May 12 2022,

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THE BIG IDEA

Hi all,

As promised, today I’ll start hosting weekly discussions of the news in the WeedWeek Discord. We’ll get rolling at 10 am PT today and you can log in here

We’ve got lots to discuss:

  • Jungle Boys hit with labor lawsuit
  • Cannabiz awaits Gov. Newsom’s tax plan
  • Why Weedmaps bought Enlighten

Enjoy,

Alex

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JUNGLE BOYS HIT BY LABOR LAWSUIT

Two former-employees have sued companies affiliated with SoCal operator Jungle Boys, alleging wrongful termination, unlawful retaliation, failure to pay all wages due and “false imprisonment” among other claims. The 45-page complaint also alleges that the defendants did not allow pregnant women employees.

High Times recently called Jungle Boys, which was established in 2006, a “storied” company and “one of the premier examples of urban farmers bootstrapping their way to success.”

In a statement, Arthur Hodge, a lawyer for the defendants, wrote that an initial investigation found the allegations to be inaccurate and that the defendants would contest the matter in court. 

Read the story at WeedWeek

CANNABIZ AWAITS GOV. NEWSOM'S TAX PLAN

GETTY IMAGES

In Sacramento all eyes are on Gov. Gavin Newsom’s (D) revised state budget plan, due out tomorrow. It’s  expected to include his proposed framework for reforming pot taxes, the state industry’s most pressing concern.

An email sent out yesterday by the California Cannabis Industry Association (CCIA) anticipates three significant changes based on a preliminary briefing it received: 1) Zeroing out the state cultivation tax; 2) Shifting excise tax collection and remittance from distributors to retailers; 3) Increasing the 15% excise tax after three years to offset losses from the cultivation tax.

  • CCIA, which opposes raising the excise tax, cautions that it has not yet seen the proposal in writing.

Growers despise the cultivation tax, currently $161/pound of flower, which they point out is the only cultivation tax on any crop in California.

  • Amy Jenkins, an industry lobbyist and president of Precision Advocacy, argues that the cultivation tax has a “compounding effect” which raises prices throughout the supply chain.

Precision and Santa Barbara Co. group Good Farmers Good Neighbors commissioned a new study from the libertarian Reason Foundation which predicts eliminating the cultivation tax would raise total state tax cannabis revenue by 123%, since it would increasing the amount of taxed, legal product bought by consumers.

“Depending on the governor’s proposal,” CCIA’s email reads, “We may have reason to celebrate or we may have an urgent need to mobilize for change. We are prepared for both contingencies.”

WHY WEEDMAPS BOUGHT ENLIGHTEN

enlighten
Provided by Enlighten

Last week, Irvine-based Weedmaps said it had acquired Enlighten, a leading provider of in-dispensary marketing, for undisclosed terms. The deal aims to expand Weedmaps reach into IRL dispensaries.

When it started operating more than a decade ago, Weedmaps key function was helping consumers locate dispensaries. As that service became less essential, it grew into a Yelp of pot building out its menu features and eventually enabling online purchases. It also built a suite of enterprise software for retailers including a point of sale system.

With Bowling Green, Ky.-based Enlighten, Weedmaps gains access to a network of screen displays across more than 1,200 dispensaries.

In an interview, Weedmaps CEO Chris Beals described the deal as creating an “omni-channel” product for dispensaries to reach consumers at all three points of purchase: 1) A dispensary’s site, 2) A portal (Weedmaps) and 3) In-store.

  • The combination enables dispensary clients to easily broadcast offers, such as a deal of the day, across multiple channels. “It provides a huge amount of value for a minimal lift on our side,” Beals said.
  • Beals said he doesn’t believe there’s any equivalent ecosystem in cannabis or mainstream retail.
  • The company also expects to improve its product recommendation capabilities through data sharing.

Enlighten CEO Jeremy Jacobs describes the customer journey in three parts, acquisition, upsell and retention. Weedmaps, he said, is already has the industry’s top customer acquisition platform and customer retention platform Sprout, which it acquired last year. Now Enlighten enables it to upsell brick and mortar customers.

DOGWALKERS

MedMen settles New York lawsuit

SoCal-based retailer MedMen settled the lawsuit filed by MSO Ascend Wellness Holdings after MedMen backed out of an announced plan to sell 87% of its New York operations to Ascend for $73M. Under the settlement, MedMen will sell almost 100% of its stake for $88M plus an additional $14M when Ascend makes its first REC sale in New York. Before the settlement, LA Business Journal checked in with the MSO, “where change is a constant.”

Taking crypto local

Last week I meant to include Itty Bitty in the list of innovative brand business models. Itty Bitty offers its NFT holders a set of benefits including discounts on its equity brand. Additionally, while the crypto world/metaverse can seem remote and abstract, founder Aubrey Lang said he hopes to ground Itty Bitty in local communities by partnering with non-chain restaurants eager for more foot traffic.

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