Monthly Archives: March 2018

UK’s first medical cannabis investor floats in London

 

Britain’s first investment firm dedicated to funding medical cannabis ventures will float in London today, amid a global “green rush” of investment into products made from the widely-banned weed.

Sativa Investments has raised £1.1m through the IPO on the capital’s Nex exchange, which is also used by Arsenal football club. The fundraising values Sativa at £4m.

The vehicle has been founded by serial entrepreneur Geremy Thomas, who has made millions through ventures in the early days of mobile phone technology and consumer finance.

Mr Thomas told The Daily Telegraph the fund would enable UK investors to capitalise on the “massive growth potential” of medical cannabis – despite the products being all-but banned in Britain.

“This is the most exciting area I’ve invested in so far because of the scale of the opportunity and the benefit it delivers for people,” Mr Thomas said.

“It has been held back for too long because of political bias rooted in the drug wars of the Seventies. But public opinion has swung against this.”

Mr Thomas predicted that the UK would liberalise its laws to allow more medical cannabis products “within 18 months”, following the path set by countries including Israel, Canada, Germany and more than half of US states.

Medical cannabis products are used around the world to treat a number of ailments, including for pain relief, anxiety and to reduce seizures in epilepsy.

A limited number of medicines containing cannabidiol, a derivative of cannabis more commonly known as CBD, have been approved for use in the UK for conditions such as easing loss of muscle control in people with multiple sclerosis.

But a blanket ban on products containing the psychoactive part of cannabis – THC – has prevented a wider range coming to market.

Analysts predict cannabis sales will overtake beer in California next year following its legalisation for recreational as well as medicinal use at the start of this year, highlighting the product’s explosive growth in places that have liberalised their drug laws.

Britain is already home to one of the world’s largest medical cannabis companies. GW Pharma is listed on New York’s Nasdaq stock exchange, with a market valuation of $3.1bn (£2.2bn), but is based in the UK and grows cannabis plants in greenhouses covering the area of 23 football pitches in Norfolk.

To read more visit: https://www.telegraph.co.uk/business/2018/03/29/uks-first-medical-cannabis-investor-floats-london/

Small Pot Farms Are Biting the Dust

 

How would you feel if you sold your home and used your father’s retirement savings to start a business, only to lose it all after years of grueling work?

For Rebecca and Bjorn Hartman, the co-owners of a legal weed farm in Yelm, the answer is: ecstatic.

“The first few days after we decided we were done, we were just giddy, just happy to not be a slave to it anymore,” Rebecca Hartman said.

That’s the reality facing a growing number of small weed farm owners in Washington. They lined up by the thousands to get the coveted licenses to legally grow weed, but four years into Washington’s “green rush,” they’re finding it might be nearly impossible to actually turn a profit. Faced with the plummeting price of pot, the huge burden of complying with state regulations, and the competition with big farms that sell the majority of the state’s pot, small farms are starting to give up.

Micah Sherman, director of operations for Raven Grass farm in Olympia, said structural problems in Washington’s market are likely leading to an exodus of smaller farms.

“I anticipate anywhere from 25 to 50 percent of growers will either drastically reduce or shut down operations entirely this year,” Sherman said. “People are currently dumping large amounts of product at seemingly liquidation prices. There are numerous stories of desperate attempts at selling product at any price to pay bills and a general sense of impending doom among growers.”

In many ways, this turbulence in the market is the natural outcome for any industry that goes from black market to legal overnight—capitalism always has winners and losers. But the cannabis industry in Washington faces burdens that are wholly unique.

Stephanie Boehl, an adjunct law professor at Seattle University and a co-owner of a pot farm in Okanogan County, said cannabis business owners are forced to pay more for every aspect of their business because of pot’s stigma and federal illegality.

“Every transaction in the industry usually comes with some sort of marijuana premium, whether we are dealing with an electrician, supplier, landlord, or private investor,” Boehl said. “So that has a cost. But we also have the weakened position of bargaining with zoning restrictions and zoning laws that are not fair, and we are not in a position to push back because we are regarded as an illegal industry, regardless of what state law is.”

With pot’s current low price (the average wholesale price per gram was just $2.51 last fall, according to TopShelfData.com), it doesn’t take too many of these additional costs to shave off any remaining profit for the farmer.

When the Hartmans decided to close their farm, they destroyed all the remaining weed, figuring it would probably cost them more to sell it than what they would earn.

While small farmers pack up, big farms are only getting bigger. This past October, the state’s largest producer, Northwest Cannabis Solutions, sold more weed ($2.647 million) than the state’s 500 smallest farms combined ($2.638 million).

Bjorn Hartman said he isn’t angry with those large farms, he just wants to see the market treat small farmers fairly. “I don’t want to make it seem like we are blaming anyone other than ourselves,” he said. “Ultimately, we are responsible for our failure because we could have done things differently.”

Their biggest flaw may have been simply being too small. They never hired another full-time employee.

But Washington’s market doesn’t appear to support such small-scale farming, which is a shame. Our state is well-known for tiny wineries, coffee roasters, and breweries. Some of the best breweries in Seattle have as few as one or two employees, and I love being able to buy weed from equally small businesses.

But as more farms like the Hartmans’ go out of business, shopping small for weed might be a thing of the black-market past.

To read more visit: https://www.thestranger.com/weed/2018/03/28/25959156/small-pot-farms-are-biting-the-dust

Canada’s Golden Leaf Wants to Carpet the U.S. With Pot Retail Stores

Golden Leaf Holdings Ltd. is taking the first step to becoming the Starbucks or McDonald’s of weed, even though marijuana remains illegal across much of the U.S.

The cannabis company has opened a chain of marijuana stores in Oregon called Chalice Farms. And now venture firm BlackShire Capital has signed a letter of intent to franchise the model, setting the stage for stores across North America.

Startups in the fledgling — but fast-growing — industry are vying to create the first household name associated with marijuana. With investment bank Cowen & Co. seeing legal marijuana sales reaching $50 billion by 2026 from just $6 billion in 2016, investors have flooded the space in the hopes of riding the so-called Green Rush to riches.

“Like Starbucks is to coffee, we believe Chalice will be to cannabis,” said William Simpson, Golden Leaf’s chief executive officer.

State Laws

While analysts agree the industry is full of untapped potential, the patchwork of state laws has prevented companies from expanding aggressively: Nine states and Washington, D.C., allow recreational use, and 20 states allow medical use.

The Chalice Farms dispensaries in Oregon were designed to create a warm, welcoming environment that would introduce new consumers to cannabis and dispel preconceived notions, Simpson said.

The public’s response has been favorable, Simpson said, with the most successful store averaging $400,000 a month in gross sales through the third quarter of 2017. The slowest location averaged about $100,000. The company said these figures would be higher in areas with a less-developed cannabis retail presence.

The franchise model, meanwhile, follows the same playbook as restaurant chains and coffee shops. But with marijuana prohibited from crossing state lines, every Chalice Farms won’t be able to offer the exact same products. Toronto-based Golden Leaf will attempt to work around this issue by manufacturing its own products locally, or developing a list of approved manufacturers and products in each state or region as necessary, Simpson said.

Entrepreneurs looking to become franchisees will have to pay a one-time $50,000 fee and 5 percent royalty fee.

BlackShire CEO Kevin Reed said the idea is to launch 35 to 45 stores in the next two years — first in Canada before moving to the U.S. The venture firm and Golden Leaf are in talks to create a management company for the franchises, which would be jointly owned.

BlackShire intends to invest C$25 million ($19.4 million) for potential Canadian and U.S. operations.

“We believe that we’re going to build something that will be around forever,” Simpson said. “It’ll be part of the household names when people think of cannabis in 20 years.”

To read more visit: https://www.bloomberg.com/news/articles/2018-03-27/canada-s-golden-leaf-seeks-to-carpet-u-s-with-pot-retail-stores

The Challenges of Cannabis Lawyering in Nevada

Nevada’s recreational marijuana market is less than a year old, but sales and tax revenues are soaring beyond early projections. Melissa Waite, a partner at Jolley Urga Woodbury Holthus & Rose in Las Vegas, is part of the flourishing green rush in the Silver State.

To read more visit: https://www.law.com/therecorder/2018/03/13/the-challenges-of-cannabis-lawyering-in-nevada/?slreturn=20180214101748

Legislation to Fix Cannabis Industry Banking Issues Introduced in U.S. Senate

Photo via Keith Cooper

A bipartisan group of high-profile senators has already signed on in support of the marijuana banking amendment, which could see a vote as soon as this week.

One of the cannabis industry’s biggest roadblocks could soon come tumbling down, as the U.S. Senate prepares to vote on an amendment that would allow state-legal ganjapreneurs access to federally-backed banks.

According to Forbes, Oregon Democrat Jeff Merkley introduced Senate Amendment 2107on Wednesday as a part of a larger bill aimed at reducing financial industry regulations of 2010’s Dodd-Frank Act, originally passed in the wake of the Great Recession. The new amendment would restrict federal regulators from “prohibiting, penalizing, or otherwise discouraging a depository institution from providing financial services to a cannabis-related legitimate business.”

Because cannabis is still considered a Schedule I narcotic by the federal government, banks that rely on federal insurance have for years denied accounts to state-legal weed businesses, forcing America’s growing green rush to largely operate in cash. With no place to store their funds, canna-businesses argue that a lack of banking options has brought the plant’s criminal past into the legal market, with constant worries of theft and seizure by law enforcement.

Only days after Merkley’s amendment was introduced, the legislation already has nine high-profile co-sponsors from both sides of the aisle, including Rand Paul (R-KY), Bernie Sanders (I-VT), Kamala Harris (D-CA), and Elizabeth Warren (D-MA).

Despite the groundswell of support for Merkley’s marijuana banking amendment, the same cannot be said for Senate Bill 2155, the larger bill in which SA 2107 is housed.

Seen by opponents as a severe reduction of the Wall Street safeguards imposed after 2008’s financial crisis, SB 2155 (formally titled the Economic Growth, Regulatory Relief, and Consumer Protection Act) would let banks with $250 billion or less in assets off the hook from Dodd-Frank regulations, among other pro-banking rollbacks.

After the bill passed an initial vote with support from 17 Democratic lawmakers, Senator Warren — a co-sponsor of Merkley’s canna-banking amendment — chided her party mates, calling the overarching banking bill an affront to the American public.

“People in this building may forget the devastating impact of the financial crisis 10 years ago — but the American people have not forgotten,” told Democratic senators this week, according to Mother Jones. “The millions of people who lost their homes; the millions of people who lost their jobs; the millions of people who lost their savings — they remember, and they do not want to turn loose the big banks again.”

Outside of SB 2155 and SA 2107, Forbes writer Tom Angell notes that a piece of standalone Senate bill for cannabis banking already has 15 bipartisan co-sponsors, with an companion bill in the House already ammassing 89 supporters.

With significant support from Senate Republicans and Democrats (despite Warren’s objections), legislators will vote on SB 2155 next week, where the marijuana banking amendment could very well serve as a liberal consolation prize in an otherwise conservative victory.

To read more visit: https://merryjane.com/news/legislation-to-fix-cannabis-industry-banking-issues-introduced-in-u-s-senate