💸 The Tape

Michigan's Cannabis Regulatory Agency revoked 20 medical grower licenses held by Clare-based GP Holdings, doing business as Millie Montana Industries, and fined the company $2 million on Tuesday. The headline violation reads like satire: the company shipped packages manifested in the state's Metrc tracking system as marijuana flower that turned out, on testing, to be dirt and mulch. Other packages labeled as flower were shake, kief or post-harvest plant waste. None of the sampled "flower" sent to a processor contained any THC.

The investigation dates to 2022, when the CRA asked for surveillance footage of several product transfers and was told it didn't exist. From there regulators found untagged biomass, untested product moved to a processor without approval, storage units without alarms or commercial locks, inaccurate and delayed Metrc entries, no standard operating procedures, no waste-disposal plan, and an industrial hemp dryer and grinder installed without approval. Millie Montana, which once billed itself as the largest woman-owned cannabis licensee in Michigan, has been closed since 2025. Its owner told the CRA the shutdown was "due to risks involved in the market."

She's not wrong about the market. She's just a very bad advertisement for it.

The economics that make dirt look like a business plan

Michigan is the second-largest cannabis market in the country and the cheapest by a wide margin. Adult-use sales were $258.8 million in August, down roughly 8.5% from a year earlier. Flower volume fell harder: 108,719 pounds sold in August against 122,991 the year before, an 11.6% drop, and that's with prices sitting at the lowest level of any legal market. The average retail ounce of adult-use flower was $60.33, compared with $61.79 a year ago and over $90 in 2022. On a per-gram basis that's about $2.13 — a number that embarrasses every other state's price sheet and makes Minnesota's $14.50 look like a typo.

Wholesale is where the real damage lives. Michigan's Treasury publishes an average wholesale flower price each quarter to compute the state's new tax, and for the current quarter it's $641 per pound. Last quarter it was $600. One large operator disclosed a bulk flower selling price of $615 a pound in the second quarter — roughly $38 an ounce before the grower pays anyone. The best-run cultivators in the state are producing flower for something like $17 an ounce, which means the viable business model is now "be in the lowest-cost decile or leave." Hundreds of growers aren't in that decile, and nearly 900,000 pounds of flower were already sitting in inventory before Croptober even started.

Then there's the tax. On January 1, Michigan layered a 24% wholesale tax on top of the existing 10% retail excise and 6% sales tax, the product of a bipartisan road-funding deal Governor Whitmer signed last year. Industry groups said they were blindsided. The tax was sold to the legislature as a $420 million annual revenue source. Through its first six months it collected $73.4 million. The shortfall is structural: a tax on wholesale value doesn't raise much when wholesale value is $641 a pound and falling, and it gives every operator in the chain a reason to minimize the taxable number — vertically integrated companies in particular, since Treasury imputes a "wholesale price" for product that never changes hands. It's now the central issue in the governor's race, with Republican John James pledging to repeal it and cannabis executives writing him checks.

Add it up: record unit volumes, collapsing dollar sales, the lowest prices in America, a wholesale market where a pound of flower is worth less than a decent dinner for four, and a tax regime that raises the cost of every transfer. 2025 was a record $3.17 billion in sales and revenue still fell. 2026 is tracking below it.

Where fraud comes from

Markets like this don't just squeeze margins. They change behavior. When legitimate flower is worth $38 an ounce at wholesale and the compliance cost of moving it through Metrc, testing and licensed transport is fixed, the incentive to cut corners goes up every quarter. The CRA's findings at Millie Montana — product that was something other than what the manifest said, untested transfers, weights that didn't match — are the signatures of a licensee treating the tracking system as paperwork rather than the thing that makes the market legal.

It's also the second $2 million fine in two weeks. On September 16 the CRA pulled the processing license of Michigan Investment 10, maker of the popular Muha Meds vape brand, after finding evidence of possible diversion. Diversion in a market with this much surplus flower means product leaving the regulated channel — likely for states where a pound fetches four or five times what Michigan pays. Both cases are regulators finding that the oversupply isn't just depressing prices; it's leaking.

CRA Executive Director Brian Hanna, newly elected president of the national regulators' association, called the dirt shipments "egregious conduct that strikes at the integrity of Michigan's regulated marijuana market." He's right, and the pattern of record fines says the agency has decided that enforcement is the lever it has left. It can't fix wholesale prices and it didn't write the tax.

Why this matters beyond Michigan

Michigan is what an uncapped market looks like ten years in. No license limits, no canopy caps, no residency requirements, hundreds of growers chasing a consumer base that buys 30 million units a month at $8.67 each. For consumers it's been a windfall. For operators it's been a slow-motion liquidation that drove TerrAscend out of the state entirely this year and has Ascend and Curaleaf treating it as a cash-flow problem to manage rather than a market to grow.

Every state writing adult-use rules right now — Virginia with its 350-store cap, Pennsylvania weighing SB 120, Minnesota deciding whether to lift its cultivator limit — is looking at Michigan as the cautionary case. The lesson isn't that regulation failed. It's that unlimited supply plus a tax on a collapsing wholesale base produces exactly the operators who ship mulch and call it flower, and then regulators have to spend four years and $2 million fines cleaning it up.

Michigan will still sell $3 billion of cannabis this year. The question the Millie Montana case raises is how much of what's on the manifests is actually what it says it is.

Source: MJ Biz

📈 Dog Walkers

$CMPS ( ▼ 4.01% ) Adds CPO

Compass Pathways (Nasdaq: CMPS) named Kelley Boucher Chief People Officer, effective immediately, and on the surface it's an HR announcement. Read the résumé and it's a launch announcement.

Boucher was most recently Chief People Officer at Apellis Pharmaceuticals. Before that she was EVP and Chief Human Resources Officer at Alnylam, where she ran the people side of the company's transformation from an RNAi research shop into a global commercial biotech with multiple approved products. Earlier stops at Abiomed and Shire followed the same pattern: organizations moving through rapid scaling and growing commercial complexity. This is a specialist in one thing — turning a clinical-stage company into a commercial one — and Compass hired her the same quarter it plans to file its NDA.

CEO Kabir Nath said as much, framing the role around "our expected transition from a clinical pioneer to a commercial stage company." Boucher's first mandate is guiding the organization toward a first-half 2027 launch of COMP360, subject to FDA approval.

The context is a company that has spent September behaving like a launch is real. It presented 52-week durability data from COMP005 showing a 13-point MADRS reduction at one year. It announced grant recipients to build provider training programs for post-approval psilocybin delivery. It launched a U.S. physician education campaign at Psych Congress. And it holds Breakthrough Therapy designation, a rolling NDA already underway, and a National Priority Voucher that could compress FDA review.

What Compass doesn't yet have is a commercial workforce. A psychedelic launch requires trained therapists, certified treatment sites, REMS compliance staff and a field force that can explain a two-dose, monitored-session protocol to psychiatrists who've never prescribed anything like it. That's a hiring problem before it's a sales problem.

Companies don't recruit the executive who scaled Alnylam to manage a clinical-stage headcount. They do it when they're about to need a few hundred more people, fast.

$VREOF ( ▼ 8.61% ) Structures Ohio Note

Vireo Growth (CSE: VREO) (OTCQX: VREOF) disclosed a put/call agreement Tuesday under which it may end up owning a promissory note issued by BG Ohio SPV LLC to Battle Green Holdings SR LLC — and paying for it entirely in stock.

The mechanics: the note holder can force Vireo to buy the note at US$19.50 per Vireo share; Vireo can elect to buy it at US$18.60; and if neither side moves before the note matures, Vireo acquires it anyway at the trailing 30-day VWAP. Against principal of US$18.1 million, the put or call would issue a maximum of 972,905 shares, with more possible for accrued interest unless Vireo pays that in cash. The agreement runs three years and nothing is issued until a right is exercised.

What the release doesn't say is what the note finances or who sits behind the borrower. "BG Ohio SPV" points at an Ohio-related special purpose vehicle, but Vireo hasn't disclosed the underlying asset, and it's not a state the company has listed in its footprint. Read it as an option on a future asset rather than a completed deal.

The structure itself is characteristic. Vireo has spent eighteen months building the largest retail footprint in the country through all-stock deals, and this is the same playbook applied to credit: rather than lend cash or take on debt, it gives a lender a put on Vireo paper at a fixed price, which functions as a stock-settled backstop for whatever the SPV is doing. The lender gets downside protection; Vireo gets optionality without touching its $123 million cash balance.

The dilution is modest — under a million shares — and the pricing is above where the stock has recently traded, which is the tell that both sides expect the equity to appreciate. It follows a Nevada dispensary closing and a share issuance to settle the Altmore dispute this month. Vireo is still doing a deal a week; this one just happens to be a loan.

📺 Trade To Black

Legal Experts Break Down ALJ's Cannabis Rescheduling Pause | TTB Presented by Flowhub

• The stay, explained: Judge Derek Julius paused the rescheduling hearing after opponents moved to add the new GAO report to the record; DEA must respond by October 13.

• Four paths forward: ATACH's Michael Bronstein lays out the realistic outcomes — deny and lift the stay, take official notice with no new briefing, grant the motion as proposed, or admit it on a modified schedule.

• Procedurally necessary, not a signal: Dentons' Eric Berlin explains why Julius essentially had to pause and consider the motion, and why the DEA/FDA documentation gaps have existed for decades without derailing a single scheduling decision.

• The report says nothing about marijuana: The GAO found zero cannabis-specific problems, and DEA has followed HHS's recommendation in 84 of 84 completed cases — the same 2023 HHS evaluation the rescheduling rests on.