In April 2019, Canadian giant Canopy Growth said it would acquire MSO Acreage Holdings for $3.4B, once U.S. law permitted. The deal, touted as the industry’s biggest ever, has now been revised sharply downward to value Acreage at about $900M, according to Cowen analyst Vivien Azer.
MJBiz

• A press release attributed the change to difficult economic conditions and volatile markets.
• Depending on specifics, the deal does not necessarily require full federal U.S. legalization to close. Banking reform could be enough.
• Canopy, which recently announced a $1B+ quarterly loss, says  layoffs, drinks, the U.S. market and CBD all factor into its turnaround plan.
  BNNBloomberg
• As part of the new deal, Acreage CEO Kevin Murphy will step down.
• Attorney David B. Feder looked at Acreage’s delayed Q1 financials, “They’re not pretty.”
• Here’s my interview with Murphy from a year ago, when he was riding high.
  WeedWeek

One figure who has been notably silent is former U.S. Speaker of the House John Boehner (R) who joined the Acreage board in April 2018. Though he had never used cannabis, he stood to make $20M if the original deal went through. Acreage stock is way down since then.
Washington Post, N.Y. Times

• Last year I asked, “Is John Boehner good for weed?“
  WeedWeek

WeedWeek Canada editor Jesse Staniforth and I discussed the Canopy/Acreage deal on this week’s edition of the WeedWeek News Brief.

• We also mentioned that Canadian site The Growth Op took down an article criticizing Canopy subsidiary Tokyo Smoke for displaying expensive work by Banksy. ????WW Canada has more.

Quick Hit

1. MSO iAnthus received a demand for debt repayment.
   MJBiz

For this week’s summer business issue, we looked at how the industry is doing in our unpredictable times. The short answer seems to be: Pretty darn well, considering.

• “Overall, cannabis sales seem to be following their standard seasonal patterns. July and August are often strong months,” Hilary Corrigan reports in WeedWeek.
• The industry’s jobs market has never been stronger.
• Brands are figuring out how to retool for a summer without festivals.
• Dispensaries have overhauled their operations and marketing for this “doozy” of a year.

Quick Hit

1. Pot stock analyst Alan Brochstein is increasingly bullish on the second half of 2020.
   New Cannabis Ventures

WeedWeek business columnist Dan Mitchell looks at a new program, from Oakland software company Treez, that could solve many pot shops’ payment woes.

Mitchell writes:

Dispensaries have tried all kinds of workarounds, from rotating through merchant credit-card accounts until the banks pull the plug, to installing an ATM out front. Some hook up with payments companies that specialize in cannabis, but most of those are full of friction; for starters, each customer typically has to sign up with the same company, and the process can be burdensome. On top of that, most of those companies use “digital wallets,” which customers have to refill. 

Treez…thinks it has solved the problem with its new product, Treez Pay. Unlike most payment services, Treez Pay doesn’t make use of a digital wallet. There’s not even an app to download. 

But first, dispensaries have to qualify.

A career Justice Department employee testified that U.S. Attorney General William Barr improperly hounded cannabis companies because of his antipathy to the industry.
CNN

• John Elias testified that 29% of the department’s antitrust probes targeted cannabis. “The rationale for doing so centered not on an antitrust analysis, but because [Barr] did not like the nature of their underlying business.” 
• Two of the government’s independent watchdogs are investigating.
  CNN
• The Justice Department’s misconduct office found that the department didn’t act improperly in its probe of 10 cannabis mergers.
  Politico

Prominent cannabis attorney Hilary Bricken weighs in at Canna Law Blog, “Cannabis, Competition and a Constitutional Crisis.”

Quick Hit

1. Politico looks at the state legalization initiatives racing to make the November ballot.

The City of Los Angeles appears poised to overhaul of its regulations to benefit long-suffering applicants for equity licenses. ????WW California has more.
AP

• Canna Law Blog looks at what the changes could mean for the key market.
• The move comes shortly after Massachusetts said it would reserve REC delivery licenses for equity applicants.
  WeedWeek
• The National Cannabis Industry Association said it would offer free membership and other benefits to equity businesses.

With some jurisdictions stepping up on “equity,” tensions over what it means and who should benefit are heating up.

• 4thMVMT, which aims to build a network of equity entrepreneurs through a franchise-like model, has clauses in its agreements with entrepreneurs which an attorney called “predatory.” 4thMVMT chief (and recent WeedWeek Power Player) Karim Webb denied doing anything predatory or against franchisees’ interests.
  Los Angeles Times
• MG Retailer got criticized for its piece on 8 Cannabis Businesses Working for Social Equity.
• Writing at Medium, Danielle Schumacher, co-founder of THC Staffing Group, calls the MG Retailer piece “oblivious,” and notes, among other things, that the highlighted companies are largely white-owned. “It is irresponsible to publish such superficial and inaccurate perspectives of what social equity work entails,” she wrote.
• In a letter to the cannabis and hemp industry, Cannaclusive co-founder Mary Pryor called for diversity and accountability. Katie Shapiro wrote it up at Forbes.
• Canada’s legal weed industry also has a diversity problem, Vice reports. ????WW Canada has more.

Quick Hit

1. One entrepreneur thinks hemp could help restore Black farm ownership.
   Hemp Industry Daily

Last month, a group of more than 200 Oregon cannabis companies managed a big win against a racketeering (RICO) lawsuit. Despite the legal tide seemingly moving in favor of cannabis, MJBiz looks at how businesses can fight similar suits in the future.

• RICO, a law passed in 1970 to prosecute organized crime organizations, gives prosecutors exceptional powers, such as asset seizures, that make the cases difficult for defendants to fight.
• To prepare, the story says businesses should build alliances in the industry and keep “airtight” records.
• Observers say RICO suits can be used as an “organized attack” on the industry by legalization opponents.

Quick Hit

1. Desperate for cash, more California cities are welcoming REC businesses.
   Politico

Credible sources keep advancing interest in the medical value of illegal drugs:

• NPR‘s Terry Gross spoke to psychiatrist Dr. Julie Holland on the potential to treat severe depression with psychedelics. 
• “There are certain plant medicines in particular — things like psilocybin or ayahuasca — that really help people not only explore their personal trauma,” Holland says, but also [experience] “this feeling of unity and connection. People really come away from these experiences having a new perspective.”
• The CDC’s National Center for Injury Prevention and Control was deluged with comments on MED and the medical value of kratom, a plant indigenous to southeast Asia.
  Marijuana Moment
• Cyclica, a Toronto start-up using AI to discover new psychedelics-based medicines, raised $17M.
  Business Insider
• The U.S. Department of Defense (!) is investing $27M in psychedelic drug discovery.
  Marijuana Moment

On the other hand, a consortium of consumer groups asked lawmakers to reject calls to legalize CBD as a dietary supplement or ingredient in food products.

Harvard psychiatrist and pioneering cannabis activist Dr. Lester Grinspoon died at 92.

In the late 1960s, Grinspoon, a friend of celebrity astronomer and cannabis user Carl Sagan, set out to write a book on the dangers of marijuana.  As David Bienenstock explains in Leafly, it didn’t work out that way:

Grinspoon sought to “compile an authoritatively researched argument against cannabis that would definitively demonstrate the medical and scientific basis for the plant’s prohibition.

But instead of encountering the hard data he’d expected, Grinspoon had an epiphany—he’d been “brainwashed about cannabis.”

Grinspoon’s 1971 book Marihuana Reconsidered, was a bestseller, annoyed President Nixon and “savaged the U.S. government’s case for keeping cannabis illegal.” It also may have blocked him from ever obtaining a full professorship.
Boston Globe (2018)

• Grinspoon’s son Dr. Peter Grinspoon, is a primary care physician, Harvard professor and board member at Doctors for Cannabis Regulation. Peter published a memoir, Free Refills, about his opioid addiction.
• Grinspoon’s has another son, David, who’s an astrobiologist. Carl Sagan would surely approve.

The L.A. Times devotes a long review to cannabis subscription box Nugg Club:

The magical striped box I received on a sunny SoCal Sunday afternoon managed to deliver something that can’t exactly be tallied or quantified — and something I hadn’t realized was sorely missing in the era of legal weed: a sense of fun, wonderment and joyful discovery.

For cannabis enthusiasts of a certain era (those whose herb-smoking heyday was three to four decades ago), pot-purchasing was part-crap shoot and part-winning lottery ticket; Iowa road weed in a garbage bag one day, skunky green bud smuggled across Lake Champlain from Canada on a rubber raft the next. And, instead of brightly lit store fronts, the go-to was a network of like-minded friends that formed, for lack of a better word, a club.

The box, currently available in L.A. and Orange counties, is available to COVID-19 healthcare workers for $1 plus tax.

MedMen co-founders Adam Bierman and Andrew Modlin departed the beleaguered company’s board of directors. 

The company also announced the settlement of lawsuits alleging they ran the company “like a ‘Wolf of Wall Street‘-inspired personal slush fund.” (MedMen didn’t acknowledged wrongdoing.)

In a harsh piece for Forbes, longtime cannabis journo Chris Roberts writes:

“All that’s left is the fight over the scraps, MedMen’s desiccated and then charred hulk—and identifying both the villain and the moral of this cautionary tale.

“The analysis is not something most cannabis companies and cannabis investors will want to hear. The hubris that both floated and sank MedMen runs absolutely rampant in legal weed.

“MedMen was the first, the loudest, the brashest and the most ridiculous, but it won’t be the last. There are too many other companies built in its mold.”

Plus, Virginia denied MedMen’s request to open a MED shop.
News-Leader

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Separately, MSO Acreage Holdings is dealing with some tricky situations of its own:

• An unidentified institutional investor issued the company a $15M short term loan at a 60% annual interest rate.
  MJBiz
• Acreage put up collateral of its facilities in three states as well as its IP “among other items.” If the company defaults it’ll be on the hook for another $6M.
  Press release
• Ex-Massachusetts Governor and former Acreage board member Bill Weld (R) is suing the company. He alleges it improperly downgraded his stock holdings from 625,000 shares to just over 360,000. Acreage declined to comment to Bloomberg.
• Acreage’s sister company Wellness Connection of Maine is suing the city of Portland alleging its residency preference for licensees violates the U.S. Constitution.
  MJBiz
• A report recently noted Acreage CEO Kevin Murphy is the third highest paid cannabis CEO, with annual pay exceeding $10M.
  The Growth Op
• Here’s WeedWeek‘s interview with Murphy from a year ago.