It was a busy start to this Thursday in the cannabis world, with one company rolling out its first recreational brand featuring a controversial spelling decision, another detailing a multimillion-dollar acquisition, and a third winning an important legal victory. Meanwhile, another jurisdiction in the United States moved closer to recreational cannabis legalization, while a Canadian jurisdiction vows to closely scrutinize recent deals between the public and the pot sector.
– Jameson Berkow
WeedMD debuting new brand “Color Cannabis” next week
Canadian cannabis producer WeedMD opted for a distinctly non-Canadian spelling in its new brand “Color Cannabis”, the company’s first focused on the recreational market. Expected to become available nationwide as of next week, the line will include dried flower as well as pre-rolls, ingestible oils and gel capsules from 10 different strains. Asked why a Canadian company would use the American spelling of “Color”, spokesperson Marianella delaBarrera told Cannabis Pro “we wanted a brand name that got people thinking about the meaning of the word regardless of spelling. With the “u” omitted — it’s making people think about it.” The Cannabis Pro team certainly found the decision, made in conjunction with branding agency Sid Lee, something to think about. So, mission accomplished, then.
Newfoundland AG to probe cannabis deals
Julia Mullaley, Auditor General of Newfoundland and Labrador, said late Wednesday her office would launch an investigation into the provincial government’s dealings with cannabis companies. Newfoundland signed a $40-million supply contract with Canopy Growth Corporation in late 2018 that has since become a subject of political controversy. The opposition Progressive Conservative Party has repeatedly accused the governing Liberals arranging cannabis deals that personally benefitted friends of Premier Dwight Ball. While Ms. Mullaley has yet to establish a timeline or specific investigative parameters, she told the local CBC station in St. John’s her office will review “systems, regulations, contracts and compliance mechanisms associated with the legalization of cannabis” including the Canopy deal. “The fact that there were some concerns around a particular contract — those are things we can look at once we actually undertake the work,” she said.
Delaware advances cannabis legalization measure
Residents of the Blue Hen state got one step closer late Wednesday to legalizing cannabis for recreational purposes. Members of Delaware’s House Revenue and Finance Committed voted 8-3 in favour of House Bill 110, which would allow adults 21 and over to buy cannabis legally. The proposed legislation now heads to the full House for a vote, where a 60 per cent supermajority will be required because the bill deals with the implementation of new taxes. If passed in its current form, Delaware would become the 12th state to legalize recreational cannabis and only the second to do so through legislative action. The bill would establish a state marijuana commissioner, who would have authority to initially issue 15 retail licenses, 50 cultivation licenses and five testing facility licenses. Existing medical cannabis dispensaries would be given priority for new licenses under the proposed law, but home cultivation would not be allowed. Taxes would initially be set at 25 per cent for retail sales, among the highest in the United States, but would fall to 15 per cent following an 11-month transition period.
Pasha Brands acquires licensed producer Medcann
In a deal worth roughly $16-million, Vancouver-based craft cannabis brand house Pasha Brands is purchasing Medcann, a small licensed cannabis producer based on Vancouver Island. Previously announced in April prior to Pasha becoming a publicly-traded entity, the agreement includes $3-million in cash and roughly 14.4 million Pasha shares issued at $0.90 each. Medcann received its processing, cultivation and sales license from Health Canada in March for its 10,000 square foot facility in Chemainus. The details of the transaction come just one day after the company appointed former bakery executive Jason Longden as CEO and just two days after the company’s disappointing debut on the public markets. As Cannabis Pro’s Mark Rendell has written in more detail, the company began trading on the Canadian Securities Exchange under the ticker “CRFT” on Monday and has since fallen from a peak of $1.05 per share to $0.69 as of Wednesday’s market close.
Investors drop MedMen lawsuit
California-based cannabis retail chain MedMen as declared victory in one of the two major legal challenges the company is facing. Brent Cox and Omar Mangalji of The Inception Companies have voluntarily dropped their lawsuit against MedMen and the company’s co-founders Adam Bierman and Andrew Modlin. In a statement released early Thursday morning, MedMen said the plaintiffs decision “can only be described as a personal admission that their case was improper.” In January, a Los Angeles Superior Court Judge ruled Cox and Mangalji’s case was unlikely to succeed based on the limited evidence of self-dealing and fiduciary duty breaches that they had presented at the time. While the case now moves to confidential arbitration, MedMen remains far from the clear as a similar lawsuit remains very much active. In February, James Parker, the company’s former chief financial officer, made similar allegations of stock manipulation in a wrongful dismissal suit that remains ongoing. Parker is seeking close to US$20-million in compensation.