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Welcome to this week's Insider Cannabis.
First off, my interview with Aurora Cannabis CEO Miguel Martin seemed to have struck a chord with readers on social media - many did not appreciate the thought of comparing cannabis to Monsanto, a company that was often a lightning rod for criticism over GMOs and pesticides and their role in our food supply and agricultural economy.
Despite that, the point stands: Cannabis is an agricultural commodity. Growing will shift to more cost-effective strategies as legalization spreads to new jurisdictions.
Whether there will be a cannabis company that ends up looking like Monsanto is a difference of opinion, based on who you talk to. Many artisanal growers don't agree with that and don't want that to happen.
But when the CEO of one of the largest cannabis companies in the world says that's what he expects to see, it's worth listening, whether you agree or not.
Next, Yeji and I spoke with new Tilray CEO Irwin Simon after the long-awaited merger with Aphria closed on Monday.
Simon, a legendary dealmaker in his own right - he was the CEO of Nasdaq-listed health foods and supplements company Hain Celestial - told us that putting together the Tilray-Aphria merger was one of the hardest deals to close in his career.
That's because so many of Tilray and Aphria's shareholders are retail investors who bought stock on platforms like Robinhood and TD Ameritrade, it was really hard to get them to show up to the proxy vote.
"You know, nobody has home phones anymore. No one answers their cell phone to an unknown number. When you mail a proxy to someone's house or apartment, it goes in the garbage," Simon told us when we asked about why the vote was delayed. They've had to come up with new strategies to get around this, like texting shareholders directly, among other ideas.
We'd love to hear from you if this is a problem you've seen at your company. Get in touch with us at jberke@businessinsider.com, and ylee@businessinsider.com.
Last, I'll be moderating a panel with Steve Hawkings, the CEO of the US Cannabis Council and executive director of the
Tune in if you can.
And as always, if you like this newsletter, please share it with your friends, colleagues, boss, spouse, or whoever would also enjoy it.
- Jeremy Berke (@jfberke)
Here's what we wrote about this week:
The CEO of cannabis giant Aurora explains why he's laser focused on plant genetics and predicts a 'Monsanto' of cannabis will emerge
Aurora CEO Miguel Martin said in an interview with us that a 'Monsanto' of cannabis with a deep genetic library will soon emerge. Cannabis consumers are picky, and they want specific tastes, smells, and "highs" from their weed.
Companies with IP and genetics will be able to jump into new markets more easily, Martin said.
Ascend Wellness is the newest cannabis company to go public. Its CEO says its IPO is a sign that the industry is growing up.
Ascend Wellness Holdings, a US cannabis company, began trading on the CSE on Tuesday. CEO Abner Kurtin said in an interview he opted for an IPO over a reverse merger to attract top-tier investors.
He added he wanted to take the 3-year-old company public to have a "currency" for acquisitions.
Pornhub has been in acquisition talks with an investor group led by a Canadian cannabis entrepreneur
Pornhub has been in talks to sell to an investor group led by Chuck Rifici, a former official of Canada's Liberal Party, sources say. It's unclear if Rifici has raised money for the deal or if other investors are involved.
Lawmakers in Canada are going after Pornhub after recent controversies.
2 top cannabis investors say their best advice is to buy stock in cannabis companies held back by a weird rule
If you're looking for an opportunity in cannabis, invest in companies impacted by 280E, top investors said in a webinar hosted by Yeji and myself. 280E is a section of the federal tax code that prevents cannabis companies from deducting regular expenses.
Industry experts say they expect this rule to change - uncorking massive growth and profit potential.
2 cannabis giants have conquered the market using polar opposite strategies. A Wall Street analyst outlines why they're his top picks.
Over the past year, a handful of US cannabis companies have become frontrunners. Curaleaf and Trulieve, both giants in the space, have pursued opposite strategies.
But a top analyst told us they're both poised to succeed if federal legalization happens.
4 New York cannabis companies told us they're planning to ramp up cultivation and prepare for wholesale now that the state has legalized recreational marijuana
New York has legalized cannabis. The cannabis companies currently in New York say they're generally happy with the law. Companies like GTI and Curaleaf told us they're looking to ramp up cultivation to meet demand.
Executive moves
- It's out with the old and in with the new at Tilray, after the long-awaited merger with Aphria closed on Monday, per securities filings. Irwin Simon officially took over as CEO, and he brought much of his executive team from Aphria with him: Carl Merton took over from Michael Kruteck as CFO, and Jon Levin is out as COO - his replacement is yet to be named.
- Greg Engel is stepping down from his role as the CEO of Canadian cannabis producer Organigram. He'll be replaced by Peter Amirault, the board chair, on a day-to-day basis until a new CEO is found.
- Tahir Johnson is joining the nonprofit Marijuana Policy Project as director of social equity and inclusion. Johnson also serves in the same role at the US Cannabis Council, an industry trade group.
Deals, launches, and IPOs
- Tilray and Aphria officially closed their long-awaited merger - first announced in mid-December - after a delayed vote and some consternation that the deal wasn't going to get over the finish line.
- Ascend Wellness Holdings went public on the CSE on Tuesday, raising $80 million in the process. We spoke to CEO Abner Kurtin about why he went the IPO route, and how it's a sign of the industry growing up.
- Poseidon Asset Management is launching a $50 million fund to invest in seed-stage cannabis companies.
- Canadian cannabis company High Tide is acquiring FABCBD, a US CBD brand, for $20.64 million with a three-year option to acquire the remaining 20% of FABCBD at any time.
- Embattled cannabis tech company MassRoots is buying Empire Services Inc., which operates 10 metal recycling facilities in Virginia and North Carolina, in a $14 million stock deal.
- Cannabis data company Headset raised $1.825 million led by Silverleaf Venture Partners to fuel expansion into new states.
Earnings roundup
- Cronos Group released its fiscal Q1 results on Friday morning, reporting $12.6 million in net revenue and a $37 million EBITDA loss.
- Next week, we'll have a busy week of earnings (deep breath): Curaleaf, Charlotte's Web, Acreage Holdings, MedMen, Trulieve, Sundial Growers, Aleafia Health, Village Farms, and Aurora Cannabis are set to report next week. We'll be talking to a good chunk of the companies and listening in on the calls where we can - look out for our takeaways next week.
Policy moves
- Rep. Peter Meijer and Rep. Lou Correa last Friday reintroduced the VA Medicinal Cannabis Research Act of 2021, which would allow the VA to perform clinical trials with medicinal cannabis. Sen. Jon Tester and Sen. Dan Sullivan introduced the bill's Senate companion.
Chart of the week
Marijuana is popular - look no further than New York's projected weed demand. By 2027, MPG Consulting and Viridian Capital Advisors predict that New Yorkers will consume 1.185 million pounds of the stuff:
What we're reading
Is There a Case for Legalizing Heroin? (The New Yorker)
As more states legalize marijuana, people with drug convictions want their records cleared (PBS)
A Religious Community and the Weed Farm in the Middle of It (The New York Times)
Cannabis' crypto temptation (WeedWeek)
'A Land Grab' for a Piece of New York's Marijuana Business (The New York Times)