⚾ MLB Allow Teams to Sell CBD Sponsorships
FDA vs. JUUL. Costa Mesa approves first dispensaries. CA operators going directly to voters. Canada’s adult-use sales rebound to $287M in April. Juva Life secures $11.8M debt from Pelorus.
📢👥 If you’re interested in attending the Highly Objective Networking Event in Boston next Thursday (June 30th) from 5-8p, RSVP here, I’ll send out the exact location on Monday to those who RSVP.
Major League Baseball now allowing teams to sell CBD sponsorships.
The commissioner's office informed teams that a sponsor would need to be certified by the NSF, a global health and safety organization, to ensure the CBD products do not contain THC, which causes psychoactive effects. A sponsor would need to be approved by the commissioner's office.
FDA may toss Juul e-cigs from store shelves. The Food and Drug Administration is poised to sweep Juul e-cigarette products off store shelves, the Wall Street Journal reported on Wednesday, in what could be a major turning point for an agency that's taken a sluggish, at times disjointed approach to regulating the vaping industry. The move, coming amid a push to cap nicotine in cigarettes, may signal the Biden administration is ready to try to put tobacco use behind us. The FDA is ready to deny Juul a marketing order for its menthol and tobacco-flavored products after a two-year review that weighed the products' benefits for adult smokers against risks to teens, the WSJ reported, citing people familiar with the matter. The e-cigarette industry is worried regulators will take a carte blanche approach to policing its products. If Juul is pulled from the market, health risks to youths will have trumped arguments for using e-cigarettes as cessation products.
California’s next cannabis battle may be coming to a city near you. Some California cannabis companies are going directly to voters to get around local officials opposed to dispensaries. The epicenter for the effort is in Manhattan Beach and three nearby cities in Southern California. Hirsh Jain, founder of the cannabis consulting firm Ananda Strategy, has tracked about two dozen cities over the past year — from Red Bluff to Sausalito to Santee — where citizen initiative drives are qualifying for the ballot or pressuring local officials to develop their own ordinances to regulate and tax cannabis sales. The rising tension over the future of cannabis access in California is perhaps best captured by Manhattan Beach. Though 62% of the city’s voters supported Prop. 64, officials remain skeptical about cannabis dispensaries. City council members say there has been no groundswell of demand for retail sales among their constituents, including some who complain about being duped and coerced into signing the initiative petitions. To fight the initiative, the council directed city staff last month to develop competing measures for the November ballot that would uphold the ban on dispensaries and establish regulations, including a 25% sales tax, to make opening a dispensary prohibitively expensive.
New Mexico Marijuana Company And Patients Sue For Insurance Coverage For Medical Cannabis. New Mexico’s largest marijuana company and a coalition of patients have filed a class-action lawsuit against seven health insurance companies in the state, demanding that they cover cannabis costs for qualifying patients. The lawsuit comes months after Ultra Health sent letters to the insurers and state agencies, requesting medical marijuana coverage for people suffering from mental and behavioral health conditions based on an interpretation of state statute. Because those recipients didn’t respond—and inflation is exacerbating the financial troubles of qualified patients who are forced to pay out-of-pocket for cannabis—the company said taking legal action is necessary. Now the first-of-its-kind case is before the state’s Second Judicial District Court. “The idea of health insurance plans paying for medical cannabis may seem like an impossible dream, but all the foundational elements have already fallen into place,” Ultra Health CEO Duke Rodriguez said in a press release.
Investor, advocates sue Florida medical marijuana regulator. A cannabis investor and medical marijuana patient advocates are suing the state after regulators allegedly failed to provide public records and approved a cannabis investment firm’s request to own more licenses than allowed under state law, according to the complaint. The lawsuit is the latest development in the legal saga of cannabis investment firm Gotham Green Partners’ bid to wrest control of multistate marijuana company iAnthus from investors like Michael Weisser, a plaintiff in the suit. The latest legal dispute comes after the Ontario Superior Court of Justice approved a proposed recapitalization transaction for Gotham Green to take control of iAnthus in 2020 after the latter defaulted on a loan. The proposal requires regulatory approvals from U.S. states, many of which have cross-ownership restrictions to tamp down monopolies in the industry. Florida’s medical marijuana laws prohibit an individual or entity from “directly or indirectly” having an ownership stake of greater than 5% in more than one medical marijuana licensee. Weisser has been fighting a decision by Florida’s Office of Medical Marijuana Use (OMMU) to grant a variance to Gotham Green, allowing it to own more than 5% of two state-licensed medical marijuana companies: MedMen and iAnthus.
Carpinteria Valley Cannabis Approaches Acreage Cap. This summer, cultivators will likely hit the county’s 186-acre cap on zoning permits in the Carpinteria Valley, now the largest greenhouse cannabis-producing region in California. It’s a milestone that will trigger two critical deadlines: one of perhaps six months, officials say, for “legal-nonconforming” operators without permit approvals to stop growing cannabis altogether; and another, of perhaps a year, for growers with approvals to obtain a county business license or lose their place under the cap.
Costa Mesa approves first cannabis retail dispensaries. Two years after residents voted in favor of Measure Q, which allowed licensed cannabis retail storefronts and delivery to operate in the city, the Costa Mesa planning commission approved the first conditional use permits for two storefront retail cannabis businesses. Culture Cannabis Club plans to open a cannabis retail dispensary with delivery at 2301 Newport Boulevard, and Vertical Four intends to set up a retail-only shop at 1990 Harbor Boulevard. With retail storefronts soon to open, Costa Mesa will join neighboring Santa Ana as the only Orange County city to allow cannabis retail shops. Voters in Huntington Beach are weighing the possibility.
Canada’s adult-use cannabis sales rebound to record $287M in April. Canadians bought a record $287M worth of regulated adult-use cannabis products in April. That brings the country’s recreational marijuana sales to $1.08B through the first four months of the year. Statistics Canada shows that April sales were 3.7% higher than March, thanks mostly to Ontario’s $115.8M in adult-use revenue. Quebec led all provinces in April with M/M growth of 18%, bringing sales to $38.7M.
Northern Lights Acquisition Corp. and Safe Harbor Financial — Redemption Backstop of Up to $50M in Connection with SPAC Business Combination. The entities have entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50M with Midtown East Management. Midtown East has agreed to not redeem any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met. The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.
Juva Life — Secures $11.8M Financing, Enabling Expansion of Cannabis Operations, Further Clinical Research. The non-dilutive financing, which was closed on June 15, 2022, was facilitated by Pelorus Equity Group, who specialize in real estate debt financing solutions. The primary purpose of the financing was to provide capital to the Company to complete the acquisition of its Stockton cultivation facility, recently appraised at a value of over $17 million, for a purchase price of $4 million. Additionally, the Company plans to use the funds to further its clinical research development programs on novel compounds Juva-019 and Juva-041, targeting the treatment of inflammation. The financing is secured by the assets of Juva and its subsidiaries, Including the real estate held in Stockton. It also includes the issuance of 2,500,000 warrants, each convertible into one common share of the Company, exercisable at $.18 CAD/share for a period of 3 years post loan maturity. Additional terms include six months worth of interest being held in reserve, $0.86M being held in reserve for build out of the Company's Redwood City cannabis retail storefront, and $0.6M being held for research and development projects related to the Company’s clinical research. The loan bears a variable interest rate of 11.5% plus SOFR (Secured Overnight Financing Rate, minimum of 1.5%) over the 36-month term of the financing.
TILT — Signs Second Amendment for its White Haven, Pennsylvania Facility Purchase and Sale Agreement. The Amendment allows TILT and IIPR to extend the end of the investigational period of the transaction contemplated to a date that is on or before September 30, 2022. The parties continue to await receipt of standard third-party diligence items that have taken longer than expected to obtain, including both complete title and environmental reports. Both parties believe that extending the diligence completion period to the end of September should provide more than sufficient time to receive all outstanding materials and complete the necessary paperwork allowing the transaction to close.
Body and Mind — Amends Seaside Dispensary Purchase Agreement. The transaction has been amended to reduce the cash purchase price from $2.5M to $1.25M. "The combination of our recent debt extension, pausing our Michigan cultivation and reduced cash payment for the Seaside dispensary are designed to strengthen the Body and Mind balance sheet for future development," stated Michael Mills, CEO of Body and Mind.
Sundial Growers —Enters into a Bid Agreement for Zenabis Global’s Assets. The assets covered by the Bid Agreement include the 380,000 square foot indoor growing facility located in Atholville, New Brunswick with an annual production capacity of approximately 46,000 kgs of dried cannabis and 15,000 kgs of extraction capacity. The facility received EU GMP certification, providing a license to the facility to export internationally to Israel, Malta, the United Kingdom, and the EU. Zenabis Group also has a joint venture agreement with ZenPharm Limited, based in Malta, allowing for commercial bulk imports into Malta from the facility in Atholville and subsequent exports of finished medicinal cannabis products to countries of the EU and United Kingdom. The Bid Agreement also provides for the acquisition of a decommissioned 255,000 sq. ft. indoor facility in Stellarton, Nova Scotia, that was used as a packaging, processing, and value-added cannabis product manufacturing facility.
📄 Company Updates / Earnings
Body and Mind — Reports Q3 FY2022 Financial Results.
Revenue of $7.9M, up 10% Y/Y, Gross profit of $2.9M
Net Loss of ($2.5M)
Adjusted EBITDA loss of ($0.8M)
At April 30, 2022, BaM had $3.7M in cash
springbig — Files Form 8-K Disclosing Additional Details from its Recently Completed Business Combination. After the Business Combination, springbig has a cash of $15M on the balance sheet. Concurrently with the completion of the Business Combination, the Company closed on the remaining funding from the previously announced equity PIPE transaction, in addition to issuing $11M of senior secured convertible notes to a global institutional investor for loan proceeds to the Company of $10M. The proceeds transferred from the TCAC trust account were $8.8M.
Captor Capital — Strategic Review. Captor Capital’s Board has initiated a process to identify, examine and pursue strategic alternatives to the Company’s current business. Brady Cobb, has been named as the interim Chairman of the Board, to oversee the leadership of the Company and the Strategic Review process with an eye towards maximizing operational efficiencies and charting the most accretive path forward to maximize shareholder value. The strategic alternatives being pursued include the potential sale of all or a material portion of the Company’s 51% equity interest in Captor Retail Group (CRG), which owns and operates the One Plant chain of retail dispensaries in California, either in one transaction or in a series of transactions, with the net proceeds being paid out through dividends to the shareholders of the Company on a pro-rated basis.
Curaleaf — Secures Two More Licenses In Spain To Increase Manufacturing Capacity Of Medical Cannabis Extracts. Curaleaf International's Medalchemy, GMP certified manufacturing site in Alicante, Spain has received approval from the Spanish Health Authorities to begin operating out of its newly built extract manufacturing site and microbiological testing laboratory. This approval coincides with the news that the sub-commission of the Spanish Congress in charge of cannabis has given the green light for the implementation of a domestic medical cannabis program, recommending doctors and patients be given access to cannabis-based extracts, oils and magistral preparations. This represents an important step for Spain where the cultivation, production and manufacturing of cannabis and cannabis products is currently allowed, but for exportation purposes only.
Curio Wellness — Partner with Clemson University to Advance Research on Cannabis Tissue Culture. The Clemson University College of Agriculture, Forestry and Life Sciences is working with Curio Wellness to conduct a two-year research project to advance plant tissue science for the medical cannabis industry. Jeff Adelberg, an expert in plant tissue culture and a horticulture professor at Clemson, will lead a team involving both the University and Curio Wellness in the study.
Greenlane — Update on Plan to Generate $30M in Non-Dilutive Liquidity. As previously announced in March 2022, this strategy to generate $30M in non-dilutive liquidity entails the following primary components: 1. Securing an asset-based loan to support working capital needs ($10M); 2. Selling the Company's headquarters building in Boca Raton, Florida ($10M); and, 3. Discontinuing and disposing of non-core and lower-margin inventory ($10M).
CEA Industries/Surna Cultivation Technologies — Secures LOI from Greene Brothers Farm for a Potential $10M in Revenues. CEA Industries subsidiary, Surna, a leader in controlled environment agriculture (CEA) systems engineering and technologies, has entered into a letter of intent to provide products and mechanical engineering services over five phases with Greene Brothers Farm, a family owned and operated farm that is developing a 26-acre site exclusively for indoor cannabis cultivation. CEA Industries anticipates contract revenues of ~$10M over an estimated two to three-year period. The initial contract, valued at $1.2M, is for the first phase of products and services and is planned to be completed by early Q4 2022. The project builds out a new all-indoor Cannabis Park, located in Lockeford, California, between Stockton and Sacramento, on a 26-acre property once used as a vineyard and wine distribution center. The Greene Brothers Farm Cannabis Park is an ambitious major expansion of the Greene Brothers’ operations that are currently located at a 200-acre farm in Mendocino County. The Cannabis Park will be the new headquarters for the Greene Brothers and will include cultivation, manufacturing, non-storefront retail sales and distribution. Once complete, the Cannabis Park will utilize 371,918 square feet of new structures.
Cronos Group x Ginkgo Bioworks — Achievement of THCV Equity Milestone. Using Ginkgo’s platform for organism design and development, Cronos has successfully achieved the productivity target for tetrahydrocannabivarin (THCV), a cannabinoid hypothesized to reduce the appetite-enhancing property of THC. Access to additional rare cannabinoids will support Cronos’ innovation pipeline and commercialization strategy. Launched in 2018 with the goal of accessing rare molecules in the cannabis plant to create innovative and differentiated products that would otherwise be cost-prohibitive, the partnership between Cronos and Ginkgo aims to produce cultured cannabinoids at industrial scale.
🏬 Event / Retail / Distribution
Inaugural CA State Fair Cannabis Awards — Partners with KOLAS to Launch First-ever Digital Authentication for Cannabis Award Winners. The CA State Fair Cannabis Awards is a state agency-sanctioned competition open to all licensed California cannabis cultivators that will celebrate the 2021/2022 harvest of the California-grown, cannabis flower. KOLAS Technology SBM (Stop Black Market), a subsidiary of Sacramento-based cannabis giant KOLAS, will provide each of the 70 CA State Fair Cannabis Award Winners a certificate with a unique QR code that will link to the specific details of the award-winning entry.
Texas Original — Opens Houston’s First Permanent Medical Cannabis Pickup Location. The 1,776 square-foot facility is conveniently located in the Heights neighborhood and is the first of its kind in the city. Patients have access to a full suite of medical cannabis products—including gummies, tinctures, and lozenges.
The Cure Company — Opens First Flagship Dispensary On Crenshaw In Inglewood. The debut of this 3,496 sq ft dispensary will feature The Cure Company's award-winning portfolio including the likes of Marathon OG, CureLato, Fritz, 5G Smalls, and Minis. The Cure Company will offer a brand new exclusive drop: The Cure Co - Ice Cream Cake 3.5g Flower.
Ayr Wellness — 48th Florida Dispensary Opening in Longwood. The new dispensary spans 2,300+ sq. ft. of retail space, including an active drive-thru station. Product offerings will include Ayr’s full line of concentrates, edibles, vapes, and a growing selection of high-quality flower, including the recently launched Kynd whole premium flower and Later Days whole flower.
Kiva Sales and Service (KSS) — Will Distribute Jones Soda/Mary Jones into CA Market. At launch, Mary Jones will feature a line of 10mg THC cannabis-infused sodas sold in single dose, 12-oz bottles, with a four-pack carrier ideal for social occasions and sharing. All products are available in Jones' fan-favorite Root Beer, Berry Lemonade, Green Apple, and Orange & Cream flavors, with a rotating selection of seasonal and limited-edition flavors planned for future release.
GrowGeneration — Jackson, Mississippi Store Opening. The new store becomes the first in Mississippi, and the Company’s 64th store nationwide and will expand the number of states the Company operates in to 14. Additionally, the Company has signed two leases in North Chesterfield, Virginia and Hazelwood, Missouri. These stores are expected to be opened in the second half of 2022 and will expand the number of states GrowGen operates in to 16.
Airo Brands x Ascend Wellness Holdings (AWH) — Launch Airo Products in New Jersey. Airo is a leading cannabis inhalation brand, available in more than 1,300 dispensaries across the U.S. and Puerto Rico. Offering the premium AiroPro, AiroSport & AiroX technology, as well as their unique AiroPod cartridge oil formulations, Airo is one of the top selling brands in several markets, including Illinois, Nevada, Colorado, Washington, and Maryland.
Cova Software x Tymber — Partner to Streamline POS + eCommerce for Cannabis Retailers. The Cova POS and Tymber integration allows cannabis retailers to display accurate product information for online menus, share live inventory updates with online shoppers, build and manage customer profiles, and process transactions with compliance and efficiency. Tymber gives dispensaries an SEO-optimized, eCommerce platform that empowers retailers to break their dependence on iframe menus and 3rd party marketplaces with a recognizable brand and frictionless shopping experience. Instead of a system of fragmented services, Cova and Tymber have established a streamlined platform, optimized to manage orders, taxes, fees and discounts. The system provides cannabis retailers with intuitive sales tools like live inventory tracking and convenient service offerings such as delivery.
Kind Love — Turbocore Proprietary Microencapsulation Technology. The unique shape and function of Turbocore make it incredibly easy for consumers to elevate their smoking experience, with virtually no effort or expertise required. The toothpick-like shape allows Turbocore to be stuck directly into a pre-roll or joint. From there, consumers can simply light the joint and begin smoking as usual—but the experience will be dramatically improved. Each of the picks contains 100 mg of extract, and consumers can choose depending on their strain preferences.
Fly Beverage — Launch Of New Travel Size Shot Format. Fly Beverage launched two traveled sized 2oz shots, bringing the company’s total SKU count under the Uncle Arnie’s brand to six products. This launch builds on the initial success of Uncle Arnie’s flagship 8oz beverages, having sold over 500,000 units in the previous 24 months, and currently commanding a 26% market share of the 100mg beverages sold in California year-to-date. In addition to the introduction of a new size format, this launch showcases Uncle Arnie’s first functional beverages leveraging cannabinol (CBN) for calming effects. The two new products are: Uncle Arnie’s Blueberry Night Cap Shot (100mg THC 5mg CBN) Uncle Arnie’s Strawberry Kiwi Shot (100mg THC)
Flower One — Launches Veteran Created and Inspired Brand, Kuno. Kuno’s products will be available at a discounted price to veterans at participating retailers. A portion of the brand’s sales will be donated to the SEAL Future Foundation and other veteran-focused charity organizations. Kuno products will be available in Nevada at Jardin, Oasis, NuWu and other participating retailers. Products from this launch will include 1/2 oz and 1/8 oz of premium full-sized, single-strain flower.
Aurora Cannabis cutting 12% of workforce in reorganization. Aurora Cannabis is cutting 12% of its global workforce as part of a corporate restructuring, the Company confirmed in an email to MJBizDaily, saying it identified additional cost savings worth up to $69M to support its path to profitability.
Akanda — Concerned Shareholders Replace a Majority of Akanda's Board. The concerned shareholders of the Corporation collectively own or control 16,556,779 common shares (~54.1% of the issued and outstanding shares), passed a written resolution of the shareholders of the Corporation pursuant to the provisions of the Business Corporations Act removing each of Louisa Mojela, Philip van den Berg, Charles Kié, Gila Jones, Gugu Dingaan and Bridget Baker as directors of the Corporation effective immediately, and electing each of Harvinder Singh, Mohsen Rahimi, Jatinder Dhaliwal and Kathryn Field.
The Parent Company CMO Esther Song Breaks Down Business, Culture and Heritage (Cannabis Business Times)
When Investing in Cannabis MSOs (Parallel) Gets Messy (High-Rise)
TerrAscend Gears Up for Adult-Use Transitions in Three Key Markets (NCV)
Eric Leslie, Co-Founder, Cheeba Chews discusses origin story and innovation (The Dime)
PharmaCann spans 8 States and anticipates doubling its revenue this year (NCV)
GABY is focused on growth in the Golden State (NCV)
👋 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.