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💳 Debt continues to dominate financings (93% of capital raised past 3 Quarters)
Curaleaf Edgewater Park (NJ) taking longer than exepected to open. DoorDash Canada x Superette enter into partnership for pickup. Fluresh (MI) raised $48M debt at favorable rate.
I’ll be at Hall of Flowers tomorrow, so excited to see which brands are making an appearance given the last one in Palm Springs was just five months ago in December. I’ve heard from several CA brands already that they are not going to have a booth presence but may attend to keep up with what other companies are doing. I’m also co-hosting a breakfast event to kick off Day 2 of Hall of Flowers with Alpine IQ, Bespoke Financial, and MediaJel. If you’re interesting in the networking breakfast (125 RSVPs already), reply to this email and I’ll send you the eventbrite link.
Also—the last two podcasts uploaded are from Alpine IQ and Bespoke Financial, give them a listen to learn more about the companies and founders, who will be at the event tomorrow as well.
Stifel cuts cannabis industry projections. Stifel analyst W. Andrew Carter trimmed his view for the total 2022 U.S. cannabis sales to $27.2 billion from an earlier estimate of $28.6 billion amid decelerating category growth, oversupply, outsized pressure on lower income consumer spending, rising input cost inflation and increased capital costs. Stifel reiterated sell ratings on Aurora Cannabis and Canopy Growth because of an “increasingly difficult Canadian market.” WM Technology stands out as “the best positioned” cannabis name to capitalize on category growth, with shares that continue to undervalue a “robust” growth outlook, he said. Carter also remains “increasingly positive” on Cronos on strength in its Spinach cannabis business, as well as accessories seller GrowGeneration on its supply chain skills. (MarketWatch)
What the changing face of financing means for US cannabis cultivation, retail sectors. Equity issuance dried up as the optimism regarding federal legalization evaporated and stock prices again plunged. From Q3 2021 through the Q1 2022, debt accounted for 93% of total financing, with private companies raising a record 10% of that total. Viridian Capital Advisors expects that trend to continue through 2022. Public companies are loathe to raise equity for two reasons: 1) prices are well below perceived intrinsic values and 2) hope for legalization reform that could enable uplisting is freezing the market. (MJBizDaily)
DoorDash Canada will offer cannabis pickup on its app in partnership with Superette. Superette and DoorDash Canada both recognize the growing expectations of customers who want to access the best of their neighborhood through the convenience of an app. This partnership will address that growing demand by bringing Superette's in-store shopping experience onto the DoorDash app. The partnership will give consumers access to curated menus and special collections that reflect the best of the locale in which each store is based. (Press Release)
New Mexico sold $22 million in recreational cannabis in April. After one month of recreational cannabis sales in New Mexico, retailers sold $22.1 million in April according to new data released by the Cannabis Control Division (CCD.) Albuquerque had the most sales, totaling just over $8 million in recreational cannabis sales that month. Las Cruces came in second place, selling $2.06 million. Santa Fe sold a bit over $1.8 million worth of recreational cannabis in April. Sales began on April 1, 2022. The CCD also reports that sales in communities near the Texas border were strong. Hobbs and Sunland Park each sold more than $1 million worth of recreational cannabis, earning those cities a spot in the top-five New Mexico cities in terms of sales. (KRQE)
It’s taking longer than expected for N.J.’s 13th legal weed dispensary to open. Unlike its competitors, the Curaleaf-owned medical marijuana dispensary in Edgewater Park did not open its doors to customers seeking to buy adult legal weed during the state’s big launch on April 21. Instead, a police officer patrolled the Edgewater Park site and turned away traffic for most of the day. A large electronic sign board flashed the words, “No recreational cannabis sold here,” while multiple officers along Route 130 turned away more than 750 cars whose occupants were not there for medical cannabis. At first, it was expected to take a few extra days for the dispensary to work out minor glitches with the township and become the state’s 13th legal weed site. But it will likely be weeks, maybe even months, before Curaleaf Edgewater Park will open because it needs a much bigger parking lot, according to the land use attorney and engineer for Edgewater Park Township. (NJ.com)
Inside Seth Rogen’s Cannabis Company Headquarters. The comedian and his business partner, Evan Goldberg, turned a Los Angeles bungalow into a stylish place to test out their elevated cannabis products. The brand operates out of a 1918-built Los Angeles bungalow that Rogen shows off in a new YouTube video for AD. “We did not set out to base Houseplant out of a house,” the comedian says at the start of the tour—but it makes perfect sense. “A lot of our products are home goods. We found that being able to see them in a home setting was invaluable.” (AD)
Fluresh Closes senior secured note with a federally regulated commercial bank headquartered in southeast Michigan. The secured Bank Note closed on December 28, 2021, and is for aggregate gross proceeds of $25M. The Bank Note has a variable interest rate and, at the time of closing, bore an interest rate of 5.75% per annum with 50% of the aggregate proceeds capped at 7.0%. The lender also completed a $23M debt refinancing of Fluresh's Grand Rapids, MI property alongside the closing of Fluresh's Bank Note. The Grand Rapids property is owned by a real estate development company managed by two of Fluresh's founders.
AFC Gamma enters into $60M Senior Secured Revolving Credit Facility with Commitments from Two FDIC-Insured Banks and the ability to increase the facility to $100M. The two banks have over $70 billion of assets in the aggregate. The Credit Facility has a maturity date of April 29, 2025 and will bear interest at a floating rate of Prime + 0.50%, subject to a Prime floor of 4.00%. Upon closing the Credit Facility, AFC Gamma terminated its prior $75M revolver that was provided by AFC Finance, LLC, an affiliate of Leonard Tannenbaum, AFC Gamma’s CEO.
Ethos Cannabis Expands into Ohio with Cultivation and Dispensary Acquisitions. In December 2021, Ethos acquired Agri-Med Ohio, a Tier II Medical Cultivation Licensee located in Langsville, OH. Agri-Med Ohio is being integrated into the Ethos platform to further enhance and expand operations. Ethos will continue to produce the Meigs County line of products and looks forward to introducing additional products to the Ohio market in the future. In April 2022, Ethos acquired About Wellness Ohio, a medical dispensary licensee located in the Greater Cincinnati Area in Lebanon.
Trulieve Acquires Greenhouse Wellness West Virginia. Greenhouse was awarded the dispensary permit in Martinsburg, West Virginia, in January 2021. This location, combined with Trulieve's nine other dispensary permits, are spread across many of the most populous areas in the state. Trulieve currently operates medical dispensaries in Morgantown and Weston. Several new locations are slated to open throughout the state in the coming months. Trulieve paid an immaterial amount of cash consideration for the transaction.
Harborside Converts $5.9M Promissory Note to Equity. A promissory note in the amount of $6.2M, which includes principal, interest and fees, has been repaid by: (i) a cash payment in the amount of $358.5K; and (ii) the issuance of $5.9M worth of stock at a price of $0.35/share, that being 16,660,993 shares. The Note, which was issued in July 2021 by Urbn Leaf in relation to a bridge financing, is now considered to be paid in full and is no longer outstanding.
Glass House Brands Completes Acquisition of PLUS. The Company acquired PLUS for ~$25.6M through a combination of unsecured convertible debt and equity, plus additional performance-based consideration. According to BDSA, the Company's house cannabis brand, Glass House Farms, was the No. 1 ranked flower brand by sales in California in Q1 2022. PLUS is a leading edibles brand in California and was the No. 4 ranked edibles brand in California by sales in Q1 2022.
Glass House Brands to Acquire Remaining Equity, Property Ownership in The Pottery Dispensary. Glass House currently owns 50% of each the equity and property ownership interest in the dispensary. Under the terms of the Agreement, Glass House will acquire all of the equity interests of N.R.O. Management, LLC, and The Pottery, Inc. for 500,000 equity shares of Glass House set at a fixed price of $6 per share. The shares will have a one-year lock-up period from the closing date. As part of the transaction, Glass House will also acquire The Pottery's three active state cannabis retailer, distributor, and cultivation licenses; as well as six city-level adult-use and medical cannabis retailer, distributor, and cultivation licenses. In addition, Glass House has committed to acquire all of the undivided ownership interests in the Property held by TLMD Holdings, LLC and TLMD Real Estate Holdings, LLC, respectively, for $3,005,000 in cash.
Innovative Industrial Properties Expands Real Estate Partnership with PharmaCann at New York Property. IIP provides PharmaCann with $45.0M in funding for the development of a new 98,000 sq ft industrial building for cultivation and significant enhancements in production capacity and additional upgrades at the existing 127,000 sq ft facility in NY.
Fire & Flower Exercise Series B Warrants by Circle K owner Alimentation Couche-Tard (ACT). The Company received gross proceeds of $37,794,556 (the "Proceeds") from the exercise of the Series B Warrants, comprising (a) 6,717,554 Series B Warrants exercised at a price of $4.5103, representing the 20-day volume-weighted average price of the common shares of the Company and (b) 1,580,513 Series B Warrants exercised at a price of $4.7732, in each case, in accordance with the terms of the Series B Warrant Certificate. Following the exercise of the Series B Warrants, ACT's ownership of common shares of Fire & Flower increased by ~14.5% to approximately 35.3%. ACT also holds $2.4M principal amount of 8.0% convertible debentures and 17,796,284 share purchase warrants. The Series C Warrants are exercisable between October 1, 2022 and June 30, 2023 at an exercise price equal to the lesser of (A) $30.00; and (B) 125% of the 20-day VWAP of the Fire & Flower common shares on the last trading day prior to the date on which the Series C Warrants are exercised.
Akanda Completes Acquisition of Holigen, Advancing Cannabis Leadership Position in Europe, the Middle East and Africa (EMEA). Under terms of the agreement, Akanda acquired 100% of the issued and outstanding shares of Holigen for a combination of ~$3.0M in cash, 1.9M common shares, and the assumption at of ~$4.3M of debt which is non-recourse to Akanda. In addition, to further align Akanda and Flowr, concurrently with the closing of the acquisition, Akanda purchased 14,285,714 Flowr common shares for aggregate gross proceeds to Flowr of ~$790K at a price per share of C$0.07. Akanda has provided at least $678K of interim funding to Holigen to support its working capital needs prior to closing.
📄 Company Updates / Earnings
springbig and Tuatara Capital Acquisition Corporation Announce Amendments to Business Combination to Enhance Transaction for Public Shareholders and Additional Funding Through a Convertible Note and Committed Equity Financing Facility. The amended and restated merger agreement reduces the total enterprise value of the Company to $275M, representing an 8% reduction in valuation from the initial agreement. In addition, a bonus pool of up to 1M shares of TCAC common stock will be allocated pro-rata to non-redeeming public stockholders up to a maximum of one bonus share for each share held, effectively reducing their cost base. springbig and TCAC are also announcing an agreement for the issuance of senior secured convertible notes with a 24-month maturity, up to $16M principal amount of which have been subscribed to by a global institutional investor. An initial tranche of $11M will close in connection with the closing of the merger agreement. The second tranche of $5M, subject to certain conditions in the agreement, will close 60 days after the resale registration statement is declared effective by the SEC. In addition, TCAC entered into a committed equity financing facility with an affiliate of Cantor Fitzgerald. Under the terms of the CEF Facility, Cantor has committed to purchase, after the closing of the proposed merger with the Company, up to an aggregate of $50M of TCAC's common shares from time to time at TCAC's request.
Vibe Reports 2021 Financial Results. Dispensary sales were up 19.5% in 2021, Revenue was $29.3M, compared to $24.2M in 2020. Adjusted EBITDA was $2.3M. Positive Operating Cash Flow of $219K. Completed two equity financings raising gross proceeds of C$19.1M. Commenced development of a 10-acre F40 zoned agricultural land site in Monterey County via a $5.1M cash acquisition. Cash position of $9.1M at December 31, 2021.
Shryne Group Opens 21st Retail Location in Santa Rosa, CA. STIIIZY Santa Rosa is Shryne Group's 11th location in Northern California, and 21st location in the state. The newest STIIIZY store features visual art installations and exclusive STIIIZY merchandise including apparel and accessories. The modern retail space spans 3,500 square feet and includes STIIIZY products such as the exclusive STIIIZY extracts, flower, edibles and more, alongside other quality brands.
Curaleaf Opens Two New Florida Dispensaries in Pembroke Park and Englewood. The Company's latest expansion in the Sunshine State will increase its retail footprint to 47 dispensaries statewide and 130 dispensaries across the country.
Verano Opens 45th Florida MÜV Medical Cannabis Dispensary in Hobe Sound. As the first medical cannabis dispensary in the Atlantic coast community of 13,163 residents, MÜV Hobe Sound joins the Company’s MÜV Stuart and Port Saint Lucie locations on Florida’s popular “Treasure Coast,”—a tourist region that boasts hundreds of locally owned restaurants, world-class beaches and golf courses, and numerous outdoor adventure activities.
Ayr Wellness Opens 46th Florida Dispensary in Tampa. The new dispensary encompasses ~3,000 square feet of retail space in Hillsborough County, and is located just off the Dale Mabry Highway, an artery connecting several major shopping destinations, MacDill Air Force Base and Tampa International Airport.
Columbia Care Brings Cannabist Dispensary Experience to Portsmouth, Virginia. The Company operates another Cannabist in Virginia Beach and is set to open another in Carytown this summer. This is the 31st Cannabist location among the Company’s 84 active retail locations.
Alpine IQ creates a frictionless bridge that empowers brands and their retail partners to achieve shared objectives in the cannabis industry. The Brands platform, powered by Alpine IQ’s technology, produces real-time data that empowers brands to create market defining customer experiences, such as the ability to view performance analytics, generate DTC loyalty strategies via collectible products, co-marketing with partners across text/email/push/ads, and identify key sales opportunities. Brands that partner with Alpine IQ will have global visibility into their performance across in-network retailers using AIQ as well as out-of-network retailers via inviting them to a completely free version of Alpine IQ.
Wyld Launches Cannabis-Infused Sour Gummies. Formulated with the same real fruit ingredients and natural flavors as Wyld's existing product portfolio, Wyld Sours also includes a proprietary blend of food-grade botanical terpenes to maximize the effects of each product's cannabinoid profile. Wyld Sours are currently available in two flavors, including a sativa-enhanced Sour Apple and indica-enhanced Sour Cherry. The brand's newest additions also feature new color-coded packaging designed to educate consumers on terpene effects and ensure consistent and repeatable cannabis experiences. Wyld's latest product line is now available in seven states, including Oregon, California, Colorado, Nevada, Arizona, Michigan and Washington.
Calexo launches Watercolors, a new line of cannabis-infused sparkling waters and an accompanying line of streetwear. Made with sparkling water, natural flavors, and nano-emulsified THC (5mg per 12oz can), Watercolors are precisely dosed for an uplifting and easy-to-control experience. A refreshing alternative to alcohol, Watercolors feature zero sugar and zero calories. Available in three flavors, Fuschia, Spring and Sea, Watercolors will be available in 4 pack boxes at select California dispensaries from May 2022.
Aeropay x Flowhub Team to Offer ACH for Cannabis Sales. Aeropay, the cannabis industry's leading digital payments provider, and Flowhub, the leading national cannabis point-of-sale platform for dispensaries, have announced an integration partnership to enable ACH payments via Aeropay for over 1,000 dispensaries powered by Flowhub's software. Retailers using Flowhub can now offer cashless payments at checkout, which increases sales by more than 25% per transaction.
Curaleaf's Select Brand Expands CBD Offerings With Launch of Select CBD Bites. Select CBD Bites are formulated with natural ingredients and unique cannabinoids such as CBN, CBG and CBD to target three specific areas of focus: sleep, restoration and recovery. Each bite contains 25mg of cannabinoids derived from U.S. grown hemp that is third-party lab tested for purity and consistency. Select CBD Bites contain one of the broadest assortments of cannabinoids on the market and are now available in three flavors. Last year, Curaleaf announced its national distribution agreement with Southern Glazer's Wine & Spirits, the world's largest distributor of beverage alcohol.
Planet 13 Expands Popular TRENDI Brand to California with Premium Flower. TRENDI will be exclusive to Planet 13 Orange County to start. Founded in 2018, TRENDI is the industry standard for class, elegance, and quality cannabis. TRENDI specializes in expertly sourcing the most popular strains from highly sought-after cultivators in the state, offering consumers top-shelf flower collections available in limited small batch runs.
springbig partners with Tymber to Launch Fully Integrated Loyalty Rewards Feature. Retailers using Tymber and springbig can allow customers to opt into springbig-powered loyalty rewards and SMS marketing programs. Over time, shoppers can accrue points and directly redeem rewards through the Company's website and Tymber's mobile apps. Retailers that utilize this integration will also have increased ownership over their marketing channels and e-commerce data which will drive sales and customer acquisition initiatives.
MedMen Announces Edward Record as CEO. Record joined MedMen’s Board of Directors in 2021. He brings deep retail and restructuring experience, having overseen financial and operational performance for several large national retailers. He previously served as the Chief Financial Officer for Hudson's Bay Company, whose U.S. holdings include Saks Fifth Avenue. Before joining HBC, Record was Chief Financial Officer for J.C. Penney. Prior to J.C. Penney, Record held leadership positions at Stage Stores, Kohl’s and Belk.
TerrAscend Promotes Jodie Lampert to SVP of Human Resources. Lampert previously served as VP Human Resources at Gage and in her new position will facilitate the integration of talent across the combined organization. Before entering the cannabis industry, Lampert spent more than 20 years leading HR teams in the automotive industry, at companies including Harman International, Continental Automotive, and the Lear Corporation.
HEXO Appoints Charlie Bowman as CEO and Julius Ivancsits as CFO. Bowman previously served as HEXO’s acting COO and GM of HEXO USA. Prior to joining HEXO, he served as CFO at Goba Capital, Alpha Measurement Solutions, and Be Green Packaging along with multiple roles at CPKelco.
Trulieve CEO Kim Rivers Receives Green Market Report Women's Leadership Award. In the last year, Rivers has been the driving force behind several major business developments in the cannabis industry, including Trulieve's leading retail footprint in U.S. cannabis, industry leading profitability, and transformational purchase of Harvest Health and Recreation. Rivers set a new industry standard with Trulieve's release of its inaugural Environmental, Social, and Governance (ESG) report, the first issued by an American multi-state cannabis operator. The Women's Leadership Award honors women in the cannabis industry for their work in several different categories including Activism/Politics, Social Equity, Cultivation, and Media.
Emily Paxhia, Poseidon, on harnessing the Green Wave (The Dime)
How to Find and Utilize Investment in the Cannabis Industry (mg)
Michael Auerbach, Founder and Chairman of Subversive Capital and The Parent Company, provides updates on TPCO and the growth that hasn't shown (Cannabis Investing)
Cannabis Weekly Recap with Tim Seymour (CNBS)
Forian Is Bringing the Power of Analytics to the Cannabis Industry (NCV)
👋 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.