June Roundup: Deal activity picking up despite possibility of U.S. crackdown

Despite ongoing mixed signals from U.S. Attorney General Jeff Sessions, cannabis investment appeared to pick up in June.

Sessions has ordered a review of U.S. cannabis policy. The review is being conducted in secret with little room for public input but is expected to release its report by July 27.

Here are some of the noteworthy deals and business stories from June:

A rural Oregon couple filed a racketeering (RICO) lawsuit against 43 defendants. The suit came after the 10th Circuit Court of Appeals ruled that neighbors can sue a Colorado pot farm for smells and other nuisances. Since it considers the odor a form of racketeering or property damage, the decision opened the door to lawsuits against all cannabis businesses and apparently threatens the industry. This was the initial intention of Safe Streets, a Washington D.C. anti-drug group which supported a group of Colorado horse ranchers to pursue this case.

Enterprise software company MJ Freeway won the contract to provide seed-to-sale tracking to Washington State. It will replace Franwell’s BiotrackTHC system as the state’s provider. This comes after MJ Freeway won a $10 million contract to provide the same service in Pennsylvania. This month MJ Freeway also suffered its second security breach in six months, when some of its source code was posted online. The company called it a theft but said customer data would not be affected. In January its system suffered a minor crash which it called a criminal attack.

Tyler and Cameron Winklevoss, the twins who previously accused Mark Zuckerberg of stealing the idea for Facebook, are reportedly being sued by an investor after backing out of a commitment to buy his shares in cannabis delivery app Eaze for $500,000. Todd Steinberg claims the pair had already signed a binding term sheet to acquire the shares. The twins apparently got cold feet after Eaze CEO Kevin McCarty stepped down in December.

A consortium of 20 investors acquired a majority stake in High Times in a deal that valued the media brand at $70 million. The deal was led by venture capitalist Adam Levin through his firm Oreva Capital. Investors also include musician and entrepreneur Damian Marley, Denver cannabis entrepreneur Ean Seeb, Isaac Dietrich, CEO of social media app Massroots and Nick Kovacevich, CEO of packaging company Kush Bottles. High Times, which will publish its 500th issue in July, generates 20 million monthly visits to its web properties. It has also become well known for its “Cannabis Cup” events.

Cannabis companies raised $734 million between January 1 and 4/20, up from $108M during the same period last year according to a report from New Frontier Data and Viridian Capital Advisors.

Canadian medical marijuana producer MedReleaf raised C$100.7 in what was touted as the largest cannabis IPO yet. Despite the raise, the deal disappointed investors with the stock quickly falling below the open price of C$9.5. It traded in the C$8 range for much of the rest of June.

Cannabis company GB Sciences won a contract from Louisiana State University to produce medical marijuana for the state. The deal, due to be finalized in August, will make GB the sole operator of LSU’s cannabis grow, and the sole vendor. It is the first cannabis contract awarded by an American university. Louisiana’s other licensed grower is Southern University.

Maryland regulators acted to revoke a license awarded to Minnesota-based medical marijuana producer Vireo Health. The reversal is due to two former Vireo employees who face charges for allegedly driving 12 pounds of cannabis oil, worth about $500,000, in an armored vehicle from Minnesota to New York to meet a production deadline. Prosecutors say fraudulent records in Minnesota indicated the oil had been destroyed. Vireo said it would appeal the decision. Pennsylvania has not moved to revoke a license recently awarded to Vireo.