The blockbuster deal between Origin House and leading MSO Cresco Labs has been delayed by a U.S. anti-trust law review. The companies still expect the deal to proceed “in the coming months.” ... Bill C93, which will offer expedited pardons to people with simple cannabis possession charges, passed second reading in the Senate. ... TGOD announced yet another large extraction deal, despite not actually growing much product to extract.
– Mark Rendell
Origin House merger with Cresco Labs delayed by anti-trust review
The merger between Origin House (formerly called CannaRoyalty Corp.) and Cresco Labs has been delayed due to a review under U.S anti-trust law, Origin House said on Tuesday. The Canadian-funded, California-focused firm is aiming to merge with the U.S. multi-state operator in a deal that was valued at approximately $1.1-billion when it was announced in April, and touted as “the largest public company acquisition in the history of the U.S. cannabis industry.”
Origin House shareholders, who will received 0.84 Cresco Lab subordinate shares for each of their Origin House shares, voted in favour of the deal on Tuesday. However, the merger is still under review, pursuant to U.S. antitrust laws.
“On the afternoon of June 10, 2019… the Company received a request for additional information… from the United States Department of Justice Antitrust Division. The Second Request extends the HSR Act waiting period for up to 30 days after Origin House and Cresco Labs have each substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the Department of Justice,” Origin House wrote in a news release on Tuesday.
“Origin House and Cresco Labs remain committed to completing the transaction and are confident that we will be able to submit all requested documentation to the Department of Justice as soon as possible,” said Marc Lustig, Chairman and CEO of Origin House in the news release.
The release further added that “it is now expected that the Arrangement will be completed in the coming months.”
Bill C93 passes second reading in Senate
Bill C93, which will offer an expedited, no-fee pardon to people with records of simple cannabis possessions, passed second reading in the Senate on Tuesday. The bill now heads to the Senate Committee on Legal and Constitutional Affairs, the final stage before third reading and ratification.
C93 was amended several times over the past month in the House of Commons before reaching the Senate, but remains largely the same bill the Liberals introduced earlier in the year. People with convictions for possessing less than 30 grams of cannabis will be allowed to apply for a record suspension immediately, without the usual five-year wait period, and without paying the usual $631 fee.
No pardons are being offered for more serious cannabis-related offences, such as trafficking, and the Liberal-led House decided against an NDP proposal to expunge simple possession records rather than simply offering pardons. The NDP argued that record expungement would make it easier for people to cross the border into the U.S.
On Tuesday, Public Safety Minister Ralph Goodale told the Canadian Press that he had spoken to counterparts in Washington about the new Canadian rules around pardons.
“There may be old information, or it could be conflicting information,” he told CP. "And we just want to make sure that it’s as complete and accurate and current as it can be, so that people are not unduly or improperly impeded at the border.”
According to reporting from the Globe’s Mike Hager and Tom Cardoso from March, “Ottawa estimates roughly 10,000 Canadians will apply to get free pardons for their cannabis-possession convictions.”
TGOD announces extraction deal with Neptune
No pot? No problem. The Green Organic Dutchman announced yet another massive extraction deal on Wednesday, despite neither of its large facilities being finished or licensed and despite having registered almost no revenue from the sale of cannabis in Canada.
The company says it will supply Neptune Wellness Solutions Inc. with 230,000 kilograms of cannabis and hemp biomass over the next three years for extraction. It announced a similar, though smaller, deal with Valens GroWorks Corp. back in March
“Volumes are expected to be back-end loaded with the first year accounting for approximately 20 per cent of the total volumes of the contract,” said Neptune in a news release.
TGOD, which has marketed itself aggressively as the world’s largest organic cannabis producer, has yet to actually grow or sell much product. The company has a small facility licensed in Ancaster, Ont., and began selling medical cannabis to a group of 200 patients in late March – its first cannabis sales in Canada. The company’s second larger facility in Ancaster, and a large greenhouse complex in Valleyfield, Que. are still under construction and have not received licenses.
“The first shipment of biomass from TGOD is expected to be received by Neptune in September 2019,” Neptune said in the news release.