Not that long ago, Canadian cultivators bragged about their size of their grows. Today it looks a lot like they overestimated their needs. Now Canadians may turn some of those desolate facilities into indoor food farms:
Financial Post

“The COVID-19 fallout has sparked a renewed interest in the issue of domestic food security, particularly as to whether Canada has enough capacity to grow its own food in a doomsday scenario where the country could no longer rely on imports.

“Some food experts say greenhouses, including those currently mothballed by the struggling cannabis industry, could play an increasingly important role in being prepared for such an eventuality.”

????WW Canada has lots more on why those grows are empty.

Americans approve of the state legalization experiments, a YouGov poll found.

• Among all adults, 19% said the experiments were a success only and 36% said they were more of a success than a failure.
• On the downside, 13% said they were more of a failure and 6% called them a failure only. The rest didn’t know.
• The findings are remarkably consistent across region, gender, age, politics and income, though Republicans were more likely to call it a failure than Democrats.

A few weeks ago, YouGov found most Americans think marijuana businesses are “essential.”

Despite the staggering number of Americans who’ve lost their jobs in the past month, hundreds of Pennsylvania MED jobs are unfilled due to delays on mandatory FBI criminal background checks and drug tests.
Washington Post/Philadelphia Inquirer

• “It’s just so unbelievably frustrating,” said Harrisburg lawyer Judith Cassel, who represents several medical marijuana businesses. “I have five clients with over 100 openings. And there are likely hundreds more that are waiting. These are good-paying jobs, many of which come with health-care benefits.”

At New Cannabis Ventures, Alan Brochstein writes “selective consolidation” is coming for the industry:

“We anticipate a wave of mergers and acquisitions ahead, but we believe the focus will be divestitures by multi-state operators (MSOs) rather than mergers of entire companies, which are challenging due to the complexity of regulations by state. Florida, for example, permits a company to own only one license, which would make acquiring MedMen or iAnthus difficult for any company already operating in the state. Nevada has locked down license transfers, making asset sales in that state very challenging, for now.”

Canadian regulators temporarily halted trading of iAnthus stock.
MJBiz

Quick Hit

1. Canna Law Blog visits the cannabis company structure hall of shame. It’s illustrated.

Lobbyist Jackie McGowan said the pandemic has pushed the California cannabis industry to “the brink of collapsing.”
Sacramento Bee

• Despite the industry’s “essential” status, the help isn’t arriving.
• “There is no program that is set aside for cannabis. That’s all we’re asking for,” Jerred Kiloh, owner of SoCal dispensary The Higher Path and president of the United Cannabis Business Association said.
• Out of state MSOs like Harvest and Acreage have been shutting their California businesses.
• To support each other, some California distributors are banding together to “blacklist” retailers who don’t pay their bills.
  MJBiz
• Dozens of companies have asked Sacramento for deferred license fees and other forms of relief. 
  Desert Sun
• The industry does stand to benefit from various small business relief programs in the state.
  MJBiz
• Canna Law Blog looks at a new wave of Golden State “Breaches, Lawsuits and Shake-Ups.”

Separately, in the latest twist on Los Angeles’ licensing, a social equity-minded group is suing the city over its retail license application process. The suit comes weeks after an audit found the city took “reasonable and appropriate” steps to prevent bias. Canna Law Blog has more.
L.A. Times

• Despite current hardships, the state will spend $30M to promote cannabis industry equity.
  City News Service

????WW California has lots more.

Quick Hit

1. In California, testing costs account for 10% of wholesale product costs, according to a UCDavis study.

This week lawmakers passed, and President Trump signed, a $480B stimulus package, which replenishes coffers for the small business paycheck protection program (PPP). While most cannabis companies are small businesses, they will not be eligible for federal relief.
Vox

• Legalization supporters Rep. Earl Blumenauer (D-Ore.) and Rep Ed Perlmutter (D-Colo.) introduced a bill that would make cannabis businesses eligible for coronavirus relief.
  The Hill
• Ten Senators, all Democrats, called for the industry to receive federal relief.
  Marijuana Moment
• Motley Fool explains why pot shops could receive aid in the inevitable next stimulus bill.
• Industry lobbyists are trying to make it happen.
  MJBiz

Many WeedWeek readers will be unsurprised to learn many Americans are spending their $1,200 stimulus checks on weed.
Green Entrepreneur

In his WeedWeek column, Dan Mitchell finds the CBD business is up and arms about the bogus Covid-19 related claims some purveyors are making. And the FDA is on the case.

The CBD industry is filled with fly-by-night operators trying to exploit the product’s popularity, which  began in earnest right around when states began legalizing cannabis. Besides making unfounded or shaky health claims, some of them sell products labelled CBD, which don’t contain CBD. Some dub products “organic,” even when they don’t adhere to organic standards — which is against the law. Some CBD products have been found adulterated with potentially harmful ingredients. 

Read the whole thing.

For this week’s Power Player’s interview, I spoke to Hershel Gerson, managing director at cannabis-investment bank Ello. Gerson joined the green rush last year after years in accounting and corporate finance. 

In our wide ranging conversation, Gerson discussed his favorite retail strategy, why he thinks the pandemic will accelerate U.S. legalization and several reasons he’s “very bullish” on the weed industry.

A few highlights:

On cash strapped states turning to cannabis:

They had the same issue in 2008 and they took to regional gaming. I anticipate a similar effect with cannabis where the tax revenues are just going to be too attractive for states not to adopt positive legislation, especially when neighboring states are going to have a REC program.

On why he’s bullish:

With the new markets and new consumers coming in, we anticipate 20% plus growth available to the industry. So you’re looking at a very attractive investment opportunity.

On his preferred retail strategy:

Guys who focused on single states to get density and positive cashflow are in an advantageous state compared to companies that went  broad to try to get beachheads in multiple states and felt capital would just be there in perpetuity.

Read the whole thing.

An analysis of 33 pot companies tracked by MJBiz found eight don’t have enough money to last more than 10 months.
Bloomberg

• It’s going to be an “extinction-level event for some companies,” an MJBiz analyst said. “But it’s a healthy and necessary process for any industry to go through once it’s had a phase of absolute excess and exuberance.”
• Analyst Jonathan Cooper sees many U.S. companies at risk of insolvency.
  Seeking Alpha
• This comes as cannabis use reached an all-time high in March.
  Bloomberg
• The Washington Post and Cannabis Business Times look to California where the pandemic is “expediting the state’s existing cannabis market failures.”
• Despite some noise about it in D.C., lawyer Hilary Bricken writes the cannabis industry is unlikely to be eligible for the next round of federal relief.
  The Hill, Canna Law Blog
• In a sign of the times, Canndescent, whose CEO Adrian Sedlin used to boast the brand was worth a 25% premium, released “super affordable” brand Baker’s. On LinkedIn, Sedlin described it as a “deep value offering designed to help dispensaries retain consumers during this economic downturn and to keep consumers from switching to the black market.”  
  CNBC

For this week’s Power Players interview, I spoke with Entourage Effect Capital managing partner Matt Hawkins. We talked about what the firm, which has made close to $200M in cannabis investments, is looking for in new companies.

On why it’s a good time to be investing in cannabis:

When you think about investing in distressed assets, the first things that come to mind are either margin shrinkage or top line shrinkage. In a lot of cases in the cannabis industry, that’s not the case: those two things are typically in a positive trend. The only thing that’s really impacting the cannabis industry in the negative sense, at least prior to Covid, was the cash crunch. There’s not enough liquidity and capital to take advantage of all the opportunities.

On the pandemic’s impact:

I think the expansion of state by state legality is going to be driven to a whole other level with states and municipalities looking for increased revenue streams to offset what’s been lost here recently and will continue to be lost. And the federal government’s no different. I think we can look to the federal government and say, “Look, we’re an essential business, why are we illegal? Why are we not able to participate in the CARES Act?”

On the industry fallout:

“There’s going to be some clear winners and some clear losers in the multi-state-operator sector. It really boils down to who has money and who doesn’t.”

Read the Whole Thing.