California’s cannabis legalization strategy has failed to knock out the state’s entrenched black market cannabis sales, and countless consumers are still turning to illicit California dispensaries.
High taxes and the presence of black market dispensaries are cutting into the projected tax revenues for California’s cannabis industry. In a state that was promised billions in tax revenue, the latest projections fall considerably short of expectations. “A projected windfall of tax revenue was a major selling point for legal cannabis in California,” reported the Los Angeles Times. According to the latest state budget documents, California is now expecting a US$223 million shortfall in cannabis tax revenue through June 2020.
Industry insiders are attributing the loss in projected revenue to high taxes and strict licensing regulations that failed to incentivize consumers to turn away from black market sources.
“That’s the thing about California,” said Tom Adams, Managing Director at BDS Analytics. “It was the most loosely regulated medical market ever, and turned into one of the most tightly regulated adult-use markets ever, and the highest-cost adult-use regulatory regimes, so you saw the market shrink in its first year.”
What’s sustaining California’s illegal cannabis market?
Much of California’s black market blues can be traced back to the high tax rates imposed by state regulators and local municipalities on cannabis products. The lack of licensed retail stores has made matters worse, providing black market operators with an opportunity to compete based on convenience.
Under California’s new cannabis tax scheme, consumers are paying as much as 45 percent in taxes on their cannabis purchases. That includes a 15 percent excise tax on recreational and medical cannabis sales and a cultivation tax on growers that amounts to US$9.25 per ounce of flower or US$2.75 per ounce of leaves. In addition, local municipalities can tack on taxes of 5 to 15 percent on sales and cultivation. With noticeably higher price tags, legal cannabis retailers are finding themselves increasingly undercut by a thriving black market as consumers look for cheaper, more readily available products.
“The fact is consumers don’t know that they’re going to an illegal store. They don’t know who has licenses and who doesn’t, so consumers are being duped into going into illegal dispensaries because the pricing is cheaper,” Corey Mangold, CEO of Orchid Ventures (CSE:ORCD,OTC Pink:ORVRF), told the Investing News Network (INN). Orchid’s premium vape brand has developed a loyal consumer following, with its product lines currently sold in more than 250 dispensaries across California and Oregon. The company has expansion plans targeting Nevada, Washington, Michigan, Florida and Massachusetts.
Municipalities refusing cannabis retail licenses are placing another strain on growth in the legal market. For comparison, consider the cannabis retail landscape in Colorado. California’s population size is six times that of Colorado, which has 562 licensed cannabis stores to California’s 620 licensed stores. Consumers in California’s underserved areas inevitably turn to black-market retail shops, which are estimated to number more than 1,000 in Los Angeles alone. Many of these stores were legal before the new legislation came into effect and they have not yet complied with the new licensing regulations in an effort to avoid the taxes and higher costs faced by licensed cannabis stores. These illegal stores are now flying under the radar and undercutting legal dispensaries with lower prices.
California dispensary struggles
The inability to displace the black market could have negative consequences not only for the legal cannabis industry in California, but the entire country. The fact that the state is raking in far less revenue than expected from recreational cannabis sales may dissuade other states from taking the plunge into legal cannabis, ultimately stalling projected growth in the overall US legal cannabis market.
Across the United States, total recreational cannabis sales in 2018 increased by 16 percent to US$9.8 billion, according to a report by BDS Analytics and Arcview Market Research, compared to the 35 percent growth that occurred from 2013 to 2017. “The main reason for the slowdown was the troubled launch of adult-use sales in California on January 1, 2018,” said the report. This slowdown in growth can have a ripple effect throughout all levels of the industry.
“The black market hurts the industry in many ways, the first of which is financial,” said Mangold. “The legal cannabis industry is backed by institutional and private investors that have sunk billions of dollars into the sector. When consumers purchase from the black market, that money goes to companies that are not paying taxes or offering employees livable wages and health benefits. Secondly, purchasing cheaper cannabis products from black market sources can come at a cost to consumer safety. Black market products aren’t tested for pesticides or residual solvents, both of which can be extremely harmful and even fatal.”
Under California law, all cannabis products, such as flower, concentrates and edibles, must undergo strict consumer safety testing by independent labs. Illegal products sold at unlicensed dispensaries are unlikely to have been tested by state standards and could be tainted with mold, pesticides, heavy metals and even fecal matter.
“When you buy flower from legal cannabis growers you know it is pesticide and heavy metal free and of the highest quality,” Paul Chow, co-founder and director of vertically integrated cannabis company Next Green Wave (CSE:NGW,OTCQX:NXGWF), told INN. “Everything is tested and you can see for yourself the breakdown of every plant, including the harvest and shelf dates.”
Licensed cannabis companies have raised concerns to state officials about threats to consumer safety and loss of revenue to illegal dispensaries, along with what they see as a perceived lack of action against the illicit cannabis trade.
Legal cannabis expected to survive
In late June, California launched a three year, US$1.7 million public information campaign known as “Get #weedwise” in an effort to encourage cannabis consumers to purchase safety-tested products from licensed sources. Bureau of Cannabis Control Chief Lori Ajax said, “(The campaign) will directly impact consumer safety by clarifying that only cannabis purchased from licensed retailers has met the state’s safety standards.”
The campaign includes ads on social media sites and billboards driving home the point that illegal cannabis products pose a risk to health and safety. “Do you know what’s hiding in your counterfeit edibles?” asks one ad. “Does your oil have something to hide?” reads another. The ads also include a call to action for cannabis consumers to visit the state’s online database, CApotcheck.com, where they can make a quick check to ensure they are shopping at a licensed dispensary.
Supporting legal retailers and keeping their products out of unlicensed shops is one way California cannabis brands can differentiate themselves and gain an advantage in this evolving marketplace. “Many of the major brands can be found inside the illegal stores,” said Mangold. Orchid Ventures’ vaporizers and premium cannabis oils are not among those products sold in illegal shops. “Those companies that take the moral high ground and don’t sell into the black market will ultimately gain the respect of legal retail outlets, government officials and agencies, and eventually the consumer. Enabling the black market doesn’t benefit an industry that’s trying desperately to erase the past of prohibition.”
The California Bureau of Cannabis Control’s “Get #weedwise” campaign is a part of a larger effort to send a message to black-market stores and growers that if they continue to sidestep state law, they will be shut down. Agency spokesman Alex Traverso says the state’s plan to fight the proliferation of black market cannabis includes enforcing cannabis regulations via shutdowns of illegal stores and grow operations, and expediting business license applications for those that opt to go the legal route.
California has not seen the billion-dollar cannabis bonanza its budget office anticipated, but the demand is there. The recreational market is still in its infancy and the road to a more mature industry has involved some significant obstacles. As the state’s leaders get more serious about stamping out black market sales, cannabis companies that eschew illicit shops could be better positioned to capture market share in the legal industry.
This article was originally published by the Investing News Network in July 2019.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
Ayurcann Holdings Corp. (CSE: AYUR) (the “Company” or “Ayurcann”) an integrated Canadian extraction company specializing in the processing of cannabis and hemp for the production of oils and various derivative products, announces the granting of stock options and restricted share units.
The Company has announced that it has granted incentive stock options to directors, officers, employees and consultants of the Company to purchase an aggregate of 1,000,100 common shares under the Company’s Stock Option Plan. Each option is exercisable at a price of $0.16 per common share, expires three years from the date of grant and vest six months from the date of the grant.
The Company has also granted restricted share unit grants, pursuant to the Company’s Restricted Share Unit plan, dated April 1, 2021, totaling 1,548,875 to certain eligible participants.
For further information, please contact:
Igal Sudman, Chairman, Chief Executive Officer and Corporate Secretary
Ayurcann Holdings Corp.
About Ayurcann Holdings Corp.:
Ayurcann is a leading post-harvest solution provider with a focus on providing and creating custom processes and pharma grade products for the adult use and medical cannabis industry in Canada. Ayurcann is focused on becoming the partner of choice for leading Canadian cannabis brands by providing best-in-class, proprietary services including ethanol extraction, formulation, product development and custom manufacturing.
Neither the Canadian Securities Exchange nor its Regulation Services Provider have reviewed or accept responsibility for the adequacy or accuracy of this release.
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A planned business merger between two leading cannabis producers hit a small delay this week as a critical vote got moved.
Keep reading to find out more cannabis highlights from the past five days.
Tilray delays critical shareholder meeting
On Thursday (April 15), Tilray (NASDAQ:TLRY) announced it will be postponing its shareholder vote on the fate of its merger with Aphria (NASDAQ:APHA,TSX:APHA). It will take place on April 30 instead of April 16.
Neither cannabis company offered an explanation for the change. Tilray has asked shareholders to participate in this vote regardless of how many shares they may hold. “Tilray stockholders who have not already voted, or wish to change their vote, are strongly encouraged to do so,” the company said.
This news came days after Aphria shareholders overwhelmingly voted in favor of the business transaction, with a total of 99.38 percent of shareholders voting for the deal to continue. Confirmation from Aphria Chairman and CEO Irwin Simon indicated the partnership was en route to being complete.
This past week Aphria also released financial results for the third quarter of its 2021 fiscal year, in which the firm highlights the overall direction of the company with the Tilray deal.
“We expect to have a tremendous runway for long-term sustainable growth as we build upon our existing foundation in Canada and internationally by increasing the scale of our global operations,” Simon said in a statement.
Cannabis retailer celebrates digital trend
Bidding for the piece, named “Non-Fungible Toke“ started at a price of C$4.20. The retailer plans to donate the proceeds to two charities, Second Harvest and Less.
The latter is designed to counter the carbon footprint of blockchain technology, a common criticism drawn against the rise of NFTs and other novel technologies.
As of 11:00 a.m. EST on Friday (April 16), the NFT bid was up to C$169.11.
Cannabis company news
- The Valens Company (TSX:VLNS,OTCQX:VLNCF) issued its financial report for the first quarter of its 2021 fiscal year. In its results, the company highlights a net revenue uptick of 24.7 percent from the previous quarter, resulting in C$20 million for the period.
- Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF) closed a public offering of 5 million subordinate voting shares at a price of C$50 each for total gross proceeds of C$287.5 million. The company celebrated its financial position after an offering in January, which will lead to the pursuit of merger and acquisition targets.
- Australis Capital (CSE:AUSA,OTCQB:AUSAF) appointed Jason Dyck as its new chief science officer and chairman of the firm’s scientific advisory board. Dyck previously served as an executive at Aurora Cannabis (NASDAQ:ACB,TSX:ACB), leading the scientific efforts for the cannabis producer. “I look forward to providing AUSA with advice and direction in its scientific efforts towards bringing innovations to market with immediate and significant commercial appeal,” Dyck said.
- Truss Beverage, a cannabis drinks venture co-owned by Molson Coors Beverage Company (NYSE:TAP,TSX:TPX) and HEXO (NYSE:HEXO,TSX:HEXO), released the details of its new lineup of infused beverages. Six new drinks will become available around the summer and are intended to pair with the season.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Partnerships with Minardi Law , Minorities for Medical Marijuana, CultivatED, and the Georgia Justice Project will include clinics and virtual events across Florida , Georgia , and Massachusetts
Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States announced today a series of expungment clinics located throughout south and central Florida as well as virtual events in Georgia and Massachusetts . The clinics are part of the Company’s celebration of the 50 th anniversary of 420.
During the month of April, Minardi Law has hosted expungment clinics and will be hosting two more as follows:
- Releaf Patient Appreciation Day, April 17 th ( Valrico )
- First Annual 4/20 Event ( St. Petersburg Beach )
At these clinics, an attorney will be present to review records and see if someone is eligible for a sealing or expungment of their records. As part of the events, Trulieve will be helping cover the costs for finger prints, legal fees, and court costs.
Trulieve is working with Minorities for Medical Marijuana (“M4MM”) to host a 4/20 Expungement Clinic, part of M4MM’s Project Clean Slate. This event will take place on Saturday, April 24, 2021 , from 9:30am – 4:30pm at Riviera Beach City Hall. Anyone seeking to take place in this event is required to register in advance at http://trulieve.cc/expungementpreregistration .
In addition, Trulieve is sponsoring the First Friday Series , a weekly virtual event from the Georgia Justice Project to help Georgia citizens with record restrictions, and is also sponsoring the Fellowship Presentation and Expungement Clinic being offered through CultivateEd and GBLS on Friday, April 23 from 3:00pm – 4:00pm . You can register for the Massachusetts expungement clinic in advance here: HTTPS://BIT.LY/2Q655KK
“Our mission as a company has always been to improve people’s lives,” said Trulieve CEO Kim Rivers . “We’ve always been dedicated to improving the communities we call home. Partnering with Minardi Law , Minorities for Medical Marijuana, Georgia Justice Project and CultivatED on these clinics was a simple decision for us; we encourage anyone seeking help with the expungement process to attend one of these clinics in your own state to start the process.”
For more information about Trulieve and the April expungment clinics, please visit www.Trulieve.com .
Trulieve is primarily a vertically integrated “seed-to-sale” company in the U.S. and is the first and largest fully licensed medical cannabis company in the State of Florida . Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve-branded stores (dispensaries) throughout the State of Florida , as well as directly to patients via home delivery. Trulieve also has operations in California , Massachusetts , Connecticut and Pennsylvania. Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL and trades on the OTCQX market under the symbol TCNNF.
To learn more about Trulieve, visit www.Trulieve.com .
SOURCE Trulieve Cannabis Corp.
News Provided by PR Newswire via QuoteMedia
Seth Rogen’s New Cannabis Brand are Now Available at Apothecarium Dispensaries in San Francisco , Berkeley and Capitola
The Apothecarium is offering cannabis from Houseplant, the cannabis lifestyle brand founded by Seth Rogen and Evan Goldberg at its five California dispensaries. The Apothecarium has three San Francisco locations (Castro, SOMA and Marina ) and one each in Berkeley and Capitola (outside of Santa Cruz ).
“With the vast number of dispensaries in California , we put a lot of effort into identifying the right ones that align with Houseplant’s values,” said Seth Rogen , Co-Founder of Houseplant. “The Apothecarium shares the same commitment to creating a strong consumer experience that we pride ourselves on and we are thrilled to bring our three initial strains to their stores in the Bay Area.”
Houseplant is launching with three flower strains, all of which will be available at The Apothecarium, including: Diablo Wind (sativa), Pancake Ice (sativa) and Pink Moon (indica). Like their founder’s groundbreaking film “Pineapple Express”, Houseplant strains are named after weather phenomena. Each strain will be sold in a custom tin.
“We are so proud to be one of the very first dispensaries in California to offer Houseplant to our customers,” said Ryan Hudson , CEO and co-founder of The Apothecarium. “Seth, Evan and everyone at Houseplant love and respect cannabis as much as we do. We simply cannot wait to share their beautiful and delicious flowers with our guests.”
“We’ve been working with the Houseplant team for more than a year and are grateful to have a partner that shares so many of our values, including an emphasis on cannabis education, quality, reform of cannabis laws and beautifully designed, recyclable packaging.”
“Seth has been hands-on during the process, spending time with our store managers to make sure they know the products and how much care has gone into vetting and selecting the best strains. We think our guests are going to love Houseplant.”
About The Apothecarium
The Apothecarium is recognized as one of the nation’s premier cannabis dispensaries, with an emphasis on education via in-depth one-on-one consultations from highly trained cannabis consultants. The company was founded by three first cousins and two family friends in 2011. Our dispensaries are known for providing educational events that are open to the public at no cost — and for welcoming seniors, first-time dispensary visitors, and people with serious medical conditions. The Apothecarium’s flagship San Francisco dispensary was named the best-designed dispensary in the country by Architectural Digest . Patients and customers may order at our dispensaries or online for pickup or delivery at apothecarium.com [apothecarium.com] .
The Apothecarium is committed to giving back to the communities we serve. We have donated more than $400,000 in cash to community groups and nonprofits — plus more than $300,000 worth of in-kind donations.
All Apothecarium dispensaries continue to implement safety measures to protect guests and team members. Protocols include strict social distancing inside and outside the dispensaries, a mask requirement for everyone inside the dispensaries, no contact check-in procedures and ongoing sanitizing throughout the day.
CA Licenses: C10-0000523-LIC; C10-0000522-LIC; C10-0000515-LIC, C10-0000738-LIC, C10-0000706-LIC
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MISSISSAUGA, Ontario TheNewswire – April 16, 2021 Sire Bioscience Inc. (CSE:SIRE) (OTC:BLLXF) (FSE:BR1B) (CNSX:SIRE.CN) (“SIRE” or the “Company”) announces that Brian Nugent has resigned as a member of the Company’s board of directors (the “ Board ”). It has been a pleasure and a blessing to have worked with Brian Nugent over the past few years, his business acumen and tremendous experience will certainly be missed, SIRE wishes him nothing but the best in all his future endeavors.
About Sire Bioscience
SIRE is headquartered in Mississauga, Ontario with its wholly owned subsidiary PLANTFUEL® based in Denver, Colorado. SIRE is managed by a group of successful entrepreneurs who have extensive experience in the areas of consumer-packaged goods, manufacturing, logistics, and distribution. SIRE is a CPG life science company focused on the plant-based foods and supplements industry.
For additional information contact:
Sire Bioscience Inc.
Copyright (c) 2021 TheNewswire – All rights reserved.
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