📰 More Management Changes (Cronos CEO, HEXO CFO, Schwazze COO)
📰 More Management Changes (Cronos CEO, HEXO CFO, Schwazze COO)
Michelin Stars to Cannabis. Flower One Q2'20 results. Cresco Labs launch Good News brand.
🌿Industry
Michelin Stars to Cannabis. In a world where the definition of craft cannabis looks to be getting a bit blurry, the agricultural skillset that former French Laundry farm chef Aaron Keefer brings to Sonoma Hills Farm’s new cannabis effort can only be described as artisan. For years, Keefer helped cultivate and maintain French Laundry’s three Michelin Stars in the most literal sense. That is, in addition to all the other assorted accolades that give the Yountville restaurant a seat at the table when discussing the best fine dining experiences on the planet. But Keefer was growing pot long before he got into a kitchen for the first time at age 17. Even as he worked to keep French Laundry on top of the culinary world, he was moonlighting as a cannabis provider to some of San Francisco’s OG dispensaries. Keefer also previously worked with Jeremy Fox and the Bouchon Beverly Hills.
When the opportunity came up for Keefer to merge his passions with Sonoma Hills Farm, he jumped at it. Since 2018 he’s worked on the western edge of wine country in hopes of creating an ecosystem to grow the best pot possible, matching the quality of the vegetables he grew, which run a few hundred bucks a plate. These days, Keefer serves officially as Sonoma Hills Farm’s Vice President of Cannabis Cultivation and Operations. The story in itself is wild, and understandably it picked up a lot of steam in February when the farm put a bit more effort into getting the word out about Keefer’s departure from the famed Thomas Keller Restaurant Group to lead their cannabis operation. But you can only tell so much by word of mouth. So this week we headed north to see the farm with our own eyes. We wanted to experience it away from all the hype, to let the terpenes speak for themselves. And they did- loudly.
Why No Cash Crop Is More Vulnerable To California Wildfires Than Cannabis.
After years of crashing prices, the market for sun-grown cannabis was roaring back. Small farmers were making money again. Onerous regulations favoring big operators and steep licensing fees had driven many small cultivators out of business, but for those who managed to stick it out, 2020 seemed like the beginning of the reward. Legalization would actually work! Then the lightning hit and the fires started, and 2020 came for the outdoor weed farmers. Key growing regions in southern Humboldt and in the Bell Springs area in Mendocino are blanketed in smoke or threatened by flames, and in the crucial weeks ahead of the fall harvest.
There is no other crop in the state quite so vulnerable to fires—and no industry with less help available to it after such a disaster. Cannabis is uniquely sensitive to wildfires because it is grown in wildfire zones. This is not a foolish or antiquated decision. It’s good agriculture and good business.
An accusation of betrayal targets GTI CEO. In early 2014, Cary Neiman was a scrappy cannabis grower feeling ecstatic as he watched the long-standing taboo around his favorite plant easing. More and more states were enacting laws to allow medical and even recreational uses. He was determined to participate in the economic boom that would inevitably follow. So, on April 2, 2014, Neiman called up the richest person he knew. What happened next is the subject of a lawsuit against one of the world’s largest cannabis companies. According to the lawsuit filed by Neiman in Illinois’ Cook County Circuit Court, Neiman’s richest acquaintance, a private equity investor named Benjamin Kovler, who knew nothing about the cannabis business at the time, promised Neiman partnership and financial support but ended up stealing the company and kicking Neiman out.
Greenstop launches its cannabis vending machine in California dispensaries. Cannabis is now available from vending machines in select California dispensaries. Made by California-based Greenstop, the self-serve kiosks can simultaneously serve four customers while still conforming to local regulations. And they couldn’t come at a better time. The Smart Dispensary units are located in two locations at launch: Marina Caregivers in Marina Del Rey, California, and The Healing Touch, in Encino, California. Because each kiosk serves four people, adding one kiosk to a small dispensary can increase sales capacity without hiring a new budtender.
Weedmaps — Cannabis Policy, White Papers & Briefs. Good resource guide that has white papers on tax, delivery, banking, and more.
IRS issues new tax-payment guidance for marijuana companies. The IRS issued general guidance on 280E, Income Reporting, Cash, etc.
📄Financial Results
Revenue: $3.9M, with sales in June increasing 144% over May and 78% over April
Gross Margins: 46%, up significantly from 28% in Q1 2020
Launched new products for several brands, including The Clear, Old Pal, and 22Red, and signed Lift Tickets Laboratories as 16th brand partner
Provided manufacturing inputs for 4 of the top 10 edibles brands and 2 of the top 10 vape brands in Nevada (Source: Headset, August 2020)
Produced 3 of the top 20 edible brands in Nevada, including Kiva’s Camino Gummies, and Old Pal, which remains the number-one flower brand based on total units sold
The Company also raised an additional $5M overnight marketed offering, priced at C$0.25/unit which consisted of one share and one warrant exercisable at C$0.36/share for a period of 36 months.
Investors reacted negatively to the surprise capital injection and the stock has been trading down the past 3 trading days.
🧔People
Cronos taps former Blue Buffalo, Nestle exec as new CEO. Cronos appointed Kurt Schmidt to be its new chief executive officer on Wednesday in a move the cannabis producer said will help usher in a new phase of growth for the Toronto-based company. Schmidt, who has worked in the CPG space for more than three decades at companies such as Blue Buffalo and Nestlé, replaces Mike Gorenstein, who will become Cronos' new executive chairman. Kurt currently serves on the Board of Campbell Soup Company.
HEXO — Trent MacDonald appointed CFO. MacDonald most recently served as the CFO for Rx Drug Mart, a private pharmacy operator/consolidator, helping to guide it through significant growth in sales. Prior to that, he served as VP Finance of Indigo (TSX: IDG) and VP Finance for some of Sobeys’ (TSX: EMP.A) largest divisions and regions.
Schwazze— promotes CIO to COO. Nirup Krishnamurthy, Chief Integration and Information Officer, will become COO. Krishnamurthy joined Schwazze earlier this year, bringing 25+ years of experience in innovation, technology, integration, restructuring and M&A at Fortune 500 companies. As CIO for United Airlines, he helped oversee one of the largest turnaround restructurings in corporate American history, spearheading initiatives to drive major cost reductions and revenue enhancement. Krishnamurthy also held C-level roles with Northern Trust Bank and former grocery retailer The Great Atlantic & Pacific Tea Company (A&P).
CannaCraft adds CMO, VP Sales. Angela Pih as CMO and Ron Gray as VP Sales. Pih most recently served as CMO at Papa & Barkley. Prior to entering the cannabis sector, Pih held various executive marketing roles for premium brands and retailers including Halston and Planet Blue. Gray brings 20+ years of sales leadership experience, most recently serving as SVP Sales for Papa & Barkley. During his three years in that role, he helped the brand achieve 8 out of 10 top-selling topicals and 4 out of 10 top-selling tinctures, as well as launched their CBD line into national accounts. Prior to P&B, he spent 3 years in hands-on roles exploring all facets of the industry, from cultivation to distribution. Prior to entering the cannabis sector, Gray held various sales leadership roles in the pharmaceutical industry.
💻Hiring | 🔍Looking
Groundworks Industries — Director of Operations, CA. The Director of Operations, CA is responsible for providing overall leadership and direction of Groundworks Industries California Operations in alignment with the company strategic plan. Informed by a 'Balanced Scorecard' approach equally emphasizing People, Process/Technology, Customer and Finance the Director of Operations, CA will develop, implement and monitor processes while leading a large cross functional team to ensure operational excellence, achievement of financial targets, and maintain a focus on people development.
AWH — FP&A Analyst. Analyst will be responsible for performing various financial activities including budgeting, modeling, forecasting, performance reporting, and expense management. This position is an integral part of a dynamic finance team and a key business partner to the retail and manufacturing businesses.
🏬New Store Openings / Product Launches
Cresco Labs launch Good News (shorties, vapes, gummies)
Trulieve and SLANG Worldwide partner in MA
Wana Brands launches with Indiva in Canada
Liberty Health brings Clarity Brands (Gummies) and Big Pete's (Cookies) to FL
Liberty Health brings VCC brands (cookies, pretzels, lozenges, beverages, teas, and tinctures) to FL
Trulieve — Tampa (58h FL location)
Curaleaf — Ely, NV (3rd NV dispensary, 93rd overall)
🤷♂️Somewhat Relevant
Podcast — Understanding the Big 4 MSOs (ft. CannaVestments aka Nick Gastevich)
Who writes this newsletter? ➡️ Dai Truong