⚔️ MedMen Terminates Investment Agreement with AWH for MedMen NY
GTI acquires LeafLine Industries (MN). MJBiz acquired by Emerald X for $120M. The Greenrose Holding Company closes acquisition of True Harvest (AZ).
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🌿 Industry
5 charts that explain the cannabis industry’s unpredictable 2021. Political and pandemic upheavals made 2020 an exceptional year. And the roller-coast ride failed to slow in 2021, marking a second straight year of extreme unpredictability for the cannabis industry. Would marijuana retail sales continue to skyrocket, with more and more pandemic-weary consumers seeking out cannabis for stress relief?
Would the new Democratic president and Congress be able to push through landmark cannabis reform legislation?
Would investors resume writing big checks for cannabis companies?
MJBizDaily put together five charts to help explain the state of the cannabis industry in 2021:
How Oklahoma Became a Marijuana Boom State. Ever since the state legalized medical marijuana three years ago, Oklahoma has become one of the easiest places in the United States to launch a weed business. The state now boasts more retail cannabis stores than Colorado, Oregon and Washington combined. In October, it eclipsed California as the state with the largest number of licensed cannabis farms, which now number more than 9,000, despite a population only a tenth of California’s. The growth is all the more remarkable given that the state has not legalized recreational use of marijuana. But with fairly lax rules on who can obtain a medical card, about 10% of Oklahoma’s nearly four million residents have one, by far the most of any other state. Fueled by low barriers for entry and a fairly hands-off approach by state officials, Cannabis entrepreneurs have poured into Oklahoma from around the U.S.. It costs just $2,500 to get started, compared to $100,000 or more across the state line in Arkansas. And Oklahoma, a state that has long had a tough-on-crime stance, has no cap on how many dispensaries can sell marijuana, the number of cannabis farms or even how much each farm can produce.
Missouri Medical Cannabis Sales Reach $200M in 14 Months. In all, there are more than 160,000 medical cannabis patients in the state. So far, there are 180 dispensaries, 58 manufacturing facilities, 41 cultivators, 19 transportation-related businesses, and eight testing laboratories licensed by the state. Legal cannabis advocates in the state, led by Legal Missouri 2022, are campaigning to put an adult-use question on this year’s midterm ballots. If approved, the amendment would grant 144 new cannabis business licenses via lottery, with 66% of them set aside for cultivation companies and 33% for dispensaries.
Illinois legal cannabis sales reach ~$1.4B in 2021, double last year's total. December cannabis sales broke monthly sales records with $137.9M sold and Illinois cannabis stores doubled sales over the prior 12 months. Monthly sales totals for all of 2021 published by the Illinois Department of Financial and Professional Regulation showed nearly $1.4B sold, more than doubled the $669M sold in 2020. December sales of $137.9M topped the previous monthly record set in July 2021 with $127.8M sold. For the prior calendar year, in-state residents bought $943M while out-of-state residents bought more than $436M.
💵 Deals
MedMen — Terminates Investment Agreement with AWH. The Investment Agreement, pursuant to which AWH would have invested into MedMen’s New York Operations, was previously announced in a press release dated as of February 25, 2021. AWH also issued a press release, saying MedMen materially breached the previously announced definitive investment agreement. AWH has made repeated attempts to close the transaction. Subsequently, AWH received notice that MedMen has attempted to unilaterally terminate the Investment Agreement despite receiving final approval from the state of New York and AWH waiving all of their closing conditions. This is a material violation of MedMen's obligations under the Investment Agreement to close the transaction. AWH will continue to pursue all measures to encourage MedMen to honor the Investment Agreement and close the transaction. AWH’s CEO, Abner Kurtin, also took to twitter to comment on the matter:
MedMen is in a much different position than when it agreed to the deal with AWH in February. The company amended its convertible notes in August (and Tilray bought the notes and warrants) and Michael Serruya became Chairman and Interim CEO in November (additional access to cash if needed through Serruya Private Equity).
GTI — Enters Minnesota through Acquisition of LeafLine Industries. As one of only two licensed cultivators in the Minnesota medical cannabis market, LeafLine is licensed to grow, process and dispense cannabis directly to patients. The acquisition of LeafLine includes a cultivation facility and five open and operating retail locations in Eagan, Hibbing, St. Cloud, St. Paul and Willmar. Green Thumb will also maintain the opportunity to open up to three additional retail locations in the state. With a population of nearly six million people, Minnesota began medical cannabis sales in 2015 and currently has only about 29,000 registered active patients according to the Minnesota Department of Health.
The Greenrose Holding Company — Closes Asset Purchase of True Harvest, LLC. Under the terms of the acquisition, Greenrose paid consideration of $57.6M at close ($12.5M cash, $23.0M convertible note, $4.6M assumed debt, and $17.5M stock). Contingent upon True Harvest achieving a certain price point per pound of cannabis flower relative to total flower production within 36 months of the closing of the transaction, Greenrose will pay additional consideration of up to $35.0 million in the form of an earnout, payable in shares of common stock of the Company.
MJBiz acquired by Emerald X for $120M in cash plus potential earnouts. MJBiz has been acquired by Emerald X, a wholly owned subsidiary of Emerald Holding, a New York-based B2B event and media company. The earnout will be an amount equal to the EBITDA growth of MJBiz (amount equal to the average MJBiz EBITDA over the past two years minus $13M multiplied by 9.3). The acquisition includes MJBizCon, the oldest and largest trade show of its kind in the cannabis industry, as well as related media and event brands that include award-winning publications MJBizDaily, Hemp Industry Daily and MJBizMagazine. The purchase also includes The Emerald Conference, a cannabis science event MJBiz acquired in 2020. Emerald’s major events include Outdoor Retailer, ASD Market Week and the International Pizza Expo.
📄 Company Updates
Red White & Bloom — Settles $4.0M Debt, Refinances $10.0M Acreage Florida Acquisition Note, Grants Stock & Options. The company issued 6,784,812 shares to settle a $4.0M debt. The weighted average conversion price is ~$0.56 per share. By settling the debt at a favorable conversion price, RWB will realize an accounting gain of ~$1.8M. Further to its press release of April 28, 2021, RWB has refinanced the $10M principal amount of its “seven month” vendor take-back note issued to High Street Capital Partners, LLC, in connection with RWB Florida LLC’s acquisition of all of the issued and outstanding shares of Acreage Florida. To refinance, RWB entered into an agreement for an aggregate principal amount of ~$11.5M secured debenture on November 29, 2021 from an arm’s length investor. The Debenture bears interest at the rate of 10% per annum and matures on May 30, 2022 unless accelerated under certain circumstances. Additionally, on December 21, 2021, RWB granted the following: 500,000 stock options to a member of the board of directors at the price of $0.31. The shares will vest in one year and135,000 restricted share units (RSU) to a subcontractor for services at a deemed price of CAD$1.00. The RSUs vest on issuance.
🏬 Retail
Columbia Care — Opens 80th Dispensary with New Cannabist Location in Virginia Beach, VA. The new dispensary marks Columbia Care’s fourth location in Virginia, following its recently announced gLeaf opening in Glen Allen, a Richmond suburb. The Company is licensed to operate a market-leading total of 12 dispensaries between Columbia Care and gLeaf to serve the growing base of nearly 40,000 registered medical patients across the state. To support this retail footprint, Columbia Care currently operates nearly 148,000 square feet of existing cultivation and production capacity and has a fleet of delivery vehicles able to serve the entire state.
Ayr Wellness — Adds to Pennsylvania Footprint, Opens New Dispensary in Bryn Mawr. Ayr Wellness Bryn Mawr will be the Company’s eighth affiliated dispensary in The Commonwealth of Pennsylvania. The ~3,000 sq. ft. dispensary continues the rapid expansion of the Company’s presence in Pennsylvania’s burgeoning medical marijuana market. The dispensary is located in the vicinity of five major colleges. Bryn Mawr is located toward the center of the “Main Line”, a group of affluent suburban villages stretching west from Philadelphia toward Malvern, PA. The Bryn Mawr dispensary is the fifth of six potential dispensaries opened by CannTech PA LLC, a wholly owned Ayr subsidiary, clustered in the Philadelphia and Pittsburgh metro areas. PA Natural Medicine, another Ayr subsidiary, operates three dispensaries in Central Pennsylvania towns State College, Bloomsburg and Selinsgrove.
🧔 People | 💻 Hiring
Verano — adds Veteran CPG Industry Finance Executive Brett Summerer as CFO. Summerer brings more than 21 years of diverse financial leadership experience to Verano’s executive team. Throughout his career, he has held leadership positions of increasing responsibility across multiple information technology, manufacturing, and CPG companies. Summerer began his career in the IT sector at Modern Engineering, and after serving as Head of Information Technology, he ultimately rose to the CIO position, where he managed the firm’s budget, vendor contracts, and operational integration for four acquisitions. He then spent 10 years at General Motors in FP&A, Controller, and CFO positions in the U.S. and Asian markets. After leaving GM, he served as the Head of FP&A and Supply Chain Finance for Corning Incorporated, and subsequently gained pharmaceutical industry experience as the Head of Finance for their pharmaceutical business. Most recently, Summerer served as VP, Head of Supply Chain Finance and CFO of The Kraft Heinz Company’s U.S. Operations, where he led all aspects of the CPG company’s financial activities across its extensive national manufacturing footprint in its largest market.
22 Cannabis Leaders Who Will Shape the Industry in 2022. Whether it’s the astute bets they make on the companies of the future, novel paths of expansion and growth, or continued leadership on social justice and equity, these are the people who will shape the cannabis industry over the next twelve months.
Harborside — Departure of Board Member Michael Dacks. Dacks is leaving to pursue other opportunities as Harborside prepares to reconstitute its Board in 2022, following the closing of the acquisitions of Loudpack and Urbn Leaf to create StateHouse Holdings, as announced in the Company's press release (11/29/21).
PAX — Head Of eCommerce (SF)
Weedmaps — Director, Product Analytics & Operations (Remote)
FLOWER CO. — Growth Marketing (Remote)
🎙️ Interviews
Trulieve CEO, Kim Rivers — Cannabis “is a fundamental state story” that is here to stay
Navy Capital CEO, Sean Stiefel — shares his top cannabis stock picks
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