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Cresco Labs to Become the New Leader in Cannabis with Acquisition of Columbia Care

March 23, 2022 by MJ News Network Leave a Comment

Transformational deal will combine best-in-class wholesale, retail and operations with an expanded strategic footprint in the largest and fastest growing markets in cannabis

ILLINOIS: Cresco Labs and Columbia Care Inc. announced today they have entered into a definitive arrangement agreement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Columbia Care. Subject to customary closing conditions and necessary regulatory approvals, the Transaction is expected to close in the fourth quarter of 2022.

Under the terms of the Arrangement Agreement, shareholders of Columbia Care will receive 0.5579 of a subordinate voting share of Cresco Labs for each Columbia Care common share (or equivalent) held, subject to adjustment representing total consideration enterprise value of approximately US$2.0 billion based on the closing price of Cresco Labs Shares on the Canadian Securities Exchange as of March 22, 2022. The Transaction provides Columbia Care Shareholders with premiums per Columbia Care Share of approximately 16% based on the closing prices of the Columbia Care Shares and the Cresco Labs Shares, and (ii) 19%, based on the 20-day volume weighted average prices of the Columbia Care Shares and the Cresco Labs Shares, each on the CSE as of March 22, 2022.

After giving effect to the Transaction, Columbia Care Shareholders will hold approximately 35% of the pro forma Cresco Labs Shares (on a fully diluted in-the-money, treasury method basis).

Key Transaction Highlights and Benefits

Superior Market Access

  • Largest Multi-State-Operator by pro-forma revenue – Gives Cresco Labs the largest pro-forma revenue in cannabis today at over $1.4 billion.1
  • Strategic, national footprint – Over 130 retail stores across an 18 market footprint,2 representing the #2 retail footprint in the industry, and the #1 retail footprint outside of Florida. The combined company will cover all 10 of BDSA’s top-10 largest and fastest growing markets by 2025, representing approximately 55% of the U.S. population and over 70% of addressable cannabis market.
  • Market share leader in key states – Independently, the companies currently have #1 share positions in four markets (IL, PA, CO, VA,), a #2 share in MA, and a pathway to a top-3 position in three more (NY, NJ and FL), bringing the combined company to a material market position in seven of the top 10 markets by revenue in 2025, according to BDSA.
  • Exposure to adult-use upside – The combined company will have a meaningful presence in today’s most influential markets and those with the biggest tailwinds for growth and adult use upside including: NY, NJ, VA, PA, OH, MD, and FL.

Proven Capabilities in Wholesale and Retail

  • The industry’s leading brand portfolio – #1 market share in the U.S. with strength in every major segment: #1 in branded flower, #1 in concentrates, #1 in vapes and top 5 in edibles, per BDSA.3
  • Most productive retail banner – Cresco Labs’ Sunnyside retail stores have average annualized revenue per store of over $11 million, the highest of any scaled national operator in the industry.
  • Industry leading wholesale platform – Pro-forma Q4 2021 wholesale revenue of over $120 million, the highest in the industry.

Balanced Economics

  • Increased scale and diversification – On a pro-forma basis, the Company expects to have annual revenues in excess of $100 million in 8 different states by 2023 as the combined company increases depth across other markets and diversifies its revenue base.
  • Improved revenue mix – Increased retail revenue mix to 65% of total, from 47% today (for Cresco standalone), increasing vertical integration and scale to drive profitability improvement.
  • Opportunity for synergies and de-levering – Ability to increase retail productivity, reduce redundant operational and capital expenses as well as de-lever the organization through the proceeds from the sale of redundant licenses and assets in high-value markets.

Management Commentary

“We are incredibly excited to announce this transformative transaction today at a very important time in the development of this industry. This acquisition brings together two of the leading operators in the industry, pairing a leading footprint with proven operational, brand and competitive excellence. The combination is highly complementary and provides unmatched scale, depth, diversification and long-term growth. On a pro-forma basis, the combined Company will be the largest cannabis company by revenue, the number one wholesaler of branded cannabis products, and the largest nationwide retail footprint outside of Florida,” said Charles Bachtell, CEO of Cresco Labs. “The combination of Cresco Labs and Columbia Care accelerates our journey to become the leader in cannabis in a way no other potential transaction could. We look forward to welcoming the incredible Columbia Care team to the Cresco Labs family. I couldn’t be more excited about this enhanced platform and how it furthers the Cresco Labs Vision – to be the most important and impactful company in cannabis.”

“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” said Nicholas Vita, CEO of Columbia Care. “In an evolving industry, the opportunities to better achieve our mission through consolidation led us to this historic moment. With Columbia Care’s strategic national footprint in the most attractive markets and Cresco Labs’ success in execution and incredibly popular brands, we will together create the most important – and the most investable – company in cannabis. Getting to know Charlie, his team, and the culture at Cresco Labs has given me a high level of confidence in the ability to successfully integrate Columbia Care and maximize the tremendous value of the combined footprint.”

Terms of the Transaction

The Transaction will be effected by way of a plan of arrangement pursuant to the Business Corporations Act (British Columbia). The Transaction has been unanimously approved by the Boards of Directors of each of Cresco Labs and Columbia Care. Columbia Care Shareholders holding approximately 25% of the voting power of the issued and outstanding Columbia Care Shares have committed to enter into voting support agreements with Cresco Labs to vote in favor of the Transaction. After giving effect to the Transaction, Columbia Care Shareholders will hold approximately 35% of pro forma Cresco Labs Shares (on a fully diluted in-the-money, treasury method basis). The Consideration is subject to adjustment in the event that Columbia Care is required to issue shares in satisfaction of an earn-out payment for a prior acquisition, with the potential adjustment in proportion to the additional dilution from such potential issuance relative to Columbia Care’s current fully diluted in-the-money outstanding shares. Additional details of the Transaction, including any adjustment to the Consideration, will be described in the management information circular and proxy statement that will be mailed to Columbia Care Shareholders in connection with a special meeting of Columbia Care Shareholders expected to be held in the second quarter to approve the Transaction.

The Transaction has been unanimously approved by the Boards of Directors of each of Cresco Labs and Columbia Care. Columbia Care Shareholders holding approximately 25% of the voting power of the issued and outstanding Columbia Care Shares have committed to enter into voting support agreements with Cresco Labs to vote in favor of the Transaction. Certain Columbia Care Shareholders have also agreed to not transfer a significant portion of their resulting Cresco Labs Shares for up to an eight-month period following closing of the Transaction.

The Arrangement Agreement provides for certain customary provisions, including covenants in respect of non-solicitation of alternative transactions, a right to match superior proposals, a US$65 million termination fee payable to Cresco Labs under certain circumstances.

The Transaction is subject to, among other things, receipt of the necessary approvals of the Supreme Court of British Columbia, the approval of two-thirds of the votes cast by Columbia Care Shareholders at the Special Meeting, receipt of the required regulatory approvals, including, but not limited, approval pursuant to the Hart–Scott–Rodino Antitrust Improvements Act, and other customary conditions of closing. Approval of Cresco Labs Shareholders is not required. Additional details of the Transaction will be provided in the Circular.

Recommendation of the Columbia Care Board

The Board of Directors of Columbia Care has unanimously determined, after receiving financial and legal advice and following the receipt of a unanimous recommendation of a special committee of independent directors, that the Transaction is in the best interests of Columbia Care, and that, on the basis of the Fairness Opinions (as defined herein), that the Consideration to be received by the Columbia Care Shareholders is fair, from a financial point of view, to the Columbia Care Shareholders.

The Columbia Care Board unanimously recommends that Columbia Care Shareholders vote in favor of the resolution to approve the Transaction. The Columbia Care Board obtained a fairness opinion from Canaccord Genuity Corp. and an independent fairness opinion from ATB Financial Markets Inc., each which provide that, as at the date of such respective opinion and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth therein, the Consideration to be received by the Columbia Care Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Columbia Care Shareholders.

Financial and Legal Advisors

Stoic Advisory Inc. and Solidum Capital Advisors are acting as financial advisor to Cresco Labs. A.G.P./Alliance Global Partners provided a fairness opinion to Cresco Labs’ Board of Directors. Bennett Jones LLP is acting as Canadian legal advisor to Cresco Labs. Paul Hastings LLP is acting as US legal advisor to Cresco Labs.

Canaccord Genuity is acting as financial advisor to Columbia Care and provided a fairness opinion to the Columbia Care Board. Stikeman Elliott LLP is acting as Canadian legal advisor to Columbia Care. Foley Hoag LLP is acting as US legal advisor to Columbia Care.

Conference Call and Investor Presentation

Cresco Labs will host a conference call and webcast to discuss the financial results and the Arrangement Agreement this morning at 8:30am EST. The Company will provide prepared remarks followed by a Q&A session with Charles Bachtell, CEO of Cresco Labs, Dennis Olis, CFO of Cresco Labs, Greg Butler, CCO of Cresco Labs, and Nick Vita, CEO of Columbia Care. In addition, the Company has posted an investor presentation with key highlights of the transaction to its investor website.

Dial-in: 1-844-200-6205 (Toll Free), 1-646-904-5544 (US Local), +1 929-526-1599 (Other)

Access Code: 216557

Archived access to the webcast will be available for one year on the Cresco Labs investor relations website.

Filed Under: Business, Homepage Tagged With: Big Marijuana, Canaccord Genuity Corp, cannabis industry news, Columbia Care, Cresco Labs, MA, mergers and acquisitions, mjnews, MJNews Network, MSO, the business of cannabis, the business of legal marijuana

Yes, You Can Still Be Fired For Using Cannabis: Making Sense of Employment Discrimination Post-Legalization In Illinois

March 3, 2021 by MJ News Network 1 Comment

 

By Jaye R. Lindsay, Esq., Crossroad Legal

Like most well-intentioned laws, the sweeping legislation known as the Illinois cannabis Regulation and Tax Act (CRTA), passed in December 2019, included wide-ranging implications for employees and employers throughout the State. For one, the law effectively made it completely legal to consumer or possess cannabis for personal recreational use. But this left open the question of whether a person could be fired for testing positive for cannabis or cannabinoid compounds. Obviously, employers want to make sure they have a right to prohibit people from operating heavy equipment or showing up to work high. But how does an employer do that?

After all, unlike alcohol, THC remains in your system for days or even weeks. A person could test positive for THC weeks after use and at a time when there is no residual impact on functioning at all. Thus, it presents the challenge of balancing the need to allow employers to ensure a safe work environment and the right of the people to use a lawful substance that has many known benefits, including medicinal uses. Cannabis lawyers across the state remain divided on how to best advise clients on this issue. But it does appear, at least for the time being, that the Illinois General Assembly agrees people can be terminated for lawful use of cannabis. Here’s what you should know.

Conflicting Laws

There is now some conflict between two laws in Illinois. First, Gov. J.B. Pritzker signed into law the amendments contained in Public Act 101-0593, which allows an employer to revoke an offer of employment if it is discovered the applicant used cannabis prior to starting the job.

Compare this with newly passed amendments to CRTA, which made no changes to the existing language from the Right to Privacy in the Workplace Act. Under that law, employers in some situations are restricted from discriminating against employees based on the use of lawful products. The term “lawful products,” carries some implications, but even the law acknowledges that where legal substances are consumed off the employer’s premises and not during work hours, discrimination is prohibited.

How the Conflict of Laws Creates Tension for Employers and Employees

As one can imagine, this all presents a big problem. After all, THC can show up in tests weeks after use and long after any possible effects would have worn off. This distinguishes cannabis from alcohol and many other substances that can only be detected during active intoxication. So, how should employers handle the situation. If they allow employees to test positive for THC, they could face serious liability if someone is hurt on the job. Imagine someone operating power tools or heavy machinery while intoxicated. But if the employer terminates the employee or passes up an applicant based on past use, then a discrimination claim may be made.

Key Provisions of CRTA Attempted to Address the Problem

Under the CRTA legislation, the law is clear about what it does not do:

  • An employer can still terminate employees for using or possessing cannabis on the job
  • Nothing in the law stops an employer from having a reasonable zero tolerance policy with respect to use and possession on the job
  • Nothing in the law prohibits an employer from disciplining or terminating employees for violating their policies
  • Nothing in the law forces employers to allow employees to work under the influence
  • The law does not create a specific right of action to sue employers for failing to comply. This simply means that a plaintiff would still need to prove all the typical elements of a claim for discrimination, without special consideration under this law.

However, the law also goes on to say that an employer can consider an employee impaired if they have a “good faith belief” that the employee is showing signs of “articulable symptoms while working” and which limit or diminish that employee’s work performance. The law provides specific examples, such as effects on:

  • Speech
  • Physical dexterity
  • Agility
  • Coordination
  • Demeanor
  • Irrational or unusual behavior
  • Negligence or carelessness in operating equipment or machinery
  • Disregard for the safety of the employee or others
  • Involvement in any accident that results in serious damage to equipment or property
  • Disruption of a production or manufacturing process
  • Carelessness that results in any injury to the employee or others.

Options to Appeal an Employer’s Disciplinary Actions

The law also provides that if an employer decides to terminate or discipline an employee based on one of the good faith factors above, then the employer must provide a mechanism for the employee to contest that decision and make a reasonable dispute regarding the facts.

Early Court Decisions 

Illinois’ legalization law is still very new, so there have not been many legal challenges in the courts yet.  Other state statutes, however, have been challenged through litigation. For instance, in Whitmire v. Wal-Mart Stores Inc., 359 F. Supp. 3d 761, 791 (D. Ariz. 2019), the federal court reviewing a discrimination suit based on Arizona law held that without evidence that the employee actually “used, possessed or was impaired by marijuana at work on [a date], it is clear that Defendant discriminated against Plaintiff in violation of [the state’s Medical Marijuana Act] by suspending and then terminating Plaintiff solely based on her positive drug screen.”

What this Means for Employers and Employees in Illinois

This decision, though not legally binding on any Illinois court, does give some hope to cannabis advocates and those supporting the move to decriminalize cannabis in all its forms. It seems that employers may wish to have clearer policies that directly address the company’s no tolerance rules and how those will be enforced. Likewise, for employees who are disciplined and/or terminated for cannabis use, there is a strong chance that they could make successful claims for discrimination in the future. Of course, this analysis does not even touch upon the potential concerns relating to medicinal cannabis use and how discrimination may actually constitute a violation of the Americans with Disabilities Act or other laws designed to protect the rights of those with healthcare needs.

For those facing workplace discrimination based on cannabis use, it’s always a good idea to consult with someone who understands employment law and cannabis regulation. Skilled cannabis lawyers are available throughout the state, and we will continue working to stay abreast to changes in legislation.


About the Author: Jaye R. Lindsay is an experienced trial lawyer in southern Illinois, serving the region from the firm’s offices located in O’Fallon, IL and Mount Vernon, IL. He owns Crossroad Legal, a veteran-owned and operated law firm, focusing on criminal defense and personal injury. He and his firm are ardent supporters of fundamental liberties and strong advocates of cannabis legalization and criminal justice reform. Jaye can be reached at (618) 515-5555 or by visiting the firm at www.Crossroadlegal.com.

Filed Under: Homepage, Legal Tagged With: Americans with Disabilities Act, Crossroads Legal, CRTA, decriminalization, employment law and cannabis, IL, Illinois, Jaye R. Lindsay, legalization, mjlegal, MJlegal news, mjnews, normalization

Cresco Labs Closes Acquisition of Verdant Creations’ Four Dispensaries, Reaches Maximum Retail Licenses in Ohio

February 16, 2021 by MJ News Network Leave a Comment

ILLINOIS:  Cresco Labs, one of the largest vertically integrated, multi-state cannabis operators in the United States, announced today the closing of its acquisition of Verdant Creations dispensaries in Cincinnati, Chillicothe, Newark and Marion, Ohio (collectively “Verdant”). These acquisitions give Cresco four additional dispensaries, bringing the Company’s dispensary presence in Ohio to five – the maximum allowed by the state.

The Verdant acquisition is aligned with Cresco’s strategy of building meaningful, material market positions in the states that matter most. As the seventh most populated state in the U.S., Ohio has a registered medical patient count that more than doubled in 2020 from roughly 78,000 patients to 160,000, in addition to 52 operational dispensaries statewide and 2020 annual cannabis sales of nearly $220 million1. Cresco Labs is well positioned in the market with the largest type of cultivation license allowing 25,000 sq. ft. of cultivation, a full processing facility currently under expansion, and now the maximum number of retail locations allowed by the state. Additionally, the Company distributes its flower product to 88% of Ohio’s dispensaries and is excited to bring its full House of Brands to market following the completion of it’s processing and manufacturing facility later this year.

“In 2020, we demonstrated the growth and leverage that can be created by focusing only on the most strategic markets, executing high-quality cultivation at scale, distributing our branded products onto every shelf and focusing on targeted, consumer-focused, high-volume retail. In 2021, we’re using the same playbook to go deeper in strategic states, including Ohio,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder. “The Verdant acquisition significantly deepens our position in Ohio, a market that looks structurally similar to Illinois and Pennsylvania in the early years of those medical markets. We are thrilled to be amplifying our operations in Ohio this year and look forward to bringing our brands to more patients throughout the state.”

Cresco Labs’ five Ohio dispensaries are located in Cincinnati, Chillicothe, Marion, Newark, and Wintersville. The Company also has a cultivation and processing facility in Yellow Springs.

Filed Under: Business, Dispensaries, Homepage Tagged With: cannabis news, Cresco Labs, IL, Illinois, medical marijuana dispensary, MJBiz, mjnews, MJNewsNetwork, mjnewsnetwork.com, MSO, OH, Ohio, Ohio dispensary, the business of cannabis, the business of marijuana, Verdant Creations

Illinois Adult Use Cannabis Monthly Sales Figures 2020

January 6, 2021 by MJ News Network Leave a Comment

ILLINOIS: The Illinois Department of Financial and Professional Regulation, Office of the Secretary, issued updated sales figures for the state’s adult use cannabis sales.

Here are the Illinois full year sales figures for 2020, broken out by monthly totals.

 

Filed Under: Homepage, Legal, Recreational Tagged With: 2020 adult use sales, adult use in Illinois, cannabis news, Illinois, legal cannabis, MJ News Network, MJBiz, mjnews, MJNews Network, mjnewsnetwork.com, the business of cannabis, the business of marijuana

Cresco Labs Publishes Inaugural Seed Annual Report

December 29, 2020 by MJ News Network Leave a Comment

Report details meaningful contributions towards restorative justice initiatives, community business incubators and educational and workforce development programming

ILLINOIS: Cresco Labs, one of the largest vertically integrated, multistate cannabis operators in the United States, is proud to publish the first annual report for its SEED (Social Equity and Educational Development) initiative. The report highlights the Company’s many achievements over the past year to help create a more diverse and inclusive cannabis industry through SEED’s restorative justice initiatives, community business incubators and educational and workforce development programming. The 2019-2020 SEED Annual Report is available online at crescolabs.com/seed.

Cresco Labs' SEED initiative conducted 13 Community Business Incubator events incubating over 250 individuals for two Illinois application periods (Photo: Business Wire)Cresco Labs’ SEED initiative conducted 13 Community Business Incubator events incubating over 250 individuals for two Illinois application periods (Photo: Business Wire)

“We are proud to have launched the cannabis industry’s first comprehensive social justice and social equity initiative and to report the significant strides the SEED program has made towards the more equitable inclusion of Black and Brown people in cannabis,” said Charlie Bachtell, CEO and Co-founder of Cresco Labs. “As we reflect on SEED’s first year successes, we recognize that this is just the beginning of a long road ahead and a tremendous amount of work is still to be done.” Our goal is to provide the time, know-how and resources to elevate more voices and foster economic opportunities for people from communities disproportionately impacted by prior drug laws. The ability of this industry to reach its maximum potential will be governed by its ability to address the social responsibility components tied to this subject matter. Our SEED team is made up of incredibly talented, hard-working individuals who are building a culture where all Cresco Labs employees are inspired to improve inclusiveness within the cannabis industry. Our SEED initiative supports our vision to be the most important company in cannabis and is helping to build the most responsible and respectable industry possible. Together, we are firmly committed to continuing the progress we’ve achieved this inaugural year into the future.”

The SEED Annual Report outlines the mission of SEED, describes its goals and initiatives, and details the efforts dedicated to the program’s success. Highlights of the 2019/2020 program include:

  • Invested over $1.5M and contributed over 2,200 Cresco Labs staff hours for more than 40 multi-tiered SEED initiatives
  • Sponsored and financially supported 22 restorative-focused events and more than 1,200 individuals seeking expungement of their records
  • Conducted SEED’s inaugural Community Business Incubator that assisted 50 businesses and over 250 individuals in total over two application periods in Illinois
  • Established 8 community and workforce development initiatives and assisted in the development of cannabis industry curriculum with 5 universities and colleges

Cresco Labs’ SEED team was the recipient of the 2020 Bill Leslie Visionary Award from Cabrini Green Legal Aid, a nonprofit established in 1973 to serve legal needs arising from the lack of opportunity, criminalization of poverty, and racial inequity experienced within the Cabrini Green community in Chicago, Illinois. This recognition reinforces the SEED initiative’s effort to build community relationships and do its part to be restorative and inclusive.

In May 2019, Cresco Labs created SEED to address the absence of people, businesses and communities disproportionately impacted by the War on Drugs in the cannabis industry. Its mission is to develop tangible pathways into the cannabis industry for communities impacted by the War on Drugs through the three pillars of SEED: Restorative Justice, Community Business Incubator, and Education & Workforce Development. SEED’s restorative justice programming includes expungement events, lobbying to change the nation’s drug laws, and working to ensure that no person remains in prison for a cannabis conviction. Established in November 2019, Cresco’s Community Business Incubator provides qualifying social equity applicants with the resources, knowledge and guidance needed to successfully apply for adult use dispensary licenses awarded by the Illinois Department of Financial and Professional Regulation. SEED develops educational cannabis programming tailored to communities disproportionately impacted by the War on Drugs, as well as builds collaborative relationships with colleges and universities to develop curriculum, teach classes and host workshops to educate and prepare students for careers in cannabis.

To learn more about Cresco Labs’ SEED initiative, visit crescolabs.com/seed.

Filed Under: Business, Homepage Tagged With: cannabis industry news, Cresco Labs, IL, mjnews, MJNews Network, SEED annual Report, social equity, social equity and educational development, the business of cannabis, the business of marijuana

Cresco Labs Opens Tenth Illinois Sunnyside Dispensary In Naperville

December 23, 2020 by MJ News Network Leave a Comment

The Company increases its national retail footprint to 20 operating stores

ILLINOIS: Cresco Labs, one of the largest vertically integrated, multi-state cannabis operators in the United States, announced today the opening of its tenth Illinois dispensary in the third largest city in the state, Naperville. The adult-use Sunnyside dispensary is located at 2740 W. 75th St., one of the busiest shopping areas in Naperville, a western suburb of Chicago.

 

“Our retail platform continues to outperform because we put such a premium on finding the right location for our stores, and Naperville is another example of opening a new location in the heart of one of the city’s most vibrant retail spaces—on the same block as Costco, Whole Foods and Starbucks. We are normalizing the cannabis shopping experience,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder. “With the opening of Sunnyside Naperville, we are proud to be the first cannabis operator to reach ten dispensaries in Illinois. This milestone and the acceleration of our store growth this year is a reflection of our differentiated strategy and our best-in-class ability to execute it.”

Illinois is one of the most robust cannabis markets in the country where state retail sales are on an annual run rate of more than a billion dollars.1 Sunnyside retail stores continue to command an outsized share of the market.

Sunnyside Naperville will employ nearly 40 people in the nearly 8,400 square foot dispensary featuring 12 points of sale. Adult-use customers can browse live inventory, place online orders through Sunnyside.shop and pickup orders in-store. They will receive a confirmation when their order is ready for pickup. Sunnyside Naperville requires all customers to wear masks and practice social distancing. Regular store hours are 9:00 AM to 9:00 PM CST daily, seven days a week.

In Illinois, Cresco Labs has 10 operating stores in the River North and Lakeview neighborhoods of downtown Chicago; Chicago northwestern suburb of Schaumburg; villages of Elmwood Park and Buffalo Grove in Cook County, the most populous county in the state; northern cities of Rockford and South Beloit, which is near the Wisconsin border; city of Champaign in central Illinois; and city of Danville in eastern Illinois near the Indiana border.

The Company has 20 operating stores in six states, including Illinois, Arizona, Ohio, Pennsylvania, New York and Massachusetts.

Filed Under: Business, Dispensaries, Homepage Tagged With: adult use, Big Marijuana, cannabis industry news, Cresco Labs, dispensary, IL, Illinois, marijuana industry news, MJBiz, mjnews, mjnewsnetwork.com, MSO, Naperville, pot shop, the business of cannabis, the business of marijuana

Cresco Labs’ Good News Brand Expands Into Michigan

December 18, 2020 by MJ News Network Leave a Comment

The Company Increases its Portfolio to Five Brands of Products Now Available in the State for Medical Patients and Recreational Consumers

ILLINOIS: Cresco Labs, one of the largest vertically integrated, multi-state cannabis operators in the United States, announced today the expansion of its Good News brand to Michigan, a state with accelerating adult-use cannabis sales and a growing medical program totaling nearly $600 million in cannabis sales to date, according to data from Headset1. Good News launches with gummy edibles available at dispensaries throughout the state. Good News gummies (100 mg. total; ten, 10 mg. gummies per pack) are sold in approachable packaging and crafted with consumers’ desired mood in mind — Me Time (Indica), Brunch (Hybrid), Friyay (Sativa) and Vegas (Sativa).

Cresco Labs’ Good News brand launches in Michigan with 10 mg. gummy edibles now available to purchase at dispensaries. (Photo: Business Wire)Cresco Labs’ Good News brand launches in Michigan with 10 mg. gummy edibles now available to purchase at dispensaries. (Photo: Business Wire)

“Since receiving our Medical Processing License in March 2020 and launching recreational sales in June, we have remained committed to our strategy of prioritizing wholesale distribution and I’m proud of our Michigan team for creating an outstanding operation that supports our brands and products,” said Charlie Bachtell, CEO & Co-founder of Cresco Labs. “Michigan is a sophisticated market, and we believe our growth speaks to the quality and variety of the brands and products that we are offering to our dispensary partners, patients and customers. We are investing resources in the most strategic markets, and we continue to be excited about the growth potential of Michigan’s cannabis program.”

Nick Fallon, General Manager of Michigan, added, “We’re thrilled to bring Good News to Michigan—it will be our fifth brand available to medical patients and recreational consumers. Our Mindy’s Chef Led Artisanal Edibles and High Supply brands are performing well, with consumers appreciating a low dose edible option from Mindy’s and more affordable, quality vapes from High Supply. In addition, our customers are enjoying our Cresco Liquid Live Resin vape cartridges, which are unique and differentiated from other live resin products in market today because they represent the purest form of the plant and deliver premium quality and flavor. We are proud to offer more choice with the debut of a higher dose edible option from our Good News brand.”

In December of 2019, Michigan became the tenth U.S. state to legalize cannabis for adult-use consumption. In the first eight months of this year, Michigan’s adult use and medical markets brought in over $281 million and more than $313 million, respectively, for a total of $595 million in cannabis sales, according to data from Headset1. Michigan has one of the country’s fastest-growing adult-use markets, with state sales generating over $104 million in October2. In addition to its new adult-use market, Michigan’s growing medical market is ranked second in the country behind California.

Good News is the Company’s mainstream, social-occasion based brand with a product line developed to deliver a quality, safe and consistent cannabis experience through easy to use and benefit-forward forms focused on occasion and mood benefits. Good News is currently available in California, Illinois and now Michigan.

Cresco Labs’ other House of Brands and products available in the state for medical patients and customers include Cresco live resin concentrates and liquid live resin vape cartridges, Mindy’s Chef Led Artisanal Edibles gummies, High Supply disposable vape pens, and Remedi capsules and tinctures.

Cresco Labs has a licensed cultivation and processing facility in Marshall, Michigan, which has a total of 53,000 square feet of cultivation space and is currently under renovation.

For more information on Good News, please visit wearegoodnews.co.

Filed Under: Business, Homepage Tagged With: cannabis news, Cresco Labs, Good News Brand, IL, Illinois, Michigan, mjnews, mjnewsnetwork.com, MSO, the business of cannabis, the business of marijuana

DCFS and Illinois Courts Refusing to Follow New Cannabis Anti-Discrimination Law: Parents Risk Losing Children Over Cannabis Use Despite Legalization

December 9, 2020 by MJ News Network Leave a Comment

By Jay Lindsay, CROSSROAD LEGAL

ILLINOIS: On June 25, 2019, Governor J.B. Pritzker signed into a law sweeping new legislation legalizing personal recreational use of Cannabis in Illinois. Under the law, Illinoisans can now use cannabis not only for medicinal purposes, but also recreationally. The law also prohibits discrimination based on cannabis in certain situations. Specifically, the anti-discrimination provision is strategically drafted to avoid cannabis users from suffering negative or adverse impacts in Illinois family and juvenile courts, including actions by Child Protective Services. Despite passage of this law, DCFS and courts remain unwilling to comply with these anti-discrimination rules.

To fully understand why this is important and how it affects Illinois parents, a little background is necessary.

The Cannabis Regulation and Tax Act of 2019

Effective the first day of 2020, Cannabis became legal for personal use in Illinois. The new law is entitled the Cannabis Regulation and Tax Act, and the personal use provisions are found in the Illinois Code at 410 ILCS 705/10-5 et seq. Under the new law, Illinois residents are legally permitted to use and possess Cannabis and Cannabis-related products. There are, of course, limitations.

POSSESSION OF CANNABIS

  • Up to 30 grams of Cannabis in raw form
  • Cannabis-infused product or products containing no more than 500 mg of THC
  • Five grams of cannabis product in concentrated form 

PRIOR INCARCERATIONS

Under House Bill 1438, which ultimately became the new law last year, the Governor has created a clemency process that will ultimately help to exonerate and clear the records of hundreds of thousands of people convicted of minor Cannabis charges. 

  • Automatic expungement for any possession charge of up to 30 grams
  • Potential clemency for possession of 30-500 grams, but only upon petitioning a court to vacate the conviction.

The Marijuana Policy Project estimates that this will result in an estimated 770,000 overturned convictions. This is perhaps the most notable part of the legislation, because it could effectively re-enfranchise almost a million Illinois residents of things like voting and gun rights. Under current law, drug-related convictions can be used as a reason for the Illinois State Police revoking or denying a Firearm Owners Identification Card (FOID).  Likewise, for felony convictions, many people lose the right to vote. Many of these rights are now likely subject to restoration.

Public Support for Cannabis

Before directly addressing the issue of discrimination, it is worth noting that the majority of Illinoisans support legalization. Even in the most rural and conservative reaches of the state, Cannabis is gaining wide-spread acceptance. According to the advocacy group, Legalize Illinois, the following statistics were reported in relation to resident approval of legalization:

  • Chicago: 77% support and 22% oppose legalization
  • Downstate: 58% support and 40% oppose legalization
  • Statewide: 66% support and 32% oppose legalization

Anti-Discrimination Provision

Now that the background and legislative underpinnings are clear, we turn to the problem at hand.  Under the new law, there’s a specific provision that directly applies to family courts and actions by the Department of Children and Family Services (DCFS). The provision found at 410 ILCS 705/10-30(a) outlines the precise ways that the government may not use a person’s conduct under the statute. Below, the statute is broken into three parts for clarity:

Neither the presence of cannabinoid components or metabolites in a person’s bodily fluids nor possession of cannabis-related paraphernalia, nor conduct related to the use of cannabis or the participation in cannabis-related activities lawful under this Act by a custodial or noncustodial parent, grandparent, legal guardian, foster parent, or other person charged with the well-being of a child . . .

. . . shall form the sole or primary basis or supporting basis for any action or proceeding by a child welfare agency or in a family or juvenile court, any adverse finding, adverse evidence, or restriction of any right or privilege in a proceeding related to adoption of a child, acting as a foster parent of a child, or a person’s fitness to adopt a child or act as a foster parent of a child, or serve as the basis of any adverse finding, adverse evidence, or restriction of any right of privilege in a proceeding related to guardianship, conservatorship, trusteeship, the execution of a will, or the management of an estate . . .

. . . unless the person’s actions in relation to cannabis created an unreasonable danger to the safety of the minor or otherwise show the person to not be competent as established by clear and convincing evidence. This subsection applies only to conduct protected under this Act. 

Juvenile Court Act vs. Cannabis Regulation and Tax Act

In a landmark Supreme Court decision, Justice Sandra Day O’Connor wrote, that there is “a fundamental right of parents to make decisions concerning the care, custody, and control of their children.” See Troxel v. Granville, 530 U.S. 57 (2000).

Moreover, the Court wrote, “[t]he liberty interest at issue in this case-the interest of parents in the care, custody, and control of their children-is perhaps the oldest of the fundamental liberty interests recognized by this Court. See id. at 65. 

It is with this context from the Supreme Court that we next must address how Illinois law treats removal of children for abuse and neglect allegations.

Under the Illinois Juvenile Court Act of 1987, DCFS is charged with protecting minors from abuse and neglect. When there is a credible report of abuse, DCFS will investigate the allegations and, if founded, may remove a child from their home, place them into emergency protective custody, then turn the matter over to the local States Attorney for the appropriate county. At this time, the prosecutor will file a petition to adjudicate the minor a ward of the court. If successful, the child will be placed into foster care, while a provider agency, such as Caritas or Lutheran Child and Family Services (LCFS), will take over managing the casework associated with the matter. A service plan is created, and parents must complete the service plan and meet all requirements of the agency before the children can be returned.

Under the Juvenile Court Act, 705 ILCS 405/2-18(2)(f), the court deciding the matter at the adjudicatory hearing may consider:

proof that a parent, custodian or guardian of a minor repeatedly used a drug, to the extent that it has or would ordinarily have the effect of producing in the user a substantial state of stupor, unconsciousness, intoxication, hallucination, disorientation or incompetence, or a substantial impairment of judgment, or a substantial manifestation of irrationality, shall be prima facie evidence of neglect.

Under the Juvenile Court Act drug is not a per se or automatic reason for removal of children. Drug use must create a “substantial” effect on the parent, to the point that the Department feels that the parent cannot properly care for a child. In practice, this is very different, however. Typically, ANY use will be enough for DCFS to remove a child. Historically, this included Cannabis. 

Breaking it Down

Since there are now two potentially conflicting laws, Courts are left to decide whether or not they will follow the new anti-discrimination provision by simply disregarding evidence of Cannabis use, or whether they will continue to view Cannabis as a drug that supports removal of minor children.

Case Examples from Practice

 The author is a former Assistant Public Defender for a rural county in downstate Illinois. In the first year since legalization, numerous cases have come before the court with little evidence of drug use except minor Cannabis possession or positive THC test results. Consider the following* examples:

  • Young mother has argument with boyfriend, and children are removed due to allegations of domestic violence. After 6 months, all services are complete. There was no evidence of illegal drug use, alcohol abuse or other substance-related issues. While under oath, a case worker testified that the sole reason why the children have not yet been returned to the mother from May 2020 to November 2020 is her positive drug tests for THC. At a hearing, one child was returned to a father, in part due to the fact that mother was alleged to have continued using Cannabis.

Rationale – According to DCFS, the mother had a service plan that required her to remain free from all drugs, including Cannabis; therefore, it is the State’s position that even though Cannabis is legal, she is prohibited from using it.

  • Judge orders young mother to receive overnight visits and have children returned within 30 days, due to minimal nature of the case. DCFS refuses to honor the court’s order, based on allegations that the mother is still using Cannabis. A single positive test for THC from several months earlier used to argue that she is unfit to have the children go home. The court allowed the matter to be continued for another 90 days and decided not to return the child.

Rationale – According to DCFS, there were concerns about the mother using Cannabis, because she is underage (18) at the time, and thus use would be considered illegal.

  • Young mother has a messy home and is accused of being under the influence while caring for her small child. Notably, under oath, the police officer repeatedly referred to discovering evidence of illicit drug use in the home. On closer cross-examination, it turned out the mother had an empty vape pen on her nightstand. No Cannabis was located on the property. The mother did admit to using Cannabis at times, but no evidence was provided to indicate she had used Cannabis that day or that she was in possession of Cannabis. While other reasons were used for removing the children, such as the condition of the home, this was a critical piece of evidence heard by and relied upon by the court.

Rationale – According to DCFS, simply having marijuana paraphernalia in reach of a minor child was sufficient to remove the children, as it indicated a drug addiction.

Facing the Dilemma Head-On

With these examples squarely before us, it’s important to note a few things. First, possession of 10 grams or less of Cannabis by a person under the age of 21 is considered a civil violation, punishable by a fine of between $100 and $200. See 720 ILCS 55/4. In fact, possession doesn’t even reach Class A misdemeanor status (comparable to a first-offense DUI) until a minor possesses between 30 and 100 grams of Cannabis. With this in mind, it’s difficult to understand how DCFS and the courts can deprive a parent of such a fundamental liberty as the right to raise one’s own child over such a minor offense. Likewise, the Cannabis Regulation and Tax Act clearly outlines that Cannabis use should not be considered in these court proceedings. The law makes no exception for age of the user.

Where We Go Next 

Ultimately, the problem is that although Cannabis has been fully legalized for recreational use, judges and DCFS are still very much using Cannabis as the sole reason (or at a minimum, a substantial reason) for removing children from parents. And once removed from their parents, children are often kept in foster care for years. If the parent tests positive for Cannabis even once, the courts and DCFS will invariably argue that the parent is failing to make reasonable efforts and substantial progress toward the return of the child. This key language is used to eventually terminate parental rights for good.

It is imperative that the fundamental liberties of parents in Illinois be protected at all costs. As Justice O’Connor wrote in 2000, the right to raise one’s own children is perhaps the oldest recognized liberty in our country’s history. Indeed, this fundamental right is being breached every day in courtrooms across the state, because the clear text of the law is being ignored. Despite Illinois passing a law that prohibits consideration of Cannabis use or possession in DCFS proceedings and juvenile court hearings, state agencies and judges remain completely unwilling to disregard it. In doing so, one could certainly argue that the courts are re-criminalizing Cannabis. In fact, the outcome is that one can lose their children forever for something that amounts to little more than a civil fine if done underage. Imagine losing your children for burning without a permit or littering.

It’s high time that the Illinois legislature put some teeth in the law by creating some form of penalty for state agencies that disregard the law. It also raises the possibility that some parents may have significant civil actions against the State of Illinois where DCFS and provider agencies disregard the law and remove children due to Cannabis use in the home. Illinois NORML continues to advocate and fight hard for the residents of the state every day.

*Due to confidentiality of juvenile court records, the author is unable to discuss specific cases or names of participants.


Jaye R. Lindsay is the founding attorney for CROSSROAD LEGAL, a general practice law firm based in O’Fallon, IL.

Filed Under: Decriminalization, Homepage, Legal Tagged With: cannabis and the law, Cannabis Anti-Discrimination Law, Cannabis Regulation and Tax Act of 2019, DCFS, Governor J.B. Pritzker, IL, ILL, Illinois, Illinois 2020, Illinois NORML, marijuana law, Marijuana Policy Project, MJ Legal News, mjlegal, mjnews, mjnewsnetwork.com, MPP, NORML, social equity

Cresco Labs Announces Record Revenue of $153.3 Million, Growth of $59 Million

November 18, 2020 by MJ News Network Leave a Comment

Company affirms position as the largest wholesaler of branded products in the industry with $90.5 million in wholesale revenue

Record revenue of $153.3 million, 63% growth QoQ, an absolute increase of $59 million

Record adjusted EBITDA1 of $46.4 million, 182% growth QoQ

Record cashflow from operations of $17.8 million

Retail revenue growth of 60% QoQ to $62.8 million

Third consecutive quarter with over 40% revenue growth

ILLINOIS:  Cresco Labs Inc., one of the largest vertically integrated multi-state cannabis operators in the United States, today released its unaudited financial results for the third quarter ended September 30, 2020. All financial information presented in this release is in U.S. dollars, unless otherwise noted.

Management Commentary

“Cresco Labs entered the third quarter firing on all cylinders achieving record levels of revenue, profitability, and cash flow. We remain the number one operator in the industry focused on, and delivering results in, the wholesale distribution of branded products. Our retail is outperforming, and we are generating substantial operating leverage,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “Comparing Q1 to Q3, we increased revenue by $87 million while keeping SG&A flat. The investments we made to support growth are paying off, and as a result our profitability has grown dollar for dollar with gross profit. Because of the decisions we’ve made, the changes we’ve managed through and the hard work devoted by our team over the last 12 months, Cresco Labs has substantiated itself within the very top tier of the industry and confirmed the value that is driven by our differentiated strategy. This is a unique story of strategic breadth, depth and execution. As we look toward our next phase of growth, it’s rinse and repeat – the playbook will be applied to more states and, again, we will achieve meaningful, material market positions.”

Third Quarter 2020 Financial Highlights

Operating Results

  • Revenue for the third quarter of 2020 was $153.3 million, an absolute increase of over $59.0 million or a 63% increase over Q2’20 revenue. Wholesale growth was driven by an increase in harvests from expanded capacity in Illinois and Pennsylvania with strong growth in California. Retail growth was driven by strong sequential same-store growth and two new store openings in Illinois.
  • Operational Gross Profit1 as a Percentage of Revenue was 53% in the quarter as compared to 47% in the prior quarter driven by increased efficiency in our expanded Illinois and Pennsylvania facilities.
  • Adjusted EBITDA1 was $46.4 million, an increase of 182% sequentially driven primarily from higher revenue, increased operational gross profit across our largest markets and strong SG&A control which dropped dramatically as a percentage of revenue.
  • Net Income2 was $4.9 million, which includes unrealized gains and losses on mark-to-market instruments that fluctuate until obligations are settled, changes in fair value of biological assets, interest expense and tax expense.
  • Net Cash Provided by Operating Activities was $17.8 million, compared to $9.9 million used in Q2. The increase in cash provided by operating activities was driven by increased operating leverage across the business as the Company scales.

Shares Outstanding

Total shares on a fully converted basis were 380,035,735 as of September 30, 2020.

Conference Call and Webcast

The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Wednesday, November 18, 2020, at 8:30am Eastern Time (7:30am Central Time). The conference call may be accessed via webcast or by dialing 866-688-4235 (409-216-0711 for international callers) and providing conference ID 9237505. Archived access to the webcast will be available for one year on the Cresco Labs’ investor relations website.

Filed Under: Business, Homepage Tagged With: Big Marijuana, cannabis investors, Cresco Labs, Illinois, mjnews, mjnewsnetwork.com, MSO, the business of cannabis, the business of marijuana, vertically integrated cannabis operator

Illinois Adult Use Cannabis Monthly Sales Figures (Updated October 5, 2020)

October 8, 2020 by MJ News Network Leave a Comment

ILLINOIS: Sales of legal cannabis continue to grow here in the land of Lincoln, even as the rest of the US economy still struggles to recover from the COVID-19 pandemic.  Consumer demand for legal marijuana remains.  According to recently released data from the Illinois Department of Financial and Professional Regulation, adult use cannabis sales reached $67.6 million in September, nearly $18 million to out of state customers traveling in from neighboring Indiana and other states where cannabis is not legally available.

Here are the latest official numbers:

Filed Under: Business, Homepage Tagged With: cannabis industry news, ILL, Illinois, Illinois Department of Financial and Professional Regulation, legal cannabis, mjnews, mjnewsnetwork.com, the business of marijuana

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