📰 Cannabis Administration and Opportunity (CAO) Act Introduced in the Senate
Kings Garden defaulted on rent with IIPR. Jushi CFO resigns to work at competing MSO. Wyld launches fully compostable packaging. OK, ND, AR, & NE submit signatures to put cannabis on November ballot.
Cannabis Gets Senate's Attention in Long-Shot Decriminalization Bill. Senate Democrats plan to introduce a bill to decriminalize marijuana at the federal level next week, although the legislation faces long odds in the evenly divided chamber. Majority Leader Chuck Schumer worked with Senators Cory Booker of New Jersey and Ron Wyden of Oregon on the measure. The senators circulated a draft of the bill last year and made tweaks after feedback from Senate committees. The Cannabis Administration and Opportunity Act (CAO) would remove Cannabis from the list of drugs covered by the Controlled Substances Act. States, however, can still maintain and create prohibitions on production and distribution of marijuana. The House of Representatives has twice passed its own legalization bill, the MORE Act, but has yet made it to the Senate. [link]
US cannabis companies tread cautiously into turbulent Canadian market. Executives at a variety of U.S. cannabis companies told MJBizDaily that they find Canada’s centrally regulated market appealing. And despite Canada’s overproduction of cannabis and falling prices, some U.S. executives see more opportunities north of the border versus core U.S. markets where sales are declining on a Y/Y basis. Kiva, announced a deal in May with Montreal-based license holder Greentone. Ben Schultz, who heads up new market expansion for Kiva, said the company has traditionally expanded into new markets through licensing and partnership deals. Schultz said such arrangements are one way of mitigating risk: The company doesn’t have to to shell out big bucks to build its own manufacturing facilities. [link]
Oklahoma, North Dakota, Arkansas, and Nebraska submit signatures to put cannabis on November ballot. In the past week, residents of Oklahoma, Arkansas, and North Dakota submitted signatures to qualify adult-use cannabis legalization measures for their respective Nov. 2022 state ballots. [link]
Plummeting Cannabis prices are smoking out small cannabis businesses in Michigan. The average price for an ounce of recreational flower dropped from more than $512 in January 2020 to $131 in May, a 74.4% decline, according to the Michigan Cannabis Regulatory Agency. During the same period, an ounce of medical flower dropped from $267 to $117. There are more than 1,000 dispensaries in Michigan, and nearly half of them sell recreational cannabis. An additional 100 recreational dispensaries will open in Detroit, the state’s largest city. To compete, dispensaries have been steadily decreasing their prices since recreational sales became legal in December 2019. [link] While a maturing market means increased competition and dispensaries, it also means brands like Ripple and Jeeter expanding to the State. [link]
Columbia Care — Obtains Final Order of the Supreme Court of British Columbia Approving Business Combination with Cresco Labs. As previously announced, in certain states—namely Florida, Illinois, Maryland, Massachusetts, New York, and Ohio – Columbia Care and Cresco Labs will divest assets for regulatory approval prior to close. Columbia Care and Cresco Labs are pleased to announce that the divestiture process has been progressing as planned with robust demand from a deep and diverse pool of bidders, predominantly new market entrants and single-state operators looking to expand into these markets. Thoughtful consideration is being put towards the evaluation of potential buyers for regulatory approval purposes. The divestitures are expected to close concurrently with the closing of the Arrangement, which is currently anticipated near the end of 2022.
River Remedy — Raises $8M from Individual Investors for Vertically-Integrated MS Operations. River Remedy was among the first companies to receive a cultivation license in Mississippi’s new medical cannabis market earlier this month. The Company recently completed Phase 1 of construction in a 37,000 sq ft cultivation, processing and dispensary facility in the Jackson metro area after raising $8M earlier this year. The core team includes industry veterans from established, recreational markets as well as more nascent medical markets in the Southeast and Midwest. The vertically-integrated Company expects to be a first-mover in both wholesale and retail markets later this year.
Tilray Brands — Closes HEXO Transaction. Tilray Brands acquired the HEXO Note from HTI, which has a current principal balance of $173.7M outstanding. The purchase price paid to HTI for the HEXO Note was $155M, reflecting a 10.8% discount on the outstanding principal balance. The conversion price of the HEXO Note of CAD$0.40 per share, implies that, as of July 11, 2022, Tilray Brands would have the right to convert into approximately 48% of the outstanding common stock of HEXO (on a non-diluted basis). The purchase price was satisfied, in part, by Tilray Brands’ issuance to HTI of a new $50M convertible unsecured note and approximately 33.3M shares in Class 2 common stock of Tilray Brands. The Tilray Convertible Note bears interest at a rate of 4.00% per annum, calculated and paid on a quarterly basis and matures on September 1, 2023. HEXO did not receive any proceeds as a result of Tilray Brands’ purchase of the HEXO Note from HTI.
Nabis x The Parent Company — Exclusive Distribution Partnership. Nabis will distribute all of TPCO’s products, including Monogram and other TPCO owned brands to licensed retailers. Prior to partnering with Nabis, TPCO relied on self-distribution for its diverse portfolio. Through this engagement, TPCO will fulfill its vision with a strong strategic partner to generate efficiencies that lead to lower costs across the entire supply chain. By streamlining wholesaling and improving market penetration, the partnership also allows TPCO to invest even more in research, development, innovation and new product and brand launches.
MediPharm Labs — Enters into $6.2M Purchase Agreement for the Sale of Australian Facility. The Agreement includes the assets of MPLA, specialized licensing, operational knowledge, and Australian and New Zealand customers currently served from that facility. All international contracts outside of Australia and New Zealand will remain with MediPharm Labs and be serviced from our Barrie GMP facility. OneLife Botanicals is an emerging leader in Australia region for cannabis-based wellness and medical products, with plans to launch OTC CBD products across Australia. Purchasing the MPLA facility expedites OneLife Botanicals' timing to commercialization.
📄 Company Updates
Kings Garden — Defaulted on Obligations to Pay Base Rent and Property Management Fees for July to IIPR. The Company defaulted on its obligations to reimburse IIPR for certain insurance premiums at the properties incurred by IIPR that are payable by as operating expenses under the Leases. Kings Garden’s monetary default under all of the Leases was approximately $2.2Min the aggregate, consisting of approximately $1.8M of base rent and property management fees for the month of July and approximately $382,000 of insurance premiums, but excluding applicable late charges and default interest. IIPR is continuing discussions with Kings Garden regarding the Leases, and has commenced discussions with other operators regarding potential re-leasing of certain of such properties.
LeafLink — Expands Direct Payment Solutions to Six States. LeafLink’s Direct Payments solution enables buyers and sellers to increase the speed and security of wholesale transactions and has officially launched in Colorado, California, Arizona, Massachusetts, Ohio and Nevada this month. LeafLink’s Direct Payments solution addresses operational pain points experienced by buyers and sellers who rely on cash transactions, allowing them to seamlessly send and receive compliant ACH payments. For buyers, Direct Payments enables businesses to effectively manage cash flow by eliminating the uncertainty of mailing and clearing checks. Sellers, on the other hand, can leverage Direct Payments to digitize manual cash collections, lower transaction costs and expedite time-to-cash timelines. Complimentary for all LeafLink customers until next year, the service allows brands and retailers to save time, secure their payments and centralize their transaction process within the LeafLink platform.
LEUNE — Launches in Maine. East Coast customers can now purchase LEUNE Pre-Rolls & packaged flower in signature profiles Sol Berry, Cloud Berry, Desert Gold, Piña Dream, as well as All-In-One Vaporizers and Vape Cartridges at licensed recreational cannabis dispensary retail locations across the state of Maine including Rose Mary Jane and others. The quickly rising West Coast lifestyle brand launched in California in 2018, and expanded Arizona in 2021.
Tyson 2.0 — Expands National Footprint to Arizona, Maryland, Ohio and Pennsylvania. Columbia Care is Tyson 2.0's exclusive national cultivation, manufacturing and distribution partner in the markets where it operates. The partnership was first announced in October of 2021, with products hitting shelves in November of 2021. Tyson 2.0 is now available in nine Columbia Care markets, with more planned in the coming months.
Green Flower — Partners with Worcester Polytechnic Institute to Offer Cannabis Education Programs. These certificate programs focus on the cannabis industry in four areas; business, law and policy, agriculture and horticulture, and healthcare and medicine. Offered in an online format and open to anyone over the age 18, the programs are designed to help students gain industry-specific knowledge and experience related to the rapidly developing industry. WPI is the first Massachusetts higher education institution to partner with Green Flower to offer the programs.
MariMed — Begins Trading on the Canadian Securities Exchange (CSE). CEO Robert Fireman believes listing on the CSE will increase liquidity for shareholders and provide access to a significant pool of prospective retail and institutional investors, as well as potential additional Wall Street analyst coverage.
TILT Holdings and Shinnecock Indian Nation of New York — Break ground on historic, tribally-owned cannabis enterprise, Little Beach Harvest. Little Beach Harvest will feature 5,000 square-feet of dispensary space and also offer drive-through service along the main Southampton roadway, creating a unique engagement point between the First People and the Hamptons community. The dispensary and future wellness lounge will become a destination in itself, as they are just minutes from Southampton’s business district.
Planet 13 — Begins Drafting Application to Add a Consumption Lounge to SuperStore. The Company intends to apply for a lounge license and expects to be a successful applicant. The initial plan is to convert Planet 13's Trece restaurant space to a consumption lounge, restaurant and entertainment experience. The Planet 13 Entertainment Complex will be the first of its kind space where a consumer can watch products being made, purchase and consume all under one roof. A true luxury, tourist friendly lounge close to the Las Vegas Strip. Trece is currently an approximately 4,500 sq. ft. restaurant permitted for occupancy of up to 388 people.
Clever Leaves — Strengthens German presence through expanded Cantourage partnership. Clever Leaves will supply Cantourage with high-THC dried flower product from the Company’s Wappa strain, cultivated in Clever Leaves’ facility in Portugal, where the company operates approximately 25,000 m2 of actively producing GACP-certified greenhouse. Cantourage will utilize Clever Leaves’ product to produce IQANNA 10 which will have one of the highest THC levels available in German pharmacies. Clever Leaves and Cantourage’s expanded partnership further increases the range of international, high-quality medical cannabis products available to the EU market under Clever Leaves’ brand IQANNA and further strengthen the Company as a multinational operator.
Jushi — Grand Reopening of Beyond Hello™ Palm Springs. The redesigned retail location at 4765 E Ramon Road features a new desert-inspired aesthetic, some of the most sought-after locally sourced cannabis and artisan crafts, along with a new art exhibit from award-winning photographer, Jushi Chief Creative Director Andreas (“Dre”) Neumann.
Ayr — Launches Adult-Use Cannabis Sales in Watertown, the Company’s Second Adult-Use Dispensary in Massachusetts. Sira Naturals d/b/a Ayr is awaiting approval from the Massachusetts Cannabis Control Commission (CCC) to sell medical cannabis at the Watertown location and anticipates beginning medical sales at the Watertown dispensary soon.
Verano — Surpasses 50 Dispensary Milestone with the Opening of MÜV Fort Myers Cypress and MÜV Sarasota Main, Raising Florida Footprint to 51 Locations Statewide. Verano’s active operations span 13 states, comprised of 103 dispensaries and 13 cultivation and processing facilities with more than 1 million square feet of cultivation capacity. MÜV Fort Myers Cypress sees an average daily traffic of 52,500 vehicles. MÜV Sarasota Main is located in Sarasota’s historic downtown district.
Verano — Opens MÜV Sebring, the Company’s 52nd Florida Location. MÜV Sebring, has average daily traffic of 40,000.
Wyld — Launched a first-of-its-kind, fully compostable, single-use, child-resistant packaging for gummies in Canadian markets. The petite flexible pouch for the Canadian market holds two gummies and is completely compostable and biodegradable—from the adhesives to the inks to the zipper. All of the materials used in its Canadian packaging are certified compostable and biodegradable and are made from renewable resources like bio-based polybutylene succinate, wood pulp, and bio-resins. This includes all adhesives and inks, as well as the CR zipper. Wyld also released its 2021 Impact Report.
Presidential — Releases Moon Rock Prerolls and Blunts in Mini Sizes. Presidential's Moon Rocks feature the brand's signature estate-grown, high-quality flower infused with premium THC distillate through their proprietary process, then coated in top-tier kief. The new PeeWee Prerolls and Blunts offer Presidential's most popular products in smaller sizes perfect for individual sessions. The PeeWee Prerolls will be available in packages of three 0.5g prerolls, rolled in natural hemp paper cones. The PeeWee Blunts will also come in packages of three, with 0.7g blunts rolled in 100% tobacco-free wraps that burn slowly and smoothly. Both the Prerolls and Blunts will be available in Presidential's top five flavors: Classic, Grape, Peach Mango, Strawberry and Watermelon.
Curaleaf's Select Brand — Launch "The Farmer's Select" Program. "The Farmer's Select" is an ongoing series of limited-edition collaborations with licensed legacy farmers and diverse operators in California. In celebration of launch, Select's second Elite Live collaboration is now available across the state in partnership with Delighted Farms, a state-of-the-art indoor farm managed by a team of legacy California growers.
Jushi Holdings — CFO Resigns to Take Role at Competing MSO. Ed Kremer has resigned from his position as CFO to accept a role at a competing MSO. Kremer is party to an employment agreement with Jushi, which, among other things, prohibits him from working for a competitor for a 12-month period. The Company takes post-employment obligations seriously and will take steps to enforce its contractual rights. President and Founder, Jon Barack, will assume the additional role of interim CFO with immediate effect.
THC Designs — Ex-Finance Director Sued For Alleged Request to Doctor Financials. William McKenna, the former Finance Director for THC Designs filed a lawsuit against the company on July 6, 2022. McKenna claims he was fired for refusing to defraud investors and tax authorities went the company’s owner Ryan Jennemann asked him to doctor the financials. He claims he was asked to reduce the liabilities so that the company could borrow more money. McKenna also thinks that the company was growing and selling psilocybin mushrooms for cash and not recording those sales.
Flora Growth — Taps Amazon Executive Elshad Garayev as CFO. Garayev served in a variety of financial leadership roles at companies such as Amazon, Boeing BP and RPK Capital, managing a diverse array of initiatives at various companies including reporting, accounting, investments, private equity, international operations, M&A, energy services, and manufacturing.
Agrify — Max Holtzman Joins Board, Stuart Wilcox Becomes COO, Chris Benyo Promoted to CRO, President & COO Thomas Massie Resigns. Max Holtzman, who currently serves as Operations Director at Ocean 14 Capital, and who previously served as the Senior Advisor to the United States Secretary of Agriculture, has been appointed to Agrify’s Board of Directors as an Independent Director. Stuart Wilcox, former Chief Operating Officer of Curaleaf has been named the Company’s COO. Wilcox stepped down from the Agrify Board as a Director concurrently with his appointment as COO. Chris Benyo, who joined Agrify in January 2022 and most recently served as Senior Vice President and General Manager for Agrify’s Extraction Division, has been promoted to the newly created role of CRO. Thomas Massie, the Company’s former President and COO, has departed Agrify and resigned from the Agrify Board of Directors in order to pursue other business opportunities.
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👋 Highly Objective is curated by Dai Truong, who leads Cannabis Investment Banking at Arlington Capital Advisors. 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.