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<ul class="summary-list"><li>The cannabis company MedMen has been hit with plenty of setbacks, sending its stock tumbling.</li><li>MedMen's bad news in recent months includes the departures of senior execs, two rounds of layoffs, asset sales, and ongoing lawsuits.</li><li>We spoke to MedMen CEO Adam Bierman about the company's path forward.</li><li>Bierman said that while he was slow to restructure the company, he is confident in MedMen and expects the stock to rebound. </li><li><a href="https://www.businessinsider.com/prime">Click here for more BI Prime stories</a>.</li></ul><p>MedMen, a <a href="https://www.businessinsider.com/marijuana-shop-medmen-fifth-avenue-manhattan-2018-4">flashy cannabis retailer</a> with stores in locations like Las Vegas, Venice Beach, and Manhattan's Fifth Avenue, has been punished by investors.</p><p>The stock is trading under 50 cents per share, down sharply from more than $3 a year ago. In some ways, the firm is a poster boy for the pitfalls of the hype surrounding the legal cannabis industry, where companies that were once focused on growth have been forced to pare back.</p><p>Adam Bierman, the CEO of MedMen, says investors were right to send his stock lower, and that he's working on a turnaround.</p><p>"The investor community and the street, they don't really get anything wrong," Bierman told Business Insider in a Thursday afternoon phone interview.</p><p>"If our stock is trading at a tremendous discount to our peer set, there's a reason for it," Bierman said. MedMen confirmed it has engaged a turnaround firm, FTI Consulting, to help with the company's restructuring process, including negotiating with vendors.</p><p>Bierman said the restructuring process will help push the stock back to where its peer companies are trading. "Just trading in line is, maybe, 10X from where we are today," he said</p><h2>Executive departures, lawsuits, and corporate controversies </h2><p>MedMen has been rocked by a series of executive departures, lawsuits, and corporate controversies over the past year.</p><p>David Dancer, the company's chief marketing officer, departed in September after less than a year on the job, as <a href="https://www.businessinsider.com/medmen-cmo-david-dancer-has-left-the-marijuana-retailer-2019-9">Business Insider reported in September</a>.</p><p>Former CFO James Parker <a href="https://www.latimes.com/business/la-fi-cannabis-medmen-lawsuit-20190224-story.html">filed a wrongful dismissal suit last February</a>, which cited his concerns about rampant spending within the company and an unhealthy work environment. </p><p>Chief Operating Officer Ben Cook, General Counsel Lisa Sergi Trager, and SVP of corporate communications Daniel Yi left the company in April.</p><p>MedMen <a href="https://www.businessinsider.com/pax-eaze-weedmaps-hexo-canntrust-layoffs-job-cuts-in-cannabis-2019-10">laid off roughly 40% of its corporate workforce</a> in November and December, in a push to be cash-flow positive by the end of 2020. A planned, $680 million all-stock acquisition of Illinois-based cannabis company PharmaCann <a href="https://www.businessinsider.com/why-medmen-pharmacann-blowup-is-a-disaster-for-cannabis-ma-2019-10">was terminated in October</a>. </p><p>The company has also sold off stakes it bought in cannabis brands - which it says will net the company $8 million - and has engaged Canaccord Genuity to "explore strategic alternatives" for cultivation licenses and stores "not deemed critical to the company's retail footprint." </p><p>MedMen also plans to limit new store openings and delay investments in the medical marijuana markets in New York and Arizona.</p><p>On top of all that, MedMen announced earlier in November that it was selling its stake in Treehouse, a cannabis real estate investment trust.</p><h2>'The markets and The Street, they don't get it wrong' </h2><p>Bierman said he was too slow to start restructuring the firm, as share prices in publicly-traded cannabis companies collapsed and investment dollars started to dry up.</p><p>"With the markets collapsing, and investors wanting to see different types of results from these companies, we're probably six months behind repositioning the business," Bierman said. "As a result, our stock price has been punished. I think that it was on us to enter into the restructuring, it was on us to execute our way through the restructuring."</p><p>Bierman said in his view, MedMen is one month out from completing the restructuring and getting the company back on track. The company is scheduled to report its next set of financial results on February 26.</p><h2>Negotiating with vendors</h2><p>Reports have also swirled on Twitter and in certain Reddit communities that the company has not been able to pay its vendors, including startup cannabis brands in California. </p><p>MarketWatch <a href="https://www.marketwatch.com/story/us-pot-retailer-medmen-says-its-trying-to-use-stock-to-pay-its-bills-amid-cannabis-industrys-cash-crunch-2020-01-23">reported</a> that MedMen was offering shares of stock instead of cash to pay vendors. </p><p>Though the company confirmed that the email reviewed by MarketWatch was real, MedMen CFO Zeeshan Hyder declined to address what he called "specific rumors that are on the internet" in a phone interview. He said that the company is "working with all of our key vendors across the company to figure out the right payment plan and solution that works for both sides."</p><p>Hyder said that some vendors told the company they'd prefer MedMen to deliver them shares upfront, rather than negotiating a deferred payment plan in cash.</p><p>"One of the things that we've been focused on as part of the restructuring efforts is to optimize our working capital and to preserve cash, just given the current capital markets environment," Hyder said.</p><p>When asked by Business Insider about rumors that the company is nearing bankruptcy, Bierman had stern words. </p><p>"Those rumors are completely unfounded, completely untrue, and salacious at best, and libelous at worst," Bierman said. "The company has not been in this strong of a position, from a cash position, an overall health position, and prospects for what's next position, in a very long time."</p><p>For cannabis companies, however, <a href="https://www.reuters.com/article/us-otc-marijuana/another-risk-for-marijuana-biz-no-bankruptcy-protection-even-for-tangential-players-idUSKCN1SZ2QB">filing for Chapter 11 bankruptcy isn't an option</a>, since THC, the chief psychoactive component of cannabis, is federally illegal in the US, <a href="https://www.reuters.com/article/us-otc-marijuana/another-risk-for-marijuana-biz-no-bankruptcy-protection-even-for-tangential-players-idUSKCN1SZ2QB">Reuters has reported</a>.</p><p>Bierman said the fact that insiders such as himself, MedMen co-founder Andrew Modlin, their partner Chris Gannon, and outside investor Wicklow Capital invested in the last fundraise is a sign that they are confident in the company's future.</p><p>"You don't have insiders writing equity checks if the future is bleak, you have them writing equity checks because they understand what kind of massive upside there is, in this stock," Bierman said.</p><ul class="read-more-links"><li><strong>Read more:</strong></li><li><a href="https://www.businessinsider.com/cannabis-infused-beverage-startup-cann-seed-round-pitch-deck-2019-6">A VC firm led by a Net-A-Porter cofounder just made a big bet on cannabis beverages. Here's an exclusive look at the pitch deck that helped Cann raise $5 million.</a></li><li><a href="https://www.businessinsider.com/list-top-cannabis-focused-venture-capital-funds-vcs-by-deal-count">Here are the top 14 venture-capital firms making deals in the cannabis industry, and where they're looking to place their next bets</a></li><li><a href="https://www.businessinsider.com/gencanna-mile-high-labs-lay-off-employees-job-cuts-2020-1">2 hemp and CBD startups just laid off workers as the industry confronts a uniquely challenging phase</a></li><li><a href="https://www.businessinsider.com/respira-heat-free-vaping-device-investors-pitch-deck-2020-1">Respira raised over $2 million to disrupt the embattled vape industry with a heat-free vaporizer. Here's the pitch deck that made it happen.</a></li></ul><p class="tagline"><a href="/intelligence/digital-health?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_subscription&amp;itm_content=health&amp;itm_campaign=digital-health"></a></p><p>Featured Digital Health Articles:<br />- <a href="/telehealth-industry-explained">Telehealth Industry: Benefits, Services &amp; Examples</a><br />- <a href="/value-based-care-pay-for-performance-healthcare-model">Value-Based Care Model: Pay-for-Performance Healthcare</a><br />- <a href="/senior-care-market-trends">Senior Care &amp; Assisted Living Market Trends</a><br />- <a href="/wearable-technology-healthcare-medical-devices">Smart Medical Devices: Wearable Tech in Healthcare</a><br />- <a href="/artificial-intelligence-healthcare">AI in Healthcare</a><br />- <a href="/remote-patient-monitoring-industry-explained">Remote Patient Monitoring Industry: Devices &amp; Market Trends</a></p>

The CEO of troubled cannabis company MedMen told us investors were right to punish his stock. Now he says they'd be smart to bet on a turnaround.

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Courtesy of Poseidon Asset Management, Emily Paxhia</span></p><p class="caption">Morgan and Emily Paxhia, partners at Poseidon Asset Management.</p></div><p></p></div></div></p><ul class="summary-list"><li>Poseidon Asset Management, a marijuana-focused fund, is raising $75 million to go after Series A or later investments in marijuana companies, said Morgan Paxhia, a managing partner.</li><li>The fund will be divided across four verticals in the marijuana industry, though Paxhia said he's particularly bullish on ancillary tech.</li><li>Poseidon has a solid track record: The fund got into buzzy vape startups Pax and Juul early on, and sold off their position in Aphria, a Canadian cannabis producer, before it was targeted by short-sellers. </li></ul><p>A leading marijuana-focused firm run by a brother-and-sister team is raising a new fund.</p><p>San Francisco-based Poseidon Asset Management is looking to raise a total of $75 million for its venture-focused Fund II, said Morgan Paxhia, Poseidon's managing partner. Already the fund has raised $15 million in its first close, he said. </p><p>Paxhia said Poseidon's new fund will focus on Series A stage or later investments in marijuana companies.</p><p>"In the grand scheme of things in the venture world, $75 million is still small," Paxhia said. "But we think it's the right size for staying nimble and being able to capitalize on good deals."</p><p>Paxhia said the new fund will focus across four different verticals in the cannabis industry, including industrial hemp, branding and retail, cultivation and processing logistics, and ancillary software-and-data startups.</p><h2>Bullish on marijuana tech </h2><p>Paxhia said he's particularly bullish on marijuana tech companies.</p><p>"We've been investing in ancillary technology since the beginning," Paxhia said. "It's generally seemed to receive the least amount of capital, the least amount of interest."</p><p>The fund has already made two investments in marijuana tech startups that will close before the end of the year, though Paxhia declined to name them. </p><p>"We think the marketplace is very much misunderstanding how scalable, and how large the addressable market is for that segment," Paxhia said.</p><p>A lot of funds see the vertical as "too competitive and too hard to understand," Paxhia said. "So for us, that was a good time to lean in." </p><p><em><strong>Read more</strong>: <a href="https://www.businessinsider.com/marijuana-focused-firm-rose-capital-closed-55-million-fund-i-2018-11">A marijuana-focused investment firm started by a pair of Wall Street veterans just closed a $55 million fund</a></em></p><p>While Pahxhia said that his firm has received a lot of interest from big funds, the fund will "touch the plant" - that is, invest directly in companies that sell marijuana to consumers - so no large institutional investors will come onboard yet.</p><p>"It's just a question of getting them over the starting line in terms of compliance," Paxhia said. Because marijuana is considered an illegal, Schedule I drug by the US federal government, <a href="https://www.businessinsider.com/marijuana-industry-investment-custodial-issues-2018-11">most institutions shy away from investing in the industry</a>.</p><p>But, "they're doing their homework," Paxhia said. "As soon as they're greenlighted, they're going to be coming in."</p><p>That greenlight could take the form of the States Act, bipartisan legislation that would block the federal government from going after state-legal cannabis businesses.</p><p>Ancillary tech companies are seen as safer places to put money by most investors, as they don't deal with marijuana directly. Mainstream venture funds, including Lerer Hippeau, <a href="https://www.businessinsider.com/top-marijuana-vc-firms-by-deal-count-2018-10">have invested in startups like the New York City-based Leaflink</a>, an online platform for marijuana dispensaries.</p><h2>A solid track record of exits </h2><p>Poseidon has a solid track record of exits.</p><p>The firm got into buzzy vape startups Pax and Juul ahead of the curve and sold off their position in Aphria - the publicly-traded marijuana producer in Canada that has been targeted by short-sellers in recent weeks - earlier this year.</p><p><em><strong>Read more</strong>: <a href="https://www.businessinsider.com/4front-ceo-talks-about-whats-next-after-merger-2018-12">A top cannabis CEO talks about what's next following a $300 million merger, saying he's playing 'Risk' while his competitors are playing 'Monopoly'</a></em></p><p>Poseidon also invested in Green Thumb Industries, an Illinois-based marijuana producer that went public on the Canadian Securities Exchange earlier this year, and in PharmaCann, which was <a href="https://www.businessinsider.com/medmen-ceo-talks-about-whats-next-biggest-cannabis-company-in-us-2018-10">acquired by the marijuana retailer MedMen in October</a>, among other exits. </p><p>"We're in all the largest deals in the cannabis industry to-date," Paxhia said. "That's why we're up over 100% this year."</p><ul class="read-more-links"><li>Read more:</li><li><a href="https://www.businessinsider.com/cronos-altria-sullivan-and-cromwell-worked-on-18-billion-deal-2018-12" data-read-more-link="" data-e2e-name="read-more-link">Why a white-shoe law firm working with a Canadian pot company on a $1.8 billion M&amp;A deal is 'momentous' for the marijuana industry</a></li><li><a href="https://www.businessinsider.com/law-firms-building-out-cannabis-practices-2018-11" data-read-more-link="" data-e2e-name="read-more-link">Big law firms are building out specialized pot practices to chase down a red-hot market for weed deals</a></li><li><a href="https://www.businessinsider.com/former-mexican-president-vicente-fox-says-cannabis-isnt-a-gold-rush-2018-12" data-read-more-link="" data-e2e-name="read-more-link">'Everybody thinks they're going to make billions overnight': Mexico's former president says the cannabis industry isn't a gold rush</a></li></ul>

A top marijuana-focused fund is quietly raising $75 million to make venture investments in pot companies

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>AP Photo/Steven Senne</span></p><p class="caption">Sam Barber, president and CEO of the Cultivate dispensary, arranges smokable strains of cannabis before opening on the first day of legal recreational marijuana sales, Tuesday, Nov. 20, 2018, in Leicester, Mass.</p></div><p></p></div></div></p><ul class="summary-list"><li>Canadian cannabis producers are lobbying the Toronto Stock Exchange to allow them to invest in US marijuana companies.</li><li>The move would allow Canadian companies like Canopy Growth and Aurora Cannabis to access the much more lucrative US market.</li><li>A source said it's not clear what a new policy may look like - or whether it'll happen anytime soon. </li></ul><p>Canadian cannabis companies are lobbying the Toronto Stock Exchange to allow them to buy or invest in US marijuana companies, in a potentially transformative move that would allow them access to the much larger and more lucrative US market, according to people familiar with the matter.</p><p>TSX-listed cannabis companies are not allowed to cultivate or sell products containing THC in the US because marijuana is federally illegal. The TSX has previously threatened to delist companies that violate US federal law. </p><p>But for Canadian cannabis companies like Aurora Cannabis and Canopy Growth, the US, with its much larger adult population, <a href="https://www.businessinsider.com/cannabis-companies-competing-for-market-share-2018-11">is a long sought-after prize</a>. </p><p>The US marijuana market could hit $75 billion over the next 10 years, if the federal government relaxes its prohibition on the drug, according to some Wall Street analysts. That's compared to the relatively paltry Canadian market, which has a much smaller population. </p><p><em><strong>Read more: <a href="https://www.businessinsider.com/cannabis-companies-competing-for-market-share-2018-11">'</a></strong><a href="https://www.businessinsider.com/cannabis-companies-competing-for-market-share-2018-11">My lips are wet, my mouth is watering to get a piece of that': A war is brewing between US and Canadian marijuana companies to claim a $75 billion market</a></em></p><p>A spokesperson for TMX Group, which operates the TSX, declined to comment and pointed to the company's 2017 policy which forbids listed companies from violating US federal law. </p><p>It remains unclear what a new policy would look like - or whether it's a change that would happen anytime soon, according to one person. What is clear, however, is that Canadian marijuana companies would gladly leverage their billions to enter the US at the first opportunity. </p><p>Companies that do sell THC-containing products in states where it's legal, like <a href="https://www.businessinsider.com/green-growth-brands-ceo-peter-horvath-still-interested-in-aphria-bid-2019-2">Green Growth Brands</a> and <a href="https://www.businessinsider.com/medmen-ceo-talks-about-whats-next-biggest-cannabis-company-in-us-2018-10">MedMen</a>, are forced to list on the Canadian Securities Exchange, a secondary exchange to the TSX in Canada. CSE rules allow listed cannabis companies to operate in the US, as long as they provide sufficient "risk disclosure" for shareholders. </p><p>Some of these firms also trade over-the-counter in the US. </p><p><em><strong>Read more: </strong><a href="https://www.businessinsider.com/why-cannabis-companies-pursue-reverse-takeovers-2018-11">Marijuana companies are using a 'backdoor' strategy to tap the public markets - and it's fueling an M&amp;A boom</a></em></p><p>No major North American exchange, including the TSX, NASDAQ, or NYSE allow cannabis companies that cultivate or distribute THC-containing products in the US to list.</p><p>That hasn't stopped some of the biggest publicly traded Canadian marijuana companies from trying to figure out how to access the US market while staying onside of both federal and stock exchange regulations.</p><p>Canopy Growth <a href="https://markets.businessinsider.com/news/stocks/canopy-growth-stock-price-new-york-hemp-license-2019-1-1027866476">announced its intention in January to invest up to $150 million on a hemp production facility in New York state</a>, following the passage of the Farm Bill which legalized hemp cultivation in the US.</p><p>Unlike marijuana, hemp, by definition, contains less than 0.3% of THC, and can't be used to get high. Hemp is also a source of CBD, a compound in the cannabis plant that's received a ton of attention from investors in recent months as the compound has popped up in products ranging from Epidiolex, an FDA-approved epilepsy drug, to cupcakes and lip balms all over the US.</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/aurora-cannabis-will-unveil-plan-to-produce-cbd-for-us-market-2019-1">Aurora Cannabis is gearing up to break into the $1.6 billion CBD industry in the US</a></em></p><p>A senior executive at Aurora Cannabis, Cam Battley, told Business Insider in January that <a href="https://www.businessinsider.com/aurora-cannabis-says-farm-bill-provides-path-to-enter-us-market-2018-12">the company will be unveiling a hemp-derived CBD strategy</a> for the US market "over the next few months."</p><p>CSE-listed US cannabis companies, known as multi-state operators, <a href="https://www.businessinsider.com/cannabis-companies-competing-for-market-share-2018-11">are spoiling for a fight</a> by building scale, as evidenced by the multimillion-dollar mergers in recent months.</p><p><span>Harvest Health &amp; Recreation on Monday <a href="https://www.businessinsider.com/marijuana-ma-harvest-health-acquires-verano-holdings-in-850-million-deal-2019-3">announced that it will acquire Chicago-based Verano Holdings in an $850 million all-stock transaction</a>. </span></p><p><span>And in October, US marijuana chain MedMen acquired PharmaCann <a href="https://www.businessinsider.com/marijuana-retailer-medmen-acquires-pharmacann-for-682-million-2018-10">in a $682 million all-stock transaction in October</a>, and iAnthus a New York-based marijuana company, <a href="https://www.businessinsider.com/marijuana-retail-chain-ianthus-mpx-bioceutical-2018-10">acquired MPX Bioceutical in a $640 million</a> that same month. </span></p><p><em><strong><a href="http://newsletter.businessinsider.com/join/4np/wall-st-insider&amp;hash=f4e91136c13f3c40c496d77bc7347502">Sign up here</a><span> </span>for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.</strong></em></p><div><ul class="read-more-links"><li>Read more:</li><li><a href="https://www.businessinsider.com/marijuana-ma-harvest-health-acquires-verano-holdings-in-850-million-deal-2019-3" data-read-more-link="" data-e2e-name="read-more-link">Marijuana chain Harvest Health is acquiring a competitor in an $850 million stock deal, creating one of the largest US cannabis companies</a></li><li><a href="https://www.businessinsider.com/citigroup-execs-consider-role-in-banking-cannabis-deals-2019-3">Citigroup is considering working with pot companies as banks figure out ways to chase a $75 billion market</a></li><li><a href="https://www.businessinsider.com/cannabis-industry-best-lawyers-2019-1" data-read-more-link="" data-e2e-name="read-more-link">Meet the big-shot lawyers who are turning weed into a $194 billion industry</a></li><li><a href="https://www.businessinsider.com/cannabis-industry-top-12-venture-capital-firms-2018-10" data-read-more-link="" data-e2e-name="read-more-link">Check out our exclusive list of the top 12 venture capital firms making deals in the booming marijuana industry</a></li></ul></div>

Canadian marijuana companies are lobbying a stock exchange to allow them to invest in the lucrative US market and it could be transformative for the $75 billion industry

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Susan Walsh/AP; Yutong Yuan/Business Insider</span></p></div><p></p></div></div></p><ul class="summary-list"><li>Cannabis startups are sending veteran lobbyists to Capitol Hill in support of the STATES Act - a bill that would require the federal government to keep a hands-off approach on the decisions made by states on marijuana legalization.</li><li>The bill was introduced last summer by Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO), showing there is broad, bipartisan support for cannabis reform. President Donald Trump even said he <a href="https://www.nytimes.com/2018/06/08/us/politics/trump-marijuana-bill-states.html">will "probably" end up supporting it</a>.</li><li>Tracking seed to sale is difficult, and the nearly $10 billion industry is dealing largely in cash, creating serious safety concerns for wholesalers, distributors, and dispensaries. </li></ul><p>Marijuana is one of the most rigorously overseen industries. Yet, it has no financial infrastructure. Imagine: Legal cannabis is a $10 billion industry doing every single transaction in <em>cash</em>. </p><p>Cannabis businesses can't bank like other businesses, because most major banks consider the industry risky - even though numerous states have legalized marijuana in some form, it's still an illegal substance in the eyes of the federal government. Any bank that does decide to take on marijuana business could be charged with "aiding and abetting" a federal crime. </p><p>This leaves cannabis business owners with no choice other than to deal in mostly cash, which creates public safety issues. Delivery drivers, like those who work for <a href="https://weedmaps.com/">WeedMaps</a> and <a href="https://www.greenrush.com/">greenRush</a>, have an increased risk of being targeted for burglary. It's no wonder cannabis dispensaries often have electric fences and security rooms to vet potential customers. </p><p>The answer may seem simple: remove cash from the equation. But the question is far more complex: How is the cannabis industry ever going to get big banks to be comfortable handling their business?</p><p>That's where the STATES Act comes in - a bill that would require the federal government to honor decisions made by states that have legalized recreational and medical marijuana. </p><p>Since the bill was introduced in June, cannabis startups have increasingly branched out from the familiarity of the grow room to the halls of Congress, hiring lobbyists and providing other financial support to make the case. </p><h2>Cannabis on Capitol Hill</h2><p>"We work with federal lobbyists, and also at the local level, pushing your state senator to support initiatives, whether it's an amendment like [cannabis] banking reform, which seems to be bipartisan," said Bryan Meltzer, a partner at Feuerstein Kulick who also represents greenRush, the weed delivery service. </p><p>Meltzer is right - cannabis has quickly become bipartisan. When the STATES Act was introduced, it was both Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO) who presented it. President Donald Trump even said he would <a href="https://www.nytimes.com/2018/06/08/us/politics/trump-marijuana-bill-states.html">"probably"</a> support it. Right now, the bill is making its way through committees, and until it premieres on the House floor, there is lobbying to do. And that means hiring people who know the legislation process. </p><p>Cannabis companies like Surterra, WeedMaps, Eaze, and PharmaCann (recently acquired by MedMen) have spent hundreds of thousands of dollars hiring lobbyists to educate members of congress on the cannabis marketplace.</p><p>"Cannabis legalization isn't a one party issue," said Carl Fillichio, spokesman for WeedMaps. "We have a broad agenda. So it's important for us to work with a diverse and broad cadre of partners and advocates to ensure that our voice is heard in city halls, state capitals and in the United States Congress."</p><p>WeedMaps works with lobbying firms Liberty Government Affairs and Nelson Mullins Riley &amp; Scarborough, which has former Pennsylvania congressman Ron Klink on its payroll. </p><p>Similarly, <a href="https://www.eaze.com/">Eaze</a> Solutions, Inc. spent $130,000 after it hired by Holland &amp; Knight LLP in 2018, a veteran lobbying firm, according to public records. Eaze is also represented on the hill by staff with connections to former House speaker Newt Gingrich and the Clinton administration. </p><p>David Mack, Eaze's senior vice president of public affairs, said as the cannabis industry expands, more traditional folk become interested in the policy issues. </p><p>Trying to influence regulation is hardly unique to the cannabis industry. But cannabis companies say they have a particularly pressing issue to fight for when pushing for legislation like the STATES Act: the safety of operators and clients. </p><h2>How do you protect $10 billion?</h2><p>Safety is such a major concern in the industry that before LeafLink launched its platform in 2017 in California, CEO Ryan Smith never met clients at their warehouses, but instead at coffee shops. He said it is not uncommon for his clients to hire security guards to do loops around their facilities all day to prevent cash and product theft.</p><p>"Right now, 12 and 15 percent of a brand's costs are just around shuttling and moving around cash," said Smith. "It's like something out of the early 1900s, forcing legal companies to operate like an unlicensed company would." </p><p>Charlie Wilson, chief revenue officer of <a href="https://www.greenbits.com/">Green Bits</a>, which provides financial services to cannabis businesses, agrees. </p><p>"Safety is but one reason to make progress," he told Business Insider in a statement. "Financial services enhance transparency, so government regulators can more effectively oversee product sales, money movements and thus, tax receipts."</p><p>Paul Warshaw, CEO of greenRush, estimates that allowing customers to buy using their debit and credit cards could increase business growth by 50 to 100 percent overnight.</p><p>"It's a critical missing piece in the space," said Warshaw. "We are no different from DoorDash."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/apple-iphone-siri-shortcuts-save-time-hacks-2019-1">How to use this time-saving feature Apple added to the iPhone</a></h3>        <div>                    </div>    </div>

Cannabis retailers can't bank like other businesses, so they are sending lobbyists to Capitol Hill

<p><strong><em>Welcome to Cultivated, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom. <a href="http://newsletter.businessinsider.com/join/cultivated">Sign up here to get it in your inbox every week</a>. </em></strong></p><p><strong><em><a href="https://www.businessinsider.com/subscription/prime-discount?r=birefer-jberke">If you want a discount to BI Prime to read my stories, sign up here!</a></em></strong></p><p>Happy Friday Cultivated readers,</p><p>We're back in the office after an extended break. I hope you all had some well-earned time off over the holidays and New Year's. My break was unfortunately not super fun as I suffered a concussion skiing, but I'm on the mend and back at it.</p><p>Let's get to it:</p><p>New York Gov. Andrew Cuomo on Wednesday <a href="https://www.nytimes.com/2020/01/08/nyregion/state-of-the-state-cuomo-ny.html">said legalizing marijuana would be one of his chief goals</a> for 2020 in his annual State of the State address. The importance of New York, one of the epicenters of global commerce and culture, legalizing marijuana cannot be overstated. The policy shift would have ripple effects around the world.</p><p>If Cuomo is successful, which New York state Democrats think he will be, then millions of people in four of the biggest cities in North America - New York, Chicago, Los Angeles, and Toronto - would all have access to legal cannabis. </p><p>And you could add Mexico City to that list as well if President Andrés Manuel López Obrador gets his way and <a href="https://www.marijuanamoment.net/top-mexican-senator-says-marijuana-legalization-will-be-a-priority-this-year/">passes marijuana reform</a> this year. </p><p>In industry news, Canadian cannabis giant Aurora announced that Cam Battley - one of the company's and the industry's most public-facing execs - stepped down the weekend before Christmas. The move was a surprising one for sure, as Battley has always been very available to reporters.</p><p>And Cresco Labs finally closed its acquisition of Origin House, a deal first announced back in April. Execs I've spoken with at the major US cannabis companies all expect their marquee transactions to close, after the <a href="https://www.businessinsider.com/why-medmen-pharmacann-blowup-is-a-disaster-for-cannabis-ma-2019-10">highly public MedMen - Pharmacann blow up</a> in November.</p><p>I also wanted to introduce you all to <a href="https://www.businessinsider.com/author/yeji-jesse-lee">Yeji Jesse Lee</a>, our new editorial fellow, who will be covering the cannabis industry with me and my editor Zach Tracer. We're expanding our empire here at BI. </p><p>Last, we're still <a href="https://www.businessinsider.com/pax-eaze-weedmaps-hexo-canntrust-layoffs-job-cuts-in-cannabis-2019-10">covering the larger story of layoffs across the sector</a>. You can find ways to securely reach me at the bottom of this newsletter if you have a tip. </p><p><em>-Jeremy</em></p><p><strong><em>Here's what we've been writing about:</em></strong></p><h3><a href="https://www.businessinsider.com/respira-heat-free-vaping-device-investors-pitch-deck-2020-1">Respira raised over $2 million to disrupt the embattled vape industry with a heat-free vaporizer. Here's the pitch deck that made it happen.</a></h3><p>Once seen as a healthier alternative to smoking, the consequences of vaping were thrust into the spotlight this fall as <a href="https://www.businessinsider.com/timeline-of-vape-related-illnesses-and-deaths-2019-9">thousands of people across the US were sickened</a> after vaping cannabis and nicotine products.</p><p>Against this backdrop, a startup called <a href="https://respiratechnologies.com/">Respira</a> is working to offer a "heat-free" vaporizer which releases the desired compound - be it THC or nicotine - without the toxic elements. Respira's vaporizers aren't yet on the market, and the company says they should be available later this year.</p><p>"There's this prevailing myth that only combustion or actual burning creates harmful byproducts, and that's just unequivocally not true," Mario Danek, Respira's CEO, told Business Insider in an interview. "The heat in and of itself creates toxic byproduct formation in vapes. These are unintended, but harmful consequences." </p><h3><a href="https://www.businessinsider.com/canadian-company-wayland-group-26-departures-in-december-2019-2020-1">Wayland Group just revealed it's shedding workers as the Canadian cannabis firm restructures amid an industry shakeout</a></h3><p>Wayland Group <a href="https://webfiles.thecse.com/CSE_Form_7_-_Monthly_Progress_Report_-_December_2019_2.pdf?LRk5BYDNH0HMR3NWT2v2o.2_eghn19IF=">said it lost 26 workers</a> in December in areas including operations, quality assurance, engineering, human resources, finance, and IT departments. It's not clear if the departures were voluntary, and the company didn't respond to requests for comment from Business Insider.</p><p>The announcement comes after a difficult year for the company, which grows and processes cannabis. The company has seen a steep decline in its stock prices over the past few months and said in December it was <a href="https://www.globenewswire.com/news-release/2019/12/03/1955239/0/en/Wayland-Seeks-Creditor-Protection-to-Pursue-Restructuring-Plan.html">seeking protection</a> from creditors to pursue a restructuring. The company received <a href="https://www.globenewswire.com/news-release/2019/12/17/1961311/0/en/Wayland-Announces-Court-Approval-of-Amended-DIP-Facility.html">court approval for financing</a> to help in the process.</p><h3><a href="https://www.businessinsider.com/pax-eaze-weedmaps-hexo-canntrust-layoffs-job-cuts-in-cannabis-2019-10">Cannabis companies have slashed over 1,000 jobs in recent weeks as the industry contends with a 'toxic' landscape. We're keeping track of all the cuts here.</a></h3><p>The <a href="https://www.businessinsider.com/cannabis-job-postings-have-quadrupled-since-2016-according-to-indeed-2019-8">once red-hot cannabis industry</a> is coming back down to earth.</p><p>In recent weeks, cannabis companies - including venture-backed startups like Pax and giants like MedMen - have announced a series of job cuts, amounting to over 1000 laid-off workers in the sector as a whole.</p><p>There are unique reasons for the job cuts at each company, but industry analysts and experts say the operating environment for cannabis companies has entered a <a href="https://www.businessinsider.com/cannabis-investing-slump-stocks-fall-layoffs-fewer-deals-2019-11">uniquely challenging phase</a>. Headwinds include illnesses linked to vaping, lower-than-expected retail revenues in Canada and states like California, and legislative and regulatory hurdles that make accessing capital much more expensive than in other industries.</p><h2>Capital raises, M&amp;A activity, partnerships, and launches</h2><ul><li>Cresco Labs and Origin House finally <a href="https://www.businesswire.com/news/home/20200108005533/en/Cresco-Closes-Acquisition-Origin-House-Adding-Leading">closed the merger</a> that was first announced in April. The deal, <a href="https://www.businessinsider.com/marijuana-retailer-cresco-labs-to-buy-origin-house-for-825-million-2019-4">originally announced at $825 million</a>, was slashed in half to roughly $400 million in November. </li><li>FSD Pharma began trading on the NASDAQ on Thursday. Yeji and I chatted with CEO Dr. Reza Bokhari on Thursday, where he discussed some of the challenges involved with uplisting from the CSE to the NASDAQ.</li><li>CannabisWorks, a recruitment and executive search firm, officially launched in January to focus on the North American cannabis industry. </li><li>Axim Biotechnologies is <a href="https://www.globenewswire.com/news-release/2020/01/08/1967886/0/en/AXIM-Biotechnologies-to-Acquire-Leading-Oncology-Research-and-Development-Company-Sapphire-Biotech-Inc.html">acquiring Sapphire Biotech</a>, an oncology R&amp;D startup, to develop IP around cancer detection and tumor reduction with cannabinoids. </li></ul><h2>Executive moves</h2><ul><li>Ericka Pittman is <a href="https://www.prnewswire.com/news-releases/ericka-pittman-joins-viola-as-chief-marketing-officer-300981620.html">joining Viola</a>, a cannabis company founded by NBA veteran Al Harrington, as the company's chief marketing officer. Pittman formerly served as the CMO of AQUAhydrate, and as a senior executive at Diddy's Combs Enterprises. </li><li>Max Cohen has <a href="https://ir.jushico.com/news-events/press-releases/detail/52/jushi-holdings-inc-announces-executive-management-update">resigned as Jushi Holdings COO</a>. He'll stay on as a member of the company's board.</li><li>Art Massolo, formerly chief business development officer at Mile High Labs, <a href="https://www.prnewswire.com/news-releases/hunter--esquire-adds-art-massolo-to-leadership-team-300984908.html?tc=eml_cleartime">has joined</a> cannabis headhunting firm Hunter + Esquire. </li><li>Former Overstock president Stormy Simon is <a href="https://www.globenewswire.com/news-release/2020/01/06/1966300/0/en/Hightimes-Holding-Corp-names-former-Overstock-com-President-as-new-CEO-as-it-readies-itself-for-Commerce.html">taking over as CEO of High Times</a>. The company will branch out beyond media and into branded dispensaries under Simon's direction. Former CEO Kraig Fox is stepping down from the company.</li><li>Ron Goodson is r<a href="https://investor.harvesthoc.com/press/press-release/2020/Harvest-Health--Recreation-Inc-Welcomes-Ron-Goodson-as-Chief-Operating-Officer/default.aspx">eplacing John Cochran as Harvest Health &amp; Recreation's COO</a>. Goodson previously served as COO of Verano Holdings. </li><li>John Fowle is <a href="https://ir.akerna.com/news-events/press-releases/detail/86/akerna-names-john-fowle-cfo">joining Akerna as the company's new CFO</a>. </li><li>Colin Moore is <a href="https://www.newswire.ca/news-releases/supreme-cannabis-announces-leadership-transition-as-company-accelerates-transformation-into-premium-cannabis-cpg-company-860929347.html">taking over</a> from Navdeep Dhaliwal as Supreme Cannabis's interim CEO. Dhaliwal is departing the company. </li></ul><h2>Chart of the week</h2><p>In Illinois, where recreational cannabis sales started on New Year's Day, adult-use products generated more than $10 million in sales in the first five days. The biggest boom? On the first day with more than $3 million in sales and 77,000+ transactions:</p><h2>What I'm reading</h2><p><a href="https://www.wsj.com/articles/cloudy-regulation-slows-cbds-seep-into-food-and-drinks-11578574807">Adding CBD to food, drink was a hot trend, until FDA chimed in</a> (The Wall Street Journal)</p><p><a href="https://www.washingtonpost.com/lifestyle/style/people-are-seeing-cats-while-high-out-of-their-minds-these-are-their-stories/2020/01/05/d0ebfb3a-2beb-11ea-bcb3-ac6482c4a92f_story.html?utm_campaign=wp_main&amp;utm_medium=social&amp;utm_source=twitter">People are seeing 'Cats' while high out of their minds. These are their stories.</a> (The Washington Post)</p><p><a href="https://www.theatlantic.com/health/archive/2020/01/why-cbd-took-over-america/604327/">America loves its unregulated wellness chemicals</a> (The Atlantic)</p><p><a href="https://www.economist.com/the-americas/2019/12/18/canadas-legal-cannabis-market-gets-off-to-a-slow-start?fsrc=scn/tw/te/bl/ed/downfromahighcanadaslegalcannabismarketgetsofftoaslowstarttheamericas">Canada's legal cannabis market gets off to a slow start</a> (The Economist)</p><p><a href="https://www.wsj.com/articles/marijuanas-money-man-11576869335">Marijuana's money man</a> (The Wall Street Journal)</p><p><a href="https://www.cnn.com/2020/01/02/business/cannabis-breathalyzers-are-coming-to-market/index.html?utm_content=2020-01-02T13%3A15%3A11&amp;utm_source=twbusiness&amp;utm_term=link&amp;utm_medium=social">Testing drivers for cannabis is hard. Here's why</a>. (CNN Business) </p><p><em>Did I miss anything? Have a tip? Just want to chat? Send me a note at jberke@businessinsider.com or find me on twitter <a href="https://twitter.com/jfberke?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">@jfberke</a>. You can also reach me on encrypted messaging app Signal at (646) 376 6002. </em></p>

CULTIVATED: Disrupting the vape industry, layoffs at Wayland Group, and more.

<p><strong><em><div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div></em></strong></p><p><strong><em>Introducing Cultivated, our new weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom. <a href="http://newsletter.businessinsider.com/join/cultivated">Sign up here</a>.</em></strong></p><p>Happy Friday the 13th everyone (spooky):</p><p>As with last week, the cannabis sector was dominated by the unfortunate news of vaping-related illnesses. As a refresher, I put together a timeline of what state and federal officials knew about the illnesses and when. <a href="https://www.businessinsider.com/timeline-of-vape-related-illnesses-and-deaths-2019-9">You can read that here, and we'll keep updating it as we learn more</a>.</p><p>But there was some other news apart from the vape scare that I'd like to highlight. First, Aurora Cannabis, one of the largest cannabis companies, reported earnings. While the company didn't have a bad quarter revenue-wise, it missed on its guidance by around 1% and the stock was hammered as a result.</p><p>I spoke with Aurora Chief Corporate Officer Cam Battley yesterday by phone. He said a few interesting things. One, he felt like the market has a "follow-the-leader" approach where, after companies like Canopy Growth and Cronos Group did deals with large alcohol and tobacco companies, investors expected Aurora to do the same.</p><p>"There's pressure there," said Battley. "We don't want to give up control and enter partnerships that don't work for us."</p><p>Second, Battley reiterated that Aurora is actively looking at US CBD acquisitions, <a href="https://www.businessinsider.com/aurora-cannabis-will-unveil-plan-to-produce-cbd-for-us-market-2019-1">which we have reported on in the past</a>. He also said that Aurora is looking closely at the landmark Canopy Growth-Acreage deal, and may consider pursuing a similar acquisition under that framework. We <a href="https://www.businessinsider.com/canopy-growth-acreage-holdings-deal-will-open-up-the-market-says-lawyer-2019-4">previously reported that the deal's unique (if vague) structure would provide a pathway</a> for other Canadian cannabis companies to do the same. </p><p>On the policy front, House Majority Leader Steny Hoyer told the Democratic caucus that <a href="https://www.marijuanamoment.net/marijuana-banking-bill-will-get-a-full-house-floor-vote-this-month-sources-say/">a bill to protect banks that serve cannabis companies will get a full House floor vote</a> by the end of the month. The news follows Senate Banking Committee Chairman Mike Crapo's <a href="https://www.politicopro.com/">statement to Politico</a> that his committee will hold a vote on similar legislation.</p><p>In other news, I sat down with Bradley Tusk, the CEO of Tusk Ventures and author of "The Fixer" in his Manhattan offices on Wednesday to tape an episode of <a href="https://www.firewall.media/">The Firewall podcast</a>. We had a wide-ranging discussion that went from cannabis tech startups to psychedelic drugs, and Mexico's incipient cannabis legalization - all in a snackable 20 minutes. The episode will drop on Wednesday, and you can listen to it wherever you get your podcasts.</p><p>And last, here's a tidbit I thought you all might like. I spoke with Marc Hauser, who leads the law firm Reed Smith LLP's cannabis practice earlier today.</p><p>He had a great quote around the regulatory complexity of cannabis and the challenges of putting together deals. "It's both legal and highly regulated at the state level, and highly illegal at the federal level," Hauser told me. "It's like a quantum physics problem."</p><p><em>-Jeremy </em></p><p><strong><em>More stories from around the BI newsroom:</em></strong></p><section><h3><a href="https://www.businessinsider.com/k-zen-5-million-seed-round-pitch-deck-dcm-ventures-2019-9">Here's the pitch deck that cannabis-beverage startup K-Zen used to raise $5 million from seasoned Silicon Valley VC firm DCM Ventures</a></h3><p><a href="https://www.businessinsider.com/top-investors-say-these-marijuana-startups-will-blow-up-2019-5">The cannabis-infused-beverage startup</a> K-Zen raised $5 million from the venerable Silicon Valley venture firm DCM Ventures in May.</p><p>K-Zen co-CEO Judy Yee told Business Insider that the startup tailored its fundraising approach to investors who would be willing to invest in cannabis, as <a href="https://www.businessinsider.com/how-big-vc-firms-are-making-their-first-cannabis-investments-2019-8">most mainstream venture funds are still reticent about the space</a>.</p><p>Yee walked me through K-Zen's pitch deck and talked about the genesis of K-Zen in a recent interview. </p><section><h3><a href="https://www.businessinsider.com/top-marijuana-stocks-to-invest-cowen-vivien-azer-2019-9">Here are the 3 top pot stocks to bet on in the US and one to avoid, according to Wall Street's leading cannabis analyst</a></h3><p>Wall Street's star <a href="https://www.businessinsider.com/latest-cannabis-business-news-2019-6">cannabis-industry</a> analyst Vivien Azer initiated coverage on some of the splashiest US cannabis names - known as multistate operators or MSOs in industry parlance - including <a href="https://www.businessinsider.com/curaleaf-is-acquiring-grassroots-cannabis-for-875-million-2019-7">Curaleaf</a>, <a href="https://www.businessinsider.com/green-thumb-industries-acquires-beboe-for-undisclosed-amount-of-stock-2019-2">Green Thumb Industries</a>, <a href="https://www.businessinsider.com/marijuana-retailer-cresco-labs-to-buy-origin-house-for-825-million-2019-4">Cresco Labs</a>, <a href="https://www.businessinsider.com/canopy-growth-acreage-holdings-deal-will-open-up-the-market-says-lawyer-2019-4">Acreage Holdings</a>, and <a href="https://www.businessinsider.com/medmen-ceo-talks-about-whats-next-biggest-cannabis-company-in-us-2018-10">MedMen</a>.</p><p>Azer's <a href="https://www.businessinsider.com/top-marijuana-stocks-to-invest-cowen-vivien-azer-2019-9">top US cannabis pick</a>: Green Thumb Industries. She also likes Curaleaf and Cresco Labs, particularly as these companies balance wholesale and retail revenues.</p><p>She put a harsh price target on MedMen - $1.50. While she said the brand has strong equity in the lucrative California market, the company's constant need for cash and rampant spending will hurt it in the longterm. </p></section><section><h3><a href="https://www.businessinsider.com/how-to-make-a-successful-pitch-according-to-investors-2019-9">Top investors from a cannabis-focused fund and early Juul investor share their 3 best tips for making a successful pitch</a></h3><p>Brother-and-sister-duo Morgan and Emily Paxhia know what turns a pitch into funding for a startup.</p><p>As the managing partners of <a href="https://www.businessinsider.com/poseidon-asset-management-raising-75-million-for-marijuana-focusd-fund-ii-2018-12">Poseidon Asset Management, a cannabis-focused investment firm</a>, the pair have seen - and sat through - tons of pitches of varying quality. The two shared their best pieces of advice for startup founders looking to make a successful pitch <a href="https://www.businessinsider.com/webinar-headset-ceo-walks-through-successful-series-a-pitch-deck-2019-9">in a recent webinar moderated by Business Insider</a>.</p><p>Check out their three best tips <a href="https://www.businessinsider.com/how-to-make-a-successful-pitch-according-to-investors-2019-9">here</a>. </p></section></section><h2>Capital raises, M&amp;A activity, partnerships, and launches</h2><ul><li><a href="https://www.prnewswire.com/news-releases/newlake-announces-85-5-million-capital-raise-for-newly-formed-real-estate-company-300916162.html">NewLake Capital Partners raised an $85.5 million private placement</a>. It's a real estate play, according to the press release: the company will focus on acquiring specialized industrial and retail properties to be leased to state-licensed cannabis operators.</li><li>The Department of Justice's Antitrust Division <a href="https://www.businessinsider.com/marijuana-retailer-medmen-acquires-pharmacann-for-682-million-2018-10">allowed MedMen's $682 million all-stock transaction of PharmaCann</a> to go through. It's a good sign for the industry, as the DOJ is reviewing the recent spate of mega-mergers under the Hart-Scott-Rodino Antitrust Improvements Act (HSR). </li><li>Israeli cannabis company Canndoc, a subsidiary of InterCure, <a href="https://www.biospace.com/article/releases/intercure-canndoc-signs-strategic-distribution-agreement-with-s-l-e-of-teva-pharmaceuticals/">signed a deal with a subsidiary of generic drug manufacturer Teva Pharmaceuticals</a> to distribute medical cannabis products in Israel and internationally.</li><li>Cannabis e-commerce platform <a href="https://www.prnewswire.com/news-releases/dutchie-leading-online-cannabis-marketplace-secures-15-million-series-a-round-300915668.html">Dutchie closes a $15 million Series A led by Gron Ventures</a>. Backers include Snoop Dogg's Casa Verde Capital and Kevin Durant's Thirty Five Ventures. I'll be chatting with Dutchie's CEO, Ross Lipson, on Monday.</li><li><a href="https://www.prweb.com/releases/mgo_acquires_new_york_based_cpa_firm_schwartz_company/prweb16568079.htm">MGO LLP acquires New York City accounting firm Schwartz &amp; Company</a> to serve cannabis industry clients. MGO LLP is part of the MGOELLO network. The firm <a href="https://www.businessinsider.com/wall-street-alumni-launch-ello-capital-for-cannabis-ma-deals-2019-7">recently launched Ello Capital</a>, a boutique advisory that helps cannabis companies fundraise. </li><li>UK-based medical cannabis and CBD company <a href="https://finance.yahoo.com/news/uk-medical-cannabis-cbd-company-182024190.html">Cannaray closed a $9.7 million Series A</a>. The company touts its aggressive, "Brexit-proof" expansion strategy in the announcement. </li><li>Cannabis REIT Innovative Industrial Properties closed on a four-property portfolio in Southern California in a $17.3 million deal.</li><li>Canivate Growing Systems Ltd, which has raised $10.8 million, launched this week. <a href="https://www.prnewswire.com/news-releases/canivate-launches-with-plans-to-establish-new-standard-for-clean-green-and-pure-cannabis-and-hemp-cultivation-300914655.html">The company touts its cannabis growing technology</a>, which reduces the amount of water and other resources to grow cannabis. </li><li>Medicine Man Technologies enters into an agreement to acquire Strawberry Fields, a Colorado cannabis cultivator, in a $31 million cash-and-stock deal.</li><li>Tilray <a href="https://finance.yahoo.com/news/tilray-sell-400m-shares-via-135511973.html">entered into an agreement with Cowen</a> to sell up to $400 million shares. </li><li>On the media front, Politico's subscription business, Politico Pro, <a href="https://www.politicopro.com/federal/cannabis">launched a new vertical focused on federal and state cannabis policy</a>, along with a morning newsletter. </li></ul><h2>Executive moves</h2><ul><li>Canopy Rivers, the VC arm of Canopy Growth, <a href="https://www.newswire.ca/news-releases/canopy-rivers-launches-strategic-advisory-board-885533822.html">formed a new strategic advisory board</a>. The board includes John Ruffolo, formerly the founder of OMERS Ventures, Meg Lovell, formerly M&amp;A head at Imperial Brands PLC, and Philip Donne, formerly the CEO of Kellogg Canada.</li><li>Brad Kotansky, a former banker and entrepreneur, <a href="https://4frontventures.com/2019/09/4front-expands-finance-team-with-new-cfo-other-key-appointments/">joins 4Front as CFO</a>.</li><li>48North Cannabis <a href="https://www.newswire.ca/news-releases/48north-provides-update-on-executive-team-857430217.html">names Alison Gordon as the sole CEO</a>. The company accepted the resignation of Gordon's co-chief executive, Jeannette VanderMarel this week. VanderMarel will stay on as board director.</li><li>Green Flower Media adds Gil Christie as EVP of Enterprise Solutions &amp; Investor Education. Christie previously founded Fitch Learning. </li><li>California cannabis chain Caliva adds Jeffry Allen to its board. The company also adds Joseph Sequenzia as chief marketing officer, Leann Taylor as chief strategy officer, and Drew Kornreich as chief M&amp;A officer.  </li></ul><h2>Chart of the week</h2><p>Here's a list of the cannabis companies that are hiring the most this year, from the job recruiting site Indeed. As a reminder, we <a href="https://www.businessinsider.com/how-to-get-a-job-in-cannabis-according-to-top-recruiters-2019-9">published a recruiter's guide to landing a job in the cannabis industry</a> last week:</p><p><div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div></p><h2>Stories from around the web</h2><ul><li><a href="https://www.politico.com/story/2019/09/13/crapo-cannabis-banking-vote-1729925">Crapo plans landmark cannabis banking vote</a> (Politico)</li><li><a href="https://cannabiswire.com/2019/09/06/indigenous-canadians-grapple-with-the-future-of-cannabis/">Indigenous Canadians grapple with the future of cannabis</a> (Cannabis Wire)</li><li><a href="https://www.npr.org/2019/09/05/757882048/scientists-unveil-weed-breathalyzer-launching-debate-over-next-steps">Scientists unveil weed breathalyzer, launching debate over next steps</a> (NPR)</li><li><a href="https://www.bloomberg.com/news/articles/2019-09-13/pot-s-illicit-history-makes-patenting-hard-in-the-legal-weed-era">Pot's illicit history makes patenting hard in the legal-weed era</a> (Bloomberg)</li><li><a href="https://www.theglobeandmail.com/robcannabispro/article-legal-cannabis-packaging-still-struggling-with-sustainability-issues/">Legal cannabis packaging still struggling with sustainability</a> (The Globe and Mail) </li></ul><div><div id="piano-inline-content-wrapper" data-piano-inline-content-wrapper=""><p><em>Did I miss anything? Have a tip? Just want to chat? Send me a note at jberke@businessinsider.com or find me on twitter <a href="https://twitter.com/jfberke?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">@jfberke</a></em></p></div></div><p class="tagline"><a href="https://www.businessinsider.com/intelligence/digital-health?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_subscription&amp;itm_content=health&amp;itm_campaign=digital-health-3"></a></p>

CULTIVATED: DCM Ventures makes a bet on cannabis drinks, Wall Street's leading cannabis analyst on her top 3 US picks, and more

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Courtesy of MedMen</span></p><p class="caption">Adam Bierman (L) is the CEO of MedMen, a cannabis dispensary chain.</p></div><p></p></div></div></p><ul class="summary-list"><li>Many US-based cannabis companies are going public on the Canadian Securities Exchange in a nontraditional way - a so-called reverse takeover.</li><li>Reverse takeovers are when a private company buys a shell company that's already publicly-traded.</li><li>It's a strategy to become a public company quickly, particularly in an industry that's federally illegal in the US. </li><li>Going public means these companies can roll up competitors using their stock as the cannabis industry enters a wave of consolidation. But there are drawbacks to the strategy, according to lawyers.  </li></ul><p>The <a href="https://www.businessinsider.com/category/marijuana">legal cannabis industry is booming</a>, and US-based startups are looking towards their northern neighbor to capitalize on the frenzy around the emerging sector.</p><p>Because cannabis companies with operations in the US aren't able to list on US-based exchanges - marijuana is federally illegal, after all - these companies have pursued a little-known strategy for quickly going public in Canada: the reverse merger.</p><p>While reverse mergers have a mixed reputation because of their link to a series of a<span>ccounting scandals in 2011 involving Chinese firms that gained access to U.S. markets through these transactions, </span>they're now becoming increasingly popular with cannabis companies. </p><p>According to data from Dealogic, the number of US companies pursuing reverse mergers in Canada has nearly doubled in the last five years.  </p><h2>What's a reverse merger?</h2><p>A reverse merger, or reverse takeover (RTO), is when a private company acquires a public company that's already trading on a public exchange. </p><p>The public company is what's known as a shell, with no real revenue or executive team, though both retail investors and big funds are able to buy and sell shares as with any other publicly-traded firm. </p><p>"Historically,<span> reverse mergers in the US were kind of viewed as a 'backdoor' way of going public," said Charles Alovisetti, a corporate lawyer Denver, Colorado-based firm Vicente Sederberg. But </span><span>"there's nothing necessarily nefarious about it." </span><span></span></p><p><span><em><strong>Read more</strong>: <a href="https://www.businessinsider.com/marijuana-retail-chain-ianthus-mpx-bioceutical-2018-10">A competitor is emerging to challenge the marijuana retail chain dominating the industry, and it just closed a $640 million acquisition</a></em></span></p><p>In a traditional IPO, companies have to register with the Securities and Exchange Commission (or in Canada the Canadian Securities Administrators) and are rigorously vetted by major investment banks, whose analysts and bankers ask a ton of detailed questions about the company's finances.</p><p>The IPO process also involves a months-long "road show" where the company and the investment bankers handling the transaction pitch the company to potential investors. </p><p>Companies choosing the RTO route are able to skip much of that process - though smaller banks do underwrite these types of deals - and step into a public listing immediately after the acquisition closes. </p><p>This can be useful<span style="font-weight: 400;"> if the company is planning to use its stock to go on a buying spree, said Samuel Dibble, a San Francisco-based partner at law firm Baker Botts.</span></p><p><span style="font-weight: 400;">"The one circumstance where I would say, okay, this makes sense is look: we have a really viable company. We're confident we could raise money, but we don't want to wait because we think there's a real opportunity right now to consolidate within the industry," Dibble said.</span></p><p><span style="font-weight: 400;"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Lucy Nicholson/Reuters</span></p><p class="caption">A MedMen store in Los Angeles, California.</p></div><p></p></div></div></span></p><h2>It's deal mania for US-based cannabis retailers </h2><p>Companies that go public via RTO are triggering a deal boom. </p><p>There have been nine cannabis M&amp;A deals so far in 2018, up from just one in 2017, according to data from Viridian Capital Advisors, a cannabis-focused financial advisory firm. The average size of the deals has also increased more than five times in the last year, from $6.5 million to $32.9 million.  </p><p>MedMen, which operates a number of upscale cannabis dispensaries in California, Nevada, and New York, among other states, <a href="https://www.businessinsider.com/medmen-is-going-public-through-a-reverse-takeover-2018-4">went public at the end of May</a> after buying the British Columbia-based Ladera Ventures (formerly T.M.T. Resources), a shell company which previously operated oil-and-gas extraction sites in Alberta.</p><p><span>Acquisitions followed: in October, MedMen <a href="https://www.businessinsider.com/marijuana-retailer-medmen-acquires-pharmacann-for-682-million-2018-10">acquired the medical-marijuana dispensary chain PharmaCann in a $682 million all-stock transaction</a>, nearly doubling the combined firm's footprint overnight.</span></p><p><span>iAnthus, one of MedMen's retail competitors, went public via RTO in 2016 after acquiring Genarca Holdings. In October, <a href="https://www.businessinsider.com/marijuana-retail-chain-ianthus-mpx-bioceutical-2018-10">iAnthus scooped up the Toronto-based MPX Bioceutical in a $640 million all-stock transaction</a>, among many other smaller transactions.</span></p><h2>'Two buckets' of cannabis companies </h2><p>RTOs don't make sense for every cannabis company.</p><p>There are companies like marijuana cultivator Tilray, which, though majority-controlled by a US firm, predominately operate in Canada and don't violate federal law - and are therefore able to list on US-based exchanges like the NYSE.</p><p>And then there are others like MedMen that have opted to go public via a reverse merger on the Canadian Securities Exchange (CSE). The CSE is a secondary exchange based in Toronto - the more mainstream Toronto Stock Exchange won't list companies that distribute or sell cannabis directly. </p><p>Canada <a href="https://www.businessinsider.com/canada-legal-marijuana-sales-start-on-october-17-2018-10">has federal laws legalizing marijuana on the books</a>, meaning Canadian institutions are able to invest in the industry, and that companies dealing with the plant directly are able to access banking services, list on public exchanges, and deduct the regular costs of doing business from their taxes.</p><p>In the US, it's a different story: while recreational marijuana is legal in 9 states and medically legal in 31, it's still considered a Schedule I drug by the US federal government.</p><p><em><strong>Read more: </strong></em><em><a href="https://www.businessinsider.com/medmen-ceo-talks-about-whats-next-biggest-cannabis-company-in-us-2018-10">The CEO of the biggest cannabis company in the US reveals what's next following a $682 million acquisition</a></em></p><p>US-based exchanges won't list cannabis companies with any US operations, no matter what the states say. And most institutions won't invest, fearing a crackdown from federal regulators.</p><p>That leaves them few options to raise money, other than tapping into Canadian public markets.</p><p>"The CSE has become the exchange of choice for US operators," said Vincent Lusardi, the CEO of Curaleaf, a Massachusetts-based cannabis retail company that owns dispensary licenses in a number of states. "It's where investment capital is meeting the opportunity of the moment." </p><p>Curaleaf went public via an RTO in October.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>AP Photo/Ted S. Warren</span></p><p class="caption">Devin Melnyk, a long-time marijuana grower and a consultant with Pure Sunfarms, holds trimmed marijuana as it comes out of a high-volume cannabis trimming machine at a massive tomato greenhouse being renovated to grow pot in Delta, British Columbia.</p></div><p></p></div></div></p><h2>Criticisms abound about reverse takeovers </h2><p>There are a number of drawbacks to reverse takeovers for both investors and the companies themselves. </p><p>For investors, the process of an RTO is "a lot less transparent" than a traditional IPO, said Anna Pinedo, a partner at law firm Mayer Brown.</p><p>"Oftentimes it leads to some degree of concern by the institutional investor community," Pinedo said. Companies that go public through an RTO may not have been vetted in the same rigorous way as IPOs, leading to a dearth of solid information about the company's financials, she said.</p><p>For the company itself, it may not know exactly who owns their shares since they are acquiring a shell - and the shareholders may be in it for a short-term profit, Dibble said.</p><p>"<span style="font-weight: 400;">It doesn't guarantee that there's any consistent trading market or that they're truly investors out there who are interested in owning your stock," Dibble said. "There's a lot of nefarious trading activity that goes on in any thinly-traded stock." </span></p><p><span style="font-weight: 400;">That can lead to short-term volatility, as in Curaleaf's example, which dropped precipitously on the day it started trading (though it has since mostly recovered). </span></p><p><span style="font-weight: 400;">Dibble said he always advises cannabis companies that there are easier ways to raise money than through an RTO. </span></p><p><span style="font-weight: 400;">If you can get the money from a private investor, it's cheaper and faster than an RTO - and you can control who owns shares in your company, Dibble said.</span></p><p><span style="font-weight: 400;">"You won't lose your strategic advantage," he added. </span><span style="font-weight: 400;"></span></p><h2>See also:</h2><ul><li><a href="https://www.businessinsider.com/top-marijuana-vc-firms-by-deal-count-2018-10">The top 12 venture-capital firms making deals in the booming cannabis industry that's set to skyrocket to $75 billion</a></li><li><a href="https://www.businessinsider.com/aurora-cannabis-went-public-on-the-nyse-amid-industry-volatility-2018-10">A huge marijuana company that just went public in the US saw its shares slip after a damning industry report. Here's why cannabis investors aren't worried.</a></li><li><a href="https://www.businessinsider.com/hedge-fund-billionaire-leon-cooperman-investing-in-marijuana-2018-8?r=teaser">Hedge fund legend Leon Cooperman is investing in the marijuana industry - and it's another sign the sector is heating up</a></li></ul>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/retractable-apartment-2018-10">We toured a $3.6M retractable apartment in NYC - here's what it's like inside</a></h3>        <div>                    </div>    </div>

You Searched For "pharmacann" and got 7 results

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