💰 Illinois collects $317 million in Cannabis taxes for FY2021 (ended 6/30/21)

Harborside completes acquisition of Sublime ($43.8M). Glass House Brands commences trading on the NEO Exchange.

LinkedIn

If you’re in/around LA on Monday, July 19th, I’m hosting an event (5-8p) to bring together readers of the newsletter at Amuse (Culver City), if you’re interested in attending, RSVP here. I’ll message everyone with the exact address/parking instructions next week. Beers will be provided by my firm, Arlington Capital Advisors, and some colleagues will be in attendance as well.

Hope to see you there!


News

Illinois rakes in $369.7 million in cannabis taxes. The Illinois Department of Financial and Professional Regulation reports total sales for May 2021 were ~$116.4 million, $1.5 million more than was sold in April. Total reported sales since January 2020 are more than $1.17 billion. The total tax revenue the Illinois Comptroller’s office reports for fiscal year 2021 was $317 million for the full 12-month cycle that ended June 30. Last year, with only six months of legal sales, the state saw around $52.7 million in taxes. That makes the total amount of taxes reported so far more than $369.7 million. Read more here.

Curaleaf International — Secures Complete GMP Certification of Second EU GMP Facility in Europe. Medalchemy, the Group’s Good Manufacturing Practice (GMP) certified manufacturing site in Alicante, Spain has secured approval from the Spanish Health Authorities (AEMPS) to import, manufacture and export medical cannabis flower. This will allow the Group to expand its existing supply of medical cannabis across Europe, a market which, according to Prohibition Partners, is expected to be valued at €3.2 billion by 2025. Curaleaf expects the total addressable European market is $120 billion. 

🎙️Gage, Cookies, & Michigan Dominance ft Fabian Monaco, CEO of Gage Cannabis Company. How the Gage & Cookies partnership came together // How to understand trends and insights in dispensaries // How Fabian has weighed growth vs optimization when scaling Gage // How Gage evaluates entrances to new markets // Which east coast markets they’re considering // The importance of relationships with vendors in the supply chain // Gage’s future product roadmap // Which product category will be the biggest by sales in 10 years // One of the most sought after markets in Pennsylvania and why MSOs are flocking there. Listen here.


Deals / Corporate Update

Harborside — Completes Acquisition of Sublime for $43.8M. Founded in 2016, Sublime is best known for its expansive line of high-potency, high-quality and affordable, Fuzzies branded pre-rolls, a leading brand of pre-rolls in the state of California, as well as vapes and roll-your-own flower kits. Since 2019, Sublime has delivered a revenue CAGR of approximately 70%, and ended 2020 with 7.9% California pre-roll market share. The Purchase Price represents a multiple of ~1.78x to the estimated $24.6M of standalone 2021 revenues for Sublime. Total consideration of $43.8M comprises of ~$38.4M stock and ~$5.4M cash (of which ~$3.4M was used to repay indebtedness of Sublime).

Glass House Brands — Commences Trading on the NEO Exchange. Glass House began trading, July 5, 2021, on the NEO under the symbols GLAS.A.U and GLAS.WT.U. The listing follows the successful completion of the previously announced business combination with Mercer Park Brand Acquisition Corp. SPAC.

Greenlane and KushCo — Commencement of proxy solicitation in connection with their previously announced merger. If approved, the Transaction will establish a leading ancillary cannabis company serving a premier group of customers, including many of the leading multi-state-operators and licensed producers, top smoke shops in the United States, and millions of consumers globally. Transaction is expected to close in the third quarter of 2021. The Transaction has been unanimously approved by the boards of directors for both Greenlane and KushCo, and by a special independent committee consisting entirely of Greenlane's independent and disinterested directors, which was appointed by the Greenlane board of directors. The boards of directors of Greenlane and KushCo have unanimously recommended that stockholders vote "FOR" the Transaction.

Agrify — Enters into Multi-Year Vertical Farming Research and Development Partnership with Curaleaf. The research will be focused on evaluating the impact of certain environmental conditions created and controlled by Agrify’s Vertical Farming Units (VFUs) and Agrify Insights™ software platform on harvest yields, plant terpene profiles, and flavonoid concentrations. It will also explore and analyze techniques to enhance the aesthetic appeal, aroma, and overall chemical profile of cannabis flower. In addition, the joint research team plans to study the effect of regulated environments on the overall health and longevity of cannabis plants, including research on the maturation of the chemical profile of the plants over their lifecycle. Under the terms of the Agreement, Agrify will supply its VFUs and provide use of the Company’s Agrify Insights™ software platform for a period of three years at Curaleaf's primary R&D facility located in Massachusetts, with an option to extend another three years.

Vext Science — Signs MOU with SōRSE Technology to Sell MAJOR Cannabis Infused Beverages in Arizona. Under the MOU, SōRSE will provide all know how and formulations for the creation of MAJOR 100mg THC cannabis-infused beverages, and Vext will provide licensed space for the production and storage of products, and produce beverages for sale. Vext will pay an initial royalty of US$100,000 upon the signing of a final agreement, pay a fixed price for SōRSE emulsion, and pay a fixed price per unit produced, to SōRSE. Vext may also choose to manufacture SōRSE's other existing formulations and/or use SōRSE emulsions to develop additional products under the Vapen brand, for which it will pay SōRSE a royalty.

Auxly — Strengthens Financial Position With the Implementation of Amendments to Imperial Brands $123 Million Convertible Debenture and Sale of Curative Cannabis. Pursuant to the Amendments, Imperial and Auxly have: (i) extended the maturity date of the Debenture by 24 months from September 25, 2022 to September 25, 2024; (ii) provided Imperial with the right, on an annual basis, to convert any or all of the accrued and unpaid interest on the Debenture then outstanding into Common Shares, at a conversion price equal to the five-day volume weighted average trading price of the Common Shares on the date that Interest Conversion Election is made; (iii) provided that the payment of interest under the Debenture, which currently accrues at a rate of 4% per annum and is payable annually, will remain unchanged but will be payable on maturity of the Debenture; and (iv) re-instated certain approval rights of Imperial under the Investor Rights Agreement.

WeedMD — Intent to Change Corporate Name to Entourage Health Corp. Entourage Health represents WeedMD’s evolution—from its inception in 2013 as one of the first licensed producers, to its launch of award-winning brands, followed by the merger with Starseed Medicinal and pending addition of craft cultivator CannTX.


Earnings

IIP — Q2 2021 Operating, Investment and Capital Markets Activity. As of July 6, 2021, IIP owned 72 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of ~6.6 million rentable square feet (including ~2.2 million rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of ~16.7 years. As of July 6, 2021, IIP had invested an aggregate of ~$1.6 billion (consisting of purchase price and development and tenant reimbursement commitments funded, but excluding transaction costs) and had committed an additional ~$347.8 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties, which does not include an $18.5 million loan from IIP to a developer for construction of a regulated cannabis cultivation and processing facility in California.

From April 1, 2021 through today, IIP made four acquisitions for properties located in Massachusetts, Michigan and Pennsylvania, and executed three lease amendments to provide additional tenant improvements at properties located in Florida and Pennsylvania. In these transactions, IIP established new tenant relationships with Sozo Companies and Temescal Wellness of Massachusetts, while expanding existing relationships with Green Peak Industries LLC (Skymint), Harvest Health & Recreation, Jushi and Parallel. Additional detail regarding each transaction is set forth below:


Product

Korova Cuts — launches in CA.


People / Jobs

Canopy Growth — taps former Liberal Staffer to lobby about changes to measurements of Cannabis in units to benefit Beverages. Canopy Growth has tapped a former senior Liberal staffer to lobby the government on its behalf to loosen some of the restrictions that apply to cannabis beverages. Julie DeWolfe of GT & Company Executive Advisors is lobbying for Canopy Growth, which received $16 million from the Canada Revenue Agency in the last financial year. The company, which is located in Smith Falls, Ont., is advocating for the federal government to make amendments to Schedule 3 of the Cannabis Act, which refers to beverages that contain Cannabis. Specifically, the company wants to discuss amendments to the Cannabis Act that refer to “units of cannabis beverages instead of weight, and allow consumers to purchase a more reasonable number of low-concentration THC and CBD beverages.”

710 Labs — Head of Direct to Consumer (LA). Oversee the operation, continuous improvement, and go to market of 710 Labs’ direct to consumer channel across California and additional states. 8+ years experience managing ecommerce teams, with a focus on strategy, expansion, and customer experience. Prior P&L experience.


👋 Newsletter curated by Dai Truong.