Hi all,

As promised, today I’ll start hosting weekly discussions of the news in the WeedWeek Discord. We’ll get rolling at 10 am PT today and you can log in here. 

We’ve got lots to discuss:

• Jungle Boys hit with labor lawsuit
• Cannabiz awaits Gov. Newsom’s tax plan
• Why Weedmaps bought Enlighten

Enjoy,

Alex

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Two former-employees have sued companies affiliated with SoCal operator Jungle Boys, alleging wrongful termination, unlawful retaliation, failure to pay all wages due and “false imprisonment” among other claims. The 45-page complaint also alleges that the defendants did not allow pregnant women employees.

High Times recently called Jungle Boys, which was established in 2006, a “storied” company and “one of the premier examples of urban farmers bootstrapping their way to success.”

In a statement, Arthur Hodge, a lawyer for the defendants, wrote that an initial investigation found the allegations to be inaccurate and that the defendants would contest the matter in court. 

Read the story at WeedWeek

In Sacramento all eyes are on Gov. Gavin Newsom’s (D) revised state budget plan, due out tomorrow. It’s  expected to include his proposed framework for reforming pot taxes, the state industry’s most pressing concern.

An email sent out yesterday by the California Cannabis Industry Association (CCIA) anticipates three significant changes based on a preliminary briefing it received: 1) Zeroing out the state cultivation tax; 2) Shifting excise tax collection and remittance from distributors to retailers; 3) Increasing the 15% excise tax after three years to offset losses from the cultivation tax.

• CCIA, which opposes raising the excise tax, cautions that it has not yet seen the proposal in writing.

Growers despise the cultivation tax, currently $161/pound of flower, which they point out is the only cultivation tax on any crop in California.

• Amy Jenkins, an industry lobbyist and president of Precision Advocacy, argues that the cultivation tax has a “compounding effect” which raises prices throughout the supply chain.

Precision and Santa Barbara Co. group Good Farmers Good Neighbors commissioned a new study from the libertarian Reason Foundation which predicts eliminating the cultivation tax would raise total state tax cannabis revenue by 123%, since it would increasing the amount of taxed, legal product bought by consumers.

• The study’s author Geoffrey Lawrence also makes the case in an op-ed, published in several newspapers.

“Depending on the governor’s proposal,” CCIA’s email reads, “We may have reason to celebrate or we may have an urgent need to mobilize for change. We are prepared for both contingencies.”

Last week, Irvine-based Weedmaps said it had acquired Enlighten, a leading provider of in-dispensary marketing, for undisclosed terms. The deal aims to expand Weedmaps reach into IRL dispensaries.

When it started operating more than a decade ago, Weedmaps key function was helping consumers locate dispensaries. As that service became less essential, it grew into a Yelp of pot building out its menu features and eventually enabling online purchases. It also built a suite of enterprise software for retailers including a point of sale system.

• Weedmaps’ parent company is now traded on the NASDAQ.

With Bowling Green, Ky.-based Enlighten, Weedmaps gains access to a network of screen displays across more than 1,200 dispensaries.

In an interview, Weedmaps CEO Chris Beals described the deal as creating an “omni-channel” product for dispensaries to reach consumers at all three points of purchase: 1) A dispensary’s site, 2) A portal (Weedmaps) and 3) In-store.

• The combination enables dispensary clients to easily broadcast offers, such as a deal of the day, across multiple channels. “It provides a huge amount of value for a minimal lift on our side,” Beals said.
• Beals said he doesn’t believe there’s any equivalent ecosystem in cannabis or mainstream retail.
• The company also expects to improve its product recommendation capabilities through data sharing.

Enlighten CEO Jeremy Jacobs describes the customer journey in three parts, acquisition, upsell and retention. Weedmaps, he said, is already has the industry’s top customer acquisition platform and customer retention platform Sprout, which it acquired last year. Now Enlighten enables it to upsell brick and mortar customers.

MedMen settles New York lawsuit

SoCal-based retailer MedMen settled the lawsuit filed by MSO Ascend Wellness Holdings after MedMen backed out of an announced plan to sell 87% of its New York operations to Ascend for $73M. Under the settlement, MedMen will sell almost 100% of its stake for $88M plus an additional $14M when Ascend makes its first REC sale in New York. Before the settlement, LA Business Journal checked in with the MSO, “where change is a constant.”

Taking crypto local

Last week I meant to include Itty Bitty in the list of innovative brand business models. Itty Bitty offers its NFT holders a set of benefits including discounts on its equity brand. Additionally, while the crypto world/metaverse can seem remote and abstract, founder Aubrey Lang said he hopes to ground Itty Bitty in local communities by partnering with non-chain restaurants eager for more foot traffic.

Business:

• Lowell Farms saw Q1 revenue decrease 18% to $12.4M.
• Orange County-based cannatech shop Blaze acquired Canadian point of sale software company Greenline for undisclosed terms.
• Chicago-based MSO Cresco Labs is expanding its craft, Sonoma County produced FloraCal brand to Illinois, where of course, it will have to be grown in-state.
• Leading edibles brand Kiva said it would bring its products to Canada, in partnership with Greentone.
• Women’s Wear Daily published a dispatch from Hall of Flowers.

Local:

• LA City Council proposed creating an emblem to indicate licensed dispensaries in Los Angeles County. 
  City News Service
• A civil grand jury recommended changes to Humboldt County’s licensing process.
  Times-Standard
• A plan to bring consumption lounges to Sacramento has stalled.
  Sacramento Bee
• Long Beach City Council approved a measure to study the effects of lowering pot taxes.
  Signal Tribune
• Turlock (Stanislaus Co.) doesn’t appear to be stopping a dispensary from opening, despite its previous majority owner pleading guilty to federal bribery charges.
  Modesto Bee

Fun and interesting:

• Respect My Region previews the Emerald Cup‘s first arrival in Hollywood this weekend.

Company milestones:

• Retailer Harborside, now part of Statehouse Holdings said it would open a new Harborside branded shop in SF’s Haight-Ashbury and an Urbn Leaf branded store in La Mesa (San Diego Co.). It brings the company’s total store count to 13. 

Job Moves:

• Greenhouse flower brand Pacific Stone named longtime liquor executive Angela Cheng SVP marketing and Ted Whitney VP sales. Whitney was previously VP Retail Operations at California brand NUG.

Upcoming:

• Carnaval SF’s May 28-29 cannabis garden is to be hosted by woman-owned brands Gift of Doja and Nouera. 
• NORML is hosting its national interdisciplinary symposium May 20-22 in San Diego.
• Women’s network Blunt Brunch‘s first SoCal event will be July 27th in Hollywood.
• The inaugural, invite-only, Mendocino Craft Farmers Auction, presented by the Mendocino Cannabis Alliance and the Mendocino Producers Guild will be July 16.