🤑 Another Cannabis SPAC launches
Clover Leaf Capital SPAC prices $125 million IPO. C3 Industries (MI) raises $25M. Ayr Wellness acquires Tahoe Hydro (NV) for $17M. Harborside asks interim CEO to step down.
👥 We had 60+ newsletter readers show up to Amuse yesterday for the LA happy hour. If you’re interested in one in your city, help me determine where to host future happy hours by following Highly Objective (the name of this newsletter) on LinkedIn so I can get the data on where most readers are based.
Cannabis may have originated in northwest China, study suggests. Cannabis' earliest roots may have stemmed from northwestern China—not South Asia as commonly believed, according to a study published on Friday. Researchers found the Cannabis sativa species—the "much beloved and maligned plant" widely used as a recreational drug—likely emerged from the region by Neolithic times (10,000-3,000 BC), according to a news release from the journal Science Advances, where the study was published. Cannabis was one of the first plants domesticated by humans, and has a long history of being used in textiles, food, and oilseed as hemp, the study said. But this history has been difficult to research, due to modern legal restrictions around the plant's use and accessibility. To trace the origins of cannabis, a team led by researchers in Switzerland and China compiled 110 whole genomes, covering a spectrum of different wild-growing feral plants, domesticated varieties and modern hybrids of hemp and psychoactive forms of the plant, commonly known as marijuana, with higher levels of the compound Tetrahydrocannabinol (THC).
Why 3 illicit marijuana operators decline to go legal in California. Saddled by steep regulatory and compliance costs, legal marijuana companies in California can’t compete with illicit operators on product prices. Administrative bottlenecks, substantial capital requirements and dysfunctional social equity programs have kept many legacy players out of the legal marijuana market. At the same time, cheaper operating costs and limited legal risk continue to fuel the underground trade.
Thousands of illicit business owners who’ve grown and sold cannabis for decades as well as built networks of distributors and loyal customers – long before skirting the 20%-30% tax markups faced by licensed businesses in California. Most of their bulk flower never leaves Southern California, reflecting the strong demand for illicit cannabis in that region. Global Go Analytics estimates California’s illicit cannabis market generates $8 billion in annual sales, nearly double that of the legal market, which the MJBizFactbook pegs at $4.4 billion last year. When state regulators launched California’s legal marketplace in January 2018, medical marijuana dispensaries had to gain both local and state recreational permits. The vast majority – as many as 1,000 by industry estimates – simply closed, moved or chose to remain unlicensed, diminishing access for consumers and suppliers. At the same time, dozens of cities and municipalities declined to license retailers and other cannabis businesses. Adams estimates the policy overhaul shifted at least $500 million in cannabis sales from the legal market to the illicit sector.
Curaleaf violated labor law in MA cannabis union case, judge says. U.S. cannabis multistate giant Curaleaf engaged in unfair labor practices by “implicitly” promising certain retail store workers in Massachusetts increased benefits and better employment conditions if they didn’t support unionization, a labor court judge ruled. The 25-page decision last week by National Labor Relations Board administrative law judge Ira Sandron in Washington DC is a cautionary tale for marijuana businesses in terms of how they communicate with employees when unionizing activities are under way. However, the judge dismissed several other allegations against Massachusetts-based Curaleaf, including a claim the company unlawfully terminated an employee because of her pro-union views. The conflict arose when the United Food and Commercial Workers Local Union 328 began formal efforts to unionize workers at Curaleaf’s Hanover, Massachusetts, retail store in April 2020, during the early stages of the coronavirus pandemic. The employees, who wanted hazard pay and better benefits, have since voted in favor of joining the union.
In 4-1 vote, Carson City, NV bans cannabis consumption lounges. The motion was in direct response to Assembly Bill 341, which Gov. Steve Sisolak signed into law in June, giving counties the option to welcome cannabis lounges. Carson City's new ordinance prohibits business licensure of cannabis consumption lounges and prohibits the consumption of cannabis and cannabis products in public places. Mayor Lori Bagwell pointed out the city has two retail cannabis dispensaries within city limits and said that neither voiced any opinions for or against the ordinance. Though, the board did receive two public comments via email, rejecting the ordinance. The law allowing lounges statewide does not go into effect until Oct. 1, and applications for cannabis lounge business licenses will not be considered until next year. Bagwell said she did not want to be among the first cities in Nevada to host cannabis lounges.
Akerna Flash Report. Cannabis concentrate sales rose 50% on Saturday, 7/10, as consumers celebrated 710 Oil Day. The top-selling concentrate categories for this year's 710 were: 1. Live Resin, 2. Budder, 3. Oil, 4. Shatter, 5. Rosin. In comparing 710 day to 2021 averages, Akerna data uncovered some interesting shifts in consumer behavior. Where the 30-40 age group have had the largest share of spending this year, the under 30 age group took the lead for 710 day.
Cannabis SPAC Clover Leaf Capital prices $125 million IPO. Clover Leaf Capital, a blank check company backed by Yntegra Group targeting the cannabis industry, raised $125 million by offering 12.5 million units at $10.00. Each unit consists of one share of common stock and one right to receive one-eighth of a share upon the consummation of the initial business combination. The company is led by CEO and Chairman Felipe MacLean, who founded the Yntegra Group and currently serves as CEO. He is joined by CFO Luis Guerra, who serves as co-founder and Managing Director of Vitax Partners. Clover Leaf Capital intends to focus its search on US businesses in the cannabis industry with an enterprise value of $200 million or more that are compliant with all applicable laws and regulations within the jurisdictions in which they are located. The Miami, FL-based company plans to list on the Nasdaq under the symbol CLOEU.
C3 Industries — Raises $25M in Upsized and Oversubscribed Equity Raise. C3 Industries Looks to Continue Expansion in Key Markets Including MI, MA, MO and OR. The close of its substantially oversubscribed $25 million (originally sought $10M, but received $50M+ in verbal commitments) capital raise was led by existing investor Madison Square Park Capital. Current investor Welcan Capital and new institutional investor Navy Capital, among others, also participated in the round. C3 previously closed $40+ million of capital in a series of private rounds, bringing the total amount of capital raised to date to roughly $65 million. C3 has built a strong platform for continued growth in Michigan, Massachusetts, Missouri and Oregon, with approximately 250,000 sq. ft. of cannabis production space operating or under development. The company has more than 20 High Profile retail dispensaries in various stages across all four of its markets. C3 has begun construction on the expansion of its existing 36,000 sq. ft. cultivation and manufacturing facility in Michigan, which will add an additional 90,000 sq. ft. to quadruple production capacity for 2022. The company currently has eleven retail locations with full approval in Michigan and multiple additional locations under development.
Ayr Wellness — Agrees to Acquire Tahoe Hydro, Adding Award-Winning Cultivators of High-Quality Flower in Nevada. Tahoe Hydro operates ~33,000 square feet of total cultivation and manufacturing space in its facilities in Carson City, Nevada, and Sparks, Nevada. It grows flower and produces concentrates for some of the state’s top selling brands, including Tahoe Hydro and LIT (Lost in Translation), top-sellers and local favorites throughout the state, according to BDSA, and is a Nevada flower supplier for the well-known Cookies brand. The terms of the transaction include, subject to adjustment, $17 million in total consideration ($5 million cash, $3.5 million debt, and ~$8.5 million in stock). Based on current projections, the Company estimates it is paying approximately 4.5x Tahoe Hydro/NV Green’s combined 2021 Adjusted EBITDA. The acquisition of Tahoe Hydro and NV Green adds two cultivation licenses, one production license, and one distribution license to Ayr’s Nevada footprint.
Clever Leaves — Closes $25 Million Financing from SunStream. Clever Leaves issued a secured Convertible Note to SunStream with an interest rate of 5.0% per annum (subject to increase in the event of certain events of default) and a three-year maturity. Interest on the Convertible Note is payable on a quarterly basis, either in cash or by increasing the principal amount on the Convertible Note, at the Company’s election.
Flower One — Exclusive Brand Partner Agreement with Miss Grass Brand in Nevada. Through this partnership, Flower One will become the exclusive brand partner for Miss Grass in the state of Nevada, bringing various cannabis products to the state including Miss Grass Minis, Miss Grass Flower, and Miss Grass To-Go’s. Miss Grass products will be available in Nevada in the fourth quarter of 2021 and will include 2-gram pre-roll packs, cone-style pre-rolls, and 1/2 oz of premium full-sized, single-strain flower.
📄Company Updates / Earnings
CannTrust — Court Approval of Plan of Compromise, Arrangement and Reorganization. The Company’s Fourth Amended & Restated Plan of Compromise, Arrangement and Reorganization dated July 7, 2021 (CCAA Plan) was sanctioned by the Ontario Superior Court of Justice (Court) in connection with the Company's restructuring proceedings under the Companies' Creditors Arrangement Act (the CCAA). Implementation of the CCAA Plan remains subject to a number of conditions, including the U.S. Approval Order being entered in the U.S. Class Action and the expiration of applicable appeal periods. CannTrust expects the conditions to be satisfied and implementation of the plan to occur in three to five months, or in the fourth quarter of 2021.
🏬Retail / Delivery
Verano — Pittsburgh to get its first drive-through medical marijuana dispensary. The new drive-through dispensary, owned by Verano Holdings, will be located at 6300 Robinson Centre Drive near the Mall at Robinson, and will include four different drive-through stalls. Chris Kohan, co-founder of The Healing Center, says he is excited to bring the first drive-through medical marijuana dispensary to Western Pennsylvania.
Parallel — Opening of Its First goodblend™ Retail Store in Pennsylvania. The Company has commenced sales of medical cannabis products in Pennsylvania through the opening of its first goodblend™ retail branded store in Pittsburgh, with the intent to open a second store in Erie in the coming weeks. It will also be one of the very few truly urban medical marijuana dispensary locations in the Pittsburgh area, with most of the dispensaries concentrated in the suburbs or locations with large parking lots near highways. In fact, Pittsburgh is set to soon get a drive-through dispensary out in Robinson. In Pittsburgh proper, goodblend will join four other medical cannabis dispensaries. The goodblend dispensary will be located under the Baumhaus apartment building at 5502 Baum Blvd.
The Cake House — Opening of First Store in Vista, CA. The Company will open its second—and flagship—location, in Wildomar, California. The Cake House will open two to three more stores in 2021 and more than 10 are planned for 2022.
The Parent Company — Launches New Delivery Hub in San Diego. The new hub will service an additional 3.3 million residents of the greater San Diego area, expanding the reach of the Company to directly service ~60% of California's population.
Lowell Herb Co. — Continues Its Tradition of Giving Consumers More of What They Want. Beginning this month, Lowell Herb Co. will increase the amount of flower within its traditionally marked 3.5 gram (1/8 ounce) packages to now offer four grams in all jarred flower products, distinguishing the new offering as a Farmer’s Eighth. Inspired by the baker’s dozen philosophy and evolving consumer trends, the extra half gram of flower in all eighth packages will come at no extra cost to customers.
4Front Ventures — Debuts Terp Stix™, an Award-Winning, Distillate-Infused Pre-Roll Brand to Illinois Cannabis Consumers. The Company's proprietary infusion process evenly distributes high-quality distillate with indoor-grown flower to deliver a sleek, flavorful and canoe-free consumption experience.
Agrify — Launch of Innovative, Project-Based Learning Program, Agrify University. Agrify University is a brand new 3,500 sq. ft. state-of-the art indoor vertical farming facility featuring Agrify’s latest technology and advanced cultivation methods. We believe this new immersive, hands-on project-based learning experience will empower Agrify customers and next-generation growers with the knowledge and education to successfully cultivate cannabis with efficiency at scale by leveraging the power of Agrify’s vertical farming units (VFUs) and the Agrify Insights software solution.
🧔People | 💻Hiring
Harborside — Management Changes. Peter Bilodeau has been asked to step down from his role as Interim (CEO) effective immediately, and Matt Hawkins, Chairman, will assume the position of Interim CEO while the Company completes its search for a successor. In addition, Ahmer Iqbal, former CEO of Sublime, has been appointed COO of Harborside.
WYLD — National Director of Sales (Toronto)
Weedmaps — Senior Director, Revenue Finance (Remote)
Snoop Dogg on Who Should (and Shouldn’t) Benefit From Cannabis Boom. On top of his cultural role on the Mount Rushmore of stoners, Snoop Dogg made headlines this spring when right-wing billionaire Charles Koch launched an effort to federally legalize marijuana after a Zoom call with the rapper. The Leafs by Snoop founder weighs in on the changing industry and who should benefit.