🍊 MedMen Sells Florida Assets for $83M Cash to Bluma Wellness Founder

Cannabis sales in NJ expected to start within weeks. PharmaCann and LivWell complete merger. Earnings – GTI ($894M 2021 revenue), Weedmaps ($193M 2021 revenue), Cronos ($74M 2021 revenue).

Mar 01, 2022

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🌿 Industry

Legal Cannabis sales could start in N.J. within weeks, Governor Murphy says. After missing a self-imposed deadline last Tuesday to open the state for legal Cannabis sales, Gov. Phil Murphy said last Wednesday night New Jersey is “within weeks” of having existing medical weed dispensaries sell recreational cannabis. “They’ve got to prove they’ve got the supply for their medical customers. I hope shortly thereafter, the standalone recreational marijuana operators.” Several medical marijuana providers have openly complained the state is taking too long to approve their requests to serve the legal market. They’ve threatened to lay off employees and destroy product if the adult market doesn’t open soon.

Ohio topped $381M in Cannabis sales in 2021, up 72% over 2020. There was at least $56M in sales in 2019, $277.2M in 2020 and $380.8M in 2021. While Ohio's legal marijuana industry continues to blossom, its medical sales activity continues to trail those of similar states. Take Pennsylvania, for example, which has a medical marijuana program and a population (~13 million) comparable to Ohio's (~11.8 million). Ohio's $690.1 million in sales through 37 months is a bit more than one-third of the sales volume Pennsylvania saw over three years and a couple of additional months. While this is not a perfect apples-to-apples comparison, these numbers show that Pennsylvania's medical program is reaching more citizens than Ohio's is. This could be due in part to differences between the respective programs.

Curaleaf moves to quash rumors that executives’ ties to Russia may lead to sanctions. Curaleaf has told investors that it is not subject to any sanctions against Russia although it has some ties to the country. Curaleaf said its founder, executive chairman and largest shareholder Boris Jordan is an American citizen who was born in Long Island, N.Y., and that he’s never been a citizen of any other country. Jordan spent several years working in Europe and Russia and currently has several businesses in the U.S. (Curaleaf among them), Europe and Russia. The Company’s second largest shareholder is Andrei Blokh, a successful retired CPG entrepreneur who is not active in the Company. Blokh is a U.S. citizen, who also holds a Russian passport.

Property billionaire hopes to set up huge cannabis farm on a tiny island in the Irish Sea. A vast marijuana farm could soon be built on a small island between the U.K. and Ireland. Peel Group, a real estate firm led by 79-year-old billionaire John Whittaker, the company’s chairman and largest shareholder, wants to build a £100 million ($136 million) cannabis-growing facility on the Isle of Man, where it is headquartered. The proposed facility, located on the fringe of the capital Douglas, would be used to produce medicinal cannabis that would then be distributed around the world and prescribed to patients. However, the self-governing nation is yet to legalize medicinal cannabis, meaning cannabis produced at the facility could not be prescribed for use on the Isle of Man.

Leaflink Insights Flash for February 2022.

Select takeaways:

Wholesale cannabis industry grew 28% in January 2022 year-over-year (YoY)
Top-performing brands in January — High Grade (AZ), Jeeter (CA), Wana Brands (CO), CHOICE (MI), Cannapunch (NV), Growth Rogue (OR), and Cultivate (MA)
Massachusetts grew the fastest at 178.5% Y/Y
During January 2022, average sales per seller fell 5.9% YoY, and average spend per buyer grew 4.2% YoY
Flower retained its #1 spot this month with 33% of GMV during January 2022, helped by a 0.3% increase in sales.
Edibles & Ingestibles saw the largest increase in market share this month, gaining 1.84% month over month, the second month in a row this category led market share increase. The 18.7% overall market share marks a 0.3% decrease over the same period last year.

💵 Deals

MedMen — Sells Florida Assets for $83M, New Trademark Licensing Agreement. MedMen will sell its Florida assets to Florida-based Green Sentry Holdings LLC for $83M. The cash deal includes the sale of substantially all of MedMen’s Florida-based assets, including its license, dispensaries, inventory and cultivation operations. Additionally, the Company agreed to license its trademarks in the state for a two-year period, subject to termination rights, for a quarterly revenue-based fee. Green Sentry is led by Brady Cobb, former CEO of One Plant Florida and its parent company, Bluma Wellness (acquired by Cresco Labs). MedMen currently has 7 Operational stores in Florida with 8 listed as Coming Soon.

PharmaCann and LivWell Enlightened Health — Completion of Merger. The completion of the merger increases PharmaCann’s operations to include over 50 dispensaries and 10 cultivation and production facilities across eight states. LivWell Founder and CEO John Lord will join the PharmaCann Board of Directors.

Harborside — Shareholders Overwhelmingly Support Proposed Acquisitions of Urbn Leaf and Loudpack. Harborside shareholders voted overwhelmingly in favor of the issuance of ~151,427,786 Harborside subordinate voting shares to acquire 100% equity interests in LPF JV Corporation (Loudpack) and UL Holdings Inc. (Urbn Leaf).

Superette — Acquisition of Cannoe and concurrent $5M financing. Superette’s acquisition of Cannoe brings immediate and meaningful scale to its retail operations, doubling its footprint to twelve operating stores, with four locations to be finalized in 2022. The addition of Cannoe’s six stores will give Superette exposure to new areas and key brand driven markets including highly frequented cottage and resort towns. In connection with the Transaction, Superette was able to secure $5M in financing to support strategic growth opportunities, both organic and inorganic.

Flora Growth — Completes Acquisition of JustCBD. Cash consideration of $16.0M and 9.5M privately issued Flora common shares, subject to certain potential future adjustments. JustCBD is an established CPG brand with a portfolio of over 300 products and a seamless omnichannel approach that includes a direct-to-consumer business with over 300,000 customers and a network of over 14,000 stores across the United States and internationally. JustCBD generated audited revenues of $28M and EBITDA of $7M in fiscal year 2020 across multiple categories, including gummies, tinctures, vape cartridges, creams, pet wellness, among others, all of which we believe to have meaningful long-term growth potential.

📄 Company Updates / Earnings

GTI — Q4 and Full Year 2021 Results

Q4: Revenue increased 4.2% sequentially and 37.4% Y/Y to $243.6M, $22.8M GAAP net income / $0.10 per basic and diluted share, Adjusted Operating EBITDA was $76.0M (31.2% margin), Cash: $230.4M, Debt: $239.9M

2021: Revenue increased 60.5% to $893.6M, GAAP net income of $75.4M / $0.34 per basic share, Adjusted Operating EBITDA expanded of $307.8M (34.5% margin)

WM Technology— Q4 and Full Year 2021 Financial Results

2021 Revenue of $193.1M (96% margin), up 19% Y/Y, Q4 Revenue of $54.2M, up 22% Y/Y, $52.0M Gross Profit (96% margin)
2021 Adjusted EBITDA of $31.7M, Q4 Adjusted EBITDA of $3.8M
2021 Net income was $152.2M, Q4 Net income was $78.4M
Monthly active users (MAUs) increased to 15.7M as of December 31, 2021 up 57% Y/Y, average monthly revenue per paying client slightly decreased to $3,789 down 1% Y/Y, Average monthly paying clients increased by 23% Y/Y to 4,766
Cash totaled $67.8M as of December 31, 2021

Cronos Group — Q4 and Full Year 2021 Results

Q4: Net revenue of $25.8M, Gross profit of $1.9M, Adjusted EBITDA of ($27.4M)

2021: Net revenue of $74.4M, Gross profit of ($17.5M), Adjusted EBITDA of ($160.5M)

Cash: $887M as of 12/31/21

Business Update: Exit its Peace Naturals Campus in Stayner, Ontario, Canada, incurring a $119.9M non-cash impairment charge

Slang Worldwide — Share Consolidation Following Shareholder Vote. Immediately prior to the Consolidation, a total of 422,457,742 Common Shares and 141,758,367 Restricted Shares were issued and outstanding. Immediately following the Consolidation, a total of 70,409,448 Common Shares and 23,555,755 Restricted Shares are issued and outstanding.

🏬 Retail

Sweet Flower — Launches Pop Up at Platform, Culver City.

Through March 11th, visitors to Platform can visit Sweet Flower's "Pop Up at Platform" to learn more about Sweet Flower and its curated selection of cannabis products. Sweet Flower's knowledgeable florists will be on site to answer all questions regarding cannabis and its benefits. The Pop Up is located a mile away from its' recently opened Culver City dispensary.

🌱 Product

MediaJel — Brings New Funding Platform to Cannabis Marketers. MediaJel Capital partners with cannabis marketers to fund the development and execution of their digital marketing, programmatic advertising, SEM, SEO, website services, and online content initiatives. MediaJel Capital's online funding portal was built in partnership with Lendflow, a financial SaaS infrastructure platform, and allows regulated businesses to safely and securely access funding via a simple application and contract execution process. There is no fee or obligation for applying, and within 24-72 hours, applicants receive funding options to review and choose from, based on their marketing and growth goals.

Pure Sunfarms and NOYA bring Cookies cannabis concentrates to Canada. Working with Cookies genetics from NOYA, the exclusive cultivation and processing partner of Cookies in Canada, Pure Sunfarms has grown and processed Cookies strains into cannabis concentrates. The initial offering includes GP20 Diamonds, GP20 Sauce, Georgia P Diamonds, and Georgia P Sauce now available in Ontario.

Happy Cabbage Analytics — Releases Clair, Customer Insights for Delivery & Budtenders. Clair displays real-time customer profiles and targeted product recommendations powered by machine learning. Clair is the third product to be added to Happy Cabbage Analytics’ software suite. Now clients can track and optimize the customer journey across Marketing (Polaris), Business Operations (Sirius), and Sales Interactions (Clair).

HERBL x URSA Extracts — Exclusive Distribution. HERBL will distribute URSA Extracts, maker of high quality concentrate products. All products are single source, single strain and small batch extracted from whole fresh frozen flower sourced from artisanal farms in California.

Paradise Smokes x Unrivaled Brands — California Distribution. Paradise Smokes offers a premium preroll experience in a number of form factors. The premium Accelerator Brand offers .7g indoor flower joints, available in singles and five-packs, and Paradise Plus 2g joints, infused with .2g Ahti Hash rosin, available in singles. All products are hand wrapped in unbleached organic rice paper, complemented by glass tips and premium flower from Seed Junky.

Common Citizen x Omura — Michigan Launch. Omura will provide biodegradable whole flower cannabis vaporizing cartridges, Flowersticks, to Common Citizen that will be filled with Common Citizen’s cannabis.

🧔 People | 💻 Hiring

Acreage — Appoints COO, General Counsel Resigns. Dennis Curran has been appointed COO, replacing Robert J. Daino who will be retiring at the end of March. Before joining Acreage, Curran was Chief Customer Officer at GSK Consumer Healthcare. Prior to GSK, he spent 29 years with Procter and Gamble (P&G) in both the US and Europe. James Doherty, General Counsel, has resigned.

GABY — Appoints Paul Stacey SVP Finance and CFO. Stacey will succeed GABY's current CFO, Marshall Minor (joined July 2021), who has announced his intention to explore additional opportunities elsewhere. Stacey previously served as the CFO of Dr. Murphys, a cannabis extraction and distribution facility with its own brand.

🎙️ Interviews

Weed And War: Dispatch From A Ukrainian Cannabis Website Based In Kyiv

Joe Bayern, Curaleaf, CEO on the parallels of traditional CPG and cannabis CPG

Ryan Smith, Leaflink, CEO on creating the tech infrastructure driving cannabis retail growth

Morgan Paxhia, Poseidon, Partner on 5 Things I Need To See Before Making an Investment

Denyelle Bruno, Perfect Union, CEO on the state of Cannabis

Cannabis Investing Network on Downside Risks in Cannabis Stocks

Peter Caldini, Acreage Holdings, CEO on the Company’s turnaround

👋 Highly Objective is curated by Dai Truong, who leads Cannabis Investment Banking at Arlington Capital Advisors. Third-party information presented here and links to third-party content are for informational purposes only and are not intended as a recommendation, offer or solicitation for the purchase or sale of any financial instrument, security or investment. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Linking to third-party sites in no way implies an endorsement or affiliation of any kind between Arlington Capital Advisors, LLC, or its affiliates and any third party. The information in this blog constitutes my own opinions (and any opinions posted by guest bloggers from time to time) and it should not be regarded as a description of services provided by Arlington Capital Advisors, LLC or any affiliate.

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