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🌿 Leaflet 🌿 November 12, 2019 🌿

🌿 Leaflet 🌿 November 12, 2019 🌿

Welcome back to our weekly newsletter, which outlines recent cannabis news you need to know about related to entrepreneurship, finance, legal, medicine, science, and technology. November began with high market activity across the industry and the release of positive earnings reports, while new developments within government agencies and results from emerging studies sent shock waves across the country.

CannaGather began the month with exciting events in Los Angeles and Connecticut, teaming up with big players in the science and medicinal space. Be sure to join us at a CannaGather in your city as we continue to network and explore the latest progress in our communities as the reach of cannabis increases. 

Know someone who is just as cannacurious as we are? Be sure to share this post to keep them in the loop!

// CannaGather Calendar

November 14 // Baltimore, MD // Maryland Medical: Prioritizing the Patient

November 20 // New York, NY // Vaping Crisis: The Good, the Bad, and the Ugly

November 20 // Orange County, CA // Green Bits: Part 2

November 21 // Denver, CO // The Future of Edibles: Keynote Q&A with Nancy Whiteman

December 3 // Los Angeles // CGLA December: Distribution & Manufacturing Decoded

// Entrepreneurship

Drake Links Up With Canopy Growth, But Are Celebrities Good For Cannabis Brands?

Canopy Growth (TSX: WEED) (NYSE: CGC) and Canadian rapper Drake announced this Thursday that they will launch a Toronto-based cannabis producer named the More Life Growth Company, to be 60% owned by Drake and 40% owned by Canopy. Drake now joins a list of celebrities partnered with Canopy, including Snoop Dogg, Martha Stewart, and Seth Rogan.

As Canopy aligns with internationally-recognized names, the question arises: does this strategy actually work? Canopy’s CEO Mark Zekulin feels that “Drake’s perspective as a culture leader and entrepreneur…will allow [the] new company to bring an unmatched cannabis experience to global markets.” But others, such as Jefferies analyst Owen Bennett, hold a different perspective. Bennett believes that celebrity partnerships are “not the key driver of shareholder value” and that “every additional celebrity or licensed brand [Canopy] adds runs the risk of creating customer confusion and even diluting sales around [their core brand].”

What This Means and Why You Care:

Newer industries contain a wide sample of brand strategies. Cannabis entrepreneurs can gain valuable insight by tracking the variety of outcomes from these strategies used by larger companies such as Canopy, as well as smaller or local ones. Celebrities have historically been a major presence within the cannabis community, particularly as advocates, but how this translates to the legal market on a grand-scale is yet to be fully realized.

// Finance

Things Looking Up: A Positive Week for the Cannabis Market

After a a stretch of tough weeks for cannabis stocks, this week saw a promising list of earnings. Cannabis packaging maker KushCo Holdings (OTCMKTS: KSHB) reported a 186% revenue growth and a growing CBD business, while Innovative Industrial Properties REIT (NYSE: IIPR), a real estate capital provider for the medical cannabis industry, had their stock jump over 10% after their Q3 earnings were released.

On the M&A front, Columbia Care (NEO: CCHW) (OTCQX: CCHWF) (FSE: 3LP) announced that it would acquire The Green Solution, Colorado’s largest vertically integrated cannabis operator, in a $140 million transaction to set up Columbia Care as a leading operator in the $1.6 billion Colorado cannabis market. Other recent announcements include Merida Merger Corp (Nasdaq: MCMJU) (NEO: MMK.UN) closing its $120 million IPO, and fitness-focused CBD company CaniBrands finalizing a $5 million funding round and revealing that their products will be available via Amazon Prime come 2020.

What This Means and Why You Care:

The cannabis market evolves at a rapid pace. While some companies took recent blows, the high activity this week is a sign that the industry is resilient. Investors should be extra vigilant when assessing the market success of known players and others on the rise.

// Legal

Let’s All Get on the Same Page

The confusion surrounding cannabis rules and regulations are apparent on federal and state levels. Although there are some interim cannabis regulations laid out by the Food and Drug Administration (FDA), which many states use as a guideline to drive policy, the agency has yet to release a definitive plan for a CBD regulatory process. Hemp was legalized nation-wide under the 2018 Farm Bill and the FDA has been slowly clarifying their position ever since. For example, the FDA stated in May that “it is unlawful to add CBD to food or drink,” which lead NYC to issue a ban on select CBD products.

Former FDA head Scott Gottlieb proposed a potential regulatory process this week in a series of tweets that outlined skeptisism of CBD-use but encouraged the FDA “to help oversee quality, purity, potency and help prevent third rate purveyors from flooding market with shoddy products outside regulatory purview.” His suggestions include the regulation of CBD supplements by putting the “burden on producers to prove CBD safety at very low levels while ensuring manufacturing standards, purity, [and] minimum levels of active ingredient during a transition period of enforcement discretion.”

Meanwhile, a draft of the U.S. Hemp Production Program (covered in last week’s Leaflet) by the U.S. Department of Agriculture (USDA) was released last month, and a public comment period is officially underway.

Things are just as unclear on the state level. The New York Police Department recently seized 106 pounds of what is now believed to be legal hemp after a tip from FedEx. The NYPD promoted the bust on Twitter after arresting the brother of Oren Levy, owner of Green Angel CBD. Paperwork shipped with the hemp certified that THC-levels were below the federal limit of .3 percent, but cops determined it was illegal through a testing process that Levy claims is outdated. “Please spread the word! We need to let people know we are not criminals!” says Levy on Instagram, also telling the NY Post that he’s out up to $30 thousand since the hemp was confiscated. “I want it back. It’s 100 percent legal.”

What This Means and Why You Care:

As CBD and other hemp-related products become more widespread, it is imperative for policymakers and law enforcement to stay on the same page. Industry members can help by participating in public conversations around FDA and USDA regulations, as well as making sure local law enforcement understands the implications of recent developments.

// Medicine, Science, & Technology

New Vaping Study Brings Some Clarity

On Friday, the Centers for Disease Control and Prevention published an evaluation of lung fluid from patients with vaping-related illnesses in their Morbidity and Mortality Weekly Report. Vitamin E acetate was identified as a “potentially harmful constituent” in THC-containing products, backing up previous reports from other sources. The CDC says that the additive, which is commonly used as a vitamin supplement or ingredient in skin lotions, is sticky and clings to lung tissue, but researchers are still not quite sure how it affects the lungs or if it is actually the substance causing harm. In an unregulated market, makers of illicit vapes can add this form of vitamin E as a thickener or to dilute THC.

Separately, Yale University School of Medicine announced this week that they are kicking off a “groundbreaking” new study with Connecticut-based medical cannabis producer CT Pharmaceutical Solutions. Researchers will focus on the effectiveness of cannabis on alleviating pain and stress. This is the first study approved by the Connecticut Department of Consumer Protection’s Medical Marijuana Research Program, a legal expansion which allows academic institutions, hospitals, and medical cannabis producers and dispensaries to apply to conduct research. 

What This Means and Why You Care:

Cannabis producers, consumers, and lawmakers can gain crucial insight from these official studies. The future of vaping depends on the ability of governments to understand the benefits and dangers of these products and implement regulations accordingly. The only way to make sure that laws are in the interest of the public is to provide a collaborative process for these studies to take place, such as Connecticut’s expansion of their Medical Marijuana Research Program.

// Community

CannaGather Kicks Off November in LA and CT

The month got off to a hot start with CannaGather events focused on science and medicine. In Los Angeles, CEO Galen Williams and Medical Director Daniel Price of Israeli medical cannabis company Tikun Olam sat down to share their profound pasts in the business and medical fields, Tikun’s current and future strategies, and a HUGE medical achievement they’ve yet to announce to the world. Also joining CannaGather LA was technologist, entrepreneur, and author Roger Obando. His chat with CGLA host Rico Tarver centered around building and scaling a tech startup in the cannabis industry, the current investment climate, and a bit about his new book, “The Highest Common Denominator.”

Andrew L. Salner, Medical Director of the Hartford HealthCare Institute, joined CannaGather Connecticut this week. Dr. Salner is one of the state’s top oncologists and serves on the CT Medical Marijuana Program Advisory Board. In addition, a lucky attendee at the event went home with a cannabis extractor machine from sponsor MagicalButter.

Missed out on all the fun? Check out exclusive recaps of our New York and Los Angeles events below:

  • CGLA November: Backed By Science

Do you want to get involved and join the CannaGather team? Reach out to us, we would love to have you on board as we grow!

Written by Justin Bernstein

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