Toronto-based cannabis company Flora Growth Corp. says it has the United States, Germany and Mexico in mind as its closes a $30 million cash-and-stock acquisition of Miami-based JustCBD.

The deal announced Monday includes $16 million in cash and an additional 9.5 million privately issued Flora common shares to the companies that own and operate JustCBD, Just Brands and High Roller Private Label.

Flora Growth CEO Luis Merchan said the acquisition will strengthen the company’s foothold in the U.S. CBD market and give the company an “incredible opportunity to leverage our economically advantaged cultivation to support the expansion of the JustCBD brand in the global market.”

Flora Growth mentioned Colombia, Germany and Mexico as expansion targets because they allow CBD sales.

Flora Growth says it plans to leverage the CBD it grows in Cosechemos, Colombia, to reduce input costs for JustCBD products, which include tinctures, edibles, topicals and pet products.

The acquisition comes four months after Flora brokered a licensing agreement with Tonino Lamborghini, an Italian luxury lifestyle brand with food and beverage interests, to sell CBD-infused beverages in North America and Colombia.

Also, Flora Growth bought California vape maker Vessel Brand last November in another stock-and-cash deal worth $30 million.

JustCBD CEO Hussein Rakine will work on Flora’s U.S. expansion strategy, the companies said.

Flora Growth Corp. trades on the Nasdaq as FLGC.

Lawmakers in Washington state are considering a last-minute ban on intoxicating hemp-derived products such as delta-8 THC.

According to The Associated Press, the recently introduced bill was spurred by the booming hemp industry.

Many businesses have turned to Washington state’s hemp industry for cheaper biomass in order to produce intoxicating cannabis products that, because of their hemp origins, can also be sold at gas stations and other such retail outlets.

Such products have been sold to minors, said lawmakers, who are hoping to stop that practice.

The question of what should be done about cannabinoids such as delta-8 THC and others derived from hemp has divided the Washington state cannabis industry, the AP reported.

Many entrenched marijuana industry participants are taking advantage of hemp flower – which is typically far cheaper than marijuana flower – to manufacture and sell products that compete directly with licensed farmers’ MJ products.

If Washington were to move forward with a ban on intoxicating hemp products, it would join at least 17 other states that have enacted similar bans over the past year, the AP noted.

New York, for instance, banned delta-8 THC last spring.

A Texas court has dismissed a lawsuit accusing pharmaceutical CBD maker GW Pharmaceuticals of violating another company’s patented method of cannabidiol extraction for its epilepsy drug Epidiolex.

The 2020 lawsuit from Canadian cannabis producer Canopy Growth alleged that GW, now part of Jazz Pharmaceuticals, knowingly used a Canopy-patented cannabis extraction method.

U.S. District Judge Alan D. Albright ruled in favor of GW on Feb. 25. His ruling leaves a path for Canopy to appeal he decision.

During the course of the case, GW produced “confidential technical documents” about their manufacturing process, Albright wrote.

Subsequently, the court interpreted the meaning of a specific technical term in Canopy’s patent, “CO2 in liquefied form under subcritical pressure and temperature conditions.”

In light of GW’s documents and the court’s interpretation of that term, the ruling noted, Canopy determined it “cannot prevail on the issue of infringement.”

Smiths Falls, Ontario-based Canopy has the right to appeal the court’s interpretation of the patent term in question.

GW, headquartered in the United Kingdom, was acquired by Jazz Pharmaceuticals in 2021.

On a Tuesday investor call, Jazz CEO Bruce Cozadd said the company was “pleased with where the court came out on the final judgment in the litigation with Canopy.”

Epidiolex is made from CBD extracted from marijuana grown in the UK.

“They do have the right to appeal that, but we’re certainly pleased with where we stand,” Cozadd added.

A Canopy spokesperson said in a statement to Hemp Industry Daily that, “as this matter is still ongoing and before the courts, Canopy Growth will not provide further comment at this time.”

Net sales of Epidiolex were worth $463.6 million in Jazz’s 2021 fiscal year, according to annual financial results released Tuesday. Jazz Pharmaceuticals trades on the Nasdaq as JAZZ.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.

Buying a point-of-sale system for a cannabis store is no small endeavor. Many factors come into play. But the decision-making process can be made easier by following some general guidelines.

A cannabis retailer should choose a POS system with features that support their business model, operations and brand, according to cannabis retail designers, consultants and POS experts.

“A POS is going to help us run our business, right? So what tools do you need to be able to run that business?” asked Krista Raymer, co-founder of Vetrina Group, a Toronto-based cannabis consulting firm.

“If you’re data-focused, you want a POS provider who is going to provide you the data to make decisions. If the majority of your business is going to be run through e-commerce, finding a POS provider that has a smooth integration with e-commerce is going to be really important.”

Christine Foss, Director of Product for POSaBIT Inc., a Washington state-based POS and payment company, said while there’s a lot to consider when choosing a POS system, ultimately a retailer’s business operations should drive the decision-making process.

Most cannabis retailers start by considering their workflow and how their POS will support that.

“Devices have limitations on the workflow. If you have a register that’s bolted to the counter, you can’t walk around the store with it if you want to have an Apple store model,” Foss said.

Mobile is also useful for retailers who plan to fulfill lots of online or curbside orders, or make deliveries.

But that brings up another point – internet access. What happens if your store’s Wi-Fi goes down or your employee is making a delivery and needs to complete a transaction in an area with bad connectivity? Check for systems that have an offline mode that can be updated once connectivity is re-established, Foss suggested.

Compliance, control and flexibility

Like every aspect of the cannabis industry, “compliance is king” when choosing a POS system, Foss said.

The POS provider should keep on top of changing laws—whether that’s purchase limits or tax laws—and, ideally, help you avoid problems, she said.

Another feature in POS systems is the program’s ability to control what budtenders can and cannot do at the point of purchase and provide visibility back to the owners based upon each purchase.

“Sometimes what happens is budtenders will give away too many discounts, or they’ll give away a discount that they shouldn’t,” Foss said. “We can set up discount stacking limitations, we can allow expectations, or we can have a whole discount limit within the store, so no one’s getting more than 50% off.”

Another factor for retailers to consider is whether they want to pull up a transaction by the product or by the customer, Foss said.

Systems that can pull up the customer first at the point of a transaction will allow a budtender to access that person’s profile, including their favorite products, any recent purchase history or other notes about the customer. That feature supports more personal engagement with the customer, which is helpful if personalized customer interaction is part of the retailer’s brand, Foss said.

Upgrading the ATM model

A POS system improves upon the traditional ATM model many dispensaries have, and it can increase profitability, Foss said.

POS systems allow cannabis retailers to make debit sales, resulting in higher average transactions than cash sales alone, Foss said.

For example, a POSaBIT case study of a Washington state cannabis retailer found that the store’s average debit ticket was nearly $20 more than the average cash ticket.

“It’s just the nature of the beast. People spend more money with a card,” Foss said. “A lot of owners will say, I make a lot of money from my ATM. And yes, they do. But the amount of money you’re going to make up from that average ticket being so much larger is a much bigger difference than making dollars off the ATM.”

A POS system aligned with all cannabis rules and regulations can also help retailers avoid potential legal problems associated with dispensary ATMs, like the recent warning from Visa.

The financial behemoth notified banks and other financial institutions that it was aware of a scheme under which cashless ATMs in dispensaries were being deliberately miscoded to disguise cannabis purchases—an apparent way to circumvent federal marijuana prohibition and banking rules.

POS systems aren’t perfect

The biggest complaints about POS systems from customers usually target hardware reliability as well as system breakdowns, slow speeds or reporting errors, Foss said.

Another logistical headache can be details like naming conventions for products. For example, does the POS system allow products to be shared across stores? Once the product is in the system at one location, is it auto-generated in the system? This avoids having a database with multiple entries of the same product, Foss said.

But at the end of the day, one of the biggest concerns with POS systems is customer service. So make sure any vendor you choose offers top-notch customer service and is highly responsive in the event of problems, Foss advised.

“Not being able to reach someone when something is really wrong is a problem,” Foss said.

“You know there’s a big difference between a donut shop versus a cannabis store where there are compliance issues and some really bad ramifications if you don’t get things resolved quickly.”

Download the MJBizDaily Cannabis Retail Buyers Guide for a checklist of what to consider in buying POS systems, plus more insights on designing an effective cannabis retail store.

(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the cannabis industry. David Durkee is vice president of new ventures for Quicksilver Scientific, a manufacturer of premium nutraceuticals and delivery technologies based in Louisville, Colorado. This column first appeared at MJBizDaily.)

Cannabis beverages have arrived, but where are the consumers?

Canadian investment firm Canaccord Genuity estimates THC-infused beverages will be a $340 million market by 2022; by comparison, their alcohol counterparts raked in $346 billion in 2021.

To even approach the same levels of market share, cannabis beverage makers need to understand the gaps and how to bridge them.

Consumer sentiment is often the main driver in new category creation, and the same holds true for the burgeoning marijuana beverage industry.

In the current market, there are four major areas of opportunity driven by consumer sentiment that makers should consider.

1. Alcohol drinkers are becoming more mindful of the impact alcohol has on their health and well-being and seeking alternative ways to relax or socialize.
2. New consumers are curious about or easing into the recreational cannabis category but are intimidated by the stereotypical act of lighting up and/or playing the guessing game with edibles effects.
3. Existing cannabis consumers are seeking a way to complement their existing consumption preferences or to replace traditional smoking habits.
4. People sensitive to the effects of alcohol no longer want to feel hungover but still want a sessionable experience with friends that allows them the social and physical benefits.

Once makers have a grasp on the consumer insights that are driving growth in the beverage category, they can begin to consider the unique market opportunities that work in their favor.

• Wider beverage market and beer sales are in a slump. For the past several years, growth within the larger beverage category has stagnated, pushing many manufacturers to invest heavily in R&D within new markets. Alcohol replacement with a cannabis beverage is one of the biggest market opportunities, which is why major beer companies and brewers such as Molson Coors, Heineken and Pabst are diving into the space.
• THC product popularity is growing. 18 states have now legalized recreational use, creating a $28 billion cannabis market. Specifically, growth in the cannabis-infused beverage category was up by 22% year-over-year in 2020 versus 2019, and 57% of those who do consume cannabis beverages in the U.S. are consuming them at least weekly.
• New technology is creating faster onset and better absorption. Cannabis beverages offer advantages that other popular segments such as edibles and gummies don’t. The body has to digest edibles in order to access the active ingredients, but with a cannabis beverage, the onset, absorption and bioavailability is much quicker and more effective. This helps prevent the common misadventure of inexperienced consumers taking an edible, not feeling the effect right away, growing impatient, taking another – and overconsuming.
• Cannabis has a broader range of health benefits. Any kind of function or attribute a beverage maker might want to work with is available from medicinal to nutritional. Unlike alcohol, cannabis beverages can deliver different terpenes and nutraceuticals, offering an array of beneficial effects on the nervous system, the immune system and the metabolic system all at once.
• Potential manufacturing advantages. A 12-ounce can of beer contains only 2 ounces of alcohol, but you can’t shrink it or make it into a concentrate and follow the lucrative Coke and Pepsi model of shipping concentrate to a manufacturing facility. However, when federal legalization happens, CBD- or THC-infused beverage manufacturers would be able to take advantage of this model, shipping their concentrate to existing facilities that already make carbonated beverages. With the recent decline in carbonated beverage and beer sales, it’s reasonable to assume that these facilities would be relatively underutilized, creating an opportunity to step in and take advantage of production availability.

While consumers might seem ready and the market fertile, there are many capital requirements and complex issues that make the marijuana beverage industry a complicated one to navigate.

Here are some challenges makers should also keep front of mind.

• Slotting and displays within existing dispensaries. This can be a potential extra cost as most cannabis beverages require a refrigerated display and would come at an extra cost to the supplier or distributor. Additionally, unlike traditional dispensary offerings that can sit under a glass display case or in a jar within the retail space, refrigerated displays are not small. The space and configuration requirements will differ depending on the retail outlet.

• Sales at outlets other than dispensaries. The current U.S. cannabis industry consists of a complex state-by-state patchwork of laws around CBD- and THC-infused beverages. Some markets allow sales of CBD beverages in liquor stores, and CBD cocktails are available in bars, while drinks containing THC can be sold only in licensed dispensaries or retail outlets in states where cannabis has been legalized. And, except in very limited circumstances in certain jurisdictions, most CBD- or THC-infused beverages cannot be consumed in public spaces such as restaurants, bars or other venues. Limiting their consumption to private or home settings also limits current economic opportunities without federal legalization.

• Size and weight restrictions. The sheer weight and bulk of beverages creates its own distribution challenges, which is why major beverage companies such as Coke and Pepsi have invested in developing their own distribution networks. Smaller items weigh less and are easier to transport and distribute through existing channels. They don’t take up as much merchandising space and don’t require refrigeration to make them palatable for immediate consumption. In addition, consumers are less likely to buy large amounts of heavy and bulky products when they can just as easily purchase lightweight, portable items that can go anywhere, such as vape pens or gummies.

• Distribution and interstate travel requirements. A little less than half the U.S. states and territories have legalized adult-use marijuana by adults, so recreational cannabis is still illegal in all the other markets and at the federal level, which means transportation of products across state lines is prohibited. That limits the economy of scale that other beverage manufacturers have in terms of the ability to use one large physical facility to serve several distribution centers in other states or interstate shipping of concentrate.

As with any new market, there will be ups and downs as brands compete for market share while also navigating the many regulatory, supply-chain and manufacturing issues.

Both established brands and those new to the ready-to-drink market are in for a bumpy ride, but keeping these challenges front of mind can help set them up for success.

David Durkee can be reached at david.durkee@quicksilverscientific.com.

To be considered for publication as a guest columnist, please submit your request to editorial@staging-hempindustrydaily.kinsta.cloud with the subject line “Guest Column.”

Fresh off its first survey of the American hemp industry, the U.S. Department of Agriculture is proposing a deeper analysis of the sector through another survey in partnership with the University of Kentucky.

The USDA recently gave notice that it plans to survey roughly 20,000 hemp producers to find out more about market conditions.

“There is little to no information on demand for hemp-derived products, and market risks are exacerbated by lack of transparency and consistency in reporting,” the USDA wrote in its survey proposal.

The agency’s first survey, in 2021, revealed that hemp farmers are overwhelmingly white and male while also younger and more diverse than producers of other crops.

The USDA said it would like to conduct its survey in conjunction with the University of Kentucky annually to “determine break-even production costs and range and implications for market structure.”

If the project is approved, the university would carry out the survey and summarize raw data for the USDA’s National Agricultural Statistics Service.

The USDA is taking public comments on the proposal through March 25.

A blockchain startup in Utah and an Indigenous-owned company in Alberta, Canada, are collaborating to use hemp to remove carbon from the atmosphere and compete for a $100 million prize from Tesla CEO Elon Musk.

The proposal from The Hemp Blockchain Inc. and the FFES Environmental, a company owned by the Sucker Creek First Nation in Canada, calls for the Canadians to grow hemp on First Nation land, with the Utah company measuring and verifying the crop’s carbon footprint.

The partners hope the plan wins funding from the XPrize Carbon Removal fund, a $100 million purse set up by Musk.

The prize is designed to incentivize technology to remove carbon from the atmosphere.

Winners must demonstrate technology that can:

• Remove at least 1,000 tons of carbon per year.
• Model their costs at a scale of 1 million tons per year.
• Show a pathway to achieving a scale of gigatons per year in the future.

Sucker Creek First Nation is a Cree First Nations band government of about 2.000 people, located near Enilda, Alberta.

The Hemp Blockchain is a privately held company that provides blockchain verification for hemp growers and processors looking to buy or sell voluntary carbon credits.

Hemp Blockchain Chief Operating Officer Steven Prosniewski told Hemp Industry Daily the tech startup plans to detail the tribe’s plans to produce hemp-fiber products that can replace plastic and be used as construction components.

Blockchain technology, he said, will allow hemp growers to give investors verifiable data about how much carbon their hemp plants are sequestering.

He argued that the hemp industry needs hard data to verify the plant’s reputed ability to sequester carbon from the air and “sink” it in manufactured products.

“We see the demand out there,” Prosniewski said. “Everybody wants to see this happen.”

Read more about how hemp companies are using blockchain technology here.

California marijuana operator Moxie is suing the billionaire family backing insolvent Green Growth Brands, claiming fraud in connection with a $310 million merger deal in 2019 that was scrapped.

Moxie, as MXY Holdings, filed the suit this week in Delaware’s Chancery Court against the Ohio-based marijuana and CBD company’s founder, Joseph Schottenstein, his family members and others, Law360 reported.

The suit claims the defendants fraudulently misrepresented their intentions, persuaded Moxie to loan $5 million to Green Growth Brands, then scrapped the merger deal several months later without repaying the loan or a $10 million stock termination fee.

The defendants “enriched themselves by siphoning off Moxie’s labor, resources, and goodwill — all the while stifling Moxie’s ability to engage in competitive business activities and carry out its strategic growth plans,” according to the complaint obtained by Law360.

Schottenstein and the other defendants didn’t immediately respond to a Law360 request for comment.

The Schottenstein family is one of the richest families in the United States, deriving its wealth from grocery stores and stakes in the clothing and shoe industries.

Green Growth once had marijuana operations in Florida and Nevada.

The company also owned a chain of shopping mall kiosks focusing on CBD-infused personal care and beauty products and had wholesale agreements with Greg Norman, Seventh Sense and Green Lily, according to regulatory filings.

MJBizDaily reported that then-Green Growth CEO Peter Horvath cited the changing cannabis industry’s environment for terminating the deal with Moxie and that GGB had agreed to repay a $5 million “advance” and reimburse Moxie $4 million in deal fees by July 1, 2020.

But by May 2020, Green Growth had filed for insolvency protection in Canada.

The court filings said that the company had:

• Always been cash-flow negative.
• Faced liquidity issues since early 2019.
• More than $100 million in debt.

Green Growth lost $66 million on revenue of $33.8 million during its last six months of 2019, according to regulatory filings.

A suburban Atlanta county is wrongly seizing hemp-derived THC products and scaring businesses away from legal products, according to an Atlanta law firm that is suing to stop the practice.

The lawsuit asks a state court to block seizures or arrests in Gwinnett County, where a district attorney recently wrote a nonbinding opinion that intoxicating hemp products including delta-8 and delta-10 THC violate Georgia drug law.

Attorney Tom Church told Hemp Industry Daily that the interpretation is incorrect and is chilling business for Georgia hemp manufacturers and retailers.

“This stuff is sold throughout the entire state, mostly in vape stores,” he said.

The complaint says that hemp extracts are being sold “openly and publicly under the reasonable belief that Georgia has legalized these products as long as the cannabinoids in the products were sourced from hemp.”

Church said that several businesses selling the intoxicating hemp derivatives have been raided, with at least one arrest.

His clients are vape stores that have not been raided but are seeing a loss of business because of the January DA statement that the hemp products “contain controlled substances that in some cases are lethal,” according to the Gwinnett Daily Post.

A hearing in the case had not been set Monday.