📰 Icanic Brands acquires LEEF Holdings for $120M Stock
📰 Icanic Brands acquires LEEF Holdings for $120M Stock
Lowell Farms $18M Private Placement. AFC Gamma/BeLeaf Medical (MO) $23M Credit Facility. The Valens Company acquires Citizen Stash for $54M. Ayr Wellness Offers Incentive for Cash Exercise of Warrants
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🌿Industry
Cannabis Stocks Burn Out as U.S. Legalization Efforts Languish. Cannabis stocks have plunged 50% from their highs earlier this year as a lack of movement in U.S. legalization efforts has triggered an exodus of retail traders from the sector. The waning interest is also reflected in retail demand. At the peak in February, retail investors bought more than $2.5 billion of pot stocks over the course of a week, data from Vanda Securities show. Since then appetite has dried up, with inflows as low as $73 million the week of Aug. 16, according to Ben Onatibia, senior strategist at the research house.
Gilkey is CEO of Austin-based Hometown Hero CBD. Hometown Hero sells CBD products as well as products containing Delta-8 THC, a synthetic molecule similar to the federally banned Delta-9 THC found in the cannabis plant. (Whenever you see references to “THC,” it’s almost always Delta-9 THC.) Edibles with Delta-8 THC get you high, but states are getting hip to this and passing bans on Delta-8. But then Gilkey realized something. The Farm Bill doesn’t outlaw all THC, it just outlaws THC above the 0.3 percent threshold. What if you extracted enough THC from hemp and put it into a gummy? Couldn’t you consume enough THC to get a buzz—and since the product came from hemp, and was just 0.3 percent THC (and 99.7 percent other stuff), wouldn’t it still be legal? That’s the theory behind Hometown Hero CBD’s “Select Spectrum” products. These gummies, about the size of a thick and oversized quarter, have 10 milligrams of THC and 10 milligrams of CBD—just like some of the cannabis edibles you’d find at a legal dispensary or sold illegally on the street.
NY Gov. Hochul orders special session over pot, evictions to clean up Cuomo mess. Hochul criticized Cuomo, albeit without naming him, when she said she wanted “to jumpstart the long-overdue decisions pertaining to establishing cannabis in the state of New York. I’ll be [announcing] my nominations to start the process to legally produce and distribute cannabis in the state of New York. There was no reason why simple announcements, in terms of who the executive director is and who the chairperson is, were not done in time. But I’m going to make up for that lost time.”
💵Deals
Icanic Brands — Acquires LEEF Holdings (Extraction). LEEF Holdings has a 12,000 sq. ft. extraction and manufacturing facility with up to 45 tons of biomass throughput per month and up to 3,000 liters of distillate extraction capability per month. LEEF’s Willits, California headquarters include Type 6, Type 7, Type 11 Distribution and Dispensary licenses. LEEF’s pending 196-acre cultivation license would make it the largest farm in California and sits on over 1,900 acres of prime California real estate. The Closing Purchase Price implies ~2.0x 2022E revenue multiple and 6.5x 2022E EBITDA multiple. The purchase price will be comprised of (i) the Closing Purchase Price and (ii) the Earn-Out Payments. The initial payment forming part of the Purchase Price will be equal to the higher of (i) $120M or (i) 2.0x TTM revenue of LEEF for the period ended September 30, 2021 (2021E Revenue of USD $42.7M, so likely the $120M Purchase Price). The Closing Purchase Price will be satisfied in full through the issuance of Icanic Shares, at an issue price per share equal to the 30-day VWAP for the period ending on the business day prior to the signing of a definitive agreement.
Lowell Farms — Closes $18 Million Private Placement. The offering consists of 18 million units of the Company for a purchase price of $1.00 per Unit or aggregate gross proceeds of $18.0 million. Each Unit is comprised of one subordinate voting share of the Company and one‐half of one Share purchase warrant of the Company. Each Warrant is exercisable to acquire one subordinate voting share of the Company until August 30, 2024, at an exercise price of $1.40 per Warrant Share, subject to adjustment in certain circumstances.
AFC Gamma — Provides BeLeaf Medical with $23M Senior Secured Credit Facility to Fund Its Missouri Expansion. The credit facility is designed to provide BeLeaf with the capital necessary to expand its three Missouri cultivation facilities in Lakefront, Jonesburg and Cherokee, as well as purchase the Jonesburg cultivation facility. The Company has nearly completed construction on ~25,000 square feet of canopy between its locations and plans to add an additional ~16,000 square feet. Since the medical marijuana program launched in October 2020, according to the Missouri Medical Cannabis Trade Association, sales in Missouri have hit $91 million, with 130,000+ registered patients as of July 31, 2021. According to, MJBizDaily, medical marijuana sales in Missouri are projected to reach $225—300 million for 2021E.
Sugarmade — Signs Definitive Agreement to Acquire California Cannabis Licenses to Provide for the Opening of Three New Vertically Integrated Nug Avenue Locations. Each of the three licenses can be used for up to three of the five categories of licensed cannabis-related business activities allowed under the terms of these licenses: retail delivery, manufacturing, distribution, transport-only, and cultivation. By using each license for a combination of 1) retail delivery of cannabis products, 2) supply chain distribution of cannabis products, and 3) manufacturing/packaging of cannabis products, the Company now possesses the licensing credentials to open three new Nug Avenue locations in the Los Angeles metropolitan area.
Tinley — Facility Receives Provisional Distributor License; Signs with Humboldt Social to Produce “Social Nature” Infused Beverages. Tinley’s facility in Long Beach California has been awarded a Provisional Cannabis Distributor License by California’s Department of Cannabis Control. This enables the Company to immediately transfer finished product from its licensed manufacturing space to its licensed distribution area, provide warehousing and clear finished products for state testing. This license enables the Company to add the remaining component of its suite of services for third-party beverage brand manufacturing that the Company set out to offer in building the Long Beach facility. The Company is also announced that Humboldt Social, a leading cannabis hospitality company, will produce its “Social Nature” cannabis beverages at Tinley’s facility for use at exclusive cannabis-friendly hotels, lounges and other venues in California.
The Valens Company — Acquires Leading, Premium Craft Licensed Producer, Citizen Stash for $54.3M. Under the terms of the Arrangement Agreement, Citizen Stash shareholders will receive 0.1620 of a Valens common share for each Citizen Stash Common Share held. The Exchange Ratio implies a premium per Citizen Stash Common Share of approximately 35.1% based on the 15-day VWAP of the Citizen Stash Common Shares on the TSX-V and the Valens Shares on the TSX as of the close of markets on August 27, 2021. The Acquisition represents ~4.3x 1H fiscal 2021 annualized revenue.
Entourage Health — Partners with Boston Beer Subsidiary to Launch and Sell Portfolio of Innovative Cannabis-Infused Beverages in Canada. Entourage Health (formerly WeedMD), a Canadian producer and distributor, has signed agreements with BBCCC, a subsidiary of the The Boston Beer Company and Ontario-based Peak Processing Solutions, a subsidiary of Althea Group Holdings, to launch a new portfolio of non-alcoholic cannabis-infused beverages in Canada, with production commencing in Q4, 2021. Under the terms of the five-year development, supply, manufacturing, sales and marketing agreements, BBC and Peak will develop the beverages with Entourage’s cannabinoid-rich input biomass processed at Peak’s Windsor, Ontario facility. Entourage will be the exclusive distributor of the cannabis-infused beverages in Canada leveraging Entourage’s expansive local sales and marketing network.
📄Company Updates / Earnings
Ayr Wellness — Offers Incentive for Cash Exercise and Provides Notice of Early Expiry of All Remaining Warrants. The expiry of the Warrants is being accelerated as permitted under the warrant agency agreement dated December 21, 2017. On notice in accordance with the applicable provisions of the Warrant Agency Agreement, the expiry date of the Warrants is now 5:00 p.m. (Toronto time) on September 30, 2021. Ayr has announced incentive exercise rights available to the holders of the Warrants who exercise their Warrants for cash. Ayr will be offering a C$0.75 incentive for the cash-only exercise of the issued and outstanding Warrants, which would result in gross proceeds to the Company of ~$55 million if all of the ~6.5 million issued and outstanding Warrants, other than the ~2.9 million founders’ warrants, are exercised thereunder. Upon exercise, a Warrantholder is entitled to receive one (1) subordinate voting share of the Company at an exercise price of C$11.50 per Subordinate Voting Share. For each Warrant duly exercised during the Final Incentive Exercise Period, the Company will make an incentive payment of C$0.75, which shall be set off against payment of the applicable exercise price, resulting in an effective exercise price of C$10.75 to exercise a Warrant during the Final Incentive Exercise Period.
GABY — Q2 2021
Revenue: $11.3 million and gross profit of $3.9 million (35%)
Adjusted EBITDA: $0.9 million
🏬Retail
Lume — opens 23rd Michigan location today in Saginaw. So far this year, Lume has opened 10 adult-use stores and has plans to open a dozen more before 2021 ends, bringing its total number of Michigan adult-use stores to 40 by the end of the year, according to the company. The ambitious effort is part of Lume's goal of having 100 adult-use stores open throughout Michigan by 2024.
🌱Product
Old Pal — Wins 1st Place for Blonde or Golden Ale at 2021 California Craft Brewers Cup. Old Pal Partnered with Redondo Beach-based King Harbor Brewing Co to create the Old Pal Ale back in December 2020.
Texas Original Compassionate Cultivation — Fast-Acting Gummies Hit the Market, Meeting Expanded Demand for Medical Cannabis Under House Bill 1535. Texas Original Compassionate Cultivation (TOCC), Texas’ leading medical cannabis provider, will introduce the state’s first fast-acting gummies on Sept. 1, 2021 as Texas expands the Compassionate Use Program (CUP) under House Bill 1535. The gummies join TOCC’s full suite of high-quality medical cannabis products now accessible to more patients throughout Texas, including those experiencing post-traumatic stress disorder (PTSD) or any stage of cancer. The high-quality, fast-acting gummies will be available in 5 and 10 milligram doses of THC, with 0:1 THC-only and 1:1 balanced formulations. The strawberry passion fruit flavored-gummies are the first in the Texas market infused with medical cannabis through Vertosa’s nanoemulsion technology that enhances the patient experience with a quicker onset. Pricing for TOCC's gummies begins at $50.
🧔People | 💻Hiring
Hollister Biosciences — Appointment of Two New Board Members, Kevin Harrington and Jakob Ripshtein. Kevin Harrington is a veteran CEO, bestselling author and platform-building entrepreneur known to millions as one of the original "sharks" on the 4x Emmy-winning ABC series Shark Tank. His many landmark achievements include inventing the infomercial, pioneering the As Seen on TV brand, co-founding the Electronic Retailers Association (ERA), serving as a co-founding board member of the Entrepreneurs' Organization (EO) and creating HSN Direct as a joint venture with the Home Shopping Network. Jakob Ripshtein served as the President of Aphria. He joined Aphria after serving as the CFO of Diageo North America and President of Diageo Canada.
🎙️Interviews
Why Starting A Marijuana Business Is So Hard | Big Business
The Cannabis Operations — Building an Empire: How Cookies continues to revolutionize how people view Cannabis.
Entourage Effect Capital To Raise New Private Equity Fund Focusing On Later-Stage Cannabis Companies
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