🍫 Canopy pays $297.5M for Call Option to buy Wana Brands. 🚙 Dutchie raises $350M Series D at $3.75B Valuation.

Cresco Labs acquires Laurel Harvest (PA) for $80M. Lantern spins off Drizly Group with $40M Capital. Cellibre $11.5M Series A.

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🌿Industry

Overwhelmed by illegal cannabis, Oregon county declares emergency. A county in southern Oregon says it is so overwhelmed by an increase in the number and size of illegal marijuana farms that it declared a state of emergency Wednesday, appealing to the governor and the Legislature’s leaders for help. The Jackson County Board of Commissioners said law enforcement officers and county and state regulators and code enforcers are overwhelmed and warned of an “imminent threat to the public health and safety of our citizens from the illegal production of cannabis in our county.” To reach those levels, the commissioners asked for additional state employees, state funding for the county to hire employees and contractors and for a repeal of a prohibition on local taxes on registered, legal marijuana businesses.

New Mexico explores public financing for cannabis businesses. Small-scale marijuana businesses in New Mexico could soon have access to publicly financed loans of up to $250,000 in an effort to promote social and economic fairness. The New Mexico Finance Authority on Thursday proposed a $5 million line of credit to licensed cannabis microbusinesses in a presentation to a panel of state legislators. Under the proposal, loans would be made available to cannabis “microbusinesses” that can be licensed to cultivate and sell marijuana from up to 200 plants.

Missouri Tosses Residency Requirements for Medical Cannabis Companies. A Missouri judge last week ordered a permanent injunction against the requirement in the state’s medical cannabis law which required cannabis businesses in the state to be at least 51% owned by residents, the Springfield News-Leader reports. Missouri Western District Judge Nanette Laughrey had issued a preliminary injunction against enforcing the residency requirement in June.


💵Deals

Canopy Growth — Plans to Acquire Wana Brands. The Agreements are structured as three separate option agreements whereby Canopy Growth has a call option to acquire 100% of the membership interests in each Wana Entity. As consideration for entering into the Agreements, Canopy Growth will make an upfront cash payment of $297.5 million. Upon exercise of the right to acquire each Wana Entity, Canopy Growth will make a payment equal to 15% of the fair market value of such Wana Entity at the time the option is exercised. As additional consideration for the right to acquire each Wana Entity, Canopy Growth may make additional deferred payments in respect to each Wana Entity as of the 2.5 and 5-year anniversary of the Upfront Payment, less certain deductions. At the option of Canopy Growth, the Call Option Payments and the Deferred Payments may be satisfied in cash, shares or a combination thereof at the Company's sole discretion.

Wana manufactures and sells gummies in the U.S. state of Colorado and licenses its intellectual property to partners, who manufacture, distribute, and sell Wana-branded gummies across the U.S., including California, Arizona, Illinois, Michigan, and Florida giving Wana a total footprint of 12 U.S. states currently, and across Canada. Wana expects to have license agreements in place in more than 20 U.S. states, including in future adult-use markets in New York and New Jersey, prior to the end of calendar 2022. Wana has a profitable business with a track record of generating strong revenue growth and category-leading gross and EBITDA margins. Impressively, the company did not raise any outside capital.

Headset data shows a different picture of the edibles market leader (as of 10/14/21) when looking at the past 90 days — though Wana does benefit from an early start in Canada and a larger (vs. OR/WYLD) and more mature market in Colorado (vs CA/Kiva).

Dutchie — Raises $350M Series D at $3.75B Valuation. The Company announced a $200M Series C raise at a $1.7B valuation back in March. D1 Capital Partners, with participation from existing investors, including Tiger Global, Dragoneer, DFJ Growth, Thrive Capital, Gron Ventures and Casa Verde Capital. New investors include Willoughby Capital, Glynn Capital and Park West Asset Management. The latest funding round boosts the company’s total funding to over $600 million.
Dutchie currently works with over 5,000 dispensaries in North America and processed $14 billion in annualized sales for those dispensaries, seeing 100% YoY growth with dispensaries.

Cresco Labs — Acquires Vertically Integrated Operator, Laurel Harvest, for $80M. The Transaction will include a newly constructed indoor cultivation facility in Lancaster County allowing for new cultivation capacity, with the ability to expand the facility further, and another strategic point of distribution that is complementary to Cresco Labs’ cultivation facility in Brookville. As part of the acquisition, Cresco Labs will also acquire the real estate of Laurel Harvest’s cultivation facility and Scranton dispensary. The consideration amount for the Transaction is $80M (mix of cash and stock) plus earnout based upon achievement of certain post-closing milestones.

Lantern — Spins Off Drizly Group with $40M Capital, Leadership Changes. In February 2021, Uber announced an agreement to acquire Drizly for ~$1.1 billion in stock and cash (which just closed). As part of the deal close, Lantern has transitioned to a separate corporate entity and received $40 million in capital from Drizly Group. Lantern currently offers on-demand cannabis delivery for patients and adult-use consumers in Massachusetts, Michigan, and Colorado. Company President Meredith Mahoney named Co-Founder and CEO; Co-Founder Justin Robinson transitions to full-time role at Lantern; Head of Industry Affairs Katie Neer named General Counsel; Akele Parnell, Head of Equity Partnerships, to lead incubator program.

Pelorus Equity Group — Secures up to $20M Line of Credit at 4.75% with a FDIC Insured Bank. Along with the recent closing of $42.2M Senior Unsecured Notes with a 7% fixed coupon rate, Pelorus is now able to offer a lower cost fully stabilized lending product to borrowers looking to reduce their cost of financing. To date, Pelorus has completed 58 commercial real-estate loan transactions and has deployed $225MM to cannabis businesses and real estate owners, comprising 1,850,000 sq. ft. sq. ft. in eight states across the U.S.

Cellibre — $11.5M Series A Funding to Commercialize Cultured Cannabinoid Platform. Cellibre, a sustainable manufacturing technology company that employs an organism-agnostic approach to turn cells into specialized factories to produce globally significant products at scale announced today the close of an oversubscribed and upsized Series A financing. The round was led by Merida Capital with participation from Cellibre company founders, as well as, Scott Gordon, Flatiron Venture Partners, L2V, Entourage Effect Capital, and Delta Emerald Ventures. In a recent paper published in Nature Sustainability, it was estimated that the current greenhouse gas footprint of US cannabis production was equivalent to the annual emissions from over 15 million vehicles. Cellibre's patented technology could reduce the resources required to make cannabinoid-based products by as much as 100-fold. In addition, the Company's technology also solves longstanding supply chain issues associated with high costs, inconsistent production, contamination risks, testing requirements for traditional agriculture, and the evolving regulatory environment within the $100+ billion cannabinoid product market.

AeroPay x Jane Technologies — Partner to Enable Online Payments Nationwide for Dispensaries and Brands. The AeroPay payment method allows cannabis consumers to seamlessly pay for pickup or delivery orders directly from the dispensary or brand's checkout page on mobile or web.

GrowGeneration — Mutual Termination of HGS Acquisition, Enters New Mexico with Acquisition of All Seasons Gardening. The two companies will continue to work together to develop a mutually beneficial working relationship. The Company also announced its acquisition of All Seasons Gardening, an indoor-outdoor garden supply center specializing in hydroponics systems, lighting, and nutrients. All Seasons Gardening is the largest hydroponics retailer in New Mexico. With the acquisition of All Seasons Gardening, GrowGen's portfolio of hydroponic garden centers now includes 63 stores across 13 states.


📄Company Updates / Earnings

GTI — Inaugural Recipients of Good Green Grants. Good Green is the company’s newest flower brand delivering a high-quality, affordable product that gives back to communities disproportionately affected by the War on Drugs. Each organization selected fits one of Good Green’s core pillars: education, employment and expungement. The three recipients received unrestricted grants of $75,000 that will be used to advance each organization’s mission. The initial beneficiaries are:

  • Philadelphia Lawyers for Social Equity: The Philadelphia Lawyers for Social Equity provides free legal advice and representation to low-income Philadelphia residents who are held back by their criminal records, seeking expungements and pardons and leading systemic reform.

  • Innovation Works Baltimore: Innovation Works Baltimore aims to help close neighborhood, racial and wealth divides by connecting neighborhoods, entrepreneurs and investors to create jobs and long-term social enterprises that will ignite and transform local economies.

  • Why Not Prosper, Philadelphia: Founded by formerly incarcerated women, Why Not Prosper provides pre-release mentoring to incarcerated women as well as residential and community services to help incarcerated Pennsylvania women transition successfully from prison to reentering society.

Greenrose Acquisition Corp. — Extension of Time to Consummate Business Combinations. The Company is exercising its option to extend the time available to consummate its previously announced business combinations to November 13, 2021.


🏬Retail / Cultivation

Trulieve — Opens 97th FL store in Cutler Bay.

One Plant Florida Dispensaries Transition to Sunnyside. Effective immediately, eight One Plant locations in Avon Park, Bonita Springs, Boynton Beach, Orlando-Fern Park, Jacksonville, Ocala, Port St. Lucie and St. Petersburg have transitioned to Sunnyside. This August, Cresco Labs opened its first full-concept Sunnyside in Fort Lauderdale. Additional locations are planned to open this year.

Developer files paperwork to start building $200M cannabis plant in South Buffalo. Zephyr Investments LLC, led by Brad Termini, filed documents with the Buffalo Planning Board to seek approval on the first phase of the complex in the Buffalo Lakeside Commerce Park. The planning board will consider a site plan review Oct. 25.


🌱Product

Curaleaf — Select Brand Diversifies Edible Offerings with New Select Snooze Bites.

Designed for the perfect wind-down, Snooze Bites combine a unique 1:1 ratio of fast-acting THC and long-lasting CBN. The scientifically developed formula incorporates 5mg of nano-encapsulated THC, which is made by creating tiny, water-soluble molecules from cannabis oil and is therefore quickly absorbed into the bloodstream with effects typically experienced within 15 to 30 minutes.

Columbia Care — Launches Legacy California Cannabis Brand, Classix, in Five New Markets Across the U.S. Classix, a heritage California product brand, launched in five additional markets – Arizona, Delaware, Illinois, Massachusetts and New Jersey. Classix products are now available in a number of the Company’s dispensaries, including Cannabist, and third party partners in six markets.

Hi5 — Cannabis-Infused Beverages will be available in Maine. Hi5, a fast-acting cannabis infused seltzer brand by Theory Wellness, will be available in Maine exclusively at Theory Wellness retail locations beginning today, Friday, Oct. 15. Hi5 has experienced rapid growth in Massachusetts with roughly three-quarters of a million cans sold since it was initially released in March 2021.

Hector "HECZ" Rodriguez Launches Cannabis Brand. Gaming entrepreneur Hector "HECZ" Rodriguez, founder and CEO of OpTic Gaming, launches his latest venture: Pine Park - a premium cannabis and hemp brand rooted in nostalgia and committed to the discovery and development of the industry. To bring the Pine Park world to life, Rodriguez has partnered with a network of independent cannabis farmers, including Jason Morgan, a Santa Cruz, CA native and third generation strawberry farmer. Morgan's intimate 9,000 square foot mixed light facility serves as the primary research and development center for Rodriguez's favorite strains and,  eventually , proprietary Pine Park genetics. To provide an assortment of their best strains in Indica, Sativa and Hybrid SKUs, Rodriguez has tapped two widely respected farms in the Salinas Valley, Waverider Nursery and Posibl Project.

Happi — Cannabis-Infused Sparkling Water Celebrating Life's Happy Moments. Happi is brought to market by Michigan-based founder Joe Reynolds, who understood that women are seeking an easy way to enjoy just the right dose of cannabis, and President Lisa Hurwitz, a veteran of both the CPG and cannabis industries with a career-long focus on women's brands and products. Happi is produced by Redbud Roots, one of Michigan's premier manufacturers of cannabis products.


🧔People

SPARC — President & COO Sean Kelley Steps Down. He steps down from day-to-day responsibilities after 5 years at the Company.

Texas Original Compassionate Cultivation (TOCC) — Strengthens Operations with Team Promotions and Additions. After announcing the company’s expansion to Bastrop, Texas, and the hiring of its new CFO, Steven Yoo, TXOG is bolstering its product operations amid increased demand as newly qualified patients join the recently expanded Compassionate Use Program. William Doolan has been promoted to VP of Product Operations and Jason Sanders to Director of Cultivation. The company also hired Meghan Clough as Director of Product Management, who most recently served as senior product manager at YETI.

Curio Wellness — Names Rob Bellezza, Former Unilever Senior Operations Leader, as COO. Rob comes to Curio from Unilever, where he held several leadership roles at multiple companies within the supply chain, procurement, and integration functions at both regional and global levels. This includes nine years as the Head of Operations at Ben & Jerry’s, a Unilever company, where he spearheaded expansion of the facilities, embedded World Class Manufacturing and delivered sustainable efficiencies. Most recently, Rob served as Head of Supply Chain overseeing the End-to-End operations for Seventh Generation, also a Unilever company.

AWH — T. Andrew Brown to serve as President of AWH New York. Brown will put his more than 35 years of experience in the legal and government sectors to work in building relationships with state and local elected officials, the Office of Cannabis Management, and industry stakeholders. Brown currently serves as the President of the New York State Bar Association and previously was the general counsel of the National Bar Association.


🎙️Interviews

Burb, Green Label and Coffee & Kush: Partnership over Competition. Building the Cannabis Avengers with Burb, Green Label, and Jason ‘Problem’ Martin’s Coffee & Kush, connecting Canada and California.

Sayshu of MM Fund — Investing for the Future of Cannabis. Sayshu discusses different ways to approach investing and the brand story in U.S. Cannabis.

How The Cure Company Became A $100 Million Cannabis Brand. Very few cannabis companies grow weed as consistently and with a massive, devoted following as The Cure Company. Its parent, Perennial, operates an impressive umbrella of brands and storefronts including The Originals, Kush Valley Collective, Lifts Prerolls, DTPG Collective, Freeway Cannabis made in collaboration with Rick Ross, and more.

SALT — Investing in Cannabis: Analyzing the Industry’s Future. Analyzing the Industry’s Future with Jennifer Drake, AYR Wellness. David Feuerstein, Feuerstein Kulick. Rob Sechrist, Pelorus. Emily Paxhia, Poseidon.

Sundial's CEO Talks Cannabis Industry Expectations, Says US May Repeat Some Of Canada's Mistakes at Benzinga Cannabis Capital Conference. When it comes to America, George said it has a clear, massive total addressable market with many opportunities, but also a lack of capital, an issue many people assume federal legalization would resolve. What are we going to see in case of federal legalization is the wrong companies getting capitalized and too much competition, the CEO said.

GrowGeneration Opts for Build Over Buy on Way to 100 Stores in 2023. Co-Founder and CEO Darren Lampert talks about the current markets, recent acquisitions and 2021 projections.

Keith Stephenson: Legacy and Longevity in the Volatile Cannabis Industry. Stephenson is the founder and CEO of Purple Heart, the longest-running cannabis dispensary in Oakland, CA, and the country’s first Black-owned cannabis business.


👋 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.