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Happy Friday Cultivated readers,
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.
Let’s get to it:
New York Gov. Andrew Cuomo on Wednesday said legalizing marijuana would be one of his chief goals 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.
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.
And you could add Mexico City to that list as well if President Andrés Manuel López Obrador gets his way and passes marijuana reform this year.
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.
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 highly public MedMen – Pharmacann blow up in November.
I also wanted to introduce you all to Yeji Jesse Lee, 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.
Last, we’re still covering the larger story of layoffs across the sector. You can find ways to securely reach me at the bottom of this newsletter if you have a tip.
Here’s what we’ve been writing about:
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.
Once seen as a healthier alternative to smoking, the consequences of vaping were thrust into the spotlight this fall as thousands of people across the US were sickened after vaping cannabis and nicotine products.
Against this backdrop, a startup called Respira 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.
“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.”
Wayland Group just revealed it’s shedding workers as the Canadian cannabis firm restructures amid an industry shakeout
Wayland Group said it lost 26 workers 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.
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 seeking protection from creditors to pursue a restructuring. The company received court approval for financing to help in the process.
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.
The once red-hot cannabis industry is coming back down to earth.
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.
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 uniquely challenging phase. 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.
Capital raises, M&A activity, partnerships, and launches
- Cresco Labs and Origin House finally closed the merger that was first announced in April. The deal, originally announced at $825 million, was slashed in half to roughly $400 million in November.
- 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.
- CannabisWorks, a recruitment and executive search firm, officially launched in January to focus on the North American cannabis industry.
- Axim Biotechnologies is acquiring Sapphire Biotech, an oncology R&D startup, to develop IP around cancer detection and tumor reduction with cannabinoids.
- Ericka Pittman is joining Viola, 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.
- Max Cohen has resigned as Jushi Holdings COO. He’ll stay on as a member of the company’s board.
- Art Massolo, formerly chief business development officer at Mile High Labs, has joined cannabis headhunting firm Hunter + Esquire.
- Former Overstock president Stormy Simon is taking over as CEO of High Times. 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.
- Ron Goodson is replacing John Cochran as Harvest Health & Recreation’s COO. Goodson previously served as COO of Verano Holdings.
- John Fowle is joining Akerna as the company’s new CFO.
- Colin Moore is taking over from Navdeep Dhaliwal as Supreme Cannabis’s interim CEO. Dhaliwal is departing the company.
Chart of the week
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:
What I’m reading
Adding CBD to food, drink was a hot trend, until FDA chimed in (The Wall Street Journal)
People are seeing ‘Cats’ while high out of their minds. These are their stories. (The Washington Post)
America loves its unregulated wellness chemicals (The Atlantic)
Canada’s legal cannabis market gets off to a slow start (The Economist)
Marijuana’s money man (The Wall Street Journal)
Testing drivers for cannabis is hard. Here’s why. (CNN Business)