BIG PHARMA ARRIVES WITH $7.2B GW ACQUISITION

In the biggest cannabis-related acquisition yet, Jazz Pharmaceuticals said it would buy GW Pharmaceuticals in a $7.2B cash and stock deal, the strongest indication yet of big drugmakers’ long-speculated interest in cannabis.
WeedWeek 

  • In 2018, the U.S. Food and Drug Administration (FDA) approved GW’s Epidiolex, a CBD-based pharmaceutical, as a treatment for severe pediatric epilepsy disorders. It was the first time the agency greenlit a cannabis-derived drug.
  • U.K.-based GW has also developed a medicine containing CBD and THC which has won approval in several countries as a treatment for multiple sclerosis-related spasticity. It’s currently in late-stage trials under the brand name Sativex, with an eye on U.S. approval. 

Cannabis executives have long been wary, not to say paranoid, of Big Pharma. But observers I spoke to don’t think it threatens the REC industry.

Here’s what the deal does mean.

  • As pharma and the cannabiz circle each other, MJBiz asks what’s next.
  • Also, a new bipartisan bill would regulate CBD as a dietary supplement, likely accelerating its uptake by mainstream retailers and consumer packaged goods companies.
    Nutritional Outlook

IN THE NEWS — 2/6/21

Happenings:

WHY ARE ONLY 8% OF CANNABIZ CEOs WOMEN?

The cannabis industry has a gender parity problem. 

According to a recent survey, California delivery app Eaze found that women accounted for 48% of new customers in 2020, up from 38% in 2018.

  • Attracting female consumers has long been a yardstick for the industry to measure its progress towards mainstream acceptance.
  • However, men continue to dominate in the leadership positions that command the highest salaries and set the industry’s future course.
    WeedWeek

The power differential isn’t just a matter of optics or doing the right thing, argues a new white paper from The Arcview Group investor network and the National Cannabis Industry Association. Compelling data suggests companies with women in leadership roles make more money.

Will the industry adapt?

ON BRAND: MARKETERS TAKE CONCENTRATES MAINSTREAM

In her new On Brand column, Jackie Bryant looks at how marketers are expanding the consumer base for concentrates beyond the heaviest users:
WeedWeek

Ancillary product companies are adjusting their product lines for the concentrates boom. Daily High Club, the monthly paraphernalia box subscription service, offers an “Ultimate Concentrates Dab Kit,” which retails for $120, far less than it would cost a dabbing neophyte to pick up a glass rig, quartz banger, torch, and other accessories a la carte. 

Inhale it all.

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“On Brand” is brought to you by Mattio Communications.

Quick Hit 

  1. On the other hand, the vape pen market has sagged.
    MJBiz

IN THE NEWS — 2/3/21

Other recent developments:

“CASH IS KING AGAIN,” AS DEALS HEAT UP

In January, North American cannabis companies raised close to $1B. Insiders widely expect this tidal wave of capital to accelerate the industry consolidation which gained momentum in Q4. 

“I would characterize the climate as very optimistic,” said Sander Zagzebski, a deals attorney at law firm Greenspoon Marder, which has a large cannabis practice. He anticipates Q1 will be “very good,” and the summer to be even better. 

In an interview with WeedWeek, Zagzebski discussed how cannabis mergers have changed since the last bubble, and th shifting calculus, now that federal legalization could be imminent.

Read the whole thing. 

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Meanwhile, key Democratic Senators, including Majority Leader Chuck Schumer (D-N.Y.) are calling for an end to federal prohibition in 2021. That’s not necessarily what leading multi-state operators (MSOs) want.
Marijuana Moment, WeedWeek

Quick Hit

  1. At Forbes, Chris Roberts predicts a “GameStop moment” for pot stocks.

“CAPITAL IS FLOWING WITH RECKLESS ABANDON”

When’s the last time, Stephen Miles asked rhetorically, that a consumer packaged goods industry could grow to $80B in annual revenue from scratch? 
WeedWeek

  • Miles, CEO of Chicago-based Sharp Capital Advisors, had some interesting things to say in a recent interview. 
  • We discussed how the smartest operators view the market, why brands aren’t (yet) the way to win, and what big MSOs want from Congress this year. 

Hint: It’s not full-federal legalization.

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The capital continues to flow. Canada-based TerrAscend, which has operations in several states, raised C$224M (US$175M) with 80% coming from four U.S. institutional investors.  

IN THE NEWS — 1/30/21

Goings on this week:

JAY-Z’S $10M BET ON EQUITY

This month, hip hop icon Jay-Z, in partnership with The Parent Company, a California-based portfolio of brands, launched what is probably the biggest and highest profile cannabis equity effort to date: A $10M investment fund which aims to back cannabis businesses owned by people of color.
WeedWeek

  • Start-ups backed by the fund also stand to benefit from The Parent Company’s corporate heft and Jay-Z’s cultural megaphone. (He’s the company’s chief visionary officer.) 
  • I spoke to Michael Auerbach, the SPAC executive who put The Parent Company together, about how the fund will operate, and his goals for it.

“The real exit in this industry, is the end of prohibition.”

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Related: Illinois is generating tax revenue from legal sales, but its closely watched social equity program has gone nowhere.
Politico

NEW YORK’S PATH TO LEGAL REC

Other than federal reform, the biggest cannabis regulatory question this year is whether New York will legalize REC. In addition to creating a huge new market, thriving weed businesses in New York City would signal to the rest of the country, and much of the world, that legalization is inevitable.
WeedWeek

I spoke to David Mangone, director of policy at The Liaison Group, a lobbying firm focused on federal cannabis reform, about what to expect in the Empire State. 

He’s feeling pretty good about it.

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Meanwhile, Senate Majority Leader Chuck Schumer (D-N.Y.) told cannabis entrepreneur and former NBA star Al Harrington that he’s merging several reform bills, a sign he may move forward with full legalization faster than some industry watchers anticipate. 

  • And, Pennsylvania Gov. Tom Wolf (D) has REC legalization on his 2021 priority list.
    Marijuana Moment, 2x