🤝 Leafly To Go Public Through Business Combination With Merida Merger Corp I
🤝 Leafly To Go Public Through Business Combination With Merida Merger Corp I
Deal values Leafly at $385M Enterprise Value / $532M Market Cap. Earnings – Curaleaf, Acreage, Canopy, Cronos. Cronos adds new CFO.
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🌿Industry
Former Anti-Marijuana Congressman And Top Trump Health Official Joins Cannabis Company Board, Documents Show. A former head of the U.S. Department of Health and Human Services (HHS) is serving as a member of the board of directors for a medical marijuana business in Georgia, according to documents obtained by Marijuana Moment. Tom Price, who served as HHS secretary under President Donald Trump for seven months before resigning following criticism over hundreds of thousands of dollars in travel expenses, is listed as a board member of Botanical Sciences, LLC, one of six cannabis businesses to win licenses last month under Georgia’s limited medical cannabis program.
💵Deals
Leafly To Go Public Through Business Combination With Merida Merger Corp I. The transaction values the combined company at an implied, fully diluted enterprise value of approximately $385 million and equity value of approximately $532 million, subject to any redemptions by Merida stockholders. Leafly provides a subscription-based platform for more than 7,800 brands and 4,600 paying retail subscribers. Approximately 55% of North American retail licensees are currently subscribed to its marketplace and advertising services. The transaction is expected to generate proceeds of up to $161.5 million, subject to any redemptions by Merida stockholders. This follows and is inclusive of Leafly's recent $31.5 million capital raise led by Merida Capital Holdings, Delta Emerald Ventures, SOJE Capital, and Leafly's existing shareholder base. The proceeds of the capital raise and transaction provide Leafly with substantial capital to enhance its advertising and platform technology, expand its marketplace, and execute customer acquisition initiatives.
Greenlane Holdings — $32 Million ATM. The Company has entered into definitive agreements with institutional investors for the purchase and sale of 10,126,583 shares of the Company’s common stock (or common stock equivalents) and warrants to purchase up to an aggregate of 6,075,950 shares of the Company’s common stock, at an effective purchase price of $3.16 per share of common stock (or common stock equivalent) and associated warrant at $3.55 per share, exercisable immediately and have a term of five years.
📄Company Updates / Earnings
Curaleaf — Second Quarter 2021 Results
Revenue: $312 million, up 20% sequentially and 166% YoY
Adjusted EBITDA: $84 million, up 35% sequentially and 201% YoY
Adjusted EBITDA margin: 28% on core U.S. operations, up 400 bps QoQ
As of June 30, 2021, the Company had $334 million of cash and $338 million of outstanding debt net of unamortized debt discounts
Select to pay $500K to settle lawsuit over mislabeled vape cartridges, the Company had mislabeled 186,000 vape cartridges under its Select brand as 100% Cannabis when in fact employees had cut the cannabis oil with additives
Acreage Holdings — Q2 2021 Results
Consolidated revenue: $44.2 million, up 63% Y/Y
Gross margin: 54.0%, up 12.6 percentage points Y/Y
Net loss: ($2.6 million), up from ($37.2 million) Y/Y
Adjusted EBITDA: $8.1 million compared to a loss of ($6.5 million) Y/Y
The company ended the quarter with $37.8 million in cash and restricted cash. During the second quarter of 2021, the Company closed on the previously announced sale of its Florida operations for total proceeds of $60 million. The cash provided by this sale, including the proceeds from the subsequent sale of notes receivable received from the buyer of the Florida operations as consideration, and together with restricted cash, were used to repay $44.1 million in debt during the quarter
Ayr Wellness — Partner, Land of Lincoln Wins Dispensary License in Illinois. Ayr is an operational and 49% equity partner in Land of Lincoln. The dispensary location is designated for Bloomington, Illinois, part of the Bloomington-Normal metropolitan area in Central Illinois. The combined metropolitan area has a population of ~190,000 people but only two existing dispensary locations to serve the market.
Jushi — Founders Convert Super Voting and Multiple Voting Shares into Subordinate Voting Shares. All issued and outstanding super voting shares of Jushi and multiple voting shares of Jushi held by James Cacioppo and Denis Arsenault, were converted into subordinate voting shares of Jushi in accordance with the terms of the Super Voting Shares and Multiple Voting Shares. The outstanding warrants to acquire Super Voting Shares and Multiple Voting Shares were also converted into warrants to acquire Subordinate Voting Shares, without any amendment to the other terms of such warrants.
Canopy Growth — Q1 FY 2022 Financial Results / Stock flat on results
Revenues: Net revenue of $136 million in Q1 2022 was an increase of 23% versus Q1 2021 driven by strong double-digit growth across Canadian cannabis and other consumer products, partially offset by a decline in international cannabis. Total net cannabis revenue of $93 million in Q1 2022, represented an increase of 17% over Q1 2021. Total other consumer products revenue in Q1 2022 increased 39% year-over year to $43 million
Gross margin: Reported gross margin in Q1 2022 was 20% as compared to 6% in Q1 2021. Gross margin in Q1 2021 was negatively impacted by lower production output and unfavorable pack size and geographic mix in the Canadian recreational business as well as start up costs in the U.S. including building inventory and activating new production capacity along with higher third-party shipping, distribution and warehousing costs, partially offset by payroll subsidies received from the Canadian government in Q1 2022, pursuant to a COVID-19 relief program
Net Earnings: Net Earnings in Q1 2022 of $390 million, which is a $518 million improvement versus Q1 2021, was driven primarily by Other Income totalling $581 million during Q1 2022 primarily attributable to non-cash fair value changes of $601 million
Adjusted EBITDA: Adjusted EBITDA loss in Q1 2022 was $64 million, a $29 million narrower loss versus Q1 2021 driven by higher sales and lower operating expenses. Adjusted EBITDA loss in Q1 2022 was negatively impacted by a $10.1 million impairment charge related to the changes in our sourcing strategy for certain products
Free Cash Flow: Free Cash Flow in Q1 2022 was an outflow of $186 MM, a 3% greater outflow vs Q1 2021. Relative to Q4 2021, Free Cash Flow during the quarter was negatively impacted by the timing of certain one-time payments totalling $19 million, incremental interest payment associated with the US$750 million debt financing that occurred in Q4 2021 as well as the impact of inventory build for BioSteel's Ready-To-Drink ("RTD") products in the U.S.
Cash Position: Cash and Short-term Investments amounted to $2.1 billion at June 30, 2021, representing a decrease of $0.2 billion from $2.3 billion at March 31, 2021 reflecting EBITDA losses and capital investments.
Cronos — Q2 2021 Results
Net revenue: $15.6 million in Q2 2021, increased by $5.7 million from Q2 2020. The increase Y/Y was primarily driven by continued growth in the adult-use Canadian cannabis market and increased sales in the Israeli medical cannabis market
Gross loss: $15.8 million in Q2 2021, increased by $12.9 million from Q2 2020. The increase in losses Y/Y was primarily driven by an increase in inventory write-downs in the ROW segment, which totaled $12.0 million in Q2 2021, representing an increase of $8.9 million from Q2 2020, the impact of strategic price reductions on various adult-use cannabis products in Canada taken in the second half of 2020, as well as start-up costs associated with new product development in the Rest of World (ROW) segment
Adjusted EBITDA loss: ($49.8 million), increased by $22.8 million from Q2 2020. The increase in losses Y/Y was primarily driven by an increase in gross loss as described above, an increase in sales and marketing costs due to brand development in the U.S. segment, and an increase in R&D costs driven by increased spending on product development and developing cannabinoid intellectual property in the ROW segment
Cash: $895M as of June 30th, 2021
Body and Mind — Management Agreements and Option to Acquire Two Illinois Entities That Each Won a Chicago Conditional License in Illinois Dispensary Lottery. BaM has management agreements with each of NMG IL and NMG IL 4 and the option to indirectly acquire all of the membership interests in each of NMG IL 1 and NMG IL 4 pursuant to a convertible credit facility between BaM's subsidiary, DEP Nevada and each of NMG IL 1 and NMG IL 4, and membership interest purchase agreements between DEP and the members of NMG IL 1 and NMG IL 4, subject to obtaining all required local and state regulatory authorization.
POSaBIT — Trading on the OTCQB Venture Market. POSaBIT (CSE: PBIT) is a financial technology company that delivers unique and innovative, blockchain-enabled payment processing and POS systems for cash-only businesses. POSaBIT specializes in resolving pain points for complex, high-risk, emerging industries like cannabis with an all-in-one solution that is compliant, user-friendly and utilizes top-of-the-line hardware. The company announced it is currently trading on the OTCQB Venture Market under the ticker symbol “POSAF”.
Stem Holdings d/b/a Driven By Stem — Launches Budee™ E-Commerce and Delivery Platform in Oregon. Budee will operate across Greater Metro Portland, offering a broad range of best-selling products, available through reliable, same-day and scheduled next-day delivery service. Additionally, Budee is anchored by Stem’s local TJ’s on Powell dispensary, recognized for its curated products including flower, pre-roll, concentrates and edibles, as well as non-cannabis gear. Beyond the Portland market, Budee will roll out across the remainder of the state over the next year, starting with the city of Eugene in October.
🏬Retail
GTI — Rise Warminster, PA (62nd Retail Location). In addition to Rise Warminster, there are Rise™ stores in the following locations in Pennsylvania: Chambersburg, Cranberry, Duncansville, Erie (Lake), Erie (Peach), Hermitage, King of Prussia, Latrobe, Meadville, Mechanicsburg, Monroeville, New Castle, Carlisle, Steelton and York, the last three of which are licensed to KW Ventures. Green Thumb entered the Pennsylvania market in 2017 and operates a manufacturing facility in Danville where the company produces its branded products including Rythm premium flower and full-spectrum vapes and Doctor Solomon’s medical-grade drops and lotions.
Harvest — Opens Sixteenth Arizona Dispensary in Mesa. Harvest of North Mesa is located at 1150 W McLellan Rd. Additional Harvest dispensaries in Arizona are located in Avondale, Casa Grande, Chandler, Cottonwood, Glendale, Guadalupe, Havasu, Mesa (second location), Peoria, Phoenix (two locations), and Scottsdale.
Verano — Opens MÜV Bradenton, FL Dispensary. This is Verano’s 35th MÜV location in Florida, and 83rd operating dispensary overall. Verano plans to open five or more additional Florida dispensaries during the remainder of 2021, including new locations in Tampa, Orange City, Pinellas Park and Hollywood.
🌱Product
Everything You Need To Know About The Cannabis Brand Pacific Stone. The sun-grown cannabis from Santa Barbara-based Pacific Stone is popular in California—its cannabis took over 4.7% of the profit of sales in the first quarter of 2021, which was more than any other company in the state. It’s quickly climbed to the best-selling placement among flower brands for its consistency, affordability, and chic yet straightforward design. You can find its cannabis for sale in over 500 dispensaries, all grown in the Central Coast and then distributed across the expanse of the state of California. Both consumers and cannabis content judges (and reviewers) say it really is good weed. Its Wedding Cake strain won 1st place for Best Hybrid Flower at the 2018 SoCal High Times Medical Cannabis Cup.
Korova — Mini Dip Cookie.
Octavius — Masters of Buds Enters Southern California Retail Market with exclusive launch at Sweet Flower. Octavius Cannabis - Masters of Buds, is a leading African American majority owned lifestyle-improving cannabis retail brand conscious of the importance and impact of true social equity. Founded in Pasadena, MOB is an organization dedicated to setting a new standard for modern cannabis retail that is inclusive, diverse, and approachable by all.
BuzzFeed — Launching Its Own Cannabis Brand. The new brand is called Goodful. Launched under the umbrella of its lifestyle brand by the same name, BuzzFeed is partnering with California-based weed producer NUG Inc. and will release three different Goodful-branded flower packs, reported Forbes. Indica, Sativa and Hybrid varieties are available at select Nug retailers in California.
🧔People | 💻Hiring
Cronos Group — Appoints Bob Madore as CFO. Bob Madore recently served as CFO of American Eagle Outfitters from 2016 to 2020. Prior to that, he served in a number of key financial and operational roles at Ralph Lauren beginning in 2004 through 2016, most recently as CFO from April 2015 to September 2016. Before joining Ralph Lauren, Bob was CFO for New York & Company from 2003 to 2004, and served as COO and CFO of FutureBrand, a division of McCann Erickson, from 2001 to 2003. Before that, he held various executive management positions at Nine West Group, from 1995 through 2000. Bob began his career in 1987 at Deloitte & Touche in audit services and worked in the firm’s M&A practice from 1993 until 1995.
710 Labs — Senior Digital Marketing Analyst (LA)
CANNDESCENT — Director of Business Development (CA)
Treez — Business Operations Analyst (Remote)
🎙️Interviews
Vishal Rungta: What does it take to bring a quality product to scale? As brands grow in scale and expand into new markets, it can be challenging to maintain a consistent level of product quality. All too often, expanding is a big risk for businesses—executives need to be strategic in order to help their product succeed in new markets. Vishal Rungta, CFO, President, and Co-Founder of C3 Industries, is an expert on successful brand expansion and quality control. In this episode, Vishal gives his insight on developing a unique brand experience and the importance of having a foundation of high quality products. He emphasizes the need for consistency throughout all operations in order to scale in a manner that does not sacrifice quality and elaborates on his strategies on expanding into new markets.