Lp,s are doomed!
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Florida Has A Math Problem When It Comes To Cannabis
Terry Hacienda
14-07-2023
The Florida Smart & Safe campaign for recreational cannabis use has secured and verified over 1 million signatures. Roughly .5% of the population stepped up for recreational marijuana. Despite the support, the group has to get approval from the Florida supreme court before it can go to a general vote.
Florida’s elected leaders seem to have an issue that runs opposite of the public. In a survey from Pew Research, only 10% of the population wants marijuana to be illegal. A full 89% believe medical marijuana should be available to everyone and 59% believe it should be with alcohol in recreational use.
“I think it’s going to be a tough fight, and I think it could go either way,” constitutional attorney Will Cooper shared with WFLA. “The key is the Supreme Court in Florida. They have a history of being very aggressive and striking down these initiatives relating to marijuana use in Florida.”
Florida Attorney General Ashley Moody already announced intentions to fight the proposed constitutional amendment. Moody’s communications director said it’s essential Floridians know what they’re voting for. Again, they aren’t sure Florida citizens are smart enough to understand.
Florida twice approved medical marijuana. The first time it had over 55% of the state vote in favor but the Governor and Florida court said they were ill informed and refused to allow it to pass into law. Then in November of 2016 Floridians again voted on a constitutional amendment to introduce medical cannabis to the state. The amendment passed with 71.3% of voters in favor of the initiative. Governor Ron DeSantis refused has extremely slow walked the process. Currently, for a population of 21 million, the state has 501 dispensary locations currently in operation. Florida also has 1790 dedicated liquor shops not counting convenience stores (9,500+), bars, restaurants, and grocery stores (4,000+).
This fight is commons as the they are dealing with two other major issues that can derail the Sunshine State. Public and private university faculty are reporting that they are losing staff at a high rate and struggling to fill vacant positions that were once covetous. A brain drain is happening in the college system and people are declining to move to the state for high-paying technical jobs. The state will have to lean on service workers to generate more taxes.
The second is the soaring cost of home insurance with four national insurance firms refusing to cover Florida. The issue is so dire, there is concern of a housing market crash.
Twenty perfect of the state’s population if over 65. According to data in the Journal of the American Medical Association, patients suffering from pain, cancer, anxiety, and insomnia report significant, sustained improvements in their health-related quality of life following the use of medical marijuana.
That is a amount of the population who can have a direct benefit from better and legal access. So when it comes to legal cannabis, the will of the public and the actions of the state just don’t add up.
[color=red][CALLOUT: I'm being told illicit operators are picking up assets/equipment on the cheap from failed/failing legal cannabis businesses./color]
Oh yeah in saturated markets like OR, CA, OK, etc that’s been happening for years - many distressed cos just sell their land+equipment on Craigslist. I recommend upstart legal players on a budget to look there too
My 2014 prediction caper is on track…
Knowledge is power.
Who’s your daddy?
Who are you going to call?
Sorry to be blunt, but trump did not win the election.
John, there goes your bottom…
Home / Finance
Cannabis producer Canopy hit with $0 price target by analyst
Matt Lamers, International Editor
July 14, 2023
Beleaguered cannabis producer Canopy Growth received a $0 price target by Eight Capital on Wednesday after the Toronto-based financial firm said it is no longer appropriate to value the Canadian operator as a going concern.
In a research report titled “Last Puffs of the Roach,” analyst Ty Collin said it’s Eight Capital’s view that Canopy has:
Fewer than 12 months of cash runway.
A lack of viable financing alternatives.
Large ongoing losses without a clear path to profitability.
Sitting on tons of bunk cannabis nobody wants.
“We therefore apply an asset-based/breakup valuation for Canopy, where we find a net asset value of zero after accounting for the Company’s substantial debts,” Collin wrote.
“With the recent bankruptcy of leading cannabis retailer Fire & Flower and the distressed sale of Hexo to Tilray, we think investors should be awake to the fact that no Canadian cannabis company is too big to fail in this environment.”
In June, Canopy reported a net loss of 3.3 billion Canadian dollars ($2.5 billion) for its fiscal year ended March 31, and the company warned of its ability to continue as a “going concern.”
Collin noted that Canopy burned CA$143 million of cash in its most recent quarter, “failing to slow its rate of cash consumption in (fiscal 2023) despite longstanding efforts to streamline costs.”
Eight Capital said it believes the company could deplete its coffers within the next year, “absent drastic interventions and a speedy slashing of cash costs, which we deem improbable in view of Canopy’s track record.”
“Management’s plan of action (is) likely too little, too late.”
Selling under production cost is not helping any…
Earlier this week, Canopy announced that all conversions pursuant to the $100 million (132 million Canadian dollars) senior unsecured convertible debentures sold to an institutional investor in February 2023 have been completed.
Canopy said in a news release that it has completed numerous balance sheet actions to strengthen its financial position since the beginning of fiscal 2023 – for instance, by implementing a business-transformation plan.
Separately, Canopy announced the sale of its facility in Modesto, California, on June 29.
Canopy said it has now sold five facilities for proceeds of CA$81 million since April 1, 2023.
The business anticipates generating a total of CA$150 million from facility sales by Sept. 30, 2023.
Fitch downgraded Canopy’s rating to CCC- in October 2022. Previously, the company was rated CCC.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.
That rating carries “substantial credit risk” and a “very low margin for safety. Default is a real possibility,” according to the agency.
plunk down your money, and riches will come...was CGC worth 40 dollars at the high?... no. is CGC worth .38 cents at the low?... no.... so somewhere in between is the value of this company...
When they run out out of cash, the low will be .01 cent or less.
They plunk down 50 million in a safe.
Waist of money…
LPs are moldy.
DOOMED!
Home / Retail
Colorado sees ‘worst 4/20 in five years’ amid slumping April cannabis sales
B
July 10, 2023
Colorado’s regulated cannabis industry suffered its “worst 4/20 in five years,” according to the Marijuana Industry Group, citing a roughly 14% decline in April marijuana sales from the same month last year.
“Marijuana sales in the month of April haven’t been this low since 2018,” the Denver-based trade group noted in a news release.
Monthly figures released by the Colorado Department of Revenue show nearly $131.6 million in total marijuana sales for April. That’s down from $153 million in sales in April 2022.
Neither the Department of Revenue nor the Marijuana Industry Group (MIG) offered a breakdown on 4/20 sales in Colorado.
The April sales total includes approximately $114.8 million in recreational marijuana sales (down 12.8% year-over-year) and $16.7 million in medical cannabis sales (down 21.6% year-over-year).
The annual sales decline in April follows a disappointing 2022 for legal recreational and medical marijuana retailers in Colorado, with annual sales down more than 20% from 2021’s record sales total.
“Colorado cannabis small business owners count on the weeks leading up to the 4/20 holiday to be some of the strongest sales of the year,” MIG Executive Director Truman Bradley said in a statement.
Bradley called for “a regulatory overhaul to prevent more cannabis small business owners from closing their doors and laying off their workers.”
“We earnestly hope that Colorado’s policymakers will start taking a new approach to marijuana policy, one that will protect small business owners and the public programs funded by cannabis.”
Colorado is the oldest legal adult-use cannabis market in the U.S., but the state’s cannabis boom is largely considered to be over.
DOOMED!
Home / News by State / California
Q1 cannabis sales in California fall to $1.25B, lowest level since pandemic
author profile pictureBy Chris Casacchia, Staff Writer
May 26, 2023 - Updated May 31, 2023
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Women, minority execs show few gains in U.S. cannabis industry, according to the latest data from the MJBiz Diversity, Inclusion and Equity Report. Get your copy here.
(The headline for this story has been corrected to note that sales were $1.25 billion in the first quarter.)
First-quarter cannabis sales in California slid to $1,249,584,223, the lowest quarterly total since the onset of the COVID-19 pandemic, according to the latest statistics from the state’s Department of Tax and Fee Administration.
Sales were down 5.9% from the same quarter a year ago and the lowest since the second quarter of 2020, when sales were $1,153,285,028.
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The first-quarter statistics put California’s marijuana operators on track to generate just less than $5 billion in sales this year, or 7.1% less than 2022, when taxable sales of recreational and medical marijuana eclipsed $5.3 billion.
If projections hold true, cannabis sales would fall for the second consecutive year in the world’s largest regulated market.
It’s the first time that has happened since regulations for adult-use retail sales were established in 2018.
Sales last year decreased 8.6% from roughly $5.8 billion in 2021, according to state data.
Beyond high taxes, competition from the illicit market and wide swaths of the state still lacking retail access, a credit crises has engulfed the California industry for the better part of a year.
That has prompted marijuana distributors and brands in the state to hire a credit association to rate retailers in hopes of reducing hundreds of thousands of dollars in unpaid invoices – and reining in repeat offenders.
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In a related initiative, a group of California cannabis companies formed a coalition to raise awareness and provide solutions to mitigate the credit crisis threatening to upend the local marijuana industry.
Dozens of cannabis brands, wholesalers and producers last week launched Financial Stability for California Cannabis to confront complex debt problems affecting the entire supply chain.
What can Australia learn from Thailand a year after cannabis was decriminalised?
By Annika Burgess
Thailand's weed industry has boomed since the drug was decriminalised, but now even cannabis advocates are calling for more rules. (Reuters: Chalinee Thirasupa)
Over the past year, thousands of marijuana businesses have flooded the streets since the country decriminalised cannabis to help boost the tourism, agriculture and wellness industries.
"There's just so much available ... There's 10 shops opening up every day," Col, a British expat living in the northern city of Chiang Mai, told the ABC.
"Every time we drive down the street, there's another one. It's gone crazy.
"I never knew there could be that many names!"
Col and his partner Jules — who have lived in Chiang Mai for 13 years — were surprised when in June last year, Thailand became the first country in Asia to take marijuana off the banned narcotics list.
Before the new rules took effect, possession of cannabis could have landed you in prison for up to 15 years.
A sign reading "Sorry, we're stoned" with a KFC in the background.
The tourist city of Chiang Mai has become saturated with weed businesses since the drug was decriminalised. (Supplied. )
The government's intention was to allow people to grow, sell and use the plant for medicinal purposes — not promote it for recreational use.
But from the outset, the rules were foggy.
"It wasn't clear where you can smoke it, how much can you buy, what kind of things you can buy," Jules said.
"There was a lot of confusion."
Jules and Col say they are supportive of the new industry boom in Chiang Mai because of the opportunities it is bringing locals.(Supplied)
Promised legislation has failed to pass through parliament, leaving the country without an umbrella law to regulate the plant's use.
Bills introduced in three states to legalise cannabis for personal use
The Legalise Cannabis party made the move to reform cannabis legislation to help shift Australians out of the criminal justice system.
While smoking weed in public is illegal, recreational use at home is unregulated.
So far, more than 1 million people have registered to grow the plant, and there are about 9,000 legally registered sellers.
Although there have been benefits generated by a new industry "goldmine", even cannabis advocates are calling for more rules and regulations.
Kitty Chopaka, a pro-cannabis activist and owner of Chopaka — a marijuana shop in Bangkok — said the new industry stemmed out of nowhere.
Now, she says the government is left questioning "how do we deal with this?"
"I would say it is beneficial … but it can also be predatory and damaging," she said.
"It's kind of like back in the wild west."
Kitty Chopaka says changes over the last year helped remove some of the stigma around the medicinal use of cannabis.(ABC News: Mazoe Ford)
With concerns raised by some MPs over substance abuse and protections for children (here we go again) Thailand's new coalition government led by the Move Forward Party remains locked in debate over legislation.
It has flagged reinstating cannabis as a narcotic until a bill is passed. Refer is hard to shake!
As discussion ramps up to relax cannabis laws across Australia, Professor Simon Lenton, director of the National Drug Research Institute at Curtin University, said it was important to look at Thailand's one-year experiment to help get the model right.
"What we've seen in Thailand really shows us what we shouldn't be doing rather than what we should be doing," he said.
Although weed was intended to be sold for medicinal use, no prescription is required to purchase it.
Balancing the 'blowout'
Ahead of the laws changing last year, the Thai government celebrated by distributing one million free cannabis plants across the country.
And thousands of "ganja-preneurs" jumped at the chance to benefit from an industry which is forecast to be worth as much as 42.9 billion baht ($1.8 billion), by 2025.
Professor Lenton said people saw an opportunity to make money very quickly.
"Although there was discussion about it being primarily focused on medicinal use, there has been a huge blowout in the number of outlets and reports of increasing rates of use," he said.
A worker inspects marijuana leaves at a Thai cannabis farm.(Reuters: Chalinee Thirasupa)
WEED.TH, a cannabis related search site, has been mapping the shops and their abundance of offerings for both locals and tourists.
As of February 2023, it had more than 8,000 products listed on the site, the platform's managing director Lita Stitranadej, told the ABC.
"The growth we've seen since 2022 has been nothing short of phenomenal," Ms Stitranadej said.
"In June, when cannabis was first decriminalised, only two brave shops opened their doors."
But as more shops appeared, confidence grew and now WEED.TH has 5,100 approved shops on the platform, she said.
A map of Phuket with cannabis leaf symbols showing where weed shops are.
A map from WEED.TH shows the concentration of cannabis businesses in the popular tourist destination Phuket. (WEED.TH)
Ms Chopaka believes the shop saturation will begin to level out, but there's concern about international imports which are impacting costs and taking business away from local growers.
"I hope that we will be able to find our own way with less influence from the international market," she said.
"There's nothing really being done about it."
The highs of cannabis tourism
The new reality for tourists returning to Thailand
It was once known for its zero tolerance policy. Now it has some of the most lax cannabis laws in the world.
In Chiang Mai, a tourist city which has become one of the country's weed hubs, many locals and businesses still see the law changes as largely positive.
More than 300 shops have appeared over the year, according to WEED.TH, and much of the country's supply comes from nearby farms in the north.
Amanda Gedney, who runs a local cannabis shop, Green Dog, said people tend to respect the rules and the weed influx "hasn't changed the pace of normal life".
"People are still being responsible and not just smoking anywhere, and the whole city doesn't smell or anything," she said.
Dispensaries are being creative with their offerings, selling everything from marijuana flowers in different strengths and flavours, with sommelier-like customer service, to pre-rolled joints and locally-made CBD beauty products.
Meanwhile, local resorts have been providing cannabis-infused spa treatments and five-star restaurant menus laced with marijuana leaves.
Pitak Norathepkitti, general manager of Anantara Chiang Mai Resort, said their cannabis spa treatments have been popular, and marijuana massage oils and products made up one-third of their store's sales.
But, the resort still only sees weed as a "micro-trend" which provides opportunities for tourists "looking for something memorable" rather than being a main focus.
A woman getting a massage with a massage cloth with a marijuana leaf on it.
Cannabis-infused spa treatments have become a popular wellness offering.(Supplied: Anantara Spa)
From what he has witnessed over the past year, Mr Norathepkitti isn't worried about weed bringing the "wrong type of tourists to Chiang Mai", and believes eventually only the serious players will remain.
However, he said if cannabis were to be used to attract tourism, it needed better control and planning.
"It is positive. If everyone comes together then it's positive," he said.
"It can be done well if local authorities, experts in the field and businesses come together to move in the right direction."
Pitak Norathepkitti is positive about weed legalisation, but doesn't want weed to be the main tourism driver. (Supplied)
In February, Thailand's prime minister said he was confident the country would receive more than 30 million foreign tourists this year.
In 2022, Thailand beat its tourism target with 11.15 million foreign visitors, a surge from just about 428,000 the previous year when broad pandemic-related travel curbs were in place.
Although it is difficult to attribute numbers to cannabis tourism, Ms Stitranadej said it had definitely played a role.
Many shops are "flourishing in tourist-populated areas," she said.
A petition launched by WEED.TH to keep the weed off the banned narcotics list has so far garnered more than 7,000 signatures, of which 25 per cent are from tourists and expats, Ms Stitranadej added.
What path could Australia take?
Professor Lenton said Australia should start moving away from strict cannabis prohibition, but it is important to take a community-focused, middle-ground approach.
Is medicinal cannabis effective for pain, and is it legal to take?
Lauren Jackson was granted an exemption to take medicinal cannabis when she made a fairytale comeback to basketball. But its use remains stigmatised while Australia's laws are difficult to understand and navigate.
He said in Thailand and parts of North America lax regulation has allowed the industry to become commercially driven.
"The industry wants to maximise profit and public health goals are lost," he said.
"We shouldn't be repeating the same mistakes we've made with alcohol and tobacco."
Last month, the Legalise Cannabis party introduced bills into parliaments in Victoria, New South Wales and Western Australia proposing to legalise marijuana for personal use, using a model similar to the ACT.
The ACT has decriminalised cannabis so users can carry up to 50g of the drug without a prescription, but it still can't be sold or smoked in public.
"What we're trying to achieve is a collaborative approach around harmonisation and a sensible and meaningful reform to end the criminalisation of people who consume cannabis for personal use," Rachel Payne, a Victorian Legalise Cannabis MP, told the ABC.
Rachel Payne says there is broad support across the community for regulation and meaningful conversations around cannabis. (Supplied)
The bills, which will need support from major parties to become law, follow plans announced by the Greens to introduce legislation at a federal level.
The Greens model proposes up to six plants should be allowed to be grown at home and that weed could be sold through regulated cannabis cafes and dispensaries.
The party said there was a potential for at least $28 billion in tax revenue to be raised over nine years.
Professor Lenton said it was worth considering having a small number of retailers selling a limited range of products under strict government regulation.
Other countries have also introduced "cannabis social clubs", where groups of cannabis users register to gain rights to grow a certain number of plants for the club.
So, rather than following aspects of Thailand's approach where it's "difficult to put the genie back in the bottle," Professor Lenton believes Australia can start by taking smaller steps.
"Interventions that really keep the profit model out of it, and are really about maximising public health benefits and minimising public health harms," he said.
Dude!
Cannabis is legal now!
Remember?
Legacy wins but you don,t.
Ignorance is a bliss.
Me?
A capitalist. I like to make money.
But you like to lose.
Oh well.
To each is own.
Looser.
Daily users cop from Legacy growers.
Tourist and once a monthers go lps.
Little Johny comes to a party and claim to have some Canopy weed to roll.
He gets thrown out.
headz.cc bulk purchase to the rescue. Or any of the thousands growers on the web.
I,m on oil, 4 grams a day, equivalent to 40 grams of flowers.
That is where the money is.
Lps caters to newbs. They maybe cop one moldy gram a week.
You are DOOMED big time.
But you guys are so cannabis market naive…
What are you doing losing $ on something you don,t understand.
Legacy has been making money for generations.
They know better than cutting weed with Fentanyl.
They are after repeat customers… remember?
Great business Canadians.
Typical cannabis naive refer madness from straight cats who haven’t got a clue
Folks in the know disagree.
Nobody I know will spend 100$/day on bunk.
Only newbs buy lps.
And they don’t come back for more.
Hence legacy to the rescue.
You are doomed!
Another cannabis naive straight cat!
You are so wrong..
They need your dollars bad….
Doomed!
Unpaid cannabis regulatory fees continue to climb in Canada
Matt Lamers
July 7, 2023
Unpaid regulatory fees owed by cannabis companies to Canada’s federal government jumped more than 200% from a year earlier, to almost 4 million Canadian dollars ($3.1 million) as of the end of March.
The overdue fees have grown every year since 2019, as cannabis businesses licensed by the federal government struggle under the weight of taxes, fees, an intensely competitive market and poor business decisions.
For the 2022-23 fiscal year, the fees in arrears grew to CA$3.9 million, 225% more than the previous fiscal year’s CA$1.2 million, according to new figures shared with MJBizDaily by Health Canada.
The outstanding funds are only for the annual regulatory fee applied to licensees.
Proceeds from annual regulatory fees are used by the government to cover the costs associated with regulating the cannabis industry, such as paying hundreds of federal employees.
The annual regulatory fee generally amounts to 2.3% of a company's gross revenue.
Canada's cannabis excise tax, which is also applied to gross revenue, is separate from the annual fee.
Industry executives have criticized the government for what they say are excessive fees and taxes.
In fiscal 2021-22, for example, various levels of government collected more than CA$1.5 billion from the cannabis industry via excise tax, other taxes (such as sales taxes) and various fees.
Industrywide wholesale sales - the main source of revenue for most licensed cultivators - was only CA$3.1 billion that year.
In addition, government-owned marijuana wholesalers such as the Ontario Cannabis Store - which collectively represent the most profitable firms in Canada's cannabis industry - have applied markups of up to 45% on private marijuana companies that buy their products for retail sale. (The OCS is lowering its markup on edibles from 45% to 25%.)
Those kinds of margins, when considered with taxes and fees, leave little for private business, industry executives say.
“We’ve seen in Smiths Falls, Ontario, and Olds, Alberta, the consequences of an administration of fees and taxes which makes our industry largely unsustainable,” George Smitherman, CEO of the industry group Cannabis Council of Canada, said during a news conference in Ottawa, Ontario, earlier this year.
Smitherman was referring to 800 employees in Smiths Falls who were let go by Canopy Growth as well as 85 jobs in Olds cut by Calgary, Alberta-based producer and retailer SNDL.
“Everywhere you look, someone’s put up a fee or a regulatory barrier or burden that in the collective sense is making it impossible for our sector to make the progress that was expected and sustainable in the long run.”
The growing amount of unpaid government fees accumulated by licensed producers is no surprise to Mitchell Osak, president of Toronto-based Quanta Consulting.
“Fundamentally, LPs are overtaxed and overcharged with fees in a very hostile operating environment,” he told MJBizDaily.
‘The financial rooster may finally be coming home to roost for many of them.”
Osak suspects many companies are likely months, if not weeks, from failing.
“The LPs don't have the money to pay (the government) on time, when more mission-critical business needs like payroll are staring them in the face," he said.
"Realistically, many of these fees won't ever get paid to the government because the companies will go out of business.”
Osak said another factor might be fueling the growing amount of unpaid fees.
“Cost-cutting measures have led to the pruning of back-office staff as well as turnover,” he said.
“This has created a situation where fewer or less trained people have to do the same amount of financial management work.
“Payment delays in some companies simply comes down to accounts-payable processing or approval delays.”
Osak also said some licensed producers might be refusing to pay out of sense of grievance and anger with the government.
Health Canada’s fees
Health Canada says it charges four cannabis-related fees to marijuana business license applicants and licensees to recover program costs.
Those four fees amounted to CA$75.7 million in revenue in 2021-22, according to the health department's latest annual Fees Report.
The annual fee accounted for the vast majority of all cannabis-related fees collected.
In the 2020-21 fiscal year, the annual fees amounted to CA$71.1 million, or 95% of Health Canada’s cannabis business fees.
Three of the fees are for what Health Canada calls “transactional” activities, meaning for one-time events, including:
Application screening.
Security clearances.
Import/export permits.
Those fees cover a single application or permit and are nonrefundable.
Health Canada is beginning to work on application screenings, security clearances and import/export permits only after an invoice is paid in full.
As a result, these fees do not have arrears because they must be paid ahead of time.
“These fees are charged to recover the costs incurred by Health Canada and the Royal Canadian Mounted Police to perform the service being requested,” a spokesperson for the health department told MJBizDaily via email.
The annual regulatory fee is intended to recover the remaining costs of administering the Cannabis Act and its regulations.
The fee is invoiced each fiscal year, which runs April 1 to March 31.
The fee is required to be paid by Sept. 30.
Insolvency filings
The insolvency filings of an increasing number of cannabis companies provides clues as to how much money Canada’s federal government is missing out on in the way of taxes and fees.
In April, Canadian cannabis producer Phoena Group was granted creditor protection.
The company's list of unpaid creditors shows that it owes the Canadian government more than CA$2 million in unpaid fees and taxes.
In fact, the Canadian government was the company’s third-largest unpaid creditor, indicating that fees and taxes contribute a notable amount to cannabis businesses' costs.
At the time of its insolvency, Phoena had amassed a total debt with the Receiver General for Canada and the Canada Revenue Agency of CA$911,893 and CA$870,506, respectively.
The unpaid creditor list showed that Health Canada was owed CA$95,799.
Trichome Financial Corp. also owed the Canadian government millions of dollars in unpaid fees and taxes when it obtained creditor protection late last year.
The unpaid creditor list showed the Canada Revenue Agency was owed CA$7.7 million and Health Canada was owed approximately CA$443,000.
When The Flowr Corp., another cannabis company, filed for creditor protection, its second largest debt was to the Canadian government via the Receiver General for Canada (CA$781,994).
Health Canada was owed $1,886.
You will have to do your own research.
Legacy would be any cannabis growers that is not an licences producers.
They are great at providing excellent canna…
They « own » the cannabis market for 90 years and counting ever since 1932.
AAAA ounces delivered for 30$.
Pounds are 400$.
Bulk buying allowed.
Licences Producers are good at growing bunk.
They are trying to sell their bunk weed under cost in order to try to survive a little longer… Lol.
Licences Producers are there to sell shares to newbies & suckers.
DOOMED
Herbl collapse signals wider fallout in California marijuana industry
Chris Roberts,
July 6, 2023
California-based marijuana distribution giant Herbl is going to the courts in a bid to recover some of the roughly $10 million it claims retailers owe the company, which fell into receivership in June.
At the same time, according to court and investor documents, at least one of Herbl’s former brand partners – Sunset Connect – is suing to recover a six-figure debt the San Francisco maker of pre-rolls claims that Herbl owes and refuses to pay, records show.
The unprecedented struggle over what’s left of the once-prominent distribution company is a wave in a broader ripple effect that observers fear could sink more California cannabis businesses amid a cash squeeze plaguing the state’s marijuana industry.
In terms of what’s left of Santa Ana-based Herbl, retailers, brands, investors and creditors as well as state and federal tax collectors appear to be in a race to be the first to collect money from a rapidly vanishing pot.
Herbl’s unprecedented collapse is also a test case for the U.S. marijuana doomed industry as a whole.
Federal prohibition means cannabis companies can’t use typical avenues for businesses in such financial straits, including bankruptcy proceedings that would allow for debt to be restructured and certain assets protected.
In Herbl’s case, “it is understood from the terms of the receivership that investors and claimants will be prioritized over the brands seeking payment,” said Alexis Lazzeri, a Los Angeles-based attorney at Manzuri Law.
In addition to Pasadena-based East West Bank, Herbl’s main lender, Herbl’s investors include New York City-based Roystone Capital Managemet.
Roystone did not respond to a request for comment.
It’s unclear how much Herbl may owe its erstwhile brand partners, but observers said those cannabis companies may be least likely to recover money owed.
Herbl has yet to make a public statement about its collapse.
Nor did it directly inform its partners.
‘Destined to happen’
The Herbl situation is also amplifying the voices of critics who argue that California’s mandatory distribution model as well as current state tax structure are unworkable.
That’s particularly true in a bear market in which creditors are seeking either unrealistically quick returns on their investments or calling back their capital from cash-poor businesses.
“I think this was destined to happen, the way the California market is set up,” said Griffen Thorne, a Los Angeles-based attorney and corporate law specialist at Harris Bricken, an international firm with a specialized cannabis practice.
“I don’t think it’s an Herbl thing. It’s just a symptom of the way the industry was set up and the way the market is going right now.”
“There’s going to be a lot of fighting over unsecured debt,” he added.
“There’s a lot of people out there vying for money, and it’s going to be hard for those folks to get paid.
“This is going to be the first of many failures and flameouts we’re going to see as a result of the creditor crunch.
“It’s just not going to be clean, and, unfortunately, this is where we’re at with the industry.
Anatomy of a struggle
Court records in Los Angeles and Orange counties show Herbl is suing at least 10 retailers and delivery services for unpaid debts.
Past-due amounts range from $22,000, owed by Southern California-based General Verde Organics, to more than $123,000 owed by Urban Buds, a Los Angeles-area delivery service, according to court records.
Urban Bud did not respond to MJBizDaily requests for comment. General Verde could not be reached for comment.
Herbl’s collection efforts began earlier this spring, before the company’s struggles became publicly known, though attorneys for Herbl filed several complaints seeking past-due bills in June, court records show.
How much Herbl, in turn, owes the brands whose products it distributed is not known.
Also unknown is Herbl’s potential overdue tax liability to the state and the IRS.
Herbl fell into receivership in early June after the company’s main lender, East West Bank, called in a key loan, as MJBizDaily first reported.
The bank’s aggressive collection efforts set off a chain reaction that broke the already weakened company.
According to an undated investor update from Herbl founder and CEO Mike Beaudry obtained by MJBizDaily, East West canceled Herbl’s line of credit in March.
Herbl was already “in desperate need of new capital” after an attempted raise the previous August resulting in no new investors “despite (the company’s) willingness to extend extremely favorable terms,” Beaudry told investors in the update.
At the same time that East West canceled Herbl’s line of credit, the bank demanded the company start repaying a $5 million loan “in increments of $250k per week or face immediate foreclosure proceedings,” Beaudry wrote.
‘Uniquely vicious’
That “bloodthirst” was “uniquely vicious, but not surprising given that the distribution model essentially makes distributors act as banks to the cannabis industry, fronting money for retailers,” Manzuri Law’s Lazzeri said.
“It might also be an indication of a loss in trust in the state of the cannabis industry and a lack of incentive to continue to hold it up,” she added.
Herbl made the bank payments, but the resulting cash crunch – coupled with spiraling overdue accounts-receivable from retailers that ballooned to “nearly $10 (million), of which $7M+ is significantly in arrears” – “forced us to begin missing payments with our brand partners,” Beaudry wrote.
“That, in turn, caused our brand partners to begin exiting our platform.”
The resulting downward spiral came to a head in June. Brands publicly announced they were leaving Herbl before Herbl employees posted farewells on social media.
“We are working with East West Bank on next steps, which we anticipate will involve a process of liquidating HERBL’s assets,” Beaudry noted in the investor update.
Beaudry did not respond to an MJBizDaily request for comment.
David Hafner, a spokesperson for California’s Department of Cannabis Control, told MJBizDaily that regulators are ‘informed that Herbl is in receivership and is communicating with the licensee and receiver to address issues related to the licenses.”
“As with any licensed business in California, cannabis licensees who have unpaid invoices can avail themselves of any applicable legal processes to recover funds,” Hafner continued.
“We encourage our licensees to seek out the appropriate, legal solutions to resolve their matters.”
Herbl also does business in Nevada, where its operations are so far unaffected, Beaudry wrote in the investor update.
Brands left out
One of those brands, Sunset Connect, did just that.
In a June 20 lawsuit filed in San Francisco Superior Court, Sunset Connect is seeking compensation for more than $130,000 worth of pre-rolls that Herbl sold to retailers.
That product was sold and Herbl collected payment, but then Herbl informed the brand that “they would not be paying,” the lawsuit alleges.
Ali Jamalian, Sunset Connect’s founder and owner, told MJBizDaily via text that Herbl “did a great job as a full-service distributor.”
However, the subsequent “lack of transparency and willingness to make so many brands a casualty of said lack of transparency is not excusable,” he added.
“I for one never even received any communications announcing their receivership or inability to pay, not sure if other brands did but I doubt it.”
“Analyst” finally see the light of day…
About time! Lol.
11 years too late…
Used car salesmen caper.
Home / Cultivation
Cannabis irradiation poses quandary for growers, scares consumers
Bonno
July 5, 2023
Cannabis cultivators are caught in a dilemma about providing clean, safe product that passes inspection for acceptable levels of microbial contaminants.
The standard solution is irradiation: gamma rays zapping cannabis flower with the highly charged, radioactive element cobalt 60.
Is irradiation good? Is it bad? Should cultivators even admit to doing it?
Some of the confusion comes from state regulators, who are still figuring out what microbes to guard against from a list of the plant’s typical microbial contaminants.
If they don’t pass testing – generally because of bad microbial growth due to poor sanitation in the grow and processing stages – growers will have to nuke it.
But who wants nuked cannabis?
The fact is that state-regulated cannabis often has been blasted by gamma radiation for hours – or by electron beam radiation, or, the preferred method by U.S. cultivators, x-ray radiation – to kill bad microbes.
One microbe in particular, aspergillus, which is present everywhere, can cause serious respiratory illness and even death – not only among consumers but also cultivation workers.
Gamma irradiation is an old-school tool.
It’s the same sort of radiation used for many food products sold in the United States. The U.S. Food and Drug Administration lists nine food varieties that can be radiated, including beef and pork as well as fresh fruit and vegetables including lettuce and spinach.
At least 59 other countries irradiate their foods because it is considered an effective form of food preservation that extends shelf life by reducing spoilage – albeit with a slight reduction in vitamins.
But most cannabis cultivators don’t want you to know their product has been zapped.
U.S. cannabis growers who use radiation have made efforts to dodge the stigma by calling irradiated cannabis “electronically pasteurized” or “cold pasteurized.”
But irradiation has become a part of standard operating procedures (SOPs) because it penetrates the plant well without causing undue damage – unlike other plant decontamination methods using heat, chemical reagents or even toxic substances such as ethylene oxide gas.
When their cannabis fails testing, cultivators zap it, sell it to the public and hope for the best.
There’s some evidence that even zapping can end up leaving bits of disconnected DNA intact, which can help the microbe “revive itself,” according to Jini Glaros, chief scientific officer at Modern Canna Laboratories in Lakeland, Florida, who called for more investigation into that possibility.
The problem with eliminating bad microbes
Getting rid of microbial contaminants in cannabis has always been a dodgy exercise for a federally illegal product.
“All of the infrastructure – the good manufacturing practices, the good agricultural practices and the product safety that is required in manufacturing these other consumer food goods – is not required for cannabis manufacturing,” Tess Eidem, a microbiologist with Denver cannabis consultancy Rogue Micro.
“Your dog food is regulated by the FDA, unlike cannabis,” she noted.
“With cannabis, you really don’t have to put in any preventive controls. You don’t have to have a sanitation program. You don’t have to have a quality team.
“All of the food safety that manufacturers in the food industry are expected to do and proactively address to identify their risks and their food-safety plans are not required in cannabis,” Eidem said.
“All cannabis manufacturers really have to do is pass compliance testing.”
Passing testing can mean up to 24 hours of product sitting in an irradiation machine, Eidem said.
“In the short term, a cultivator can recover failed products (by remediation). But in the long term, it’s a crutch – and it’s not really solving the underlying issues.”
Suehiko Ono, founder and CEO of EOS Farms, a family-owned organic cannabis farm in Pittsfield, Massachusetts, irradiates cannabis as a way to be compliant with the strict and broad analysis requirements for cannabis sold in Massachusetts.
“The microbe testing threshold comes from extreme fear and caution on the side of regulators”.
“The basic approach and attitude from regulators is: Do something even if it does nothing, because you can’t do nothing – even if what you’re doing doesn’t really do anything but confuse the matter. But you have to protect the consumer.”
Microbe testing thresholds in the state are “both over-determinative and under-determinative,” he said.
“(They’re) over-determinative in that they test for any of the millions of species of total viable aerobic bacteria and total yeast mold. They don’t differentiate,” Ono said.
“They test for the presence. And they don’t test for aspergillus, which is the only one that’s been shown to cause harm. They don’t even tell you if it’s there or not.
“So, if we’re going to force these nonsensical microbe-testing thresholds, then you’ve got to remediate. There’s no way around it.”
A different approach abroad
It’s a different scenario outside of the United States.
Canadian cannabis producers routinely irradiate an estimated 80%-90% of their product.
All medical cannabis imported into Germany must be irradiated in a laboratory that is compliant with that country’s strict requirements.
In the Netherlands, where medical marijuana is available to patients through a prescription by a qualified doctor, the Dutch government controls the irradiation process.
Irradiation is the preferred method of decontamination in the Netherlands, according to a 2016 study by Arno Hazekamp, the former head of research and education for Dutch cannabis producer Bedrocan International.
Medical cannabis can’t be sold within the Netherlands until the country’s Ministry of Health certifies the product as irradiated.
Concerns among adult-use consumers
Most of the fears about irradiation in the cannabis industry come from recreational consumers who are not well informed, according to Tjalling Erkelens, the founder and board chair of Bedrocan.
The producer of medicinal cannabis follows European guidelines for good manufacturing practices.
Irradiation does not destroy the cannabinoids in the plant, Erkelens told Bonno, dispelling one common myth about irradiation.
“It very slightly affects terpenes,” Erkelens said.
“There’s no degradation of THC or CBD. If the product is properly packaged, there’s no loss of water. Basically, nothing changes.”
Erkelens said he has heard the unfounded fears that gamma radiation is not good for patients using medical cannabis.
“What’s that about? What’s the scientific basis for that? Please prove to me that this is bad for patients,” he said.
“There’s no remainder of the irradiation process itself (in the cannabis). The only thing it does is it cuts actually the string of life in living creatures, of living spores and living bacteria.
“It’s why I don’t like those machines that process cannabis flowers, because there are no eyes on the end products. So, the risk of getting mold in the product is there.”
Erkelens’ general recommendation to avoid bacteria in the product is to treat the indoor grow facility like a hospital.
“You should wash your walls and your floor,” Erkelens said. “It should be embedded in protocols and done on a very regular basis.
“And when you go in to where the plants are flowering, be sure that everything you bring in there is clean. Even be sure to bring in clean air.”
That same clean-room recommendation is echoed by Kyle Baker, co-founder and chief strategist of EcoBuds, a biosecurity company based in Carbondale, Illinois.
“If I tell the client that they need to clean every day, sometimes twice a day, and that was the answer to their problem of failing tests, they look at me cross-eyed”.
“But if they do it, they don’t have to use radiation. They don’t have to use remediation methods. Because the consistency of not having disease issues that affect yield are significantly decreased.”
Next steps
The real problem is that a young industry is still getting a handle on regulations, Modern Canna’s Glaros told us.
“It’s a little weird that we’re not letting consumers know when a product has been irradiated,” she said.
“I know that regulations aren’t requiring producers to label that they’ve irradiated their product, and so that’s not happening on that side of it.
“I think the regulations are being created before we have all of the information.”
“That’s not necessarily anyone’s fault,” Glaros said. “It’s just that this is such a new industry in a way.
“We’re still in its infancy compared to the food industry and the pharmaceutical industry.
“Hopefully regulators are listening to the people doing the research and seeing the data and making changes to those regulations based on that information.”
Facts do matter.
We know this business extremely well.
We also take our cues from legacy family and we grow dank aaaa’s..
Lps had a “permit” to sell weed.
Not only do they grow expensive moldy bunk that has to be mixed with costly cat litter,
but they burned billions doing it. Lol.
Wrong folks for the job!
Legacy to the rescue.
When you legalize canna, legacy blooms and lps burns $$$$$.
Legacy has been at it for decades.
Lps simply don,t know what they are doing growing bunk Gamma raid weed.
And that is a fact!
The proof is in the pouding.
Doomed!
CANNABIS Less than 25% of U.S. cannabis businesses were profitable in Q4, 2022: Whitney Economics
The firm says 42 per cent of American pot businesses were profitable in Q4 the previous year
ByRowan DunnePublishedJune 22, 2023
Less than 25% of American cannabis businesses were profitable in Q4, 2022: Whitney Economics Photo via Whitney Economics
The United States cannabis industry is in crisis and most businesses there are struggling to stay afloat, according to a new survey report released on Thursday by the analytics firm Whitney Economics.
The report found that only 24.4 per cent of American cannabis businesses were profitable during Q4 last year, a 41 per cent drop from the fourth quarter of 2021 when Whitney reported that 42 per cent of pot distributors in the country had financially viable operations. Over 70 per cent of respondents reported that their profits had decreased during the quarter.
The results come from the firm’s second annual Cannabis Operator Sentiment and Business Conditions report, which is derived from a yearly survey of U.S. cannabis business licensees. It is intended to assess how cannabis industry operators view their success and the factors that hinder their growth.
A total of 224 respondents from 13 states participated in the survey, representing approximately 1.1 per cent of cannabis business license holders in those states. There was a 67 per cent rate of male respondents and a 27 per cent ratio of female respondents, with the remainder preferring not to say.
The firm says it presents this data with a 90 per cent rate of confidence and a 5.5 per cent margin of error. The report does not publish individual or company information and respondents were anonymous.
Less than 25% of U.S. cannabis businesses were profitable in Q4, 2022: Whitney Economics
States that participated in the survey. Map via Whitney Economics
Read more: Heritage Cannabis ships first batch of live resin vape cartridges to Australia
Read more: Xebra inks cannabis cultivation agreement with top ranking Mexican agriculture university
Whitney says cannabis operators are reporting increasing costs across the board and that the retail price for pot continues to drop. The firm says there is also a shift in consumer behaviour and reduced levels of spending, intense price competition and lower margins that are creating stress throughout the industry.
Following the release of the new report, Whitney is forecasting seven quarters of reduced growth for cannabis operators in the U.S. and says there is little relief in sight. The business environment isn’t expected to start improving until 2025.
Whitney also says that regulatory and legislative policies in the country are more concerned with tax generation than creating a viable and business-friendly environment. Respondents felt that if policies became more industry-focused and supportive of businesses then conditions may improve.
“By conducting this survey, Whitney Economics strives to bridge the gap between the theories of business economics and the daily lives of operators within the cannabis industry,” said Beau Whitney, Founder of Whitney Economics.
The firm was founded in Portland, Oregon in 2014 and its founder is currently serving in significant roles with different industry organizations. Whitney is currently the Chief Economist for the National Cannabis Industry Association and National Industrial Hemp Council and the Oregon chapter President of the National Association of Business Economics.
Read more: Cannabix Technologies breaks new ground in cannabis detection with edibles testing success
Read more: Aurora Cannabis reports losses but maintains strong cash position in Q3 2023
Recent industry troubles will likely pass with time
Other states not surveyed in the report have also been experiencing difficulties in the cannabis economy.
“The market’s just bad, there’s businesses closing left and right,” said a cannabis sales worker in an interview with The Denver Post this May. The publication says that in March this year retail sales in Colorado dropped by US$17 million from 2022.
The major U.S. cannabis operator Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) closed down the majority of its operations in Colorado, Oregon and California this year over lack of financial viability in those states, two of which did participate in Whitney’s survey.
Curaleaf’s CEO Matt Darin said in January that those states may represent opportunities in the future but the price compression brought on by lack of effective enforcement of the illicit market prevented the company from generating acceptable returns on its investments there.
Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) is another U.S. cannabis distributor that saw a US$30 million drop in gross profit at the end of Q1 this year in comparison to the first quarter of 2022.
The company recently closed two of its California dispensaries over a lack of continued financial feasibility. Trulieve has had its share price drop by almost 68 per cent over the past year from $16.72 last June to a value of $5.36 on Thursday.
Another report released in March by the cannabis business intelligence firm New Frontier Data indicated that although the U.S. cannabis industry has been experiencing difficulties, the situation would improve over time.
“Inflation, high taxes and competing illicit markets are compounding price pressures in mature legal markets, and the potential for a recession will negatively impact cannabis consumer spending in the medium term,” said the firm’s CEO Gary Allen, adding that those challenges will do little to deter the growing demand for legal cannabis in the long term.
According to New Frontier Data, the U.S. is expected to generate US$5 billion more from cannabis sales this year than in 2022.
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New Jersey Medical Cannabis Sales Fading Quicker Than Adult-Use Sales Grow
The state’s licensed retailers sold more than $179 million of cannabis during the first three months of 2023, a decline from the previous quarter.
Adobe Stock
TONY LANGE | JUNE 26, 2023
Although New Jersey’s adult-use cannabis market continued to grow during the first quarter of 2023, the state’s overall sales figures have exhibited a nine-month plateau as regulators continue to build out the program with new licensees.
Licensed dispensaries recorded nearly $145 million in adult-use sales and roughly $34.5 million in medical sales in the first three months of this year, according to figures released June 21 by the New Jersey Cannabis Regulatory Commission (CRC).
While the adult-use sales figure grew 8.7% from the previous quarter, medical sales dipped 31%, resulting in an overall market decrease of 1.7%.
“We did see a significant drop in this last quarter,” CRC Executive Director Jeff Brown said during the commission’s board meeting last week. “Previously, they’ve remained pretty strong, but we did see about a $15 million decrease in medicinal sales from Q1 2023 versus Q4 2022. Nonetheless, the [adult-use] market continues to grow.”
Brown’s comments come as overall sales figures remain stagnant following an initial boost from an adult-use retail launch on April 21, 2022. Overall sales for the third quarter of 2022 ($178 million), fourth quarter of 2022 ($182 million), and first quarter of this year ($179 million) represent a nine-month flatline in growth amid the fallout of medical participation.
The recent medical sales dip—from $50 million in Q4 to $34.5 million in Q1—comes as New Jersey’s medical cannabis program’s patient numbers have decreased more than 24,000 since a peak of roughly 129,000 patients in May 2022.
Two days after Brown announced the first-quarter sales figures, state lawmakers criticized the commission’s rollout of the adult-use program during a Senate Judiciary Committee hearing on June 23, saying state regulators have been slow to approve license applications for new market entrants and have hindered industry growth with red tape, the New Jersey Monitor reported.
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Legislators also scolded the commission’s handling of Curaleaf’s licensing renewals in April, when board members voted to put five of the multistate cannabis operator’s permits on hold only to conditionally reinstate those licenses four days later.
RELATED: Curaleaf’s New Jersey Licenses Renewed With Conditional Approval During Emergency Meeting
Brown and CRC Chairwoman Dianna Houenou defended the CRC’s oversight of the industry during the hearing, according to the Monitor.
“The role of the commission, especially as a new agency standing up this industry, we inherently need to assess and understand what the demands are across the state for our patient community and our adult-use consumers, and then provide regulations and opportunities accordingly,” Houenou said.
Among the 2,084 license applications submitted to the CRC since 2021, there were 783 that remained pending as of June 13, according to the commission.
Despite more than 1,000 of the submitted applications being for retail operations, there are only 33 adult-use dispensaries open in the state as of June 26, with the majority of these facilities operated by existing medical licensees with multistate footprints, according to the New Jersey Office of Information Technology.
Just three of the 33 retailers—Nova Farms in Woodbury, Earth & Ivy in New Brunswick, and Union Chill in Lambertville—are new to the adult-use program without a grandfathered connection to the medical cannabis program.
These retailers have provided millions of dollars in tax revenue to New Jersey, including more than $29.5 million from the state’s 6.625% sales tax.
In addition, the CRC reported last week that more than $459,000 in tax money was collected from the Social Equity Excise Fee (SEEF) in the first quarter of 2023. Revenue from SEEF, collected at $1.52 per ounce of cannabis sold by cultivators, is earmarked for disbursement to communities most impacted by the drug war.
While state regulators have continually said their focus is on providing an equitable and inclusive adult-use marketplace, CRC board member Charles Barker expressed his discontent in March for the lack of diversity among licensees, saying that the board’s intent to prioritize those most harmed by the drug war had yet to be reflected in its awardees. In the meantime, larger companies have had an extension on their first-mover advantage from medical to adult-use operations.
Diversely owned businesses make up roughly 70% of the adult-use license applications submitted to the CRC, yet those businesses have yet to reap the retail rewards of a roughly $600 million annual market.
But much of the “red tape” to becoming an operational adult-use cannabis business in New Jersey derives from the local level, where myriad ordinances and zoning approvals often cause delay. Plus, navigating the capital raises necessary to run a successful business is one of the largest hurdles for many equity operators.
At the state level, New Jersey is a “fairly reasonable” place to do business as it relates to cannabis regulations that are clear, extensive and cover various ownership issues, Jennifer Cabrera, a New York-based partner at cannabis law firm Vicente LLP, told Cannabis Business Times earlier this year. She called the adult-use program welcoming for new market entrants.
Still, balancing act for cannabis regulators in any emerging state market often comes down to rollout speed and licensing inclusion—but the two rarely align in a manner that avoids criticism from all stakeholders involved.
Home / Cultivation
Oklahoma medical marijuana supply far exceeds demand, report says
By MJBizDaily Staff
June 26, 2023
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Supply in Oklahoma’s medical marijuana market is at least 32 times higher than patient demand, helping fuel underground sales nationwide, according to a new study.
The 24-page report from the Oklahoma Medical Marijuana Authority (OMMA) quantifies and confirms what industry insiders have suspected for years: The state is inundated with an exponential oversupply of regulated marijuana.
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Many of the systemic challenges in the state have been self-inflicted.
Production was largely unchecked for years as Oklahoma’s MMJ market surged amid limited regulatory restrictions and enforcement, creating a proliferation of unlicensed operators in the process.
The report, conducted by Cannabis Public Policy Consulting, queried more than 1,300 cannabis consumers from 68 of 77 counties in the state.
Among the major findings:
Supply and demand strongly suggest potential out-of-state diversion of marijuana products.
Licensed operators are very likely supporting an illicit market at the point of cultivation and retail sales.
The volume of oversupply within the regulated system, coupled with low barriers to entry, suggest unlicensed/illicit cannabis cultivation operations are unlikely to be observed across the state and might be operating in plain sight.
Regulators and lawmakers have taken steps to try to manage oversupply and an estimated 2,000 MMJ licensees who obtained permits fraudulently or are using their licenses to mask illegal sales.
In May, Republican Gov. Kevin Stitt signed a bill into law that extending the moratorium on issuing any new medical cannabis business licenses to Aug. 1, 2026.
The two-year moratorium was scheduled to end Aug. 1, 2024.
Law enforcement has also closed down hundreds of illegal grow operations across the state.
Oklahoma is home to 6,563 registered growers, according to the latest OMMA statistics.
That’s a decline of more than 500 from January.
There were roughly 356,000 registered medical patients at the end of May.
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The OMMA has proposed several initiatives to rein in oversupply and unlicensed operators, including:
Large-scale investigations and enforcement granted through recent legislation and expanded authority of Attorney General Gentner Drummond and Oklahoma’s Bureau of Narcotics and Dangerous Drugs.
Utilizing technology and more human resources to focus on noncompliance and illicit activities.
Boosting regional presence.
Implementing new legislative, regulatory and production management policies.
“We will address the oversupply of marijuana, safeguard the integrity of our medical market, and ensure the safety of our patients,” OMMA Executive Director Adria Berry noted in a letter to stakeholders included in a 12-page strategic response.
JohnCM
Re: lodas post# 127751
Wednesday, June 21, 2023 10:51:15 PM
Post# of 127865
Rock solid support is close at $0.50
Time to splurge! Lol
Home / Cultivation
Oklahoma medical marijuana supply far exceeds demand, report says
B
June 29, 2023
Supply in Oklahoma’s medical marijuana market is at least 32 times higher than patient demand, helping fuel underground sales nationwide, according to a new study.
The 24-page report from the Oklahoma Medical Marijuana Authority (OMMA) quantifies and confirms what industry insiders have suspected for years: The state is inundated with an exponential oversupply of regulated marijuana.
Doomed.
Many of the systemic challenges in the state have been self-inflicted.
Production was largely unchecked for years as Oklahoma’s MMJ market surged amid limited regulatory restrictions and enforcement, creating a proliferation of unlicensed operators in the process.
The report, conducted by Cannabis Public Policy Consulting, queried more than 1,300 cannabis consumers from 68 of 77 counties in the state.
Among the major findings:
Supply and demand strongly suggest potential out-of-state diversion of marijuana products.
Licensed operators are very likely supporting an illicit market at the point of cultivation and retail sales.
The volume of oversupply within the regulated system, coupled with low barriers to entry, suggest unlicensed/illicit cannabis cultivation operations are unlikely to be observed across the state and might be operating in plain sight.
Regulators and lawmakers have taken steps to try to manage oversupply and an estimated 2,000 MMJ licensees who obtained permits fraudulently or are using their licenses to mask illegal sales.
In May, Republican Gov. Kevin Stitt signed a bill into law that extending the moratorium on issuing any new medical cannabis business licenses to Aug. 1, 2026.
The two-year moratorium was scheduled to end Aug. 1, 2024.
Law enforcement has also closed down hundreds of illegal grow operations across the state.
Oklahoma is home to 6,563 registered growers, according to the latest OMMA statistics.
That’s a decline of more than 500 from January.
There were roughly 356,000 registered medical patients at the end of May.
The OMMA has proposed several initiatives to rein in oversupply and unlicensed operators, including:
Large-scale investigations and enforcement granted through recent legislation and expanded authority of Attorney General Gentner Drummond and Oklahoma’s Bureau of Narcotics and Dangerous Drugs.
Good luck.
Utilizing technology and more human resources to focus on noncompliance and illicit activities.
Boosting regional presence.
Implementing new legislative, regulatory and production management policies.
“We will address the oversupply of marijuana, safeguard the integrity of our medical market, and ensure the safety of our patients,” OMMA Executive Director Adria Berry noted in a letter to stakeholders included in a 12-page strategic response.
Luxembourg Legalizes Cultivation And Consumption Of Cannabis At Home
By Maurice Fick, RTL Today on June 29, 2023
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38 deputies voted in favour of the bill, with 22 against. The parties DP, LSAP, Déi Gréng, déi Lénk and ADR had already announced in advance that they were in clear favour of bill 8033.
A repressive policy towards drugs is “an absolute failure”, said Minister of Justice, Sam Tanson (Déi Gréng) at the end of the debate. For that reason, “we must dare to take another path” and “seek solutions”.
Her party colleague Josée Lorsché remarked: “It’s not a question of trivialising or promoting cannabis”, but with this bill “it is a question of combating drug-related crime and the sale of cannabis on the black market.” She added that this would also lead to better quality products, as those offered on the illegal drug market are “more harmful to the health of users”.
BUSINESS
Cannabis company Canopy Growth sells California facility, changes auditors
SMITHS FALLS, Ont. - Canopy Growth Corp. says it has completed the sale of its facility in Modesto, Calif.
By The Canadian Press
Thursday, June 29, 2023
1 min to read
Article was updated Jun 29, 2023
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Staff work in a marijuana grow room that can be viewed by at the new visitors centre at a Canopy Growth facility in Smiths Falls, Ont. on Thursday, Aug. 23, 2018. Canopy Growth Corp. says it has completed the sale of its facility in Modesto, Calif.
Sean Kilpatrick / THE CANADIAN PRESS
SMITHS FALLS, Ont. - Canopy Growth Corp. says it has completed the sale of its facility in Modesto, Calif.
The cannabis company is selling some of its facilities as part of an organizational transformation announced last year to help cut spending.
It says it has now sold five facilities for $81 million since April 1.
ARTICLE CONTINUES BELOW
Canopy expects to raise up to $150 million from facility sales by Sept. 30.
The company also announced the appointment of PKF O’Connor Davies LLP as its accounting firm and accepted the resignation of KPMG LLP from the role.
Canopy says the move reflects a joint decision between the company and KPMG.
Home / Canada
Cannabis producer Canopy splits with auditor, could save millions
By MJBizDaily Staff
June 28, 2023 - Updated June 28, 2023
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Tickets for MJBizCon 2023 in Las Vegas are on sale now! Dare to grow and discover the business solutions to elevate your cultivation operation. Buy your ticket.
Canopy Growth Corp.’s principal accountants resigned June 22, but the company told MJBizDaily the move was a “joint decision” with the auditor and not related to recent accounting woes.
“On June 22, 2023, KPMG LLP, which had been serving as the independent registered public accounting firm of Canopy Growth Corporation, declined to stand for reelection and resigned as the Company’s independent registered public accounting firm,” Canopy disclosed in a regulatory filing with U.S. Securities and Exchange Commission.
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Canopy’s fiscal 2022 sales were recently restated lower, by 10 million Canadian dollars ($7.5 million), while year-to-date sales for fiscal 2023 were lowered by approximately CA$14 million.
Canopy reported a net loss of CA$3.3 billion for its fiscal year ended March 31 and warned of “material misstatements” in past disclosures.
Canopy previously indicated the restatements had been related to international sales that had been improperly recognized by BioSteel Sports Nutrition’s previous management.
The Smiths Falls, Ontario, producer acquired BioSteel in 2019.
On June 22, 2023, Canopy hired auditing firm PKFOD to replace KPMG as its new independent public accounting firm.
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“This change has been underway for some time and is not related to the restatement of BioSteel revenues but reflects a joint decision between Canopy Growth and KPMG,” a spokesperson for Canopy said in a written statement to MJBizDaily.
The spokesperson suggested the change could save the company anywhere from 25%-50% in annual accounting costs, which were roughly CA$6 million in the previous fiscal year.
In a call with analysts to discuss quarterly earnings, CEO David Klein said it was important to “act swiftly to provide stability to the business at this pivotal time.”
The CEO said Canopy fired several members of the BioSteel leadership team and is considering litigation to recover damages and costs associated with the BioSteel sales mishap.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.
Home / Canada
Cannabis producer Tantalus Labs restructures, lays off workers
By MJBizDaily Staff
June 29, 2023 - Updated June 29, 2023
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Women, minority execs show few gains in U.S. cannabis industry, according to the latest data from the MJBiz Diversity, Inclusion and Equity Report. Get your copy here.
Another Canadian cannabis producer is entering court-supervised restructuring amid cut-throat competition and heavy government taxation of the 4-year-old industry.
In an email to MJBizDaily, British Columbia-based Tantalus Labs confirmed it has filed a Notice of Intent for Restructuring in Canadian federal court.
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“This filing comes with the difficult reality of laying off the substantial majority of our team, retaining only a few key employees to navigate the complexity of this restructuring process,” CEO Dan Sutton said in the email.
Sutton said the company is initiating “the process of restructuring with the mission to find a path forward for our brand and winning products to continue to deliver value to customers and distributors nationwide.”
Tantalus Labs becomes the latest casualty in the Canadian cannabis space.
Toronto-based retailer Fire & Flower Holdings recently received an order for creditor protection from a Canadian court, putting approximately 1,400 full- and part-time workers in limbo.
Before that, Vaughan, Ontario-based cannabis producer Phoena Group was granted creditor protection and is winding down its operations.
Sutton has been a leading voice in the industry’s drive to prompt the Canadian government to ease the excise burden on cannabis businesses.
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MJBizDaily reported in May that a growing number of Canadian cannabis producers are unable to pay their excise bills, and their debts are mounting.
Federally licensed Canadian producers owed the Canada Revenue Agency 192.7 million Canadian dollars ($145 million) as of March 31, 2023 – over three times more than the amount owed in the previous year.
Canadian governments at all levels have collected billions of dollars in payments from cannabis businesses – from sales, not profits – in the form of excise tax, other forms of tax and various fees.
For example, Canada’s CA$3.1 billion in wholesale sales in the 2021-22 fiscal year alone, government “rent” amounted to CA$1.55 billion – or roughly half of all wholesale sales.
“Notwithstanding years of advocacy with government, we have been unsuccessful in achieving excise tax reforms that would permit a business of our scale to continue to operate successfully in its current form within the Canadian cannabis industry,” Sutton said.
Sutton said Tantalus – which is not publicly traded – delivered roughly 45% sequential revenue growth in the second quarter of this year.
“Despite continued market success by firms like Tantalus,” he added, “the regulatory and taxation environment is persistently so burdensome that even today, five years into recreational legalization, free cash flow in the Canadian cannabis industry remains systemically challenged.”
FIVE YEARS OF CANADIAN LEGALIZATION
MCMILLAN·JUNE 29, 2023
This October will mark five years of Canadian cannabis legalization. The analytics firm Headset has compiled a report that looks at sales growth, pricing, brand development, and product innovation.
Cannabis sales throughout Canada have grown by 157% since May 2020. But despite this growth, the last three years have seen slower growth.
The saturated Ontario market has also seen sales drop by 20% while the number of stores has grown by 40%.
Canadian legalization began with flower as the dominant product category. But pre-rolls have increased their share in the last year to reach parity with flower.
Between 2020 and 2023, the number of cannabis brands in Canada has increased by 369%. However, the market is becoming more concentrated. In 2020, 21% of brands captured 80% of total sales.
In 2023, the top 12% dominate 80% of the market.
While the price for edibles and flower fall, infused pre-rolls and vape pens are popular.
CANADIAN LEGALIZATION: FIVE YEARS LATER
Source: Headset
While the Headset report looks at the Canadian cannabis market five years after legalization, their data only began in late 2019. Therefore, it’s more of a three-year review.
For example, between May 2020 and May 2023, sales totals throughout the country grew by 157%.
Ontario and B.C. saw the most significant increase, 295.8% and 140%. Saskatchewan and Alberta saw smaller increases at 71.5% and 62.6%, respectively.
This growth is slowing. As we’ve covered before, the covid cannabis bubble has popped. Since 2020, sales growth has consistently shrunk from 88.3% between 2020 and 2021 to 29.9% in 2022.
In May 2023, Canadians saw an 11.8% increase in sales growth. But this is significantly smaller than previous increases.
For a broader picture, we can look to Ontario. During the covid hysteria, Ontario experienced a 144.2% increase in total sales. But from 2022 to 2023, the province’s cannabis industry grew by 7%.
Only Saskatchewan saw high sales increases (24%) from 2022 to 2023. Whether this has anything to do with their freer cannabis economy (i.e. No government monopoly distributor) was outside the report’s scope.
NO INCREASE IN DEMAND
Five years after Canadian legalization, there’s no new consumer demand. Growth is coming from new stores serving untapped markets. (Or markets previously served by the underground market).
Since June 2022, Ontario has seen a 29% increase in store count.
But while store counts increase, the average sales per store has decreased. Between 2022 and 2023, Ontario‘s average monthly sales per store dropped by 13%.
Of course, new, opening markets such as Mississauga offset some of this. Ontario‘s third-largest city had previously banned cannabis stores.
BRAND GROWTH FIVE YEARS LATER
Five Years of Canadian Legalization
Five years after Canadian legalization, brand growth has increased by 369%. But like other categories, growth has slowed since 2022. That said, there was still a 27.1% increase in brands between 2022 and 2023.
While the number of stores has helped these brands, actual sales data is disproportionate. Between 2022 and 2023, median total sales per brand dropped by 70%.
In 2020, the Canadian market followed the 80/20 rule, where 21% of brands accounted for 80% of sales. In 2023, the top 12% of brands dominate 80% of sales.
As we’ve predicted here at CLN, the Canadian cannabis market was always intended to be a cartel dominated by Laurentian elites. Just like every other major industry in this country.
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Pricing plays a role in this consolidation of Canadian legalization five years later.
Falling wholesale prices are eroding margins for retailers and brands. In the five years since Canadian legalization, prices in all categories have fallen.
Non-inhalables such as beverages, edibles, and tinctures initially increased. But by the end of 2019, it was clear the edible market in Canada was a bust—no doubt due to the arbitrary 10mg THC cap.
By May 2023, the price for non-inhalables had dropped by 25.3% compared to the previous year.
CONSUMER PREFERENCES FIVE YEARS LATER
Source: Headset
How have consumer preferences changed in the five years since Canadian legalization?
Canadian cannabis consumers have dethroned flower from its number-one position. Flower dominated the market at one point, making up half the total sales.
Now, flower only takes a third of all sales. Vape pens have become popular, most likely due to convenience and lack of smell. But the pre-roll category is on par with flowers as one of the most popular products in Canada.
Again, we can explain this by convenience. For many, it’s easier to grab flower that’s ready to smoke. While we’re not complaining, it’s surprising that Health Canada hasn’t cracked down on pre-rolls.
No doubt, in their minds, the only reason to buy a pre-roll is for the convenience of smoking while you drive or operate heavy machinery.
Other categories, like tinctures and sublingual, continue to lose their little market share.
Five years after Canadian legalization, consumers buy discount flower brands and “connoisseur/infused” pre-rolls.
FIVE YEARS OF CANADIAN LEGALIZATION
Five Years of Canadian Legalization
Courtesy: steve-lovelace.com
Five years of Canadian cannabis legalization have been a mixed bag. While the new industry created jobs and opportunities, growth has been haphazard and handicapped by stringent rules. Rules that are subject to change based on the whims of public health bureaucrats.
Headset suggests current sales growth is likely due to increases in the number of stores than any actual increase in consumer demand. Along with razor-thin margins and 12% of brands accounting for 80% of sales, the cannabis industry faces significant hurdles.
What will Canadian legalization look like five years from now? Without changes in regulations, prices, and punitive taxes, Canadian legalization may create an industry like our banks, telecommunications, oil, or even maple syrup.
That is, a made-in-Canada cartel. Owned and controlled by our Laurentian elites.
Little wonder this country has the same productivity as Alabama, the U.S.’ poorest state.
Doomed.
FOOTNOTE(S)
https://www.headset.io/industry-reports/canadian-cannabis-overview-a-look-at-the-last-5-years-of-recreational-sales