🤝 Ayr Wellness Enters Illinois with Agreement to Acquire Herbal Remedies Dispensaries for $30M

Body and Mind Closes $11.1M Debt Financing. Adaviv Raises $2.3M. BellRock Brands Restructures Management. CV Sciences and UCSD Publish Study of Cannabidiol Efficacy in Treating Nicotine Dependence.

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🌿Industry

Vapor Pens: An analysis of category & brand performance.

Key findings:

  • In the US, Vapor Pens are the second largest product category, with 20.6% market share of total cannabis sales in the US. Vapor Pens are the third largest category in Canada, with 16.1% market share

  • 90.5% of all Vapor Pen sales are in the Cartridge segment in the US, and 92.2% in Canada

  • One gram package sizes are most popular in the US, making up 65% of Cartridge sales. In Canada, the half gram package size is the most popular, making up 50.6% of Cartridge sales

  • Cartridge prices have held steady at $33-$35 USD in the US. But in Canada, prices have dropped 23% since April 2020

  • Gen Z customers spend more than 27% of their wallet on Vapor Pens. Vapor Pen wallet share decreases as we move from younger to older customers, with Male Baby Boomers as the only group with less than 15% of sales to the category. Within each age group, Female customers have higher Vapor Pen wallet share than their male counterparts.


💵Deals

Ayr Wellness — Enters Illinois with Agreement to Acquire Herbal Remedies Dispensaries. Herbal Remedies was among the first cannabis dispensaries licensed in the State of Illinois when the State approved the Compassionate Use of Medical Cannabis Program in 2013. Ayr intends to purchase 100% of the membership interests of Herbal, an operator of two licensed dispensaries in Quincy, Illinois, the county seat of Adams County, the western-most county in Illinois. The terms of the transaction include consideration of $30 million ($10 million stock, $12 million seller notes and $8 million cash). Based on current projections, the Company estimates it is paying ~5x Herbal Remedies’ 2021 EBITDA. Herbal will add approximately 50 employees to Ayr’s total headcount.

Body and Mind — Closes $11.1 Million Debt Financing with FocusGrowth Asset Management, LP. Under the terms of the Loan, the Company can immediately draw the initial term loan of $6.67 million of which $6 million in funds is advanced to the Company and the Company can draw on the delayed draw term loan of $4.44 million prior to December 31, 2021 of which $4 million in funds will be advanced to the Company. The Loan matures in four years and bears interest at a rate of 13% per annum payable on the first day of each month hereafter. There are fees, financial covenants, and prepayment fees associated with the Loan as well as a security agreement and other related agreements. As part of the terms of the Loan, the Company has issued an aggregate of 8,000,000 common stock purchase warrants to FGAM of which 4,800,000 Warrants will entitle the holder to acquire shares of common stock at an exercise price of $0.40 per Warrant Shares until July 19, 2025 and 3,200,000 Warrants will be held in escrow by the Company and released to FGAM at the time the Company draws on the delayed draw term loan, or cancelled if the Company does not draw on the delayed draw term loan, which will entitle the holder to acquire a Warrant Share at an exercise price of $0.45 per Warrant Share until July 19, 2025. 

GrowGeneration — Acquires Aqua Serene, Expands Footprint in Oregon's Southern "Green Belt." Aqua Serene is one of Oregon's largest indoor/outdoor garden center, with revenue of over $14 million annually. Aqua Serene has provided Oregon growers with specialty hydroponic supplies and professional horticultural consultation services for over two decades. The Aqua Serene team of 10 employees will join GrowGen's team of over 600 grow professionals as part of the transaction.

Adaviv — Raises $2.3M in Upsized and Oversubscribed Seed Round. The round was led by Delta Emerald Ventures, with additional backing from Poseidon and the SOJE.
AdaViv's Lean Cultivation™ Platform and Crop-Care™ Software leverages proprietary software, machine vision and AI analytics to illuminate plant health and growth biometrics, enabling earlier detection, treatment efficacy tracking and lower costs of labor and waste. Adaviv has helped cannabis operators detect 7-10 times more plant health issues in a timely manner, reduce cycle-to-cycle yield variation by 50% and drive 20%+ yield improvements. Crop loss is a $220 billion annual cost to the agriculture industry. Even within Controlled Environment Agriculture, where climate, water and lighting can be precisely controlled, pests, diseases and other plant stress factors can create volatility in yield and quality, or even catastrophic crop loss. Adaviv is first bringing its solutions to the cannabis industry, where it's essential to optimize the health and performance of each plant. Tools like pesticides and chemical fertilizers that are standard across agriculture are not available to the highly regulated and fragmented cannabis market. Early detection and intervention of pests and diseases are critical to success, and Adaviv has produced over 3 million annotated plant images from high-resolution data containing rare instances of pests, disease and stress.

High Tide — Continues Rapid Expansion into United States Through Acquisition of Leading Online Retailer DankStop. The transaction is immediately accretive as DankStop generated revenue over $3 million during the 12 months ended April 30 2021, with an EBITDA margin in the low double digits. The consideration for the 100% of DankStop acquired will be $3.85 Million in common shares of High Tide. Pro forma for the acquisition, High Tide’s revenue run rate in the U.S. is ~CAD$55 million.

CityRow — raises $12M for connected rowing machines and studios. Not a Cannabis deal but the $12 million Series A was led by JW Asset Management with participation from Sol Global. Founded in 2014 as an in-person rowing studio, CityRow was relatively early to adopt the at-home connected model. CityRow says it experienced a 375% revenue growth last year, largely on the strength of rowing machine sales and platform subscriptions.


📄Company Updates

CV Sciences and University of California, San Diego Publish Study of Cannabidiol Efficacy in Treating Nicotine Dependence. In animal models, CBD has shown to reduce craving of alcohol and cocaine use and is known to modulate nicotinic receptor function. In this study, rats dependent on nicotine and experiencing withdrawals were treated with CBD. Treatment prevented the animals from exhibiting withdrawal symptoms – including increased pain sensitivity and weight gain – during short- and long-term nicotine restriction. Millions of people use smokeless tobacco because they are addicted to nicotine. To quit, users must overcome nicotine cravings and the desire to have a chew, snuff, or pouch in their mouths. CV Sciences is working on a treatment solution for both. The worldwide smokeless tobacco addiction treatment market is estimated at greater than $2 billion and provides another important long-term growth channel for CV Sciences, in addition to the Company’s consumer product segment.

Lowell Farm Services — Begins Processing Third-Party Cannabis at New Salinas Facility. Following the June 2021 acquisition of the licensed facility, Lowell has commenced B2B operations serving regional cultivators with processing services.

Jushi Holdings — Expiration of HSR Act Waiting Period for the Proposed Acquisition of Nature’s Remedy of Massachusetts. As announced in April 2021, Jushi plans to acquire Nature’s Remedy, one of 146 retail operating licenses, one of the 50 operating cultivation licenses, and one of 46 processing licenses in the Commonwealth of Massachusetts. Nature’s Remedy has two operating adult-use dispensaries, as well as a 50,000 sq. ft. cultivation and production facility in Lakeville, MA with approximately 19,500 sq. ft. of high-quality indoor flower canopy and state-of-the-art extraction and manufacturing capabilities.

Sundial Growers — Completes the Acquisition of Spiritleaf Retail Cannabis Network. The addition of well-established Spiritleaf franchised and corporate-owned stores, representing the country's largest single-brand recreational cannabis retailer with 100-plus stores across six provinces, provides Sundial with an integration and expansion platform in current operating markets in Canada.

High Tide — Closes Acquisition of Daily High Club. The Acquisition was completed pursuant to the terms of the merger agreement previously announced by the Company on June 25, 2021.


🏬Retail

Trulieve Brings Medical Cannabis to Crystal River, FL. This is Trulieve's 86th Florida dispensary.


🌱Product

SweetWater Brewing — Company's Flagship 420 Brand Gets Bigger and Bolder with the Launch of 420 Imperial IPA. A fresh take on ingredients from the original SweetWater 420 Extra Pale Ale, this bold, flavor-packed Imperial IPA boasts a delicious combination of hops - creating a super-tasty, high-ABV new brew. The big, deep, copper-colored Imperial IPA is well-balanced with the right amount of hop bitterness and malty sweetness, combining traditional and modern hops to create flavor and aromas of mango, peach, pineapple, citrus and pine. IPA lovers will savor the unique blend of 2-row, Munic and C70/80 grains as well as Centennial, Cascade, Columbus, Mosaic, and Sultana Midnight Wheat Hops as well as Mosaic, Sultana, Lotus, and Cascade Dry Hops in this lip-smackin' new brew.

Gage Growth and Pure Beauty — Announce Exclusive Partnership. Through the Partnership, Gage will be the exclusive producer, processor, wholesaler and retailer of Pure Beauty branded products in Michigan. Gage and Pure Beauty will work to develop and commercialize a product lineup that includes flower, a full range of pre-rolls, extracts, beverages and edibles that will be sold at Gage branded provisioning centers (dispensaries).

Papa's Herb® — Enters the Oregon Market Through Halo Collective. Under the Licensing Agreement, Papa's Herb gives Halo permission to produce and market products under its registered trademarks in the Oregon Market. In addition, the Licensing Agreement allows Halo to exclusively license Papa's Herb trademark images and wordmarks, "PAPA'S HERB" and "COME TO PAPA," and product portfolio to include their signature Papa's THC Distillate Vape Pens, Live Resin Concentrates, and Papa's Infused Pre-Rolls. In 2021 Papa's Herb also expanded to the Canadian market through a license agreement with Tilray (TSE: TLRY) (NASDAQ:TLRY), one of the largest licensed cannabis producers in Canada. Papa's Herb has penetrated over 60% of the total Ontario market in the first six months of 2021 with only two product segments. Papa's Herb products have garnered a strong foothold in the California cannabis market. In 2021, Papa's Herb posted over 113% year-over-year growth in the vape category while other competitors have lost market share. Papa's Herb is one of only four brands to show growth in the vape category in 2021.

Gary Payton — Launches “General Principle” Brand in Association with BC Craft Supply Co. The new General Principle collection features performance-inspired cannabis products, driven by natural food ingredients, medicinal herbs and supplements, and premium cannabis and hemp extracts. The result is a series of functional, sports-oriented cannabis products designed to taste great, feel great, and be effective.  

Zola Bakes teams with Toast on hemp-infused cookies. Zola Bakes, known for its signature rainbow cookies available locally in New York City as well as for nationwide shipping through Goldbelly, has collaborated with cannabis brand Toast on a new experience. Zola Bakes rainbow cookies are dripping with flavor, and can now be infused with Toast to feel as good as they taste. Zola BAKED are bite sized rainbows crafted with 6 layers of neon almond cake, chocolate drip and topped with glitter. Each cookie is infused with Toast Full Spectrum Hemp Extract providing the benefits of hemp. Each box comes with an assortment of raspberry, apricot, and Nutella rainbow cookies. They start at $64 and are available through the Zola Bakes website. Coming soon is a cookie cake featuring 6 layers of almond cake, with layers of raspberry jam and Nutella topped with a CBD-infused chocolate drip.


🧔People | 💻Hiring

BellRock Brands — Restructures Management to Enhance Senior Leadership Capabilities and Accelerate Strategic Growth Initiatives. Chuck Smith will be stepping down as CEO and will remain in the role until the search for a new CEO has concluded. In addition to aiding in the transition of responsibilities to his successor, Smith will continue to serve as an ongoing advisor to the Company, particularly with respect to regulatory and cannabis marketplace dynamics. BellRock’s current COO, Brian Jansen, has been appointed as President. Prior to the business combination of BR Brands and Dixie Brands, Jansen served as interim CEO and COO of Mary’s Medicinals. Kavi Bhai has been promoted to CFO. He served as the CFO of Mary’s Brands prior to the formation of BellRock. Prior to joining Mary’s Brands, he was an Audit Manager at Frazier & Deeter. Bhai’s promotion coincides with the Company’s exit of former CFO, Alex DeGortari. In addition to the changes at the senior management level, Executive Chairman Andrew Schweibold and Board Member Brian Graham will assume more active roles in executive functions to augment the management team. Schweibold has spent his career in the financial services sector as a private investor and board member to a myriad of companies across a broad range of industries. Graham is an existing member of the BellRock Board, a legacy Dixie Board Member, and a seasoned CPG executive/director with extensive entrepreneurial and CEO experience. 

Concurrent with the Company’s leadership changes BellRock is withdrawing its previously announced guidance of $50 million in revenue for 2021. Additionally, the Company’s restructured management team is committed to working diligently and expeditiously with its auditors to complete the annual filings and the interim filings as soon as possible.


🎙️Interviews

Early breakdown of the Cannabis Administration & Opportunity Act, Harborside & Sublime, and D2C in CA. Matt Hawkins, managing partner at Entourage Effect Capital delves into some of the latest developments on the Cannabis Administration and Opportunity Act. It is still to early to pass this important legislation, but they break down two of its key aspects and why they’re so important to the industry. In SSO news they dig into the Harborside and Sublime deal that is currently in the works and how it could serve as a great example on how to navigate through California’s complicated state regulations in the right way. Finally they talk a bit about an MJBiz article that came out about California cannabis brands that are beginning to sell directly to consumers, (a.k.a. D2C) and how that might bypass the need for brick and mortar businesses. 

Cannabinoid Connect. Brady Cobb is the Founder and Former CEO at Bluma Wellness and One Plant Florida, which were acquired by Cresco Labs in April of 2021 for $213 million in an all stock transaction.


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