California Department of Cannabis Control Proposes Consolidation of Cannabis Regulations

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Emergency rule-making action would create a single set of regulations for commercial cannabis activity in California

CALIFORNIA:  The Department of Cannabis Control (DCC) today published proposed emergency regulations. This action follows those taken in July by DCC to move all cannabis regulations into Title 4 of the California Code of Regulations. This is the second and most significant action taken by DCC thus far to improve the cannabis regulatory framework and comes within the first 60 days as a new state department. 

The proposed regulations consolidate, clarify and make consistent requirements, including aligning license application requirements, ownership and financial interest of a cannabis business, and establishing uniform terminology and definitions across license types. The emergency regulations also include rules governing trade samples between businesses, which was recently authorized by Assembly Bill (AB) 141.

Read the proposed regulations and rulemaking documents: www.cannabis.ca.gov/rulemaking.

 

2021 Study: How Legalizing Recreational Marijuana Impacts Home Values

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CALIFORNIA:   When marijuana legalization first appeared on a California ballot in 1972, voters rejected it. But the tides of public opinion have turned.

Today, 91% of American adults believe marijuana should be legal in some form — with the majority (60%) saying they support measures that would legalize recreational marijuana.

This widespread acceptance of marijuana is quickly reshaping state laws. As of July 2021, 36 states and Washington D.C., have legalized marijuana for recreational use, medicinal use, or both. The industry is projected to be worth $30 billion by 2025.

As legalization brings marijuana into the mainstream, it’s sparked questions for real estate professionals and individual citizens alike. Will legalization impact property values, for better or worse? Will communities begin to reap benefits of marijuana legalization — or suffer the consequences?

So far, the National Association of Realtors — the industry’s largest trade organization — has demurred, stating it “does not have a position on cannabis legalization.”

To learn how marijuana legalization may impact real estate, we used publicly available data from Zillow and the U.S. Census, among other sources, to explore the relationships between home values, marijuana legalization, dispensaries, and tax revenue. We used multiple regression analyses to model current trends and predict future patterns.

Overall, we found marijuana legalization leads to higher property values and millions of dollars in new tax revenue.

In fact, states that legalize recreational marijuana and add new retail dispensaries see far greater property value and tax revenue gains than states that block dispensaries or limit marijuana to medicinal use.

KEY TAKEAWAYS

  • From 2017 to 2019, home values increased $6,338 more in states where marijuana is legal in some form, compared to states that haven’t legalized marijuana.
  • As states tax marijuana sales for the first time, the increased revenue drives new investment in things such as public services and infrastructure — which in turn drives higher demand in real estate, higher property values, and greater revenue from property taxes.
  • On average, home values increase by $470 for every $1 million increase in tax revenue.
      • In 2020, the eight states that reported a full year of marijuana tax revenue earned $2.3 billion — including $1 billion in California alone.
      • The seven states (and Washington, D.C.) that have yet to collect a full year of marijuana taxes are predicted to collectively bring in $601 million in new annual tax revenue.
  • States that have legalized and allowed sales of recreational marijuana see the biggest increases in home values:
      • Between April 2017 and April 2021, property values rose $17,113 more in states where recreational marijuana is legal, compared to states where marijuana is illegal or limited to medicinal use.
  • In the five states that have legalized recreational marijuana but have yet to begin sales, home values are predicted to increase by an average of $61,343 when sales go into effect.
      • Among states that have legalized recreational marijuana, California has seen the biggest increase in home values — up by $128,341 since 2017, after we controlled for other variables.
  • We found that cities with more dispensaries are positively correlated with higher home values, suggesting legalization boosts jobs and economic growth.
      • Home values increased $22,090 more in cities with recreational dispensaries, compared to home values in cities where recreational marijuana is legal but dispensaries are not available.
      • With each new dispensary a city adds, property values increase by $519.

 

Governor Newsom Signs Cannabis Trailer Bill, Creating the Department of Cannabis Control

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Formation of the Department consolidates three programs into one and advances efforts to streamline the state cannabis regulatory structure

CALIFORNIA:  The Department of Cannabis Control (DCC) was established yesterday, following the signing of Assembly Bill 141. This action consolidates the three state cannabis programs into a single department. The creation of a standalone cannabis department, proposed by Governor Gavin Newsom, is part of a larger effort to improve access to licensure, simplify regulatory oversight and support California businesses. The Governor appointed Nicole Elliott to lead DCC as its Director.

 

This action represents the most significant consolidation and reorganization of state agencies since the Business, Consumer Services and Housing (BCSH) Agency was created in 2013. It is the culmination of 18 months of sustained effort by officials from more than 10 state agencies and reflects input from stakeholders and the legislature. 

“California has led the nation in progressive cannabis policies, beginning 25 years ago as the first state in the nation to legalize medicinal use of cannabis,” said Governor Newsom. “We’ve taken another significant step forward to fulfill the opportunities of legalization and better serve all Californians. We will continue building upon our efforts to foster a diverse and inclusive industry, protect consumer and public safety, safeguard our environment and advance economic opportunity for small businesses.”

DCC consolidates regulatory, licensing and enforcement functions previously performed by three programs housed within different state departments: the Department of Consumer Affairs’ Bureau of Cannabis Control, the Department of Food and Agriculture’s CalCannabis Cultivation Licensing Division, and the Department of Public Health’s Manufactured Cannabis Safety Branch. DCC is housed within the BCSH Agency.

“The state’s consolidation effort delivers on the commitment made by the Newsom Administration to listen to and work with California’s legal cannabis industry to streamline participation in the legal market by offering a central point of contact for licensed operators,” said BCSH Agency Secretary Lourdes Castro Ramirez. “One of the key missions of our agency is to build strong, equitable, and vibrant communities. This action takes bold steps in that direction.”

DCC will regulate all commercial cannabis license holders in California, including cultivators, retailers, manufacturers, distributors, testing laboratories, microbusinesses, and industry event organizers. DCC will also manage the state’s track-and-trace system, which is used to track cannabis and cannabis products, from seed to sale, within the legal supply chain.

Today, officials unveiled the new logo and website. The logo includes a modern representation of a cannabis leaf. The leaf’s intertwined design is a visual representation of the unification of the three programs and collaborative spirit with which DCC intends to engage businesses and stakeholders.

The California Cannabis Portal, www.cannabis.ca.gov, was relaunched as the DCC website and will continue to serve as a centralized online location for cannabis information. The website was rebuilt and redesigned in partnership with the California Government Operations Agency’s Office of Digital Innovation (ODI) to be more accessible and better serve Californians. The prior websites for the three licensing authorities will remain accessible to the public while content continues to be migrated.

Old email addresses for staff will redirect to their new DCC email address for several months.

While the Department of Cannabis Control has officially launched, much work remains on the horizon. More news will come in the months ahead.

 

Eaze Launches First Shoppable Cannabis Delivery App for Apple

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CALIFORNIA: Eaze, the nation’s largest cannabis delivery marketplace, today announced the launch of a first-of-its-kind shoppable app for iPhone users. Available for download today via the Apple App Store, the app allows customers to complete all aspects of cannabis purchase and delivery, making it even easier and more convenient for consumers to access safe, legal products. 

The shoppable Eaze app is a major milestone for the legal cannabis market and consumers. Apple has long prohibited full e-commerce functionality, forcing customers to complete transactions through the Eaze.com website. Apple recently changed that policy, enabling Eaze to create a shopping experience that is easier, more fun, and reflects how many people actually shop today.

The Eaze app allows customers to complete all aspects of delivery seamlessly: registration, ID verification, product selection, payment, and receipt to the doorstep.

“Eaze has always been about using the latest developments in technology to make shopping for legal cannabis more accessible,” said Eaze CEO Rogelio Choy. “It’s hard to overstate how important this is to our company and the industry. It’s deeply gratifying to launch the Apple Store’s first fully-functional cannabis delivery app, making it even easier for our two million registered customers to legally consume.”

The Eaze app features:

  • On-Demand Delivery, Order Tracking, and Easy Payment: Cannabis delivered safely to the door of customers verified 21+, real-time order tracking and easy payment via debit card, bank account, or cash.
  • Amazing Deals: Shop Eaze’s selection of rotating deals for the biggest blaze for your buck.
  • Dank Selection: Shop Eaze’s highly curated selection of the best brands for the best value, including Kiva Confections, STIIIZY, Old Pal, Circles, Plus, and many more.
  • Cannabis for a Cause: Eaze always stocks BIPOC, LGBTQ+, and women-owned brands — including Leune, DREAMT, and SF Roots — so customers can spend on what matters.

“The flexibility and depth of our technical team allowed us to respond immediately to the changes in Apple’s policy, and create an app that offers our customers the ideal experience for cannabis delivery,” said Eaze Distinguished Engineer CJ Silverio.

Eaze’s app was developed in-house and geofences purchases to jurisdictions where cannabis is legal. Eaze currently delivers across California, and will begin delivery in Michigan later this month. In accordance with state and local laws, sales are limited to adults 21+ and all customer IDs are verified multiple times throughout the purchase and delivery process.

Customers can download the app today and use code “EAZE20” to get $20 off their first delivery.

An Animated Stonan O’Brien Tokes Up On CannNews

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HOLLYWEED: You’ve heard the buzz, now watch the interview all the internet is talking about.

In this CannectedTV exclusive animated parody, CannNews reporter Ed Dibble gets heady with comedian “Stonan O’Brien,” host of the “Stonan O’Brien Show.”

Punny, funny, and full of hempy humor, the animated newscast is the latest offering from 420MEDIA as part of the rolling launch of it’s CannectedTV streaming content service.

Available on all major streaming platforms (Google Play, AppleTV, Amazon Firestick, and Roku) Cannected™ is a creation of 420MEDIA, and is designed to be the first mainstream destination for answers to common cannabis questions.

Cannected TV shows feature the most knowledgeable cannabis experts across a diverse array of professional and personal backgrounds.

According to 420MEDIA founder Kerri Accardi, Cannected will be devoted to medical cannabis, offering viewers “education through entertainment” or what the entrepreneur likes to call “edutainment.”

Check out the entire episode on Marijuana Channel One:

WM Holding Company, LLC, a Leading Technology Platform to the Cannabis Industry, Completes Business Combination With Silver Spike Acquisition Corp.

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Public company to be named WM Technology, Inc. and common stock to begin trading on the Nasdaq under symbol “MAPS” on June 16, 2021

CALIFORNIA:  WM Holding Company, LLC, a leading technology and software infrastructure provider to the cannabis industry, announced today that it has completed its previously announced business combination with Silver Spike Acquisition Corp. (Ticker: “SSPK”).

The transaction was unanimously approved by SSPK’s Board of Directors and was approved at a special meeting of SSPK stockholders on June 10, 2021. In connection with the closing, SSPK changed its name to WM Technology, Inc. The ticker symbol for the common stock will change from “SSPK” to “MAPS” and will begin trading as such on the Nasdaq Stock Market on June 16, 2021.

Founded in 2008, WMH operates Weedmaps, a leading online listings marketplace for cannabis consumers and businesses, and WM Business, one of the most comprehensive SaaS subscription offerings sold to cannabis retailers and brands. The Company provides software and other technology solutions and is non-plant touching. WMH has a history of growth since its inception. From fiscal year 2014 through 2020, the Company grew revenue at a CAGR of 35% and expanded its gross margin rate from 92% to 95%. For the year ended December 31, 2020, WMH generated $162 million of revenue, net income of $39 million and Adjusted EBITDA of $43 million.

WMH’s senior management team will continue to lead the now combined company, including Chris Beals (Chief Executive Officer), Arden Lee (Chief Financial Officer), Juanjo Feijoo (Chief Operating Officer and Chief Marketing Officer), Justin Dean (Chief Technology Officer and Chief Information Officer), and Brian Camire (General Counsel).

“We are excited to complete this business combination, which will further advance our mission to power a transparent and inclusive global cannabis economy, further solidify our position as a leading technology platform to the cannabis industry, and accelerate our growth,” said Chris Beals, Chief Executive Officer of WMH. “We continue to benefit from strong, sustainable macro tailwinds as cannabis legalization advances throughout the U.S. and internationally. As a public company, we now have an even stronger platform to advocate for legalization, social equity and licensing in many jurisdictions, while providing cannabis businesses with the tools needed to succeed in a highly complex world of regulations. We are well positioned to continue scaling the Weedmaps marketplace in service of our users, while expanding the functionality of our WM Business SaaS offerings in service of our clients.”

Scott Gordon, CEO and Chairman of SSPK, commented, “We are proud to complete the combination of Silver Spike and WMH, further establishing Weedmaps as a leading online listings marketplace for cannabis consumers and businesses, and WM Business as the most comprehensive SaaS subscription offering sold to cannabis retailers and brands. We believe WMH is the most compelling investment opportunity in cannabis today and as a public company, WMH is uniquely positioned to deliver on its vision of helping licensed cannabis businesses thrive while driving growth and returns for shareholders.”

Transaction Overview

The transaction provides $579 million of gross proceeds primarily comprised of $254 million of cash from SSPK’s former trust account and $325 million of cash from a private investment in public equity (PIPE), not including transaction fees. The PIPE is anchored by investors including funds and accounts managed by AFV Partners, the Federated Hermes Kaufmann Funds and Senvest Management LLC along with a $35 million commitment from Silver Spike Capital. $125 million in proceeds will be delivered to the balance sheet of WMH as primary capital, including to pay transaction expenses and used to fund the company’s planned growth, including further scaling its cloud-based WM Business SaaS subscription offering, and growing its active user base and business listings in the U.S. and international markets. $455 million in proceeds will go to existing WMH equity holders. WMH’s executive officers have rolled 100% of their equity holdings as part of the transaction. A more detailed description of the transaction can be found in the definitive proxy statement filed by SSPK with the SEC on May 26, 2021.

Advisors

Rothschild & Co. served as exclusive financial and capital markets adviser and Cooley LLP and Dentons LLP served as legal advisors to WM Holding Company, LLC. Stifel, Nicolaus & Company, Incorporated and Piper Sandler & Co. served as joint placement agents and financial advisors. BTIG, LLC, Canaccord Genuity LLC, JMP Securities LLC, and Trust Securities, Inc. also served as capital markets advisors and Davis Polk & Wardwell LLP served as legal advisor to Silver Spike Acquisition Corp. Gibson, Dunn & Crutcher LLP and Jonathan Dennis served as legal advisors to the founders of WM Holding.

Here’s What Your Cannabis Business Needs to Know About Product Tampering

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By Corey Tobin

Regardless of the cannabis industry segment you operate in, product tampering is a critical risk exposure that can cause your company serious financial and reputational harm if gone unchecked.

Whether your cannabis business grows, manufacturers, distributes or sells products, it’s crucial to understand the nuances of this emerging challenge in today’s hyperactive market.

Here’s What You Should Know about Product Tampering:

Black-market tampering is on the rise. At any time, a cannabis product your company sells, manufactures or distributes could be subject to tampering. This includes post-sale products that are being repackaged and resold on the black market.

According to the Centers for Disease Control and Prevention, the problem of potentially hazardous additives or contaminants in cannabis products—particularly those involving vaping—are especially problematic in the black-market where quality control is nonexistent and consumers are unable to verify the quality or contents of the products they’ve purchased.

In the event an incident occurs, your company can be held liable.

Tampering on the manufacturing level can (and does) happen. Don’t assume that tampering can’t happen once products come into your manufacturing facility and are handled by employees. Your company is responsible for the safety of every product that enters the facility, rolls onto your processing line and then goes back out again.

In-store tampering is more common than you might think. Any product in a retail cannabis establishment that isn’t properly safeguarded is at risk for tampering that could make a consumer seriously ill or even cause death. Even though you didn’t manufacture the product in this situation, the risk can be transferred back to your company.

Product liability remains one of the most substantial risk exposures in the cannabis industry. If you’ve made it this far without securing product liability insurance coverage, count yourself fortunate and consider a policy that’s right for your business.

Do you have concerns related to your cannabis business and the products you grow, sell, manufacture, or distribute? If you have any questions related to your coverage, please contact me at ctobin@boltonco.com or 626-703-1556. As a cannabis industry specialist, I can help you stay informed on key liability coverages to protect your business.

Follow along on Corey’s Instagram and LinkedIn for more.

Dama Financial Introduces Smart Safe Solution

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CALIFORNIA: Dama Financial, the nation’s largest provider of access to banking and financial services for the cannabis industry, has added Dama Smart Safe to its business toolkit.

Smart safes allow business owners to authenticate and monitor their cash at every step of the handling process. With rapid advancements in counterfeit technology, the detection of fake currency with the naked eye has become nearly impossible. Smart safes are equipped with bill validators that significantly decrease the risk of fraud. At the same time, the cash is reconciled automatically, eliminating the need to spend hours doing it manually. 

With Dama Smart Safe, the safe can promptly record any deposit as a credit to the customer’s Premier Business account, providing access to the money the next business day. Dama Smart Safes can be configured to meet the needs of any size operation.

“Cannabis businesses deserve solutions that solve real problems.” said Anh Hatzopoulos, Dama co-founder and chief executive officer. “Between human error and the risk of theft, handling cash has become one of the more difficult processes for any business to manage, so we’re proud to roll out Dama Smart Safe to help cannabis operators improve both efficiency and public safety.”

Comments from Dama Smart Safe customers:

“We love the quick access to funds. It’s like having a bank teller inside our store twenty-four hours a day to accept our deposits,” said Kaz Ajir, co-founder of Grupo Flor, which owns the dispensary East of Eden.

“Dama’s Smart Safe Solution saves our operation hours every single day,” said Monica Gray, chief operating officer of Nice Guys Delivery.

Dama’s other offerings include access to Premier Banking (FDIC-insured accounts), credit, cash management, and merchant services.

Biopharmaceutical Research Company Will Be Among First in the Nation to Receive a License for Federal Cannabis Production 

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CALIFORNIA: Biopharmaceutical Research Company (BRC), a specialty pharmaceutical manufacturing and analytical company focused on plant-based therapeutics, will soon be awarded one of the first federal production licenses from the Drug Enforcement Administration (DEA) to produce clean, consistent and compliant cannabis for federally approved researchers across the United States.

BRC will be among a select few organizations to receive such a license after the DEA amended regulations within the Controlled Substances Act to begin allowing the cultivation of cannabis for research purposes. Prior to today’s decision by the DEA, only one facility in the United States was federally authorized to cultivate cannabis for research purposes.

“Once finalized, this federal license will forever change the trajectory of our business and the medicinal cannabis industry. The DEA’s leadership will set off a nationwide wave of innovative cannabis-derived treatments, unlock valuable intellectual property and create high quality American jobs,” said BRC CEO George Hodgin, a former US Navy SEAL.

“The BRC team is already familiar with DEA compliance procedures based on our extensive history of controlled substances activity, and our world class staff is ready to hit the ground running on this new business arm that the DEA has authorized. Cultivation and compliance are our bread and butter, and now that we are in a position to receive this license, our best work yet can begin to take shape.”

BRC is already certified by the DEA and United States Department of Agriculture (USDA) to analyze and test controlled substances, including cannabis and hemp.

“We have invested a great deal of money and waited a very long time for this over the last four years, and this is the validation and the holy grail we’ve been waiting for,” added Hodgin. “With this license, BRC can legally produce quality cannabis and cannabis-derived products that can be used to identify new treatments that can help veterans and all patients struggling with chronic pain, cancer, and countless other illnesses. Equally important, we will also gain valuable insights into the potential dangers and misuse associated with cannabis that will help keep all Americans safe and healthy. We are proud and honored to be one of the first federally legal cannabis companies in the United States.”

The Emerald Cup 2022 Moves to Los Angeles & Adds “Harvest Ball” NorCal Event

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CALIFORNIA: The iconic cannabis competition, The Emerald Cup, is proud to announce they are moving the ECA’s (The Emerald Cup Awards) and legendary festival for 2022 to Los Angeles. This news follows a historic 2021 event where the pandemic-proof event went virtual – via hundreds of hours of new and existing content – becoming “The Emerald Cup Channel” on cannabis’ first TV network Social Club TV. A full director’s cut of the event debuted for video-on-demand on 4/20/2021.

Staying connected to their roots the traditional December dates for the Cup will live on as the Emerald Cup Harvest Ball and the beginning of the Road to the Cup.  The event will be the opening of submissions for the Spring 2022 contest and the beginning of the Road to the Cup.  The event will be more intimate than the past and focus on the fresh harvest and genetics.  Tickets will be limited so don’t wait and miss out.  Described as a global gathering of the Emerald Cup tribe in celebration of the traditional harvest time, the event will take place in Santa Rosa, CA over 2 days and will continue to offer education, entertainment and community to their international family and fan base.

“The tribe has spoken and we are making the move to bring our Cup to the world’s largest cannabis community and industry  – Los Angeles” says The Emerald Cup founder and CEO Tim Blake. “Following our most recent, and largest event ever, our community has exploded and we are transitioning to a venue closer to the epicenter of California’s cannabis market. This evolution continues as we cement our place as the most recognized and attended cannabis competition in the world.”

Named the “Academy Awards of Cannabis” by Rolling Stone, The Emerald Cup, has celebrated excellence in organic, sun grown and now indoor cannabis with over 35 catagories and awards across the product spectrum from flower, concentrates, topicals and edibles. Attracting countless attendees and special guests over the years, including top talent including The Roots, Ziggy Marley, Michael Franti, Rebelution, Chelsea Handler and SantiGold. Joining the calendar and complementing The Emerald Cup, the new Harvest Ball is an opportunity for the community among the cannabis industry to serve as a first opportunity to submit entries for the 2022 Emerald Cup Awards, but will also host a diverse marketplace, high-wattage musical performances and expert panel discussion on trends and innovation and in the industry.

Key elements of The Emerald Cup Harvest Ball will include:

  • Featuring the fresh harvest of the growing season with a focus on new genetics

  • Marketplace

  • Emerald Concert Stage

  • Kickoff to the 2022 Emerald Cup Contest

  • A Sanctuary Space honoring plant medicine with educational and entertainment programming

  • Area 101 (Where it all started)

  • Regenerative Agriculture Garden Activation

  • VIP Parties

  • Food, Beverages and Cannabis

“With over 17 events, starting with our first in 2004, the Cup has always been a fixture on the cannabis and festival calendar with our early December presence,” shared Tim Blake. “With the pandemic forcefully changing, and evolving us, we moved this year’s event to April. The response from our community, entrants and audience was resounding, this new timing was better for growing and cultivating the most optimum entries for competition. Our new event the Harvest Ball  continues to open the space for our community to bond and share information in the wake of a time of massive change across all parts of cannabis. What this experience is teaching us is that our industry thrives on communication and collaboration. We are confident the Harvest Ball will quickly blossom into a must-attend in all our calendars.”