🏬 Columbia Care Launches "Cannabist" Retail Brand

Trulieve acquires Harvest in $2.1B stock deal. Verano $130M Senior Secured Term Toan at 9.75%. Holistic Industries raises $55M. Boston Beer Company to start R&D of Non-alcoholic Cannabis Beverages.


🌿Industry

Marijuana industry expected to add $92 Billion to US economy in 2021.

The total U.S. economic impact from marijuana sales in 2021 is expected to reach $92B—up 30%+ from last year, and is expected to be worth upwards of $160B in 2025, according to analysis from the newly published MJBizFactbook. To measure the industry’s economic impact, MJBizDaily analyzed similar industries and applied a standard multiplier of 3.5x (i.e., for every $1 spent at dispensaries, an additional $2.50 will be injected into the economy, much of it at the local level) on projected recreational and medical marijuana retail sales. The numbers are a best guess because the marijuana industry’s structure is somewhat unique because it encompasses agricultural, manufacturing and retail activity.

The Boston Beer Company to Begin Research and Development of Non-alcoholic Cannabis Beverages. The Boston Beer Company is establishing a subsidiary to serve as a dedicated research and innovation hub in Canada focused on non-alcoholic cannabis beverages. Boston Beer, the maker of recognized alcohol brands such as Samuel Adams and Truly Hard Seltzer, hopes to continue its industry-leading track record of innovation in this emerging space. Boston Beer has hired industry veteran Paul Weaver to lead a new cannabis beverage research hub in the federally regulated market of Canada.  This new subsidiary will enable the company to develop and pilot unique cannabis beverages while cannabis regulations continue to evolve in the United States and worldwide.

Weed and Wine Come Together in Santa Ynez Valley. For 30 years now, Sunstone Winery has provided the Santa Ynez Valley one of its more famously photographed touchstones, shifting from “Tuscan-inspired” villa in wedding albums to “futuristic French chateau,” at least for purposes of one recent Star Trek show. This week, the new owners of Sunstone took it to the next level of improbability, announcing they’d secured the necessary planning permits to cultivate cannabis where for 30 years organic wine grapes have been grown. This marks the first-time cannabis and viniculture — often presented as intractable foes — will coexist in peaceful commercial cultivation at the same time and the same place in Santa Barbara County. 

Perhaps more remarkable, Sunstone’s new owners managed to negotiate an understanding with seven neighbors — several of whom are big names in the wine industry — and effectively defanged what could easily have escalated into another drawn-out appeals battle waged in front of the Planning Commission and Board of Supervisors. At maximum build-out, Sunstone will be planting only 6.5 acres of cannabis. That’s hardly anything compared to some of the bigger proposals wending their way through the county’s approval process. And it will be phased in gradually over a three-year period. Next March, Teddy Cabugos said, he will plant two acres; the year after that, he will plant another three. And the year after that, another one and a half. “I want to make sure there are no adverse effects for my own grapes,” he said. 

Aster Farms releases first of its kind Sustainability report.

  • Water Use. Aster Farms utilizes three sources of water; an on-site well, a licensed diversion from a spring, and a 400,000g agricultural (ag) pond. The ag pond fills with rain and spring water during the winter and is supplemented by the well during dry months.

  • Increase water delivery efficiencies. Upgrading the irrigation system, replacing drip lines and relining the ag pond to reduce water loss from leaks. To reduce water evaporation once water is delivered to the plants, they have implemented two strategies—covering the ground around the plants with straw to protect the moist soil from the sun and watering at night when less evaporation occurs.

  • Greenhouse Gas. Practices no-till farming, sourcing locally (within 50 mile radius), buying in bulk and repurposing materials onsite. The less deliveries, less time on the road and less they purchase, the less CO2e we are responsible for

  • Solid Waste. Compost all of their “green waste” on site and once ready, mix it back into the soil to feed the plants. For non-organic solid waste they do our best to minimize by purchasing in bulk and choosing glass over plastic for packaging. For example, they prevented 729 plastic soil bags from arriving at their farm by having the potting soil delivered in a dump truck. Moral of the story? Buy more bulk

  • Energy Use. Utilize a combination of PG&E grid and solar power. Their light deprivation greenhouse and processing facility are connected to the grid, while their well and irrigation pumps are solar powered.

  • Sustainable Community. In 2020, Aster Farms worked closely with Success Centers in SF and OUR Academy. They provided expertise to the organizations, workshopped with and mentored equity applicants in the industry and also supported with donations. They work closely with equity retailers in The Bay Area, they hire BIPOC, veterans, LGBTQ+, people with criminal records. And will continue to do so. Full stop.

Other highlights:

Colorado’s first-quarter retail Cannabis sales up 28% from 2020

HEXO announces US production facility in Colorado

What is Delta-8-THC? Is it safe?

Colorado bans delta-8 THC, other THC isomers derived from hemp


💵Deals

Trulieve — the Largest US Cannabis Transaction; Acquisition of Harvest Health & Recreation; Creates the Most Profitable Multi-State Operator in the World's Largest Cannabis Market. [more here]

Holistic Industries — $55M Raise. Holistic Industries raised $55M in the form of a convertible note. The proceeds from the oversubscribed offering, led by the Harbert Stoneview Fund, will be used to drive expansion into newly licensed markets, including Missouri and West Virginia, expansion into additional markets, M&A activity the company is currently pursuing, as well as launches of new brands and product innovations.

Verano — Upsizes Existing Credit Agreement by $100M (9.75% Interest). Verano has entered into an Amended and Restated Credit Agreement for a senior secured term loan of $130M. The Restated Credit Agreement has a maturity date of May 30, 2023, and provides for additional, non-dilutive funding of $100M, with an annual interest rate of 9.75% for the incremental amount. Chicago Atlantic will act as the administrative agent and collateral agent.

Mercer Park Brand Acquisition Corp. (SPAC) — Extension and Expected Cash Amount. To facilitate the closing of the Glass House Group Transaction, the holders of the Company’s class A restricted voting shares have approved an extension of the Company’s permitted timeline to complete a qualifying transaction to July 30, 2021. After processing notices of redemption received with respect to the Extension, BRND expects that immediately prior to the closing of the Glass House Group Transaction it will have an aggregate of ~$266M (assuming no additional redemptions and including the previously announced private placement expected to close concurrently with the Glass House Transaction) to fund its growth strategy and pay transaction expenses. 22,406,149 class A restricted voting shares were redeemed in connection with the Extension.

[Note: The IPO raised $402.5M, an additional $85M Private Placement was raised with the announcement, which at the time, expected up to $355M Cash Balance at Closing]

Grupo Flor — Acquires San Jose’s White Fire Dispensary. Grupo Flor will acquire White Fire (San Jose) for $16M. Established in 2015, the dispensary adds to Grupo Flor’s expanding portfolio, which currently includes the East of Eden branded dispensaries in Salinas and Moss Landing, and a new Flor dispensary set to open this summer in Union City. Once open, the Union City shop will be the first cannabis dispensary in the nation located in a regional supercenter boasting over 11M visitors a year. Grupo Flor’s VP Retail Mike Bitar adds that the company plans to open an additional White Fire outlet in Prunedale before Q3 2021.

Vibe — Expands to Massachusetts Market. An entity controlled by Vibe, Page Cultivate LLC, has received Phase 2 approval from the City of Springfield, Massachusetts to build a new, state of the art cannabis cultivation facility. As the only successful cultivation applicant, Page/Vibe will now proceed to Springfield's Phase 2 Host Community Agreement (HCA) and City Council review process. The facility is designed to achieve cannabis flower yields in excess of 14,000 pounds per annum (47,000 sq. ft., double-tiered cultivation facility). 

Other highlights:

Verano — Filing of C$1.25B Preliminary Base Shelf Prospectus

Parallel — Sale-Leaseback Transaction in Pennsylvania with IIP for ~$68M


📄Earnings

Curaleaf — First Quarter 2021

  • First Quarter 2021 Revenue of $260M, up 170% YoY and up 13% Sequentially; 2021 Adjusted EBITDA of $63M, up 213% YoY and up 16% Sequentially, Achieving a Margin of 24%; Revenue Guidance for Q2 2021 of $305—$315M

  • As of March 31, 2021, the Company had $315M of cash and $340M of outstanding debt net of unamortized debt discounts

GTI — First Quarter 2021 Results

  • Revenue increased 9.7% sequentially and 89.5% Y/Y to $194.4M

  • Adjusted EBITDA grew 9.0% sequentially and 179.3% Y/Y to $71.4M (36.7% margin)

  • $10.4M GAAP net income ($0.05 EPS)

  • $39.7M cash flow from operations

Vireo Health — First Quarter 2021 Financial Results

  • Q1 GAAP Revenue of $13.2M (42.6% GM), increased 9% compared to Q1 2020

  • Excluding former PA subsidiaries, Q1 revenue increased 30% YoY and 14% sequentially

  • EBITDA loss of $3.6M compared to a loss of $5.0M in Q1 2020. Adjusted EBITDA was a loss of $1.8M, as compared to a loss of $3.1M in Q1 2020

  • Cash: As of March 31, 2021, cash on hand of $40.6M. Total current liabilities were $24.1M, with $2.0M in debt due within 12 months

Harvest Health & Recreation — First Quarter 2021

  • First quarter revenue was $88.8M, up 101% from the first quarter 2020 and 27% sequentially; First quarter net loss before non-controlling interest was $23.0M, compared to $7.4M in the fourth quarter 2020; Adjusted EBITDA was $26.9M in the first quarter, up 196% compared to $9.1M in the fourth quarter 2020. 2021 revenue target increased to at least $400M

Schwazze — First Quarter 2021 Results

  • Revenue increased 504% to $19.3M compared to $3.2M during the same period

  • Proforma Revenue estimated at $26.8M

  • Raising Low End of Guidance—Total Revenue of $110—$125M; Adjusted EBITDA of $30—$36M

MedMen — Third Quarter Fiscal Year 2021

  • Third quarter revenue of $32.0M, up 3.8% Q/Q adjusting for removal of MedMen NY Inc. from continuing operations; Total Retail Adjusted EBITDA increased to $8.5M from $6.0M Q/Q, for a 22.5% margin, and Total Retail Adjusted EBITDA from continuing operations increased to $7.4M from $5.5M Q/Q (23.3% margin)

Flower One — First Quarter 2021 Results (preliminary)

  • Revenue: $13.5M+; As of March 2021, the Company is now the top flower provider in Nevada, Produces #1 (Cookies) and #2 (NLVO, the Company’s in-house brand) top-selling flower brands in the state; Also the leading producer of distillate, bulk and white label flower sales in Nevada

GrowGeneration — First Quarter 2021 Financial Results

  • Revenue increased 173% to $90M; 2021 Revenue Guidance Raised to $450—$470M and Adjusted EBITDA Guidance to $54—$58M; Comparable Store Sales for the Quarter Increased 51% from Prior Year; $0.10 EPS

Hydrofarm — First Quarter 2021 Results

  • First Quarter 2021 Highlights vs. Prior Year Period: $111.4M compared to $66.9M Net sales, 66.5% growth. Gross profit increased 100.8% to $23.2M (20.8% GM), compared to $11.6M (17.3% GM). Net income was $4.9M ($0.13 EPS) compared to a net loss of ($3.7M) (($0.18) EPS). Pro forma adjusted Net Income(1) was $7.3M ($0.19 EPS) compared to a loss of $(1.6M) ($(0.05) EPS). Adjusted EBITDA increased to $9.9M compared to $1.6M.

  • Recent Developments: Completed follow-on equity offering raising ~$309.8M in net proceeds. Completed the acquisition of branded nutrient manufacturer, HEAVY 16.

  • Revised Full Year 2021 Outlook vs. Prior Year: Net sales growth of 30% to 40%. Adjusted EBITDA of $36.0—$42.0M.


🧔People

TILT Holdings — President Gary Santo to Succeed Mark Scatterday as CEO; Scatterday to Continue Serving as Chairman of the Board. Santo was appointed President of TILT in October 2020. Since that time, he has solidified TILT’s B2B strategy, executed on strategic distribution and brand partnerships, and made key hires across compliance, marketing and human resources. He brings more than 25 years of experience leading lean, high-performance teams in consumer credit, financial services, gaming and technology, higher education and specialty-pharma. He has held a variety of senior roles at The First Marblehead Corporation, Fitch Ratings, International Game Technology, Lantheus Medical Imaging and most recently, Columbia Care.

The Parent Company — appoints CEO of Roc Nation, Desiree Perez to Board. Within her current position, Perez has played a key role in every significant deal Roc Nation has made in the past decade—from negotiating the worldwide touring deal between JAY-Z and Livenation, to expanding JAY-Z’s portfolio with the product launches of successful luxury liquor brands D’Usse cognac and Ace of Spades champagne, to securing a worldwide partnership with Universal Music Group—all while overseeing the company’s day-to-day operations. Prior to becoming CEO, Perez served as Roc Nation’s Co-Founder & COO for 12 years.

Schwazze — Formation of R&D Subsidiary, Schwazze Biosciences Ltd. Jeff Garwood, former CEO of GE Water & Process Technologies and current board member of Schwazze, will be the Chairman of the Management Board that includes Nirup Krishnamurthy, COO, who holds a PhD in operations research, and Jim Parco, SVP of Manufacturing, who holds a PhD in experimental economics, will head the new R&D entity as its inaugural President. Remy Kachadourian, who holds a PhD in chemistry, has also joined the newly formed subsidiary as the Director of Innovation and Quality.


🏬Retail

Columbia Care Rebrands With Apple-inspired “Cannabist” Retail Experiences. The weed cultivator and manufacturer, with a reputation as a medical supplier, is aligning its retail properties across the country under one name: Cannabist. Columbia Care will remain as the parent company, operating redesigned dispensaries across the country that aim to attract the growing number of Americans who are looking into cannabis for recreational use, as well as medicinal purposes. As such, the new retail spaces are inspired by the hospitality industry as well as the Apple Genius bar and the sophisticated style of Starbucks. Previously, Columbia Care dispensaries had the product available in boxes behind the cashier. The new dispensaries place the weed strains front and center. There’s also now bar areas for discovery and self-serve kiosks. The design of the new shops pays homage to the fact that Columbia Care began in New York with an art deco design and aesthetic, and designed with the three core pillars of the brand in mind: “Higher knowledge, higher standard and higher experience.”

The first location to launch under the Cannabist brand is the recently opened dispensary in Springville, Utah. By the end of May, three existing Columbia Care locations, in Tempe, AZ, Villa Park, IL, and San Diego, CA, will become Cannabist branded retail locations, with a pipeline of more than 80 new and existing locations to follow over the next 24 months.

[Note: I see a Media Company (Cannabist) acquisition in the Company’s future]

GTI and COOKIES — Grand Opening of COOKIES on the Strip in Las Vegas

Glass House Group — awarded two additional Santa Barbara Retail Licenses. The Company has been awarded two additional retail licenses by Santa Barbara County to open adult-use dispensaries in Santa Ynez and Isla Vista. With the additional dispensary licenses, Glass House will expand its retail footprint to six throughout California, adding to its existing operating locations in the City of Santa BarbaraBerkeleySanta Ana, and Los Angeles. The Santa Ynez and Isla Vista locations are expected to open in the Q1 2022.

Harborside — Receives Approval to Commence Adult-Use Sales at San Leandro Dispensary. The company is moving to a more efficient location in San Leandro. As a result of the planned move, Harborside expects to be able to generate substantially more revenue and be more profitable by reducing its operating costs by more than $2M over the 10-year lease term.


🌱Product

Ayr Wellness — Launch of Revel Premium Flower in Pennsylvania. The initial launch will include five strains of flower, including First Class Funk, Mango Skunk, MR OG, Tangarang, and Zombie Kush. In June, Ayr will introduce Revel vape cartridges, concentrates, RSO and tinctures to the Pennsylvania market. The Company plans to expand the Revel line to additional states over the coming months.

Curaleaf International — Launches Range of Medical Cannabis Products in Germany. The initial launch of a high THC oil product aims to meet immediate patient demand and will be extended over the course of the year to incorporate a number of different strengths and THC/CBD formulations in both oil and flower formats, addressing a wide range of patient needs. Germany is Europe's largest medical cannabis market and is expected to be worth $2.1B by 2025.

High Times — Launches Premium Cannabis in California & Michigan. Providing the choice cultivars from growers across California and Michigan, High Times Black Label aims to deliver the best curated product selection the region has to offer. Sold as hand-trimmed eighths of flower, and as single full gram joints, or in 5 half-gram joint packs, the collection is competitively priced from $15 - $55, allowing even the most price-conscious consumers access to high quality goods.

Sungrown Cannabis Takes On Indoor Bud In Head-To-Head Challenge. To get the word out about the triumph of outdoor flower over indoor bud, Flow Cannabis Co. has created a video about the #Sungrownchallenge. Each time the video is shared on social media will trigger a $5 donation to support Planting Justice, an Oakland, California nonprofit dedicated to food justice and community healing through planting, growing and harvesting healthy food, up to a maximum donation of $10,000.


🎙️Interviews

Gage Growth CEO, Fabian Monaco, On Possible M&A, How Michigan Could Become No. 2 Cannabis Market, SAFE Banking Act. Gage is looking for acquisition deals, Gage execs have visited about 10 states in recent months as part of the company’s cannabis market research. Illinois, Massachusetts, New Jersey, Maryland, Pennsylvania and Ohio are markets of interest that have similar demographics and consumption habits as Michigan.

Bespoke Financial Wants To Be More Than Just a Lender. It Wants To Be Stripe for Cannabis. In April, Bespoke raised $8M in Series A funding to expand a broader tech platform built on top of its underwriting model. A sort of Stripe-but-for-cannabis, the software aims to connect with banking systems, point of sales systems, compliance platforms and accounting packages like QuickBooks. In combination with a suite of lending options, Bespoke allows cannabis companies more flexibility in how they order, invoice, borrow and pay

Evelyn Wang (Papa & Barkley CEO) x Asian Americans for Cannabis Education.

The premise of scaling audience and testimonials is something applicable across all our market channels, and the difference by channel is how you direct the traffic. In the California dispensary channel, it’s about tapping into that audience and directing traffic into the store. We are unique in that we also have national retail and DTC business, and so that becomes about directing traffic to transact online or at a national retailer.”


💻Hiring

Cookies — Senior Director of Growth Marketing (SF)

Urbn Leaf — Marketing Operations Manager (San Diego)

Weedmaps — Director, Strategic Initiatives (Irvine)


👋 Newsletter curated by Dai Truong.