CBD OIL

The cannabis industry is growing so quickly that even COVID-19 can’t slow it down. Before the pandemic, the industry amassed $13.6 billion in U.S. legal cannabis sales in 2019 – a figure that is expected to more than double to $30 billion in the next five years, according to New Frontier Data.  In states where cannabis is legal for medical or recreational use, dispensaries have been deemed necessary, essential businesses – especially when it comes to calming stress and anxiety in our ever-changing times.

Cannabis legalization and newly budding dispensaries have expanded across the U.S., which may come with an unfortunate counterpart – a higher incidence of crime. Despite lower prices in states that have legalized cannabis, as compared to states where it is still illegal, theft has run rampant across grow operations, warehouses and, most often, dispensaries.

Dispensaries can be targeted more frequently. Robbers may perceive them as an easy target, because they are businesses that have larger amounts of cash on hand. Many dispensaries only accept cash because payment processors and financial institutions aren’t willing to work with them. This is primarily because cannabis is still deemed an illegal substance under federal law, and the actions of financial institutions are governed by federal, not state, laws. Once the Secure And Fair Enforcement (SAFE) Banking Act is approved, cannabis businesses will be able to work more easily with banks, in turn reducing the amount of cash on site and erasing the dollar signs in opportunistic thieves’ eyes.

However, cash isn’t the only high thieves seek when they break into dispensaries. There’s also the product itself. Protecting it – and providing peace of mind to the facilities’ owners and occupants – is a concern for dispensaries, grow operations and warehouses. Robbers are motivated by the opportunity to make even more fast cash through reselling the product found onsite.

To eliminate such easy targets, security requirements for the cannabis industry are a necessity. They are also involved, complicated, and vary from state to state. A number of security specifications apply between state laws and local ordinances. Inventory must be properly surveilled and managed at all stages of transportation and storage. Any discrepancies in inventory can result in large fines and other penalties. To aid in understanding security compliances, the National Cannabis Industry Association (NCIA), a national trade association, recommends that start-ups obtain attorneys to guide businesses through their state’s laws and regulations.

This is why, especially for new business owners, it is critical to consider the best, most advanced security solutions – especially when it comes to doors and points of egress – that are easily integrated into buildings during the design phase. These solutions protect the products, properties, and people throughout the cannabis supply chain.

Understanding State Security Regulations
While there are no federally recognized security requirements for the cannabis industry, there are similar requirements across all states that have legalized cannabis, including:

• Maintaining strict access control throughout the facility – this is especially important for grow operations and warehouses
• Functional alarm systems
• Documented standard operating procedures
• Video surveillance systems – many states mandate very precise requirements, such as length of storage time and even video resolution specifications
• Notifying appropriate regulatory agencies immediately or within a strict timeframe after a security incident or theft
• Securing all records and record storage

While these are common, state-mandated security requirements, it is critically important to know and understand all rules, regulations, and laws concerning the industry within the business’s specific state. Making sure the business is compliant with all aspects of state laws for security and preventing violations, including the hefty financial penalties that can accompany them, is key.

States require cannabis facilities to implement sophisticated security features for several reasons. One of the most obvious is the fact that the industry supplies a high-value product and is a cash-intensive business. Integrating security features into the building can be a challenging task for architects and designers. To help tackle these challenges, manufacturers have introduced products to the cannabis industry, creating easier, more effective and aesthetically pleasing security solutions.

Integrated Designs For High Level Security
Security shouldn’t be a constraint when considering design aesthetics. Certain elements can be discretely tucked away, including cameras and security doors by way of specifying a concealed rolling door, conveniently disguised in the ceiling during operating hours. These doors can even close under alarm eliminating the need for manual intervention. Other security measures, such as bullet resistant glass, are hidden in plain sight.

Untrustworthy employees, smash-and-grab thefts or meticulously planned heists mean secure building design is of the utmost importance. In order to have the most effective security, there needs to be design vision – a clear intent for incorporating advanced security into the facility, whether visible or not.

Suggested security measures include video surveillance around the outdoor perimeter of the property as well as inside the facility. Physical barriers, such as specialized entrance locking systems – including fingerprint-scanning biometric technology – and security doors that may also include intrusion detection and automatic closure systems are recommended. All systems may be paired with 24/7 visual monitoring by security personnel.

Many state regulations also require restricted access to specific areas within dispensaries, grow operations and warehouses, with employee names and activities logged for reference. These necessary measures aid in inventory monitoring and control, further reducing the likelihood of internal theft.

When specifying building security, it’s important for architects to consider what type of building they are designing. There are differences in providing security for dispensaries versus warehouses and grow operations. Dispensaries and storefronts are frequently out in the open and in locations that are well-known to consumers. Warehouses and grow operations are usually tucked out of the way, rarely publicized, and less noticeable.

Rolling Grilles And Doors Deter Dispensary Theft
With a high-value product and cash on hand, dispensaries in particular have unique security challenges. And because they are retail businesses, egress and fire codes must be strictly adhered to, in addition to special security regulations.

In light of this, security doors require special consideration. They are necessary to provide secure protection against theft but shouldn’t distract from the architectural vision of the building or interior design.

Rolling security grilles are the ideal solution to protect the counter inside the dispensary and may also be ideal for the front of the store. They fit in small headspaces where there is limited ceiling room and can be easily concealed when not in use.

Even heavy-duty rolling doors used to protect the glass storefront of the dispensary and prevent intruders from entering the building’s dock area can be hidden when not in use. If building code allows, architects may specify a rolling door that coils up into the door’s header, residing behind an exterior soffit. These robust security doors’ lift-resistant bottom bars also can be obscured from sight.

Heavy-duty security doors at the front of the dispensary block sight access and provide a visual deterrent. They give the building a secured look when in use, but heavy-duty rolling doors don’t need to be imposing to customers during the dispensary’s operating hours.

Robust Visible Protection For Grow Operations And Warehouses
Grow operations and warehouses usually opt for more visible security doors to deter criminal activity. They also have different design considerations because of building layout and production needs. For instance, larger grow operations house plants and supplies which require heavy equipment to move throughout the facilities.

Heavy duty rolling security doors can be made with up to 12-gauge steel with interlocking slats and tamper resistant fasteners – making them stronger than standard garage doors. They provide high-end security at loading docks and limit access to restricted areas inside.

Rolling doors can also be used to block employee access to off-limits areas common in grow operations and warehouses. Because they are heavily reliant on utilities and infrastructure, such as water mains and humidity and temperature controls, warehouses and grow operations are ideal applications for rolling doors. If unauthorized personnel with ill intentions access these utility areas, it could spell disaster with ruined crops and damaged or unsafe products – turning into substantial financial losses. From a design standpoint, these doors do not need to be concealed. In fact, their visibility signals restricted access areas and hints at the security measures taken to protect these facilities.

Enhanced Security Features
Whether designing a dispensary, a grow operation facility, or a warehouse, rolling doors may be paired with automatic protection features to enhance the building’s security and help workers feel safe. These automatic closing systems allow the security doors to be immediately activated by a building alarm or the push of a panic button in emergency situations. The doors also feature advanced locking systems – some of which are hidden in non-traditional locations – providing further tamper resistance.

Some rolling door manufacturers offer in-house architectural design groups to guide architects and designers in choosing the ideal security doors. These groups can address and solve any design dilemmas that arise during the project. Every rolling door is built to a specific opening, making each product unique to that area of the project. Because of this customization, manufacturers can meet virtually any specification.

Meeting Insurance Requirements
Selecting the correct rolling door along with other advanced security features aids in meeting insurance requirements. Each insurance company has individual minimum-security conditions in its policy. Many insurance companies will not provide theft insurance if cannabis businesses do not have adequate security or cannot demonstrate they have it.

Planning Leads To Integrated Protection
The technical and legal aspects of securing dispensaries, grow operations, and warehouses can be overwhelming and, at times, confusing. Legal counsel, state agencies, industry associations, and manufacturers encourage new cannabis businesses to use them as resources as they unravel the nuances of the industry’s security regulations.

By combining robust security features such as video surveillance, proper access controls, rolling doors or grilles and automatic closure systems, cannabis facilities can meet state and insurance requirements and deter theft. With thoughtful design consideration and planning, these security features also have the capabilities to seamlessly blend with interior and exterior design aesthetics.

It’s been quite a year for retail cannabis. Despite medical and recreational dispensaries maintaining “essential” status throughout most of the country, the global pandemic has seen hundreds of thousands of lives lost and millions of jobs cut in the restaurant, hospitality and travel industries.

The holidays give everyone an opportunity to spread some seasonal cheer. Cannabis dispensaries are celebrating the season by offering competitive prices on interesting combinations of products and new ways to stay connected to one another after a challenging year socially.

Cannabis Business Times and Cannabis Dispensary rounded up some of our favorite holiday deals from dispensaries across the country aiming to provide consumers with a more cheerful holiday.

The Green Solution: The (Holiday) Solution

The Green Solution, with 21 locations in Colorado including Denver and Pueblo, has launched “The (Holiday) Solution.” The $60 bundle allows consumers to choose five edibles by NectarBee, a Colorado-based cannabis brand that specializes in concentrates. Popular edible varieties include hazelnut chai truffle, butterscotch lozenges, mint swirl brownies and more. The company also produces six flavors of infused-drinks including cherry soda, ginger ale and root beer.

Chalice Farms: Holiday in Color

Prominent Oregon cannabis company Chalice Farms recently introduced the “Holiday in Color” pre-roll pack which includes six 0.3-gram pre-rolls in various strains including Purple Punch, Duct Tape, Dosi Doh and Hazmat OG. Chalice Farms is also wrapping up its “12 Days of Holiday” campaign, which offers consumers a deal on a different type of product each day from Dec. 13 through Dec. 24. Many specials were designed in conjunction with Oregon manufacturer partners like Buddies Brand, Mana Extracts and OreKron.

The+Source: Holiday Gifts & Promotions

At The+Source, a Nevada cannabis brand with locations in Reno and Las Vegas, shoppers can choose from great holiday-themed products including the new CANN social tonics in flavors like grapefruit rosemary and lemon lavender. Also available are infused pretzel bites by multi-state manufacturer Body and Mind (BaM), which are dipped in chocolate and butter caramel. To help spread holiday cheer to those who need it most, shoppers at The+Source can also choose to round up the cost of their purchase to the nearest dollar and donate the difference to Three Square, a Nevada-based food bank and rescue program that provides meals for people in need.

Seed & Smith: Flight Boxes

Housed in a former forklift manufacturing facility, Seed & Smith is a Denver cannabis cultivator, concentrate manufacturer and dispensary focusing on a high-end cannabis product and experience. For the holiday season, they are offering two brand new “flight box” bundles. The concentrate variety includes two grams of Garlic Road and Kush Mints live resin, two grams of Strawnana and White 99 sugar wax, a Seed & Smith nectar collector, pop socket and pin for $100. The joint pack flight box offers four Seed & Smith joint packs each containing seven half-gram premium pre-rolls of strains Malibu Sunrise, Mimosa, Miracle Alien Cookies and Garlic Road. The flight box also includes a lanyard, Seed & Smith lighter, joint bubbler, pop socket and pin.

Simply Pure: 12 Days of Holiday Deals

Husband & wife team Wanda James and Scott Durrah were the first African-American dispensary owners in the country when they opened Simply Pure in 2010. Located in the Highlands district of the city, Simply Pure prides itself on being a politically conscious cannabis company that actively encourages participating in the industry by Black and Brown people.

For the holiday season, Simply Pure is running its own 12 days of holiday deals from Dec. 13 through 24. Each day, the company is giving away prizes like swag bags, chillums and glass blunts, coupons on recreational cannabis products, apparel, vape cartridges and much more. Certain prizes are only available to Denver residents.

“The holidays are always a stressful time and even more so this year with COVID-19,” said James in a statement emailed to Cannabis Business Times and Cannabis Dispensary. “We hope our holiday specials can meet people where they are and provide some needed stress relief.”

Harvest of Arizona: 12 Days of Kushmas

Harvest is one of the largest cannabis multi-state operators (MSOs) in the country. Their dispensaries throughout Arizona, Maryland and other states will be offering deals and discounts on items from vape cartridges to edibles. For cannabis lovers who want to stay digitally connected during this unusual holiday season, Harvest also offers an augmented reality nug tree virtual greeting card that can be sent via email.

 

Worth an estimated $54 to $67 billion, the bourgeoning U.S cannabis industry continues to grow at record pace despite conflicting state and federal laws that cause obstacles at every turn.

This conflict remains a source of uncertainty for retailers, cultivators and the general public. And, unfortunately, the palpable tug of war between the states and the federal government will only increase when legalization is introduced at the federal level, putting tax dollars up for grabs.

A tug-of-war between the states and the federal government makes it difficult for cannabis businesses to obtain bank accounts, insurance and investors. It also means additional security and compliance challenges. It is the reason that the cannabis industry is an unsupportive environment for start-ups and employees who face primitive or even dangerous R&D conditions in order to advance the extraction process.

As cannabis companies fight to grow their market share, many lag behind when instituting a proper risk management structure from R&D to daily operations. Cannabis businesses that haven’t incorporated risk management will need to in 2021, especially when seeking to secure funding from PE firms.

As the 8^th fastest growing industry in the U.S., maturing at more than 25% annually, adult use and medical cannabis sales are unlikely to decrease anytime soon. Rather, experts predict continued growing pains – and gains – to shape the U.S. cannabis industry in 2021.

The COVID-19 pandemic will continue to increase the growth of the cannabis industry— with a few roadblocks

Deemed “essential businesses,” many retail outlets and dispensaries stayed open throughout the pandemic and adopted new ways of serving customers, from curbside pick-up to drive-through windows and deliveries. At the same time, the pandemic hindered growth for some cannabis operations on the cusp of obtaining a license, as many applications were put on hold when state offices closed their doors for months. In some cases that meant raised capital was pulled and funding ceased. For start-ups who are seeking to apply again in 2021, it’ll be an uphill climb.

As a result of routine COVID-19 inspections in 2020, state officials uncovered a host of other issues at cannabis operations, including improper labeling, poor health and safety practices, lack of PPE compliance by staff and customers, incorrect counting of cash and more. In extreme cases, these visits resulted in regulatory fines and shutdowns. This led to the need to use seed money for something other than the organization’s original mission. In 2021, these scenarios are likely to turn into lawsuits from shareholders and activate directors & officers (D&O) and employment practices liability (EPL) claims from laid-off workers. These accusations dovetail with another major charge often levied against cannabis businesses —lightning speed growth without the business operations and risk management protocols necessary to support it.

Many cannabis businesses have not procured the necessary liability insurance coverage for the great risk that come with rapid growth. Whether it’s D&O and EPL policies as in the case above, or cyber, property or general liability (GL) policies, it’s critical to think more holistically about insurance coverage. Cannabis operations need to work with an insurance broker who specializes in the cannabis industry and understands different operations and business location, as exposures vary greatly.

R&D extraction dangers lead to unique risks

In 2021, extraction will be a major focus for cannabis organizations. Operations will continue searching for a competitive advantage to increase yield and develop superior products. Cannabis extractors will experiment with new ways to apply existing laboratory methods utilizing ethanol and CO2 as well as innovative cultivation methods adopted from the agriculture industry, using water and light exposure and different nutrients. R&D becomes a potential liability when cannabis extractors modify the use of existing equipment for a different type of extraction. Flammable products are often required, and explosions can occur.

If you are considering experimenting with R&D, engage your insurance broker to ensure the risk is covered within your existing policies and to explore best practices for experimentation and varying equipment use.

Desire for more security both inside and outside the operation

A cannabis operation’s security risk is two-fold. In light of the looting and civil unrest across the U.S. this year, heightened security measures were necessary for cannabis businesses to secure their goods. Additionally, a common risk— employee theft —increased as well.

Cannabis retail operations maintain a large supply of cash and product. As looting occurred, it was impossible to relocate cannabis product away from retail storefronts as a majority of state regulations prohibit cannabis to be removed from retail facilities. Owners and operators who did so risked being fined for non-compliance or losing their license.

The majority of cannabis theft — as high as 90% by some estimates — is employee related. In many cases, employees in cannabis grow facilities and retail storefronts scheme to cheat employers. Part of the challenge is that state regulations require plant and production facility blueprints to be publicly available. Thieves are using these layouts to plot their infiltration. In other scenarios, cannabis operators are recording walk-throughs of their facilities and publishing online documentaries. These also leave operators vulnerable.

Employers can increase security by restricting access exclusively to employee areas, while also investing in better internal access controls. Conduct an audit of your work areas with your cannabis insurance broker who can provide you with a list of best practices and do’s and don’ts for reducing theft.

Complications continue in compliance, banking and financial services 

Even though cannabis is legal for medicinal or recreational use in 43 states, businesses still struggle to secure bank accounts, business loans and insurance coverage. Small local banks and savings and loan businesses may be more willing to engage with cannabis businesses in 2021, while large institutions will keep shying away.

At every stop of the supply chain, cannabis business operators need to be proactive when developing strategies to manage risk. That means implementing risk management protocols to protect their business, their workforce as well as securing the proper insurance coverage.

This also includes growing the cannabis business’ safety net by engaging necessary insurance policies, appropriate to the business’ size and exposure, including cyber, environmental liability and crime policies, or applying for emerging loan programs in an effort to secure additional capital.

Evolution of the industry into 2021 and beyond

While the cannabis industry is evolving and changing, much will ultimately remain the same in 2021. Even if the U.S. government takes steps to federally legalize cannabis, a bill would not go into effect until later in the year at best, more likely in 2022 or beyond. Until a bill is passed, cannabis businesses will look to remain viable beyond the state level. For all cannabis businesses, 2021 will be about building on what they’re already doing and preparing for what will hopefully come next.

To those following the mergers and acquisitions of cannabis companies, 2020 was a different sort of year. Capital markets were already running dry by January, so executive teams and investors began getting creative in connecting dollars to companies.

Enter SPACs: special purpose acquisition companies, which act as blank checks for investors interesting in pooling their money for a designated goal. In our industry, SPACs function as a way for investors to align their money and identify a target company for acquisition. The net effect is actually a reverse merger, whereby the resulting company takes on the SPAC “shell” and operates as a publicly traded enterprise. (See below for SPAC Alpha’s 2020 year-to-date report on SPAC moves.)

At the tail end of 2020, Schulze Special Purpose Acquisition Corp. landed a deal with Clever Leaves, a sprawling cultivation and distribution company with bases in Colombia, Portugal, Canada, Germany and the U.S.

“We believe that Clever Leaves is now among the best-capitalized companies in the cannabis industry and is well-positioned for substantial growth and profitability based upon its disruptive, low-cost and vertically integrated operating model,” George J. Schultze, chairman and CEO of the SPAC, said. “We look forward to working with its outstanding and highly accomplished management team to create significant value over time.”

It’s a $205-million deal, which puts it in the upper echelon of recent cannabis transactions.

Among SPACs, though, this is not uncommon. Cannabis-related SPACs held more than $2 billion in assets in 2020. Because of that, these new investment packages aren’t necessarily a dime a dozen; they’re built to target high-value investments that have a healthy future as a publicly traded firm.

Silver Spike Acquisition Corp. acquired Weedmaps’ parent company, WH Holding Company, and flipped it into a public enterprise through a reverse merger. The resulting business was given a $1.5-billion valuation.

“There was no better opportunity and no more dynamic company and story for us to consider a transaction with than with WMH,” Silver Spike CEO Gordon told Reuters.

Collective Growth Corp., with former Canopy Growth CEO Bruce Linton at the helm, went public in May this year. Starting off with a $150-million raise in the early days of the pandemic, this was big news. But the SPAC took a left turn and executed a reverse merger with a lidar sensor company, a move that will remind investors how quickly the course can change.

US SPAC Weekly Monitor: December 2020 by sandydocs on Scribd

 

It’s been quite a year for retail cannabis. Despite medical and recreational dispensaries maintaining “essential” status throughout most of the country, the global pandemic has seen hundreds of thousands of lives lost and millions of jobs cut in the restaurant, hospitality and travel industries.

The holidays give everyone an opportunity to spread some seasonal cheer. Cannabis dispensaries are celebrating the season by offering competitive prices on interesting combinations of products and new ways to stay connected to one another after a challenging year socially.

Cannabis Business Times and Cannabis Dispensary rounded up some of our favorite holiday deals from dispensaries across the country aiming to provide consumers with a more cheerful holiday.

The Green Solution: The (Holiday) Solution

The Green Solution, with 21 locations in Colorado including Denver and Pueblo, has launched “The (Holiday) Solution.” The $60 bundle allows consumers to choose five edibles by NectarBee, a Colorado-based cannabis brand that specializes in concentrates. Popular edible varieties include hazelnut chai truffle, butterscotch lozenges, mint swirl brownies and more. The company also produces six flavors of infused-drinks including cherry soda, ginger ale and root beer.

Chalice Farms: Holiday in Color

Prominent Oregon cannabis company Chalice Farms recently introduced the “Holiday in Color” pre-roll pack which includes six 0.3-gram pre-rolls in various strains including Purple Punch, Duct Tape, Dosi Doh and Hazmat OG. Chalice Farms is also wrapping up its “12 Days of Holiday” campaign, which offers consumers a deal on a different type of product each day from Dec. 13 through Dec. 24. Many specials were designed in conjunction with Oregon manufacturer partners like Buddies Brand, Mana Extracts and OreKron.

The+Source: Holiday Gifts & Promotions

At The+Source, a Nevada cannabis brand with locations in Reno and Las Vegas, shoppers can choose from great holiday-themed products including the new CANN social tonics in flavors like grapefruit rosemary and lemon lavender. Also available are infused pretzel bites by multi-state manufacturer Body and Mind (BaM), which are dipped in chocolate and butter caramel. To help spread holiday cheer to those who need it most, shoppers at The+Source can also choose to round up the cost of their purchase to the nearest dollar and donate the difference to Three Square, a Nevada-based food bank and rescue program that provides meals for people in need.

Seed & Smith: Flight Boxes

Housed in a former forklift manufacturing facility, Seed & Smith is a Denver cannabis cultivator, concentrate manufacturer and dispensary focusing on a high-end cannabis product and experience. For the holiday season, they are offering two brand new “flight box” bundles. The concentrate variety includes two grams of Garlic Road and Kush Mints live resin, two grams of Strawnana and White 99 sugar wax, a Seed & Smith nectar collector, pop socket and pin for $100. The joint pack flight box offers four Seed & Smith joint packs each containing seven half-gram premium pre-rolls of strains Malibu Sunrise, Mimosa, Miracle Alien Cookies and Garlic Road. The flight box also includes a lanyard, Seed & Smith lighter, joint bubbler, pop socket and pin.

Simply Pure: 12 Days of Holiday Deals

Husband & wife team Wanda James and Scott Durrah were the first African-American dispensary owners in the country when they opened Simply Pure in 2010. Located in the Highlands district of the city, Simply Pure prides itself on being a politically conscious cannabis company that actively encourages participating in the industry by Black and Brown people.

For the holiday season, Simply Pure is running its own 12 days of holiday deals from Dec. 13 through 24. Each day, the company is giving away prizes like swag bags, chillums and glass blunts, coupons on recreational cannabis products, apparel, vape cartridges and much more. Certain prizes are only available to Denver residents.

“The holidays are always a stressful time and even more so this year with COVID-19,” said James in a statement emailed to Cannabis Business Times and Cannabis Dispensary. “We hope our holiday specials can meet people where they are and provide some needed stress relief.”

Harvest of Arizona: 12 Days of Kushmas

Harvest is one of the largest cannabis multi-state operators (MSOs) in the country. Their dispensaries throughout Arizona, Maryland and other states will be offering deals and discounts on items from vape cartridges to edibles. For cannabis lovers who want to stay digitally connected during this unusual holiday season, Harvest also offers an augmented reality nug tree virtual greeting card that can be sent via email.

TORONTO, Dec. 22, 2020 (GLOBE NEWSWIRE) — PRESS RELEASE — Ayr Strategies, a vertically integrated cannabis multi-state operator, today announced the proposed acquisition of Liberty Health Sciences, a vertically integrated operator in Florida, in a stock-for-stock transaction valued at $290 million. Additionally, Ayr announced the proposed acquisition of the membership interests in GSD NJ LLC, a licensed operator in New Jersey, for upfront consideration totaling $101 million. Including these and other pending transactions, Ayr will have operations in seven states covering 73 million people, which include four adult-use markets and three medical markets.

“Today’s announcements represent a transformational next step for Ayr as a leading multi-state operator in the U.S.,” said Jonathan Sandelman, chairman and chief executive officer of Ayr Strategies. “Our strategy has always been to go deep in the best markets, targeting attractive assets in limited-license states with large populations, where we can build a vertically integrated presence and have a significant edge. New Jersey will be a leading force in adult-use legalization in 2021, and we look forward to working with the regulators to ensure a safe and robust roll-out of the adult-use program. Florida has one of the country’s most robust and rapidly growing medical programs, and we are acquiring one of the largest operators in terms of store count.

“2021 will be a year of material growth for Ayr in the adult-use market. In Massachusetts, Ayr is already a market leader in wholesale and medical sales and will open three adult-use stores in the under-served Greater Boston area in 2021. Two of our newest states – New Jersey and Arizona – will roll out adult-use for the first time, and Ayr is excited to help lead that transition.”

Sandelman continued, “Our assets are the most productive in the industry, and we intend to bring this same operational excellence to Florida and New Jersey. We see an incredible opportunity to elevate Liberty’s cultivation, product selection and dispensary experience to the level of quality, productivity, selection and service we have consistently achieved in our existing markets with the deep bench of talent and know-how we already have in place. We are thrilled that our disciplined and targeted approach to expansion has enabled us to build this terrific footprint from a position of strength, with a team that consistently demonstrates operational excellence and great support from our debt and equity investors.”

Transaction Highlights

Florida

Ayr has signed a definitive agreement to acquire Liberty Health Sciences in a stock-for-stock combination that will take the form of a Plan of Arrangement under the Business Corporations Act (British Columbia). Liberty shareholders will receive 0.03683 Ayr shares for each Liberty share held, equating to approximately 13.1 million new Ayr shares. Total purchase price is equivalent to ~US$290 million based on the closing price of Ayr shares as of Dec. 21, 2020. Liberty will have the right to nominate one new member to the Ayr Board of Directors at closing, increasing Ayr’s total number of board members to seven.

The assets being acquired from Liberty include a 387-acre cultivation campus in Gainesville, Fla., with over 300,000 square feet of current production facilities in operation, 28 open retail dispensaries, seven completed and ready-to-open dispensaries, and seven dispensaries currently under construction. Liberty currently employs 335 people, all of whom are expected to be retained by Ayr.

Total consideration paid of approximately $290 million represents a forward multiple of approximately 4.8x 2022 estimated adjusted EBITDA. Ayr plans to spend approximately $15 million in capital expenditures in 2021 to improve and expand the Gainesville cultivation campus, as well as expand Liberty’s dispensary footprint.

The Liberty acquisition is subject to customary closing conditions, regulatory approvals, including HSR review, Liberty shareholder approval and court approval of the Plan of Arrangement. Shareholders holding approximately 29% of Liberty’s common shares have agreed to support and vote in favor of the proposed transaction.

Dorsey & Whitney LLP and Stikeman Elliott LLP acted as legal advisors to Ayr. Canaccord Genuity Corp. acted as a financial advisor to Ayr and provided a fairness opinion to the board of directors of Ayr.

New Jersey

Ayr has signed a binding agreement to acquire licensed operator Garden State Dispensary (GSD), one of the 12 existing vertical license holders in the State of New Jersey and one of the state’s original six alternative treatment centers (ATCs). GSD has three open dispensaries, the largest footprint of any operator, at heavily trafficked highway locations throughout the central region of the state, as well as 30,000 square feet of cultivation and production facilities in operation. An additional 75,000 square feet is currently under construction. GSD currently employs 110 people, all of whom are expected to be retained by Ayr.

Total up-front consideration of $101 million includes $41 million in cash, $30 million in stock and $30 million in the form of a promissory note. Earn-outs based on exceeding revenue target thresholds in 2022 will be capped at a maximum of $97 million and payable in a combination of cash, promissory notes and exchangeable shares. Including the maximum earn-out consideration, the Company estimates this represents a forward multiple of approximately 4x 2022 adjusted EBITDA.

The GSD acquisition is subject to final due diligence, customary closing conditions and regulatory approvals.

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets—including Arizona, where  the company is excited for growth opportunities following adult-use legalization—Wana is also eyeing new states, including New Jersey, which also legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

In 2020, industry members have been meeting virtually to discuss opportunities for minority participation in the cannabis space, including at the ownership level. Organizations such as Minorities for Medical Marijuana (M4MM), Minority Cannabis Business Association (MCBA) and Marijuana Policy Project (MPP) held events where speakers addressed the murder of George Floyd in Minneapolis and other killings of people of color, as well as their desire for social equity and criminal-justice reform.

Racial disparities in cannabis industry participation reflect a broader statistics in agriculture. The National Young Farmers Coalition issued a report in December 2020 titled “Land Policy: Towards a More Equitable Farming Future.” It states that in the U.S., “White individuals account for 95 percent of all farmers, own 98 percent of farmland, and receive the vast majority of agriculture-related financial assistance.”

The report provides specific call-to-action items for federal, state and local policymakers to support Black, Indigenous and People of Color (BIPOC) farmers. On the state level, these include steps to “[p]ass state legislation to help farmers manage their student loan debt so they can better access capital for land purchases” and to “[i]mprove and expand land access finance options.”

As capital remains a barrier to entry for minorities looking to enter or expand their opportunities in the state-legal cannabis space, Cannabis Business Times and Cannabis Dispensary recently caught up with industry stakeholders to discuss the financial aspects of minority participation in state-legal cannabis in 2020.

License Acquisition Before Investment

There is value in plant-touching businesses obtaining a license before trying to raise large amounts of capital, Seun Adedeji, owner and CEO of Elev8 Cannabis, a retail company with stores in Oregon and Massachusetts, recently pointed out to CD.

“For newcomers that are trying to get into the cannabis industry, my biggest advice to them is, one, find what aspect of the cannabis industry you’re looking to go to—example: if you’re looking at retail—let’s say it costs you $1 million,” Adedeji said. “Instead of trying to raise the whole million, try to get assets, try to find ways to leverage, raise a little bit of capital, raise $50,000, get [the] right attorney. Win the license, then use the license and go raise against the license. The license is what has value.”

Despite COVID-19 and other economic pressures, there is money flowing through the industry while some people are getting shut out, said Roz McCarthy, founder and CEO of M4MM, and whom CD featured on its March/April 2020 issue cover. “We do know there are certain sectors of the cannabis industry that still thrive during this pandemic, that still were doing very well for themselves, like we can talk about the increase in revenue that the cannabis industry was able to experience, even though there are some industries that took a nosedive during this pandemic,” she said.

Illinois saw at least $880 million in adult-use and medical cannabis sales as of Dec. 2, according to the Chicago Sun-Times. Meanwhile, social-equity business applicants experienced delays from the state in its issuance of dispensary licenses. State officials announced in September that 21 social equity applicants would be included in a lottery to win the 75 available dispensary licenses. But with the licensing process mired in controversy, a judge ruled in November to allow the rescoring of applications out of “public interest.”

McCarthy said that she supports the social-equity language in Illinois’ legalization bill, the Cannabis Regulation and Tax Act, and that she admires Toi Hutchinson, who serves as the senior adviser to Gov. J.B. Pritzker on cannabis control and who worked on the legalization bill as a state senator.

However, McCarthy said, “Some of the promise that you saw in Illinois—it almost felt like maybe coal in your stocking versus toys or gifts or what have you, maybe that type of analogy for the holiday. And … these entities were basing being able to get funding … upon getting their license.”

She added that she felt that the ongoing delay around the Illinois licenses “sucked all the oxygen out of the room—the opportunity. It sucked away the promise. It sucked away the excitement of seeing these new businesses come online.”

An Online Marketplace

Networking can provide invaluable opportunities for businesses. McCarthy said M4MM is set up like a chamber of commerce as well as around “advocacy, education and training,” providing opportunities for members to conduct business with each other.

McCarthy previously worked with the African American Chamber of Commerce of Central Florida and served on the board of the California Black Chamber of Commerce. “I love the fact that they had this membership-driven business-centric economic opportunity and almost like a marketplace for these minority-owned businesses, to not only do business with one another, but … for the chamber, their responsibility was to help shed a flashlight on these businesses to be able to go after contracts, to be able to look at opportunities that they can pursue that they wouldn’t have been presented with unless they were part of the chamber,” she said.

Taking a page from such chambers, M4MM is working on setting up a virtual marketplace to connect its members. “They can go on there and be able to see if there’s any businesses that would meet some of the criteria that they’re looking for,” McCarthy said. “The industry as a whole would be able to go and see these businesses and be able to say, ‘Hey, I want to do business,’ or ‘I want to learn about you’ or what have you.”

A Local Stock Exchange in Michigan

Michigan may soon make new opportunities available to cannabis operators and investors. Cimone Casson, owner of insurance company Cannas Capital and Michigan chapter president of M4MM, is working with regulators on a local stock exchange for the state’s cannabis businesses called the Michigan Marijuana Market (MMM).

A crowdfunding solution made possible under Regulation Crowdfunding (REG CF) via the 2012 JOBS Act and the Michigan Invests Locally Exemption (M.I.L.E.) Act, MMM and aims to help people of color and others to conduct business in the space. It will be administered by MRA and could launch as soon as March 2021, Casson told CBT and CD.

To qualify, cannabis businesses must prove they are operating legally, with up-to-date licensing and permitting, and other documentation, Casson said. “In addition to that, there’s also some stays in there for the investors,” Casson said, adding that those investors must be Michigan residents. “Investors can only invest so much of their net income. The maximum amount that they would be able to invest is $10,000 per entity. No entity can be on another platform at that point so that there’s no dilution of shares.”

MMM allows people to “buy back into their neighborhoods,” Casson said, adding that ”it creates a way for a strong pathway of ownership for people of Black and Brown color because these particular businesses will be in what we consider social-equity zones, which would be the communities that were most disenfranchised.

“With this being said, we still put in some pillars to make sure that it’s not predatory, meaning that there’s a certain percentage of ownership that must be owned by someone from the community.”

Looking back on social equity developments in Michigan in 2020, Casson points to the state’s establishment of a social equity team, which is looking into numerous initiatives to increase industry participation for minorities and other people who have been affected by the War on Drugs.

“What the goal is, is really for us to let the market reflect the demographics,” Casson said of Michigan’s cannabis marketplace.

Speaking about the U.S., McCarthy shared a similar sentiment, taking a moment to applaud the diversity at Trulieve, a cannabis dispensary and delivery multi-state operator based in Florida—the same state where M4MM is headquartered—and one of M4MM’s major corporate partners.

“If you were to go inside their plant, the diversity they have inside their plant—it mirrors the diversity that you see in our country. It’s old people, it’s young people, it’s Black people, and they’re in various stages of supervisory positions and what have you,” McCarthy said. “We just want to see more of that in 2021; we want to see that the inside of these companies are looking like the communities that they’re serving.”

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets—including Arizona, where  the company is excited for growth opportunities following adult-use legalization—Wana is also eyeing new states, including New Jersey, which also legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”