Charlotte’s Web Holdings, Inc., announced plans to acquire Abacus Health Products, Inc., to create the world’s largest vertically integrated hemp-derived cannabidiol (CBD) company.
The combined entity is expected to represent nearly 35% of U.S. sales within the food/drug/mass channel.
The deal will expand Charlotte’s Web portfolio in topicals, which are forecasted to become the fastest growing and largest CBD segment by 2021, according to the Brightfield Group.
Founded in 2014, Abacus specializes in over-the-counter topical pain relief and therapeutic skincare products that combine active pharmaceutical and natural ingredients, including a cannabinoid-rich hemp extract containing CBD. Abacus’ product line includes CBD Clinic, which focuses on the professional practitioner market; CBDMEDIC, which focuses on the consumer market; and Harmony Hemp, which focuses on personal care and beauty segment.
As a result of the acquisition, the companies will have more than 15,000 unique doors combined to sell their cannabidiol (CBD) topical and ingestible products.
"The complementary strengths of our relative market positions made this merger a logical strategic move," said Deanie Elsner, chief executive officer of Charlotte's Web, in a press release. "With this acquisition, we strengthen the business to reflect the evolution of the category. Because most of Abacus's products are positioned in adjacent categories, our combined distribution reach has limited shelf overlap. Together we are the most developed CBD company across every channel and segment and positioned to accelerate our growth and extend our market share. Furthermore, it enables us to drive more scale production through our vertically integrated infrastructure."
The transaction is expected to be completed in the second quarter of 2020, subject to receipt of all regulatory, court, shareholder and other approvals.
Greatland Ganja’s Leif Abel details his decision to sponsor a musher in the world’s most famous dog sled race and shares tips on how to get a good ROI on sponsorships.
The Iditarod is an annual sled-dog race held in Alaska that spans an approximately 1,000-mile stretch. Racers and their teams of 14 dogs depart with their team in Anchorage, in the state’s southeast, heading to Nome, to the northwest. It is a challenging and dangerous trek that puts to the test each racer and attracts hundreds of spectators to the Anchorage start.
Monica Zappa
Blue Steel
Cannabis aficionados might notice something a bit different at this year’s edition: Greatland Ganja’s logo is plastered on one of the racers, as the Kasilof-based cannabis cultivation operation is sponsoring Monica Zappa, another Kasilof resident and cannabis advocate.
Most racers participate because they love the sport, relying on sponsors to cover the cost of supplies and registration. Leif Abel, co-owner of Greatland Ganja, saw this year’s event as an opportunity to get some added visibility for his company while supporting a sport in which his family participated, once upon a time.
“We grew up dog mushing, it's one of the most Alaskan sports in existence, one of the biggest things that binds Alaskans and Alaska together,” Leif says.
Zappa participated in her seventh Iditarod this year (although she’s done the trail eight times, having completed it last year without the race’s support). The significance of this moment is not lost on her, especially given the race’s history. The Iditarod, Zappa explains, is “meant to commemorate the Serum Run back in 1925 that was to stop this diptheria outbreak in Nome, where children were dying.”
Zappa sees a historical connection between the race’s origins and her decision to seek out Greatland Ganja’s sponsorship. In the same way that mushers brought medicine to save the children of Nome, Zappa sees herself as bringing a positive message about the cannabis plant and the local industry to villages.
“It'll be interesting when I go out in the villages because there still is a stigma against cannabis in the villages specifically... If we could open up the opportunities for villages to be able to have access to the right products at the right price, a lot more positivity can come from it,” she says. (Zappa ended the race on March 22 in 31st place.)
Zappa is a family friend of the Abel’s, so when she approached the cultivation operation to be her main sponsor, Greatland Ganja felt comfortable she would represent the brand well. “[Dog mushing] being a core part of Alaskan culture, the price being right and it being the right people to work with, all those things lined up to make [the sponsorship] worthwhile,” Leif says.
But that isn’t the case for all of the company’s past sponsorships, and lessons were learned from those. One was learning how to evaluate the potential return on your sponsorship investment, which Leif describes as “really, really difficult.”
Monica Zappa
“The reality is that dollar for dollar, your return is really hard to judge on these things,” he says. “But a lot of it is just that: you have to make a judgment based upon data that isn't really scientific data.”
One way the Greatland Ganja team evaluates sponsorship ROIs is by looking at the audience of the particular group or event seeking a sponsorship from the company. “Who are we advertising to? Our local Alaskans,” Leif says, “so it does us little good to go and spend a bunch of money where the only people at the event are a lot of out-of-state companies or a bunch of other cultivators where public is really low in attendance.”
He explains further that, “all of our consumers in the winter are local. All of our budtenders are local, all of our owners are local. In the summer we sell to tourists, but we don't need to sponsor out-of-state groups to sell to the tourists—they come here looking for Alaskan stuff. We love sponsoring local because it promotes our own small community.”
But even associating the cannabis business with what is arguably the most Alaska event of the year comes with risk. “It was a risk though because we don't know the return,” he says. “But we've already realized some pretty great returns even before the main event.”
Chevelle Abel, Greatland Ganja’s creative director, designed Greatland Ganja branded dog kerchiefs, bumper stickers, a truck sign and hats embroidered with both the company’s and Team Zappa’s logos. “Which was perfect because Monica hit the trail in the middle of a blizzard at the Iditarod Restart in Willow, Alaska, so they definitely came in handy,” Chevelle wrote in an email to CBT.
Chevelle believed the sponsorship opportunity was a unique one for both the family business and the cannabis Alaskan cannabis industry as a whole. “We had not heard of another cannabis business race sponsorship and felt we could stand out a little from the crowd,” she said.
So far, the Greatland Ganja team’s decision is yielding some rewards, according to Leif. “Our sponsorship of Monica Zappa is probably one of our most exciting sponsorships. It's stirring up a lot of talk.”
With limited access to traditional marketing methods, Leif says local event sponsorships have been a great tool to promote his family’s company and show that the industry is working to support, not tear down, the Alaskan culture.
Oregon Marijuana Retail Licensees Allowed to Provide Curbside Delivery
The temporary rule aligns with the governor's executive order to promote social distancing.
Portland, OR -- PRESS RELEASE -- The Oregon Liquor Control Commission has approved a temporary rule that supports social distancing to promote prevention of the spread of the COVID-19 virus, by allowing licensed marijuana retailers to conduct limited transactions outside their licensed premises. The action will permit retail licensees to take orders and deliver product from the retail store to a person who is outside of the store and within 150 feet of the retailer’s licensed premises.
At an emergency meeting to consider temporary rules impacting the business activity of OLCC licensees in the alcohol and marijuana industry, the Commission took its action to promote social distancing in the wake of the COVID-19 virus. The Commission’s action aligns with the Governor’s Executive Order that prohibits public gatherings of 25 people or more, and encourages people to distance themselves by at least 3 feet while in public.
The temporary rule also increases the amount of flower that OMMP cardholders and caregivers can purchase to 24 ounces per day and no more than 32 ounces per month. This change temporarily increases the daily purchase limit for OMMP cardholders to match their personal possession limit. This rule does not change the total monthly amount a cardholder or caregiver is currently permitted to purchase from an OLCC-licensed retailer.
The temporary action that the Commission has taken is designed to balance the protection of public health while at the same time helping struggling businesses. Marijuana industry guidance can be found here.
“Every single decision that this agency is making, both for the liquor and the marijuana industries, are there for the consideration of helping people make a living and continue to make a living,” said Paul Rosenbaum, OLCC Commission Chair.
During the period of March 1-18, 2020, OLCC marijuana retailers have seen a 25-30% increase in sales compared to the same period last year. Retail marijuana stores remain open, but these changes will let them operate in a way that is consistent with the guidance from the Executive Order by decreasing in-store activity.
However the OLCC made it clear that if individual licensees take advantage of the temporary rule by disrupting public safety or public health that the rule could be suspended for the whole industry.
“We’re asking our retailers to make sure to work with the community and local officials so that this can happen in a safe and non-obstructive way to city services, otherwise we’ll need to make changes,” said Steve Marks, OLCC Executive Director.
Kyle | Adobe Stock
DEA Advances Efforts to Approve Cannabis Cultivation Applications
The DEA issued a notice of proposed rulemaking to amend its regulations to comply with the requirements of the Controlled Substances Act in an effort to move forward with cannabis cultivation for research purposes.
The Drug Enforcement Administration (DEA) has issued a notice of proposed rulemaking to amend its regulations to comply with the requirements of the Controlled Substances Act in an effort to approve pending cannabis cultivation applications and allow entities to move forward with cultivation for research purposes.
Public comment must be submitted electronically or postmarked on or before May 22, according to the notice.
The notice signals that the DEA is starting a formal investigation—called a 303 investigation—to vet the 35 entities that have applied for a cultivation license to grow cannabis for research, according to a Forbes report.
Last summer, a federal court ordered the DEA to explain why it had not responded to the pending applications after Dr. Sue Sisley and the Scottsdale Research Institute (SRI) filed a lawsuit against the Justice Department and the DEA in June 2019. Phoenix-based SRI had applied for a DEA manufacturing license in 2016 to grow its own cannabis for an ongoing study on medical cannabis as a treatment for veteran suffering from post-traumatic stress disorder (PTSD).
Some companies, including Colorado-based MedPharm, then received word from the DEA that they had been selected to move forward in the application process to grow cannabis for research purposes.
Rex Wholster | Adobe Stock
Nevada Governor Orders All Cannabis Dispensaries to Close Storefronts Amid Coronavirus Outbreak, Although Deliveries Will Be Allowed
Dispensaries were ordered to shut down by midnight on March 20.
Under an emergency declaration issued March 20 by Nevada Gov. Steve Sisolak in the wake of the nationwide coronavirus outbreak, all medical and adult-use cannabis dispensaries must close their storefronts to the public, although deliveries will still be allowed, according to the Reno Gazette Journal.
Dispensaries were ordered to shut down by midnight on March 20, according to the news outlet, and curbside pickup of cannabis products will not be allowed.
The Marijuana Enforcement Division has rolled out new virtual delivery vehicle inspection procedures to allow cannabis licensees to meet an increased demand for cannabis delivery services, the Reno Gazette Journal reported. Thirty-eight dispensaries in the state currently offer delivery services, but the new procedure will allow all dispensaries to deliver their own products, according to the news outlet.
Meanwhile, Nevada’s cannabis cultivation facilities, production facilities, distributors and testing labs will be permitted to continue their operations, but must adhere to strict social distancing guidelines, the Reno Gazette Journal reported.
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