Debra BorchardtIt’s time for your Daily Hit of cannabis financial news for June 8, 2018.
On The Site
North America
The prospect of legalized cannabis in North America just got a little bit brighter. On June 7, 2018, the Senate voted to approve Bill C-45, a measure legalizing recreational cannabis in Canada. The measure will now go to the House of Commons for a final vote.
If approved, the potential financial effect could be tremendous. A recent report released by Stifel Financial estimated “a total medical market opportunity of $1.3 billion CAD and a recreational opportunity of $8 billion CAD (retail sales).”
In the United States, President Donald Trump stated that he would most likely support a bipartisan bill, introduced by Massachusetts Sen. Elizabeth Warren and Colorado Sen. Cory Gardner, that would essentially end the federal war on cannabis. “I support Sen. Gardner. I know exactly what he’s doing; we’re looking at it. But I probably will end up supporting that, yes,” Trump told reporters, as quoted by NPR.
Kush Bottles
Kush Bottles (KSHB), a company specializing in cannabis packaging solutions, announced that it has entered into a definitive agreement with investors for a registered direct offering priced at $36 million. A.G.P./Alliance Global Partners is the sole placement agent for the offering.
Under the agreement, Kush Bottles will sell to investors 7.5 million shares of common stock, at a price of $0.001 per share, and warrants to purchase up to 3.75 million shares of common stock at a combined offering price of $4.80 per share.
In Other News
MedMen Enterprises
MedMen (MMEN) changed its compensation structure in an announcement after the market close on Friday. The company came under fire from critics about its overly generous compensation to the top executives. The statement read, “Co-founder and CEO Adam Bierman and Co-founder and President Andrew Modlin will receive their LTIP units of MM Enterprises USA LLC according to the following schedule. One-third of the total units will vest when the price of MedMen’s Subordinated Voting Shares reaches CA$ 10 in the open market, another third will vest when the share price reaches CA$ 15 and the final third when the share price reaches CA$ 20. The price will be determined as a 5-day VWAP in any exchange where MedMen shares are traded. This modification to the grants under the LTIP was made to provide greater economic alignment with MedMen’s shareholders.”
Hemp Industries Association
Hemp Industries Association Reaches Settlement with DEA and Affirms Victory from 2004 Hemp Foods Rules Challenge
The HIA and DEA then entered into mediation that resulted in a recently negotiated settlement requiring the DEA to take several actions. Most significantly, the DEA issued an internal and external directive to federal agencies, with language agreed to by the parties, clarifying that the mere presence of cannabinoids does not render material a controlled substance—as the issue of whether a material constitutes a drug is rather in fact determined by whether the material is derived from the non-exempt parts of the plant. This directive should provide clarity to federal agencies and minimize interference with the expanding flow of hemp commerce.
