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Gage Cannabis Announces US$20 Million Reg A+ Commitment from JW Asset Management

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DETROIT, Dec. 16, 2020 /PRNewswire/ — PRESS RELEASE — Gage Cannabis Co., a cannabis brand and operator in Michigan, has announced it has secured a minimum investment of US$20 million from funds advised by JW Asset Management, LLC as part of the company’s Regulation A, Tier 2, equity financing.

JW Asset Management’s investment will provide Gage with resources to accelerate the expansion of its retail and cultivation footprint, pursue accretive acquisitions, and help position and solidify Gage as the leading cannabis operator in the state of Michigan. JWAM has been an active investor in the cannabis sector since 2014, investing in many of the industry leaders, including TerrAscend Corp., where Jason Wild’s strategic involvement and support has been instrumental in driving tremendous value for shareholders.

“JW Asset Management is widely recognized as one of the premier investors in the cannabis sector. Their participation provides Gage with a strong balance sheet that enables us to further establish our brand in one of the fastest-growing cannabis markets in the United States,” said Fabian Monaco, president of Gage. “We are confident in executing on our 2021 goals, driven by the growth of both the cultivation and dispensary arms of our business. We are fortunate to have developed a strong relationship with JWAM and are grateful for their support as we capitalize on the opportunities ahead in Michigan.”

Wild, founder and president of JWAM added, “Gage has rapidly established a strong footprint in Michigan and I’m thrilled to participate in their growth. I’m confident that Gage’s experienced team will continue to execute on the opportunity ahead.”

Gage’s Michigan footprint has grown significantly since their first retail opening in the state in September 2019. Today, the company supports five provisioning centers (dispensaries), three cultivation facilities and one processing facility across the state of Michigan, with plans to double its retail footprint by the end of the first quarter of 2021. Earlier this month, Gage had its first harvest at its flagship Monitor Township cultivation facility with a second harvest scheduled for this week.

The first tranche of approximately US$10 million of the US$20 million commitment from JWAM has been received by the company. Gage expects to receive the remaining funds prior to year end 2020. In consideration for JWAM’s participation in the offering (US$1.75 per share), the company has agreed to issue an equivalent number of warrants to purchase subordinate voting shares of the company. Each warrant shall entitle the holder to purchase one subordinate voting share in the capital of the company for US$2.60.

Go-public Plan in Q1 2021

The company continues to pursue a go-public transaction which it tentatively expects to complete by the end of Q1 2021. Additionally, the company confirms that general public access to the offering will close on Dec. 16, 2020. Gage encourages interested investors to visit www.GageInvestors.com for more information.

2020 Saw the Rise of Cannabis Delivery

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This year, the oldest members of Gen Z turned 23. That means the legal cannabis industry is about to be bombarded with new customers—members of a distinct generation with new tastes and emerging cultural touchstones.

The HQ Cannabis Brand Affinity report was issued in December 2020 by Headquarters, a strategic advisory studio focused on driving growth for businesses and brands entering the California cannabis market, in conjunction with The Statement Group. The report lays out the lifestyle trends and spending power found among Gen Z (and millennial) customers.

Gen Z is defined as anyone born between 1997 and 2012-2015 (depending who you ask). As of January 2020, according to the report, Gen Z spending power clocked in at $143 billion.

So, what does the younger set gravitate toward? The big topics include: hip-hop and R&B, fashion, social influencers and gaming.

READ MORE: Gen Z and Millennials: A New Age of Cannabis Consumers 

“Gen Z and millennial lifestyle cannabis consumers—an often tough-to-reach consumer group—make up a significant share of the cannabis market today,” said Headquarters CEO Daniel Abrahami. “As we head into the holiday season and New Year, these consumers are only expected to take a greater share of the market. … Our hope is that cannabis brands leverage this proprietary data to gain the competitive advantage they’re looking for in this highly competitive space.”

Read the full report here or scroll down for an embedded version. 

With the rise of online ordering and cannabis delivery, it becomes incumbent upon dispensary owners to navigate their marketing messages toward the consumer. Often in 2020 and going forward, this can mean getting out of the traditional retail environment and providing a more immersive message. 

“From a psychographic standpoint, it’s always great to know which cannabis icons like Wiz Khalifa, Seth Rogen or Snoop Dogg resonate with Gen Z and millennial consumers, but those huge names are often not actionable for most budgets,” said The Statement Group Founder Cory Jones. “We dig deeper into the data to uncover everyone that your consumers love—from brands, artists and influencers, who range from 1,000 to 100 million followers. When you know exactly who your audience is interested in, you have a detailed roadmap to develop revenue-driving partnerships, paid media campaigns and social media and native content strategies. It takes the guesswork out of marketing and cuts wasted spends. When you align your brand with your audience’s interests, your engagement skyrockets and you build a deeper emotional connection and loyalty with your consumers that lasts years.”

Alignment is key. It’s not like dispensary owners need to partner with Wiz Khalifa to hone their messaging. Rather, these lifestyle trends might allow for more inventive strategies. Advertising + gaming. Music + customer loyalty programs.

As Gen Z grows up, these interests will only grow more important as a broad suite of intersections with the ever-expanding cannabis industry.

“They’re living their life the way they want to live it,” Jennifer McLaughlin, vice president of merchandising for cannabis operator Calyx Peak Companies, told us earlier in the year. “It’s all about the social interaction for them now—socially interacting with cannabis. Market to the fact they have these rich lifestyles. Market to what they’re doing in their lives.”

HQ Brand Affinity Report: Millennials GenZ Cannabis Consumers by sandydocs on Scribd

 

SPACs Infused a Tough Capital Market for Cannabis Businesses This Year

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This year, the oldest members of Gen Z turned 23. That means the legal cannabis industry is about to be bombarded with new customers—members of a distinct generation with new tastes and emerging cultural touchstones.

The HQ Cannabis Brand Affinity report was issued in December 2020 by Headquarters, a strategic advisory studio focused on driving growth for businesses and brands entering the California cannabis market, in conjunction with The Statement Group. The report lays out the lifestyle trends and spending power found among Gen Z (and millennial) customers.

Gen Z is defined as anyone born between 1997 and 2012-2015 (depending who you ask). As of January 2020, according to the report, Gen Z spending power clocked in at $143 billion.

So, what does the younger set gravitate toward? The big topics include: hip-hop and R&B, fashion, social influencers and gaming.

READ MORE: Gen Z and Millennials: A New Age of Cannabis Consumers 

“Gen Z and millennial lifestyle cannabis consumers—an often tough-to-reach consumer group—make up a significant share of the cannabis market today,” said Headquarters CEO Daniel Abrahami. “As we head into the holiday season and New Year, these consumers are only expected to take a greater share of the market. … Our hope is that cannabis brands leverage this proprietary data to gain the competitive advantage they’re looking for in this highly competitive space.”

Read the full report here or scroll down for an embedded version. 

With the rise of online ordering and cannabis delivery, it becomes incumbent upon dispensary owners to navigate their marketing messages toward the consumer. Often in 2020 and going forward, this can mean getting out of the traditional retail environment and providing a more immersive message. 

“From a psychographic standpoint, it’s always great to know which cannabis icons like Wiz Khalifa, Seth Rogen or Snoop Dogg resonate with Gen Z and millennial consumers, but those huge names are often not actionable for most budgets,” said The Statement Group Founder Cory Jones. “We dig deeper into the data to uncover everyone that your consumers love—from brands, artists and influencers, who range from 1,000 to 100 million followers. When you know exactly who your audience is interested in, you have a detailed roadmap to develop revenue-driving partnerships, paid media campaigns and social media and native content strategies. It takes the guesswork out of marketing and cuts wasted spends. When you align your brand with your audience’s interests, your engagement skyrockets and you build a deeper emotional connection and loyalty with your consumers that lasts years.”

Alignment is key. It’s not like dispensary owners need to partner with Wiz Khalifa to hone their messaging. Rather, these lifestyle trends might allow for more inventive strategies. Advertising + gaming. Music + customer loyalty programs.

As Gen Z grows up, these interests will only grow more important as a broad suite of intersections with the ever-expanding cannabis industry.

“They’re living their life the way they want to live it,” Jennifer McLaughlin, vice president of merchandising for cannabis operator Calyx Peak Companies, told us earlier in the year. “It’s all about the social interaction for them now—socially interacting with cannabis. Market to the fact they have these rich lifestyles. Market to what they’re doing in their lives.”

HQ Brand Affinity Report: Millennials GenZ Cannabis Consumers by sandydocs on Scribd

 

Changes in CBD & Cannabis Use during the Pandemic

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A report by Brightfield Group found that cannabis use increased to 44% during the pandemic in November, up from 34% in March. Gen Z saw the most significant change at 52% with Millennials not far behind at 49%; Baby Boomers saw the lowest change at 25%. Still, no matter the generation, all segments increased usage.[1]

The report also found that, of heavy cannabis users (5+ days per week), 52% further increased their usage; 87% of these users noted that cannabis has helped them deal with stress from the pandemic. Not to mention, some users found cannabis helpful in fighting boredom during lockdowns.

About 37% of users are smoking and/or vaping cannabis, with about 35% using edibles more often. Only 21% find themselves using other products, such as tinctures and creams. It’s worth noting that the majority of those smoking and/or vaping are Gen Z and Millennials.

Another Brightfield Group report evaluated how people were purchasing cannabidiol (CBD). With social distancing and an overall effort to avoid in-store purchases, it comes as no surprise that online sales skyrocketed. With that, there has been greater popularity in curbside pickups and deliveries.[2]

Throughout the first quarter of 2020, about 23% of CBD consumers purchased products online. However, that number more than doubled to 47% by Q2 and Q3. Still, specialty retailers also saw an increase in sales throughout the first, second, and third quarters. Generally speaking, there’s simply been even more interest in CBD products.

Most notably, 2020 saw a number of new CBD users enter the marketplace. In Q1, 12% had been using the cannabinoid for three months or less; by Q3, that number rose to 14%. While these aren’t anything comparable to 2019 statistics, it shows that CBD is continuing to garner interest. It’s worth mentioning that most of these new users were purchasing CBD edibles and tinctures.

It’s also interesting to note that beauty and skincare product usage also increased from 18% in Q1 to 33% in Q3; in fact, their usage surpassed theapeutic topical use in Q3.

2020 has been one of the most difficult years in modern history. Yet, cannabis and CBD use and sales have prevailed and even surpassed expectations, likely attributable to its anxiolytic and sleep-inducing benefits. While the upward trend we’re seeing may not be as notable in 2021, it will definitely continue, proving that the industry is certainly booming and will be for some time.

Image Credit: Mohamed Hassan

Image Source: https://pixabay.com/illustrations/visa-business-buying-card-3082813/

References

  1. Brightfield Group. “Changes in Cannabis Consumer Behavior Due to COVID-19.” November 2020.
  2. Brightfield Group. “Buying CBD During a Pandemic: Channel and Consumer Trends.” November 2020.

Long-term Effects of CBD in a Pre-clinical Model

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As medical interest in cannabidiol (CBD) grows, so does the need to know its long-term effects. CBD’s therapeutic potential can’t be fully achieved until people better understand its possible risks, as the Food and Drug Administration (FDA)’s hesitance to allow CBD in food and drinks stems from a lack of data.

One recent study examined CBD’s long-term safety in Caenorhabditis elegans (C. elegans), a nematode that has been widely utilized as a pre-clinical model. This species is often used in research because its lifespan averages 2-3 weeks and 60-80% of its genes have a human ortholog, or the same function.[1] As such, this model is used to screen drugs in early testing to determine if they are safe.

In this study, the nematodes were given different doses of hemp-derived CBD over the course of their short lives so that researchers could examine the physiological effects of CBD on safety and lifespan. They found no evidence of CBD effects on toxicity. In fact, CBD consumption extended mean lifespan by up to 18% at certain doses. They also found that CBD mitigated age-related decline by measuring activity levels.[1] These results are similar to another study on C. elegans.

The researchers weren’t able to determine the mechanisms through which CBD positively affected the nematodes. In addition they were given hemp-derived CBD isolate. Full-spectrum hemp-derived CBD or cannabis-derived CBD may have different effects. While C. elegans is a great pre-clinical model, these results cannot be directly applied to humans. However, the initial results are promising.

The health industry is interested in CBD because of its medicinal potential. And as more and more evidence demonstrates that CBD has many physical and mental health benefits, with adequate safety data, it will become easier to develop new CBD-based therapies.

Image Credit: Republica

Image Source: https://pixabay.com/photos/flasks-erlenmeyer-chemistry-606611/

Reference

  1. Land MH, et al. “Effect of cannabidiol on the long-term toxicity and lifespan in the preclinical model Caenorhabditis elegans.” Cannabis and Cannabinoid Research. 2020; in press.



Hemp in the Nutritional Segment

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For many years, the cultivation of hemp was illegal in different parts of the world. However, this has changed in the last couple of years and many countries have relaxed their laws on hemp production. This has contributed to positive growth, as in the US alone, the sale of hemp-based products is projected to reach 2.61 billion dollars by 2022. The nutritional segment is one facet of the hemp industry that represents great potential.

Legal hemp is defined as plants with very low levels of the cannabinoid delta-9-tetrahydrocannabinol (THC). The European Union defines hemp as cannabis cultivars that contain less than 0.2% THC, while in the US the threshold is set at 0.3%.

Hemp is a crop with diverse applications in industries such as manufacturing, and cosmetics in the production of textiles, biodegradable plastics, paper, paint, animal feed, and medicine, as well as ingredients for nutritional supplements.

Hemp is packed with biologically active cannabinoids such as the popular cannabidiol (CBD), which offers significant therapeutic benefits including anxiolytic, anti-inflammatory, and spasmolytic effects.[1]

As hemp is becoming mainstream, the nutritional segment is carving out a niche aside from industrial and therapeutic segments. This nutrient-rich plant has been consumed as a food for thousands of years. Hemp leaves, sprouts, and flowers are used to make juices and green salads for nutritional benefits.

Hemp seeds are a rich source of amino acids including methionine, cystine, and arginine. They are also loaded with fiber, minerals, vitamins, and fatty acids. This can be used to fortify foods and increase their nutritional value.[1]

Hemp seeds are also used to make flour, which is rich in moisture, protein, and carbohydrates. Hemp seed oil can be used in cooking as a substitute for olive oil, and hemp seed oil may positively impact cholesterol levels.[1] Hemp sprouts are also rich in polyphenols, flavonoids, and flavonols, which have beneficial effects on cardiovascular health.

The described nutritional benefits of hemp qualifies it be classified as a superfood and has the potential to revolutionize the nutritional industry.

Image Credit: Nicky Pe

Image Source: https://pixabay.com/photos/hemp-cannabis-leaves-green-plant-5438493/

Reference

  1. Cerino P, et al. A review of hemp as food and nutritional supplement. Cannabis and Cannabinoid Research. 2020; in press.

Attorney General William Barr Resigns, New Jersey Legislature Sends Adult-Use Cannabis Bill to Governor: Week in Review

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This year, the oldest members of Gen Z turned 23. That means the legal cannabis industry is about to be bombarded with new customers—members of a distinct generation with new tastes and emerging cultural touchstones.

The HQ Cannabis Brand Affinity report was issued in December 2020 by Headquarters, a strategic advisory studio focused on driving growth for businesses and brands entering the California cannabis market, in conjunction with The Statement Group. The report lays out the lifestyle trends and spending power found among Gen Z (and millennial) customers.

Gen Z is defined as anyone born between 1997 and 2012-2015 (depending who you ask). As of January 2020, according to the report, Gen Z spending power clocked in at $143 billion.

So, what does the younger set gravitate toward? The big topics include: hip-hop and R&B, fashion, social influencers and gaming.

READ MORE: Gen Z and Millennials: A New Age of Cannabis Consumers 

“Gen Z and millennial lifestyle cannabis consumers—an often tough-to-reach consumer group—make up a significant share of the cannabis market today,” said Headquarters CEO Daniel Abrahami. “As we head into the holiday season and New Year, these consumers are only expected to take a greater share of the market. … Our hope is that cannabis brands leverage this proprietary data to gain the competitive advantage they’re looking for in this highly competitive space.”

Read the full report here or scroll down for an embedded version. 

With the rise of online ordering and cannabis delivery, it becomes incumbent upon dispensary owners to navigate their marketing messages toward the consumer. Often in 2020 and going forward, this can mean getting out of the traditional retail environment and providing a more immersive message. 

“From a psychographic standpoint, it’s always great to know which cannabis icons like Wiz Khalifa, Seth Rogen or Snoop Dogg resonate with Gen Z and millennial consumers, but those huge names are often not actionable for most budgets,” said The Statement Group Founder Cory Jones. “We dig deeper into the data to uncover everyone that your consumers love—from brands, artists and influencers, who range from 1,000 to 100 million followers. When you know exactly who your audience is interested in, you have a detailed roadmap to develop revenue-driving partnerships, paid media campaigns and social media and native content strategies. It takes the guesswork out of marketing and cuts wasted spends. When you align your brand with your audience’s interests, your engagement skyrockets and you build a deeper emotional connection and loyalty with your consumers that lasts years.”

Alignment is key. It’s not like dispensary owners need to partner with Wiz Khalifa to hone their messaging. Rather, these lifestyle trends might allow for more inventive strategies. Advertising + gaming. Music + customer loyalty programs.

As Gen Z grows up, these interests will only grow more important as a broad suite of intersections with the ever-expanding cannabis industry.

“They’re living their life the way they want to live it,” Jennifer McLaughlin, vice president of merchandising for cannabis operator Calyx Peak Companies, told us earlier in the year. “It’s all about the social interaction for them now—socially interacting with cannabis. Market to the fact they have these rich lifestyles. Market to what they’re doing in their lives.”

HQ Brand Affinity Report: Millennials GenZ Cannabis Consumers by sandydocs on Scribd

 

Delta 9 Establishes Recycling and Landfill Diversion Program in Partnership with Emterra Environmental

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When Cannabis 2.0 launched in Canada with the sale of cannabis edibles, beverages and vape products, Marshall Posner, chief marketing officer for vertically integrated licensed producer Delta 9, said the company wanted to do more to ensure cannabis packaging and waste was being dealt with responsibly.

While packaging for dried flower and other cannabis products can generally be recycled as part of Canada’s Blue Box recycling program, many vape products are designated as special waste and cannot be recycled in the same way, meaning that they often end up in landfills.

“As we’ve seen these products become more prevalent in our stores, we felt we needed to do something in a responsible fashion to help address … where this packaging and cannabis waste is ending up,” Posner told Cannabis Business Times and Cannabis Dispensary.

This led Delta 9 to partner with Canadian recycling company Emterra Environmental to create a sustainable recycling program for cannabis packaging and disposable vape pens, as well as a landfill diversion program for vape cartridges, to help the Canadian cannabis industry transition to a circular economy.

Emterra Environmental was founded 44 years ago as a Vancouver-based recycling company.

“Unlike some of our industry peers, we don’t see ourselves as a waste disposal company or a landfill operator,” said Paulina Leung, VP of corporate strategy and business development for Emterra Environmental. Her mother started the company, which has since grown to 1,100 employees, 15 recycling plants and over 800 trucks. “Our true core is to be a recycler and to help ensure any kind of material we extract from the earth gets to be used over and over again.”

Emterra Environmental has moved beyond its initial role as a recycling and waste management company, Leung said, and now works directly with companies, such as Delta 9, that want to take responsibility for their products and work to increase sustainability in the marketplace.

“That’s where we have a similar ethos with Delta 9,” Leung said. “We’re both vertically integrated companies in our respective industries, and instead of waiting for government to tell us what to do with cannabis packaging and vape products, we found each other and we created this customer program … to help Delta 9 continue to grow in a sustainable way.”

Delta 9 launched in 2013 as one of Canada’s original LPs, and currently operates eight retail stores across Manitoba, Alberta and Saskatchewan in addition to its cultivation operations. The company will open a ninth store next week and aims to open another 11 retail locations by the end of 2021.

“We think of ourselves as a socially responsible company, and we’ve participated in a variety of green initiatives or recycling programs that the industry has started and stopped over the past year and a half,” Posner said. “We were excited about this and it seemed like a good fit for us to restart or relaunch a new program that would ultimately be sustainable for the industry.”

Leung added: “We saw other programs in the industry come and go, and in seeing those programs come and go, we saw that there were opportunities and ways to make our program more effective, more efficient, and also more authentic.”

The first component of the program allows consumers to recycle cannabis packaging similar to Canada’s well-established Blue Box program, while a second component focuses on landfill diversion for disposable vape cartridges and vape pens.

“Of course, landfilling is absolutely the worst,” Leung said. “Things stay in landfills forever—it never decomposes. So, the second option was to recover the energy from the cartridges. That’s what makes our program unique.”

To participate in the recycling program, consumers can simply bring their empty containers and vape products to any Delta 9 retail location and deposit them into boxes labeled “Flower – Recycling” or “Vapes – Landfill Diversion.”

Photo courtesy of Emterra Environmental

The program accepts cannabis packaging and disposable vape cartridges and vape pens from any licensed producer, regardless of brand. Consumers can simply bring their empty containers and vape products to any Delta 9 retail location and deposit them into boxes labeled “Flower – Recycling” or “Vapes – Landfill Diversion.”

Consumers are asked to wrap the vape cartridges in individual bags before putting them into the box to make it easier for the recycler to sort the cartridges from the pens, which ultimately increases recyclability, Leung said.

The contents of the flower recycling box will be picked up and delivered to ReVital Polymers’ plastics recycling facility in Sarnia, Ontario, where post-consumer plastics are processed into engineered resin products.

The collected vape pens and vape cartridges are processed at Emterra Environmental’s partner electronics recycling facility, where the pens are separated from the cartridges for processing. The battery, plastic and metal are recovered from the vape pens, while the cartridges are handled as special waste and sent to an energy-from-waste facility for processing. All of this happens domestically in Canada, and no waste is shipped abroad.

“When the recycling is full on our end, there’s a bag inside,” Posner said. “We take it, put it in a box and book a pick-up online from Canada Post, and that’s it. It’s a real simple process. I think that’s what I really like about this program. If you look at successful programs, they’re really quite simple. There aren’t all of these steps that you have to adhere to.”

Emterra Environmental and Delta 9 have created educational Q&As to display on their websites and in-store to help both consumers and Delta 9’s retail staff understand the process and why it is important.

In the several days since the program’s launch, online and in-store response has been positive, Posner said.

“Our customers have been asking us for months when we’ll be introducing vape recycling or some kind of a vape program or … recycling program for cannabis packaging,” he said. “I think for a lot of them, they’re like, ‘Oh, good, it’s about time.’”

The long-term success of any diversion program requires the industry to participate, Leung added, and she and Posner hope that other LPs will take notice and join in.

“Delta 9 certainly led this initiative and I really hope they have set the example and other LPs will join because when industry acts as a whole, not only will the program be more cost-effective for everybody, but it will also show government that they don’t need to regulate the industry from a waste management perspective,” Leung said. “Industry is taking responsibility for the end-of-life management of cannabis and vape products and packaging, they’re being proactive, and I think government appreciates that. From a compliance or government affairs perspective and from achieving a cost-effective program, industry working together will result in the best outcome for all the players.”

Creating packaging with circular end-of-life solutions is not a competitive issue, she added, and should instead be something that the entire industry collaboratively addresses.

“As soon as Marshall and I started talking, it was very like-minded,” Leung said. “We saw that the industry is growing very quickly, and sometimes when an industry is growing very quickly, some of the elements of sustainability take a while to catch up. … I hope this is a launching pad for a nationwide program that will be able to manage all the cannabis packaging, as well as the vape pens and the vape cartridges. … I really hope that the industry hears this call to action and works together.”

The partnership between Delta 9 and Emterra Environmental relies on shared expenses, which will ultimately contribute to the long-term viability of the program, Posner said.

“The packaging is as diverse as the types of products that are held in them, and on the spectrum of really recyclable to terrible [and] not recyclable, the packaging will fall anywhere on that spectrum,” Leung said. “What we want to do in this program is to take a look at each brand and each type of packaging available and to be able to give some analysis and recommendations to the LPs to say, ‘This type of packaging is really good—can you transition more of your packaging to this type?’ Then, we’ll also be honest and say, ‘This type of packaging is not good, so can we work together and find some other alternatives?’”

“This was important to our employees, it’s important to our customers, and quite frankly, we think it’s a responsibility of any company,” Posner added. “Whether [it’s] a cannabis company or another that is producing waste and putting waste into the marketplace, [it should] have a solution on the backend or at least contribute to a solution on the backend to help deal with the waste.”

FTC Announces Crackdown on Deceptively Marketed CBD Products

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Companies made unsupported claims that their oils, balms, gummies, coffee, and other goods could treat serious diseases such as cancer and diabetes

Note: The FTC will host a media call-in on this announcement with
Andrew Smith, Director, Bureau of Consumer Protection
Date: Thursday, December 17, 202
Time: 11:00 a.m. ET
Call-in: 844-291-6360; Access Code: 389969
Call-in lines, which are for media only, will open 15 minutes prior to the start of the call.

The Federal Trade Commission today announced the first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products. The FTC is taking action against six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others.

The FTC is requiring each of the companies, and individuals behind them, to stop making such unsupported health claims immediately, and several will pay monetary judgments to the agency. The orders settling the FTC’s complaints also bar the respondents from similar deceptive advertising in the future, and require that they have scientific evidence to support any health claims they make for CBD and other products.

“The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Otherwise, don’t be surprised if you hear from the FTC.”

The crackdown, Operation CBDeceit, is part of the Commission’s ongoing effort to protect consumers from false, deceptive, and misleading health claims made in advertisements on websites and through social media companies such as Twitter.

Each case the FTC is announcing today is described below:

Bionatrol Health, LLC

According to the FTC’s complaint against Utah-based companies Bionatrol Health, LLC and Isle Revive, LLC, and two former managers and owners, since at least December 2019 the respondents sold a CBD oil to consumers on two websites. Among other things, the respondents allegedly claimed without substantiation that their CBD product is safe for all users, treats pain better than prescription medications like OxyContin, and prevents and treats age-related cognitive decline and chronic pain. The respondents also claimed, without scientific evidence, that CBD oil is “medically proven” to improve a variety of conditions, according to the FTC’s complaint. In addition, the FTC alleges the respondents deceived consumers who ordered one bottle of their CBD oil by changing the order to five bottles without consumers’ consent.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs without human clinical testing to substantiate the claims. It also requires competent and reliable scientific evidence for other health-related product claims, and prohibits the respondents from misrepresenting the cost of any good or service and from charging consumers without their express, informed consent. Finally, it requires the corporate respondents and individual respondent Marcello Torre to pay $20,000 to the FTC and to notify consumers of the Commission’s order.

Epichouse LLC (First Class Herbalist CBD)

According to the FTC’s complaint against Utah corporation Epichouse, LLC, which operated under several names, including First Class Herbalist, and the company’s founder and owner, John Le, since at least September 2019 the respondents sold several CBD products on their website, including oils, a pain-relief cream, coffee, and gummies.

Among other alleged unsupported claims, Epichouse and Le promoted CBD as safe for all users, able to treat pain better than prescription medications such as OxyContin, and able to prevent a wide range of serious conditions, including cancer, diabetes, and heart disease. In their advertising, they also falsely claimed that CBD is scientifically proven to improve many serious health conditions—including chronic pain and hypertension—and provide neurological benefit—such as preventing age-related cognitive decline—according to the FTC’s complaint.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. It requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, the order requires the respondents to pay $30,000 to the FTC and notify consumers of the Commission’s order.

CBD Meds, Inc.

According to the FTC’s complaint against CBD Meds, Inc.; G2 Hemp, Inc.; and Lawrence Moses, a/k/a Lawrence D. Moses, Jr., individually and as an officer of the corporate entities, the two companies advertised CBD oil on their website and on YouTube. In their ads, the FTC contends, the Winchester, California-based firms made a number of false or unsubstantiated claims, including that CBD effectively treats, prevents, or mitigates serious diseases and conditions like artery blockage, cancer, glaucoma, autism, and schizophrenia, among many others. The respondents also falsely represented that some of the efficacy claims were scientifically proven or that the U.S. government has confirmed the health benefits of CBD.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, the order requires the respondents to notify consumers of the Commission’s order.

HempmeCBD

According to the FTC’s complaint against EasyButter, LLC, also d/b/a HempmeCBD, and its owner and officer Michael Solomon, since at least January 2018, the respondents have sold CBD products on their website, including CBD-infused shea butter, gummies, lozenges, honey sticks, vape pens, and oils. The complaint alleges that HempmeCBD claimed its CBD products could treat or cure serious ailments like cancer-related symptoms, substance abuse, and AIDS. The complaint alleges HempmeCBD lacked the scientific substantiation for such health claims and falsely claimed to have studies showing CBD is effective at treating autism.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. It also requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires the respondents to pay the FTC $36,254 and to notify consumers of the Commission’s order.

Reef Industries, Inc.

According to the FTC’s complaint against California-based Reef Industries, Inc.; Cannatera, Inc.; AndHemp, Ltd., and the companies’ three principals, the respondents have sold a variety of CBD products directly to consumers on their website and Twitter accounts since at least January 2019 and misrepresented the health benefits of CBD. The FTC alleges that the respondents made unsubstantiated claims that CBD can prevent, cure, mitigate, or treat diseases and serious health conditions, including Alzheimer’s disease, arthritis, autoimmune disease, and irritable bowel syndrome. The complaint also alleges the respondents falsely claimed that studies or scientific research prove that CBD is effective at treating, curing, or mitigating these diseases and conditions.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires them to pay the FTC $85,000 and notify consumers of the Commission’s order.

Steves Distributing, LLC

According to the FTC’s complaint against Steves Distributing, LLC, d/b/a Steve’s Goods; and the company’s CEO Steven Taylor Schultheis, since beginning operations in 2018, the respondents have sold a variety of products containing both CBD and cannabigerol (CBG), which, like CBD, is a non-psychoactive compound derived from hemp. The company advertises its CBD and CBG products, including tinctures, gummies, capsules, topical balms, suppositories, bath balms, and coffee, on its website and through social media companies like Twitter.

The FTC alleges that the respondents claimed, without adequate substantiation, that their CBD and CBG products are effective alternatives to prescription medications and treat a wide range of diseases and serious health conditions, including Alzheimer’s disease, cancer, and diabetes. The complaint also alleges the respondents falsely claimed that their CBD and CBG products have antibacterial properties, prevent or reduce the risk of heart attacks, strokes, and other diseases, and that certain of these claims were supported by scientific evidence.

The proposed administrative order settling the FTC’s charges prohibits the respondents from making certain prevention, treatment, or safety claims about dietary supplements, foods, and drugs, unless they have the human clinical testing to substantiate the claims. More broadly, it requires them to have competent and reliable scientific evidence when making any other health-related product claims. Finally, it requires the respondents to pay the FTC $75,000 and notify consumers of the Commission’s order.

The Commission votes approving each of the six administrative complaints and proposed consent orders were 5-0, with Commissioner Rohit Chopra and Commissioner Christine S. Wilson issuing separate, concurring statements. A complete list of respondents can be found in the complaint for each respective case.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $43,280.

The Federal Trade Commission works to promote competition and to protect and educate consumers. You can learn more about consumer topics and report scams, fraud, and bad business practices online at ReportFraud.ftc.gov. Like the FTC on Facebook(link is external), follow us on Twitter(link is external), get consumer alerts, read our blogs, and subscribe to press releases for the latest FTC news and resources.

Original Article: https://www.ftc.gov/news-events/press-releases/2020/12/ftc-announces-crackdown-deceptively-marketed-cbd-products

Aphria & Tilray Merger Creates World’s Largest Cannabis Company

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On December 16, 2020, Aphria Inc. (TSX: APHA and Nasdaq: APHA) announced a merger with Tilray, Inc. (Nasdaq: TLRY), creating the world’s largest cannabis company. The two Canadian companies combined have an equity value of $3.9 billion.

Following the news of the merger, Tilray’s stock rose more than 21% the same day. Once the reverse-merger is finalized, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the 15th. Based on the past twelve months of reports, the two companies’ revenue totals more than $685 million.

Both of the companies have had international expansion strategies in place well beyond the Canadian market, with an eye focused on the European and United States markets. In Germany, Aphria already has a well-established footprint for distribution and Tilray owns a production facility in Portugal.

tilray-logoAbout two weeks ago, Aphria closed on their $300 million acquisition of Sweetwater Brewing Company, one of the largest independent craft brewers in the United States. Sweetwater is well known for their 420 Extra Pale Ale, their cannabis-curious lifestyle brands and their music festivals.

Once the Aphria/Tilray merger is finalized, the company will have offices in New York, Seattle, Toronto, Leamington, Vancouver Island, Portugal and in Germany. The new combined company will do business under the Tilray name with shares trading on NASDAQ under ticker symbol “TLRY”.

Aphria’s current chairman and CEO, Irwin Simon, will be the chairman and CEO of the combined company, Tilray. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” says Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”