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itswallstreetpr · 5 years ago

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Why MJ Stocks are Back in Gear (GRWG, NUGS, CRLBF, MJNA)

The recent resurgence of the cannabis stock space has been a surprising development to many market participants. Sentiment on this group was already in the basement before the pandemic panic took hold of the markets and crashed the whole game. But pot stocks found support in mid-March as a group. Since then, the MJ ETF is up nearly 50%, and a quick survey of leading names will show a series of aggressive bounces and a few breakouts of significant size and force. We would cite several factors behind the move, including cyclical inflection, seasonal cannabis pricing effects, the pandemic lockdown cabin fever, and expanded market share for the survivors after many stocks in the space failed to survive the depths of the bear. In short, these stocks were completely washed out after two years of bear market action, only to take another huge hit in March when the broad market was obliterated. But, just on the other side of that crash, they ran into an improving demand context, a shortage of supply, and reduced competition. The result has been an impressive rebound that could well represent the dawning of a brand new cannabis bouncing baby bull market trend still in diapers and a bonnet. There’s so much to look forward to: skepticism and short interest, unexpected growth, surprise M&A deals, new analyst attention, big IPO’s, and eventually a supernova of hype, scandal, and nose-bleed valuations that leave latecomers with a bag to hold. But that’s all down the road. Now, traders and investors have a chance to go shopping when these stocks are still unloved but just getting traction to the upside. With that in mind, we present here a brief look at some of the smaller-cap names in the space that are sparking the most interest among traders in recent days: GrowGeneration Corp (NASDAQ:GRWG), Cannabis Strategic Ventures (OTCMKTS:NUGS), Cresco Labs Inc (OTCMKTS:CRLBF), and Medical Marijuana Inc (OTCMKTS:MJNA). GrowGeneration Corp (NASDAQ:GRWG) has been putting up strong numbers in recent updates from the company, and the stock has been reacting well, surging as much as 100% from its March lows in the past two months. The company managed to rope in revenues totaling $33M in overall sales during the company's most recently reported quarterly financial data -- a figure that represents a rate of top line growth of 152%, as compared to year-ago data in comparable terms. If there’s any concerns here from a fundamental metric perspective, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($11.4M against $17.3M, respectively). GrowGeneration Corp (OTCMKTS:GRWG) trumpets itself as a company that, through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. Currently, GrowGen has 27 stores, and carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. According to company materials, “Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025 the market is estimated to reach over $30 billion with a compound annual growth.” If you're long this stock, then you're liking how it has responded in recent days as well. GRWG shares have pushed about 27% to the upside on above average trading volume in the past week since releasing Q1 financials. Cannabis Strategic Ventures (OTCMKTS:NUGS) is one of the fastest growing producers in the California cannabis market, with a record performance in April, where it saw an 800% sequential gain over calendar Q1 numbers to sell out of its inventory in early May. But the company had anticipated this risk based on a steady acceleration in its new distribution partner agreements, and had already taken steps to more than double its production capacity, with that leap in production now starting to produce fresh cannabis for sale. That suggests coming sales data will continue to show monster second derivative growth throughout Q2. Cannabis Strategic Ventures (OTCMKTS:NUGS) also recently announced that it is about to launch a full line of branded products which are already lined up to be featured through a partnership with one of the fastest growing cannabis delivery services in California. The California cannabis marketplace is seeing a shortage right now, so producers have the best context possible – unless they aren’t in a position to expand production. NUGS, luckily for its shareholders, has been able to scale up to capitalize on the context and drive what looks to be a pretty dramatic topline growth acceleration. Overall, the company’s April data showed an annualized pace exceeding $10 million in sales. “We have never seen anything like this,” noted Simon Yu, CEO of Cannabis Strategic Ventures. “We booked $100,000 in one day to clear out all of our remaining inventory. We anticipated this dynamic but still underestimated the force of the trend. Too much demand is always the problem you want to have. And we are confident we will be able to translate this into further upside in terms of our top line growth curve.” Cresco Labs Inc (OTCMKTS:CRLBF) is another name recently on the move after a strong catalyst. In this case, the company announced the completion of its expansion project for cultivation and manufacturing at its facility in Brookville, PA. According to that release, the expansion project provides an additional 66,000 square feet of indoor and greenhouse cultivation area, bringing the total cultivation space in the facility to 88,000 square feet. Given the supply issues we are seeing across the country, this move promises to translate directly into a boost for top-line data in the months ahead. This Chicago-based cannabis producer has seen its shares ramp over 100% higher off the March lows, and now sits back where it was in December, with $5/share orders up for grabs. Cresco Labs Inc (OTCMKTS:CRLBF) frames itself as Cresco Labs Inc., together with its subsidiaries, cultivates, manufactures, and sells medical cannabis and medical cannabis products in the United States. It offers cannabis in flower, live concentrates, vape, and liquid live resin under the cresco and Reserve brands; precisely-dosed and non-combustible products, including tinctures, capsules, salves, sublingual oils, and transdermal patches under the Remedi brand; culinary-backed under the Mindy's Artisanal brand; fruity confections under the Mindy's Kitchen brand; andpopcorn, shake, pre-rolls, and vapes under High supply brand. It also offers its products under Good News and Wonder brands. As of December 31, 2019, it operated 16 dispensaries in Florida. And the stock has been acting well over recent days, up something like 21% in that time. Cresco Labs Inc (OTCMKTS:CRLBF) pulled in sales of $54.6M in its last reported quarterly financials, representing top line growth of 143.9%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($70.2M against $194.7M, respectively). Medical Marijuana Inc (OTCMKTS:MJNA) shares have been sprinting higher in recent days, helped perhaps by news that Aurora just bought up a CBD producer. Perhaps some folks were hoping that Canopy or Aphria might come along and put in a bid for MJNA given its positioning in the CBD space. Good luck with that. This is not a company that’s going to seem clean under the hood after 20 years of chronic dilution and promotional hype. None of its financial data is regularly audited. And management has chosen to keep it on the pink sheets, where transparency and regulatory hurdles are set at the lowest bar. So, on the M&A front, we wouldn’t advise holding one’s breath. Medical Marijuana Inc (OTCMKTS:MJNA) bills itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries. The company licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry. It engages in the research and development of cannabinoid-based pharmaceuticals; and marketing and distribution of cannabidiol hemp oil-based products. In addition, the company provides management support and services to cooperatives, collectives, health and wellness facilities, and medical clinics; and consulting and securities services to businesses and individuals in the legal cannabis industry. Medical Marijuana Inc (OTCMKTS:MJNA) generated sales of $16.9M, according to information released in the company's most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -4.5% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.2M against $11M, respectively). Read the full article

#WeedStocks #CannabisStrategicVentures #CrescoLabs #GrowGeneration #MedicalMarijuana

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golicit · 5 years ago

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Securities Suits Filed Against Companies Involved in E-Cigarette Business

Just about everyone who has been active in the D&O insurance arena for a while knows that every now and then one industrial segment or another will suddenly find itself in the midst of a securities litigation blitz. Years ago after the Internet bubble burst, it was the doc com companies. Further back than that, as at least some of us can remember, there were all of the failed banks in the S&L Crisis (and, again, in the wake of the global financial crisis). More recently, companies in the opioid pharmaceuticals space have drawn the unwanted attention of the plaintiffs’ securities lawyers. Often these kinds of securities suits and other D&O claims follow after some industry-wide event or sector slide.

Now, it appears, another sector is drawing heat. The e-cigarette business has found itself in the headlines recently as health-related issues have been raised about the product. These health questions have been followed, almost inevitably as things go in this country, by lawsuits. As discussed below, these lawsuits now include, in at least some instances, securities class action lawsuits.

Greenlane Holdings

The first of these securities suits involving e-cigarette industry companies was filed against Greenlane Holdings, Inc., a company that distributes e-cigarettes, vaporizers and accessories through its subsidiaries. The company also distributes products containing hemp-derived cannabidiol (CBD).The company completed its IPO in April 2019. According to the company’s registration statement filed in connection with the offering, the company is “one of the largest distributors of products made by JUUL Labs,” an e-cigarette manufacturer. Among other things, the registration statement emphasized that “a significant percentage of our revenue is dependent on sales of products … that we purchase from a number of our key suppliers, including PAX Labs and JUUL Labs.”

The securities class action complaint that was later filed against Greenlane alleges that on June 18, 2019, the San Francisco Board of Supervisors unanimously approved a ban on the sale and distribution of e-cigarette products within the city. It also endorsed a ban on the manufacturing of e-cigarette products on city property. According to the complaint, on this news, Greenlane’s share price declined 17%, and in subsequent trading days, declined another 15%, falling a total of nearly 68% by the time the complaint was filed.

The securities complaint against Greenlane was filed in the Southern District of Florida on September 11, 2019, just five months after the company’s IPO. A copy of the complaint can be found here. The complaint names as defendants the company itself; certain of its directors and officers; and the offering underwriters. The complaint alleges that the offering documents prepared in connection with the company’s IPO contain material misrepresentations and omissions. The complaint purports to be filed on behalf of investors who purchased the company’s securities pursuant to or traceable to the company’s offering, and seeks to recover on behalf of the class damages under the liability provisions of the Securities Act of 1933.

According to the Complaint, the company’s offering documents were false and misleading because the defendants failed to disclose to investors “(1) that the City of San Francisco had introduced a major initiative to ban the sale of e-cigarette product across three major cities and prohibit the manufacture of products at the headquarters of Greenlane’s key partner, JUUL Labs; (2) that, if approved, the initiative would materially and adversely impact the Company’s financial results and prospects; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.”

On October 16, 2019, a second lawsuit was filed in the Southern District of Florida against Greenlane in connection with the company’s IPO. The complaint in the second lawsuit does not name the offering underwriters as defendants and updates the stock price information, but otherwise is substantially identical to the initial complaint. A copy of the second complaint can be found here.

Altria Group, Inc.

The second company to be caught up in this e-cigarette industry-related litigation is the major tobacco-product manufacturer and distributor, Altria Group, Inc. In December 2018, Altria announced that it had agreed to invest $12.8 million in JUUL Labs, the top U.S. maker of e-vapor products, including e-cigarettes. As announced Altria Labs investment of JUUL represented a 35% economic interest in JUUL.

According to the securities class action lawsuit complaint that was subsequently filed against Altria, after Altria invested in JUUL, there were a series of media articles and other reports that the Food and Drug Administration (FDA) was, among other things, investigating e-cigarette companies sales practices, including the companies’ sales practices in connection with sales to minors, as well as other media articles that the FDA was investigating reports of respiratory health issues purportedly associated with e-cigarettes and other e-vapor products. Altria’s share price declines on these news reports. Finally, in September 2019, Altria announced that Phillip Morris was calling off discussions of a possible $200 billion merger with Altria due to concerns about the scrutiny of the vaping industry and with the Company’s 35% stake in JUUL.

On October 2, 2019, an Altria shareholder filed a securities class action lawsuit against the company in the Eastern District of New York. A copy of the complaint can be found here. The complaint names as defendants the company itself and two of its executives. The complaint purports to be filed on behalf of a class of persons who purchase Altria securities between December 20, 2018 and September 24, 2019. The complaint seeks to recover damages on behalf of the class based on alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The complaint alleges that the defendants made false or misleading statements or failed to disclose that “(i) Altria had conducted insufficient due diligence into JUUL prior to the Company’s $12.8 billion investment, or 35% stake, in JUUL; (ii) Altria consequently failed to inform investors, or account for, material risks associated with JUUL’s products and marketing practices and the true value of JUUL, and its products; (iii) all of the foregoing, as well as mounting public scrutiny, negative publicity, and governmental pressure on e-vapor products and JUUL made it reasonably likely that Altria’s investment in JUUL would have a material negative impact on the Company’s reputation and operations; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.”

Discussion

These complaints have only just been filed and it remains to be seen whether and to what extent that will be successful. The complaints have not yet been tested by motions to dismiss. In that regard, it is worth noting that the scienter allegations in the Altria complaint, which purports to state ’34 Act claims, are, shall we say scarce. The Greenlane Holdings complaint not only tries to boostrap regulatory developments into a ’33 Act claim, but it tries to do so based actions that clearly took place well after the offering. In connection with both sets of cases, the complaints purport to allege that, because of developments after significant corporate transactions, the disclosures made in connection with the prior transactions were misleading.

In connection with the claims against both of the companies, the plaintiffs are trying to convert the cascade of negative regulatory developments and adverse press reports involving e-cigarettes and other vaping products into violations of the federal securities laws. In that respect both of sets of litigation represent examples of what I have described as event-driven securities litigation, in which plaintiffs allege supposed securities law violations based not on accounting or financial misrepresentations but rather based on adverse developments in the company’s business operations that result in a share price decline.

Both sets of litigation also represent examples of how an industry sector can suddenly find itself thrust into the securities litigation maelstrom. The advent of sector-targeting does not necessarily mean any of the companies in fact committed securities fraud; rather, it means that the sector has managed to move its way to the center of the target in the plaintiffs’ lawyers’ shooting gallery. Given the amount of difficult press and adverse publicity that has developed about the industry and its products, it is hardly surprising that the industry has drawn the attention of the plaintiff securities lawyers.

It is worth noting that many of the companies in the industry are privately-held. These companies are not going to draw securities class action lawsuits and are less likely (arguably much less likely) to attract D&O litigation. That is not to say that, given the current tone of publicity surrounding the industry, that this could be a very long slog for many of the companies in the industry. And given the tone of much of the recent press, this could go on for a while.

Again, just because lawsuits may be filed does not mean the lawsuits are meritorious. Plaintiffs’ lawyers may be rushing into this space, attracted by the adverse media reports. But that does not necessarily mean these lawsuits will be successful from the plaintiffs’ perspective.

The post Securities Suits Filed Against Companies Involved in E-Cigarette Business appeared first on The D&O Diary.

Securities Suits Filed Against Companies Involved in E-Cigarette Business published first on

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lawfultruth · 5 years ago

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Securities Suits Filed Against Companies Involved in E-Cigarette Business

Greenlane Holdings

Altria Group, Inc.

Discussion

The post Securities Suits Filed Against Companies Involved in E-Cigarette Business appeared first on The D&O Diary.

Securities Suits Filed Against Companies Involved in E-Cigarette Business syndicated from https://ronenkurzfeldweb.wordpress.com/

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carlinfirm · 6 years ago

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The Florida trial court applied the test articulated in Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014), to find that the plaintiff failed to show a direct harm and special injury separate and distinct from that sustained by the other shareholders based on the alleged wrongdoing.

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gigglesndimples · 7 years ago

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Freedom Leaf Interview: BiotrackTHC’s Patrick Vo

Seed-to-sale tracking is in the news. MJ Freeway has had numerous calamitous hacks to its systems. But MJ Freeway’s chief competitor, BioTrackTHC, which operates in seven states and Puerto Rico, has not. Credit goes to the Fort Lauderdale-based company’s CEO Patrick Vo and his team of software engineers. He received degrees from the University of Arizona and Indiana University before beginning his corporate career at Price Waterhouse Coopers. After moving to Colorado in 2011, Vo dove into the marijuana industry, and soon was hired by BioTrackTHC. This interview was conducted in March.

On Mar. 8, BioTrack announced it was merging with Helix TCS. Why the merger and why with Helix?

Both companies provide ancillary support products and services to the cannabis licensees, and the shareholders and management of both companies believe that the merger will position both teams to excel. Both organizations will remain distinct business units, and leadership will not change for either team. However, we plan to rationalize common business functions and have each team leverage the knowledge, operational and economic resources of the other to create even more value to the customers that rely on us. All in all, we’re very excited for the potential this merger holds for both companies and look forward to what the future holds.

Where you born and raised?

I was born in Muncie, Indiana. I’m a child of Vietnamese immigrants. That starting point shaped who I am. Woven through all of my choices is the idea that I’m “one of the lucky ones.” There are millions of others who were left behind [during and after the Vietnam War] and didn’t make it out. The greatest tragedy of my life would be to waste it by achieving mediocrity.

What led you to enter the marijuana industry?

I was a nerd when I was younger. Cannabis was something the cool kids did in school, so it was not a part of my growing up. That changed when I moved to Colorado and started working with a physician who provided medical recommendations for cannabis patients. I saw firsthand the positive impact cannabis has on patients with all sorts of conditions. I knew then that cannabis was where I wanted to be.

A few months later, I met BioTrack founders Steven Siegel and Brian McClintock and was shown their software. It was just the two of them at the time. I told them: “You created the best cannabis software that no one’s heard of. Let me help you build a company around it.”

The company initially developed prescription-drug monitoring software for the state of Florida in 2009. How did that turn into BioTrackTHC?

The company was founded to develop technology that would prevent medicine from being diverted for non-medical use. The first target was the prescription-opioid epidemic. Around 2009-2010, Colorado cannabis licensees approached us and asked if we could pivot our software for cannabis workflows. With the prescription-drug monitoring software as a foundation, we began designing cannabis-plant and inventory tracking systems based on direct input from cultivators and dispensaries.

VO: “A large-scale crackdown on the cannabis industry would be political suicide.”

How does BioTrackTHC’s seed-to-sale tracking work?

We have two seed-to-sale tracking systems: One is for businesses and the other is for governments to use. Every seed, clone and plant is issued and assigned a unique identifier. That identifier, the associated inventory record, carries information, such as the licensee that has custody of the plant, the plant/strain name, the date it was planted, its growth stage, which employee has interacted with it and so on. Once a plant is harvested, each category of plant material [flower, stems] is assigned its own unique identifier that’s a “child” of the preceding “parent” identifier. The assigning of unique identifiers and connecting new “child” inventory with its “parent” inventory creates a lineage chain from plant to plant material to consumable products. The system can tell any unique identifier’s characteristics and quantity, trace it all the way back to the plant from which it came and follow it to where it and any of its derivative products end up, whether it’s still in inventory, destroyed or sold.

The government version captures all inventory activity throughout an entire state. Not only do the government regulators have visibility over what an individual business reports, they can see products move from one licensee to another, lab-test results and [have] controls in place to prevent malicious and unintentional breaking of the law.

Patrick Vo at a dispensary

What are the advantages and disadvantages of using RFID chips?

In industries where products move through an assembly line and conveyor belts, RFID [Radio Frequency Identification] chips provide an advantage over barcodes by reading through certain lightweight materials and boxes. The theory in our industry is that an RFID reader should be able to scan a tag or a group of tags from a farther distance than reading the tag number with your eyes or using a traditional barcode scanner, thereby decreasing the time it takes to undergo an auditor inspection. However, the RFID was not designed for that application. RFID waves can’t pass through items with high water content. Indoor lights and metal can cause interference with signal reading. Densely lining up tags together may cause “shadowing” where the first tag prevents the tags behind it from being readable. An indoor room with water-filled plants that are densely arranged and surrounded by lights and metal is pretty much the worst environment for this technology.

Many of our customers operate in states that require RFID to tag plants and inventory. The feedback from essentially all of them is that RFID tags are not practical. They’re also for one-time use and cost nearly 50 cents each. In large quantities, this can have a major impact on revenues as well as the environment. To me, their only advantage is the appearance of being high-tech.

Self-reporting is basically an honor system. How do you respond to that concern?

Our platform requires that other parties input data where appropriate, removing many of the potential conflicts that arise from self-reporting. For example, state-recognized laboratories, not the licensees themselves, are responsible for inputting a product’s quality-assurance results, such as potency, microbial screening and pesticide residue, into the government’s system of record. When a licensee ships wholesale product to another licensee, our platform doesn’t automatically assign product custody to the receiving licensee. The product is categorized as “in transit” until the receiving licensee acknowledges in the system whether they’ve taken custody and the product quantity they’re accepting. Any unaccepted product goes back to the sending licensee, and any discrepancies between what was shipped and what was accounted for upon receipt, or that the shipment never made it to the destination, are reflected in one of the system’s many red-flag reports, so the state agency can be alerted and take appropriate action.

VO: “We’re all frustrated with MJ Freeway’s situation. When one team suffers, we all suffer.”

One of your competitors, MJ Freeway, has suffered a number of serious issues. Washington State recently delayed its transition from BioTrackTHC to MJ Freeway’s Leaf Data, leaving the state without a working tracking system. How did that happen?

The original launch date was Nov. 1, and it was delayed until Jan. 1. Then, the system launch was delayed again until Feb. 1. On Feb. 8, the Washington State Liquor and Cannabis Board (LCB) reported that an intruder had gained unauthorized access to the Leaf Data system on Feb. 3, less than 100 hours after the system launched. Transportation route information for wholesale deliveries from Feb. 1-4, as well as transportation vehicle VINs [vehicle identification numbers], license-plate numbers, and vehicle types were downloaded. Though Washington State makes most government data available for public records requests, detailed cannabis transportation information is typically redacted, since knowing which vehicles are transporting tens of thousands of dollars’ worth of product and exactly what routes they’re taking leaves them vulnerable to carjacking and theft.

Prior to the expiration of our contract, Washington State offered us an extension. We didn’t say “no,” but we just couldn’t say “yes” until the security concerns that came to our attention were satisfactorily resolved. We couldn’t risk the security of our own systems and our livelihoods being commingled with MJ Freeway’s system, and so the contract expired.

What led to the delay and subsequent security breach?

With only days until the expected decommissioning of the BioTrack government system, Washington State announced that MJ Freeway’s system would not make the Nov. 1 launch date, and that all licensees would have to report their plant and inventory quantities and activities via manual spreadsheets, something that everyone involved with the industry knew would be devastatingly costly. To make sure that the Washington cannabis industry could survive the “manual spreadsheet era,” we practically cloned our Washington traceability software system overnight and deployed it as a private-sector system, independent of MJ Freeway and the state. Licensees and the majority of our point-of-sale competitors agreed that our Unified Cannabis System (UCS) was the best path forward for the industry. For a small monthly fee to cover the hosting costs of the UCS, nearly all licensees in the state were able to continue reporting to our private UCS system, which then coordinated the chain of custody transfer data between licensees and generated over a million individual spreadsheet files that were automatically submitted to the LCB. It’s not an exaggeration to say that the UCS upheld the Washington industry and automated the reporting for more than 1,600 licensees from Nov. 1 until MJ Freeway’s system finally launched on Feb. 1.

Is MJ Freeway the only company operating in this space that’s been hacked? Why do you suppose that is?

We’re all frustrated with MJ Freeway’s situation. Though we all compete with each other for business, we’re ultimately fighting together to build trust, confidence, credibility and professionalism for the entire industry. When one team suffers, we all suffer.

Patrick Vo speaks at an event.

What is BioTrackTHC doing to make sure that the data you’re processing and storing remains secure?

Because the core of what we do is data—business management data, compliance data, patient/consumer data—system security has always been a top priority. BioTrack utilizes physical cryptographic security keys as well as passwords for multi-factor authentication into critical systems. This means guessing or stealing an employee’s username and password is not enough to gain access. The unique security key must be inserted in the computer’s USB port to successfully log in. Google deployed the same security keys to more than 50,000 Google employees and found they’re incredibly effective.

BioTrack also utilizes a technology that implements the Zero Trust architecture spearheaded by Google. It piggybacks on the security keys using a chained authentication system. Every developer log-in attempt is individually managed and independently tracked. Each log-in is limited in scope and valid for one-time use, and because there are no shared keys or shared developer environments, the ability for a would-be attacker to gain access to the system is dramatically reduced. And even in the highly unlikely event attackers gained access to one system, they couldn’t access other systems.

VO: “Assigning unique identifiers and connecting new ‘child’ inventory with its ‘parent’ inventory creates a lineage chain from plant to plant material to consumable products.”

When seeking state contracts, how does BioTrackTHC stand out from the competition?

Providing business software is one of the greatest values we bring to the table. Building solutions that are informed by how licensed businesses actually operate and incorporating those real-world processes and workflows into an informed government platform sets up both the government and the industry to succeed. With so many new states coming online and the continued growth of the industry, we’ve seen both the good and the bad and can therefore help different governments navigate this new terrain more effectively.

Patrick Vo at his desk

BioTrackTHC is currently operating in Arkansas, Delaware, Hawaii, Illinois, New Mexico, New York, North Dakota and Puerto Rico. What are the different regulations challenges from state to state?

Every state’s cannabis program, and the rules and regulations surrounding it, is unique. Though there are similarities and overlap, they’re all individualized to some extent. Since we’ve developed both a government-grade system and a business-grade system, we possess a robust and diverse array of turnkey software features and workflow options to build a system that can meet the vast majority of a new state’s needs right out of the box. Our team of experienced government-product managers is responsible for understanding all of the relevant cannabis regulations in their assigned states, for monitoring changes to those regulations and for managing the design modifications to the software to meet the needs of those regulatory changes.

An interesting example is Hawaii. The islands of Hawaii are separated by federal waters and federal air space, so though medical cannabis is allowed to move from production facilities to dispensary facilities on the same island, transport to other islands is not allowed. As an added control to make sure that licensees don’t intentionally or unintentionally violate the law, we wrote some code to constrain transportation so that the destination facility must reside on the same island as the originating facility.

A much more complex example is Washington state as it relates to Native American tribes. The tribes within Washington State may operate their own producer, processor and retail facilities that can also participate with the non-tribal Washington cannabis industry. Cannabis inventory can freely move between tribal licensees and non-tribal licensees, but the treatment of cannabis excise taxes creates some interesting dynamics. Tribal retail dispensaries may sell both tribal-grown products and non-tribal products. These tribal retailers are still required to retrieve cannabis excise taxes from the end-consumers in order to not have an unfair advantage over non-tribal retailers. However, those excise taxes are remitted to the tribal government and not to the Washington government because the Washington government has no authority over tribal businesses.

Non-tribal retail dispensaries may sell tribal-grown products in addition to non-tribal products and they too must retrieve cannabis excise taxes for both. However, the Washington government must separately track the excise taxes collected from the sale of tribal products so that the state can remit that portion of the taxes to the tribes.

How’s the medical-marijuana program in Puerto Rico doing?

It was originally supposed to get off the ground right around when Hurricane Maria hit the island in September. However, the cannabis businesses showed some real grit and was integral to restoring the island back to normalcy. Although much of the island is still in need of support and many people are still in horrible situations, there has been a collective push from the industry and the island as a whole to get cannabis businesses up and running because that means jobs, wages and tax revenue that could go towards post-storm recovery. In addition to the overall economic value that the businesses generate, many of the cannabis business owners and staff personally stepped in to help. It’s been truly inspiring to see how strong the Puerto Rican community is in the face of adversity.

Do you have any concerns about the legal cannabis industry grinding to a halt because of federal intervention?

I’m not very concerned at this point. Popular support for the legal cannabis industry is too large for federal law enforcement to shut it down. [Attorney General] Jeff Sessions and the U.S. Attorneys have to know that a large-scale crackdown on the cannabis industry would be political suicide.

How would you react if a U.S. Attorney showed up at your door one morning with a warrant?

I would say, “Sir, we’re a software company. We don’t sell seeds.” I would attempt to have a respectful and constructive conversation with the U.S. Attorney. Whether he or she is for or against cannabis, society’s acceptance of it is a foregone conclusion. Not everyone is pro-cannabis, but not everyone is pro-alcohol or pro-tobacco either. Even if you don’t agree with the movement, everyone can support technologies that strengthen public safety through facilitating transparency and accountability. If the U.S. Attorney continued to pursue the warrant, then so be it. We’re a part of this industry and will continue to stand up for it.

This article appears in Freedom Leaf 32. If you enjoyed this article, subscribe to the magazine today!

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The post Freedom Leaf Interview: BiotrackTHC’s Patrick Vo appeared first on Freedom Leaf.

Source: https://www.freedomleaf.com/biotrackthc-partrick-vo/

The blog article Freedom Leaf Interview: BiotrackTHC’s Patrick Vo is republished from gigglesndimples.com

from Giggles N Dimples - Feed https://gigglesndimples.com/2018/05/29/freedom-leaf-interview-biotrackthcs-patrick-vo/

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linabrigette · 7 years ago

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Everything Ex-CFTC Chair Gary Gensler Said About Cryptos Being Securities

Editor’s Note: The following transcript comes from Monday’s talk at the MIT Technology Review Business of Blockchain event given by Gary Gensler, former chairman of the Commodity Futures Trading Commission.

Good afternoon, I am going to talk to you about blockchain technology and its real potential. And I believe it does have a real potential in the world of finance.

It’s an innovative way, of course, to verifiably move value or apply code or “dapps” as some people call them on a distributed network, but what’s moving value or code on a distributed network, but really finance because it ties to the essential plumbing of the financial sector which at its core moves and allocates money and risk. So, value and code, money and risk.

It seems, in essence, this is the core to the plumbing of the financial sector. To reach its potential though, and for public confidence, blockchain technology has to be compliant with laws.

It doesn’t mean the laws have to stay exactly the same, but laws that have been established over many, many decades that customers and investors and to make sure that markets work efficiently, that’s called market integrity. So, customer protection, investor protection, market integrity. And to really work I believe blockchain technology needs to come within that public policy framework.

Now this can be done by balancing those protections while at the same time promoting innovation. But as we currently see things, we’re not in a pretty good shape right now.

There really is significant non-compliance with respect to the laws, certainly in this country and in many many other countries as well. Many initial coin offerings probably well over a thousand, many crypto exchanges, probably 100 to 200, are basically operating outside of US law.

And when I say outside, that means non-compliance with the laws right now. So, that’s a lot of this marketplace right now, now I’m an optimist, I want to see this technology succeed, it is in essence about the plumbing of the financial system and it’s a new technology that can really enhance the financial system.

So, I think we need to kind of bring it inside. And there’s gonna be a lot of technical and commercial challenges, and you’ve heard about that during the conference – about scalability, about interoperability, and governance and privacy and the like.

I’m going to just sort of focus on the public policy side, I think ultimately when it does succeed, this innovation has a chance to lower costs, lower risk and yes, in some ways, bore into some of the economic rents of centralized institutions, where they can collect excess and extra rents. The question is then, really, for this new technology, ‘How do we go forward?’ And it is often said that the devil is in the details.

So initial coin offerings. What do we know? $6.5 billion in the first quarter of 2018. Hasn’t slowed down. $6 billion dollars in 2017 which in itself was a 40-fold increase. So maybe this year could we see $25 to $50 billion dollars all year if it keeps ramping up? Is it $20 to $30 billion?

It’s no longer a small market, it surpasses a lot of the VC space and other ways of raising money. But there’s significant frauds and scams in this market as well.

One of my colleagues Christian [Catalini] thinks upwards to 25 percent. Some outside sources have numbers even well in excess of that as well. But this innovative way of crowd funding offers prefunctional, transferrable tokens for use on a future blockchain application.

And it has mixtures of economic attributes, which is both investment and consumption. So you’ve heard this debate – is it a utility token, is it a consumable token or is it investment?

Well kind of the answer is it’s both. I know that’s not an answer that a lot of people like, but that’s kind of where we are right now. The fungible nature of the tokens and the expectation of profits distinguish it from a theater ticket or a personal seat license at a sporting event. It’s fungible and you’re expecting future profits when the network comes together.

The presence of a transferrable usable token and an expectation of profit further distinguishes it from crowd funding on Kickstarter or Gofundme or elsewhere. So, lacking traditional features of equity or bonds, doesn’t pay a dividend, you don’t necessarily get a coupon, you say ‘huh I’m home free.’ Not really, not really. Because the investing public is clearly hoping for possible appreciation based on the efforts of promoters and development teams. And so, this brings me to a very important test in the law – it’s called the duck test.

Riley is not familiar to the rest of you maybe, but when you quack like the duck, when you swim like the duck, when you walk like the duck, Riley 100 years ago said, ‘I think the bird’s a duck.’ So, why is that, why am I talking about that at a blockchain conference? Well, in essence, when investing in any form of finance, whether an ICO or traditional forms like stocks and bonds, the public benefits from full and fair disclosure.

The investing public benefits from prohibitions against fraud and manipulation. And so many years ago, in the 1930s, Congress invented in the securities laws a definition of security. But that definition of security includes something other than just stocks and bonds, it also includes something called an investment contract. This is not arcane law, it’s been tested over and over again at our supreme court as recently in the last 15 years. But in the 1940s, the key test was something called the Howey Test.

So, what is this all about? Well, there was a man named William Howey and William Howey had orange groves in Florida. You might say why am I talking about orange groves? Well this company sold land and gave the buyers an option to lease the land with an affiliated company – it was not stocks, it was not bonds, but guess what – the Supreme Court said it was an investment contract. And what the Supreme Court said is an investment contract is that what you see up on the screen.

Is it an investment of money, is it a money going to a common enterprise, is it a reasonable expectation of profit relying on the efforts of others. Think of those four-part test, it’s all nuanced, it’s all facts and circumstances, but always always recall the duck test as well. And so the Supreme Courts also ruled subsequent to that in 2004 that when they’re talking about profits, the profits don’t have to be dividends. The profits don’t have to be some other right of return. The profits include something that you think is about appreciation and that was in the Edwards case.

The SEC ruled on this last summer in The DAO letter and the Munchee Order and this Centra complaint, but more important than that, SEC Chairman Jay Clayton has spoken about this. And I quote, this was Chairman Clayton, it’s not me, ‘I believe ICO I’ve seen is a security. You can call it a coin, but if the function is a security, it’s a security.’

That sure sounds like you can call it a coin, but if it’s a duck, it’s a duck. But anyway, I tend to agree with the Chairman. I haven’t reviewed all the ICOs. Who could review 1,000 to 2,000? But other than maybe CryptoKitties – which I think CryptoKitties is not a security, I’m not sure it’s an ICO though – I tend to agree with him.

So, the question now is where do we go? What’s next. And I don’t think it’s any longer question of if, I don’t think it’s a question of when, ICOs really must comply with securities, commodities and derivatives laws here in the U.S. and frankly around the globe.

And I should even throw in also anti-money laundering and know your customer because the U.S. Treasury Department is written on that as well. And this is not just because one reason – the economics, with $6.5 billion raised, when one firm – Telegram – raises $1.7 billion, what do we call that? That’s capital formation. Investors protection, consumer protection is worthy in this space. Yes, it’s a utility token, but yes it’s an investment contract.

So, the duck test, the economics, the law, the Chairman, the statement all say this is where we’re headed. So, let’s just talk about what that means. I’m going to go to four general considerations and four specific considerations.

So, four general considerations. Remediation. So, how might regulators bring 1000 past ICOs into compliance? Might be retroactive registration with rescission rights. Some requirements are going to be difficult to sort of put in there. It’s not easy to tuck them all in, particularly beneficial ownership. There’s been a requirement since the 1930s that you know your shareholders – initially to avoid double spending – just like the blockchain. But more recently to comply with anti money laundering laws. Secondly, how do you recover the losses? Can regulators and the courts help?

Well guess what, private citizens have a right under our securities law to bring their own private rights of action.

Whether it’s against ICOs, or exchanges or the like, but the money might not be there. Thirdly, it’s compliance with possible tailoring. Again, laws were written at an earlier stage. I stand here on the stage saying investor protection is important… But I’m also saying that I think we might need to tailor some of these rules and regulations so that they fit into this new technology while still protecting investors.

And lastly a regulator talking to you all, the question is what tools in the regulatory tool kit does a regulator use? Is it some enforcement actions, give a few speeches and expect the market to come into compliance? Is it hoping that private citizens will bring private rights of actions? Or is it also in addition using the rule writing authority? And I think you’ve seen that at the CFTC at the agency I was honored to run, but I think you’ll see that at the SEC at some point too.

So now let’s talk about some specifics about the ICO market.

So, first what you read a little bit about in The New York Times is, OK, the SEC and regulators around the globe need to look at all these tokens. I think that’ll bring clarity to the market. And I think that’s not just the ones we call initial coin offerings, but it’s really critical to go through the top tokens. And so, we did a little analysis, I’ve done this analysis, but with the help of some others on just the big five.

Bitcoin, litecoin, bitcoin cash all strikes that they’re probably not. As a non-lawyer, I get it. People were starting to tweet, you know, is he a lawyer? But bitcoin and so forth, probably not and why do I say that? Because bitcoin came into existence as mining began as an incentive in validating a distributed platform. No initial token offerings, no pre -mined coins, no kind of common enterprise under that Howey Test. And litecoin and bitcoin were both forks off of that.

But what about ether and ripple? And you can go down. I’m not trying to pull these out, it’s just these are the big five. These all seem to have attributes of that Howey Test. Was money given over in 2014 for ether, bitcoin for ether? Was money given to ripple every month they sell another bit of it out of the escrow?

Is there a common enterprise. Ripple labs sure seems like a common enterprise, or the Ethereum Foundation in 2014, I’m talking about. Is it on the expectation of profits, well the Ethereum Foundation offering had an 50 percent appreciation right in the first 42 days written into the offering.

And Ripple even today links to 16 market makers in XRP and they’re doing a lot to enhance the value of XRP for the benefit of holders of XRP for the benefit of their own company because they own 60 or 61 percent of XRP. And is it on the efforts of others? Well, in the Ripple case, that feels to be the case, ethereum sort of evolved into something maybe else. But, the Ethereum Foundation is still quite central, maybe not as central as Ripple Labs.

So, I think there’s a strong case, but it’s not whether I think so. I think there’s a worthy public debate about these issues.

The second issue is token design. Is there possibly a design that’s really about consumption and not about investment? And sort of solely about consumption not investment? It’s gonna be a challenging time because the SEC’s already said in the Munchee order that it will take more than semantics, or more than a token being functional. So, this functional, bit is an important bit but not enough.

Third, how should multi-stage contracts happen. Like, when filecoin raised a quarter of a billion dollars in something called a SAFT. And there’s a lot of debate.

Can you put a packaging around a token, and so the package is a security and so the token later on is not. Is that alright? The SEC has not yet spoken on that, and there’s controversy around it. Let’s call that, that’s yet to be determined.

And then fourth, is a new concept, can a security token transform to be something else. And a group of venture capitalists went into the SEC ten days ago, they’ve circulated paperwork to a lot of people and they’re sort of saying, ‘believe us we get you, we’re with the SEC, but we have a bunch of clients that are going to evolve to be a consumable token.’ I’m kind of don’t think this is going to work. I don’t think there’s any precedent in the law for a security to transform to be something else. But this is an issue on the table and it’s a worthy debate.

So, in conclusion, blockchain technology has a real potential to change the world of finance. It could lower costs, and risks and economic rents but for broad adoption the technology needs to move forward in the public policy sphere. I think basic norms are what’s critical. The basic norms of investor protection, and consumer protection and of course making sure illicit activities can’t occur. But we also need to adapt some of the rules of the road so that this new technology fits in. But I don’t think it means that we just exempt the whole field and say ‘good luck investors’.

Not when the money and the dollars are so big. With over 1,000 of these already launched, good chance it’s going to be a pretty interesting year in 2018. Market participants have a role, have a very real role with regulators and technologists figuring this all out.

But I do think the public will benefit and ultimately reap the benefits and if anybody’s interested I’ll be teaching on Tuesdays and Thursdays next fall this course.

Question and Answer:

I want to start with probably the most controversial statement you made, which is, how can you say CryptoKitties are not a security?

I just… there’s something about CryptoKitties that is wonderful, but I don’t think it’s an initial coin offering. It did have a little airdrop, by the way I think airdrops don’t get you off the hook. But it started that way, but then you have this unique �� I think it’s more like a seat license.

That you have a unique asset and you own your kitty rather than like these others. But there’s actually a SEC case long ago, actually a court case called the Weaver Beaver Association, so look that one up, that’s kind of a neat one.

In fact, the controversial statement that you made obviously was that ethereum and ripple might end up being classed as securities. First of all, there’s no reason why you wouldn’t have, but do you have a sense of how long it might take the SEC to come to a ruling on stuff like this?

I don’t know, I think that this is a multi-year process.

The reason I say that is to write a rule, get public comments, to get feedback, finalize that rule, give a period of time for implementation and maybe court challenge is two years at a minimum and possibly three to five years when you really see how things go. I think 2018 and I’ll be speaking more about exchanges later this week, but 2018’s a period of time to try to bring compliance into this sort of 1000 plus tokens.

What ripple and ether, while I think there’s a strong case particularly for ripple or XRP given the centrality and the common enterprise around Ripple Labs, and that they’re selling it every month and so forth. That’s really a discussion between them and the SEC and ultimately the way I would think is if the SEC declares that there’re securities that might end up in court, and so it won’t be the SEC it maybe not even a federal district court but an appellate court, that will decide or the Supremes.

But let me say this, if they decide that they’re not securities, I think that too probably ends up in court and the reason is is because somebody else will say, ‘well why are they getting out of regulation and I’m not.’ So, law is best when applied consistently and we went through the duck test and the Howey Test – a little humorous – but it’s also because for whichever way authorities go they have to have an eye on consistency as well.

So, I think nine months at the least, maybe two to five years at the longest.

So let’s say at some point the SEC rules that a large number of these things are in fact securities, does that have a chilling effect on the whole blockchain space?

I believe that it’s a net positive. So much in our economic life and in our personal lives oscillates so it might have a chilling effect on this frothy ICO market, but I think it’s a positive for blockchain.

We have right now major institutions that want to significantly adapt and adopt, asset managers who want to invest in this space, major exchange companies who want to move into this space.

The unregulated exchanges in aggregate – I’m making an estimate here that the unregulated exchanges in aggregate – make more money, more bottom line than the aggregate regulated spaces in the securities field around the globe right now. So they want to get into the space. Right now the incumbents are making less than the startups.

Well, you might say that that’s bully good, but the incumbents are doing it in part because they’re front running and they’re not treating their customers and investors in a way that probably you’d want.

Does it restrict the kinds of things that can be done with tokens? To simplify grossly, we’re talking about tokens that are issued on blockchains that are trying to be anonymous, decentralized, distributed. Can something that is anonymous and decentralized also be SEC compliant?

I think it’s very challenging.

There’s a number of public policy considerations and this is in 180 countries. But tax authorities don’t want to lose much of their tax base, and none of use want to really promote illicit activities around money laundering or terrorism financing and the like. E

very nation has signed into if you do an offer you know the beneficial owners. That’s not just a US thing that’s around the globe. And yet the technologists in this room would probably tell me it’s a little tricky on a blockchain to know something more than the public key and Monero and others even find a way to put, shall we say, fog on top of the public keys. So, knowing your customer and beneficial ownership is at the heart of nearly every developed country’s securities laws and investor protection laws.

I think that’s going to be, that’s something that if technologists figure it out, that’s going to be a real plus.

Scenario: SEC clamps down on lots of these things, it says a lot of you guys who issued tokens and a lot of you people holding tokens what you were doing was illegal. Well the holder’s not necessarily. The public might have been scammed but they weren’t necessarily breaking the law.

So two classes of people with two classes of problems. The people who issued the tokens, are they criminals? What happens to them? And then the people holding the tokens, were they scammed and how do they get redress?

I think regulators around the globe will sort it through but as you saw in the first of these last summer, the DAO, the SEC chose to write an order but they didn’t actually then have a civil money penalty, they just wrote an order and tried to change behavior.

I think there’s a reasonable case to be made that if you can come into compliance, if the securities and exchange commission gives some number of months and I don’t know that that’s the right period of time, but some number of months or a year or whatever to come into compliance, then they’ll look forward. The challenge is compliance is about disclosure, that’s hard to do but it’s do-able.

Compliance is about the manner of sale. You can’t change the manner of sale from two years ago, but maybe you can change the manner of sale going forward. Compliance is about beneficial ownership, that’s a tricky one. Compliance is about anti-fraud and insider trading rules.

So, I think it’s more like let’s look forward and there’s a thousand plus horses running out on the field that got out of the barn and we’ve gotta kind of bring them into compliance. And even for Ripple and ether, or maybe it’s EOS or NEO or.. but for the big market cap ones, there needs to be clarity in the market and if the clarity in the market is that they’re not securities they might still be commodities, they might still need to comply with all of those laws, but I think it’s a period of time, but if you do an issuance now in April of 2018 do it under the US securities laws.

I think everybody’s on notice now. And Chairman Clayton did that in February pretty clearly, and any law firm advising them I’m sure is telling them we can’t write you an opinion unless you comply with one of the exemptions. There are various exemptions if you only sell to accredited investors or other various ways to package these things. They’d still have some burden, they still have costs and this kind of tricky question of how you figure out who all your beneficial owners are.

Exemptions and selling to accredited investors – the SAFT – which you mentioned do you think that that resolves the problem?

Well I think you’re asking two questions. The first is do I think selling to accredited investors under what’s called Regulation D works. Yes, if you comply with all the exemptions and all the requirements of Reg D. Do I think that a SAFT or a multi-staged where you can one day be a security and a year or two later no be, or in essence, filecoin’s token, not to pick on them but it’s a real case, will filecoin’s token not have to be registered?

I think that’s unlikely but they might be successful. That’s between them and the securities lawyers at the SEC. I think that at the core is the economics. The core is you can be both a consumable token and an investment token and then you need to comply with securities laws. And if somebody’s raising a quarter of a billion dollars as filecoin did or $1.7 billion as Telegram did, and the market is the size that the market is, there’s a lot of investors who are investing and then I think the laws should adapt.

There’s going to be a lot of changes over that over the next two to five years are appropriate. But it’s better to bring it inside of the public policy framework even if there’s a bit of a chill. But to bring it in, to be stronger and reap the benefits later. And I think the internet went through this a bit and other technologies, railroads went through it in the 19th century.

New technologies usually come about outside of a public policy framework and at some point whether it’s a taxing authorities or other authorities, but we still want to achieve something. In this world we want to protect investors and consumers, we don’t want like consumers money to be lost like a half a billion dollars got lost at Coincheck in Japan in January.

I mean we all remember Mt. Gox about four or five years ago. This keeps happening.

So there’s still core public policy goals, and they’re still worthy and sort of adapting the technology and adapting the laws to fit them together.

Gary Gensler image via Flickr

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simonconsultancypage · 5 years ago

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Securities Suits Filed Against Companies Involved in E-Cigarette Business

Just about everyone who has been active in the D&O insurance arena for a while knows that every now and then one industrial segment or another will suddenly find itself in the midst of a securities litigation blitz. Years ago after the Internet bubble burst, it was the dot com companies. Further back than that, as at least some of us can remember, there were all of the failed banks in the S&L Crisis (and, again, in the wake of the global financial crisis). More recently, companies in the opioid pharmaceuticals space have drawn the unwanted attention of the plaintiffs’ securities lawyers. Often these kinds of securities suits and other D&O claims follow after some industry-wide event or sector slide.

Greenlane Holdings

The first of these securities suits involving e-cigarette industry companies was filed against Greenlane Holdings, Inc., a company that distributes e-cigarettes, vaporizers and accessories through its subsidiaries. The company also distributes products containing hemp-derived cannabidiol (CBD). The company completed its IPO in April 2019. According to the company’s registration statement filed in connection with the offering, the company is “one of the largest distributors of products made by JUUL Labs,” an e-cigarette manufacturer. Among other things, the registration statement emphasized that “a significant percentage of our revenue is dependent on sales of products … that we purchase from a number of our key suppliers, including PAX Labs and JUUL Labs.”

Altria Group, Inc.

The second company to be caught up in this e-cigarette industry-related litigation is the major tobacco-product manufacturer and distributor, Altria Group, Inc. In December 2018, Altria announced that it had agreed to invest $12.8 billion in JUUL Labs, the top U.S. maker of e-vapor products, including e-cigarettes. As announced Altria Labs investment of JUUL represented a 35% economic interest in JUUL.

Discussion

The post Securities Suits Filed Against Companies Involved in E-Cigarette Business appeared first on The D&O Diary.

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vdlegal · 4 years ago

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itswallstreetpr · 4 years ago

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The Story Turns Back to Pot Stocks (GRWG, CRON, MEDIF, NUGS)

The green machine is back. And we would expect the usual election hype to get started again ASAP. We are now closing in on the next moment when some percentage of the population will be focused more on whether or not their particular state is about to offer legal pot than on who’s the next president. And that percentage is worth a mint to the industry and to investors who get in for the run into the election. In addition, this time around is super spicy because the polling numbers slant heavily in Biden’s favor and the Biden-Sanders "unity task force" put together a lengthy document of policy recommendations across a wide array of issues that is highly instructive on the pot stock election hype factor. For example, among the issues that the task force considered was recreational cannabis legalization, calling for the decriminalization of marijuana using executive action. The task force also expressed support for the federal legalization of medical marijuana. So, get your engines started folks. With that in mind, here’s a selection of some of the most active names in the space, including: GrowGeneration Corp (OTCMKTS:GRWG), Cronos Group Inc (NASDAQ:CRON), and Medipharm Labs Corp (OTCMKTS:MEDIF), and Cannabis Strategic Ventures (OTCMKTS:NUGS). GrowGeneration Corp (OTCMKTS:GRWG) trumpets itself as a company that, through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. Currently, GrowGen has 27 stores, which include 5 locations in Colorado, 5 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators, located at https://growgen.pro/. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. GrowGeneration Corp (OTCMKTS:GRWG) just announced the pricing of an underwritten public offering of 7,500,000 shares of its common stock at an offering price of $5.60 per share. GrowGen expects the gross proceeds from the Offering to be approximately $42.0 million, before deducting the underwriting discount and other estimated offering expenses. The Offering was upsized from the previously announced offering size of $35.0 million of common stock. GrowGen has also granted the underwriters a 30-day option to purchase up to an additional 1,125,000 shares of common stock offered in the public market. The Company expects to close the Offering on or about July 2, 2020, subject to the satisfaction of customary closing conditions. If you're long this stock, then you're liking how the stock has responded to the announcement. GRWG shares have been moving higher over the past week overall, pushing about 7% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 10% in that time on strong overall action. GrowGeneration Corp (OTCMKTS:GRWG) pulled in sales of $33M in its last reported quarterly financials, representing top line growth of 152%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($11.4M against $17.3M, respectively). Cronos Group Inc (NASDAQ:CRON) casts itself as an investment firm in the biopharmaceutical space, with a strong emphasis on medical marijuana and cannabis-related research and products. In short, the company seeks to invest in other companies, either licensed or actively seeking a license, to produce medical marijuana pursuant to Canada’s Marijuana for Medical Purposes Regulations (MMPR). The firm typically invests in companies based in Canada. The firm is primarily an equity investor, may also advance debt as appropriate. It seeks to make minority investments with appropriate governance and shareholder rights. The firm seeks board representation consistent with the size of the investment but does not need control. Cronos Group Inc (NASDAQ:CRON) just announced that the shareholders have approved a special resolution authorizing the Company to make an application for the continuance of the Company from the laws of the Province of Ontario to the laws of the Province of British Columbia, as further described in the Proxy Statement. The Company believes the greater flexibility afforded by the British Columbia corporate statute by virtue of the absence of a Canadian residency requirement for members of the board of directors of the Company will allow the Company to consider Board candidates from a larger pool of candidates to ensure the Board maintains the right composition, skills, expertise and diversity to drive long-term value. The completion of the Continuance remains subject to the satisfaction of the conditions described in the Proxy Statement. While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn't been the type of action CRON shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -5% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. CRON shares have been relatively flat over the past month of action, with very little net movement during that period. Cronos Group Inc (NASDAQ:CRON) generated sales of $11.3M, according to information released in the company's most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 17.6% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.9B against $286.8M). Medipharm Labs Corp (OTCMKTS:MEDIF) bills itself as a company that primarily focuses on producing pharma-grade cannabis oil and concentrates in Canada. It also focuses on providing cannabis contract processing services to licensed producers and growers; supplying cannabis oil to companies for sale under its brand; and supplying raw materials and processing for the creation of ready-to-sell cannabis products. The company was founded in 2015 and is headquartered in Barrie, Canada. This expert focus on cannabis concentrates from our cGMP (current Good Manufacturing Practices) and ISO standard clean rooms and critical environments laboratory, allows MediPharm Labs to produce purified, pharmaceutical-grade cannabis oil and concentrates for advanced derivative products. MediPharm Labs has invested in an expert, research-driven team, state-of-the-art technology, downstream extraction methodologies and purpose-built facilities to deliver pure, safe and precisely-dosed cannabis products to patients and consumers. MediPharm Labs’ private label program is a high margin business for the company, whereby it opportunistically procures dry cannabis flower and trim from its numerous product supply partners, to produce proprietary cannabis oil concentrate products for resale globally on a private label basis. Medipharm Labs Corp (OTCMKTS:MEDIF) just announced that it has appointed James (Jim) Maloney as Chief Financial Officer, effective July 20, 2020. In his role, Mr. Maloney will be responsible for leading the finance function including all aspects of financial planning and analysis, setting Medifast's financial and capital allocation strategies, and managing investor relations. He will serve as a member of the company's leadership team and report directly to Chief Executive Officer Dan Chard. The stock has suffered a bit of late, with shares of MEDIF taking a hit in recent action, down about -7% over the past week. Medipharm Labs Corp (OTCMKTS:MEDIF) generated sales of $11.1M, according to information released in the company's most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -65.8% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($21.4M against $25.1M, respectively). Cannabis Strategic Ventures (OTCMKTS:NUGS) bills itself as one of the largest publicly traded marijuana cultivators in the United States. The Company is Los Angeles-based and incubates, develops, and partners with category leaders within the cannabis and ancillary sectors. The Firm's NUGS brand experience provides operational and financial strategic partnerships and a range of essential services to emerging and existing Cannabis consumer brands. Cannabis Strategic Ventures (OTCMKTS:NUGS) recently announce topline performance data for the month of June, which featured over $1.3 million in sales, representing over 40% sequential monthly revenue growth. This performance demonstrates a dramatic acceleration in month-over-month growth. “June set new records for the Company, with a massive acceleration in the pace of growth, which is so far continuing in July,” stated Simon Yu, CEO of Cannabis Strategic Ventures. “We have successfully repositioned ourselves in the ecosystem of the California cannabis marketplace, moving up the ladder and widening our distribution footprint. We will continue to focus on ramping production capacity and steadily driving gains in quality, efficiency, and volume. That has been our focus all year. Besides dramatic expansion in sales volume by weight, we have also been rewarded by the market with steady gains in pricing. That represents the ultimate positive reinforcement.” Even in light of this news, NUGS has had a rough past week of trading action, with shares sinking something like -2% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Shares of the stock have powered higher over the past month, rallying roughly 53% in that time on strong overall action. Cannabis Strategic Ventures (OTCMKTS:NUGS) generated sales of $1.4M, according to information released in the company's most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 91.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($222K against $13.1M, respectively). Read the full article

#canabisstocks #CBD #marijuanastocks #potstocks

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isaacscrawford · 7 years ago

Text

A Brief History of Price Controls by Annoyed Republican Administrations

By UWE REINHARDT

Although, unlike most other nations, the U.S. has only two parties worth the name, their professed doctrines compared with their actions strikes me as more confusing than the well-known Slutsky Decomposition which, as everyone knows, can be derived simply from a straightforward application of Kramer’s rule to a matrix of second partial derivatives of a multivariable demand function.

The leaders of the drug industry, for example, probably are now breaking out the champagne in the soothing belief that their aggressive pricing policies for even old drugs are safe for at least the next eight years from the allegedly fearsome, regulation-prone, price-controlling Democrats. My advice to them is: Cool it! Follow me through a brief history of Republican health policy, to learn what Republicans will do to the health-care sector when it ticks them off.

Republicans like to tar Democrats over allegedly socialist policy instruments such as price controls, global budgets and deficit-financed government spending. Democrats usually roll over to take that abuse, almost like hanging onto their posteriors signs that says “Kick me.” I say “abuse,” because Republicans have never shied away from using the Democrats’ allegedly left-wing tactics when health care chews up their budgets or turns voters against them.

Think of the early 1970s. Like most other economies in the world, the U.S. economy then suffered very high inflation, led by health spending widely judged to be out of control. So Republican President Richard Nixon thought nothing of slapping price controls onto the entire U.S. economy, keeping them longest on the health care sector. (I cannot imagine Democrats ever having the guts to do that or, for that matter, to sojourn to China, there to pay court to Mao Tse Tung, the self-anointed Communist Emperor of the Middle Kingdom).

Think of the 1980s. Ticked off by the ever increasing grab for taxpayers’ money triggered by Medicare’s retrospective reimbursement of hospitals then in place, Republican President Ronald Reagan thought nothing of slapping onto that sector a set of centrally administered Medicare prices for the whole country. That new pricing scheme, based on the Diagnosis Related Groupings (DRGs), reminds one of nothing so much as Soviet style pricing, to cite the mournful, subsequent mea culpa of one of the former bureaucrats tasked with implementing that system between 1983 and 1986.

I recall making in the early 1990s a presentation to the Missouri Hospital Association, where I opened up with the following slide:

(I actually wore that uniform at the podium. I had been bought by my wife, in 1989, from a Russian at the Brandenburg Gate in Berlin, immediately after the fall of the Berlin Wall. The photo was taken in 1990 by our son Mark, at the tank museum of the Aberdeen Proving Grounds in Maryland, before a WWII Russian T-62 tank.)

Evidently enchanted by the price-controlling, cost-containment power of President Reagan’s Soviet pricing scheme for hospitals, President George Herbert Walker Bush imposed, in 1992, a similar scheme on physicians treating Medicare patients. Known as Medicare Fee Schedule (MFS), it was based on the Resource-Based Relative Value Scale (RBRVS), a pseudo-scientific design that seeks to base relative Medicare fees for particular services on their relative cost of production. A problem with that approach, of course, is that relative costs do not coincide with relative values. It would set the fees for, say, a hypothetical transurethral tonsillectomy as much higher than that of the traditional transoral one, simply because the transurethral approach is more time consuming.

Anticipating that physicians would game the new Medicare Fee Schedule by responding to lowered fees with commensurate increases in the volume of services recommended and delivered to patients, the Bush Sr. Administration coupled the new fee schedule with Volume Performance Standards (VPS), a fancy euphemism for nationwide global budgets, one for surgical and the other for non-surgical physician services delivered to Medicare patients. Democrats may dream of global budgets. Republicans do them. That anyone seriously thought a global budget for as large an entity as the entire U.S. could ever work – that it was productive to punish conservatively practicing physicians in Duluth, Minnesota for huge volume increases in Dade Country, Florida — is a testimony to the far reaches of the human mind.

Predictably disenchanted with the non-performance of the Volume Performance Standards, a Republican House in 1997 morphed it into Medicare’s Sustainable Growth Rate (SGR). The SGR became law. It was global budgeting still for the entire nation, but so stringent that Congress dared apply it in only one year, otherwise kicking it down the road unused, for eventual resolution.

That resolution came in 2015, with the so-called “Doc Fix,” the still controversial Medicare Access and CHIP Reauthorization Act (MACRA). That act was sponsored and introduced to the Republican House of Representatives by a Republican Congressman from Texas who is also a physician. It was promptly signed into law by President Obama, after it was passed with a bi-partisan vote in both chambers. The MACRA quite sensibly seeks to establish a direct link between Medicare payments to a physician and the quality of the services delivered by that physician. Alas, once packaged by the bureaucracy into concrete regulations for operation in the trenches, the resulting complexity of measuring quality in practice and even the validity of these operational metrics now predictably has physicians all over the country up in arms.

And so it goes, to plagiarize Kurt Vonnegut.

So it is prudent to wonder just what health policy will come down in the years ahead from the Republican Mount Olympus ruled by President Trump. Republican Presidents, members of Congress and Governors may like playing golf with the leaders of the health-care industry and share a Bourbon or two with them; but they don’t like it when that industry’s endless, energetic search for mammon chews up their budgets, and they do not hesitate to react to that fiscal hemorrhaging with fury, often resorting to the allegedly socialist tactics they usually ascribe to the Democrats.

What can be said about health policy also applies to U.S. fiscal policy. Democrats have never been able to shake off the label that they are the party of deficit-financed government spending – that they practice the much maligned, socialist Keynesian economics — in spite of plenty of history to the contrary. Consider, for example, the graph below published by the non-partisan Congressional Budget office (CBO).

The time paths of federal tax revenues and spending clearly show what former Vice President Dick Cheney reportedly explained to an amazed then Secretary of the Treasury Paul O’Neill: “Reagan taught us that deficits don’t matter.”

Deficit financed government spending and tax cuts are usually considered the very core of Keynesian economics, aimed at shoring up the demand side of the economy. It is based on the idea that there is not enough demand to buy the products the supply side could deliver. It is a policy much decried by Republicans and the media supporting them, e.g., The Wall Street Journal or the anchors and talking heads on Fox News TV. It stands in contrast to so-called supply side economics, which seeks to rev up the economy by changing the financial incentives (mainly taxes) and regulatory burden faced by the supply side of the economy, assuming that the barrier to faster economic growth lies on the supply side of the economy.

Although during the election campaign in 1980 President Reagan had promised to balance the federal budget by 1984 and rev up the economy just with tax cuts that, through faster economic growth, would be self-financing, in fact his administration coupled the huge cuts in the individual tax rates it got swiftly passed by Congress with huge increases in defense spending and even farm support, driving up federal deficits to levels easily three times as high as the previously much decried, relatively puny deficits registered by President Carter (see chart below). By the end of President Reagan’s eight-year term in office, the public federal debt had tripled. By the time President Bush Sr. left office, it had quadrupled.

Had President Reagan really tried his hand at supply side economics, he would have lowered substantially the corporate tax rate from the statutory level of 35% to closer to 20% or even below, to keep U.S. capital and investments at home. Instead he left the high statutory corporate tax rate in place and even increased the tax take from the corporate sector by closing some loop holes. Reagan’s tax policy – especially his second-term efforts to close loop holes and broaden the tax base — actually seemed to slouch toward policies many Democratic economists would and did support. The point here is that overall, one can fairly argue that Reagan’s fiscal policy slouched much more toward the much maligned Keynesian policy of driving economic growth, rather than to solid supply side economics.

Seemingly paradoxically, corporate executives tend to go along with cuts in individual rather than corporate tax rates. It is so because they all manage two companies: one owned by shareholders, and the other, increasingly large company owned by their families. When given a choice between tax cuts for either or the other of the two entities, they naturally lobby for the second, which is what Republican presidents – Reagan, Bush Sr., Bush Jr. — have always faithfully delivered. We shall see what President Trump will do in that regard.

The CBO graph above also shows the eventual decline in the federal deficit and emergence of a federal budget surplus under Democratic President Clinton (although in fairness it must be said that then House Speaker Newt Gingrich gave him a helping hand). When President George W. Bush ascended to the White House, he actually inherited a federal surplus and the prospect of shrinking public debt. His fiscal policy frittered away both.

President George W. Bush, starting in 2001, basically repeated the rather reckless Reagan strategy of trying to goose the economy through increased government spending coupled with massive cuts in individual income-tax rates, all financed with large deficits and rapid increases in the federal debt. Under his reign the federal public debt rose from $5.6 trillion to close to $10 trillion. With the Medicare Prescription Drug, Improvement and Modernization Act of 2003, he even put a brand new future entitlement – heavily subsidized drug purchases by Medicare recipients – on the federal tab. That even after that action deficit financing of large future entitlements can so easily be hung around the neck of Democrats attests to the political power of the Republican oral tradition.

Finally, the CBO chart clearly shows that it would be unfair to impute the huge budget deficits and run-ups in the federal debt after fiscal 2009 to President Obama. In the wake of the global financial crisis of 2007-2009 – not of either President Bush’s or President Obama’s making — government revenues plummeted and much of the increased spending came from the so-called automatic stabilizers – mainly entitlements such as Medicaid, unemployment compensation, food stamps etc. – long ago baked into federal law. Neither of the two presidents had any control over these trends. Indeed, according to the CBO’s Budget Projections of January 2009 – published before President Obama had moved into the White House – the projected deficit in President Bush’s last budget, submitted in October 2008 for fiscal 2009 (October 2008 to September 2009), was close to $1.2 trillion. Surely that did not conform to the President’s idea of sound fiscal policy.

With this brief historical background, one can just see what might happen to fiscal policy under the reign of President Trump.

My hunch is that, to win a second term, he will heed Vice President Cheney’s dictum and, once again, practice the good old Keynesian economics that the American public loves so much: large tax cuts combined with massive, job-creating increases in federal spending on defense and on infrastructure projects, including, perhaps, sparkling new elementary- and high schools and perhaps even new health-care facilities in inner cities, to own up visibly to the folks living there to whom he had promised help, and all debt financed as good investments to make America grow and great again. Why not?

The alternative, asking the private sector to finance these infrastructure projects, may seem attractive to Republicans at first blush, but one must wonder how folks in the so-called “fly-over” country will react when all of a sudden their hitherto free roads and bridges are converted to toll-charging facilities, with tolls set on Wall Street by rapacious private equity firms beholden only to their equity investors in the US and abroad. It might not be a vote getter.

Keynesian economics has worked well for Republicans, because voters love it, as they seem to get something for nothing, federal debt and future taxpayers be damned. And in a world financial market awash in capital with nothing to do, safe U.S. government bonds will find many eager buyers.

It is all quite confusing, even to a Ph. D., and perhaps especially to a Ph. D., because, as I noted in the introduction, U.S. politics are ever so much more intellectually taxing than is the good old Slutsky Decomposition.

Article source:The Health Care Blog

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