Cannabis News

In a press release sent out this month, bioMérieux announced they have received the very first approvals in cannabis and hemp for AOAC Research Institute Performance Testing Methods (PTM). AOAC approved method validation for the detection of Salmonella and STEC (Shiga toxin-producing E. coli) in cannabis flower utilizing bioMérieux GENE- UP® SLM2 (PTM 121802) and EHEC (PTM 121806) assays.

According to the press release, these validations are the first of their kind in the cannabis and hemp industries. The AOAC-validated testing methods are approved for 1-gram and 10-gram samples.

Dr. Stan Bailey, senior director of scientific affairs at bioMérieux, says these approvals demonstrate the company’s commitment to innovative and validated science in the cannabis and hemp industries. “We are especially proud that the GENE-UP SLM2 and EHEC are the first two AOAC approvals in the United States for cannabis and hemp,” says Dr. Bailey. “This is increasingly important with now over half the population of the US living in states that have approved cannabis for recreational use and most states approving cannabis for medical use.”

The AOAC PTM designations are recognized by the US Department of Agriculture, the Food and Drug Administration, and global regulatory agencies. The validation guidance builds on AOAC’s Cannabis Analytical Science Program (CASP).

bioMérieux is a French in vitro diagnostics company that serves the global testing market. They provide diagnostic solutions such as systems, reagents, software and services.

NOVATO, Calif., Jan. 26, 2021 /PRNewswire/ — Trym, a pioneering cannabis cultivation software company, is pleased to announce the release of Touchless Harvesting, a patent-pending technology that allows cultivators to compliantly and expeditiously scan, weigh, and record plant tags while harvesting cannabis plants via a mobile device.

Touchless Harvesting saves cultivators time by providing the most efficient method for recording each plant’s weight in accordance with state regulations without touching their mobile devices.

Touchless Harvesting helps growers:

• save hours harvesting and remain in strict compliance with CDFA.
• scan plant tags via a phone or tablet without touching the device.
• complete harvests without ever logging into METRC.
• automate weight recording via Bluetooth scale integrations.
• keep sticky, trichome-covered fingers off their mobile devices.

“At Trym, we’re all about helping cultivators save time and streamline their operations. That’s why we created Touchless Harvesting.^{It’s a burden to harvest cannabis plants in California due to regulations that require tediously weighing each plant and reporting the weights to the state via METRC. Touchless Harvesting is the fastest way to harvest cannabis plants and report to METRC,” says Trym CEO Matt Mayberry. “The feedback so far has been fantastic and we look forward to expanding our reach in 2021.”}

Trym launched Touchless Harvesting with longtime partner and customer FloraCal Farms in Santa Rosa, CA. Using Trym, FloraCal Farms was able to harvest, weigh, and report 680 plants all before lunch. Efficiency and compliance are top priorities for the FloraCal team who harvest every week in their 20,000 sq.ft. cultivation facility.

“The Touchless Harvesting feature is a great convergence of efficiency and compliance,” says Andrew Rayl, director of compliance for FloraCal Farms. “It allows us to remain in full compliance with even the most conservative interpretations of harvest regulatory requirements without sacrificing any time.”

DENVER, Jan. 26, 2021 /PRNewswire/ — PRESS RELEASE — GrowGeneration Corp., a national chain of specialty hydroponic and organic garden centers, has announced the acquisition of Indoor Garden & Lighting, a two-store chain of hydroponic equipment and indoor gardening supply stores serving the Seattle and Tacoma, Wash., area. The company will be consolidating its current Seattle operation into the acquired stores. This acquisition brings the total number of GrowGen hydroponic garden centers nationwide to 40 stores.

"We’re thrilled to kickstart 2021 with our acquisition of Indoor Garden & Lighting, which boasts a strong commercial customer base and a talented team of grow professionals," said Darren Lampert, GrowGeneration’s CEO. "This deal expands our footprint in the Pacific Northwest and puts us in close proximity to Tacoma’s large commercial operators. With the addition of Indoor Garden & Lighting, we expect Washington’s thriving adult-use market to generate annual revenues of $10 million for GrowGen."

Founded in 1995, by Mike Long, Indoor Garden & Lighting has operations in Tacoma and Mountlake Terrace. GrowGen plans to close its current Seattle storefront and consolidate it with Indoor Garden & Lighting’s Mountlake Terrace location. GrowGeneration also plans to operate out of Indoor Garden & Lighting’s 10,000-square-foot warehouse in Tacoma. As part of the deal, Long and his team of cultivation experts will join GrowGeneration. 

The Indoor Garden & Lighting acquisition is the company’s first acquisition this year, and follows yet another quarter of record earnings. Earlier this month, the company pre-announced fourth-quarter revenues of $61.5 million, bringing full-year 2020 revenue to $192 million, up 140% from 2019. Same-store sales increased 63% for full-year 2020, compared to the previous year. The company also raised its 2021 revenue guidance to $335 million-$350 million, and raised its 2021 adjusted EBITDA guidance to $38 million-$40 million. GrowGen plans to have 55 garden center locations by the end of 2021.

Curaleaf | curaleaf.com

To have the biggest footprint, one must lace up the biggest shoe. 

In the cannabis industry, multistate operator Curaleaf spent the past five years building itself a massive network with a 23-state foundation, and has no plans on slowing down as it continues to acquire licenses and increase capacity. Based out of Wakefield, Mass., the vertically integrated company’s operation includes 96 dispensaries, 23 cultivation sites and more than 30 processing sites.

This past July, Curaleaf closed on an approximately $700-million deal to acquire Grassroots Cannabis, making it the largest cannabis company in the world, based on its anticipated $1 billion annual revenue at the time. 

Curaleaf | curaleaf.com

With that groundwork established, Curaleaf is now gearing for its next wave of growth by putting focus toward executing on that platform, said new CEO Joe Bayern, who started his role Jan. 1.  

“One of the things that’s tied to my transition into the new role is going and looking at what we’re calling Curaleaf 2.0, which is really the next growth spurt for Curaleaf,” he said.

Curaleaf executives put a lot of attention on trying to understand what they want the company to look like in the next three to five years, what the industry might look like during the next three to five years, and then what capability and capacity are needed, to help establish company goals, Bayern said.

Knowing where the cannabis industry is headed provides a strategic roadmap to follow, he said.

“Listen, we think it’s an incredibly compelling opportunity in the marketplace,” Bayern said. “We think [the U.S.] marketplace could be a $100-billion market at some point. So, we want to be the leading industry player in cannabis, and we think certainly by 2025 there’s no reason why we can’t get the industry to about a $50-billion market size. And we want to take a dominant share of that market size.”

While Curaleaf built momentum heading into 2021, implications for an accelerated pro-cannabis landscape sparked when the U.S. Senate runoffs in Georgia went democratic on Jan. 6, swinging the majority of the upper chamber.

Prepared to take advantage of the potential of those election results, Curaleaf executives pulled the trigger to raise more than U.S. $200 million through an overnight marketed offering on the Canadian Securities Exchange (CSE). Oversubscribed, Curaleaf ended up raising C$316,882,500 of capital, or about U.S. $251 million, before deducting the underwriters’ fees and estimated offering expenses.

“I think everybody was pleasantly surprised, at least from the cannabis industry, that both of those seats went democratic,” Bayern said. “As early as the week before, we were hearing it was going to be split, so I think we were obviously prepared to do something in case of a swing to a democratic Senate. Even before the Georgia race, we had filed a shelf prospectus back in November to be able to raise capital if the markets were moving in our favor, and they were.”

The underwriters exercised their over-allotment option in full, and, as a result, 18,975,000 subordinate voting shares of the company were issued, Curaleaf announced in a press release Jan. 12. Bayern said since Curaleaf oversubscribed – its original intent was to raise closer to $200 million – it allowed the company to get some institutional investors into its stock.

“I think people are now saying it’s time to jump in,” he said. “We think the Senate race was a catalyst for the industry, and it was just the first step of what we think is going to be a pretty exciting 2021 as far as positive legislation for the cannabis sector.”

In addition to the roughly $251 million raised on the CSE, Curaleaf announced Jan. 11 that it completed a new $50 million, three-year secured revolving credit facility. The loan is “expected to be used to fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes,” the company said in a press release.

An extension of a previous deal, Curaleaf lowered its cost of capital, from 13% on the original note to 10.25% on the new three-year secured revolving credit facility, Bayern said.  

“It’s just another indicator that we think that the capital markets are loosening up a little bit for our space,” he said. “And then I think if there is change in the [Secure and Fair Enforcement (SAFE)] Banking Act … that there’s going to be a new round of capital coming into our industry. And I think that’s going to be important for us to be able to scale up and grow and continue to expand, if we are going to be able to supply the deeds of a $50-billion market over the next couple of years.”

In addition to potential advantages the cannabis industry might experience from the results of the Georgia Senate runoffs, there’s a lot of opportunity for non-legislative changes to help accelerate momentum in the marketplace, Bayern said. One of those changes could come in the form of a revised memorandum from the Department of Justice (DOJ), he said.

In 2013, then-Deputy Attorney General James M. Cole issued guidance on cannabis enforcement, directing the DOJ not to prosecute any state-legal cannabis businesses – taking a hands-off approach. In 2018, then-Attorney General Jeff Sessions issued a memorandum that rescinded Cole’s directive. It has remained a gray area ever since.

“I think guidance around the criminal aspects of cannabis and where [the DOJ] should be focusing their time [would help momentum in the marketplace],” Bayern said. “And I think guidance coming out of the U.S. Treasury would be helpful to provide some kind of confidence and security to U.S. investors and banking organizations to be able to, again, participate in the U.S. banking landscape.”

Banking roughly $300 million, through its overnight marketed offering on the CSE and through the three-year secured revolving credit facility, to kick off 2021, Curaleaf’s growth is capitalized for the remainder for the year, and most of 2022, so the company doesn’t have current plans to go out and raise additional capital, Bayern said.

Instead, Curaleaf wants to speed up some of its projects scheduled for the back half of 2021 and the beginning of 2022, in anticipation of accelerated market growth, he said.

“As you know, if you follow the industry, the constraining item for the last couple years has really been about building enough capacity to meet the demand of the marketplace,” Bayern said. “We think as we continue to see what we’re calling a ‘green wave of acceptance,’ of consumers accepting cannabis as more mainstream products, we’re going to continue to see increased demand. We want to be prepared to be able to meet that demand.”

In its current footprints, Curaleaf is considering extending its capacity through targeted bolt-on acquisitions in the marketplace, as well as investing in the next wave of growth, which Bayern said is predicated on innovation and developing standout products backed by science.

To do that, Curaleaf wants to put money toward research and development and clinical studies, in an effort to gain exposure to a broader segment of the U.S. marketplace with products that are suitable for those consumers whom the company hopes to bring into its category, Bayern said.

“Why we’re optimistic about that is, in many cases, those consumers are already consuming other products today,” he said. “So, the consumption is there. It’s just that we can provide a better alternative to what’s in the market today, whether it’s alcohol, or whether it’s prescription drugs for need-states like sleep or chronic pain, you know, cannabis really is a better alternative to those products.”

Behind a balanced portfolio across the U.S., Curaleaf is optimistic about growing, not only in its current footprint, but also as it moves toward building an omnichannel consumer product company, Bayern said.

Curaleaf has exposure to developed West Coast markets, like California and Oregon. It has exposure to up-and-coming markets, such as Arizona and New Jersey, which passed adult-use legalizations measures in the November election. And it has exposure throughout most the Northeast, where Curaleaf is headquartered.

With populated states like New York and Pennsylvania having yet to pass legislation that fully legalizes cannabis, Bayern said Curaleaf is most excited about the future marketplace in and around that region of the U.S.

“We think New York could be one of the most attractive markets, not only in the U.S., but in the whole world,” Bayern said. “If you look at the disposable income, you look at the density of population, you look at the per-capita consumption today, it could easily be a $4-[billion] or $5-billion market over the next couple of years.

“What’s important, though, is that New York learns from some of the predecessors about how to roll out an effective program, and they do it in a way that’s responsible and really manages across all of the constituents. Whether it’s existing patients and consumers, it’s being able to generate tax revenue for the state, it’s creating jobs in New York state, and it’s addressing the many issues of the social equity and balance that’s happening in cannabis and across other parts of society.”

 

Curaleaf | curaleaf.com

To have the biggest footprint, one must lace up the biggest shoe. 

In the cannabis industry, multistate operator Curaleaf spent the past five years building itself a massive network with a 23-state foundation, and has no plans on slowing down as it continues to acquire licenses and increase capacity. Based out of Wakefield, Mass., the vertically integrated company’s operation includes 96 dispensaries, 23 cultivation sites and more than 30 processing sites.

This past July, Curaleaf closed on an approximately $700-million deal to acquire Grassroots Cannabis, making it the largest cannabis company in the world, based on its anticipated $1 billion annual revenue at the time. 

Curaleaf | curaleaf.com

With that groundwork established, Curaleaf is now gearing for its next wave of growth by putting focus toward executing on that platform, said new CEO Joe Bayern, who started his role Jan. 1.  

“One of the things that’s tied to my transition into the new role is going and looking at what we’re calling Curaleaf 2.0, which is really the next growth spurt for Curaleaf,” he said.

Curaleaf executives put a lot of attention on trying to understand what they want the company to look like in the next three to five years, what the industry might look like during the next three to five years, and then what capability and capacity are needed, to help establish company goals, Bayern said.

Knowing where the cannabis industry is headed provides a strategic roadmap to follow, he said.

“Listen, we think it’s an incredibly compelling opportunity in the marketplace,” Bayern said. “We think [the U.S.] marketplace could be a $100-billion market at some point. So, we want to be the leading industry player in cannabis, and we think certainly by 2025 there’s no reason why we can’t get the industry to about a $50-billion market size. And we want to take a dominant share of that market size.”

While Curaleaf built momentum heading into 2021, implications for an accelerated pro-cannabis landscape sparked when the U.S. Senate runoffs in Georgia went democratic on Jan. 6, swinging the majority of the upper chamber.

Prepared to take advantage of the potential of those election results, Curaleaf executives pulled the trigger to raise more than U.S. $200 million through an overnight marketed offering on the Canadian Securities Exchange (CSE). Oversubscribed, Curaleaf ended up raising C$316,882,500 of capital, or about U.S. $251 million, before deducting the underwriters’ fees and estimated offering expenses.

“I think everybody was pleasantly surprised, at least from the cannabis industry, that both of those seats went democratic,” Bayern said. “As early as the week before, we were hearing it was going to be split, so I think we were obviously prepared to do something in case of a swing to a democratic Senate. Even before the Georgia race, we had filed a shelf prospectus back in November to be able to raise capital if the markets were moving in our favor, and they were.”

The underwriters exercised their over-allotment option in full, and, as a result, 18,975,000 subordinate voting shares of the company were issued, Curaleaf announced in a press release Jan. 12. Bayern said since Curaleaf oversubscribed – its original intent was to raise closer to $200 million – it allowed the company to get some institutional investors into its stock.

“I think people are now saying it’s time to jump in,” he said. “We think the Senate race was a catalyst for the industry, and it was just the first step of what we think is going to be a pretty exciting 2021 as far as positive legislation for the cannabis sector.”

In addition to the roughly $251 million raised on the CSE, Curaleaf announced Jan. 11 that it completed a new $50 million, three-year secured revolving credit facility. The loan is “expected to be used to fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes,” the company said in a press release.

An extension of a previous deal, Curaleaf lowered its cost of capital, from 13% on the original note to 10.25% on the new three-year secured revolving credit facility, Bayern said.  

“It’s just another indicator that we think that the capital markets are loosening up a little bit for our space,” he said. “And then I think if there is change in the [Secure and Fair Enforcement (SAFE)] Banking Act … that there’s going to be a new round of capital coming into our industry. And I think that’s going to be important for us to be able to scale up and grow and continue to expand, if we are going to be able to supply the deeds of a $50-billion market over the next couple of years.”

In addition to potential advantages the cannabis industry might experience from the results of the Georgia Senate runoffs, there’s a lot of opportunity for non-legislative changes to help accelerate momentum in the marketplace, Bayern said. One of those changes could come in the form of a revised memorandum from the Department of Justice (DOJ), he said.

In 2013, then-Deputy Attorney General James M. Cole issued guidance on cannabis enforcement, directing the DOJ not to prosecute any state-legal cannabis businesses – taking a hands-off approach. In 2018, then-Attorney General Jeff Sessions issued a memorandum that rescinded Cole’s directive. It has remained a gray area ever since.

“I think guidance around the criminal aspects of cannabis and where [the DOJ] should be focusing their time [would help momentum in the marketplace],” Bayern said. “And I think guidance coming out of the U.S. Treasury would be helpful to provide some kind of confidence and security to U.S. investors and banking organizations to be able to, again, participate in the U.S. banking landscape.”

Banking roughly $300 million, through its overnight marketed offering on the CSE and through the three-year secured revolving credit facility, to kick off 2021, Curaleaf’s growth is capitalized for the remainder for the year, and most of 2022, so the company doesn’t have current plans to go out and raise additional capital, Bayern said.

Instead, Curaleaf wants to speed up some of its projects scheduled for the back half of 2021 and the beginning of 2022, in anticipation of accelerated market growth, he said.

“As you know, if you follow the industry, the constraining item for the last couple years has really been about building enough capacity to meet the demand of the marketplace,” Bayern said. “We think as we continue to see what we’re calling a ‘green wave of acceptance,’ of consumers accepting cannabis as more mainstream products, we’re going to continue to see increased demand. We want to be prepared to be able to meet that demand.”

In its current footprints, Curaleaf is considering extending its capacity through targeted bolt-on acquisitions in the marketplace, as well as investing in the next wave of growth, which Bayern said is predicated on innovation and developing standout products backed by science.

To do that, Curaleaf wants to put money toward research and development and clinical studies, in an effort to gain exposure to a broader segment of the U.S. marketplace with products that are suitable for those consumers whom the company hopes to bring into its category, Bayern said.

“Why we’re optimistic about that is, in many cases, those consumers are already consuming other products today,” he said. “So, the consumption is there. It’s just that we can provide a better alternative to what’s in the market today, whether it’s alcohol, or whether it’s prescription drugs for need-states like sleep or chronic pain, you know, cannabis really is a better alternative to those products.”

Behind a balanced portfolio across the U.S., Curaleaf is optimistic about growing, not only in its current footprint, but also as it moves toward building an omnichannel consumer product company, Bayern said.

Curaleaf has exposure to developed West Coast markets, like California and Oregon. It has exposure to up-and-coming markets, such as Arizona and New Jersey, which passed adult-use legalizations measures in the November election. And it has exposure throughout most the Northeast, where Curaleaf is headquartered.

With populated states like New York and Pennsylvania having yet to pass legislation that fully legalizes cannabis, Bayern said Curaleaf is most excited about the future marketplace in and around that region of the U.S.

“We think New York could be one of the most attractive markets, not only in the U.S., but in the whole world,” Bayern said. “If you look at the disposable income, you look at the density of population, you look at the per-capita consumption today, it could easily be a $4-[billion] or $5-billion market over the next couple of years.

“What’s important, though, is that New York learns from some of the predecessors about how to roll out an effective program, and they do it in a way that’s responsible and really manages across all of the constituents. Whether it’s existing patients and consumers, it’s being able to generate tax revenue for the state, it’s creating jobs in New York state, and it’s addressing the many issues of the social equity and balance that’s happening in cannabis and across other parts of society.”

 

New York legalized medical cannabis in 2014 and started its formal marketplace with only five licensed operators in the state.

The limitation on the number of licensed operators made it difficult for medical cannabis to make a notable impact in the state.

 

“As the author of the original Compassionate Care Act, which is the medical program, I’m not surprised that it hasn’t had that great of an economic impact, simply because the governor at the time was not a big fan,” New York State Sen. Diane Savino said of Gov. Andrew Cuomo, who has been in his executive role since 2011. “He was very skeptical about legalizing cannabis for medical purposes and he was greatly concerned that the program could lead to all sorts of problems, but he’s obviously changed his position since then.”

Savino said that the program’s original limitations created restrictions on a whole host of things—most importantly, patient access.

With only 20 operating medical dispensaries in a state with over 19 million people, it is no surprise that there was limited patient access at first. Since 2016, it has been expanded to 10 license holders, with 40 dispensaries statewide, she said.

According to the legislation, medical cannabis businesses must be vertically integrated. The thinking is that vertical integration allows one to have tighter control over regulatory compliance, but it also drives up the cost of running a cannabis operation, making it far more difficult for small businesses and entrepreneurs to get into the cannabis business, she said.

“

More importantly, it’s an expensive business to stay in,” Savino said. “You have to have a lot of liquidity, you have to have access to capital, you have to have the ability to sustain yourself, and you can’t turn to traditional lending sources. So, when you have a vertically integrated market, it seriously narrows the group of people who can participate.”

The medical program sunsets this year, which means the law expires. Savino expressed that it is a common technique in legislatures where a bill will expire at a particular time requiring it to be renewed, expanded, amended, or it ends because the program is no longer necessary.

“That was another requirement that the governor felt very strongly about back when he didn’t believe in cannabis,” she said. “He was worried that if we had to have a tightly controlled program and things got out of the way, we should be able to shut it down. In this instance, we will extend it, and that is going to give us the chance to really improve the medical program in a way that will be far more meaningful than the original program.”

Savino said the New York state legislature plans to remove the vertical integration requirement when they do the extension of the law, which will open it up to all types of licenses.

This is all happening on a parallel track to the discussions about the adult-use market in New York, she said.

In early January, Cuomo called for the legalization of adult-use cannabis in the state, leaving some wondering what the timeline will be.

Since New Jersey is in the process of implementing adult-use cannabis sales (legalized by voters in November 2020), Joshua Horn, co-chair of Fox Rothchild’s Cannabis Law practice and a leading lawyer in cannabis law, thinks New York has no choice but to press forward with an adult-use program.

“If you think about New Jersey or New York City, in particular, there are almost 20 million people in a very concise area,” he said. “People can just drive over the George Washington Bridge and go to a dispensary on the other side and drive back. So, I think New York will need to address that.”

Horn suspects that the legislation will keep moving forward this year; however, even if New York legalizes adult-use cannabis soon, it could take two to three years before dispensaries open and the product is available for sale.

“Right off the bat, the only people who could participate would be the medical growers, who, if they’re allowed to participate, the governor’s bill allows for the medical license holders to have some role in the adult-use market, but not to dominate it,” Savino said.

She said that several activists believe that medical dispensaries shouldn’t be given any role in recreational cannabis. If New York plans to address that, it could take longer before legal products go on the market.

“The governor has his proposal, and the legislature has theirs,” she said. “So, they’re going to have to negotiate, and if they can’t come to an agreement, it could fall off the table again the way it did last year or the year before.”

If the bill passes, changes will have to be made for adult-use cannabis to impact the New York economy significantly.

“If New York says the existing 10 [businesses] are the only ones who can implement adult-use, then I think it will really have no economic benefit,” Horn said. “New York is going to need to issue a fair number of permits. If it’s a robust program with over 100 permits, they have a greater likelihood of serving a greater population. It can also be taxed, just like gambling or alcohol, and then the state should do very well, but the program can’t be so constrained and limited; otherwise, it’s not going to work.”

Savino says it is hard to predict the type of economic impact that legalization will have on the state, as it could take a while to get it up and running.

“Even the most conservative projections are about a full year or two years from now,” she said. “Projections are about $350 million, and to the extent that more states come on board with adult-use marijuana, it cuts into your own state’s profit margin. And what I say over and over is if we continue to look at marijuana as a cash crop, we’re missing the boat.”

Today’s technology makes it very easy and convenient to purchase cannabis and get it directly delivered to one’s house, without consumers having to worry about data privacy issues. That is what New York is up against, Savino said.

“So, we have to keep that in mind, that it’s not about the money,” she said. “If we make it about the money, then we’re never going to make any.”

New York legalized medical cannabis in 2014 and started its formal marketplace with only five licensed operators in the state.

The limitation on the number of licensed operators made it difficult for medical cannabis to make a notable impact in the state.

 

“As the author of the original Compassionate Care Act, which is the medical program, I’m not surprised that it hasn’t had that great of an economic impact, simply because the governor at the time was not a big fan,” New York State Sen. Diane Savino said of Gov. Andrew Cuomo, who has been in his executive role since 2011. “He was very skeptical about legalizing cannabis for medical purposes and he was greatly concerned that the program could lead to all sorts of problems, but he’s obviously changed his position since then.”

Savino said that the program’s original limitations created restrictions on a whole host of things—most importantly, patient access.

With only 20 operating medical dispensaries in a state with over 19 million people, it is no surprise that there was limited patient access at first. Since 2016, it has been expanded to 10 license holders, with 40 dispensaries statewide, she said.

According to the legislation, medical cannabis businesses must be vertically integrated. The thinking is that vertical integration allows one to have tighter control over regulatory compliance, but it also drives up the cost of running a cannabis operation, making it far more difficult for small businesses and entrepreneurs to get into the cannabis business, she said.

“

More importantly, it’s an expensive business to stay in,” Savino said. “You have to have a lot of liquidity, you have to have access to capital, you have to have the ability to sustain yourself, and you can’t turn to traditional lending sources. So, when you have a vertically integrated market, it seriously narrows the group of people who can participate.”

The medical program sunsets this year, which means the law expires. Savino expressed that it is a common technique in legislatures where a bill will expire at a particular time requiring it to be renewed, expanded, amended, or it ends because the program is no longer necessary.

“That was another requirement that the governor felt very strongly about back when he didn’t believe in cannabis,” she said. “He was worried that if we had to have a tightly controlled program and things got out of the way, we should be able to shut it down. In this instance, we will extend it, and that is going to give us the chance to really improve the medical program in a way that will be far more meaningful than the original program.”

Savino said the New York state legislature plans to remove the vertical integration requirement when they do the extension of the law, which will open it up to all types of licenses.

This is all happening on a parallel track to the discussions about the adult-use market in New York, she said.

In early January, Cuomo called for the legalization of adult-use cannabis in the state, leaving some wondering what the timeline will be.

Since New Jersey is in the process of implementing adult-use cannabis sales (legalized by voters in November 2020), Joshua Horn, co-chair of Fox Rothchild’s Cannabis Law practice and a leading lawyer in cannabis law, thinks New York has no choice but to press forward with an adult-use program.

“If you think about New Jersey or New York City, in particular, there are almost 20 million people in a very concise area,” he said. “People can just drive over the George Washington Bridge and go to a dispensary on the other side and drive back. So, I think New York will need to address that.”

Horn suspects that the legislation will keep moving forward this year; however, even if New York legalizes adult-use cannabis soon, it could take two to three years before dispensaries open and the product is available for sale.

“Right off the bat, the only people who could participate would be the medical growers, who, if they’re allowed to participate, the governor’s bill allows for the medical license holders to have some role in the adult-use market, but not to dominate it,” Savino said.

She said that several activists believe that medical dispensaries shouldn’t be given any role in recreational cannabis. If New York plans to address that, it could take longer before legal products go on the market.

“The governor has his proposal, and the legislature has theirs,” she said. “So, they’re going to have to negotiate, and if they can’t come to an agreement, it could fall off the table again the way it did last year or the year before.”

If the bill passes, changes will have to be made for adult-use cannabis to impact the New York economy significantly.

“If New York says the existing 10 [businesses] are the only ones who can implement adult-use, then I think it will really have no economic benefit,” Horn said. “New York is going to need to issue a fair number of permits. If it’s a robust program with over 100 permits, they have a greater likelihood of serving a greater population. It can also be taxed, just like gambling or alcohol, and then the state should do very well, but the program can’t be so constrained and limited; otherwise, it’s not going to work.”

Savino says it is hard to predict the type of economic impact that legalization will have on the state, as it could take a while to get it up and running.

“Even the most conservative projections are about a full year or two years from now,” she said. “Projections are about $350 million, and to the extent that more states come on board with adult-use marijuana, it cuts into your own state’s profit margin. And what I say over and over is if we continue to look at marijuana as a cash crop, we’re missing the boat.”

Today’s technology makes it very easy and convenient to purchase cannabis and get it directly delivered to one’s house, without consumers having to worry about data privacy issues. That is what New York is up against, Savino said.

“So, we have to keep that in mind, that it’s not about the money,” she said. “If we make it about the money, then we’re never going to make any.”

Any brewmaster from the more than 7,000 U.S. craft breweries will tell you one of two things: That their art is a science, or that their science is an art. The answer might depend upon the brewer’s individual approach, but a combination of experience, process, precise measurement and intuition is exactly what’s required to create great beer. In a very similar way, the cannabis industry has its own version of the brewmaster: Extraction technicians.

A cannabis extraction technician deploys knowledge from multiple science disciplines to apply industrial solvents, heat and pressure to plant matter through a variety of methods with the aim to chemically extract pure compounds. Extraction techs use their passion for the cannabis and hemp plants, combined with chemistry, physics, phytobiology and chemical engineering to help create a result that’s not quite art, but not quite completely science. By manipulating plant materials, pressure, heat and other variables, the extraction technician crafts the building block for what will become an edible, tincture or extract.

Similarly, brewmasters use their knowledge of multiple science disciplines like chemistry and microbiology, as well as different brewing processes and a variety of ingredients to develop creative recipes that result in consistent, interesting beers. The brewmaster’s work is both science and art, as well. And they also manipulate plant materials, pressure, heat and other variables to achieve their desired results.

“I would certainly consider brewing to be an art and a science, but it takes a very disciplined approach to create consistent, yet ever evolving beers for today’s craft market,” says Marshall Ligare, PhD. Research Scientist at John I. Haas, a leading supplier of hops, hop products and brewing innovations. “We work to ensure brewers can create something different with every new beer, as well as something that helps create an experience as well as a feeling.”

In both brewing and extraction, the art comes in the subjective experience of the craftsman and his or her ability to curate the infinite possibilities inherent in each process. However, both are a science in their requirement of establishing production methodologies that guarantee a consistent, reliable product experience every time to win customer loyalty (and regulatory compliance). In the same way hops determine recipes for beer flavors, the cannabis plant determines extraction recipes, especially considering the role that terpenoids play in the quality, flavor and effects of the end product.

The development of new and appealing cannabis products is beginning to mimic the vast variety of craft beers now found all over the world. In the same way beer connoisseurs seek out the perfect stout, lager or IPA, discriminating cannabis consumers now search for that gem of a single-origin, specialty-strain vaporizer oil or irresistible dab extract.

“I see an exciting new day for quality-focused, craft extraction that tells a story, not only of where the cannabis plant might have been grown and how, but also the care that was taken in the processing of that strain into smokable or edible oil,” says John Lynch, Founder of TradeCraft. “Imagine the impact in the marketplace when product-makers figure out how to do seasonal one-offs where engaged connoisseurs are willing to pay a premium for the art behind limited releases.”

In either process, you’re essentially creating art with science. Each process works with different strains. Each is concerned with chemical and flavor profiles. Each has its own challenges. In both worlds, quality depends upon consistency. You’re creating art, but you need to replicate that art over and over – which can only occur with strict control of the process. Brewmasters seek control of things like yeast quantity and health, oxygen input, wort nutritional status and temperature, among other things. In their pursuit, extraction technicians seek to control temperature, pressure and flow rate–as well as all the ways these variables interact with each other. What enables this control in both efforts is the equipment used to achieve results.

“A modern brewhouse is very much like a scientific laboratory,” Ligare says. “Brewers treat their setup with the same care and attention a scientist gives to their lab equipment, and are equally concerned with precision, cleanliness and the purity of the result. With each new beer, they want to develop a process that can be controlled and replicated.”

The key to creating a precise process is to use instrument-grade machinery that performs to specifications – and allows you to repeat the process again and again. The value of using high-quality instrumentation to manage and monitor either the brewing or extraction process cannot be overstated. Although it seems counterintuitive, this is where the “craft” comes into play for both brewing and cannabis extraction. Precise instrumentation is what allows the brewer or extraction “artist” to manipulate and monitor the conditions required to meet recipe standards. Along with the quality of the ingredients (hops, cannabis, hemp, etc.), the quality of the equipment utilized to create the product is one critical element impacting the end result. “Imagine the impact in the marketplace when product-makers figure out how to do seasonal one-offs where engaged connoisseurs are willing to pay a premium for the art behind limited releases.”

In cannabis extraction, a second crucial decision is determining which solvent is the best solution for the recipe you’re using and the end result you’re hoping to achieve. This decision is a part of the “craft” of extraction, and determined according to a combination of criteria. There’s no question that each solvent has a business case it serves best, and there is ongoing debate about which approach is best. But overwhelmingly, the solvent that best serves the most business needs is CO₂ due to its inherent versatility and ability to have its density tuned to target specific compounds.

“Control is what makes or breaks any craft product,” says Karen Devereux, Vice President of Northeast Kingdom Hemp. “We’re based in Vermont and love how Vermont is known for its quality craft beer, cheese and maple syrup. We wanted to bring that craft approach to hemp extraction, and everyone knows that any craft endeavor is focused on the details and getting them right again and again. You can’t do that without controlling every aspect of the process.”

Greater control of the process can also open up worlds of discovery. The inherent “tunability” of CO₂ enables the extraction technician to target specific compounds, enhancing the potential for experimentation and even whimsy. This can lead to entirely new products much in the way a brewer can control his process to create new, interesting beers.

American portrait photographer Richard Avedon famously declared that art is “about control,” describing the artistic process as “the encounter between control and the uncontrollable.” The same can be said for beer making and cannabis extraction. The more precisely you can control variables, the more options you’ll have for yourself and your customers. The more choices you’ll have with regard to different recipes and products. And the more loyalty you’ll ultimately generate among fans of your products.

New York legalized medical cannabis in 2014 and started its formal marketplace with only five licensed operators in the state.

The limitation on the number of licensed operators made it difficult for medical cannabis to make a notable impact in the state.

 

“As the author of the original Compassionate Care Act, which is the medical program, I’m not surprised that it hasn’t had that great of an economic impact, simply because the governor at the time was not a big fan,” New York State Sen. Diane Savino said of Gov. Andrew Cuomo, who has been in his executive role since 2011. “He was very skeptical about legalizing cannabis for medical purposes and he was greatly concerned that the program could lead to all sorts of problems, but he’s obviously changed his position since then.”

Savino said that the program’s original limitations created restrictions on a whole host of things—most importantly, patient access.

With only 20 operating medical dispensaries in a state with over 19 million people, it is no surprise that there was limited patient access at first. Since 2016, it has been expanded to 10 license holders, with 40 dispensaries statewide, she said.

According to the legislation, medical cannabis businesses must be vertically integrated. The thinking is that vertical integration allows one to have tighter control over regulatory compliance, but it also drives up the cost of running a cannabis operation, making it far more difficult for small businesses and entrepreneurs to get into the cannabis business, she said.

“

More importantly, it’s an expensive business to stay in,” Savino said. “You have to have a lot of liquidity, you have to have access to capital, you have to have the ability to sustain yourself, and you can’t turn to traditional lending sources. So, when you have a vertically integrated market, it seriously narrows the group of people who can participate.”

The medical program sunsets this year, which means the law expires. Savino expressed that it is a common technique in legislatures where a bill will expire at a particular time requiring it to be renewed, expanded, amended, or it ends because the program is no longer necessary.

“That was another requirement that the governor felt very strongly about back when he didn’t believe in cannabis,” she said. “He was worried that if we had to have a tightly controlled program and things got out of the way, we should be able to shut it down. In this instance, we will extend it, and that is going to give us the chance to really improve the medical program in a way that will be far more meaningful than the original program.”

Savino said the New York state legislature plans to remove the vertical integration requirement when they do the extension of the law, which will open it up to all types of licenses.

This is all happening on a parallel track to the discussions about the adult-use market in New York, she said.

In early January, Cuomo called for the legalization of adult-use cannabis in the state, leaving some wondering what the timeline will be.

Since New Jersey is in the process of implementing adult-use cannabis sales (legalized by voters in November 2020), Joshua Horn, co-chair of Fox Rothchild’s Cannabis Law practice and a leading lawyer in cannabis law, thinks New York has no choice but to press forward with an adult-use program.

“If you think about New Jersey or New York City, in particular, there are almost 20 million people in a very concise area,” he said. “People can just drive over the George Washington Bridge and go to a dispensary on the other side and drive back. So, I think New York will need to address that.”

Horn suspects that the legislation will keep moving forward this year; however, even if New York legalizes adult-use cannabis soon, it could take two to three years before dispensaries open and the product is available for sale.

“Right off the bat, the only people who could participate would be the medical growers, who, if they’re allowed to participate, the governor’s bill allows for the medical license holders to have some role in the adult-use market, but not to dominate it,” Savino said.

She said that several activists believe that medical dispensaries shouldn’t be given any role in recreational cannabis. If New York plans to address that, it could take longer before legal products go on the market.

“The governor has his proposal, and the legislature has theirs,” she said. “So, they’re going to have to negotiate, and if they can’t come to an agreement, it could fall off the table again the way it did last year or the year before.”

If the bill passes, changes will have to be made for adult-use cannabis to impact the New York economy significantly.

“If New York says the existing 10 [businesses] are the only ones who can implement adult-use, then I think it will really have no economic benefit,” Horn said. “New York is going to need to issue a fair number of permits. If it’s a robust program with over 100 permits, they have a greater likelihood of serving a greater population. It can also be taxed, just like gambling or alcohol, and then the state should do very well, but the program can’t be so constrained and limited; otherwise, it’s not going to work.”

Savino says it is hard to predict the type of economic impact that legalization will have on the state, as it could take a while to get it up and running.

“Even the most conservative projections are about a full year or two years from now,” she said. “Projections are about $350 million, and to the extent that more states come on board with adult-use marijuana, it cuts into your own state’s profit margin. And what I say over and over is if we continue to look at marijuana as a cash crop, we’re missing the boat.”

Today’s technology makes it very easy and convenient to purchase cannabis and get it directly delivered to one’s house, without consumers having to worry about data privacy issues. That is what New York is up against, Savino said.

“So, we have to keep that in mind, that it’s not about the money,” she said. “If we make it about the money, then we’re never going to make any.”

Curaleaf | curaleaf.com

To have the biggest footprint, one must lace up the biggest shoe. 

In the cannabis industry, multistate operator Curaleaf spent the past five years building itself a massive network with a 23-state foundation, and has no plans on slowing down as it continues to acquire licenses and increase capacity. Based out of Wakefield, Mass., the vertically integrated company’s operation includes 96 dispensaries, 23 cultivation sites and more than 30 processing sites.

This past July, Curaleaf closed on an approximately $700-million deal to acquire Grassroots Cannabis, making it the largest cannabis company in the world, based on its anticipated $1 billion annual revenue at the time. 

Curaleaf | curaleaf.com

With that groundwork established, Curaleaf is now gearing for its next wave of growth by putting focus toward executing on that platform, said new CEO Joe Bayern, who started his role Jan. 1.  

“One of the things that’s tied to my transition into the new role is going and looking at what we’re calling Curaleaf 2.0, which is really the next growth spurt for Curaleaf,” he said.

Curaleaf executives put a lot of attention on trying to understand what they want the company to look like in the next three to five years, what the industry might look like during the next three to five years, and then what capability and capacity are needed, to help establish company goals, Bayern said.

Knowing where the cannabis industry is headed provides a strategic roadmap to follow, he said.

“Listen, we think it’s an incredibly compelling opportunity in the marketplace,” Bayern said. “We think [the U.S.] marketplace could be a $100-billion market at some point. So, we want to be the leading industry player in cannabis, and we think certainly by 2025 there’s no reason why we can’t get the industry to about a $50-billion market size. And we want to take a dominant share of that market size.”

While Curaleaf built momentum heading into 2021, implications for an accelerated pro-cannabis landscape sparked when the U.S. Senate runoffs in Georgia went democratic on Jan. 6, swinging the majority of the upper chamber.

Prepared to take advantage of the potential of those election results, Curaleaf executives pulled the trigger to raise more than U.S. $200 million through an overnight marketed offering on the Canadian Securities Exchange (CSE). Oversubscribed, Curaleaf ended up raising C$316,882,500 of capital, or about U.S. $251 million, before deducting the underwriters’ fees and estimated offering expenses.

“I think everybody was pleasantly surprised, at least from the cannabis industry, that both of those seats went democratic,” Bayern said. “As early as the week before, we were hearing it was going to be split, so I think we were obviously prepared to do something in case of a swing to a democratic Senate. Even before the Georgia race, we had filed a shelf prospectus back in November to be able to raise capital if the markets were moving in our favor, and they were.”

The underwriters exercised their over-allotment option in full, and, as a result, 18,975,000 subordinate voting shares of the company were issued, Curaleaf announced in a press release Jan. 12. Bayern said since Curaleaf oversubscribed – its original intent was to raise closer to $200 million – it allowed the company to get some institutional investors into its stock.

“I think people are now saying it’s time to jump in,” he said. “We think the Senate race was a catalyst for the industry, and it was just the first step of what we think is going to be a pretty exciting 2021 as far as positive legislation for the cannabis sector.”

In addition to the roughly $251 million raised on the CSE, Curaleaf announced Jan. 11 that it completed a new $50 million, three-year secured revolving credit facility. The loan is “expected to be used to fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes,” the company said in a press release.

An extension of a previous deal, Curaleaf lowered its cost of capital, from 13% on the original note to 10.25% on the new three-year secured revolving credit facility, Bayern said.  

“It’s just another indicator that we think that the capital markets are loosening up a little bit for our space,” he said. “And then I think if there is change in the [Secure and Fair Enforcement (SAFE)] Banking Act … that there’s going to be a new round of capital coming into our industry. And I think that’s going to be important for us to be able to scale up and grow and continue to expand, if we are going to be able to supply the deeds of a $50-billion market over the next couple of years.”

In addition to potential advantages the cannabis industry might experience from the results of the Georgia Senate runoffs, there’s a lot of opportunity for non-legislative changes to help accelerate momentum in the marketplace, Bayern said. One of those changes could come in the form of a revised memorandum from the Department of Justice (DOJ), he said.

In 2013, then-Deputy Attorney General James M. Cole issued guidance on cannabis enforcement, directing the DOJ not to prosecute any state-legal cannabis businesses – taking a hands-off approach. In 2018, then-Attorney General Jeff Sessions issued a memorandum that rescinded Cole’s directive. It has remained a gray area ever since.

“I think guidance around the criminal aspects of cannabis and where [the DOJ] should be focusing their time [would help momentum in the marketplace],” Bayern said. “And I think guidance coming out of the U.S. Treasury would be helpful to provide some kind of confidence and security to U.S. investors and banking organizations to be able to, again, participate in the U.S. banking landscape.”

Banking roughly $300 million, through its overnight marketed offering on the CSE and through the three-year secured revolving credit facility, to kick off 2021, Curaleaf’s growth is capitalized for the remainder for the year, and most of 2022, so the company doesn’t have current plans to go out and raise additional capital, Bayern said.

Instead, Curaleaf wants to speed up some of its projects scheduled for the back half of 2021 and the beginning of 2022, in anticipation of accelerated market growth, he said.

“As you know, if you follow the industry, the constraining item for the last couple years has really been about building enough capacity to meet the demand of the marketplace,” Bayern said. “We think as we continue to see what we’re calling a ‘green wave of acceptance,’ of consumers accepting cannabis as more mainstream products, we’re going to continue to see increased demand. We want to be prepared to be able to meet that demand.”

In its current footprints, Curaleaf is considering extending its capacity through targeted bolt-on acquisitions in the marketplace, as well as investing in the next wave of growth, which Bayern said is predicated on innovation and developing standout products backed by science.

To do that, Curaleaf wants to put money toward research and development and clinical studies, in an effort to gain exposure to a broader segment of the U.S. marketplace with products that are suitable for those consumers whom the company hopes to bring into its category, Bayern said.

“Why we’re optimistic about that is, in many cases, those consumers are already consuming other products today,” he said. “So, the consumption is there. It’s just that we can provide a better alternative to what’s in the market today, whether it’s alcohol, or whether it’s prescription drugs for need-states like sleep or chronic pain, you know, cannabis really is a better alternative to those products.”

Behind a balanced portfolio across the U.S., Curaleaf is optimistic about growing, not only in its current footprint, but also as it moves toward building an omnichannel consumer product company, Bayern said.

Curaleaf has exposure to developed West Coast markets, like California and Oregon. It has exposure to up-and-coming markets, such as Arizona and New Jersey, which passed adult-use legalizations measures in the November election. And it has exposure throughout most the Northeast, where Curaleaf is headquartered.

With populated states like New York and Pennsylvania having yet to pass legislation that fully legalizes cannabis, Bayern said Curaleaf is most excited about the future marketplace in and around that region of the U.S.

“We think New York could be one of the most attractive markets, not only in the U.S., but in the whole world,” Bayern said. “If you look at the disposable income, you look at the density of population, you look at the per-capita consumption today, it could easily be a $4-[billion] or $5-billion market over the next couple of years.

“What’s important, though, is that New York learns from some of the predecessors about how to roll out an effective program, and they do it in a way that’s responsible and really manages across all of the constituents. Whether it’s existing patients and consumers, it’s being able to generate tax revenue for the state, it’s creating jobs in New York state, and it’s addressing the many issues of the social equity and balance that’s happening in cannabis and across other parts of society.”