💰 Ascend Wellness Holdings (AWH) — $210M Senior Debt Financing, 4-Year, 9.75%

Earnings (Q2 Revenue) - Harborside ($16.2M), Vibe ($7.8M). Mainstem raises $5M Series C led by Merida Capital.

👥 Follow on LinkedIn for more real-time updates. Subscribe to the newsletter here.


💵Deals

Ascend Wellness Holdings — $210 Million Senior Debt Financing, 4-Year, 9.75%.

AWH intends to use the proceeds to (i) repay substantially all of the Company's debt excluding ~$12 million of outstanding acquisition payments with near zero interest rates, (ii) finance the Company's pending investment in MedMen NY and (iii) support the Company's future growth and acquisition initiatives. This Term Loan further strengthens the company's strong cash position. Prior to closing the Term Loan, at the end of June 30, 2021, the Company had $104.2 million in cash and equivalents. The Term Loan will bear interest of 9.5% per annum, payable quarterly in arrears, with a maturity date of August 27, 2025. The Term Loan is secured by a first lien on all Company assets.

Mainstem — $5M Series C led by Merida Capital. The Company’s main product is Purchase Pro™, launched in June as the industry's first and only cannabis-specific procurement software. Purchase Pro™ gives operators a platform that performs as a 'single pane of glass,' integrates into their existing applications, and allows visibility and control over their procurement needs across the industry. The Series C round enables MAINSTEM to better serve its customers, which include 1,000 vertically integrated operators in 26 U.S. states, 95% of which are MSOs or SSOs.

HEXO — Closes Redecan transaction. At closing, HEXO paid the selling shareholders of Redecan $400 million in cash (subject to certain customary closing adjustments) and delivered 69.7 million newly issued common shares of HEXO. Pursuant to the share purchase agreement entered into in connection with the Transaction, resale of the Consideration Shares by Redecan sellers will be restricted by a 24-month hold period during which, subject to certain exceptions, each Redecan sellers will be entitled to sell a maximum of 1/24th of the initial amount of such Redecan seller’s Consideration Shares issued under the Transaction. The Redecan sellers have also agreed to be bound by customary standstill provisions for an 18-month period.

The Valens Company — Broadens Agreement with Leading Licensed Producer to Provide Custom Manufacturing of Cannabis Products. Valens has broadened its existing agreement with a leading licensed producer (top five in Canada by market share) to include custom manufacturing of cannabis products. Under the terms of the agreement, the licensed producer will draw on Valens' full suite of product manufacturing capabilities to supply the Canadian market with a range of cannabis products in various categories across several of the LP's award-winning brands. The expanded agreement supersedes the previous extraction services agreement between the two companies and marks the largest pre-roll manufacturing agreement to date for The Valens Company.


📄Company Updates / Earnings

Harborside — Q2 2021

  • Revenues: Retail gross revenue of $11.0M and wholesale gross revenue of $5.2M, for total gross revenue of $16.2M

  • Gross Profits: ~$6.2M

  • Operating Expenses: ~$9.0M

  • Operating income (loss) was ~$(0.3)M

  • Adjusted EBITDA was ~$1.1M or 7.3% of net revenues

  • Cash: $26.9M as of 6/30/21. During Q1 2021, Harborside closed a brokered private placement for aggregate gross proceeds of ~C$35.1M and entered into a loan financing arrangement with a federally regulated commercial bank for $12.0M pursuant to a senior secured revolving credit facility due March 19, 2023. On May 28, 2021, the Company drew down ~$11.4M on the revolving credit facility in advance of purchasing the cultivation/production facility in Salinas on June 1, 2021

Red White & Bloom Brands — Q2 2021

  • RWB received Florida Department of Health, Office of Medical Marijuana Use approval and closed on the acquisition of Acreage Florida, which is licensed to operate medical marijuana dispensaries, a processing facility, and a cultivation facility in the state of Florida. The transaction included a 114,000 SF facility for cultivation and a 4,000 SF freestanding administrative office building located on 15 acres in Sanderson Florida.

  • Secured 30 double wide fully enclosed cultivation pods that collectively provide approximately 19,000 square feet of turn-key cultivation space, with 14,400 square feet of canopy capable of producing in excess of 7,000lbs of flower annually, as well as thousands of pounds of trim and shipped them to Florida.

  • RWB completed the more comprehensive portion of Michigan’s two-step application process, or “prequalification”, for medical marijuana licensing through a wholly owned operating subsidiary, RWB Michigan, LLC.

  • Completed $52M financing transactions and retired $7.7M of debt

Unrivaled Brands — Issues UMBRLA Audits and Pro Forma Results Following Close of Merger on July 1st. Based on the pro forma results of operations for the three months ended March 31, 2021, combined revenue of Unrivaled and UMBRLA, Inc. is $16.6 million, which is more than triple Unrivaled’s Q1 revenue of $5.1 million. This represents an annual revenue run rate for the combined company of $66.3 million.

Australis — Q1 2021

  • Revenue: $1.7 million. Q1 FY 2022 includes revenues from ALPS (acquired in March 2021), and management fees from GT

  • Gross Profit: $1.1 million. Gross Profit are predominantly from high margin ALPS business plus management fees with GT

  • Operating Loss: $3.4 million

  • Net Loss: ($9.7 million)

  • Working Capital & Liquidity: Working capital as of June 30, 2021, was $10.4M. The decrease was due primarily to a decline in the value of the publicly traded BaM holdings and a sale of land held for sale. Subsequent to June 30, 2021, the unit value of the BaM shares has rebounded to the March 31, 2021 per share value.

Vibe — Q2 2021

  • Revenue: $7.8M

  • Adjusted EBITDA: $0.9M, an increase of $0.2M Y/Y

  • E-commerce Orders accounted for 21.6% of transactions

  • Palm Springs Dispensary Acquisition closed on May 4, 2021, for $380,000 cash and assumption of existing and estimated liabilities of $1.2M

  • Cash: $13M, as of March 31, 2021


🌱Product

Cannabis-infused beverages to arrive in Michigan with Happi sparkling water. The brand is eager to cater to a demographic they say is too often ignored: canna-curious women who are looking for a low-calorie alternative to alcohol. The cans come in three flavors: lemon elderflower, which has 15 calories per can; raspberry honeysuckle, which comes in at 20 calories; and pomegranate hibiscus, which has 25 calories. Each can contains 2.5 mg of THC and are sold in four-packs for about $20. 


🧔People | 💻Hiring

Village Farms International — Subsidiary Balanced Health Botanicals Strengthens Appoints Alejandro de Gortari as CFO. Prior to joining Balanced Health, from 2004 to 2020, de Gortari held a variety of finance, accounting, sales and related roles with Molson Coors Brewing, including Finance Director, Latin America South, Finance Senior Manager, Latin America & Caribbean Export; Commercial, Business Development & Craft, and culminating in his position as GM, Emerging Markets (all with the Molson Coors International division). de Gortari was also CFO at Denver-based BellRock Brands

HERBL — Director of Purchasing (Goleta or Santa Rosa). The Director of Purchasing is accountable for managing a team of Inventory Planners as they work with brand partners to ensure that the supply of product meets the demand of the retailers. 

Curaleaf — Director, Strategy and Business Development. This role will conduct market analysis, study emerging industry trends, and identify strategic needs as it relates to business endeavors between and amongst the various businesses within Curaleaf.


🎙️Interviews

Goodness Growth (GDNS) Evolving to Take on New York Recreational Cannabis

Don't Think You Can Make Money on a $30 Eighth? Think again. One Massachusetts entrepreneur's quest to make cannabis affordable and diminish the illegal market. Alex Mazin is the Founder and CEO of Bud's Goods and Provisions, a Massachusetts chain of adult-use cannabis dispensaries offering a large selection of cannabis products, including one of the state's first white-label offerings, Lil' Buds.

C3's Thoughtful Strategy Toward Building a Sustainable MSO

Miss Grass Wants to Make Cannabis More Equitable.

How Session Goods Is Redefining The ‘Stoner Lifestyle’ Through Modern Cannabis Design. Beyond its own e-commerce store, the brand is available through more than 50 design-minded retailers and dispensaries in the United States and Canada. Its “Essentials” page curates an edited and continually updated selection of product partners that are as “high quality, functional, simple and ultimately beautiful” as its own. 


👋 Highly Objective is curated by Dai Truong. Third-party information presented here and links to third-party content are for informational purposes only and are not intended as a recommendation, offer or solicitation for the purchase or sale of any financial instrument, security or investment.  The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Linking to third-party sites in no way implies an endorsement or affiliation of any kind between Arlington Capital Advisors, LLC, or its affiliates and any third party.  The information in this blog constitutes my own opinions (and any opinions posted by guest bloggers from time to time) and it should not be regarded as a description of services provided by Arlington Capital Advisors, LLC or any affiliate.