💊 Jazz Pharmaceuticals acquires GW Pharmaceuticals for $7.2B
BGP Acquisition Corp. SPAC — $115M IPO. AFC Gamma sets IPO range at $17-$19. Sens. Schumer/Booker/Wyden says cannabis reform a priority. VA lawmakers pass legalization bills.
Cannabis investors are about to ride a legislative tailwind in Washington. Last week, Schumer joined by Sens. Cory Booker, D-N.J., and Ron Wyden, D-Ore., issued a joint statement that unequivocally confirmed that the passage of cannabis reform legislation in this Congress is a priority of the new leadership. This finally transitions the U.S. cannabis debate from if reform will happen, to when and how it will be implemented. Their plan is to release a new omnibus cannabis reform bill that will address de-scheduling and/or de-criminalization of cannabis at the federal level (allowing states to regulate cannabis under their current regulatory regimes). The legislation would also include long overdue restorative justice provisions to right the wrongs of the decades-long failed war on drugs, banking and capital markets provisions to allow US cannabis operators to bank and list in the United States (as opposed to Canada), and long overdue updates to the federal tax code. With a Democratic majority in both chambers of Congress coupled with the Biden White House, the issue of cannabis reform has been elevated to a matter of national importance that is now being discussed routinely.
For investors looking to take the next ride, US federal legalization may bring significantly greater performance for not just the top five players, but also the next tier of operators in the US, as well as select top-tier operators in Canada who have strategically mapped out a US strategy. The performance outlook is not just about the fundamentals of growth in the sector (targeting 25% compound annual growth rate and a total available market of $120 billion by 2030), it is also about the flow sidelined institutional capital that will come flooding in to take these stocks higher.
VA lawmakers pass marijuana legalization bills. Both chambers of the Virginia General Assembly passed legislation Friday that would legalize marijuana for adult recreational use. Work on the complicated legislation has been a priority for Democrats who control state government. But the process is far from finished — there are substantial differences between the two chambers’ bills that must be worked out before they can be sent to Gov. Ralph Northam, who could also seek to make additional changes. Both chambers’ measures would legalize possession of an ounce of marijuana or less, though that provision has different start dates. Both bills would also start the process of expunging some previous misdemeanor marijuana-related offenses, starting July 1. Both measures envision retail sales starting in 2024, overseen by a newly created regulatory entity.
Sales of regulated adult-use cannabis in Canada overtook illegal transactions for the first time in the third quarter of 2020, according to new Statistics Canada data. That development demonstrates the success of legalization in these early years, experts say, though more needs to be done regarding taxes and promotions rules to put the regulated industry on firmer ground to compete with the legacy market. Falling prices, a wider breadth of consistent inventory and growing retail options have all contributed to the legal market’s success.
L.A. social equity marijuana retailers allowed to apply for state licenses. Roughly two dozen of 200 upcoming social equity marijuana retailers in Los Angeles got the greenlight from city regulators to apply for the required state permits, marking slow but steady progress in the municipality’s march toward industry expansion. According to a spokesperson for the L.A. Department of Cannabis Regulation, 27 of the 200 applicants who qualified for social equity shop licenses have been notified they’re now able to apply for their state permits. But it’s still not clear when any of the 200 might open for business, since all retailers must receive both city and state approval and pass code inspections before they can begin sales.
MO's Court of Appeals uphold decision on Metrc contract. The Western District appeals court’s decision affirmed a Cole County judge’s ruling from last year to prevent operators (and consumers) from absorbing the additional RFID tag fees. Metrc received the State contract in April 2019 with the original proposal including the cost per month for its system, noting it would be "industry paid." When the state Office of Administration awarded a five-year, $5 million track-and-trace contract to Metrc as part of a competitive bidding process, the Request for Proposals (RFP) was clear that bidders provide “firm, fixed pricing.” Metrc’s winning bid outlined a $40 monthly charge per licensed dispensary, cultivation, and infused product manufacturing site — costs in line with industry standards in other states. But as licensed cannabis operators in Missouri know, the goal posts were subsequently moved when the state vendor added an additional, 45-cent fee for each radio frequency identification tag added to plants, and 25 cents for each package tag. Allowing a vendor to charge both the state and licensed operators for this service would have clearly driven up costs without any practical rationale, costing license holders tens of thousands of dollars annually in extra costs.
Jazz Pharmaceuticals to acquire GW Pharmaceuticals for $7.2B, Creating an Innovative, High-Growth, Global Biopharma Leader. Jazz Pharmaceuticals (Nasdaq: JAZZ) and GW Pharmaceuticals (Nasdaq: GWPH) have entered into a definitive agreement for Jazz to acquire GW for $220.00/share ($200.00/share cash and $20.00/share in Jazz ordinary shares), for a total consideration of $7.2B, or $6.7B net of GW cash. Upon close of the transaction, the combined company will be a leader in neuroscience with a global commercial and operational footprint well positioned to maximize the value of its diversified portfolio. This represents a premium of ~50% over GW's closing stock price on February 2, 2021, of $146.25 and 60% over GW's 30-day volume weighted average price of $137.17.
GW is a global leader in discovering, developing, manufacturing and commercializing novel, regulatory approved therapeutics from its proprietary cannabinoid product platform to address a broad range of diseases. The company's lead product, Epidiolex® (cannabidiol) oral solution, is approved in patients one-year and older for the treatment of seizures associated with Lennox-Gastaut Syndrome (LGS), Dravet Syndrome and Tuberous Sclerosis Complex (TSC), all of which are rare diseases characterized by severe early-onset epilepsy. Epidiolex was the first plant-derived cannabinoid medicine ever approved by the U.S. Food and Drug Administration (FDA).
BGP Acquisition Corp. — $115M SPAC IPO. BGP will target businesses engaged in the cannabis industry or related sectors. In particular, BGP is targeting market leaders with strong and credible management teams where opportunities exist for vertical or horizontal integration. Although not limited in their target search, BGP believes that US companies provide the best opportunity due to the relatively restrained access to capital and the tremendous growth potential ahead. BGP’s management team and board of directors is comprised of: Ruth Epstein (CEO and Chair of the Board), Don Jennings (President, CFO, Corporate Secretary and Director), Brian Kabot (Director), Lisa Sergi Trager (Director), Erik Ott (Director) and Scott Riley (Director).
AFC Gamma (Advanced Flower Capital) — sets $17-$19 IPO range. The commercial real estate finance company focused on the Cannabis market could raise as much as $105M. As of December 26, 2020, AFC Gamma originated and funded loans totaling ~$135.0M in aggregate original principal amount to companies, had ~$92.5M of loans outstanding and committed to ~$19.8M in additional loans and commitments from existing loans, with ~$485.2M of potential loans actively under review in their pipeline. The Company’s loan portfolio had a weighted-average YTM IRR of 21.7% and was secured by real estate, cash flows, licenses and with respect to certain loans, substantially all assets in the borrowers and certain of their subsidiaries.
SLANG Worldwide — $10M Financing led by Merida Capital. The $10M equity financing with institutional investors, including Merida Capital; structured with no debt or warrants to limit dilution. Pursuant to the Financing, the Company will issue up to 26,315,790 SLANG shares at a price of $0.38 per SLANG Share for aggregate gross proceeds of up to $10M. The strategic partnership with Merida Capital will bring SLANG products to MO and VA and accelerate the company's presence in MI , while also unlocking other cross platform opportunities across Merida's portfolio of companies.
Cellular Goods to list in London. U.K.-based Cellular Goods Plc, which provides cannabis-based consumer products and counts David Beckham among its investors, is seeking a listing on the London Stock Exchange (LSE). The IPO is expected to value Cellular Goods at $27M. Set up in August 2018, the company focuses on skincare and topical athletic recovery products, which it says will be made available through retailers and on its own website. Its cannabinoids are made in a lab, rather than being derived from plants. The listing comes after a U.K. watchdog said last year cannabis firms can float on the LSE, but only if they produce the drug for medicinal purposes. Medical pot was legalized in the U.K. in 2018 for a narrow set of purposes, but recreational use is against the law.
Schwazze — acquires two additional Star Buds dispensaries in CO. This follows the acquisition and integration of six Star Buds retail locations in CO in December 2020. The Company plans to acquire the remaining five Star Buds in Colorado by the end of March, for a total of 13. Total consideration for this most recent acquisition was ~$9.3M, consisting of $3.5M cash, $3.5M sellers’ notes, and $2.3M Preferred Stock).
springbig acquires BudTender. BudTender is a customer experience platform for Cannabis retailers, the acquisition adds 200 clients to springbig, bringing its total to 1,900.
Planet 13 — closes $54M Bought Deal Public Offering
Sundial Growers — closes $74.5M Registered Offering
TILT Holdings — contract to manufacture & distribute Her Highness NYC Products in MA
Agrify — Integration of Metrc
Exceeded previously announced guidance of $40M pro forma revenue for 2020
Expects to generate $50M+ in revenue for 2021, representing ~25% Y/Y growth
Urbn Leaf — Ed Schmults joins as CEO. Schumults most recently served as CEO at Calyx Peak. Calyx Peak Group (“CPG”) is a cannabis-centric operating and management company committed to building strong state and national brands. CPG was formed in 2016 as a Delaware Limited Liability Company (LLC) based in Las Vegas, Nevada. CPG currently owns, manages, and operates multiple assets across California, Nevada, and Ohio, with pending expansion into Massachusetts. CPG intends to double its current asset footprint by end of 2020 through acquisition of strategic assets that bolster existing brands and operations as well as assets that provide access to new states and countries.
🏬Licenses, Products & Dispensaries
Verano — awarded 7 Medical Dispensary Licenses in WV. Columbia Care — awarded 5 Medical Dispensary Permits in WV. Regulators so far have granted approval to over 30 providers to operate dispensaries in over 80 locations throughout the state. A list of providers and locations is available online here.
Cresco Labs — Launches adult-use sales at Sunnyside, Phoenix, AZ. The Company received approval from the Arizona Department of Health Services to serve adult-use customers at its Sunnyside dispensary in Phoenix and expects to launch adult-use sales in mid-February.
GTI — Rise, Erie Peach, PA (52nd Retail)
Curaleaf — St. Petersburg North (34th Retail in FL, 98th National)
Verano — Zen Leaf, Altoona, PA (23rd Retail)
SPARC — CFO (Bay Area)
Nature's Medicines — General Counsel (Phoenix)
Amuse — Merchandising Manager (Culver City)
Uber agrees to buy alcohol delivery service Drizly for $1.1B. Following the completion of the transaction, Drizly’s marketplace will be integrated with the Uber Eats app. The company will keep the standalone Drizly app as well. Founded in 2012, Drizly has become the leading on-demand alcohol delivery service in the U.S. and is available in 1,400 cities. The purchase could help drive people to use Uber’s app more often. Lantern, a cannabis delivery platform formed by select executives of Drizly, will operate as an independent private business. Lantern’s management team, staff and core products will remain the same, while Drizly’s founders, investors and board members will serve as strategic advisers to Lantern.