On The Rebound: Following their failed sale to MedMen six months ago, PharmaCann raised $20 million, as well as secured debt financing. Grown In’s story reports how PharmaCann failed to invest internally on new employees while it waited for the MedMen deal to close, as management “assumed all that would be owned by MedMen”. The new funding came from individual investors and family offices, with further proceeds from sale of assets to REITs, and is expected to allow the company to invest further in talent, including recent additions of a CTO and COO.
Why It Matters: This story is a pretty well-timed and illustrative one following last week’s Acreage/Canopy and Attorney General Barr storylines. ‘Tis the tale of many a cannabis merger - struck at the height of the boom, delayed by regulatory/antitrust inquiries, and (critically) structured in a way that failed to contemplate changing market conditions over an elongated timeline. It’s yet another reminder on the importance of leaving “another bite at the apple” - ensuring incentives are aligned for the long-term through continued equity participation or milestone payments. If sellers see a deal as their final big payday, they’re probably not going to keep grinding hard, even if the deal drags out.
Inconsistent Truth: The Food & Drug Administration reported to Congress on the state of the CBD marketplace, including the studies they’ve done on CBD products’ quality and content. The report shows significant inconsistencies in cannabinoid concentrations vs. what is marketed on the label, but also negligible evidence for dangerous metals or other compounds. Looking forward, the agency plans more extensive testing to develop its guidelines for CBD products, while maintaining enforcement action against companies that are making outlandish health claims.
Why It Matters: The CBD market is, simply put, a shitshow, and any level of guidance would go a long way in smoothing out some of the issues. Nobody should be surprised to hear that actual CBD content varies dramatically - I’ve even heard of companies marketing their “CBD” products as full-spectrum hemp, while using hemp seed oil (which has been around for decades and has no CBD). It’s scummy, scammy, and incredibly damaging to building consumer goodwill and understanding of the product category - so here’s hoping the FDA moves sooner rather than later.
It Started With An Instagram…: Talk about an epic pivot. Colin Ricker and Zach MacAffer, co-founders of NuRange Coffee, had no idea a passion for espresso martinis might lead to becoming experts on cold brew and CBD while building their brand. It’s one of the most fun founding stories we’ve profiled on Cannablurbs - check it out here.