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Safe Harbor delivers solid income despite slight revenue dip

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SHF Holdings Inc., which does business as Safe Harbor Financial (NASDAQ: SHFS) announced its financial results for the first quarter ending March 31. Safe Harbor reported that its total revenue decreased 3% to $4.1 million versus $4.2 million in the prior-year period. The company attributed the decline to fewer accounts and lower balances on deposits.

Safe Harbor also reported net income in the first quarter of approximately $2 million, compared to a net loss of $1.4 million a year ago. The company noted that the positive net income was due to lower expenses across the company. Overall, operating expenses in the period dropped by 35.8% to $3.7 million, compared to $5.8 million in the prior-year period.

At the end of the first quarter, the company had cash and cash equivalents of $5.6 million versus $4.9 million at the end of 2023.

“We continued to expand the breadth of our service offering in the first quarter, advancing several strategic initiatives and establishing a more diversified income base,” CEO Sundie Seefried said. “We have been very successful with this effort, specifically within our lending program, nearly tripling our loan book year-over-year and driving a 251% increase in our loan income to $1.64 million in the first quarter of 2024 compared to $466,293 in the comparable period of 2023.”

Cutting costs

The company managed to cut expenses in several areas, including lower investment hosting fees, decreased amortization and depreciation expenses, and reduced business insurance costs. Additionally, there costs related to compensation, employee benefits, marketing expenses, and other insurance also decreased.

Total liabilities fell from $33 million at the end of 2023 to $30 million at the end of the first quarter.

“With the increasing likelihood that cannabis will be reclassified from a Schedule I drug to a Schedule III drug, we believe there will be a material increase of capital from these businesses moved into financial institutions, thereby creating stronger demand for our services,” Seefried said.

Not out of the woods

While Safe Harbor told investors it was able to record some net income in the quarter, the four preceding quarters experienced negative operating income and negative net working capital. The company acknowledged the need to closely evaluate the financial performance in upcoming quarters to mitigate any going concern risks. The company is filing as a going concern.

If it isn’t able to sustain its present level of operations, it may be forced to make more reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned expansion programs.

The company noted that in April it was told by the NASDAQ that its stock needed to regain value over $1. The stock was lately selling at 82 cents.



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Florida’s Fluent responds to Reddit whistleblowers

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Cansortium Inc.’s (CSE: TIUM.U) (OTCQB: CNTMF) Fluent brand is facing fallout after an employee and others shared videos and images on social media allegedly showing poor growing conditions at its Tampa, Florida, cultivation facility, in addition to labor accusations.

A video, posted last week on Reddit’s r/FLMedicalTrees forum, appeared to show withering cannabis plants infested with aphids. The post quickly gained traction, bringing in more than 500 upvotes and nearly 300 comments.

“Ma’am this is an aphid farm, we feed our aphids live cannabis to keep them happy healthy and thriving!” the self-identified employee who uses the handle “Old_Length4214” wrote sarcastically in the comments section.

In response, Fluent CEO Robert Beasley confirmed that the video came from the company’s facility, but noted said there are quality control measures to address them.

“As preventing pests and pathogens entirely is not possible, we rely on our quality control program to catch these issues and eliminate them before they move on to the next stage of processing,” Beasley said in an email to Green Market Report on Tuesday.

Beasley outlined a multistep quality assurance process, including daily plant inspections, maintenance trimming and pre-harvest quality grading. He said that plants not meeting quality standards are removed or sent for extraction.

The CEO also addressed the challenges of growing cannabis in Florida’s climate.

“Cannabis does not like excess moisture in soil or in air, and Florida has both,” he explained, noting that these difficulties are factored into pricing and margins.

Another self-identified former employee, who said they worked at Fluent from October 2020 to May 2021, painted a wider picture.

Speaking on condition of anonymity, the former employee, who later worked in compliance for a cannabis testing lab, told GMR that these types of issues are problems for many operators in the state – but called out Fluent as one of the worst offenders.

“Every cultivation has issues … I remember swabbing MedMen’s (before Sunburn bought it) air vents, I remember Curaleaf had a huge issue with mold, Trulieve kept failing for pesticides even though their grow is indoors.”

The Florida Department of Health, which oversees the state’s medical marijuana program, did not respond to GMR’s requests for comment, but Beasley confirmed the agency conducted a routine quarterly inspection on Sept. 12.

“All Department inspections of medical marijuana treatment center facilities are unscheduled,” he said. That the inspection resulted in “one finding regarding waste logs, which the site team has corrected.”

While Beasley downplayed the issue to Green Market Report, the situation appears to have escalated internally. A self-described current Fluent employee, posting anonymously on Reddit as “smokechecklafleur,” described a tense work environment last Friday, two days after the original post.

“A large amount of my coworkers and myself included are considering leaving the company due to how bad things have gotten,” the employee wrote. They detailed new restrictions, including a ban on phones “whatsoever” at work and prohibitions on discussing the grow issues or a “random” visit from the state’s health department the day before.

“Morale is through the floor while management is scrambling to do damage control,” the employee added, “and we’ve been threatened with being terminated every day since the first post for more reasons than I can remember.”

The user also reported that four people had been terminated within an hour of their post.

“These are not new but rather an existing policy that was not being strictly enforced,” Beasley said about allegations that management is trying to stem information flow in response to the increased scrutiny.

He added, “The rationale is that it allows for greater efficiency and safety in the workplace environment. It also prevents incidents such as this where a former employee took pictures of plants being trimmed or disposed of and are claiming they represent the final product output.”

Regarding personnel changes, Beasley said, “We are not able to disclose the details of employment matters, however, we can confirm that if an individual violates Company policy by posting misleading and derogatory information about the Company online, it can lead to termination.”

The CEO said management’s planning a town hall meeting to discuss working conditions “in a professional and respectful setting.”



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Missouri issues yet another cannabis recall, rolls back hemp ban

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Missouri cannabis regulators continued their scrutiny of the industry’s compliance this week with their fifth recall since the adult-use marijuana market launched – this time recalling more than 23,000 goods for improper safety testing – while also announcing that many intoxicating hemp goods will be exempt from a new law that initially banned most of the products.

The state Division of Cannabis Regulation issued the recall on Tuesday after discovering the relevant products “were not compliantly mandatory tested” by ClearWater Science, one of the state’s cannabis testing labs, according to the press release issued on Tuesday by the state Department of Health and Senior Services.

“DCR cannot verify compliance with health and safety requirements,” the agency said, in justifying the recall. There have been no adverse health incidents connected to the products in question, the DCR clarified.

The goods affected by the recall include a wide range of brands and products, including pre-rolled joints, flower, concentrates, vape cartridges and edibles.

It was not immediately clear if the goods in question will be allowed to undergo retesting in order to be legally sold at dispensaries, since there’s no immediate evidence that the products themselves were tainted in any way.

The latest recall follows several earlier parallel moves by the DCR, which ramped up its oversight on the adult-use and medical cannabis industry over the past year. The total of goods recalled is now near 200,000.

Also this week, an attorney for DHSS wrote in a letter to a hemp trade association that an executive order from Gov. Mike Parsons last month that attempted to ban intoxicating hemp goods would not apply to hemp-based products with THC.

“In regard to psychoactive cannabis products, the department will focus its efforts on the identification of  ‘misbranded’ products,’” Richard Moore wrote to the Missouri Hemp Trade Association, which filed suit against the state last month over the ban.

“I trust that you understand that the consumption of these products may be dangerous,” Moore wrote to the hemp companies, “and that under no circumstances should they end up in the hands of Missouri’s children.”

Moore said his office would be only targeting goods that are “misbranded” to target kids, “for potential enforcement under the State’s Merchandising Practices Act,” the Independent reported.

“The department has no intention at this time to embargo additional psychoactive cannabis products as adulterated,” Moore wrote. “Further, within 30 days after referral to the attorney general’s office, the department will release all currently embargoed products and remove all embargo tags.”

The Missouri Hemp Trade Association reacted favorably to the news, which seems to settle for now what had been a legal tug-of-war between the governor and hemp businesses. A spokesperson told the Independent it wholeheartedly supports Moore’s move “to prosecute bad actors marketing counterfeit and misbranded hemp products to children.”

In other words, “Hemp sales are back on,” said an attorney for the trade group.



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The Daily Hit: September 18, 2024

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News from: Missouri, California, C3, European Union and more.

The Daily Hit is a recap of the top financial news stories for Wednesday, September 18, 2024.

On the Site

Missouri issues yet another cannabis recall, rolls back hemp ban

The state’s Department of Health and Senior Services will focus its efforts on “misbranded” products rather than intoxicating ones.

Read more here.

Proposed California intoxicating hemp ban may wind up in court

Advocates say the new emergency rules will eliminate access to high-CBD products.

Read more here.

Banned C3 team has new IPO for Canadian markets

The IPO was announced the day after the executives filed an appeal regarding the ban and accompanying fines.

Read more here.

Washington DC moves toward gray market cannabis crackdown

City leaders want to ramp up enforcement on so-called I-71 shops.

Read more here.

EU initiative begins bid to open access to psychedelic therapies

The initiative must collect 1 million signatures within a year to trigger the European Commission to take action.

Read more here.

In Other News

Cannabis Cured

One week after Maine regulators recalled a handful of cannabis products for failing mold and yeast tests, it remains unclear how the contaminated products made it to the market. The recall, announced last week, impacts one strain of cannabis flower and three strains of pre-rolls, all of which were produced by Cannabis Cured, a cultivator and retailer headquartered in Fairfield.

Read more here.

Flora Growth Corp.

Flora Growth Corp. entered into a strategic supply agreement with Blossom Genetics to bring Colombian medical cannabis to the German market.

Read more here.

Tilray

Tilray Medical, a division of Tilray Brands, announced on Wednesday that several Redecan EU-GMP certified medical cannabis products are now available for medical cannabis patients in Australia.

Read more here.



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