NEW YORK: On Ohiarihkó:wa/July 1, 2021, three (3) days after adopting its Adult Use Cannabis Ordinance, the Saint Regis Mohawk Tribe filed civil actions in Tribal Court naming seven (7) cannabis dispensaries that have illegally opened to sell recreational marijuana without being licensed or regulated from the Tribe.
The seven (7) named dispensaries located under the Tribe’s jurisdiction are: “Smoke Show Dispensary” located on 2761 State Route 95; “Bud Ease Dispensary” located at 16 McGee Road; “Good Leaf Dispensary” (property with no street address) located on State Route 37; “Sasta Budz Dispensary” at 220 State Route 37; “Native Flower Dispensary” located at 640 State Route 37; “Golden Nugget Dispensary” located at 42 Herne Road; and “Best Budz Dispensary” located at 775 State Route 37. The Tribe’s complaints allege that the dispensaries are in violation of tribal law by operating without a Saint Regis Mohawk Tribal License.
A Tribal Community Referendum held in December 2019 authorized the Tribe to legalize adult use (recreational) cannabis through the adoption of regulations that controls its commercial use, sale, processing, and cultivation on tribal territory. The rules include strict regulations on inventory control, labeling, testing and security requirements at all licensed facilities. The main purpose is to ensure the health and safety of the community, particularly our youth. Notably, the community referendum did not approve the adoption of regulations by any entity other than the Saint Regis Mohawk Tribe.
On June 28, 2021 the Tribe enacted the Adult Use Cannabis Ordinance following New York’s legalization of cannabis at the end of March. The individual dispensaries proceeded to open however, and began selling cannabis after the State approved it, not waiting for the Tribe to formally adopt its own ordinance. As a result, the Tribe issued Cease and Desist Orders, which granted time for each establishment to close within thirty (30) days.
In the Adult Use Cannabis Ordinance, those dispensaries that continued to operate outside of tribal law were provided a “last chance” to close, while they submit a Tribal License Application. They were provided a deadline of Thursday, July 1, 2021 to comply and close their operation. Regrettably, the seven dispensaries continue to operate without a tribal license, so the only course of action was to file enforcement action in Saint Regis Mohawk Tribal Court.
The Tribe’s Legal Complaint and accompanying Motions for Temporary, Preliminary, and Permanent Injunctions seeks enforcement of the Cease and Desist Orders in Tribal Court. It seeks an order from the Court for the dispensaries to be closed and vacated, as well as imposing a civil fine of $1,000 for each day that they failed to obey the Cease and Desist Orders.
As of today, the Tribe’s Compliance Office has reported another three (3) dispensaries have illegally opened without obtaining a tribal license. As a result, they have been served with Cease and Desist Orders and, if the dispensary owners fail to comply, the Tribe will be filing similar Complaints and Motions for Injunctions against those businesses.
CANADA: Canopy Growth Corporation and The Supreme Cannabis Company, Inc. are pleased to announce that they have entered into a definitive arrangement agreement under which Canopy will acquire all of Supreme Cannabis’ issued and outstanding common shares in a transaction valued at approximately $435 million on a fully-diluted basis.
Under the terms of the Arrangement Agreement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share (the “Exchange Ratio”) and $0.0001 in cash in exchange for each Supreme Cannabis Share held. The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the Toronto Stock Exchange (the “TSX”) as of April 7, 2021.
The Transaction is expected to provide several benefits to both Canopy and Supreme Cannabis shareholders. Notably, following completion of the acquisition, Canopy will possess a strengthened brand portfolio including one of Canada’s leading premium brands, 7ACRES. Brand growth is anticipated with distribution supported by Canopy’s robust sales and distribution network as well as superior consumer insights and R&D capabilities. In addition to receiving a market premium, Supreme Cannabis shareholders will also benefit from Canopy’s US CBD business and conditional positioning for continued exposure to the US market expansion. Further value will be derived through the scalable Kincardine, Ontario production facility, which has a demonstrated record of producing premium flower at low cost.
Key Transaction Highlights
- Solidifies Canopy’s leadership position in the Canadian recreational market, well-positioned for growth: The Transaction combines Canopy’s preeminent position with Supreme Cannabis’ Top-10 position in Canada to create a pro forma Canadian recreational market share of 6%(1), including 7ACRES holding Canada’s number one premium flower brand position, number one in PAX vapes, and Top-5 in pre-rolled joints(2).
- Combined pro forma market share estimated to be 23.3% of the premium flower segment in Ontario and 21.4% in British Columbia(3).
- Adds premium brands to Canopy’s portfolio: The addition of Supreme Cannabis’ premium brands, 7ACRES and 7ACRES Craft Collective, complement Canopy’s current consumer offering and will strengthen Canopy’s brand portfolio, with both brands expected to continue to grow with further investment and expansion. Supreme Cannabis’ Blissco and Truverra brands also add breadth to Canopy’s market presence in both the recreational and medical markets.
- Brings a premium, low-cost and scalable cultivation facility to Canopy’s production capabilities: Supreme Cannabis’ hybrid-greenhouse cultivation facility at Kincardine, Ontario has a demonstrated capability of consistently producing premium flower from sought-after strains at low cost with significant potential for scaling.
- Secures an immediate attractive premium for Supreme Cannabis shareholders: The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the TSX as of April 7, 2021.
- Participation by Supreme Cannabis shareholders in the future of Canopy: The Supreme Cannabis shareholders will receive Canopy common shares pursuant to the Transaction and will have access to Canopy’s consumer insights, advanced R&D and innovation capabilities as well as the opportunity to participate in the future growth of the US market based on the Company’s conditional positioning for rapid market entry. Post-Transaction, Canopy’s industry-leading balance sheet and cash position of approximately $2.5 billion positions the company for further expansion and product development.
- Opportunity to achieve potential cost synergies estimated at approximately $30mm within two-years: Canopy anticipates post-Transaction cost synergy opportunities across both cost of goods sold and sales, general and administrative expenses, as it optimizes and integrates Supreme’s operations and shared services.
“As we continue to expand our leading brand portfolio, we’re excited to reach more consumers through Supreme’s premium brands and high-quality products, further solidifying Canopy’s market leadership,” said David Klein, Chief Executive Officer of Canopy. “Supreme’s deep commitment to superior genetics, top-tier cultivation and strict quality control, paired with Canopy’s leading consumer insights, advanced R&D and innovation capabilities, is expected to create a powerful combination that aligns with our strategic focus to generate growth with premium quality products across key categories.”
“This transaction is a testament to the value created by all the teams at Supreme and will be beneficial to all of our stakeholders,” added Beena Goldenberg, President and CEO of Supreme Cannabis. “We have been successful at delivering great products that achieved strong customer loyalty, and operating at levels of efficiency that are industry-leading. We have also built a highly sought-after premium brand in 7ACRES. Combining Supreme Cannabis with Canopy – a Canadian market leader with exposure to the United States – presents a significant value creation opportunity for both companies. We look forward to working with Canopy to complete this transaction.”
The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of at least two-thirds of the votes cast by the shareholders of Supreme Cannabis voting at a special meeting of shareholders to consider the Transaction expected to be held in June 2021. Canopy has entered into voting support agreements with certain of Supreme Cannabis’ directors and officers pursuant to which they have agreed, among other things, to vote their Supreme Cannabis Shares in favour of the Transaction.
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals including, but not limited to, TSX approval and approval under the Competition Act (Canada) and the satisfaction of certain other closing conditions customary in transactions of this nature. The Arrangement Agreement includes customary provisions, including non-solicitation, “fiduciary out” and “right to match” provisions as well as a termination fee of $12.5 million payable by Supreme Cannabis to Canopy in certain specified circumstances.
Assuming timely receipt of all necessary court, shareholder, regulatory and other third-party approvals and the satisfaction of all other conditions, closing of the Transaction is expected to occur by end of June 2021.
A full description of the Transaction will be set forth in the management information circular of Supreme Cannabis (the “Circular”), which will be mailed to Supreme Cannabis shareholders and filed with the Canadian securities regulators on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.
Approvals and Recommendation
The Transaction was approved by the board of directors of each of Canopy and Supreme Cannabis, and Supreme Cannabis’ board of directors recommends that Supreme Cannabis shareholders vote in favour of the Transaction.
Each of BMO Capital Markets and Hyperion Capital provided the Supreme Cannabis Board of Directors with an opinion, dated April 7, 2021, to the effect that, as of the date of such opinion, the consideration payable pursuant to the Transaction is fair, from a financial point of view, to the Supreme Cannabis shareholders, in each case, based upon and subject to the respective assumptions, limitations, qualifications and other matters set forth in such opinions.
None of the securities to be issued pursuant to the Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issuable in the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Advisors and Counsel
Cassels Brock & Blackwell LLP is acting as strategic and legal advisor to Canopy.
BMO Capital Markets is acting as exclusive financial advisor to Supreme Cannabis and provided a fairness opinion to the Supreme Cannabis board of directors. Hyperion Capital Inc. provided an independent fairness opinion to the board of directors of Supreme Cannabis. Borden Ladner Gervais LLP is acting as legal counsel to Supreme Cannabis.
- Source: Provincial Boards; Headset Note: This market share data differs from Canopy’s internal market share data provided during Canopy’s previous earnings calls due to different methodologies and time periods. Market share data represents 01-Oct-20 through latest available data: Provincial Board data for ON online, PEI, NS (27/28-Mar-21) and NB (17-Mar-21); and Headset data for ON retail (28-Feb-21) and AB, BC and SK (31-Mar-21).
- Market share data represents 01-Oct-20 through latest available data: Provincial Board data for ON online, PEI, NS (27/28-Mar-21) and NB (17-Mar-21); and Headset data for ON retail (28-Feb-21) and AB, BC and SK (31-Mar-21).
- Internal Canopy Growth management estimate.
To view the Investor Relations Presentation click here.
Concern grows about easy access to intoxicants at neighborhood convenience stores
OREGON: The Oregon Liquor Control Commission has initiated rule making for Delta-8-THC and other psychoactive components of hemp and marijuana that currently fall outside the adult-use cannabis market’s system of testing and labeling. At their regular monthly meeting on March 18, 2021, Commissioners expressed concern about the general availability of this unregulated intoxicating product. The Commission also approved three stipulated settlements for violations committed by OLCC recreational marijuana licensees.
Delta-8-THC has recently emerged for sale nationwide, including in the supply chain of the OLCC recreational marijuana market, as well as in unregulated brick and mortar convenience stores and internet websites. Delta-8-THC is present in marijuana, but the OLCC only regulates Delta-9-THC produced in marijuana. When consumed by humans Delta-8-THC produces an effect (“high”) similar to Delta-9-THC.
Delta-8-THC can also be created from hemp, which is regulated under the federal Farm Bill of 2018. Typically, hemp-derived Delta-8-THC is converted from CBD through a chemical process, which also produces a large proportion – as high as 30 – 50% – of unknown byproducts. Delta-8-THC created from hemp can be found in food products and sprayed on hemp flower.
Delta-8-THC isn’t addressed in Oregon statutes, isn’t included in Oregon Health Authority marijuana concentration limits, and there’s no testing for the Delta-8-THC or the by-products included in its chemical conversion. But Delta-8 products are currently widely available for purchase outside the OLCC adult-use market, even by children.
“When this was brought to my attention alarm bells went off in my head,” said Paul Rosenbaum, OLCC Commission Chair. “You have minors going into grocery stores and they understand very well what this is all about. And let me tell you, if there’s a way to find it, people will do it.”
OLCC’s proposed rule-making would only address the presence of Delta-8-THC and other artificially-derived cannabinoids in products grown, manufactured and sold in Oregon’s recreational marijuana market. But for OLCC and the Oregon Department of Agriculture to take effective action on total THC measurement and tamp down the availability of such products to minors, legislative action is required.
“We don’t have sufficient authority over total THC in Oregon,” said Steve Marks, OLCC Executive Director. “But until we get that and ability to do final product testing to help get these things into the right markets where they’re supposed to be, either in the unregulated hemp CBD market or into our market it’s going to be hard.”
Marks observed that all states are facing the issue of how to regulate Delta-8-THC, but that Oregon is at the forefront in addressing it. Regulatory gaps do remain surrounding the broader issue of intoxicating hemp cannabinoid products in the general marketplace that can be legally sold to minors, and who should be responsible for regulating those products.
“Unregulated hemp has no final product testing,” said Marks. “They only test for Delta-9 in the field. You can’t regulate what you don’t test for. We’re talking about two species of the same plant. And that means that federal and state regulators need to harmonize their oversight of this plant, and work towards across-the-board testing of marijuana and hemp products designed for human consumption before they enter the marketplace.”
The House General Government Committee of the Oregon Legislature is expected to take up the Delta-8-THC issue at a public hearing on Thursday, March 25, where it could consider legislation ensuring that all intoxicating THC products, properly tested and labeled, are sold within the OLCC regulated system and also ban the sale of currently non-regulated Delta-8-THC products to minors under age 21.
STONEY ONLY PORTLAND will surrender its recreational marijuana retailer licenseon the date the sale/transfer of the business is completed, or by 12:00 PM on June 16, 2021, whichever is earlier for two violations.
Licensee is: Stoney Only Portland, LLC; Joseph Babb, Member; Ragna TenEyck, Member; Michael Mullins, Member.
HERB N’ SPRAWL will pay a $4,950 fine and serve a two-day recreational marijuana producer license suspension OR serve a 32-day license suspension for one violation.
Licensees are: Prairie Song Organics, LLC; Yotokko Kilpatrick, Member; Rick Saga, Member.
DEEP ROOTS CANNABIS in Springfield will pay a fine of $3,465 OR serve a 21-day recreational marijuana wholesaler license suspension for one violation.
Licensees are: Premier Concepts, LLC; Mary Jane Wilson, Member; Susie Polen, Member; Braden Smith, Manager.
DISTRICT OF COLUMBIA: Today, U.S. Representatives Earl Blumenauer (D-OR) and Barbara Lee (D-CA), co-chairs of the Congressional Cannabis Caucus, led 35 lawmakers in urging President Joe Biden to use executive clemency to pardon individuals convicted of federal cannabis offenses.
“Until the day that Congress sends you a marijuana reform bill to sign, you have a unique ability to lead on criminal justice reform and provide immediate relief to thousands of Americans,” the lawmakers wrote in a letter sent to the president. “We urge you to grant executive clemency for all non-violent cannabis offenders.”
The lawmakers stressed that discriminatory cannabis policies have perpetuated systemic racism in America for decades, citing a 2020 report issued by the ACLU that found that Black people are 3.64 times more likely than white people to be arrested for marijuana possession, despite comparable usage rates.
“During your previous tenure at the White House, President Obama understood that decades of harsh and discriminatory federal drug laws unfairly trapped minority individuals and communities in cycles of despair. That is why he used the tools of justice to grant clemency for 1,927 individuals convicted of federal crimes,” the lawmakers continued. “Your Administration has the power to expand on end this legacy and issue a general pardon to all former federal, non-violent cannabis offenders in the U.S and trigger resentencing for all those who remain federally incarcerated on non-violent, cannabis-only offenses for activity now legal under state laws.”
In their letter to President Biden Thursday, the lawmakers also noted that their request is not a partisan issue. Every president since George H.W. Bush has exercised their pardoning power for cannabis offenses.
This push from lawmakers comes after Americans in five more states voted overwhelmingly to liberalize their cannabis policies during the November elections and the U.S. House of Representatives took the historic step of passing the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act in December.
“President Biden’s leadership on issuing pardons to nonviolent federal marijuana offenders would demonstrate a down payment on his campaign promise to prioritize criminal justice reform and similarly inspire similar justice-oriented actions in a non-partisan fashion around the country,” said NORML Political Director Justin Strekal. “Shortly after President Biden’s election, the House of Representatives voted to end the federal prohibition of marijuana. Now in a new legislative session, President Biden should follow their lead and move to immediately provide relief to those who continue to suffer from a criminal record for a nonviolent federal marijuana offense. We are tremendously grateful for the leadership of the Cannabis Caucus, particularly Representatives Barbara Lee and Earl Blumenauer, as they tirelessly lead this ongoing but hopefully soon to be finished fight for marijuana justice nationwide.”
In addition to Blumenauer and Lee, the letter was signed by House Judiciary Committee Chairman Jerry Nadler and Reps. Nydia Velázquez, Adriano Espaillat, Bonnie Watson Coleman, James McGovern, Jan Schakowsky, Jesús “Chuy” García, Eleanor Holmes Norton, Rashida Tlaib, Danny K. Davis, Alan Lowenthal, Alcee Hastings, David Trone, Mark Pocan, Carolyn Maloney, Peter Welch, Dwight Evans, Ilhan Omar, Ayanna Pressley, Jared Huffman, Pramila Jayapal, Ed Perlmutter, Mondaire Jones, Zoe Lofgren, Ro Khanna, J. Luis Correa, Brenda Lawrence, Charlie Crist, Dean Phillips, Jamaal Bowman, Steven Horsford, Henry “Hank” Johnson, Jake Auchincloss, Raúl Grijalva, and Alexandria Ocasio-Cortez.
A PDF copy of the letter is available here.
ALABAMA: The Alabama Department of Agriculture and Industries (ADAI) will accept hemp applications from eligible growers and processors/handlers, using a new online application system starting, October 13, 2020. Applications will be available at agi.alabama.gov/hempapp at 9:00 am, Tuesday, October 13, 2020. The final day to apply for a hemp license is November 30, 2020 by 5:00 pm (CST).
In 2016, the Alabama Legislature passed the Alabama Industrial Hemp Research Program Act, Section 2-8-380 Code of Alabama 1975, tasking ADAI with the development of a licensing and inspection program for the production of industrial hemp. The program launched in 2019, after The Agriculture Improvement Act of 2018 (i.e. Farm Bill) declassified hemp as a schedule I drug and deemed hemp as an agriculture commodity. This legislation defines hemp as all parts of the plant containing less than 0.3% THC, including derivatives, extracts, and cannabinoids.
“As the hemp industry continues to grow in Alabama, critical research data is being collected and evaluated,” said Commissioner of Agriculture and Industries Rick Pate. “This is the department’s third year to administer the hemp program. It has always been our goal to manage the program in a fair and timely manner to benefit Alabama farmers and hemp producers and develop industrial hemp as an alternative crop.”
The 2021 university/college affiliation license application information will be forthcoming before the first week in November 2020.
For more information and updates, please visit agi.alabama.gov/hempapp. ADAI will receive Industrial Hemp applications until 5:00 pm (CST) on November 30, 2020.
URUGUAY: It’s been just over a year since Uruguay‘s President Jose Mujica signed a law creating the world’s first nationalized market for the cultivation, sale and consumption of marijuana.
The implementation of this historic law was part of a landmark year for cannabis. Recreational pot stores opened in Colorado and Washington State, while three other US states voted to approve sweeping pro-marijuana legislation. And back in South America, a middle-age housewife in Chile received possibly the region’s first legal medical marijuana prescription.
But along with the successes of Uruguay’s weed experiment are some notable hold-ups.
For starters, a year into the new paradigm, it’s still impossible to buy marijuana legally here. To date, the government still hasn’t chosen the companies that will grow its cannabis. A new president, taking office in March, who formerly has been skeptical of marijuana use will inherit much of the hard work of implementing the law.