🏦 Cannabis Stocks Rally on New Legislation to Protect Banks

Green Flower Launches GF Institute offering Credentials. Ayr Wellness Closes Acquisition of Garden State Dispensary (NJ). Glass House Closes SoCal Facility Acquisition. $165.6M in August Sales for MI.

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🌿Industry

Green Flower Launches GF Institute with Leading Cannabis Employers to Create First Industry-Accepted Credentials. GF Institute is launching with 3 standardized credentials, each requiring ~12-16 hours to complete:

  • Dispensary Associate Certificate (DAC)

  • Manufacturing Agent Certificate (MAC)

  • Cultivation Technician Certificate (CTC)

While the U.S. cannabis industry is worth $61B with sales increasing 67% in 2020, companies have not had an industry-accepted set of guidelines and credentials to develop and grow the combined workforce of more than 321,000 full-time workers. GF Institute has worked with the industry's leading subject matter experts and instructional designers to create 100% online, outcome-driven training courses consisting of written, audio-visual, and interactive content tailored specifically to each cannabis-industry job category. Three independent Steering Committees, consisting of more than 30 of the cannabis industry's leading companies and voices, have validated and approved the program's overall learning outcomes.

Cannabis Stocks Rally on New Legislation to Protect Banks.

Michigan Cannabis Sales Increase 52% to $165.6M in August. Stabilization in flower prices and strong adult-use demand boosted Michigan cannabis revenue in August by 52% compared to a year ago to $165.6M, down 3.2% from July. The Michigan Marijuana Regulatory Agency breaks out sales by medical and adult-use, with medical sales falling 119.2% from a year ago to $40.1 million, down 6% sequentially, and adult-use sales increasing 112% to $125.5 million, down 2% sequentially. Michigan generated $985 million in cannabis sales in 2020, and the program should continue to expand this year as supply becomes more available and as distribution expands. So far in 2021, year-to-date combined sales are up 97% to $1.15B.

Ohio to allow medical marijuana growers to expand to meet demand, prepare for more dispensaries. Ohio has licensed 20 cultivators who can grow up to 25,000 square feet of marijuana and 15 cultivators that can grow up to 3,000 square feet. State rules allow licensees to expand to 75,000 square feet and 9,000 square feet, respectively, but didn't outline a process for requesting expansion. There were about 125,000 active registered medical marijuana patients in the state as of July 31. The state's initial business license caps were based on a patient population of about 24,000. In September, the Ohio Board of Pharmacy initiated plans to more than double the number of dispensaries, adding 73 to the current 58.

Santa Barbara Cannabis: Pot Price Drop and Market Glut? A major glut in cannabis production and a corresponding plunge in pot prices resulted in Santa Barbara County collecting 43% less in cannabis revenues in the fourth quarter of 2021 than the same period last year. That’s a drop from $5.5 million to $3.8 million. Even so, county cannabis revenues increased by $3.5 million for the year, growing from $12.2 million last year to $15.7 million. Brittany Heaton, the county’s de facto cannabis czar, told the supervisors at Tuesday’s board meeting that overproduction may have driven the price per pound down.


💵Deals

Ayr Wellness — Closes Acquisition of Garden State Dispensary. GSD has three open dispensaries, the maximum allowed under its permit, at heavily trafficked highway locations throughout the central region of the state, as well as ~30,000 sq. ft. of operational cultivation and production facilities. An additional 75,000 sq. ft. of cultivation is under construction. Total up-front consideration of $101M includes $41M in cash, $30M in shares and $30M in promissory notes. Earn-outs based on exceeding revenue target thresholds in 2022 will be capped at a maximum of $97M and payable in a combination of cash, promissory notes and exchangeable shares. Including the maximum earn-out consideration, the Company estimates this represents a forward multiple of ~4x 2022E Adjusted EBITDA.

Glass House Brands — Completes 5.5 Million Square Foot Southern California Greenhouse Facility Acquisition. The Company has completed its previously announced acquisition of an ~5.5 million square foot greenhouse facility located in Southern California for total consideration of $93.0M cash, reduced from $118M previously, plus stock considerations payable to the original holder of the option to purchase the SoCal Facility.

Audacious — Expands California Footprint with Retail Acquisition and EAZE Distribution Partnership. The Company entered into a binding terms sheet to acquire BW Macaw Group, Inc. (Herbs). Herbs has entered into a distribution agreement with Eaze. Additionally, the Company has two contract manufacturers lined up to commence production of the Company's products in California. In addition to the retail license that is part of the contemplated transaction, Herbs' business license also includes the ability to cultivate, manufacture (production of derivatives and edibles) and distribute cannabis products. The consideration for the transaction is $5 million, payable in stock (10-day VWAP). The Herbs dispensary (Herb’s Collective) is located in San Jose. Daytime population within a ten-mile radius from the dispensary is 1.7 million people, equating to just below one dispensary per 100,000 people. This compares favorably to the state's average at around two. The dispensary is located in a high-density traffic area at the intersection of three major freeways, further benefiting by being located adjacent to Costco, driving significant traffic to the location. AUDACIOUS intends to rebrand the dispensary and transform it into a platform for further growth in the state.

Acreage — Divests Oregon Retail Chain, Cannabliss, to Chalice Brands. Under the terms of the Asset Purchase Agreement, upon regulatory approval Acreage will divest the assets of its four Cannabliss retail stores (inclusive of a working capital surplus of $500K) – located in Portland, Eugene, and Springfield, Oregon – for total consideration of $6.5M, consisting of a $250K cash payment at the time of signing and a 10-month secured promissory note for $6.25M bearing interest of 6% for the first 5 months and 10% for the remaining 5 months. With the sale of the Cannabliss retail operations, Acreage has exited Oregon which was negatively affecting the company’s bottom line and utilizing management resources. Acreage will focus its resources on its core markets.

Fire & Flower and Hifyre — Complete Acquisitions of PotGuide and Wikileaf. With an existing base of subscribers totaling approximately 225,000, PotGuide and Wikileaf subscribers will be invited to enroll in Fire & Flower's Spark Perks™ member program to unlock unique consumer benefits and discounts. The Spark Perks™ program, which already boasts over 310,000 subscribers allows Hifyre to develop individualized customer profiles that can deliver personalized product recommendations as well as rewards and discounts on future purchases. Total consideration for the purchase of PotGuide is ~$8.5 million, payable by way of $4.0M cash consideration and 5,978,050 common shares of Fire & Flower based upon the Company's 10-day VWAP. Total consideration for the purchase of Wikileaf is $7.5M, payable by way of 8,017,103 Common Shares based upon the Company's 10-day VWAP.


📄Company Updates / Earnings

Green Dragon (Eaze) — Rolls Out Local Cannabis Delivery In Colorado. Green Dragon launched its new cannabis retail delivery service in Aurora, Colorado’s third-largest city. In addition to Aurora, Green Dragon is also gearing up to start delivery services in Denver soon with a social equity partner.

Unrivaled Brands — Launches New Cultivation Facility. The new state of the art cultivation facility was designed to supply the Company’s Korova brand with its premium, high-potency strains and has numerous technological improvements over prior cultivation operations. The building contains four flower rooms with 60 lights each and is expected to yield more than 3,500 pounds per year of expertly crafted flower.

Harborside — Strategic Agreement in Cannabis Crop Steering Research. The Company has entered into a strategic research agreement with Utah State University to conduct a study led by world-renowned plant physiologist Dr. Bruce Bugbee on cannabis crop steering. This complex cultivation approach manipulates all environmental influences to increase crop yield, improve product quality and save resources. By adjusting irrigation, lighting and climate throughout the grow cycle, proper crop steering gives cannabis growers more control over the performance of their harvest. Dr. Bugbee's research will study all influencing factors to plant growth including light intensity, CO2 levels, ambient temperatures and substrate moisture levels which affect the yield, cannabinoid potency and terpene composition of cannabis plants.

Canopy Growth — Results of Annual General and Special Shareholder Meeting. All of the matters put forward before the Company's shareholders for consideration and approval, as set out in the Company's definitive proxy statement dated July 29, 2021, were approved by the requisite majority of votes cast at the Meeting.

High Tide — Q3 Quarter 2021 Financial Results

  • Revenue increased by 99% to $48.1M (35% GM), compared to $24.1M (39% GM) in the same quarter last year. Results incorporate the acquisition of META on November 18, 2020, Smoke Cartel on March 24, 2021, FABCBD on May 10, 2021, and DHC on July 6, 2021

  • Adjusted EBITDA was $1.5M compared to $3.4M for the same quarter last year. The decrease in adjusted EBITDA was primarily due to expenses related to the up listing of the Company's stock to Nasdaq including directors' and officers' liability insurance premiums, Nasdaq listing fees, one-time professional fees, and additional human resources to support the integration of newly acquired companies. As a result of the up listing to Nasdaq, the Company became a non-venture issuer resulting in higher compliance requirements

  • $38.4M of revenue was earned in Canada, $9.6M in the U.S.

  • Cash on hand totaled $26.6M compared to $7.5M as of October 31, 2020

  • The Company also recently opened its 94th store in Canada


🏬Retail

Ontario Reaches 1,000 Dispensaries. The Canadian province of Ontario, the country’s biggest market with a population of nearly 14.8 million people, now has at least 1,000 licensed cannabis stores. The government-owned Ontario Cannabis Store (OCS), the monopoly wholesaler to those stores, said in a recent blog post that the 1,000th cannabis retailer was 6 of Spade, a Black-owned business that opened Aug. 20 in Toronto. The 1,000-store milestone marks a period of rapid market growth in the Ontario market, which initially suffered from a slow cannabis retail rollout that led to an early deficiency in legal retail outlets and correspondingly low sales. Rapid growth in Ontario’s retail cannabis sector has led to heavy competition in certain areas and complaints of retail oversaturation. Ontario retail revenues were $C120.1 ($94.6M) in June, growing 8% over May on an unadjusted basis, according to data from Statistics Canada. Ontario’s June cannabis retail sales comprised 37.7% of all Canadian regulated marijuana sales that month.

Harvest — Opens Dispensary in Kissimmee, FL (13th in FL). Additional Harvest dispensaries in Florida are located in Gainesville, Lehigh Acres, Longwood, North Jacksonville, North Miami Beach, North Port, Olympia Heights, South Jacksonville, South Miami Beach, Tallahassee, and West Palm Beach.

B Real’s Dr. Greenthumb’s Cannabis Dispensary to Open Sixth Location in La Mesa. Dr. Greenthumb’s dispensaries were founded by legendary Cypress Hill rapper and cannabis activist B Real in 2018. Dr. Greenthumb’s is known for its extensive menu of top-shelf cannabis including Insane, Alien Labs, CAM, Cannabiotix and Wonderbrett. Since the first Dr. Greenthumb’s location opened in Sylmar, the dispensary’s popularity has exploded, prompting its expansion into additional locations throughout California including: Cathedral City, downtown Los Angeles, San Francisco, Sacramento and a just signed, but not yet open, location near LAX.


🌱Product

Alpine IQ — Launches Native Apps for Dispensaries. With carrier filtration continuing to limit the ability of dispensaries to connect with their customers through traditional marketing methods, Alpine IQ’s customizable native apps solution provides a secure, highly-personal marketing channel. Specific features include: Push notification enablement, Synchronized customer journeys correspond with POS, e-commerce, and social profiles, In-app shopping and ordering on IOS, Discount tier progress, multiple redemption methodologies, and cross-device compatibility, Onboard customers directly in the apps, Refer a friend program enablement, Compliance with app stores, Consolidated feed of messages from your dispensary (Text, email, native app push, and browser push notifications). The native apps are some of the many capabilities in Alpine IQ’s suite of data-driven solutions, empowering retailers to fully own their customers’ brand experience. These products and capabilities include data management, compliance automation, omni-channel messaging, audience segmentation and more.


🧔People | 💻Hiring

Lantern — Head of People (Remote)

Lantern — Controller (Remote)


🎙️Interviews

CIN — Understanding California (ft. Hirsh Jain of Ananda Strategy)

NCV — Verano Has Closed 10 Acquisitions This Year and Is Looking for More

CannabisNow — Q&A with Matt Barnes


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