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Cannabis Briefs for April 30, 2019

April 30, 2019

•Chicago, Illinois-based Cresco Labs saw revenue jump nearly 300% to $43.3 million for its fiscal year ended in December. Adjusted EBITDA swung from a loss in 2017 to $21.7 million for 2018. Cresco operates in seven states, and has plans to enter three more states looking ahead. In addition to Cresco’s recent jump into the California market via its acquisition of Origin House and its Californian subsidiaries, the report noted that the company is on track to open a processing facility in Mendota, California in the second quarter, allowing it “to distribute its full suite of brands across the state.” Cresco’s range includes Rise, Refresh, and Rest lines of cannabis flower, along with a higher-end Reserve tier. It also has Remedi portfolio of products aimed at the medicinal market, as well as Mindy’s Artisanal Edibles.

•Durango, Colorado’s Oh Hi Beverages has launched a new line of cannabis-infused seltzers. The drinks come in four flavors—Lemon Lime, Grapefruit, Pomegranate, and Ginger Basil Limeade—and contain 20-25 calories per can. The flavors contain 10mg of THC—except for Ginger Basil Limeade, which has 5mg THC and 5mg CBD. Oh Hi is currently available for wholesale through LeafLink and individual cans are distributed to recreational dispensaries across the state.

•The Massachusetts Cannabis Control Commission took a preliminary vote on Friday to approve marijuana delivery in the state. The 4-1 decision approves and adopts regulations surrounding delivery licenses that will face a final vote later in the year. As it stands, the plan would create a two-year period in which licenses would be granted exclusively to “economic empowerment applicants” from communities harmed by the war on drugs or members of the state’s social equity program, which provides job training to those communities. At the end of that period, regulators will have the option to extend it or to open delivery licensing to the general population. Deliveries will only be allowed in cities that also allow physical dispensaries as well.

•A number of alcohol and cannabis companies in Canada have formed the Cannabis Beverage Producers Alliance, intending to influence the forthcoming standards for cannabis-infused beverages. The group, led by former Nova Scotia Premier Darrell Dexter, numbers 11 member companies, including Truss Beverages—a joint venture between Molson Coors and Hexo Corp—Hill Street Beverage Co., CanBev, and others. Among their concerns: the ban on producing cannabis beverages in the same facility as other drinks, restrictions on naming or associating cannabis drinks with a parent company’s established alcohol brand, and labeling rules that disallow the use of words like “beer” or “wine” as descriptors. Finalized regulations are expected to be released this summer and implemented no later October 17, one year after Canada legalized sales of cannabis flower and oil.

•Ionic Brands Corp. is set to acquire fellow Washington company Zoots, known for its edibles. Ionic, which specializes in cannabis oils and vaporizers, will pay $855,000 in cash and issue 10.7 million shares on the closure of the transaction. Additionally, Ionic will issue up to 5.35 million common share purchase warrants to the shareholders of Zoots, with an exercise price of C$1.33 per share, exercisable over three years. Zoots forecast revenues of approximately $7.5 million for 2019 and currently distributes its line of THC drops, gummies, energy shots, and hard candies in Washington, Illinois, Colorado, and Massachusetts. As part of Ionic, Zoots will expand into Oregon, California, and Nevada.

•Canopy Growth’s New York hemp extraction complex will sit on a 48-acre property in Kirkwood, New York. The location comes with a 308,000 square-foot facility that will be modified from its previous use in the production of vacuum parts into a cannabinoid-extraction facility with the capability to manufacture consumer products from the raw material. Canopy will begin hiring senior leaders for the industrial park later this year and expects to fill its workforce by mid-2020. Canopy estimates the facility will create hundreds of local jobs. It has also begun working with farms to supply the facility with hemp and will prioritize farms within the state. Canopy intends to invest $100-$150 million in the project.

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