenses, according to the lawsuit.
The allegations in Colorado of creating illicit THC distillate from hemp is the latest scandal in the regulated marijuana industry, which is facing a mounting crisis over the validity of product composition, certificates of analysis (COAs) from testing labs and seed-to-sale tracking.
Marijuana operator responds
Mammoth partnered with a third-party independent lab to run tests on several Bonanza products.
According to court documents, Mammoth purchased gummies and vape cartridges on June 2 at a Denver store operated by Bonanza.
A COA confirmed the THC in those products was derived from hemp and produced through chemical conversion, Mammoth claims.
“These labels are false, misleading, and contain material misrepresentations,” Mammoth said in the lawsuit.
“Bonanza knowingly and/or recklessly engaged in deceptive trade practices by possessing, distributing, and selling illicit hemp-derived synthetic THC.”
ADVERTISEMENT
In a counterclaim filed July 26, C2CC – which operates as Bonanza – denied the allegations.
According to documents obtained by MJBizDaily, Englewood-based C2CC said it does not manufacture THC distillate and hasn’t purchased hemp materials.
Bonanza said in its counterclaim that it only sources distillate from third parties and added that its claims are supported through its records with Metrc, the state-required tracking software.
“It buys THC oil from quality growers/extractors and then uses these materials to create its vape and gummy products,” the brand said in a statement sent to MJBizDaily.
The company also told MJBizDaily that Mammoth offered to dismiss Bonanza from the complaint if Bonanza agreed to use Mammoth as its exclusive provider of wholesale oil for two years.
“Bonanza rejected this outrageous offer and subsequently was served with an Amended Complaint,” the company said in a statement.
Testing crisis emerging
A series of recent incidents in regulated marijuana markets across the United States has eroded confidence in certified COAs and conversion processes used for THC distillate, while products continue to evade track-and-trace requirements.
Last week, Oklahoma regulators suspended a major medical cannabis processor in the state for public health and safety violations, including failing to accurately track products.
In Michigan, regulators in early August filed a complaint against a marijuana processing company they allege purchased vast quantities of unregulated THCA concentrate from outside the market and misidentified the product in state-mandated tracking records, among numerous charges.
That breach followed an emerging pesticide scandal in the California market that continues to damage consumer confidence in the regulated market.
And in July, lab operators told MJBizDaily that some cannabis samples submitted for testing contain dozens of unknown compounds.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
Problems surface in Colorado
Colorado’s Marijuana Enforcement Division (MED), the state’s chief cannabis regulator, issued an April notice warning operators that the agency initiated investigations following numerous allegations that hemp-derived cannabinoids, such as CBD.
Those cannabinoids were converted into THC concentrates such as distillate or isolate, which then was added to regulated marijuana products, according to the notice.
“If the Division finds that a Licensee is likely using chemically converted THC in the manufacture of Regulated Marijuana Products, the Division will recommend suspension and revocation of the license and the imposition of a significant fine,” the MED said in the notice.
A MED spokesperson told MJBizDaily the agency doesn’t comment on ongoing investigations.
According to Bonanza’s counterclaim, the MED has not approved a testing procedure to determine the presence of hemp-derived THC.
Meanwhile, Mammoth amended its complaint and expanded its original lawsuit to include several other licensed operators.
MJBizDaily is not identifying those companies because they had not been notified through traditional legal channels before this story’s publication.
doomed
2 weeks ago
Doomed : ´´Tilray is a beverage company now?
Bunk weed can’t cut it?´´
Simon : ´´No problem, we will sell alcool…´´
Doomed : ´´But, but, but alcool is a cancer agent!
Simon : ´´Share buyers don’t know that…
Just keep pumping and everything will be all right.´´
Tilray bets big on beverages to drive growth.
Chris Casey
Aug 8, 2024
Tilray’s budding interest in beverages is driving growth for the company?
The company saw 26% net revenue growth in the last year, with its cannabis revenue increasing by 24%, Tilray said in its earnings report. Its net sales are projected to be worth between $950 million to $1 billion this year alone.
In Tilray’s earnings call last week, CEO Irwin Simon said the company’s efforts in beverages are transforming the company into a broader business with a wider reach into new categories.
“So over the last 5 years, we have built something that's pretty exciting, a lifestyle company that's focused on cannabis, which is cannibalizing alcohol, of course,” Simon said.
Last August, Tilray acquired 8 beer brands from alcohol giant Anheuser-Busch. The company is now the fifth-largest craft brewer in the U.S. with a 4.5% market share. And in June, Tilray launched a nonalcoholic beer brand Runner’s High, promoting it as a better-for-you alternative.
Simon said the company is focused on growing its portfolio of craft beer and nonalcoholic brands, with hopes to capitalize on the lucrative cannabis beverage segment when they are legally able. But in the meantime, it is looking for revenue flows in other areas.
“As we look at other categories and what we should expand into, as we go through our strategic plans, we've identified what is that lifestyle, what is that lifestyle opportunity for us to bring within the Tilray brands,” Simon said.
Part of its approach includes the launch of hemp delta 9-derived beverages, which are not derived from the cannabis plant but still contain THC. Simon said the formulations of these drinks are “complete” and ready to sell once it plans out which markets would be best to launch them in. The company could begin selling the drinks in Texas and New Jersey, he said.
In an interview with Yahoo! Finance last week, Simon noted cannabis is currently legal for recreational use in 27 states, and that Gen Z and millennials consume it more than alcohol. But the CEO said he’s not holding his breath with regards to a set time when the drug could be rescheduled federally.
“I’m not sure but I guess I’m not optimistic either,” he told the outlet. “Something’s got to happen.”
Xochitl Hinojosa, director of public affairs at the Department of Justice, told Food Dive in May the department is interested in changing how the law handles the drug. It seeks to reclassify marijuana from a Schedule I, which heroin holds, to a Schedule III controlled substance, which Tylenol holds. The department did not indicate when this would occur.
doomed
2 weeks ago
Kate Lavin, Editorial Director
August 8, 2024
Michigan isn’t just competing with California for regulated recreational marijuana sales.
Operators in Michigan’s regulated adult-use market also rival those in California for most unpaid invoices, according to Brett Gelfand, managing partner at St. Petersburg, Florida-based Cannabiz Collects and founder of the Cannabiz Credit Association.
“Michigan is becoming one of the worst we’re seeing,” Gelfand said.
“Oregon and Colorado used to be pretty significant states for us when it came to collection activity.
“So many of these companies got weeded out, and to be honest, we don’t get a lot of volume anymore in Colorado and Oregon.
“But in some new markets, like Michigan, it’s becoming a bigger problem.”
How big of a problem?
Delinquent payments in the regulated U.S. cannabis industry are likely to surpass $4 billion in 2024, according to Whitney Economics, an Oregon-headquartered cannabis data and research company.
MJBizDaily spoke with Gelfand about how plant-touching companies can implement best practices for accounts receivable and break the cycle of debt.
What is the main factor leading cannabis companies to not pay on invoices?
Banking and capital access.
If you’re not able to get a credit card, and you’re not able to get regular access to capital like a non-cannabis business … you’re going to try to get trade credit versus operating capital.
All these cannabis companies – without any formal training on what a bank would do – are now acting like banks.
The minute you give somebody net-15- or net-30-day terms, you’re acting like a bank.
What would a bank do if someone asks them for a loan?
They’re going to get your credit profile; they’re probably going to have a lien; they’re probably going to have a personal guarantee.
They’re going to have all this recourse in case you don’t pay – and in cannabis, it’s a free-for-all.
Cannabis companies feel like they have to extend credit to get the sale, and if not, customers are going to find somebody else.
So, they’re basically getting bullied into giving out credit terms because there have been no guardrails or transparency around who the bad actors are in the cannabis industry.
Are certain sectors of the industry suffering more from the nonpayment epidemic?
Retailers have been the most notorious for nonpayment, and it starts a cycle.
What happens is, the retailers owe money to the producers and the brands.
Then, (those companies) will be very late on paying their testing-lab vendors.
Some larger ancillary companies are tighter on the way they do things.
Grow-supply companies, lighting companies, they’ve been around the block.
They are not just going to freely extend credit.
Besides cash on delivery, what best practices do you recommend for accounts receivable?
No. 1, you have to have someone who is responsible for collecting cash.
Have a policy and procedure; write it down.
Then, make sure you have a way to analyze a company if you’re extending credit.
Have an onboarding agreement with your customer that a lawyer reviews and that has default language if they don’t pay you.
If you’re giving a significant amount of credit, where your customer really needs it, get a personal guarantee.
That’s the best thing that you can do to protect yourself.
With a lot of these retail chains going under, vendors are lucky to get a penny at the end of the day.
Why aren’t cannabis operators reporting default accounts to collections?
A lot of my clients have outstanding accounts that they haven’t submitted to collections because they’re nervous about their reputation; they don’t want to be known as a jerk in the industry for sending somebody to collections.
This needs to change.
People need to realize that if you’re working with a company, and you made a deal and they’re not abiding by that deal, you’re not the bad guy.
If you’re not paying your bills on time, you’re the culprit.
You’re the one that made a deal and didn’t stand by it.
And if you do that, then other people are going to lose their homes.
People are going to lose their businesses because of your behavior.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
What is something you wish cannabis operators knew?
There is so much risk with Facebook groups and WhatsApp groups (dedicated to exposing delinquent companies).
They’re basically nice people who got burned and want to help the community.
But there are serious laws around antitrust, and if there was a sophisticated debtor that owed money and was on this list and saw people saying, “Do not sell to this person,” you could get in a lot of trouble.
So, it’s really important for the industry to be aware that, yes, they’re trying to do the right thing, but you have to be careful.
If you’re going to share information, you have to do it in a regulated way.
doomed
2 weeks ago
RECREATIONAL MARIJUANA NEWS MARIJUANA BUSINESS NEWS CANNABIS JOBS
Here’s How Home Growing Solves Some Of The Challenges Of Cannabis
Doomed
August 8, 2024
Forbes
ImageHere’s How Home Growing Solves Some Of The Challenges Of Cannabis
Why are cannabis consumers turning from buying pot at a dispensary to home growing?
There are a lot of reasons: safety, self-sufficiency, and the prevalence of inflated, fake THC lab results. It also provides the ability to rule out traces of potentially harmful chemicals that weave their way into large Corporations commercial cannabis markets around the world. Others just want an intimate connection with the plant. None want expensive moldy bunk weed.
There are reasons to taking control into your own hands when it comes to cannabis flower. Last month, California’s Department of Cannabis Control (DCC) issued a series of recalls after chlorfenapyr—a dangerous and potentially deadly Category I pesticide—was detected in cannabis samples. Last year, it was arsenic that turned up in a batch of Oregon cannabis, prompting a recall from the Oregon Liquor and Cannabis Commision (OLCC).
Home growing eliminates the possibility of residual chemicals showing up in your stash. Over a dozen U.S. states allow home growing of adult-use or medical cannabis, while in Europe, decriminalization moves in a running list of countries allow for home growing in a patchwork of laws.
Barcelona-based Fast Buds provides seeds to around 50 countries around the world as home growing takes root in many jurisdictions.
“Legalization and decriminalization trends are moving faster and people would like to try and see what growing cannabis is all about,” Fast Buds Head of Marketing Eugene Boukreev tells Forbes in a video call, speaking about the first reason more people are experimenting with home growing. “The second reason is self-sufficiency and cost savings.”
By signing up, you agree to our Terms of Service, and you acknowledge our Privacy Statement. Forbes is protected by reCAPTCHA, and the Google Privacy Policy and Terms of Service apply.
Germany’s recent move to legalize limited adult-use cannabis and create cultivation social clubs is a turning point for the European cannabis marketplace. “Growing cannabis is going to be more cost-effective than purchasing from [cannabis clubs or dispensaries], for example in Germany,”
Boukreev says. “We have a lot of German clients that buy products for home growing.”
Devices currently on the market also help beginners learn how to grow, such as AI-powered grow boxes that help novices manage nutrients, lighting, and so forth.
“Technological advancements are another good point, because there are a lot of grow kits and automation around right now companies are trying to reach the market as well,” he says.
Consumers are also home growing because it allows them to choose to use natural alternatives that eliminate exposure to potentially harmful chemicals that are more common in commercial cannabis operations, he explains.
Award-Winning Genetics
Autoflower seeds from the genetic library at Fast Buds finish fast, while feminized photoperiod seeds tend to do better in other climates. Fast Buds’ highest-selling autoflower strains are Gorilla Cookies, Strawberry Gorilla, Purple Punch, Tropicanna Cookies, and Bruce Banner. The majority of the company’s strains are autoflower, as Europe’s relatively high latitude compared to California and other U.S. states make autoflowers ideal for those climates.
“Efficiency” is the reason people like autoflower varieties, Boukreev says, “because you can get a really nice harvest in just nine weeks regardless of sunlight. People choose autoflowers because the seeds are easy to grow.”
The company’s top six best-selling autoflower strains of 2024, with some change-ups from its highest-ever selling strains, are Gorilla Cookies, Strawberry Gorilla, Banana Purple Punch, Papaya Cookies—winner of Best New Strain at the 2024 Autoflower World Cup—Gorilla Zkittlez, and Ztrawberriez.
All eyes are on Germany, and the U.K. continues to dominate seed sales in Europe. “The two main markets for us is the United Kingdom and Germany,” Bourkreev says.
Founded in 2010, Fast Buds is home to one of the largest autoflower seed banks in the world. The brand’s award-winning genetics are available direct-to-consumer for delivery in around 50 countries. The genetic library attracts over 1 million visitors per month. Fast Buds’ unique genetics won Best Sativa and Best New Strain at the Autoflower World Cup in 2024.
It’s a great place to start if you’re interested in growing at home versus buying from a club or a dispensary.
doomed
2 weeks ago
Waiting for customer complaints before recalling bunk weed is a bad practice.
It should not be tolerated.
Specially when folks are all ready down and out with cancer.
Do you want your grand kids sparking that junk?
Home / Legal
Cannabis recalls too slow to recover possibly contaminated product
Doomed
August 7, 2024
Most marijuana recalls are issued too late to recover cannabis products potentially containing unhealthy levels of mold or pesticides, according to analysis by MJBizDaily.
Amid growing concerns over product safety – and allegations of labs allegedly tampering with results – most cannabis products already have been sold and potentially consumed by the time state regulators flag them as unsafe.
MJBizDaily recently analyzed product recalls in five state-regulated marijuana markets: California, Colorado, Massachusetts, Michigan and New York.
In some of those markets, product recalls are rare despite allegations from whistleblowers and state authorities that testing labs deliberately manipulated results to please clients.
In others, recalls nearly always are issued too late for retailers to pull the products from shelves before they’ve been sold to consumers.
Recalled products sold last year
California regulators issued six hundred mandatory product recalls in July in the wake of a Los Angeles Times/WeedWeek investigation that reported detectable levels of pesticides found in marijuana products cleared for sale.
In fifty five of those instances, the products in question – vaporizer cartridges and all-in-one vaporizers sold under the Backpack Boyz or West Coast Cure brands – first went on sale in September 2023.
Since 10 months passed between the products being offered for sale and the recalls, it’s almost certain the affected items had long since been ingested by consumers or discarded.
“Recalling something from 2023 is not going to result in many products still being on shelves or in possession of consumers,” Wesley Hein, the president of the California Distributors Association, told MJBizDaily.
“Operators are able to get compliance tests in under a week,” he added.
“The state should be able to do the same thing, so I expect that we’ll begin to see more timely recalls.”
Recalls lag by months
MJBizDaily tracked the most recent mandatory recalls issued by state regulators in the aforementioned states, information that is publicly available online in every state except for New York, which provided the information after an inquiry.
California regulators have issued 12 product recalls since May 6, identifying pre-rolls and vaporizer cartridges as potentially unsafe after discovering prohibited levels of pesticides and mold during reference lab testing in products initially cleared for sale.
In all but two cases, products were recalled three to 10 months after initially being cleared for sale.
In the two other cases, the recalls were issued seven weeks after the products were eligible for sale.
But even seven weeks is too late to capture most of the affected products, retail operators told MJBizDaily, adding that most products are gone within two months.
“I’ll go bust if I hold onto something for much more than 60 days,” said Elliot Lewis, the chief executive and cofounder of Catalyst Cannabis Co., which operates 28 locations in California.
Catalyst carried Lowell 35’s 10 Tall Pre-Rolls, which the DCC recalled Aug. 1, at five of its stores, Lewis said.
At two of the stores, the offending product was “sold out,” he added.
In Colorado, the state Marijuana Enforcement Division (MED) has issued four recalls since June 6.
Two recalls issued July 12 were for “Retail Marijuana Flower (bud/shake/trim)” potentially contaminated with “Total Yeast and Mold above the acceptable limits.”
One recalled product hit shelves March 21, with the final sale reported on April 27.
Another batch went on sale May 1, with the final sale reported in late June.
But for the June 6 and June 20 recalls, affected products were sold starting April 14, 2023, and Aug. 16, 2023, respectively.
In the case of the June 6 recall, the product was “found to contain methylene chloride (a solvent not approved for use in the production of marijuana concentrates) and pesticides not approved for use on marijuana,” regulators said.
A spokesperson for MED did not provide comment by press time.
Regulations evolving
The $36 billion regulated cannabis industry is still new, and regulators stressed that product safety is an evolving concept that states are steadily moving to improve.
“The Department of Cannabis Control (DCC) continuously assesses the effectiveness of its recall actions,” David Hafner, a spokesperson for the California regulator, told MJBizDaily via email.
“We are focusing on improving response times and prioritizing products that pose significant health risks to consumers.
“Our recent recalls demonstrate these improvements.”
The introduction of state-run reference labs that regulators use to double-check products cleared for sale by commercial labs is not yet universal.
For example, Michigan is not due to open a reference lab until the end of this year, the agency said in an April news release.
Oklahoma only recently granted its state Medical Marijuana Authority the power to open a reference lab in a batch of rules that went into effect July 25.
The new rules also clarified the OMMA’s power to seize product it declares a health and safety risk.
“States have different capacity and authority to recall products,” said Gillian Schauer, the executive director of CANNRA, an organization of state marijuana regulatory authorities.
“In some cases, testing and recall authorities in a state are dictated by statute and legislative action would be needed to change the approach,” Schauer told MJBizDaily via email.
Additionally, recalls often must proceed cautiously in order to avoid legal challenges.
“Regulators are typically extremely cautious in their investigations to ensure that enforcement actions are based on due process and sufficient evidence,” she added.
“Regulators typically cannot share public information about in-process investigations, and often investigations can take months to complete.”
Recalls sometimes rare
In Michigan, state regulators remain locked in litigation with a lab at the center of a November 2021 recall, and the state Cannabis Regulatory Authority has issued only three recalls since.
CRA spokesman David Harns told MJBizDaily the agency would not comment.
Despite detailed whistleblower allegations that labs are inflating THC potency and passing cannabis that should fail for pesticides or mold, the last product recall in Massachusetts was in 2021.
On April 11, 2023, the Massachusetts Cannabis Control Commission (CCC) issued a bulletin alerting the public that the manufacturer of a test kit used to measure microbial contaminants informed buyers the kit had “a potential defect.”
“It is possible that some products which passed testing based on the recalled test kits may have moved into the market … or have been sold,” wrote the CCC, which said only two of the state’s independent testing labs had purchased the potentially faulty kit.
Though the CCC said its “Investigation and Enforcement department is actively identifying cannabis products tested for microbial contaminants that may not be compliant with Commission regulations,” the agency did not issue any subsequent recalls.
How much affected product was later sold to consumers remains a state secret.
The CCC did not identify the labs and did not comment to MJBizDaily.
Unclear how much product sold
All states have track-and-trace programs in place.
But no state would share with MJBizDaily the track-and-trace data that would definitively indicate how much recalled product was sold to consumers.
In California, public-records laws protect that data from disclosure.
A spokesperson for Michigan’s Cannabis Regulatory Agency directed MJBizDaily to file a public-records request and refused further comment.
That public-records request is pending.