IN THE STATES…

Here’s what’s happening in the states:

The movement to expunge past marijuana convictions is also moving forward, despite the pandemic. ????WW California has more.
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CORPORATE ROUND-UP

This week in the corporate world:

“WAS QUARANTINE MADE FOR CANNABIS?”

In a dispatch from Los Angeles, The New Yorker asks, “Was quarantine made for cannabis?”

 

????WW California has lots more from the Golden State.

HIGH TIMES HIRES THIRD CEO IN A YEAR

High Times’ parent company hired its third CEO in a year as it pivots from media and events to retail.
New York Post

  • Peter Horvath, who’s taking the helm, was previously CEO at Green Growth Brands, and before that was a C-suite executive at Victoria’s Secret. In April Green Growth said it was in default on a $5M note and is selling off its dispensaries.
  • High Times attempts to raise money through a crowdfunded IPO have fallen short of its expectations. Horvath will receive a bonus if he can raise $20M.
  • High Times’ previous CEO, Stormy Simon, joined the company in January and said in February she would run for Congress in Utah as a pro-pot Democrat.
  • Bottom Line: Is anyone excited to shop at a High Times-branded dispensary?

Quick Hit

  1. With the capital markets frozen, companies like California’s Goldenseed are following High Times’ example and looking to mom-and-pop investors.
    MJBiz

CANNABIS IS HIRING

As unemployment reaches levels unseen since the Great Depression, cannabis businesses are hiring thousands of workers nationwide.
CNN, Politico

  • Politico writes, “Fewer shoppers are hitting stores, but they’re making bigger buys, and there’s been a surge in delivery sales. They are thriving even though they can’t touch federal rescue money to pay their bills or employees.”
  • In most cases, the hiring plans were in place pre-pandemic but they haven’t been derailed.
  • Front Range Biosciences CEO Jonathan Vaught argues Congress needs to support the industry.
    Green Entrepreneur

Meanwhile, cannabis social network MassRoots, a group of whose investors recently paid $1.5M to resolve federal stock fraud charges, said it received a $50,000 loan from the paycheck protection program, which is off limits to ancillary cannabis businesses. MassRoots didn’t return a request for comment.
Barron’s, Press release

“THE HYPOCRISY HAS BEEN EXPOSED”

In this week’s business column, industry leaders say the industry can no longer be both essential and illegal. While the immediate outlook is very challenging, they hope the pandemic will catalyze change:
WeedWeek

“Taxes are high. Margins are low. Regulations are onerous. [In California] The illicit market is beating the legal one. Poor management and overspending have put many companies in jeopardy. This was all true before the pandemic struck, creating yet more uncertainty and fear.

“The state government’s declaration of cannabis as an “essential” business surely saved a lot of companies from going under. And an initial surge of sales provided some relief. But the situation is still bad.”

Read the whole thing.

POWER PLAYERS: ELIZABETH MORRIS ON CANNABIZ LENDING

Who couldn’t use some extra cash these days?

For the Power Players interview, I spoke to Elizabeth Morris, COO of Dynamic Alternative Finance which has facilitated about $100M in loans to cannabis businesses. It sounds like the company is very busy.

A few highlights:

On the perils of cannabis companies borrowing money:

One thing that we do see, unfortunately, is someone will call us and say they thought they had a deal. It was a really good fit. They had a great term sheet and wonderful rates and the lender charged them $25,000 on the front end to do underwriting and then decided not to do that deal.

On the state of lending:

In equipment finance and real estate, people are still lending, but it’s taking a little bit longer. The underwriting is a little bit more strenuous because the investors have seen wild fluctuations in the market and in their own liquidity.

On being “recession proof”:

I don’t think cannabis is as recession proof as some people initially thought it was going to be. The basis for me saying that is it’s become clear that in certain states, like Colorado and Nevada, that the industry has a high dependency on tourism.  It’s not well known that 25% of cannabis revenue in Colorado is from out of state visitors.

 

Read the whole thing.

And check out some of our recent Power Players interviews:

Got any thoughts on who the next Power Player should be? Email us at hello@weedweek.net

WEED, COVID AND THE FUTURE OF RETAIL

Rosie Mattio, boss of heavy hitting PR firm Mattio Communications,  says the industry’s overnight coronavirus overhaul says a lot about the future of retail.
AdWeek

  • Among other things, retailers need to adjust to much more cost conscious consumers. “Leading brands, including Papa and Barkley and Cresco Labs, have accelerated the launch of value product lines to accommodate cash-strapped customers. Other retailers, from California to Michigan, have started offering compassionate pricing policies for patrons who need financial assistance to purchase their medical or wellness products.”

FORMER EMPLOYEES SUE MSO HARVEST

Two former employees are suing new High Times investor Harvest Health and Recreation. They accuse the MSO of engaging in multiple compliance violations and asking them to break the law. 
Phoenix New Times

  • Filed in Maricopa County (Phoenix), the lawsuits allege Harvest “improperly labeled marijuana products, sold THC-labeled products to non-patients in a dispensary lobby, and stored marijuana products in a dispensary ceiling, among other violations of the Arizona Medical Marijuana Act.”
  • Both plaintiffs say their previous complaints were rebuffed and ignored.
  • Harvest CEO Steve White said the company will deny the allegations.