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📰 California Cannabis companies sue state over revoked licenses
NJ Cannabis Commission miss deadline to start accepting new business applications. IIP/Calyx $28.3M sale leaseback for MO. Dispense raises $2M seed. Tinley Founder/CEO Steps Down.
More California marijuana companies sue state over revoked licenses. At least four California marijuana companies have sued the state after regulators revoked their provisional business licenses, alleging they were treated unfairly and not allowed to appeal the revocations to an independent mediator. As of Sept. 15, there were 11,642 active cannabis business licenses in California. Of those, only 2,929 are classified as “annual” licenses, according to data from the DCC. The other 8,713 – representing about 75% of total active permits – are categorized as provisional licenses, which face a lower threshold that businesses must meet to obtain such permits. They are a stopgap measure, and come with fewer protections built into state law. In particular, provisional license holders are not afforded due process rights the same way annual license holders are. Annual licenses are required to meet a much more stringent set of requirements, including compliance with state environmental laws. Currently, state law “permits provisional license revocation, suspension, and denial of renewal at the discretion of (regulators) at any time,” Deputy California Attorney General Patrick Boyne wrote in a brief filed on June 11 in one of the due process lawsuits. That leaves provisional license holders vulnerable to potentially vindictive bureaucrats, with no protection built into the law.
The lower rates have boosted the investment muscle of these MSOs as they expand their presence in fast-growing state markets. At the same time, the lower debt costs highlight the interest-rate gap between large operators and smaller businesses, including minority-owned companies. Investors, in general, perceive smaller companies to be riskier, lenders aren’t as interested in doing smaller loans, and entrepreneurs are hesitant to put up the personal collateral that might be required to secure the loans. Large MSOs recently have been raising capital and paying annual interest rates of about 9%-10% – several percentage points below rates a year ago. Granted, the marijuana industry is still paying far higher interest rates versus mainstream corporations in other industries. The average cost of corporate debt has hovered around 3%, according to data compiled in early 2021 by New York University’s Stern School of Business.
New Jersey Cannabis commission will miss deadline to start accepting new business applications. The state Cannabis Regulatory Commission did not begin accepting new applications for business licenses by this past weekend, thereby missing a statutory deadline intended to keep development of the legal Cannabis marketplace on track. But the commission did approve a new licensing platform to help it process applications when the time comes, and says that alone is a significant step toward launching the new industry. Legislators baked clear deadlines into the legalization law — six months from law’s signing, a commission would need to have rules, and within another six months, it needs to pick a date for legal sales to begin — to avoid further delays in starting legal weed sales. Between those lies the process for licensing more businesses to grow, process and sell marijuana to the public. The law mandates the commission begin accepting and processing new applications for licenses within 30 days of adopting its initial rules. That deadline was this past Saturday.
Cannabis sector is not banking on help from Congress before 2022. Questions around coming catalysts for the cannabis sector from Washington, D.C., have been frequent in recent conversations with investors, but with other items such as infrastructure, healthcare, and potential tax hike under debate, it’s unlikely lawmakers will act on any federal measures in the near future. “Prospects for action on bills regarding federal cannabis to be passed in the fall seem to have waned,” Alliance Global Partners analyst Aaron Grey said Wednesday in a research note. The next six months may still provide a window for some action in early 2022 before attention shifts to midterm elections later next year, Grey said.
Sales surge at Vista cannabis shops after city OKs recreational use. “Sales automatically increased,” said Mike Mellano, owner of Coastal Wellness dispensary. “We had such a quick response. Sales have been up about 35--40%. I was expecting 15% maybe.” Tradecraft Farms became the first of the city’s 11 dispensaries when it opened in 2019 following the passage of the citizen-driven Measure Z initiative, and store manager Edgar Gaytan said business appears to be up by about 20% since the shop was allowed to sell products for recreational rather than just medical use about a month ago. Even before the uptick in business, dispensaries had proven to be a surprising financial benefit to Vista. In April, the City Council was told that revenue from the dispensaries had done much better than the $1.3 million that was anticipated, and instead were expected to bring in about $4 million. The windfall helped the city balance its $92.3 million budget despite the pandemic.
New York officials ‘shocked’ by cannabis Vireo’s electrical needs. Vireo Health reportedly needs more electricity for its new New York cultivation and processing facility than the technology park can provide. Fulton County industrial development officials were “shocked” to learn from Vireo that the county-financed electrical transmission line into Tryon Technology Park isn’t sufficient for the MSO’s needs. Vireo is constructing a 325,00 sq ft cultivation and processing facility in preparation for an expanding medical cannabis market and the state’s forthcoming recreational marijuana market. Vireo is one of 10 Cannabis operators in the state. It’s unclear how the situation will be resolved. The report indicates that Fulton County Industrial Development Agency officials believe that based on Vireo’s request, an additional transmission line and substation will be needed at a cost that could exceed $4.5M.
Florida Marijuana Activists File New Legalization Initiative For 2022 Ballot Following Supreme Court Defeats. Florida marijuana activists are making another push to place adult-use legalization before voters in 2022, filing a new petition with the state after previous versions of the reform were rejected by the state Supreme Court earlier this year. The proposed constitutional amendment, which was approved for initial signature gathering last week, would allow adults 21 and older to use and possess cannabis. They could also grow up to nine plants for personal use. The initiative would not provide for retail sales, however. Regulate Florida is leading the campaign and stressed that time is limited to get enough signatures to qualify for the ballot. Activists must first collect 222,898 valid signatures to prompt a judicial and fiscal impact review, then they need a total of 891,589 signatures to make the ballot. That first hurdle has created headaches for advocates this year. After the state attorney general’s office requested a judicial review of the group’s prior legalization initiative—and filed briefs opposing the petitions—the state Supreme Court rejected it, as well as a separate reform proposal from an industry-backed campaign, because justices deemed the language misleading.
IIP — Acquires Missouri Property and Enters Into Long-Term Lease with CPC of Missouri – Smithville, a subsidiary of Calyx. The purchase price for the property was $1.5M (excluding transaction costs). CPC is expected to construct ~83,000 sq ft of industrial space at the property, for which IIP has agreed to provide reimbursement of up to $26.7M. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be $28.3M (excluding transaction costs). CPC intends to operate the property upon completion of construction as a licensed cannabis cultivation and processing facility. Calyx currently operates a 235,000 sq ft cannabis cultivation facility in California, and expects to begin construction on a dispensary location in southern California in the near future. Calyx also has a Tier 3 cultivation license and a provisional adult-use dispensary license in Massachusetts, and expects to open a dispensary in the West Plaza neighborhood of Kansas City, Missouri later this year. Founded in 2016, Calyx is headquartered in Massachusetts and plans to be vertically integrated in three states by the end of 2022.
Dispense Closes $2M Seed Funding Led By NextView Ventures, Poseidon. Dispense is currently used by dispensaries in five states: Illinois, Michigan, Ohio, New Jersey and Massachusetts. Among its clients are several big companies including Ascend Wellness Holdings. The round was led by NextView Ventures with NextView co-founder, Lee Hower, joining the Dispense board. Poseidon Asset Management and Achari Ventures participated, along with Arrive, a Roc Nation company as well as Wayne Chang.
Driven By Stem — Acquires Artifact Extracts, Salem Delivery Capabilities, and Two Additional Dispensaries. The transaction closed September 17th, 2021 with all OLCC approvals granted. In connection with such transaction, Stem issued 8,209,178 shares of common stock of Stem at a deemed aggregate value of $2.925M at a 24% premium to Stem’s closing share price of common stock. Such share consideration will be held in escrow for a period of six months with a subsequent six month leak out.
Terrascend — Receives Michigan Pre-qualification Approval For The Acquisition Of Gage Cannabis. TerrAscend has received pre-qualification approval for cultivation, processing and retail licenses from the state of Michigan's Marijuana Regulatory Agency pursuant to the Medical Marihuana Facilities Licensing Act. The pre-qualification approval represents TerrAscend's successful completion of the most comprehensive portion of the State's licensing and regulatory approval process. The pre-qualification approval is a key closing condition for TerrAscend's previously announced acquisition of Gage. The Transaction will close as soon as possible after receipt of the applicable shareholder, court and other regulatory approvals and satisfaction or waiver of all other conditions in the definitive arrangement agreement.
Ayr Wellness — Adds to Florida Footprint, Opens New Dispensary in West Pensacola. The Liberty Health Sciences in West Pensacola is the Company’s 41st operating dispensary in Florida. The new location features LHS’s expanded selection of flower strains, in addition to the Company’s recently launched Origyn concentrates, Big Pete’s Cookies and Secret Orchard vape cartridges.
Cookies — Opens Its First U.S.-Based Consumption Lounge in Coalinga, CA. The consumption lounge is located inside the new Cookies dispensary that features a full line of Cookies’ exclusive strain genetics and premium products. Located just off the I-5 approximately 200 miles from San Francisco and Los Angeles, the high-end consumption lounge is the first in Fresno County. The Cookies Coalinga dispensary opens in partnership with the social justice brand EVIDENCE, which is owned and operated by siblings Dan, Casey and Kelly Dalton. It was a natural fit for Cookies ever since Berner partnered with the Daltons to provide a pack of VIBES rolling papers in every bag of EVIDENCE.
Radiant Canna — Launches Line of Marley Natural® Cannabis Products. Radiant is exclusively producing and distributing Marley Natural cannabis products in California, including cannabis flower, concentrate and edible products. The Marley Natural Core line is sourced from Legacy farmers in the Emerald Triangle in Northern California, where it is sustainably sun grown and hand-selected. It is reasonably priced and currently offered in 1/8th jars, with 1-gram pre-rolls available soon. The cultivator of the Core line release is the highly revered Mendocino Grasslands, long known for growing superior quality cannabis in California, "where humble heritage meets artful expression." The Core product line will be complemented by the Marley Natural Studio line, highlighting limited-edition batches of potent, exotic indoor flower products grown by a curated group of award-winning cultivators including award-winning King Klone. In addition, Radiant Canna plans to introduce a line of THC-infused edibles, as well as pre-rolls and vapes later this fall.
🧔People | 💻Hiring
Tinley — Founder Jeff Maser Steps Down as CEO and Director and Joins Advisory Board; Richard Gillis Appointed as President and COO, Tinley USA and Joins Newly Created Office of The CEO. Gillis previously served as President, Tinley Western USA, where he oversaw the buildout of the Company’s 20,000 square foot co-packing facility and the launch of several Company-branded beverages. The Company also announces that Founder and CEO, Jeff Maser, has stepped down from his role as CEO and director and will join the Company’s advisory board. Rick Gillis, together with Directors Ted Zittell and Douglas Fulton, have formed an Office of the CEO to manage all corporate activities with company management on an interim basis while a search for a CEO is underway.
Red White & Bloom Brands — Appoint Ryan Costello to the Board of Directors. Costello is a former U.S. Congressman (2015-2019, R-PA), and now public policy consultant. Costello advises companies and investors on public policy and strategic objectives on matters before legislative and administrative agencies, primarily involving healthcare, energy, environmental, technology and transportation matters. In Congress, he served on the Committee on Energy & Commerce, which has jurisdiction over a broad range of industries and policy areas, including healthcare and cannabis policy, as well as the Veteran’s Affairs Committee.
Altmore Capital — Credit Analyst / Associate (McLean, VA)
710 Labs — CMO (LA)
Jane — BDR (remote)
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