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Is Glass House Brands 'cooking the books'?

Plus, Pax launches gummies, Alabama's obsessed with peaches, and more.

Hi everyone,

First off, thank you so much to everyone who subscribed in the past few days. I really appreciate you all supporting my work, and I hope to continue to make this newsletter worth your while.

I’ve got my first round of midterms coming up this week, so excuse the shorter-than-usual newsletter with more news and less takes.1

As always, you know where to find me if you have any feedback, thoughts, suggestions, criticisms, or you just want to tell me I’m doing great — I love to hear I’m doing great.

Let’s get to it.


green kush on blue denim jeans

💡What’s the big deal?

What happened: A lawsuit filed in California’s Supreme Court on June 9 alleges that Glass House Brands, a publicly traded cannabis company, is “one of the largest, if not the largest, black marketers of cannabis in the State of California, if not the country.”

  • The suit was filed by 562 Discount Med, which does business as Catalyst.

  • Catalyst’s CEO, Elliot Lewis, first made the allegations in a Instagram video in May. That post is now the basis of the lawsuit.

Why it matters: The complaint alleges that Glass House specifically uses “burner distros,” which are licensed distributors that send legally grown cannabis to the illicit market.

  • The cannabis products then end up in places like New York City, and other East Coast states.

  • The suit further alleges that diverting cannabis to the illicit market has allowed Glass House to “cook the books” and “make its operations look better than they actually are, to obtain substantial investment and/or financing, and to grow in competitive strength and market power.”

  • Glass House CEO Kyle Kazan has yet to publicly comment on the matter, and the company didn’t immediately respond to a request.

  • Green Market Report posted the full lawsuit here.

📰 What else is happening?

New York is paving the way for publicly traded multistate operators or MSOs to enter the legal cannabis market by the end of this year.

  • Regulators hope the move will speed up the rollout of legal cannabis — there are only about 12 stores open in the state, over two years after legalization passed.

Alabama awarded licenses to cultivate and sell medical cannabis, including gummies in the state.

  • 🍑 But all the gummies will have to be… peach flavored… for some weird reason. 🍑

🗣️ Quote of the week

“The way I look at this – it’s financial slavery.”

-Carson Grant, the head of CGG Enterprises to NY Cannabis Insider’s Brad Racino.

The backstory: Grant was awarded a Conditional Adult Use Retail License in New York the state’s system for giving preferential access to the cannabis industry to communities impacted by the War on Drugs.

In a June 7 meeting, Grant gave an impassioned speech about the lack of communication and transparency he’s received from The Dormitory Authority of the State of New York (DASNY) about costs and the timeline for when he can open his cannabis shop in Queens.

🚀 Product launches

What happened: Pax, known mostly for its handheld vapes, is launching a line of live rosin gummies in Massachusetts.

  • The company will expand the gummies into California, Colorado, and New York later this year.

Zoom out: Pax, backed by big-name venture funds like Tiger Global, has been pushing into the “plant-touching” space for well over a year.

  • It could provide a roadmap for other institutionally-backed cannabis tech companies that want to sell actual cannabis without burning their investors.

  • Most institutional investors won’t touch cannabis because of '“vice clauses,” but will invest on the tech or ancillary side, as I’ve written about.

What else?

🧪 Science & research

What happened: A new study published in the Journal of Breath Research found that — wait for it — breathalyzers couldn’t detect an increase in THC in a person’s breath an hour after they smoked.

“In many cases, we would not have been able to tell whether the person smoked within the last hour based on the concentration of THC in their breath,” researcher Tara Lovestead said.

An important caveat: The research was conducted on only 18 subjects, and the researchers cautioned that, of course, much more studies are needed.

Why it matters: Accurately measuring cannabis impairment is crucial for policymakers to develop rules around driving and operating heavy machinery as legalization continues to spread.

  • The problem is, THC is fat-soluble — meaning it may take over a month for it to disappear from your bloodstream, and longer if you’re a heavy user.

  • But breathalyzers don’t yet appear to work, and there aren’t many other ways to effectively measure impairment other than a police officer’s judgment, which of course comes with issues.

👩 People moves

  • Cannabis industry veteran Jeffrey Schultz is joining Foley Hoag as a partner in the law firm’s Cannabis Industry Practice in New York City.

  • Nick Pateras, formerly the interim CEO of Materia, is taking over as CEO of London-based medical cannabis firm Lyphe Group, he said on LinkedIn. 

  • Jason Reposa, the founder of cannabis company Good Feels, is keeping a running list of cannabis companies hiring on LinkedIn.

📚 Good reads