Two former executives with software company CannaRegs have sued CannaRegs, its founder Amanda Ostrowitz and the marketing tech company Fyllo which acquired it. The case alleges “securities fraud.” Read the lawsuit here.
New Cannabis Ventures

The suit alleges that in September 2019, Ostrowitz approached the plaintiffs to sell 12% of CannaRegs for $179,000, to investors Panther Opportunity Fund and Phyto Partners. The price implied a company valuation of $1.52M. The sale closed and four months later, Fyllo acquired CannaRegs for $10M in cash and stock.

• Neither Ostrowitz, Panther, Fyllo nor Phyto had a comment.

(Disclosure: WeedWeek recently approached Panther Opportunity Fund about an investment. They declined.)

Quick Hit

1. Congratulations to New Cannabis Ventures on its fifth anniversary!

For this week’s Power Players interview we spoke to Dan Ripoll, CEO of Pushr, apparently the only Black-owned licensed distributor in SoCal. A Stanford grad who used to work on Wall Street, Ripoll discussed competing with the illegal market, the upside of affordable products and how distributors act as California’s “unpaid tax collectors.” 

Ripoll:

It’s important to remember that California’s industry is still heavily influenced by a criminal element who will always find a way to circumvent the system. So the majority of the pounds that are being sold by cultivators in this market never see a licensed dispensary shelf. Distributors in the legal space are being outbid by their illicit market counterparts who don’t have to comply with any laws, or pay any taxes on the product.

It’s really interesting.

COVID-19 forced the organizers to cancel Burning Man for the first time since the festival began in 1986, but some folks showed up at the playa anyway:
Reno Gazette-Journal

An effigy made of tiki torches greets a group of Burners wandering around in the darkness Saturday night on the Black Rock Desert playa.

“Is this your first Burning Man?” one Burner asks.

“It’s my first not Burning Man,” the other responds.

Some described it as reminiscent of before the festival became a “big bloat.” One attendee described it as “Imagine Burning Man for introverts. Everyone’s 200 feet away from each other and just having a chill time.”

• There was also a virtual Burning Man on a sanctioned platform called Kindling featuring “eight phantasmagorical universes.”
  Reno-Gazette Journal

Last week, we discussed a new DEA interim rule that some CBD insiders say poses an existential threat to the industry. In essence it rules that if any substance produced in the manufacturing of CBD products contains more than 0.3% THC it is a schedule I controlled substance and illegal.

L.A. Weekly reached out to the DEA which said it is aware of the industry’s concerns and said it is evaluating the options and implied it is more focused on drugs like crystal meth and fentanyl.

• At Canna Law Blog, attorney Daniel Shortt wrote, “I do not buy this misdirection for a minute.”
• The DEA’s public comment period is open until October 20. Comments can be made here and should reference, “RIN 1117- AB53/ Docket No. DEA-500”

The California Legislature ended its unusual session by passing several key cannabis-related bills.
Marijuana Moment

• Notably, AB 1872 essentially freezes most tax increases tax increases and AB 1525 removes penalties for financial companies who work with cannabis clients.Another bill advances a previously mandates appelations program for designating where cannabis crops come from.
• Canna Law Blog has the deets.
• ????WW California has more.
• The state also rolled out a promotional campaign for the industry called “This is California Cannabis.”
  Redheaded Blackbelt

Also in California, a new lawsuit highlights the difficulties of creating an industry in Los Angeles.
WeedWeek

WeedWeek biz columnist Dan Mitchell discusses a new equity program at California player Eaze, which does not take an equity stake in the companies it’s supporting.

“Equity” is a somewhat amorphous concept that was introduced well before states started legalizing recreational cannabis in 2012. It aims to recognize the absurdity and unfairness inherent in the creation of a brand-new legal industry dominated by monied white people, selling and using a product that for decades was used to marginalize and punish black and brown people for doing the same thing. Many of those people are still in jail for pot offenses.

Efforts by state and city governments to support equity businesses have largely run aground on red tape, court cases and a raft of other complications. Eaze’s effort suggests corporate equity programs could be more effective.

Read the whole thing.

More from WeedWeek:

• A judge ruled a $100M bank fraud case, where financial institutions were allegedly tricked into processing cannabis payments, can proceed.
• A federal court ruled California’s Bureau of Cannabis Control must turn over subpoenaed documents to the DEA.
• In her Cannabitch newsletter, Jackie Bryant has everything you ever wanted to know, perhaps more than you ever wanted to know, about weed lubes.
• Ngaio Bealum takes a look at new heights cannabis cuisine is attaining. Infused chorizo-stuffed calamari anyone?

Following a strong earnings season, Business Insider talked to seven cannabis CEOs who are ????increasingly bullish on the industry, especially if the Democrats take the Senate in November.

• Many CEOs “say a Biden win — along with the Senate flipping toward the Democrats, — would be “jet fuel” for the industry.”
• Marijuana Moment has additional details on the House of Representative’s plan to vote on the MORE Act, which would federally legalize cannabis, this month. The More Act, which includes several equity provisions, is extremely unlikely to pass the GOP controlled Senate.

Quick Hits

1. Since the industry was deemed “essential,” investment capital is beginning to flow back into cannabis.
   MJBiz

While the exact mechanisms at work remain unclear, scientists are increasingly confident in the link between vaping and severe Covid-related illness:
New York Times

Since the start of the pandemic, experts have warned that the coronavirus — a respiratory pathogen — most likely capitalizes on the scarred lungs of smokers and vapers. Doctors and researchers are now starting to pinpoint the ways in which smoking and vaping seem to enhance the virus’s ability to spread from person to person, infiltrate the lungs and spark some of Covid-19’s worst symptoms.

“I have no doubt in saying that smoking and vaping could put people at increased risk of poor outcomes from Covid-19,” said Dr. Stephanie Lovinsky-Desir, a pediatric pulmonologist at Columbia University.

In a big milestone for the nascent psychedelics industry, Peter Thiel-backed  pharmaceutical company Compass Pathways, filed to go public on the NASDAQ.
BNN Bloomberg

• It plans to use the proceeds to fund clinical trials for psilocybin as a treatment for depression.

Since 2010, when she founded Simply Pure in Denver, Wanda James has been among the most prominent Black cannabis executives in the U.S. In this week’s Power Players interview, she discusses the state of equity in Colorado, competing with big companies and the value of speaking up on political issues.

“It’s absurd for the cannabis industry and people involved in cannabis to think that this is going to continue to be a majority white, majority male-owned industry and have that be okay.”

Read the whole thing.

Quick Hit

1. Ngaio Bealum talked to activists working to support and free cannabis prisoners.
   WeedWeek