Leafly Staff lives and breathes strains and products. Find out which ones were our favorites in 2022, and make sure to grab them in 2023!
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The New Jersey Economic Development Authority (NJEDA) last week announced the creation of a grant program to help small businesses with the costs associated with launching an enterprise in the state’s regulated cannabis industry. Known as the Cannabis Equity Grant Program, the new initiative will distribute up to $10 million in grants, with the majority earmarked for social equity applicants.
The new grant program was approved by a unanimous vote by the NJEDA board at its monthly meeting last week. In a statement, New Jersey Governor Phil Murphy said the grants will help level the playing field for entrepreneurs from underserved communities to participate in the new economy for recreational marijuana, which was legalized following the passage of a statewide referendum in 2020.
“My Administration is doubling its efforts to cultivate small businesses in burgeoning industries with massive untapped potential,” said Murphy. “The establishment of the Cannabis Equity Grant Program will help aspiring small business owners meet start-up expenses in a pivotal sector within our state’s ever-growing economy. Most importantly, the program will erode considerable barriers to access for communities of color, which this program will help to equip with the resources they need to not just enter, but thrive, in this exciting new industry.”
The program authorizes up to $10 million in grants to small businesses, including $6 million reserved for cannabis social equity applicants, such as those with past convictions for cannabis-related offenses and residents of economically disadvantaged areas. The pilot grant program was authorized by legislation sponsored by Senate President Nicholas Scutari and Assembly Budget Committee Chairwoman Eliana Pintor Marin and signed into law by Murphy in June.
“This program can have a positive impact by supporting diversity in New Jersey’s cannabis industry during its formative stages,” Scutari said in a statement. “As the market continues its successful growth, these grants will help provide more opportunities to a greater number of operators in a larger number of communities to participate.”
Up to $6 million in grants will be awarded to businesses granted conditional operating licenses from the state’s Cannabis Regulatory Commission (CRC) that are located in economically disadvantaged areas and plan to hire 50 or fewer employees. The grants of up to $250,000 can be used by businesses formed after March 2020 in designated impact zones to help cover the start-up costs of launching a licensed cannabis company, including rent, utilities, wages, and regulatory fees.
“The Governor and Legislature made a commitment that the cannabis market would be accessible to women and minority entrepreneurs,” said Assemblywoman Verlina Reynolds-Jackson. “The cannabis market is meant to be a boon for equity, but we are finding that for some people the cost of entry is too high. It is our hope that this grant program will help to begin leveling the playing field. We want to ensure that those most impacted by the war on drugs and our underserved communities have the opportunity to be a part of the process.”
The impact zones are defined by the CRC as areas with zip codes that meet specified socioeconomic criteria including poverty and unemployment levels and were heavily impacted by arrests for marijuana offenses. Entrepreneurs awarded the grants will also participate in technical assistance and business education courses provided by the NJEDA. Businesses located in impact zones that apply for the grants can have the $1,000 application fee waived.
“Part of the impetus for passing legislation for legalization was recognition that the prohibition of cannabis has, for decades, disproportionately and negatively affected young people in Black and Latino communities,” said Senator Nellie Pou. “As Chair of the Legislative Latino Caucus, I am heartened to see NJEDA launch this Cannabis Equity Grant Program to help financially with start-up costs for new businesses in those very communities that have been so adversely affected. This is one more important piece of the social equity contract that remains at the heart of cannabis legalization in New Jersey.”
The remaining $4 million in grant funding will be made available to all business entities that have secured a site for the enterprise and been awarded municipal approval, which are both requirements that must be met to apply for an annual license from the CRC. The application window for the grants will be open for 180 days following the launch of the program, according to state officials.
“We realize how important it is to empower cannabis businesses, many of which have faced barriers to accessing financial capital in the past,” said NJEDA Chief Community Development Officer Tai Cooper. “Communities that suffered unfairly during the criminalization of cannabis need the chance to benefit from new entrepreneurial opportunities created by cannabis legalization and regulated sales. We want to see these opportunities extended to those businesses that will help fill storefronts, warehouses, and other commercial properties that closed their doors during the pandemic and bring new jobs to communities where there is the greatest need.”
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In the month of December, brands usually choose to activate during the highly popular Art Basel week in Miami. But the hottest cannabis buzzing in the street right now, Gumbo Brands, and chart-topping hip-hop artist Moneybagg Yo, waited for the dust to settle to celebrate the announcement of their partnership for Bagg’s new Gumbo strain “Shot Off Gumbo.” In a more intimate affair, they shut down the Black-owned restaurant, Playa Miami, for about 50 guests including a few celebrity friends of the brand, Caresha of The City Girls, Amber Rose, N.O.R.E. Moneybagg Yo, label mates, tastemakers, media, and the Founders of the Gumbo Brands Karim Butler and Alexis Major themselves.
The amount of dripped-out ice in the room for such a small amount of guests was astonishingly mind-boggling. Wall-to-wall bling-off! If you’ve never been to a Gumbo event, let me warn you, they like to do everything big for the culture. The drinks were flowing with a full open bar… definitely shots of 1942 were being passed frivolously around the tables. The food was incredibly amazing. I suggest anyone in the Miami Beach area or planning to visit to make a reservation immediately… highly recommend the mouth-watering lamb chops, calamari bites and the yummy mac & cheese. Thank me later! The vibe and the networking was on one thousand, especially with DJ Wrecky who totally kept the hype going while mixing in a healthy amount of Bagg’s hottest hits all night. By the end of the event no one wanted to leave, they literally had to turn the lights on. Every guest was gifted the signature Gumbo pens and plenty of gas to go around.
Not only did Gumbo show Moneybagg Yo major love at the announcement dinner, but they also gifted him a 150 carat chain with VS diamonds and a 90 carat VS diamond watch, which is one of 18 in the world, from Pristine jewelers. The Black-owned cannabis and lifestyle brand has been buzzing like crazy in the streets, especially gaining more attention with their collaborations with today’s hottest in entertainment including Meek Mill, Lil Meech, N.O.R.E., Fabolous, and brand sponsor for viral podcast, Drink Champs.
The “Shot Off Gumbo” strain will be a Hybrid with an earthy sweet pine undertone and euphoric and stoney experience under the Gumbo Brands Umbrella.
Gumbo Brands is a revolutionary new cannabis and lifestyle company, founded by the Black-owned entrepreneurial power-couple, Karim Butler and Alexis Major. Unlike some of the corporate brands that swoop in and try to take advantage of cultural equity in this industry, Gumbo Brands’ major focus is making a difference, building wealth, and sharing knowledge within the Black and Brown communities. Black ownership accounts for only 4.3% of all cannabis businesses. This couple is breaking down that barrier by bringing more people within the community into the cannabis business and giving them the resources and career opportunities to succeed. Gumbo Brands is utilizing creative cultural initiatives in this space to encourage entrepreneurship while also supporting racial justice outcomes and inclusion, including working with the formerly incarcerated to gain licenses, who oftentimes don’t have the financial means or proper information to secure one.
Gumbo is currently a leading brand in the cannabis space and sold at top dispensaries across the nation, and on its way to global expansion with their products, which includes flower, G-pens, exclusive merch, and lifestyle products. They recently announced a partnership with the global empire Cookies that will give the brand access to 22 states and 15 countries as the cannabis takeover grows within legalized areas of the world. If you’re looking to get your hands on some of this new cannabis strain, be sure to check out www.thegumboshop.com.
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Way back in Spring of 2021, we ran a series on the New York’s Marijuana Regulation and Taxation Act, which legalized adult-use cannabis in New York and established the framework for adult-use cannabis licensing. That series of posts covered everything from the available license types to the MRTA’s real estate requirements.
In keeping with our recent tradition, this post will start our series of posts on New York’s adult-use cannabis rules and regulation. The official document is 282 pages, so we won’t cover every detail. But we will highlight the big-ticket items, significant issues that all applicants should be aware of, and the license application process as a whole.
For anyone considering applying for an adult-use license, we reiterate our recommendation of hiring an experienced cannabis attorney. And at a minimum, understanding the overall framework of the licenses and the licensing process should be a precursor an in-depth consultation on a license application. Here are the topics you can look forward to:
Given the complexity of the regulations, there may be some overlap and some deviations. We’ll also be diving into the nuances in the regulations in our promised series of webinars starting in January of 2023 (details to come!).
As all of our readers are aware (we assume), on November 21, 2022, the Cannabis Control Board (CCB) released almost all of the adult-use rules and regulations. The rules and regulations were published in the New York State Register on December 13, 2022, starting a 60-day public comment period.
Playing out the timelines (and as we’ve noted), we anticipate the license application window to open in the Spring of 2023. Which means now is the time to start actually putting together the information for a license application. Stay tuned for the next post in our series on New York’s adult-use cannabis rules and regulations, and for updates on upcoming webinars!
The post New York’s Adult-Use Cannabis Rules and Regulations: The Series appeared first on Harris Bricken Sliwoski LLP.
Detroit officials on Thursday issued nearly three dozen licenses for retail adult-use cannabis shops, more than four years after Michigan voters approved a measure to legalize recreational marijuana in the state.
The licenses were issued after U.S. District Court Judge Bernard Friedman on Wednesday morning denied a request to postpone the issuing of cannabis retailer licenses. The judge’s decision was made in a lawsuit challenging Detroit’s licensing regulations, which include provisions to encourage ownership in the regulated marijuana industry by local residents and those harmed by decades of marijuana prohibition.
“Our goal from the day voters approved the sale of adult-use marijuana was to make sure we had a city ordinance and a process in place that provides fair and equitable access to these licenses and the courts have affirmed that we’ve done just that,” Detroit Mayor Mike Duggan said in a statement on Thursday.
Following the approval of a 2018 statewide ballot measure to legalize adult-use cannabis, licensed sales of recreational marijuana began in some Michigan cities in December 2019. An ordinance to regulate adult-use cannabis sales was passed in Detroit last year, but legal challenges led a federal judge to rule that the measure was “likely unconstitutional.”
An amended ordinance was subsequently unveiled by the city council in February. A lawsuit was filed again, with plaintiffs arguing that the city’s cannabis ordinance unfairly favored longtime residents. The Plaintiffs in the case had asked Friedman to pause the licensing process while the case was decided, but the judge denied that request on Wednesday.
“I am thankful for Judge Friedman’s wisdom in ruling today against the Temporary Restraining Order that would have again prevented Detroit from moving forward with our current Adult-Use Marijuana Ordinance,” Council President Pro-Tem James Tate said about the judge’s decision.
“We make sure we do the right thing,” Tate, who led the drafting of the ordinance, said at a press conference Thursday morning. “I’ve always said — and I’ve been told — if you do the right thing, everything will work out. It may not happen exactly when you want it to or not always how you want it to, but eventually, it’ll work out.”
The city issued a total of 33 licenses for adult-use cannabis retailers on Thursday. Twenty of the licenses were issued to so-called social equity applicants, including people who live in communities that have been disproportionately impacted by marijuana prohibition policies and those with certified Detroit legacy status who currently live in Detroit or another disproportionately impacted community. The remaining 13 licenses for cannabis retailers issued on Thursday were awarded to non-equity businesses.
A total of 90 applications were received by the city for the 60 adult-use cannabis retailer licenses available in the first round of dispensary licensing, but city officials said that only 33 of the applicants met the requirements for the highly coveted permits. The city also received several licenses for cannabis microbusinesses and consumption lounges, but regulators have not yet issued those types of licenses. Detroit regulators began issuing licenses for cannabis growers and processors in April.
“The recreational marijuana industry has tremendous potential to generate wealth in income for our city, as well as personal and generational wealth for those who participate,” said Detroit Deputy Mayor Todd Bettison.
City leaders plan to hold at least two more rounds of retail cannabis dispensary licensing, with the next round opening as soon as next month with city council approval, according to Anthony Zander, director of Detroit’s Department of Civil Rights, Inclusion and Opportunity. The city will award up to 30 additional retail licenses, 20 microbusiness licenses and 20 consumption lounge licenses in the next round.
Although the federal judge decided against putting a halt to issuing the first adult-use dispensary licenses, Tate said the city should be prepared for more legal action.
“By no means is the so-called battle over,” he said. “We’ve already been told that we’re going to get sued again. We know that’s the nature of this game.”
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Only, unlike the rest of those shackled in servitude, I’d venture to say that my job probably doesn’t suck nearly as bad. I am a freelance writer, the smut and weed correspondent for various national publications across the country, including this one. There’s no one at the office where I work to hassle me if I show up late, walk around without pants or use the crapper eight times before 9 am. In other words, I am the king of the castle. This also means that I am fully responsible for the whole damn kingdom: Rent, bills, and any legal matters that may come up, that’s all on me, pal. Nobody is going to swoop in and save the day if I happen to get caught in a jam.
Don’t get me wrong, though. There are plenty of perks to the job. Free weed is one of them. Public relations agencies are always sending me the latest, greatest pot products in hopes that I’ll give them a rave review. I get a slew of packages every week. It’s like Christmas all year round. Sometimes it’s a brand-spanking new, expensive smoking device—not yet released to the public—other times it’s CBD, and often enough it’s marijuana. While this might seem like a pretty sweet deal to most people, all of this complimentary cannabis can actually cause a bit of a problem on my end. For starters, I live in the prohibition state of Indiana—getting caught with a small amount can lead to thousands of dollars in fines and jail time. It’s also a federal drug offense to get cannabis through the U.S. mail, a felony, so Uncle Sam could bend me over big time.
But when I sat down at my desk last Thursday morning, I didn’t anticipate any such trouble. With the holidays rapidly approaching, my only concern was getting all my assignments turned in before my editors shut down their emails and took the rest of the year off. So, without a moment to waste, I sucked back a lethal dose of caffeine and started typing.
As with most writers, I tend to get distracted. In between thoughts, I sometimes jump on social media and see what’s going on in the world. One of the pages I follow is this independent news watchdog based in my hometown that monitors local scanner traffic and reports incidents in real time. It’s usually a lot of “shots fired,” crackheads taking dumps in public, and unruly McDonald’s customers, that sort of thing. It’s more entertainment than news. But as I scanned the page, something interesting caught my attention. The most recent post reported that the local police department was en route to FedEx to investigate a package containing marijuana. At first, I didn’t think anything of it, other than “Oh man, somebody is in deep shit.” But then, it hit me.
What if the person the package was addressed to was me!
“Yikes,” I thought, sending the link over to my significant other to gauge her reaction.
“Is it possible they’re coming for me?” I asked.
“Yes,” she replied. “Definitely.”
It was conceivable that I was the one in deep shit.
The situation, as most of you might imagine, had me on high alert. If police showed up at my office waving a search warrant around, I was inevitably going to jail, and fast. There’s enough weed in this place (from all of those public relations packages) to get me jammed up in the criminal courts for a long time. Let’s see, there’s flower, concentrates, edibles, you name it; it’s in my possession. I could start a small dispensary if this writing gig doesn’t pan out. Those bastard cops would storm in here on a mission to find pot and pot they would find. I’d be sitting in a police cruiser within five minutes of answering the door, en route to the Vanderburgh County jail to spend a very long weekend camping out with petty miscreants and alleged murders. I’d have to make up some ridiculous story, too, on why I was arrested to keep the ruffians from trying to steal my blanket. Considering all the violence and madness that has erupted lately in the United States, pot offenses just aren’t respected in the slammer like the old days.
I’d surely be fighting in a cell, in court come Monday and probably for years to come as I paid steep fines, enduring drug classes and everything else the system would put me through to teach me a lesson. My anxiety was through the roof. I mean, I’ve been to jail enough times to know that it’s no place for me. So, the thought of police standing around a FedEx warehouse looking down at a package containing marijuana with the name MIKE ADAMS branded as the recipient, marked with an address that would lead them straight to me, did not give me an easy feeling. The jig was up. I always knew there’d come a time when I’d either have to flee the country or kill myself to escape one of the buried indiscretions of my past. I just didn’t think that day would come so soon. What should I do? What would I do? I was, as far as I could tell, a sitting duck.
But I wasn’t going to just sit around and wait for the cops to show up and have their way with me. I’d been there before. I knew if they did in fact discover a package of marijuana at the FedEx with my name on it, a search warrant would take time. I just wasn’t sure how much convincing a judge would need to sign off on it. Working in my favor was the fact that the cops didn’t know that I knew they were onto me. I had been tipped off. So, for an indeterminate amount of time, I still had the upper hand. With that in mind, I was going to make sure that if those fuckers came a knocking, they were going to have to work damn hard to bust me. I had time to dig myself out of a hole that a dimwitted public relations agent had tossed me in. It wasn’t like I was getting any work done anyway. Although I typically don’t suffer from writer’s block, it has a way of striking when all you can ponder is that a convoy of police cars and SWAT trucks are hauling ass toward you with loaded weapons. Thinking they might just kick down the door when they arrived, I quit writing and did my darndest to formulate a plan to avoid being detained.
Cue the Mission Impossible theme song, now!
I packed up all the pot in the office into a large box and began to think about all the places I could hide it. My office is in a building with several other companies. So, while I considered stashing it in the utility closet down the hall, that probably wasn’t the best option. The cleaning lady could find it and either claim it for herself or call the cops. I couldn’t risk luring them any closer than they already were. I even thought about pushing away the tiles in the ceiling somewhere in the building and storing the box up there. But that was probably one of the first places the cops would look. And if they got the dogs involved, I was screwed no matter what. They’d be howling like they just reached Pablo Escobar’s house as soon as they pulled up in the parking lot. Nope, if I was going to survive the day, that is avoid arrest, stay out of jail and make it home for dinner, getting the weed as far away from my office as possible was the only way to go.
I moved on to phase two of Operation: Deep Shit.
I tossed the box in the trunk of my car, but not without first scanning the parking lot to make sure police didn’t have me under surveillance. I then peeled out of there, on a hell-or-highwater quest to take back the freedom that had presumably been ripped from me. My plan was a simple one. Park along the side of the road near my house—a mile away from my office—walk back and play dumb. That way when the cops showed up flashing a search warrant, I wouldn’t have a panic attack and they wouldn’t find jack shit. But I had to get it there first. My nerves were already rattled, so I, as much as I tried not to, was driving like someone with something to hide.
If I passed a cop, the look in my eyes was going to tell him that I either had a body in the trunk or was traveling with a big old box of pot. All of my attempts to act casual were failing miserably. I stopped twice at a green light; used the wrong turn signal to go left; drove slower than the elderly, and even swerved like I had just left the bar drunk to avoid hitting a squirrel. Nope, I would never make it as a drug smuggler. I did, however, make it to my destination. I seriously considered lighting the car on fire before hoofing it back to the office, but I thought that may be a bit overkill. I didn’t need an arson charge on top of the one I was going to get for drug trafficking. Of course, on the walk back to my impending doom, my mind was spinning. I was overwhelmed with all of the possible scenarios that could arise even though I was a step ahead.
The cops were probably going to inquire as to the whereabouts of my car. They would surely want my home address too. If they came up empty handed at the office—and they were going to—their next move, aside from bending me over the desk and strapping on some latex gloves to see if my colon contained any weed or weapons, might be to raid the house. Cops hate to fail and if there’s any chance they can spend the day busting someone for a drug-related offense rather than dangerous, violent criminals, that’s what they’ll do. What was going to prove problematic for them was the search warrant. It would only be for my office address. They’d have to get another one with the location of my home on it, if they had any intention of ripping apart my underwear drawer. That was a detail I would just have to deal with when the time came.
For the moment, I took solace in knowing that there wouldn’t be any illegal substances in my office if and when the cops started poking around. Still, all the time I was running around town trying to avoid getting locked up, I couldn’t help but think, why am I the one out here trying to throw the police off my trail like Joe Pesci in Casino, when these public relations firms are the ones responsible for sending me weed? Why was I suddenly at risk of jail when these companies put the weed in the mail? The cops were gunning for the wrong guy. I was innocent! Rather than continue wallowing in paranoia, I decided to pick up the phone and call cannabis law attorney Aaron Pelley with Seattle-based firm Cultivia Law. Aaron’s been getting real-deal cannabis outlaws out of trouble for years. If anyone was going to help stop the cops from crawling up my sphincter, it was him. His advice: If the postmaster calls, or if the cops show up at the office door, don’t say a word. As long as the sender or recipient doesn’t fess up, they have no case.
“They can’t do anything or prove anything if you don’t fucking talk,” Pelley told me. “So, all you have to do is shut up. It’s not a complicated situation because they can’t prove that you knew or should have known cannabis was coming to you. There’s been some situations where they’ve put cameras in the package so they can see the person open it. So fucking what? I don’t know where people get the idea that that would somehow implicate that you knew or should have known cannabis was being shipped. I suppose after you open it, if you say ‘awesome, they sent me the weed I asked for,’ but none of that ever actually happens. I’ve had people shipping basketball sized amounts of weed and getting it intercepted. And as long as everybody didn’t respond to anyone, including the senders, nothing ever happened. They can’t necessarily prove the sender sent it and they don’t want to go through the trouble of pulling video footage for prosecutors.”
Although sending and receiving weed through the mail is a federal offense, Pelley says Uncle Sam rarely gets involved. He’s only known one incident where they sent in the hounds, and it was for a four-foot-tall pallet of weed. As for the local cops looking to get a pot bust, “nobody is home,” Pelley asserts. “Local cops want headlines. But it’s a federal crime that has mandatory minimums. Prison time,” he continued. “That said, if people don’t respond to the communications (from the postmaster or the police), the burden of proof is quite heavy, and the interest is quite low.”
For the next two days, I still remained a little paranoid. Those bastards were going to show up any moment and at least try to give me that cannabis colonoscopy, I just knew it. It wasn’t until the following Sunday that I stumbled across a news article from one of my local television stations showing that $180,000 worth of marijuana (90 pounds) was found in my hometown. It had been shipped from California to Evansville, and a woman named Hua Hou was in custody. It was her, not me they were after. They got their headline. After being scared shitless for days, I found some semblance of relief knowing that someone else other than me was shacking up with blanket-thieving felons. But if what Pelley said was true, I began to ponder, and the interest is low, why was this woman arrested? “Ninety pounds is a lot of weed,” he said. “I suspect that she picked up the packages and got busted, and then she probably sung,” Pelley added, saying that she would have had a leg to stand on if she had just lawyered up and stayed quiet.
Point blank, police need someone to talk.
“Even if it’s true that you didn’t have any idea that weed was coming, you don’t have control of the narrative,” Pelley explained. “The cop can write down anything he wants. If the only thing a cop can write down is that they exercised their right to remain silent and asked for an attorney, they’ll have to figure out their evidence from there. As soon as you shut up, their job becomes infinitely harder to prove or say that you had something to do with it. But it gets a lot easier as soon as you start talking.”
As for me, I wasn’t saying shit!
Still, I felt I was deserving of restitution for pain and suffering. Perhaps the public relations firms owed me a stack of cash for nearly becoming the scapegoat for their dipshitery. The whole affair must have sawed five years off my life. I now have PTSD: Postal Traumatic Stress Disorder. I’ll have to ask Aaron about a lawsuit. So, please, for the last time, stop sending me pot through the mail (wink, wink, nudge, nudge). And if you do—again, don’t—make it a reasonable amount.
“They’re not looking for one ounce of weed,” Pelley demands.
The post Stop Sending Me Weed Through the Mail appeared first on High Times.
Welcome to the seventh annual “State of the State” post on Oregon cannabis. For the first year since program launch, regulated cannabis sales fell in the state. We also saw significant legislative and regulatory changes, further contraction of the hemp industry and a myriad of interesting odds and ends. Overall, it has been a rocky ride (see: Tough Times in Oregon Cannabis). Let’s get to it.
Last year at this time, I observed that sales had begun to decline, notwithstanding the record high of $1.184 billion that Oregon clocked in 2021. For 2022, based on Oregon Liquor and Cannabis Commission (OLCC) sales data through November, we are projected to land slightly under $1 billion. Pandemic and stimulus tailwinds are well in the rearview: it seems that near-term growth may be limited to select SKUs and product categories. Today, about half of all sales are flower, followed by: 25% in concentrate/extract; 13% edible/tincture; 5% inhalable; then “miscellaneous” categories.
In addition to decreased volume, prices are through the floor. We have been sitting at a median of $600 per wholesale per pound for the past few months. That’s a big dip from $900 per wholesale pound in December 2021. A sizable pullback in the recent “Croptober” harvest hasn’t made a discernable pricing impact yet (Oregon went from 4.4 million wet pounds harvested in 2021, to just 3.1 million this year per OLCC).
Overall, wholesale pricing today is as low as we’ve seen in the regulated market, including at the nadir following the crash of 2018. The pain isn’t limited to flower: in the extract/concentrate category, we sit at $4,356 median wholesale per pound as of November 30; that’s down from $4,990 in November of 2021. Retail pricing has generally followed these trendlines.
It may be no consolation, but what we’re seeing today in Oregon is endemic to regulated cannabis jurisdictions nationwide. Other than pain points arising directly from federal illegality (e.g. financial services headaches; tax burden), problems include: oversupply, unregulated competition, a generalized lack of consumer responsiveness to lower pricing, and even macroeconomic factors like higher gas prices. All of that said, it could always be worse. see Colorado.
There is a silver of hope. Economists predict that even without the possibility of usage-rate growth, sales will increase as Oregon’s population, income and spending grow. Also, existing operators will be shielded for the foreseeable future from an increase in the number of competing, local businesses (more on that below).
Quite a few businesses are struggling and others have failed. In many ways, the environment feels like four years ago when everyone was simply trying to hang on, and/or put together deals without any money. Here in the Portland office, our cannabis litigation team has handled a series of disputes around business upheaval — including big wins — for those who can actually afford to litigate.
For buyers, opportunities abound. Certain public companies are still out there poking around, usually offering a mix of cash and debt for distressed but attractive brands; or sometimes cash and convertible debt (typically parent company stock). Many of these are essentially offers on the come with low closing prospects. Most transactions are smaller, though, and M&A activity is not as robust as the last few years. Naked license “sales” may be the largest category of deal right now, though the new license moratorium (see below) has not levered prices higher from what we are seeing.
A few of the bigger operators in the state continue to grow. Nectar Markets is the largest outfit with 640 employees (39 stores); followed by Chalice Brands with 293 employees and Wyld with 209 employees. We’ve heard scuttlebutt from clients about changes in product sourcing and pricing strategies by some of the heavyweights, which has made life tough for smaller suppliers. Whether or not that is accurate, it’s probably inevitable.
Seven years into regulated, adult use cannabis, Oregon’s program remains as dynamic as ever from a regulatory perspective. In 2022, we saw a greater number of significant legislative and administrative changes — actual, pending and proposed — than at any point since early days of the program.
Below is my list of highlights (or lowlights, depending on where you sit):
And then there are all of the changes within OLCC, on everything from policies to personnel.
As to policy, the Commission hardened its approach with respect to rules violators, starting with “change of ownership” requests in the context of alleged violations, and extending through settlement negotiations more generally. The Commission also has worked to address its lack of responsiveness and organization around public records requests. Elsewhere, it is rolling out a new licensing or “case management” platform, which our licensing paralegal will test in beta this January with a handful of invitees. And it caught up completely on business sale transactions: all of our buyers have been assigned investigators within a few days of applying since late summer.
As per usual, the Commission will continue to talk with the legislature and other agencies on matters of concern leading into the 2023 legislative session. Legislative Day is January 17th. One desire of OLCC, OHA, the Oregon Department of Agriculture, and even industry, is for a state-run “reference” lab, to assist with resting and research methodologies. This recommendation was first made in a Secretary of State audit back in 2019, but appears to have gained momentum with the new testing rules and THC “mislabeled products” issues mentioned above.
Finally, expect to see a fairly large compliance bulletin sometime this week, related to the permanent administrative order enacting multiple rule changes, filed by OLCC on November 21. (We already saw a smaller bulletin on a select portion of this order, covering drive thru and delivery rules, on December 16th.)
On the personnel side, we saw staffing shuffles at the Commission highlighted by Danica Foster rejoining the Commission as its Rules, Policy and Public Records Advisor; and Jason Hanson vacating the Director of Compliance chair (this key position will remain unfilled momentarily). We also saw a number of changes within the Administrative Hearings Division and up and down the Commission; too many to list here.
Not much is moving. Oregon issued 285 hemp grower licenses in 2022, a precipitous drop from the heyday of 1,961 in 2019. Registered grow sites plummeted even further over that period, from 6,040 to just 282. In spite of it all, Oregon is still a hemp leader on the national stage. Last year, the Oregon crop was valued at $235 million in USDA’s National Hemp Report; California was a distant second at $61.5 million.
The continued downward trend can’t last forever. Congress is scheduled to renew the Farm Bill in 2023. Changes on the table include everything from raising the “hemp threshold” from 0.3% THC to 1.0% THC, to addressing regulation of intoxicating cannabinoids derived from hemp. Another big driver will be the continued adoption of hemp-based textiles and building materials. Even though Oregon hemp has slowed dramatically, expect the state to remain at the fore if and when the trend reverses.
We’ve seen some interesting activity around the edges, which I’d be remiss to leave off:
Let me know in the comments if you think I missed anything worth mentioning, or shoot me an email. There is always something. In the meantime, here’s hoping for better times for Oregon cannabis in 2023.
For previous posts in this series, check out the following:
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