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It was another whirlwind week in the cannabis sector. We’ll help you sort through all of it with this newsletter.
First up, Canadian marijuana producer CannTrust’s woes continue. The company’s board fired CEO Peter Aceto „with cause” and forced Eric Paul, the company’s president and founder, to resign on Thursday evening.
That was after more reporting came to light this week about just how deep the rot went. After The Globe and Mail obtained emails showing that Aceto and Paul were aware of the cannabis growing in unlicensed rooms, The Financial Post followed up with a story that showed Aceto standing in front of a room where illegal cannabis was growing in a promotional video for the company.
On the US side of the border, the FDA fired a warning shot at Curaleaf — now arguably the world’s most valuable cannabis retailer — just days after it consummated its latest near-billion dollar deal.
According to the FDA, Curaleaf was marketing its CBD products as drugs with specific claims that the products could treat anxiety, opioid withdrawal, and even cancer and Alzheimer’s disease.
It’s not yet clear what the FDA’s intent with the letter was. It could be a quick fix on Curaleaf’s part to the copy on their labels and website. Or, it could be a sign of a larger-scale crackdown on CBD products until the FDA develops clear rules guiding the industry.
Curaleaf responded on Friday, saying it removed all the statements the FDA had highlighted.
In any case, the episode brings up an old debate about the CBD products we know and increasingly love. Are they dietary supplements? Are they drugs? Or maybe somewhere in between?
We should have a better answer in the coming months, as the head of the FDA’s working group on CBD, Amy Abernethy, told the Senate in a hearing on Thursday that they’d issue a status update sometime in the fall.
More stories from around the BI newsroom:
Cannabis policy is a hot top among DC lawmakers, and it’s increasingly becoming front-and-center in the 2020 Democratic primary. All of the top-ticket candidates have released plans, or at least outlines of plans, for how they’d approach the issue.
This week alone:
- Sen. Kamala Harris introduced a new bill to decriminalize marijuana at the federal level (The MORE Act). The bill would also require federal courts to expunge or resentence prior pot convictions.
- Sen. Bob Menendez and a bipartisan group including Sens. Rand Paul, Kevin Cramer, and Jeff Merkley introduced The CLAIM Act, which would ensure state-regulated cannabis businesses have access to insurance.
- The Senate held a hearing on Thursday about hemp and CBD.
- The Senate Banking Committee also held a hearing on the SAFE Banking Act, which would allow state-regulated cannabis businesses to access basic banking services like making deposits and opening checking accounts.
Supporters and cannabis reform advocates are most excited about how Sen. Harris’s bill would create an Opportunity Trust Fund by levying a 5% sales tax on THC products. The fund will include three grant programs aimed at boosting the participation of minorities and economically disadvantaged groups in the booming industry.
I also listened in on a press call with House Reps. Barbara Lee and Earl Blumenauer and a number of pro-cannabis reform advocates where they cheered on Sen. Harris’s bill. Lee and Blumenauer co-chair the Congressional Cannabis Caucus.
Beyond that, the fact that the Senate Banking Committee held a cannabis hearing at all was notable. The committee’s chairman, Sen. Mike Crapo, is generally regarded as an opponent to cannabis reform. But he did engage with the hearing in good faith, and told reporters afterward that it’s an „important” issue „we need to get right.”
Sen. Crapo’s spokesperson later told The Idaho Press that „holding a hearing doesn’t equal support.”
A leading global ad holding network is launching a cannabis consultancy, hoping to bring in $10 million in its first year
This one’s from our own Tanya Dua, who’s on the ad beat here at BI:
- French ad holding network Havas is launching Havas ECS, a consulting arm centered on cannabis and cannabinoids.
- Its aim is to help pharmaceutical, health and wellness companies navigate cannabinoid medicine through research, training, education, and advisory services.
- The goal is to bring in at least $10 million in revenue in its first year, Jeff Hoffman, Havas Health & You’s chief development officer told Tanya.
We’ve closely tracked the „normalization” of the cannabis industry over the past few months. Havas’s move is yet another step in that direction, as big law firms, bulge bracket banks, and consultancies build out practices to chase down the emerging industry.
Capital raises, M&A activity, partnerships, and launches
- Harvest Health & Recreation hires Michael L. Aguirre as assistant general counsel. Aguirre previously spent 14 years at the law firm Greenberg Traurig.
- CBD brand Kadenwood LLC adds former Surgeon General Richard Carmona to its advisory board.
- AYR Strategies, a new US cannabis company, promotes Mark Pitchford to Chief Development Officer. Pitchford previously served as AYR’s head of cultivation.
- US cannabis investment bank Viridian Capital Advisors adds Keith Levy to its board. Levy previously served as Mars Wrigley, Royal Canin, and Anheuser-Busch.
- Cannabis law firm Vicente Sederberg LLP opened an office in New York City, and added Elliot Choi, previously at Friedman Kaplan Seiler & Adelman LLP and Skadden to its M&A team. It also added Jennifer M. Cabrera, previously at Skadden, Arps, Slate, Meagher & Flom LLP to its litigation and arbitration team.
- Acreage Holdings added Laurence Wolf as SVP of Manufacturing and Distribution. He’ll report directly to Acreage’s COO.
Stories from around the web
Did I miss anything? Have a tip? Just want to chat? Send me a note at email@example.com or find me on twitter @jfberke