1. Jazz acquires GW Pharma for $7.2 billion
In an acquisition that will shake up the world of cannabinoid-based medicine, Jazz Pharmaceuticals will acquire GW Pharmaceuticals, makers of Epidiolex, in a deal worth an estimated $7.2 billion.
Epidiolex is the first cannabinoid-based medicine to be approved by the U.S. Food and Drug Administration.
According to a press release, Jazz, a pharmaceutical company based in Dublin, Ireland, will pay $220 per share of GW, in the form of $200 in cash and $20 in Jazz common stock. The transaction is expected to close in the second quarter of 2021.
Epidiolex, a CBD-based oral solution, is approved in patients 1 year old and older for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS), Dravet syndrome and tuberous sclerosis complex (TSC), all of which are rare diseases characterized by severe early-onset epilepsy. The drug has also been approved in Europe under the name Epidyolex for patients 2 years old and older.
Epidiolex reached $510 million in annual sales within two years of launch.
GW is also in late-stage trials for a cannabis-based product to treat multiple sclerosis, and it is working on drug candidates to treat autism and schizophrenia.
Jazz is a global biopharmaceutical company, serving patients in 90 countries. It focuses on neuroscience, including sleep and movement disorders, and in oncology, including hematologic malignancies and solid tumors and has a diverse portfolio of marketed medicines and novel product candidates.
“We are joining two teams that share a passion for, and track record of, developing differentiated therapies that advance science and transform the lives of patients,” Bruce Cozadd, chairman and CEO of Jazz Pharmaceuticals said in a press release.
The announcement of the acquisition comes less than two months after the Canadian cannabis company Canopy Growth filed a lawsuit against GW Pharma for infringing on a patent related to extraction methods.
Canopy Growth Corporation v. GW Pharmaceuticals PLC was filed December 22, 2020, in a U.S. District Court in Texas, the same day Canopy was granted Patent No. 10,870,632, which was originally filed by a scientist named Adam Mueller in 2000 and purchased by Canopy on December 4, 2020, as part of a group of patents.
In January, GW Pharma declined to comment on the pending litigation, but added in an email to Marijuana Venture from a company spokesperson, “based on our preliminary review of the complaint, we are confident in our position and will vigorously defend against this lawsuit.”
2. Legalization moves forward at the state level
Following the decisive results of the 2020 election, numerous governors and state legislatures are supporting legalization efforts in the first quarter of 2021.
According to Tom Angell of Marijuana Moment, at least 11 governors have stated cannabis reform is a priority in their State of the State speeches or budget plans. There were at least 16 cannabis and drug policy hearings in state legislatures on February 16 alone, he said on Twitter.
The biggest prize of all could be New York, where Governor Andrew Cuomo’s efforts to legalize last year were derailed by the COVID-19 pandemic. For the third year in a row, Cuomo included adult-use cannabis legalization in his budget plan, estimating it could raise $350 million in tax revenue for the state, with $100 million of that slated for a social equity fund.
To the south, lawmakers in Virginia are approaching legalization, with both houses of the Legislature passing bills to legalize and Governor Ralph Northam signaling his interest to sign a bill. Each house will now consider the other’s adult-use law, with a bicameral conference committee expected to reconcile the two versions into a single proposal to be sent to the governor. A recent poll showed 68% of Virginians favor legalization.
Out west, New Mexico Governor Michelle Lujan Grisham again discussed legalization of adult-use cannabis as a way to generate additional tax revenue and create jobs and included the measure as part of her agenda for the year. The state House of Representatives and Senate are also debating multiple legalization measures. An October 2020 poll showed more than 70% of New Mexico voters are in favor of legalization.
Wisconsin Governor Tony Evers also included a plan to legalize as part of his most recent budget proposal, though the Republican-controlled Legislature continues to oppose the effort.
On the medical side, Kansas could be the next state to create a program, with Governor Laura Kelly proposing a law that would establish a framework for cultivation and sale of medical marijuana, with tax revenues aimed at paying for Medicare expansion in the deeply conservative state. However, the state’s GOP leadership has already signaled its opposition to the idea.
“We place immense value in the relationships we’ve built with lawmakers, and we’re excited to begin this phase in the legislative process with them,” Kansas Cannabis Business Association co-president Erin Montroy said in a press release. “They see the effects of the Covid-19 pandemic and the economic benefit a well-regulated program can bring to a state, and we fully expect reform to pass this session.”
3. Republicans use courts to block voter-approved legalization efforts
Despite legalization efforts sweeping across the country, several Republican-led states are working to block approved ballot measures in favor of creating a cannabis industry.
In South Dakota, voters approved both medical and recreational legalization by margins of 68% and 54%, respectively, but Republican Governor Kristi Noem is hard at work to overturn both results. Noem in November instructed the Highway Patrol to file a lawsuit challenging the initiative’s legality under the state constitution’s single-subject rule initiatives. In February, a circuit judge appointed by Noem agreed, invalidating the measure. The decision is being appealed to the state Supreme Court. On the medical side, Noem has also delayed the start of the program by one year because she did not have enough time to study the issue and implement a program.
NORML deputy director Paul Armentano issued a statement denouncing the actions of Noem and other state officials aiming to overturn the will of the voters.
“The will of the voters is clear,” he said. “They want a legal marijuana marketplace and they want patients to be able to access medical cannabis. These cynical efforts to undermine and delay the enactment of these voter-approved measures is an affront to the very constituents that these lawmakers are in office to serve.”
Meanwhile, the Mississippi Supreme Court has agreed to hear a challenge to the state’s voter-approved medical marijuana initiative, which passed in November over a competing measure submitted by the Legislature. In total, 68% of Mississippi voters approved the legalization of medical marijuana. Nearly three-quarters of voters — 73.7% — favored the citizen-led initiative over the Legislature’s watered-down version. The lawsuit, filed by the Republican mayor of Madison — now in her 10th term after first being elected in 1981 — is based on a technicality, arguing that the initiative should never have been on the ballot in the first place because the state’s initiative process is outdated. According to the state constitution, petitioners must gather an equal number of signatures from its five congressional districts, which is no longer possible since the state dropped to just four districts following the 2000 census. The Supreme Court was scheduled to hear the case in April.
4. Cannabis M&A transactions increase from 2020
Although mergers and acquisitions in the cannabis space are up from last year at this time, M&A activity remains sluggish, according to the Viridian Cannabis Deal Tracker. As of mid-February, 18 transactions had been recorded, the second lowest total since Viridian began tracking M&A activity, behind 2020’s 12 in the same period.
However, several large deals were completed recently.
Illinois-based Cresco Labs continues to grow, purchasing four Verdant Creations dispensaries in Ohio. These acquisitions give Cresco five dispensaries in Ohio, the maximum allowed. Cresco Labs is one of the largest vertically integrated, multistate cannabis operators in the United States and the country’s largest wholesaler of branded cannabis products. Cresco now has 15 production facilities, 29 retail licenses and owns 20 dispensaries across nine states.
Loyalty marketing company springbig in February purchased BudTender, a Canadian-based customer experience platform that experienced 800% year-over-year store growth and 1,200% year-over-year revenue growth in 2020. Through the acquisition, BudTender will add more than 200 clients to springbig’s existing customer base, increasing its market share to more than 1,900 retail partners across the U.S. and Canada.
Eteros Technologies, owner of Mobius Trimmer, has acquired California-based Triminator, maker of harvesting equipment for cannabis growers. The acquisition provides the Canada-based Eteros Technologies with a broader product range and increased access to the U.S. market. Financial details were not disclosed. According to the company, the Mobius and Triminator product lines combine to form the world’s largest manufacturer of cannabis and hemp harvesting and processing equipment.
In late January, cannabis retail point-of-sale marketing and loyalty company DataOwl was acquired by Fyllo, a leader in digital marketing and compliance solutions for highly regulated industries. DataOwl’s marketing and loyalty solutions are in more than 320 cannabis retailers across 25 states as well as Puerto Rico and Jamaica. DataOwl’s AI-powered retail solutions will be integrated into Fyllo’s Compliance Cloud, creating the industry’s first end-to-end, brand-safe marketing platform, allowing cannabis brands to target consumers at every level.
Finally, Verano Holdings, one of the largest private multi-state operators in the country, announced the closing of its reverse takeover of Majesta Minerals Inc., which will lead to Verano becoming a publicly traded equity on the Canadian Stock Exchange under the symbol VRNO. Verano also announced the closing of its merger with AltMed LLC and affiliated operations, which has a footprint in Arizona and Florida. The combined entity will have operations spanning 14 states with 54 operational retail locations.
5. New study shows counties with more cannabis stores see fewer opioid deaths
A study recently published in a medical trade journal shows a link between counties that increased the number of marijuana retail stores to a reduction in opioid-related deaths.
Counties that went from one dispensary to two saw an estimated 17% reduction in all opioid-related mortality rates, while counties that went from two dispensaries to three saw an additional 8.5% reduction.
The study, announced in The BMJ, a weekly, peer-reviewed medical trade journal published by the British Medical Association, showed an even higher reduction in deaths from synthetic opioids, like fentanyl, with an estimated 21% reduction in mortality rates associated with an increase from one to two dispensaries.
“If consumers use cannabis and opioids for pain management, increasing the supply of legal cannabis might have implications for fentanyl demand and opioid related mortality rates overall,” it states, adding that its conclusion “holds for both medical and recreational dispensaries.”
The study was co-authored by Balázs Kovács, Ph.D., of Yale University School of Management, and Greta Hsu, Ph.D., of University of California Davis Graduate School of Management. It used U.S. mortality data from the Centers for Disease Control and Prevention combined with U.S. Census data and information from Weedmaps about storefront dispensary operations across 812 counties in the United States in the 23 states that allowed legal forms of cannabis dispensaries to operate by the end of 2017.