Large LPs Lead Canadian Cannabis Stocks Lower by Nearly 10% in July – New Cannabis Ventures


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After breaking a three-month losing streak with a 1% gain in June, the Canadian Cannabis LP Index fell sharply in July, declining 9.8% to  324.18:

The index, which fell 30.1% in 2020 to end at 275.16, is up 13.6% over the past year and 17.8% year-to-date in 2021:

It remains substantially below the all-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. In March 2020, it posted a new 52-week closing low of 196.10, a level not seen since late 2016, and it closed 65.3% above that level at the end of July:

The Canadian Cannabis LP Index, which is rebalanced monthly, included 38 qualifying publicly traded licensed producers that traded in Canada at the end of June, with equal weighting for each stock. Each of the members was also included in a sub-index, with 3 in the Canadian Cannabis LP Tier 1 Index, 15 in the Canadian Cannabis LP Tier 2 Index and 20 in the Canadian Cannabis LP Tier 3 Index during the month. At the end of June 2020, we revised the rules for inclusion, requiring companies to have a price of at least C$0.20 unless they are generating at least C$2.5 million quarterly from their cannabis production operation. Previously, we required revenue in excess of C$1 million for stocks trading below C$0.20. There are currently about two dozen publicly traded LPs that fail to qualify.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$25 million per quarter, fell 20.6% to 558.85 in July. Tier 1, which dropped 23.9% in 2020 when it ended at 488.96, has rallied 14.3% in 2021. We have increased the minimum revenue required to be included over time. At the beginning of 2021, we raised it from C$20 million. During 2019 and the first half of 2020, companies needed to generate revenue in excess of C$10 million for inclusion. In 2018, we used C$4 million as the hurdle.

This group included Aurora Cannabis (TSX: ACB) (NASDAQ: ACB), Canopy Growth (TSX: WEED) (NASDAQ: CGC),  and Tilray (TSX: TLRY) (NASDAQ: TLRY).

Among these largest LPs by revenue, Aurora Cannabis was the worst performer at -22%, while Tilray, which fell 18.6%, declined the least.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$5 million and C$25 million, fell 10.0% to 503.90. In 2020, it lost 35.9% in 2020, closing at 365.19, and it is up 38.0% in 2021. Prior to July 2020, companies needed revenue in excess of C$2.5 million to be included in this tier.

This group included 48North (TSXV: NRTH) (OTC: NCNNF), Aleafia Health (TSX: AH) (OTC: ALEAF), Auxly (TSX: XLY) (OTC: CBWTF), Cronos Group (TSX: CRON) (NASDAQ: CRON), Decibel Cannabis (TSXV: DB) (OTC: DBCCF), Delta 9 (TSX: DN) (OTC: DLTNF),  Entourage Health (TSXV: ENTG) (OTC: WDDMF), HEXO Corp (TSX: HEXO) (NYSE: HEXO), Indiva (TSXV: NDVA) (OTC: NDVAF) MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSX: OGI) (NASDAQ: OGI),  The Green Organic Dutchman (CSE: TGOD) (OTC: TGODF), Valens Company (TSX: VLNS) (OTC: VLNCF), Village Farms (TSX: VFF) (NASDAQ: VFF) and VIVO Cannabis (TSX: VIVO) (OTC: VVCIF).

The best performer for the third straight month was Decibel Cannabis, which gained 7.8%. The weakest name was HEXO Crop, down 31.3%.

Tier 3

Tier 3, which included the 20 qualifying LPs that generate cannabis-related quarterly sales less than C$5 million, sank 8.0% as it closed at 70.26. It ended at 66.59 in 2020, declining 31.2%, and is up 5.5% in 2021. Pure Extraction Technologies(CSE: PULL) (OTC: PRXTF), which has been heavily promoting its stock, was the strongest performer, gaining 62.5%. The worst performer was Neptune Wellness (TSX: NEPT) (NASDAQ: NEPT), falling 29.9%.

The returns for the overall sector varied greatly, with 4 names posting gains and 6 declining by more than 20%. The entire group posted a median return of -11.0%:

For August, the overall index will have 39 constituents, with the addition of Cannara Biotech (TSXV: LOVE) (OTC: LOVFF) to Tier 2.

In the next monthly review, we will summarize the performance for August and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

Get ahead of the crowd by signing up for 420 Investor, the largest & most comprehensive premium subscription service for cannabis traders and investors since 2013.

Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email


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Lotteries, Licenses and Lawsuits: Attaining Equity in the Cannabis Industry – WTTW News

When recreational marijuana was legalized in Illinois more than a year ago, Gov. J. B. Pritzker’s stated goal was to use the burgeoning cannabis industry to reverse the harm done to primarily Black and brown populations during the war on drugs. 

However, those profiting from pot sales in Illinois have been nearly all white men, a problem Pritzker hoped to fix by awarding social equity dispensary licenses. That effort has been hampered by lawsuits and criticism of the scoring process.

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Pritzker hoped to address some of those problems with House Bill 1443, which he signed into law this week. But Chicago State University cannabis educator Deborah Dillon says the legislation presents new problems.

“I think that the process as it was originally designed, where they were going to be two lotteries — one for the veteran-led teams and one for the non-veteran led teams — was going to be the perfect solution,” Dillon said. “However, as a result of HB1443 it seems that the veteran-led teams have three bites at the apple as opposed to just two since they’ve added a third lottery.”

Richard Wallace is the founder and executive director of Equity and Transformation Chicago, a nonprofit that fights for social and economic equity for Black workers in informal work. He says cannabis equity means not only seeing Black Illinoisans get financial stakes in the cannabis industry — it means fighting for reparations for the war on drugs.

“We are currently organizing two campaigns that I think answer some of the questions that are still not been answered,” Wallace said. “One of them is a guaranteed income pilot project for system-impacted folks. Really to try to predict what are some ways that we can answer the question of how we get direct cash payments to survivors of the war on drugs. … We need to ensure that we center [survivors of the war on drugs] in our policy efforts, and that means acknowledging the gross violations of human rights that occurred during the war on drugs. That means demanding direct cash payment to those who are affected by the war on drugs. And it’s also a commitment to guarantee that the harm won’t occur by reviewing the policies that created the crisis in the first place.”

Dillon adds that part of the process of repairing the damage done by cannabis convictions means offering those affected a path forward.

“I want the public to keep in mind that 500,000 cannabis-only arrest felons, their arrest records were expunged, but there was no provision in HB 1443 that would provide any type of training, any type of job development, any type of assistance to those 500,000 people who were arrested for low-level plan of cannabis possession. I think that that’s reprehensible,” she said.

But Wallace says he is optimistic about the future prospects for equity in the cannabis industry, as long as the state is committed to seeing it through.

“Democracy demands rigor and it has to be an additive process,” he said. “HB 1438 provided a strong foundation. I think what we have to do now is really think about where are the issue areas and then repair those issue areas … folks weren’t around in 2018 when we first got engaged in this campaign. It looked nothing like it did today and I think what we have today was part of the dream … but it’s still far from the North Star. So we have a lot of work to do still.”


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Supporting tiny NM cannabis businesses – Albuquerque Journal

Organtica founder David White stands in the company’s Albuquerque dispensary. White helped found NM Micro Biz to help smaller cannabis producers compete with large out-of-state companies. (Adolphe Pierre-Louis/Journal)

Now that cannabis is legal for recreational use in New Mexico, growers – including large, established medical cannabis producers – are jockeying for market share.

But what about the smaller producers – the mom-and-pop growers trying to break into an industry that some feel has been weighted toward bigger businesses?

A new industry group known as NM Micro Biz just popped up that’s designed to provide smaller medical cannabis producers – so-called “microbusinesses” – with the tools and education they need to succeed in a market that may soon be dominated by bigger companies.

Organtica sales manager Grace White fixes a display of products at the company’s Albuquerque dispensary. (Adolphe Pierre-Louis/Journal)

“We need more local businesses, because the big boys are coming to town,” said Sarah Dolk, an employee at the New Mexico dispensary Organtica and one of the organizers of NM Micro Biz, along with Organtica founder David White.

……………………………………………………….

White told the Journal that the focus will be on creating voluntary collaboration between medical cannabis producers, including offering education and other resources to inexperienced growers for free.

Organtica’s Albuquerque dispensary at 4001 Menaul NE. Company founder David White is helping launch NM Micro Biz, a group designed to prop up microbusinesses trying to get into New Mexico’s fledgling recreational cannabis industry. (Adolphe Pierre-Louis/Journal)

The goal is to create a more level playing field and ensure that the industry won’t be dominated by large producers who prioritize money over the well-being of medical patients, White said.

“Their focus is primarily going to be profits,” he said. “… It’s a siren song that’s very hard for these businesses to ignore.”

When New Mexico lawmakers legalized recreational cannabis, they included a provision designed to open the industry up to smaller, local producers. House Bill 1, signed into law by Gov. Michelle Lujan Grisham in April, allows for microbusinesses to produce smaller amounts of cannabis under less expensive licenses.

Still, White and Dolk said they’re concerned that legalization will lead to an influx of money from large, out-of-state producers who will price out smaller producers and flood the market with cheap, mediocre cannabis, a pattern that they say has played out in other states with recreational cannabis.

“The lure of cheap cannabis is something that is extremely disruptive to the market,” White said.

For White, the priority is making sure there are enough small producers who know what they’re doing to provide an alternative to larger growers. To get there, NM Micro Biz is working to educate newer producers on what to do and not do. Dolk said the organization has worked with about 20 different people, answering questions and offering advice. For growers who haven’t done this much before, Dolk said starting small and not trying to expand too quickly is the name of the game.

“We’re trying to go for the people who have no experience who need our help,” Dolk said.

Dolk added that the organization also has plans to offer free strains and clones to new growers. That way, Dolk said, growers will have access to plants that do well in specific grow conditions quickly, rather than needing to rely on trial and error. Dolk said she wants to create an environment where smaller growers can sell their product to Organtica or other dispensaries in the state.

“We’re just trying to hook people up together,” she said.

Going forward, White said he’d love to see hundreds of microbusinesses flourish in New Mexico, particularly from minority communities that have been disproportionately impacted by the war on drugs. While the organization is focusing on medical cannabis for the time being, White said he expects to move into the recreational arena once the program gets off the ground.

Stephen Hamway covers economic development, health care and tourism for the Journal. He can be reached at shamway@abqjournal.com.



Ancillary Cannabis Stocks Drop 5% in June Despite Surge in One Stock – New Cannabis Ventures


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Following up on our recent discussion of how cannabis investors have embraced publicly traded ancillary companies, New Cannabis Ventures launched its seventh proprietary index, the Ancillary Cannabis Index at the end of March.

After declining 4.6% in April and 2.5% in May, the index rose 3.3% in June. In July, it dipped 5.4% to 90.85, outperforming the overall cannabis sector:

The index has declined 9.2% since its introduction at the end of March:

The Ancillary Cannabis Index includes companies that provide goods and services to cannabis operators. Each qualifying company must trade at a minimum of $0.50 per share  with a minimum average daily trading value of $500K at the time the index is rebalanced each month. Additionally, members of the index must generate at least $1 million per quarter from its ancillary operations.

During July, the index included 15 members, with 3 posting double-digit gains and 8 declining by more than 10%, with a median return of -14.9%:

The three strongest stocks included Agrify (NASDAQ: AGFY), Turning Point Brands (NYSE: TPB) and Innovative Industrial Properties (NYSE: IIPR). Agrify was the leader for the second consecutive month and far outpaced the other members, rising 60.5% and helping to reduce the overall index decline.

The three weakest names during June included iPower (NASDAQ: IPW), KushCo Holdings (OTC: KSHB) and WM Technology (NASDAQ: MAPS). iPower is a recent IPO, while WM Technology went public through the SPAC process. KushCo Holdings was one of the strongest companies in June.

For August,  AgriForce Growing Systems (NASDAQ: AGRI) joins, leaving the index at 16 members. In the next monthly review,  we will summarize the performance for August and discuss any additions or deletions. Be sure to bookmark the page to stay current on ancillary cannabis company stock price movements within the day or from day-to-day.

Get ahead of the crowd by signing up for 420 Investor, the largest & most comprehensive premium subscription service for cannabis traders and investors since 2013.

Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email


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Picking the Right Cannabis Stocks Has Become Increasingly Important – New Cannabis Ventures

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Friends,

Each Friday, we evaluate the price performance of dozens of cannabis stocks by comparing similar companies for subscribers at our premium subscription service, 420 Investor. We discussed this process a bit over a year ago, describing the different sub-sectors that make up the overall cannabis sector.

Today, we break down the market somewhat differently, including 4 tiers of multi-state operators, 3 tiers of ancillary companies, 3 tiers of Canadian licensed producers, Canadian retailers, CBD companies, international operators and biotech companies, for a total of 14 different sub-sectors.

Historically, cannabis stocks have tended to move in unison for the most part, but we suggested last June that we expect returns to vary increasingly from one another, and that has certainly been the case in 2021 thus far.

Since the beginning of Q2, the New Cannabis Ventures Global Cannabis Stock Index has declined by 15.8%, which follows a 41% rally in Q1. While the largest MSOs have returned a similar amount on average since the end of March, the returns have varied greatly, with Green Thumb Industries down just 0.5% but Trulieve down 28%:

Similarly, returns have varied substantially among the second tier of MSOs in terms of revenue, with Harvest benefiting from the Trulieve acquisition:

For the largest Canadian LPs, the returns have varied significantly, with Canopy Growth falling almost twice as much as Cronos Group:

A particularly stark contrast is in the Ancillary-Financial subsector, with Innovative Industrial Properties up 19% but Power REIT down 18%:

While Power REIT has trailed the index slightly and its peers more substantially, it has far outpaced even the best returning CBD company:

We have shared just a few sub-sectors and over only a single time-frame, but the variability of returns is quite apparent looking beyond our examples. Evaluating the year-to-date returns for the largest cannabis companies by market cap further illustrates the point. Of the 14 companies that have a market cap of $2.4 billion or more, only three have outpaced the 18.7% return of the Global Cannabis Stock Index. Of the remaining 11, 7 have positive returns but trail the index, and 4 have actually declined:

These largest 14 companies have lagged the overall market as they have averaged a return of 11% year-to-date, another sign that investors need to focus on stock selection rather than just bet on the largest companies. Smaller companies have provided higher returns in 2021 on average, but picking the right stocks has been important. Being in stocks like GW Pharma and Harvest Health & Recreation prior to the announcements of their acquisition bids certainly has helped provide above-index returns.

The fundamentals and dynamics of the sub-sectors and the stocks within them vary more than ever. Not surprisingly, then, we are seeing variability in stock returns. In our view, cannabis investors are well served to spend time analyzing individual securities rather than taking a more passive approach, such as picking the largest stocks.


Cannabis Stock Research, News and Model Portfolios


Get the facts and be ready for important milestones and catalysts with a subscription to Alan Brochstein’s 420 Investor, the longest running due diligence platform trusted by cannabis investors for over 7 years. The primary goal of 420 Investor is to provide professional, real-time, objective information about the top cannabis companies in the market in order to help investors Capitalize on Cannabis™.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index and the Ancillary Cannabis Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$12.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email


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5 hot new cannabis strains – The Seattle Times

There’s never been a better time to be a consumer of cannabis. From exciting new technology to rapidly expanding availability, enthusiasts have never had more options when shopping for their favorite smoke.

Keeping up with new strains and following trends in genetics can be a full-time job. Below, find a report on some of the most popular strains new to the market this summer.

Strawberry Cookies

As genetics continue to evolve, strains are continuing to become more potent and flavorful. Strawberry Cookies combines the sweet flavors of Animal Cookies with the indica-dominant strawberry fields. The resulting hybrid is a relaxing strain with loads of flavor.

Strawberry Cookies is myrcene-dominant, and users have reported relief from insomnia and anxiety when consuming this strain. While you may have to hunt around, this strain is available in larger recreational markets like Denver and Las Vegas.

Grapefruit Durban

Possibly the hottest strain of the summer, this uplifting sativa combines the classic effects of Durban Poison with the mouthwatering flavors of Grapefruit. While it typically tests in the mid-20s for THC content, some batches have been upward of 30%, making it one of the strongest strains around.

Being sativa-dominant, most users report feeling happy, uplifted and energetic after consuming Grapefruit Durban, making it an ideal strain for daytime use. Consumers east of the Mississippi River will have the most luck coming across this strain, primarily in places like Chicago and Detroit.

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Gorilla OG

Growers have become increasingly proficient in crafting custom strains that check all of the boxes. Gorilla OG is a perfect example of how good they’re getting. By crossing Mango Kush with GG #4, users can have a powerful indica experience with loads of flavor. Recommended for night use, Gorilla OG has a powerful sedative-like effect and can have you glued to your couch after just a few tokes. This strain is widely available and can be found at recreational dispensaries across the country.

(Getty Images)

Glueberry

Another widely available new strain, you’ll have no issue tracking down Glueberry in almost every legal market. This well-balanced hybrid is a cross between Gorilla Glue, OG Kush, and Blueberry. The main flavor profile comes from the Blueberry strain, but you’ll also pick up notes of citrus.

Reported effects vary widely with Glueberry, and how you’ll feel on it is different for each person. Some users reported feeling uplifted and energetic early before the sedative-like effects set in. Because the strain is myrcene-dominant, expecting an indica experience is a safe bet.

Orangeade

Much like a tall glass of lemonade, this strain will be refreshing on a hot day. Made with Tangie and Purple Punch, there aren’t many strains that pack more flavor than Orangeade. This hybrid strain is limonene dominant, and many report feeling energetic and uplifted after consumption.

Widely available in recreational markets, Orangeade typically tests in the high teens for THC content, putting it in the middle of the pack for potency among sativa-dominant strains. If you like to feel your cannabis between your ears, this strain was made for you.

While time-consuming, one of the most exciting things about being a marijuana enthusiast is trying new strains and staying on top of the latest trends. Growers continue to improve techniques and find new ways to select specific traits from each strain to create delicious flavors with potent effects. Pick up one of these new strains on your next dispensary trip to enjoy some of the newest varieties on the market.

Cannabis Weekly is presented by Ionic.

Based in the Pacific Northwest, Ionic is passionate about crafting the finest small-batch cannabis oils and cannabis concentrates. Our pillars of Quality, Responsibility and Respectability are the guiding principles that have inspired the distinctive finish and curated experiences we create.

DISCLAIMER: This product has intoxicating effects and may be habit-forming. Marijuana can impair concentration, coordination, and judgment. Do not operate a vehicle or machinery under the influence of this drug. There may be health risks associated with consumption of this product. For use by adults 21 and older. Keep out of reach of children.

Dude, There Are Sand Flies That Consume Cannabis – JSTOR Daily

The researchers double-checked their molecular analysis tools, and the DNA hadn’t lied: blood-sucking sand flies, collected from across the world, had been munching like mad on marijuana leaves.

This wasn’t in Colorado, California, or Amsterdam. All of the pests were gathered from areas that prohibit cannabis cultivation, including Brazil, Palestine, Ethiopia, Israel, and Kazakhstan. The sand flies, which suck juices from plants but will also drink human blood while carrying offspring, had located and fed on cannabis “despite the apparent ‘absence’ of these plants from most of the field sites,” the researchers wrote. (The exception to the mystery was Kazakhstan, where a native wild strain of cannabis grows.)

Whether they were urban or rural, surrounded by deserts or lush gardens, the sand flies had found marijuana leaves to suck juices from in just about every location. An Israeli kibbutz was the sole place where none of the sand flies analyzed had recently dined on a cannabis plant—and yet a mere ten miles away in the West Bank, two thirds of the sand flies captured had recently visited the forbidden weed.

The finding is a curiosity, but far more importantly, it could inform public health decisions in the tropics and subtropics. The sand flies studied spread leishmaniasis to about a million people annually, a disease of varying severities that people can contract when flies afflicted with a particular parasite bite them to drink their blood. In areas where leishmaniasis is prevalent, insect traps targeting the sand flies could be far more effective if cannabis is used as the bait.

The researchers couldn’t say why sand flies the world over seem so attracted to cannabis. (The study authors consider it unclear, but they write that it seems unlikely that the flies could get a buzz the way humans do from marijuana.) Yet they did note that some cannabinoids have antimicrobial properties. They speculate that consuming the plant’s juices could help neutralize parasites in the sand flies’ guts—including the ones that cause leishmaniasis in humans. If the sand flies are indeed self-medicating their microbiomes with cannabis compounds, it could prove valuable information for alleviating public health issues related to the tiny suckers.


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Just like oat milk and kombucha: Inside the race to sell cannabis beverages – Politico

The universe of cannabis beverages is already large and seems to grow by the day: seltzers, wines, beers, teas, colas, cocktails. Many of the world’s biggest beer companies — Anheuser-Busch InBev, Pabst Brewing Company, Constellation Brands — have invested in cannabis drinks. Craft brewers like Lagunitas Brewing Company in California and Atlanta-based SweetWater Brewing Company are also getting into the business.

And there are some promising signs for the industry.

Most marijuana drinks have negligible calories, and the products pose little risk of a hangover. Cannabis beverage sales in the U.S. are expected to hit $421 million this year — more than double 2019 figures, according to Brightfield Group, which tracks the industry, and double again to nearly $1 billion by 2025. Yet the beverage sector is less than 2 percent of the larger $20 billion legal weed marketplace.

“This is a category that can be moved dramatically if someone can get it right,” said Bethany Gomez, Brightfield’s managing director. “No one’s gotten it right yet.”

But where investors see untold riches rolling in — eight states have backed full legalization either at the ballot box or legislatively just in the last year — there are plenty of policy, social and logistical hurdles.

Many cannabis beverages have traditionally been produced and marketed for their hardcore consumers, packing a THC wallop that would need to be calibrated or risk staggering the casual customer. The price of the drinks is driven up by marijuana’s federal illegality, requiring costly production, bottling and distribution operations to be set up in each state. There is also a more practical challenge: dispensaries don’t typically have refrigerated display cases.

“Would I love to be on the shelf next to Robert Mondavi and other prominent wines? Absolutely,” said Tracey Mason, CEO of House of Saka, which has been selling cannabis wines since 2019 in California and has plans to expand to Michigan and Canada this year. “Do I see that happening in the very near future? No. But I do see cannabis retail outlets dramatically changing and becoming much more beverage friendly.”

Luke Anderson, the co-founder of Cann, which has been selling low-potency THC seltzers with flavors like blood orange cardamom and ginger lemongrass since 2019, argues that a broader embrace of cannabis beverages will occur once consumers get comfortable with the products.

”It’s very similar to oat milk or kombucha in that the biggest thing is consumer education,” Anderson said, noting kombucha sales were only about 1 percent of the beverage market 15 years ago. “Now that’s totally changed, and you can see it dominating the cooler in premium grocery stores everywhere.”

With the spread of marijuana legalization across the country, overall cannabis sales are projected to double in the next four years, topping $40 billion, according to New Frontier Data, an analytics firm that focuses on the cannabis industry.

“The beverage ecosystem presents a phenomenal opportunity for both growth and innovation in the broader cannabis product landscape,” said John Kagia, New Frontier’s chief knowledge officer. “The illicit market doesn’t have the resources or the skills to innovate the way the legal market can.”

Keef Brands is the OG of cannabis beverages. The company started selling 100-milligram THC colas to medical consumers in Boulder, Colo., in 2010. And the company’s product line has evolved over time. In 2014, it introduced a line of 10-milligram drinks aimed at the more casual cannabis consumer.

Keef drinks are now sold in seven states and Puerto Rico, with expansions into Maine, Missouri and Ohio earlier this year. In Colorado and California, the company’s most mature markets, there’s roughly a 50-50 split between sales of low- and high-potency products, according to Keef Brands CEO Travis Tharp.

“One of our biggest things that we always have to combat is the brownie story that everybody seems to have,” Tharp said. “Where people didn’t seem to know how much they took, and then two hours later they took too much and it was a horrible experience.”

Many cannabis beverage proselytizers point to an unlikely nemesis in convincing consumers to try their products: budtenders. The main reason is that dispensary workers are often heavy cannabis consumers devoted to smokable products.

Cann’s Anderson said the company encounters this problem repeatedly when it conducts “secret shopper” tests. Even when the customer says they’re a casual consumer worried about getting too stoned, budtenders still recommend high-potency products nine times out of 10.

But Pedro Fonseca, director of retail for legendary California dispensary chain Harborside, which has four stores in the state, said drinks have become an important part of the product mix, making up about 3.5 to 4 percent of sales in any given month. Lower potency products, in particular, have made inroads with Harborside’s customers in recent years.

“You can bring it to a barbecue and not have to get stoned off your rocker,” Fonseca said. “The stigma doesn’t always come with it like it would if you’re just rolling a blunt and smoking it.”

Producing and distributing beverages is already an expensive endeavor compared to other cannabis products. Complicating matters further, the inability to take marijuana products across state lines means companies have to duplicate their manufacturing infrastructure in each state.

“We’ll never be able to compete milligram for milligram against products like gummy bears,” said Matthew Hawes, founder of Novel Beverage, which has a production facility in Maine and plans to open another one in Massachusetts. “Commercial bottling is really a business that requires scale.”

Anderson, the Cann CEO, is a recent convert to cannabis beverages, who says his breakthrough moment came when he was struggling with his identity as a queer person.

After another night of heavy drinking, he was flattened by a two-day hangover and realized he needed to bring his alcohol consumption under control.

“I cannot have this happen and get in the way of being a productive human,” Anderson recalled thinking of his 30-year-old self.

Soon after, he began working with a close friend to develop the low-THC seltzer products that kicked off Cann. They’re now available in five states with big expansion plans.

“It’s going to be just like gay marriage,” said Anderson, of the growing acceptance of cannabis beverages. “It’s just going to take time for people to just come over the hump on it.”

No hangovers or beer bellies: Cannabis firms try to woo booze drinkers – POLITICO

The universe of cannabis beverages is already large and seems to grow by the day: seltzers, wines, beers, teas, colas, cocktails. Many of the world’s biggest beer companies — Anheuser-Busch InBev, Pabst Brewing Company, Constellation Brands — have invested in cannabis drinks. Craft brewers like Lagunitas Brewing Company in California and Atlanta-based SweetWater Brewing Company are also getting into the business.

And there are some promising signs for the industry.

Most marijuana drinks have negligible calories, and the products pose little risk of a hangover. Cannabis beverage sales in the U.S. are expected to hit $421 million this year — more than double 2019 figures, according to Brightfield Group, which tracks the industry, and double again to nearly $1 billion by 2025. Yet the beverage sector is less than 2 percent of the larger $20 billion legal weed marketplace.

“This is a category that can be moved dramatically if someone can get it right,” said Bethany Gomez, Brightfield’s managing director. “No one’s gotten it right yet.”

But where investors see untold riches rolling in — eight states have backed full legalization either at the ballot box or legislatively just in the last year — there are plenty of policy, social and logistical hurdles.

Many cannabis beverages have traditionally been produced and marketed for their hardcore consumers, packing a THC wallop that would need to be calibrated or risk staggering the casual customer. The price of the drinks is driven up by marijuana’s federal illegality, requiring costly production, bottling and distribution operations to be set up in each state. There is also a more practical challenge: dispensaries don’t typically have refrigerated display cases.

“Would I love to be on the shelf next to Robert Mondavi and other prominent wines? Absolutely,” said Tracey Mason, CEO of House of Saka, which has been selling cannabis wines since 2019 in California and has plans to expand to Michigan and Canada this year. “Do I see that happening in the very near future? No. But I do see cannabis retail outlets dramatically changing and becoming much more beverage friendly.”

Luke Anderson, the co-founder of Cann, which has been selling low-potency THC seltzers with flavors like blood orange cardamom and ginger lemongrass since 2019, argues that a broader embrace of cannabis beverages will occur once consumers get comfortable with the products.

”It’s very similar to oat milk or kombucha in that the biggest thing is consumer education,” Anderson said, noting kombucha sales were only about 1 percent of the beverage market 15 years ago. “Now that’s totally changed, and you can see it dominating the cooler in premium grocery stores everywhere.”

With the spread of marijuana legalization across the country, overall cannabis sales are projected to double in the next four years, topping $40 billion, according to New Frontier Data, an analytics firm that focuses on the cannabis industry.

“The beverage ecosystem presents a phenomenal opportunity for both growth and innovation in the broader cannabis product landscape,” said John Kagia, New Frontier’s chief knowledge officer. “The illicit market doesn’t have the resources or the skills to innovate the way the legal market can.”

Keef Brands is the OG of cannabis beverages. The company started selling 100-milligram THC colas to medical consumers in Boulder, Colo., in 2010. And the company’s product line has evolved over time. In 2014, it introduced a line of 10-milligram drinks aimed at the more casual cannabis consumer.

Keef drinks are now sold in seven states and Puerto Rico, with expansions into Maine, Missouri and Ohio earlier this year. In Colorado and California, the company’s most mature markets, there’s roughly a 50-50 split between sales of low- and high-potency products, according to Keef Brands CEO Travis Tharp.

“One of our biggest things that we always have to combat is the brownie story that everybody seems to have,” Tharp said. “Where people didn’t seem to know how much they took, and then two hours later they took too much and it was a horrible experience.”

Many cannabis beverage proselytizers point to an unlikely nemesis in convincing consumers to try their products: budtenders. The main reason is that dispensary workers are often heavy cannabis consumers devoted to smokable products.

Cann’s Anderson said the company encounters this problem repeatedly when it conducts “secret shopper” tests. Even when the customer says they’re a casual consumer worried about getting too stoned, budtenders still recommend high-potency products nine times out of 10.

But Pedro Fonseca, director of retail for legendary California dispensary chain Harborside, which has four stores in the state, said drinks have become an important part of the product mix, making up about 3.5 to 4 percent of sales in any given month. Lower potency products, in particular, have made inroads with Harborside’s customers in recent years.

“You can bring it to a barbecue and not have to get stoned off your rocker,” Fonseca said. “The stigma doesn’t always come with it like it would if you’re just rolling a blunt and smoking it.”

Producing and distributing beverages is already an expensive endeavor compared to other cannabis products. Complicating matters further, the inability to take marijuana products across state lines means companies have to duplicate their manufacturing infrastructure in each state.

“We’ll never be able to compete milligram for milligram against products like gummy bears,” said Matthew Hawes, founder of Novel Beverage, which has a production facility in Maine and plans to open another one in Massachusetts. “Commercial bottling is really a business that requires scale.”

Anderson, the Cann CEO, is a recent convert to cannabis beverages, who says his breakthrough moment came when he was struggling with his identity as a queer person.

After another night of heavy drinking, he was flattened by a two-day hangover and realized he needed to bring his alcohol consumption under control.

“I cannot have this happen and get in the way of being a productive human,” Anderson recalled thinking of his 30-year-old self.

Soon after, he began working with a close friend to develop the low-THC seltzer products that kicked off Cann. They’re now available in five states with big expansion plans.

“It’s going to be just like gay marriage,” said Anderson, of the growing acceptance of cannabis beverages. “It’s just going to take time for people to just come over the hump on it.”