The maker of Raw Rolling Papers will have to pivot production by the end of spring to comply with a federal court order telling the company to stop making false claims about its organic hemp line and a nonexistent charitable foundation.

Raw’s competitor Republic Brands took the company to court alleging that Raw’s labels included false information. The owner of a suite of rolling papers that include OCB and Top branded papers eventially obtained the permanent injunction against RAW’s distributing arm, HBI International.

On Jan. 31, the United States District Court for the Northern District of Illinois ordered HBI to stop making certain claims about its products and “immediately” cease manufacturing, ordering, or replenishing its inventory with goods that fail to conform to the court’s order.

The injunction order follows a jury’s verdict that HBI, the distributor of rolling paper brands RAW and Juicy Jays, engaged in unfair competition and violated the Illinois Uniform Deceptive Trade Practices Act through its packaging and promotional activities.

According to the findings, HBI marketed its papers as having been made by artisanal craftsman in “Alcoy, Spain,” referred to Alcoy as the “birthplace of rolling papers,” and affixed an “Alcoy” stamp to some of its products.

However, in a Jan. 19 ruling, the court found that HBI “makes no rolling paper in Alcoy, Spain, whatsoever.”

HBI has also claimed on packaging and in interviews that it contributes its funds and sales proceeds to a 501c charity referred to as the “RAW Foundation,” which the court found in a Dec. 6 ruling to be “nonexistent.”

The court enjoined HBI from continuing to state, imply, or suggest that it operates or contributes funds or sales proceeds to a charitable entity or foundation referred to as the “RAW Foundation” or making reference to the “RAW Foundation” in text or images.

The RAW makers must stop production and sales of all promotions and products that use the Alcoy stamp or references the fake foundation, which happens to be much of the current inventory, by the end of May.

The order also permanently prohibits HBI from making any statement or communication, or engaging in any promotion or advertising activity that states, implies, or suggests that:

• RAW Organic Hemp rolling papers are “unrefined;”
• RAW Organic Hemp rolling papers are made with natural hemp gum, or that the adhesive used in RAW Organic Hemp rolling papers is made from or contains hemp;
• RAW Organic Hemp rolling papers are, or ever were, the world’s first or world’s only organic (or organic hemp) rolling papers;
• The bulk paper used to make RAW Organic Hemp rolling paper products is made in Spain;
• RAW Organic Hemp rolling papers are made using wind power or are powered by wind;
• HBI uses or used the center of the hemp stalk for its RAW Organic Hemp rolling papers;
• HBI or its founder Joshua Kesselman invented rolling paper pre-rolled cones;
• The OCB Organic Hemp papers are knock-offs, “RAWnabees,” copies, or fake versions of RAW.

The post Federal Court Orders RAW to Stop Making False Claims About Papers, Foundation appeared first on Green Market Report.

Vegas and Rihanna aren’t the only ones benefiting from the Super Bowl sales boosts this weekend.

Marijuana-friendly football fans are expected to restock their stashes ahead of the Sunday night showdown, and cannabis brands are increasing ad spend to include more Super Bowl-related messaging and promotions.

The Saturday and Sunday before last year’s championship match saw a 24% rise in cannabis sales versus the daily average for the rest of February, according to cannabis marketing platform springbig.

The firm reported that “a number” of its dispensary clients have translated that into investing 25% to 30% of their monthly budgets in Super Bowl-related ads, as opposed to 0% to 10% last year.

Arizona dispensaries are also preparing for an influx of tourists and townies looking for party favors and hangover relievers. The game is being held at State Farm Stadium in Glendale, a suburb of Phoenix, which has a seating capacity of more than 63,000.

“We’re looking to even higher sales this year, especially as the Super Bowl takes place in a recreational Arizona for only the second time (and this year, expecting fewer COVID precautions),” a spokesperson for springbig told Green Market Report.

Companies are looking at the opportunity as one to take advantage of. Trulieve, STIIIZY, Wana Brands, and even System of a Down’s bassist Shavo Odadjian – who will be promoting 22Red – will be hosting and participating in events to market their brands.

STIIIZY is also linking up with Weedmaps at the Rolling Stone Live pre-Super Bowl concert to do product giveaways and merchandising activation.

Advertising campaigns are kicking off earlier this time around, too.

Dispensary promotions aligned with “Big Game” messaging started as early as Feb. 1, “whereas last year most brands began Super Bowl messaging only the Thursday or Friday before the game,” according to Fyllo.

Companies with operations in Arizona are using focused messaging strategies due to the overlap with the PGA Tour’s Phoenix Waste Management Open, which happens to be the most packed PGA golf tournament in the world.

Both events are expected to draw huge crowds over the course of the weekend, and due to the overlapping tentpoles, “some advertisers have geared audience strategies to focus more on tourists and out-of-state visitors, informing them of the availability of legal cannabis in Arizona,” Fyllo said.

Around 700,000 people attend the golf event, rounding out a “significant” opportunity to reach new users who are in the state and near the Phoenix market for the weekend, the firm said.

The post Dispensaries Lure Shoppers with Super Bowl Deals, Events appeared first on Green Market Report.

Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) achieved positive adjusted EBITDA and reduced its debt even though it still recorded a net loss in its latest quarterly earnings, announced Thursday.

The company reported total revenues of C$61.7 million ($45.9 million), an improvement over the C$49.3 million reported in the previous quarter and C$60.6 million (1.8%) in the prior year period.

Net loss in the quarter was C$67.2 million, versus C$51.9 million in the prior quarter and C$75.1 million for the same time last fiscal year.

Aurora attributed the rising revenue to “growth across all cannabis business segments” as well as a full-quarter contribution of C$6.6 million from Bevo Farms, which the company acquired in August 2022. Cannabis revenues were up around 20% for the quarter.

Since 2021, Aurora has been trying to put itself on the path to profitability through cost cuts and high-margin medical cannabis revenue. In addition to the boost from Bevo, a strong euro beefed up European margins.

Adjusted EBITDA for the quarter was positive at C$1.4 million, versus a loss of C$7.4 million in the previous quarter and loss of C$7.1 million in the prior year period.

“We are pleased to have delivered on our commitment to achieve positive adjusted EBITDA in Q2 2023, following a tremendous effort to realize approximately $340 million of total annualized savings since February 2020,” said CEO Miguel Martin, who added that quarterly growth was primarily driven by its international medical program.

“Our Canadian rec business also demonstrated sequential growth driven by significant product innovation, and our Canadian medical cannabis business continued to benefit from strong patient relationships and high barriers to entry,” he added.

Aurora had around C$258.7 million worth of capital and wrote in its filings that the reduction of operating costs, access to a shelf prospectus to raise funds, and its current liquidity are enough to fund operating activities and cash commitments for investing, financing, and strategic moves.

“Looking ahead, we are focused on profitable growth opportunities across all segments, ongoing discipline in capital deployment, and our ability to generate positive operating cash flow as we continue to build value for shareholders,” Martin said.

The Canadian giant published its financial and operational results for the fiscal second quarter ending Dec. 31, 2022.

The post Aurora Cannabis Revenue Boosted by Strong Euro appeared first on Green Market Report.

Awakn Life Sciences Corp. (NEO: AWKN) (OTCQB: AWKNF) was asked by the OTC Markets group to issue an explanation behind the timing of Feb. 6 promotional emails and its stock price doubling at one point Thursday.

The OTC further requested that the company to clarify whether it has participated in what is commonly known as a “pump-and-dump” scheme, where false or misleading information is proliferated to create a buying fever that would “pump” up the price of a stock before moving to “dump” stock shares via selling their own shares at an inflated price.

“The company has not,” Awakn wrote in a Feb. 9 statement.

According to Awakn, an inquiry by management proved that “none of the company’s executive officers, directors or, to the knowledge of the company, any controlling shareholders or third party service providers, sold or purchased shares of common stock of the company within the past 90 days.”

Awakn said that it has simply continued work under an investor communications and digital marketing agreement with JRZ Capital LLC, which was disclosed in an Oct. 8, 2021, press release. JRZ Capital LLC was paid $50,000 in January this year to help send promotional emails for Awakn until the end of March.

On Monday, “OTC Markets informed the Company that it became aware of certain promotional activities concerning the Company and its common stock traded on the OTCQB Marketplace, specifically the distribution of promotional emails by third-parties, SmallCapFirm, StockWireNews, and Stock Street Wire discussing the float as well as potential catalysts of the company and summaries of recent press releases,” Awakn wrote in a Feb. 9 statement.

“The company was not involved in the creation of the materials, however has subsequently reviewed the specific details related to the company, and has confirmed these to be factual,” the company continued.

Awakn said that it is aware that the promotional activity “coincided with increased trading activity in the company’s common shares beginning on Feb. 6, 2023.”

However, the company said it didn’t believe the promotional activities were the only reason for the hike in trade volume this week, but rather attributed the increase to “currently heightened investor interest as a result of its recent press releases which disclosed that it had received ILAP approval in the U.K. as well as the initiation of an investigative study of a novel formulation of (S)-ketamine.”

Over the past year, Awakn has been contracting JRZ Capital, Geelon & Co, Just Capital Consulting, KCSA Strategic Communications, and Street Smart to aid in public relations and marketing efforts.

The post OTC Flags Awakn Life Sciences for Stock Promotion appeared first on Green Market Report.

Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) reported slumping revenues on Thursday and signaled a new cost-savings era that includes cutbacks on cultivation and 800 layoffs.

The stock fell more than 8% in early trading on the news to lately sell at $2.52, a big drop from its year high of $9.61.

The Canadian cannabis giant published its financial results for the third quarter ending Dec. 31, 2022.

Net revenue of $101 million in the quarter declined 28% versus the same period in the previous fiscal year. Canopy blamed the drop in revenue on several factors:

• Increased competition in the Canadian adult-use cannabis market
• The divestiture of C3 Cannabinoid Compound Company GmbH
• A decline in the U.S. CBD business
• Softer performance from Storz & Bickel and This Works.

Canopy acquired the German C3 for C$41 million in 2019 and then sold it in 2021 for C$114 million. C3 reported sales of C$53.8 million in Canopy’s 2020 fiscal year and C$62.3 million in 2021.

Cash Burn

The new restructuring also makes sense for Canopy considering historical cash burn has swelled its net losses 131% over the year to $266.7 million. Cash and short-term investments fell by a whopping $583 million to $789 million at the end of December from $1,372 million at the end of March 2022.

The company attributed this to the impact of cash used in operating activities, the first tranche of the term loan credit agreement repayment of $118 million, as well as cash used for acquisitions and investments, including the acquisition of the Verona, Virginia, manufacturing facility for BioSteel and a premium payment made to obtain an option to acquire Acreage Holdings Inc.’s outstanding debt as part of the October 2022 CUSA announcement.

Gross debt amounted to $1.2  billion on Dec. 31, 2022, an improvement over the debt level of $1.5 billion at the end of  March 2022.

“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” CEO David Klein said in a statement. “These changes are difficult but necessary to drive our business to profitability and growth.”

Closing Cultivation

Canopy Growth said that it would be transitioning to an “asset-light model” in Canada by exiting cannabis flower cultivation in its Smiths Falls, Ontario, facility, ceasing the sourcing of cannabis flower from the Mirabel, Quebec, facility, and moving to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.

The changes are in addition to multiple cost reduction activities planned for the year, including the divestiture of Canopy Growth’s Canadian retail operations, the organizational restructuring of certain corporate functions, and the closure of the Scarborough, Ontario, research facility.

The company intends to close its 1 Hershey Drive facility in Smiths Falls, Ontario, in addition to reducing headcount across the business by approximately 60%, or 800 positions. Of those, 40% are impacted immediately.

Management believes these cost reduction initiatives will reduce the annual cost of goods sold and selling, general, and administrative expenses by a combined $140 million–$160 million over the next 12 months, bringing the total cost reduction target to $240 million–$310 million inclusive of the reductions announced in April 2022.

Canopy Growth also said it is still committed to remaining dual–listed on the TSX and the Nasdaq as it continues pursuing its U.S. entrance strategy through Canopy USA.

“The right-sizing of our Canadian business is expected to significantly reduce our cash costs,” said CFO Judy Hong. “Canopy is firmly on the path to deliver at least quarterly breakeven adjusted EBITDA in our Canadian cannabis business in fiscal 2024, even at current revenue run-rate.”

The post Canopy Slashes 800 From Payroll, to Restructure After Revenues Slide appeared first on Green Market Report.

Irwin Naturals Inc. (CSE: IWIN) (OTC: IWINF) has entered into a nonbinding amended and restated letter of intent to purchase medical research company Braxia Scientific Corp. (CSE: BRAX) (OTC: BRAXF) for a price tag yet to be determined.

Under the agreement, Irwin will pitch a purchase price per Braxia share based upon a valuation of the outstanding $30 million worth of Braxia shares, though the final price per Braxia share and the exchange ratio will be set forth and determined when the agreement is executed.

“We are excited to be building North America’s leading mental health and depression network under the medical expertise of Braxia’s scientific management team, including Dr. McIntyre, the world’s foremost expert in depression and ketamine research,” Irwin CEO Klee Irwin said in a statement. “This combination is a major accelerator and differentiator for Irwin’s network of Emergence clinics across the U.S. as we launch clinical research services for large pharma and emerging biotechnology companies and enhance our capacity with telemedicine capabilities.”

Klee also said the combination would give the company “access to more attractive financing, making this an attractive potential business combination for Braxia shareholders.”

The company said that the purchase price would be payable on closing by the issuance of Irwin shares to each holder of Braxia stock. Based on the closing price of Irwin shares and Braxia shares on the CSE on Jan. 25 of C$3.80 and C$0.05, respectively, the purchase price and exchange ratio imply a 315.72% premium to the price of Braxia shares.

The number of Irwin shares will also be adjusted upward in the event that the total consideration received by holders of Braxia Shares is less than $30 million, to be determined at a specified period of time after the closing date and as set forth in the agreement.

The LOI further states that the Irwin shares would be subject to a lock-up period and would be restricted from transfer or sale for a period of six months after close. Braxia insiders would be subject to a lock-up period of 12 months from the closing date.

The deal would bear out operations in several state markets in the U.S. and in Canada across three important business verticals: clinics, international clinical research services, and telehealth.

“This combination will optimize the drive for growth of mental health services, creating a first-mover advantage in many important markets in North America, while also expanding innovative drug development research to benefit from economies of scale across the businesses,” Irwin Naturals president Adam Berk.

The post Irwin Naturals Signs LOI to Acquire Braxia Scientific appeared first on Green Market Report.

This story was written in partnership with Crain’s New York, the trusted voice of the New York business community. 

When New York gave the sale and use of medical marijuana the green light, officially permitting it in 2014, the firms that vied for a spot as one of the state’s 10 vertically licensed operators envisioned the true golden ticket to be early entry into the eventual recreational cannabis retail market.

That expectation was amplified when the state passed the Marijuana Regulation and Taxation Act in 2021. Investment dollars poured in, and medical licenses traded at high valuations on the secondary market, bolstered by the idea that those who bought in early would be able to capitalize on both adult-use and medical retail sales, cultivation and manufacturing.

However, under draft regulations released in November, those companies will have to wait at least three years from the official launch date of adult-use sales just to apply for a recreational retail permit. Final rules have yet to be published.

“They were hit with a bait and switch by the state regulators,” said Tom Adams, principal analyst and CEO of Global Go. “You know, ‘Come to our state and help apply your expertise and your capital to building out this incredibly limited medical-­only market that you’re clearly not going to make any money at anywhere in New York.’”

So the multistate operators came.

The proposed rules, however, also established a two-tier system that prohibits growers and manufacturers from participating on the retail side—and vice versa. That means those same players who helped establish the medical cannabis industry “got sort of the back of the hand from regulators” and now must accept that they cannot implement the business models they’ve used in other states, Adams said.

Those who invested in medical operations in New York early on expected, if not “the first bite at the apple … at least a first bite at the same time as the other licensees for some of these retail adult-use licenses,” said Brandon Kurtzman, a partner at cannabis law firm Vicente Sederberg.

Both Adams and Kurtzman said the pivot now is to develop product brands through the cultivation and manufacturing side to sell to retailers and social consumption lounges.

Boxed in

The $138.9 million write-down Toronto-­based RIV Capital took after its acquisition of New York’s Etain, one of the 10 local medical cannabis license holders, illustrates the conundrum. RIV Capital agreed to pay $212 million in cash and $35 million in stock for the small, women-led medical cannabis company.

But instead of being able to capitalize on its existing business structure, Etain has been forced into a single channel. With heavy investment already sunk into cultivation, the company appears to be boxed into being a grower—the less lucrative side of the cannabis business.

The price paid for Etain was so troubling to RIV Capital’s largest shareholder, JW Asset Management, that the firm asked for a special meeting of shareholders to replace five of the seven directors on RIV’s board.

In New York, Adams said, having a brand on store shelves “is probably more valuable than anything else” an operator can do, as there is not much real brand dominance yet among the plethora of cannabis companies out there.

Despite the firms seemingly being last in line, nothing is completely set in stone.

“It’ll be very interesting to see what happens with these draft regulations, see what the comments look like and if there’s going to be any compromise between what they put out [and] what [medical operators] are looking for in this market,” Kurtzman noted.

“The goal here is to provide access to consumers,” he added. “I think you do that by allowing new licensees but also allowing the existing licensees to participate, because that’s more or less what you told them they were going to be able to do in the law.”

The post As Rec Sales Start, Medical Marijuana Firms Left Warming the Bench appeared first on Green Market Report.