Issue 34: Harpoon Launches Itself into the Cannabis Space
Plus, I share my thoughts on the parallels between sports gambling and cannabis regulations... and disclose some additional tidbits from my sit down with Sen. Moore.
Welcome to Issue #34 of Burn After Reading! You can check out last week’s issue here, and if you haven’t subscribed yet, please do.
Harpoon Launching Beer-inspired THC Beverage
Boston-based Harpoon Brewery is ignoring reports of headwinds in the cannabis industry, as the company has decided to sail full-speed ahead into a partnership with a local cannabis drink producer.
From the press release:
Harpoon Brewery – the maker of New England's first IPA – is dipping their toes into new territory with the launch of their first THC-based beverage: Rec. Weed. Made in partnership with Massachusetts' Novel Beverage Company, Rec. Weed is a hop-forward yet approachable beverage made with 5 milligrams of THC, real passionfruit puree, green tea, and hops at only 25 calories and 3 grams of sugar per can. With tropical juiciness and citrusy hop notes, Rec. Weed has a clean, crisp finish that encourages consumers to kick back at the end of a long day and unwind with a new kind of drink in their hand.
For the uninitiated: Harpoon was the first brewery to re-open in Massachusetts in the decades following the post-prohibition consolidation of the beer industry, helping kick off the local beer movement. The brewery struggled in its early years, but eventually found success after they started making IPAs — a type of beer that many Americans had never tried at the time.
Harpoon would become an employee-owned company in 2014. They’ve enjoyed a ton of success since, snatching up smaller breweries across New England and partnering with major brands like Dunkins and the Boston Bruins.
The involvement of a smaller, employee-focused company like Harpoon seems a lot more desirable than Am-Bev and other Big Alcohol companies trying to weasel their way into the cannabis space.
(Another thing that Harpoon has going for them? Unlike that other Boston-based beer company, their CEO hasn’t toasted Donald Trump.)
Novel Beverage Company to Produce
Novel Beverage Company — Harpoon’s partner in the venture — currently operates in Massachusetts and Maine, producing brands like Buzzy Soda, Pine + Star, and Cannarita/Cannajito. They also appear to be Keef Soda’s Maine production partner.
Notably, the proposed label for Rec. Weed. doesn’t really highlight the fact that Harpoon is involved in its production. I’m not really sure why that’s the case.
Rec. Weed. (which is a clever play on Harpoon’s ‘Rec League’ line of APAs) will come in 12 fluid oz. slim cans with a suggested retail price of $6.99. That’s not exactly cheap, but is still less expensive than grabbing a regular alcohol-based Harpoon at the ballpark. If they can get that price down to the typical cost of a craft beer, I could see these things being a hit.
Here’s some dispensaries where you can find Rec. If you pick some up, let me know what you think.
Always Bet The ‘Over’ When it Comes to Corporations Behaving Badly
Tell me if this sounds familiar: A well-funded national company convinces state regulators to give them an exclusive license. They claim their resources, experience and expertise will put them in the best position to follow the industry’s strict regulations.
Then, they immediately start breaking those regulations.
We see this happen all the time in cannabis.
Now, it's already happening in Massachusetts' brand new sports betting industry, as casinos have already been busted at least four times for allowing illegal bets on local college basketball games.
(State law prohibits betting on in-state college sports that aren't part of a wider tournament.)
It keeps happening, despite promises from Encore and others that it wouldn't.
Just like cannabis, state politicians and regulators have praised sports betting as a windfall of potential tax revenue.
Just like cannabis, it seems that the same politicians and regulators aren't doing enough to ensure that companies are actually following the rules that they agreed to.
And just like cannabis, large corporations are taking small fines and other wrist slaps from state regulators as if they are just the cost of doing business.
I don't really have some big nuanced point to make here. All I'm saying is this: State governments are set to bring in hundreds of millions of dollars in tax revenue from legal cannabis and sports betting over the next decade. Can we use a tiny sliver of those funds to ensure that large companies are actually following the rules, and that there are actually consequential penalties when they don't?
SENATOR MOORE INTERVIEW RECAP
ICYMI: I put out a special issue of Burn After Reading yesterday that explored the proposal to put an independent audit unit within the CCC.
Here are some additional thoughts and musings that didn’t fit into the piece:
Moore was hesitant to discuss his own conversations with Commissioners, but confirmed he had broached the matter with a few of them.
He also was very deliberate in his word choice when sharing his thoughts on the behavior of the Commission’s investigation staff, but he also made it clear that he found their behavior to be unusual… to say the least.
Moore said that the success of the bill depends on two things: 1) How much the industry supports this idea, and 2) What other legislators think of it.
With thousands of pieces of legislation being introduced in January, this bill will probably need to be assigned to a committee before it starts to get a lot of attention from lawmakers.
Yesterday’s closed door mediation at the CCC won’t be the last; another one has been planned for March 1st.
If you know more about what’s going on inside the Commission, a reminder that my lines are always open.
If you want to meet me in a dimly lit parking garage, that works too. “Follow the weed.”
HEADLINES
New England
MASSACHUSETTS CANNABIS MARKET STILL NEEDS SOCIAL EQUITY, DIVERSITY [OPINION] (Payton Shubrick | Masslive) : “Adult-use marijuana establishments in Massachusetts have surpassed $4 billion in gross sales since the advent of recreational sales in 2018, the state’s Cannabis Control Commission announced on Feb.1. However, women and people of color at all levels in this industry are still severely underrepresented facing the challenges of access to capital, legal and accounting guidance, networks, and the reality of a market that is now saturated in parts of the state.”
STATE CANNABIS REGULATOR SEEKS INFORMATION ABOUT ALLEGED TIES BETWEEN RUSSIAN OLIGARCH AND VERMONT DISPENSARIES (Fred Thys | VT Digger) : “Asked for comment about a report in Vice this week detailing the alleged connection between Abramovich and Curaleaf, Cannabis Control Board chair James Pepper told VTDigger he had been unaware of it but after VTDigger’s inquiry instructed board staff to contact Massachusetts and Connecticut to determine what they had learned. Pepper said Curaleaf had not mentioned Abramovich when it applied for an integrated license to operate in Vermont’s adult recreational cannabis market.”
Rest of U.S. / National
LOCAL CONTROL 'CANNOT WORK' IN CALIFORNIA CANNABIS SYSTEM (John Schroyer | Green Market Report) : “According to Hirsh Jain, founder of Los Angeles-based Ananda Strategy, it’s because the “dual licensing” system in California – which requires businesses to obtain both city or county permission as well as a state license before they can launch operations – is “fundamentally broken.”’
CALIFORNIAN POT PRODUCERS PARENT CO AND GOLD FLORA TO MERGE (Arunima Kumar | Reuters) : “The deal is expected to close before the end of the third quarter. Datcher will become chairman of the merged entity's board, and Gold Flora top boss Laurie Holcomb will be named CEO of the combined company.“
NEW YORK’S POLITICAL LEADERS SILENT ABOUT STATE’S FAILURE TO RAISE CANNABIS FUNDS (Brad Racino | Syracuse.com) : “The lack of acknowledgement isn’t new: neither Hochul, Krueger nor Peoples-Stokes have publicly acknowledged NY Cannabis Insider’s recent investigation that found the headliners DASNY picked to manage the social equity fund have repeatedly failed to deliver on their past promises.”
WILL MASS LAYOFFS HELP OR HINDER THE STRUGGLING CANNABIS INDUSTRY? (Kate Robertson | MJBizDaily) : “California-based marijuana consultant Andrew DeAngelo argues that job cuts are counterproductive and warns that layoffs as a result of consolidation can also have a domino effect that ultimately hurts a company’s bottom line. “Pretty critical people get laid off because (management) thinks they can find someone to do the job just as well for cheaper,” he told MJBizDaily. “But guess what? They can’t do it just as well, and product quality comes down, and then the customer experience goes down.”’
‘WARNING SIGNAL’: CALIF. LEGAL CANNABIS SALES SEE UNPRECEDENTED DROP (Lester Black | SF Gate) : “Customers purchased $5.3 billion worth of legal pot products in 2022, according to data released Wednesday by the California Department of Tax and Fee Administration. That represents an 8% drop, or a decrease of $473 million, from what customers purchased in 2021.”
International
🇨🇦 ONTARIO IS DROPPING ITS WEED PROFIT MARGINS TO GET THE 'UPPER HAND' OVER THE ILLEGAL MARKET (Tara Deschamps | CBC) : The margin reduction will come from a fixed mark-up for each product category that will be standard for all producers and applied as a percentage above each product's landed costs, which already take into account producers' margins and excise taxes. The margin drop was largely triggered by the strength of the illicit pot market, which still made up 43 per cent of Ontario's cannabis market last March.
🇹🇭 THAILAND HEADS INTO POLLS WITH BURNING CANNABIS ISSUE IN LIMBO (Panarat Thepgumpanat and Panu Wongcha-um | Reuters) : “The Bhumjaithai Party, which successfully pushed for legalisation and campaigned on the issue in the 2019 elections, has come under fire from the opposition and some of its coalition partners in government. The opposition Pheu Thai Party, whose leader is a frontrunner to become the next prime minister, said the recreational use of cannabis posed a threat to society, especially young people.”
WELCOME DISTRACTION
A postcard from 1910 attempted to predict what Orange, MA would look like 100 years into the future. A side-by-side comparison posted by a Reddit user showed that the postcard’s predictions were just a bit off.
CAT OF THE WEEK
Jay Catsby, who’s currently available for adoption at Baypath.
Jay Catsby is an outgoing cat who is ready to meet his family! He would do best with an adult home or older children. He loves spending time with people. He gets super excited and loves to play. Jay loves cat nip and plays with toys. We believe at this time he would do better as the only animal as we are still learning about him!
SPECIAL BULLETINS
The deadline to cast your vote in the NECANN Cannabis Community Awards is 2/28.
If you’re active on LinkedIn, give the Burn After Reading Media page a follow.
That’s a wrap on this issue. Thanks for reading! If you have any suggestions or feedback, email me here. Be sure to subscribe if you haven’t already, and if you would like to support my work, please consider a paid subscription.
Rec weed is a take on rec leage, a series of low abv/na beers that Harpoon brews. The cans look like a dodgeball game.