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Marijuana company Viola closes $13 million funding round

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Los Angeles-based marijuana operator Viola Brands closed a $13 million equity funding round with the aim to expand into several new markets.

According to a news release, the company will use the funds to make in-roads in Illinois, Maryland, New Jersey and Pennsylvania.

Investment banking firm DelMorgan & Co., based in Santa Barbara, California, acted as an adviser to Viola for the raise.

Viola, a Black-owned company co-founded by former NBA player Al Harrington, is trying to promote social equity in the cannabis industry.

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  • Why experts say the future of horticultural lighting is in LED technology
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“Under Al Harrington’s leadership, Viola has demonstrated how a commercially successful brand can benefit from a mission-driven focus,” said Chris Delgado, senior managing director at DelMorgan.

“This mission and focus will be further strengthened through this investment.”

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Batch size, failure rate drive cannabis testing costs, researchers conclude

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Image depicting cannabis testing

(Photo by Julia Koblitz via Unsplash)

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Susan Audino

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Considering starting a cannabis laboratory?

Think it’s a gold mine for the taking?

Think again!

Laboratory testing is not for the faint of heart and can be downright cutthroat under some circumstances.

Many prospective laboratory owners and investors are not scientists and might in fact be first-time business owners.

The canvas of factors that enter the equation is broad and often understated.

Researchers at the University of California, Davis, crunched the numbers on the costs of cannabis testing in California.

Using a series of assumptions with a statistical simulation model, they concluded that the most significant predictors of testing cost are batch size and test failure rate.

In the 2019 California market, researchers found that batch size of 8 pounds of dried cannabis flower, along with a failure rate of 4%, will cost approximately $136 per pound to meet the regulatory testing requirements.

The research model was based on 49 California laboratories and 1,210 distributors approved by the state’s Bureau of Cannabis Compliance.

Variables that were considered in the simulations included the distance between labs and distributors, laboratory size, batch sizes and volume of testing.

Researchers also broke down the laboratory testing cost to the “successfully” tested samples versus those samples that previously failed to meet regulatory specifications.

Additional variables such as annual operational costs, startup expenses, sampling equipment, instrumentation and personnel were factored into the model.

To estimate a laboratory’s efficiency – that is, the number of successfully tested samples each year – the researchers made four sets of assumptions:

  • Maximum number of samples that could be theoretically tested.
  • Ratio of actual tests to total possible tests per day.
  • Ratio of unsuccessful tests to all tests.
  • Number of annual testing days.

Growing is all about the lighting: MJBizDaily Lighting Buyers Guide 

Read our exclusive guide for strategies and tips from expert cultivators who have amassed decades of experience studying horticulture lighting. Curated by MJBizDaily.

Inside:

  • Horticultural professionals debunk 8 common lighting myths in cannabis
  • How cannabis extraction companies can reduce energy costs
  • Why experts say the future of horticultural lighting is in LED technology
  • Cannabis lighting Glossary of Terms
  • Buyers checklist

The researchers’ paper, titled “Costs of cannabis testing compliance: Assessing mandatory testing in the California cannabis market,” provides a comprehensive evaluation of the most significant variables necessary to predict the cost of opening and operating a cannabis testing laboratory.

However, potential owners and investors should be aware of overall risks associated with the project.

The most significant prediction is the unpredictable. Potential owners are best advised to plan for the unexpected – it’s bound to happen.

The only part that can’t be predicted is knowing where or when the breakdown will happen.

But, rest assured, there will be a breakdown.

Some of the greatest challenges include understanding:

  • The importance of hiring an effective and experienced senior laboratory staff with decades of lab experience.
  • Instruments will break down.
  • Regulatory requirements and specifications will change (they’ve been a moving target for years).
  • Consumables necessary for method development will always cost more than planned.

There is nothing inexpensive about opening a cannabis testing laboratory, particularly if the laboratory is pressured to open its doors before establishing a technically and scientifically sound foundation in test methods.

Owners are best advised to not delude themselves that opening the lab with an abbreviated scope of tests will not compromise the quality of subsequent method development.

Subsequent methods will nearly always suffer the fate of being rushed and compromised because resources will be allocated to processing customer samples.

The end result? Chronic crises, high energy and stressed laboratory staff.

Prematurely opening the laboratory will likely position the laboratory to struggle and possibly implode.

Susan Audino, who holds a doctorate in chemistry, is a chemistry consultant and instructor for the American Association for Laboratory Accreditation. She is based in Delaware.

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Federal Probe Into Missouri Medical Marijuana Licensing May Be Ongoing, Court Documents Suggest

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A spokesperson for the FBI said the agency cannot confirm or deny the existence of an investigation.

By Steve Vockrodt and Jason Hancock, Missouri Independent

Federal law enforcement was still seeking information as recently as last summer about medical marijuana licensing in Missouri and utility contracts in Independence that have attracted FBI scrutiny for years.

That’s according to sworn deposition testimony from a Kansas City-area businessman that surfaced publicly last week.

The deposition of Joseph Campbell, owner of the real estate development firm Titan Fish, was conducted in November as part of an ongoing defamation lawsuit he and his company filed in 2020 against the City of Independence and two city council members. Excerpts of the deposition became public last week after they were filed in Jackson County Circuit Court by Independence’s attorneys.

Campbell testified that agents from the FBI, Internal Revenue Service and the Justice Department’s public integrity unit interviewed him on July 13, 2021.

The questions, according to Campbell’s testimony, focused on his involvement with a pair of utility contracts in Independence and medical marijuana licensing in Missouri—the latest indication that a potentially wide-ranging public corruption probe may be ongoing.

Campbell in his deposition indicated the FBI wanted to talk to him further, but hadn’t as of the time he gave his testimony.

During the deposition, Campbell said that as part of his July interview he was asked by federal agents about several people involved in state and local politics, including:

  • Independence Mayor Eileen Weir
  • former Independence council members Curt Dougherty and Tom Van Camp
  • Independence City Manager Zach Walker
  • Missouri lobbyist Steve Tilley
  • former Missouri House Speaker John Diehl

Campbell also testified that Gov. Mike Parson’s (R) name came up during the interview. But the deposition transcript that was filed last week in Jackson County Circuit Court does not contain Campbell’s full testimony—only 27 pages of at least 180 pages were included—and does not go further into why some of the names like Parson and others were discussed.

Campbell’s attorney filed a motion to suppress the document two days after it appeared in the public record, arguing that it should not have been filed because the deposition isn’t yet complete. Campbell did not return requests for an interview and his attorney, Mark McFarland, declined to discuss the matter.

Neither Campbell nor any of the people he was asked about during his interview last summer have been charged with any wrongdoing in regard to Independence or Missouri political affairs. Campbell said repeatedly during his deposition that his only involvement in the FBI’s Independence probe is as a witness.

A spokesperson for the FBI said the agency cannot confirm or deny the existence of an investigation.

The records provide a fresh glimpse into an FBI probe that’s transfixed state and local politics ever since news of it surfaced in 2019.

Independence deals

In 2017, Campbell bought the former Rockwood Golf Course in Independence from a company that had owned it for several years. Months later, the Independence City Council voted to buy the golf course from his real estate company, Titan Fish, for almost $1 million, close to twice what he paid to buy the property. The land was used to build a solar farm.

The deal drew scrutiny over a series of donations to Weir days before she voted with the majority of council members to approve the purchase. The donations came from four political action committees connected to Tilley, a former state lawmaker and longtime friend and adviser to the governor.

Tilley’s lobbying firm represents Independence’s electric utility and the company chosen to operate the solar farm.

Weir has denied any wrongdoing in relation to the donations.

Campbell’s testimony reveals he is also connected to the other Independence utility contract from 2017 that has received FBI scrutiny: The demolition of the power plant in Missouri City owned by Independence Power & Light.

The Independence City Council awarded a St. Louis firm called Environmental Operations Inc. a $10 million contract to tear down the plant, even though another bidder offered to do the job for less than half that amount.

A majority of the Independence City Council approved the contract despite opposition from some council members and a board that advises the city-owned utility.

Campbell testified that he was involved in the Missouri City power plant deal through a consulting contract he had with Environmental Operations. He testified that the land upon which the power plant stood would become “very valuable” given its proximity to a port along the Missouri River.

Campbell testified that he was originally supposed to receive half of the Missouri City property once it was repurposed. But Environmental Operations officials later told him that the firm had to own the entire site because of an indemnification agreement with Independence. So instead, Campbell testified that he would get a 11.3 percent cut of the contract.

In 2020, the Kansas City Star reported that a federal grand jury had issued subpoenas to Independence to obtain a number of records related to the two utility deals, including minutes to private meetings held by the Independence City Council where the transactions were discussed.

Attorney-client privilege?

Campbell’s testimony also discusses Diehl, who resigned as Missouri House Speaker in 2015 after it was revealed he had been sending inappropriate text messages to a legislative intern. Campbell said Diehl, who became Environmental Operations’ general counsel following his resignation, asked if Campbell would claim that the two had an attorney-client relationship.

Campbell testified that he understood Diehl had asked about forming such an arrangement in order to keep from having to hand over certain documents the government had requested through a subpoena.

Campbell testified Diehl had never represented him in a legal capacity.

A request for comment to Diehl was forwarded to J.R. Hobbs of Kansas City law firm Wyrsch, Hobbs & Mirakian. He denied Campbell’s assertions.

“Our firm has represented [Environmental Operations Inc.] in connection with the inquiry, including document production and subpoena requests, and there is no accuracy to any assertion that Mr. Diehl ever advised anyone to assert privilege if it didn’t apply,” Hobbs said, adding later: “Mr. Diehl denies any possible assertion that he extended attorney-client privilege at any time.”

Medical marijuana

Campbell’s testimony also reveals that he was helping finance a company called Herbal Health that applied for licenses to cultivate and sell medical marijuana. He said that he was asked about marijuana licensing during the July 2021 interview with federal law enforcement.

Tilley was registered as Herbal Health’s lobbyist from January 2019 to November 2020, and has numerous clients in the medical marijuana industry. He did not respond to a request for comment.

In November 2020, the head of Missouri’s medical marijuana program testified under oath that a federal grand jury subpoena his agency received was connected to an FBI investigation in Independence.

Missouri’s medical marijuana regulators received two additional federal grand jury subpoenas last year, with each redacted before being turned over to the media at the request of the federal government to obfuscate the records being sought by law enforcement.

It was not long after reports first surfaced of the FBI’s interest in the Independence utility deals that Titan Fish led a consortium that submitted a proposal to acquire and refashion Independence Power & Light’s soon-to-be-shuttered Blue Valley Power Plant.

Tilley was listed in Titan Fish’s Blue Valley proposal.

A Kansas City Star report in March 2020 quoted two Independence city council members who expressed reservations about doing business with anyone who might be subject to an FBI investigation.

Campbell in 2020 sued Independence and the two council members, saying their comments defamed him.

Campbell’s lawsuit is ongoing, though he attempted to settle with the city if the council handed over the shuttered Blue Valley power plant to Titan Fish, granted tax abatement and leased back portions of the power plant land, according to an article earlier this month in the Kansas City Star.

Weir testified in a deposition in the case. Weeks later, her attorney convinced a judge to seal her deposition after learning that an unidentified third party tried to obtain it. On Monday, The Kansas City Star filed a motion asking a Jackson County judge to unseal Weir’s deposition, arguing that her testimony is a matter of public importance and that sealing it violated the First Amendment.

Weir is running for a third term as mayor and faces a crowded primary election next month.

In an unrelated matter, the IRS seized two vehicles belonging to Campbell on May 20 and signaled that it may seize a lake house in Morgan County, Missouri, which also belongs to Campbell. An affidavit written by an IRS agent in support of the seizures alleges that Campbell, through his various businesses, fraudulently obtained government COVID-19 relief funds and that those funds were used to buy the cars and the lake house.

This story was first published by Missouri Independent.

Bipartisan Congressional Lawmakers Tell DEA To Allow Psilocybin Treatment For Terminal Patients

Photo courtesy of Mike Latimer.

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Key hearing begins in $600 million lawsuit against marijuana MSO Acreage

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A New York state judge started hearing a case Tuesday on whether a Syracuse investor group can proceed with a $600 million lawsuit against marijuana multistate operator Acreage Holdings and others over a medical cannabis license.

The lawsuit, originally filed in 2018, alleges that Acreage and others engaged in a scheme to deprive the investor group, EPMMNY, out of a 25% interest and management role in the operation, NYCanna, according to Syracuse.com.

Acreage, which filed a motion to dismiss the case, didn’t immediately respond to an MJBizDaily request for comment.

But the New York-based MSO said in regulatory filings that it “intends to vigorously defend this action, which the company firmly believes is without merit.”

A judge in the state Supreme Court in New York City has scheduled several days of hearings over the next week to determine whether to allow the lawsuit to move forward, Syracuse.com reported.

The lawsuit also has potential implications for Canadian-based Canopy Growth’s agreement to acquire Acreage, conditioned on federal legalization in the U.S.

EPMMNY is seeking to prevent Canopy from acquiring the New York license, according to Syracuse.com.

Acreage has a prime position in New York’s potentially massive marijuana market.

The company has one of only 10 medical marijuana licenses, each of which is vertically integrated.

In addition, New York legalized recreational marijuana last year and is now preparing for the launch of what is projected to be a multibillion-dollar adult-use industry.

Growing is all about the lighting: MJBizDaily Lighting Buyers Guide 

Read our exclusive guide for strategies and tips from expert cultivators who have amassed decades of experience studying horticulture lighting. Curated by MJBizDaily.

Inside:

  • Horticultural professionals debunk 8 common lighting myths in cannabis
  • How cannabis extraction companies can reduce energy costs
  • Why experts say the future of horticultural lighting is in LED technology
  • Cannabis lighting Glossary of Terms
  • Buyers checklist

EPMMNY claims in the lawsuit that it played a key role in obtaining the MMJ license.

The suit seeks $200 million as well as $400 million in punitive damages and control of the New York license, according to Syracuse.com.

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