U.S Cannabis Sales Are Reaching All-time Highs 🚀
What do Maine, Illinois, Michigan & Missouri have in common?
Welcome to Four PM — a newsletter that provides cannabis industry news & insights from cannabis industry leaders.
In Today’s Issue 💬
→ Why U.S Cannabis Sales Are Soaring. 🚀
→ Officers Raid A Legal Cannabis Facility. ❌
→ Three Cannabis Companies Join Forces. 🤝🏽
U.S Cannabis Sales Are Reaching Record Highs
Cannabis sales continue to reach new highs.
What do Maine, Illinois, Michigan & Missouri have in common?
Each of these States just posted record sales for cannabis in the month of July.
With a population of over 1.344 million people, adult-use cannabis sales reached $9.4 million USD in July in Maine.
This is a 45% increase from the previous record high set in June 2021 with adult-use cannabis sales having commenced in October 2020.
Since then cannabis is steadily growing in popularity with sales from the adult-use market on pace to outstrip medical cannabis sales for the first time.
The adult-use market has reported over $38.7 million in sales since legalization, providing the state with some $3.87 million USD tax revenue.
With a population of 12.67 million people, over 2.8 million cannabis products were purchased in July.
With this, Illinois saw over $127 million in adult-use cannabis products purchased last month.
As per the Illinois Department of Financial and Professional Regulation, $42 million in sales were from people outside of the state with the remaining $85 million in cannabis purchased by locals.
Having sold $670 million USD worth of cannabis in 2020, Illinois looks to be on track to surpass $1 billion USD worth of cannabis sales in 2021.
Illinois took in more tax dollars from cannabis sales vs alcohol sales for the first time in history last quarter — $86 million vs $76 million
With a population of 9.987 million people, cannabis sales in Michigan have also reached new highs in July.
A total of $171 million USD worth of cannabis was sold — $128 million in adult-use sales and $43 million in medical cannabis purchases.
From this, the State booked some $23 million in tax revenue.
Building on this, state officials in Michigan awarded $20 million in cannabis tax revenue to fund two research projects for cannabis.
The specific focus of these studies is to investigate the therapeutic potential of cannabis for military veterans with post-traumatic stress disorder.
Cannabis might not be legal for adult-use purposes for the 6.137 million people living in Missouri, however, medical cannabis sales exceeded some $20 million USD in July.
With July’s $20 million in cannabis sales — a total of $91 million USD worth of medical cannabis has so far been sold in Missouri in 2021.
Cannabis sales are going to continue to increase both in the United States, in Canada, and everywhere else around the world for many years.
These are great record highs, however, it won’t be long until these new record highs are smashed as consumer demand continues to increase.
The Million Dollar Mistake
In Lincoln County, Oklahoma a computer error resulted in $10 million USD worth of damages.
On the 4th of January 2018, Oklahoma became the 30th state to legalize cannabis for medical purposes.
As such patients in the state could:
→ Carry 85 grams of cannabis and store 227 grams at home.
→ Carry 28 grams of cannabis concentrates such as oils and hash.
→ Carry 2 kilograms of cannabis edibles.
With this newly created demand, a number of companies sought to capitalize on this opportunity, and Earth Research Labs was one.
Illegal vs Legal Cannabis…
In California, it’s currently estimated that half of all cannabis purchased today is from the illicit market.
As such, law enforcement agencies located where cannabis is legal have continued to target those who are cultivating cannabis for the illicit market.
The enforcement of these rules remains a high priority, as a successful raid can commonly result in millions of dollars worth of cannabis being seized.
Recently, however, one of these raids didn’t go exactly according to plan.
The Costly Computer Error…
An apparent computer error resulted in law enforcement officers in Lincoln County, Oklahoma raiding a legal cannabis cultivation operation.
This resulted in an estimated $10 million in damages to the facility and crops.
As per Oklahoma City TV station KWTV, a district attorney in Lincoln County authorized the raid on the grow, owned by Earth Research Labs.
Afterward, however, the District's Attorney’s office checked the status of the grow operation a second time only to realize the costly computer error.
“Our initial check of the system did not find anything, but a second check this morning on a different database did reveal that this was a licensed facility,” Mark Woodward, of the Oklahoma Bureau of Narcotics, told KWTV.
Woodward blamed the mix-up on a database change they made in July.
Meanwhile, Earth Research Labs CEO Rodney Topkov confirmed that he hasn’t been informed who will cover the millions of dollars in damages.
“The cops just started going right to work.
They hired a landscape crew to come in and start chopping stuff down, so right away they went right to work and didn’t let anyone ask questions”
I can't see a world in which Earth Research Labs would be asked to pay the price for a mistake they didn't make — we can expect to receive confirmation that taxpayers will be picking up this bill.
With less than 50,000 people living in Lincoln County, this will be an extremely expensive mistake for taxpayers in the region to absorb.
Building Cannabis Brands
In 2019, Gary Vaynerchuk who is one of the most prolific entrepreneurs in recent times entered the cannabis industry.
In the early stages of his career, he turned around the fortunes of his family-run liquor store, increasing annual sales from $4 million to $60 million.
In the later years, he founded VaynerMedia — a digital media agency that works with Fortune 500 companies.
Acquiring Green Street
Cannabis has been on Gary Vaynerchuk's radar for a number of years.
As opposed to building from scratch, Vaynerchuk purchased a 50% stake of Green Street, founded by Rama Mayo and Joshua Shelton.
Rama Mayo and Joshua Shelton are also the founders of the highly popular cannabis conference Hall Of Flowers.
In the time since Vaynerchuk acquired this 50% stake of Green Street, they worked with many leading cannabis brands in the U.S such as Cookies, Care By Design, Apothecanna & Eaze.
Green Street has a great track record of executing great partnerships.
At their 2019 conference, music artist Post Malone’s debuted his CBD brand Shaboink at Hall Of Flowers.
Additionally, Green Street’s new headquarters is currently under construction in downtown L.A which will be home to over 50 cannabis companies.
Helping Brands - To Building Brands…
Last Friday Green Street announced they will be merging with cultivation group Green Spectrum and distribution company Bridge Distribution.
Green Street was founded on the insight that “the biggest cannabis brands don’t exist yet” and with this merger, they seem set to pursue the creation of these cannabis brands.
As part of this move, Matt Bruhn, the former president of Pabst Brewing Company, will become the CEO of these combined companies.
House Of Brands…
Green Street has so far created 5 brands including partnerships with rapper 2 Chainz and hip-hop artist The Game.
The combination of these three companies will create a fully vertically integrated cannabis company with licenses to cultivate, manufacture, distribute and deliver these cannabis brands in California.
“We have been a house of brands licensing out our IP for more than five years, but now we’re fully licensed and in complete control of our entire supply chain” Rama Mayo said.
Moving forward, Green Spectrum’s cultivation facilities in Los Angeles will serve as the main source of product for the Bridge Distribution centers located in San Francisco and Los Angeles.
In 2019, Gary Vaynerchuk began building a Direct to consumer wine brand called “empathy wines” and in 2021 he sold this brand to Constellation Brands.
Constellation Brands has already invested some $4 billion USD into Canopy Growth.
As such, I won’t be one bit surprised if history repeats itself and this newly formed company is acquired by Constellation Brands when possible.
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