🧾 Jefferies Analyst – MSOs are “Generational Wealth Builder”

Gage partners with Wiz Khalifa's Khalifa Kush (MI). NewLake Capital Partners closes on $20.5M Cultivation and Processing facility with The Mint (AZ). Trulieve replaces MNP with Marcum as auditors.

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U.S. Cannabis Stocks are “Generational Wealth Builder,” according to Jefferies Analyst. U.S. Cannabis stocks jumped on Wednesday after an analyst at Jefferies called them “a generational wealth opportunity.” Analyst Owen Bennett launched coverage on seven MSOs with Buy ratings: Curaleaf (CURLF), Green Thumb Industries (GTBIF), Trulieve Cannabis (TCNNF), Cresco Labs (CRLBF), Columbia Care (CCHWF), TerrAscend (TRSSF), and Ayr Wellness (AYRWF). Bennett thinks U.S. annual retail sales of $17.2 billion in 2020 will reach $36 billion by 2025, and $64 billion by 2030. He thinks growth will be driven by conversion from the illicit market to the legal market, the increasing normalization of cannabis use, and the disruption of the alcohol and pharmaceuticals industries. He assumes national penetration can hit 30%, with annual spending per user at $1,750—compared to Colorado at $2,683 and alcohol at $1,378. Such assumptions equate to a market of $172 billion, according to Bennett. Bennett argues investors should focus on companies with the greatest geographic reach in key U.S. states, a sizable presence in California, growing national brands, a broad portfolio of product segments, and existing market share strength, as well as a strong share of wholesale business. With that all in mind, Cresco Labs is his top pick. He thinks Curaleaf and Green Thumb also score highly.

He also noted that valuations for U.S. cannabis operators remain in stark contrast to their Canadian peers despite how many pot companies in Canada don't have any direct exposure to the U.S. market as Cannabis remains federally illegal. For example, Canadian cannabis companies trade at 109x EV/EBITDA while U.S. Cannabis companies trade around 19.5x EV/EBITDA.

😱Twitter was quick to point out the Analyst’s track record…

Nevada State Athletic Commission votes not to discipline boxers, MMA fighters for Cannabis use. The most significant regulator of combat sports has made a huge move in the way it deals with marijuana. The Nevada State Athletic Commission (NSAC) voted Wednesday to no longer discipline fighters for cannabis. NSAC, which regulates some of the most high-profile boxing and MMA fights in the world, joins the Florida State Boxing Commission, which stopped testing for Cannabis completely in May. The new policy begins Wednesday and is not retroactive to cases that have yet to be adjudicated.

Long Beach Cannabis laws tweaked to allow shared-use of manufacturing facilities but advocates say more dispensaries are needed. Long Beach’s cannabis laws will now allow for manufacturers to share space in an effort to bring more businesses with less initial capital online after the City Council unanimously approved a shared-use amendment Tuesday night. The change will allow businesses that infuse concentrates into products, extract cannabis oils using butter or oils or just package and label products to use the same space, similar to a commercial kitchen, but the law will require common-use space to be used at scheduled times by individual operators. The tweak to the law will prioritize equity applicants for up to one year, or until 15 licenses have been issued to equity applicants, whichever happens first.

Missouri Medical Cannabis sales hit state record $16.4M in June. Missouri's medical marijuana industry topped $70 million in cumulative sales, including nearly $16.4 million in June, according to the Missouri Department of Health and Senior Services. Eight months after the state's first dispensary opened in October 2020, 126 dispensaries operate throughout the state. Those dispensaries, plus manufacturers, transporters, and laboratories, total 201 medical marijuana facilities in the state. ~121,000 Missourians have been approved as medical marijuana patients, with many more applications.

$1.19 billion worth of marijuana seized in massive bust in California. Authorities in Southern California have seized more than 16 tons of marijuana worth an estimated $1.19 billion. The 10-day sting is the largest eradication of illegal marijuana cultivations in the history of the department. The operation, which began on June 8th, resulted in 22 felony arrests, 109 misdemeanor arrests, and 19 arrests from water theft enforcement teams, officials said. More than 200 locations were served with search warrants. Nearly 375,000 marijuana plants and 33,480 pounds of harvested marijuana were seized, along with 65 vehicles, 180 animals and $28,000.

Tilray’s Aphria RX GmbH subsidiary completes first Successful Harvest and Delivery of Medical Cannabis Grown in Germany. The medical cannabis harvest is the first cultivated under European Good Manufacturing Practices (EU GMP) standard at Tilray’s state-of-the-art 6,000 square meter indoor growing facility in Neumünster, Germany. The subsequent distribution, which was carried out by a distributor on behalf of the German Cannabis Agency and in accordance with all pharmaceutical and narcotic legal requirements, underscores Tilray’s strong foothold and operational excellence within Europe’s key medical cannabis market. Since Germany’s Cannabis as Medicines Act was enacted in March 2017, the country has relied exclusively on imports to meet the growing medical demand currently estimated at well over 100,000 patients. Tilray’s ongoing domestic harvest and production will play an indispensable role in ensuring that patient needs are met with products of the highest quality medical cannabis while at the same time reducing dependence on imported supply.

💵Deals / Partnerships

Gage Growth and Wiz Khalifa's Khalifa Kush Partnership. Through this partnership, Gage will be the exclusive producer, processor and retailer of KK branded products in Michigan. Gage and KK will work to develop and commercialize a product lineup that includes flower, pre-rolls, extracts, and concentrates that will be sold at Gage provisioning centers. The arrangement includes a grant of license to certain intellectual property to produce and sell KK branded products in Michigan, and is subject to Michigan regulatory approval. KK will consult on cultivation, distribution, branding, consumer engagement and other operating responsibilities. The initial term of the license agreement is five years on an exclusive basis.

NewLake Capital Partners expands Real Estate Partnership and Closes on Cultivation and Processing Facility with The Mint in Arizona. NewLake acquired a parcel of land for the construction of a 130,757-square-foot cultivation and processing facility in Phoenix, Arizona. Concurrent with the closing of the acquisition, NewLake entered into a long-term, triple-net lease agreement with The Mint, a vertically integrated multi-state cannabis operator based in Tempe, Arizona, which intends to operate the property as a licensed cultivation and processing facility. The total investment of up to $20.5 million includes a purchase price for the property of $2.4 million and a commitment of $18.1 million in Tenant Improvement Allowance for construction. Prior to this closing, in April 2021, NewLake completed the acquisition of an ~40,000 sq ft industrial property in Palmer, Massachusetts for $1.6 million and committed $3.0 million in Tenant Improvement Allowance with The Mint.

Sundial increases Commitment to SunStream Bancorp by C$350 Million. Sundial Growers (NASDAQ: SNDL) has increased its commitment to SunStream to C$538 million from its previously announced commitment of C$188 million. SunStream is a joint venture between Sundial and the SAF Group that leverages a strategic financial and operational partnership to target asymmetrically enhanced risk-return opportunities in the cannabis industry to provide exposure to a portfolio of attractive debt, equity and hybrid investments.

📄Corporate Update

Trulieve appoint Marcum LLP as Auditors. Marcum was appointed following the resignation of MNP as the Company's independent registered public accounting firm effective July 5, 2021.


GABY adds Loreto Grimaldi to Board. Grimaldi has held senior positions such as COO, EVP, SVP and General Counsel over a 25+ year career and has led Legal, Operational, Insurance, Regulatory and Human Resources functions in these organizations. Currently, Loreto is the Chief Operating and Legal Officer for Tricor Automotive Group, a distributed finance and insurance services company with operations in Canada and the US, owned by auto dealership groups in Canada representing over 240 franchised dealerships with annual sales of over $4 billion.

🏬Retail / Delivery / Cultivation

Planet 13 adds Moxie as Third Store-in-Store at new Orange County, CA SuperStore. Moxie joins after Planet 13 secured Select and STIIIZY for the store-in-store concept.

Emjay expands to San Francisco Market, Serving 400,000 New Households. The company offers free 60-minute and pre-scheduled delivery with real time tracking. Emjay has a $25 minimum order coupled with some of the lowest prices in the state. The Company has other delivery and retail locations in Los Angeles and La Mesa.

Trulieve Start Operations in West Virginia. The Company has begun cultivation at their 100,000 square foot size facility in Huntington, West Virginia. As of June 30, 2021, the state of West Virginia has 2,305 patients enrolled in their medical cannabis program, meeting the deadline for three-year registration. Those who register by September 30th will be eligible for two years, and after October 1st will be eligible for a one-year card. 

Jushi’s Franklin Bioscience OH, LLC Has Commenced Operations at State-of-the-Art Ohio Processing Facility. The Company expects FBS – OH to begin processing raw materials to produce carefully crafted, high-quality, and state approved products to supply the Ohio medical market. The Company projects that at scale the Facility will be capable of processing upwards of 10,000 lbs. of biomass annually using clean CO2 extraction out of its 8,000 sq ft processing facility. As of June 22, 2021, the Ohio Medical Marijuana Control Program reported over 207,000 registered medical patients and 666 certified participating physicians as of June 9, 2021. The state reported ~$449 million in total medical cannabis product sales through June 21, 2021. As reported by the state in June, there are currently 53 operational dispensaries, 27 operating cultivators, and 30 operating processing facilities across the state. Additionally, the Ohio Board of Pharmacy recently approved the licensing of 73 new dispensaries, which will increase the total dispensary count across the state to 130 dispensaries.

Lowell Farms Celebrates Its Highest Ever Quarterly Harvest Yields With the Release of Preliminary Harvest Report. The preliminary report estimates over 9,700 pounds of dry cannabis flower was harvested during the second quarter, an increase of more than 105% from Q1 2021. June alone netted 3,673 pounds of dry cannabis across three cultivation greenhouses, an increase of more than 18% from May. The second quarter saw 40 full turns, compared to 36 in the first quarter, and the average pounds-per-turn surged more than 80% Q/Q. The preliminary report includes estimates for several harvests that are still in the drying and curing phases, thus finished weights for those harvests have been estimated. The performance can be attributed to upgrades made throughout Lowell Farms’ facilities, including those to the electrical, mechanical, and environmental systems, as well as a “clone dome” for the nursery that was brought online in Q1 2021, which allowed the cultivation team to propagate clones to scale with consistent quality and potencies. Additionally, the company employed an Argus Specialist to oversee the process of implementing the control system within its operation. The portfolio of strains coming from the newly-improved cultivation facilities have consistently tested in the mid-to-high 20s for THC potency. The 40,000-square-foot facility is capable of processing up to 800 pounds of cannabis flower daily. The new business unit called Lowell Farm Services (LFS) will also house one of the country’s first end-to-end, fully-automated pre-roll manufacturing lines.


Ayr Wellness Launch Seven Hills Flower in Pennsylvania. The launch of Seven Hills follows the introduction of Revel branded flower in May. Seven Hills is first offering from the company’s hybrid-greenhouse facility located in Pottsville, PA. Sales of Seven Hills flower begin today and will launch exclusively in the Ayr Wellness dispensaries in Plymouth Meeting, New Castle, and Gibsonia, Pennsylvania. Wholesale to other dispensary operators in the Commonwealth will begin later this month. In May, Ayr introduced Revel flower, grown at its indoor facility in Warrendale. Wholesale of Revel products began at the end of June and sold out within the week, hitting over $1.5 million of revenue. Pennsylvania has a robust and growing medical marijuana market with over 500,000 patients, 119 licensed dispensaries and 25 licensed cultivators. Annual statewide sales are expected to surpass $1 billion by 2024, with flower comprising ~45% of the total market, according to BDSA. Upon completion of its cultivation expansion plans, Ayr will become one of the largest cultivators in the commonwealth with close to 200,000 sq. ft. of cultivation and production capacity.  


Jason Wild Better Margins In Cannabis. Executive Chairman at TerrAscend and President of JW Asset Management, Jason talks starting out in pharma and bringing his investing strategy to cannabis. Being disciplined about holding on to winners and selling losers. Concentrating on East Coast and limited license states; going deep not wide.

Pantry Foods CEO. Scott Jennings started Pantry Foods to make cannabis food with healthy, guilt-free ingredients.


Glass House Brands — Head Of Investor Relations (Long Beach)

Amuse — Product Manager (Culver City)

👋 Newsletter curated by Dai Truong.