THE EBBU FILES: A WEEDWEEK EXCLUSIVE

SCOOP:

“A high-profile Colorado marijuana start-up misled prospective investors and promoted an investment structure that may have violated state laws, according to internal company documents and emails leaked to WeedWeek. The company, Ebbu, subsequently rewarded its investors when it sold its assets in a cash-and-stock deal worth roughly $250 million.

“Publicly available court filings and press accounts suggest fundraising irregularities at Ebbu, but these apparently never attracted scrutiny from Colorado regulators or law enforcement. The situation raises questions about how effectively the state enforces its marijuana investment laws. Ebbu’s story shows why money of unknown origin — akin to “dark money” in politics — could be a significant problem in the fast-growing and federally illegal marijuana industry.

I previously wrote about Ebbu in 2016 and in February 2019.
WeedWeek, Pando

LEAFLY’S NEW LOOK

Leafly has a new “cannabis visualization system,” which attempts to take users past the debunked sativa/hybrid/indica spectrum and deliver a richer understanding of the plant. It’s pretty to look at, but doesn’t get past the basic problem that there’s no standardization of strains.

Unlike with, say, wine grapes, cannabis brands remain free to name their product whatever strain they want. Thus it’s hard to believe a strain called Gelato will have the effect Leafly says it will have.

  • My all time favorite Leafly review began, “Pretty hard to write this on Dream Beaver…” and just got better from there.

SQUARE TO ACCEPT CBD CLIENTS

After a three-month invite only program, payment processing giant Square said it would start accepting CBD companies as clients.
Business Insider

  • The online retail platform Shopify works with CBD companies but outsources the payment processing to another vendor.
  • It’s a big win for CBD companies since regulations and restrictions for merchants are arguably more confusing than for THC.

LAYOFFS AT EAZE

California delivery app (and WeedWeek advertiser) Eaze cut 36 staffers, roughly 20% of its workforce.

The company also replaced CEO Jim Patterson with COO Rogelio Choy. Both have backgrounds in tech. Patterson will remain on the company’s board.
San Francisco Chronicle

  • Eaze is enmeshed in a legal battle with DionyMed, a Canadian company competing for delivery market share in California.
  • This summer the company, which has raised $166M in funding, had to scale back predictions that its platform would move $1B in product in 2020.
    MarketWatch
  • Eaze also recently announced Momentum, a program to support equity cannabis entrepreneurs.

REPORT: LICENSED CA COMPANY HAS AN UNLICENSED FACTORY

In another nice scoop from Leafly‘s David Downs, California licensed SoCal company Kushy Punch was busted by the state Department of Consumer Affairs for allegedly running an unlicensed cannabis factory as well as a licensed one.

  • A source told Downs the company used the unlicensed factory to process flower it believed would not pass California’s pesticide standards. Products produced there, including vapes, are then sold on the illegal market.
  • Kushy Punch CEO Ruben Cross didn’t respond to Leafly‘s requests for comment.

Quick Hits

  1. In California, quite a few former politicians are finding their way into the cannabis industry. ��WeedWeek California has more.
    L.A. Time    s
  2. Jorge Pupo, the top Nevada regulator who a lawsuit alleges was too cozy with some successful license applicants is out of a job. (Pupo didn’t return Leafly’s requests for comment.) ��WeedWeek California has more.
    Nevada Independen    t, Leafly

INVEST NOW?

It’s been a rough ride for pot stocks, but Alan Brochstein at New Cannabis Ventures thinks now could be the time to invest:

“While the current market is challenging and could see additional pressure over the next few months, we think this is a great time for long-term investors to consider the sector. For years, we have struggled with the valuations, but they look better than ever”

SAFE BANKING BILL SPLITS REPUBLICANS

The SAFE Banking Act, which sailed through the U.S. House of Representatives in a bi-partisan vote, has triggered a conservative backlash.
NBC, Marijuana Moment

  • Fox News talker Tucker Carlson thinks he knows why the bill passed so easily: “When [lawmakers] mismanage the country this badly, you want the people to be so out of it they don’t respond. That is really true. They want you to be dumb.” (President Trump, a Carlson fan, supports the legislation.)
  • Tony Perkins, head of the Family Research Council, wrote, ” There are probably some conservatives out there who’ve fallen for the libertarian lie that the government can do a better job regulating marijuana and protecting people if it’s legal.”
  • In the Washington Examiner, Colorado Congressman Ken Buck has an editorial on why he voted no.

The conservative who matters to the cannabiz right now is Sen. Banking Committee Chair Mike Crapo (R-Id.) who has expressed openness to banking legislation.

Last week, Politico‘s Zachary Warmbrodt explained how Republicans learned to love a pot bill.

INDUSTRY RESPONDS: “LEGALIZE US!”

In an initiative led by the National Cannabis Industry Association (NCIA), 800 prominent industry figures signed a letter to Congress calling for descheduling cannabis as the only responsible solution to the vape crisis.
Marijuana Moment

  • The letter recommends Immediately descheduling cannabis and regulating it like alcohol.
  • 2) The letter “encourages,” “strongly encourages,” and “encourages,” (again) the industry to regulate its own vaping products.
  • NCIA Executive Director Aaron Smith: “There is a reason there are no illness outbreaks related to tainted alcohol in this country: the substance is regulated at the federal and state levels, and licensed producers have almost entirely replaced bootleggers,”

Despite it all, licensed THC vape sales are stabilizing in key markets, “for now.”
M.J. Biz

VAPI is also the backdrop of a bitter fight over REC product testing in Massachusetts.
Boston Globe