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🐎 New Mexico Cannabis Sees $3.5M in Sales after First Weekend of Adult Use
MORE Act passes in House. March And Ash x CannaCraft merge to form Groundwork Holding. 4Front Ventures acquires Island Cannabis. Earnings - Tilray Brands, The Parent Company, TILT, 4Front Ventures.
New Mexico cannabis sales total more than $3.5M in first weekend. From Friday through Sunday, New Mexico cannabis businesses racked up a total of more than $3.5 million in recreational use sales statewide. In total, buyers made nearly 58,000 individual transactions. That puts the average purchase at about $61/purchase.
House Votes to Decriminalize Cannabis. The House passed legislation this past Friday to decriminalize marijuana at the federal level, as Democrats and three Republicans banded together to capitalize on the political resonance of legalized cannabis as an issue of economic growth, racial justice and states’ rights. Similar legislation passed in 2020 but went nowhere in the Republican-controlled Senate. The vote on Friday was the first since Schumer elevated the issue in that chamber. After its passage, he said, “the time has come for comprehensive reform of federal cannabis laws. Of course, we will need Republicans to pass a legalization bill in the Senate, and we will be working hard to try and get them.”
280E disqualifies all expenses beyond cost of goods sold (COGS) for businesses involved in trafficking of Schedule I or II substances, resulting in extremely high federal income tax rates. In 2021, Trulieve’s effective tax-rate was 89%, up from 60% in 2020 and 49% in 2019, due to 280E. As the table points out, the federal tax was inflated by $85.6M due to 280E.
While Trulieve generated $271M in 2021 EBITDA, Net Income was $18M.
Oregon Raises Potency Limits for Cannabis Edibles to 100mg / 10mg THC per serving. As part of Oregon’s new cannabis rules, licensed cannabis shops can begin selling edible packages which contain up to 100mg THC and 10mg THC per serving. The new rules allow stores to sell edibles which are nearly twice as strong as those allowed under the previous limits. Prior to the upcoming switch, cannabis stores could only sell packages with up to 50mg THC and 5mg per serving.
Cannabis Sales Bounce Back in February. Following a sharp decline in December from November, cannabis sales plunged in January across markets covered by cannabis data analytics firm BDSA. In February, all of these markets advanced on a per-day basis, with some markets actually experiencing sequential growth despite three fewer days in the month. The year-over-year (YoY) growth rates stabilized or advanced despite ongoing pressure from declining flower sales. CA—California sales fell 7.8% sequentially to $253.5M, with its 11.7% YoY decline in February slightly better than the 12.2% YoY drop in January. Flower sales continue to drag down overall sales, declining 22%, with pre-rolls gaining 9%. Ingestibles fell 9%, while concentrates dropped 7% from a year ago during February.
Airbnb has teamed up with Sonoma County craft cannabis farm, Sonoma Hills Farm, to offer an overnight stay (Saturday, April 30—Tuesday, May 3) at a neighboring property (privately-owned residence) that overlooks the farm, Booking opens at 10am on 4/20. As part of the stay, Sonoma Hills Farm’s VP of Cannabis Cultivation and Production Aaron Keefer will offer guests a tour of the farm’s culinary vegetable and hemp garden (due to regulations and legal limitations guests will not be visiting a cannabis grow or interacting with cannabis during their stay). The Company also recently dropped a limited release collaboration with Select Elite Live oil. Select hand-picked sungrown flower from OCal and Sun & Earth certified Sonoma Hills Farm to turn it into the Elite Live oil—known for higher terpene content for enhanced flavor. The collab features a new R&D strain from Sonoma Hills Farm.
March And Ash x CannaCraft — Merge to form Groundwork Holding.
Jackie Bryant reported on the story and said both March and Ash and CannaCraft will retain their current organizational structures and their respective C-suites. March and Ash operates seven dispensaries in San Diego and Imperial Counties. CannaCraft is best known for its in-house cannabis brands—Farmer and the Felon, Care by Design, and AbsoluteXtracts. The merger provides CannaCraft with built-in retail storefronts and a delivery network, as well as a vertical operation for March and Ash’s retail outfit.
4Front Ventures — Acquires Island Cannabis. 4Front's plans to reduce production costs and scale Island’s volume through their Commerce facility (170,000 sq ft). CEO, Ray Landgraf, COO, Brandon Mills, and the Island leadership team will join 4Front.
Harborside — Completes Acquisition of Loudpack. The acquisition of Loudpack follows Harborside's acquisition of Urbn Leaf completed on March 1, 2022 and Harborside's acquisition of Sublime completed on July 2, 2021. Following completion of the acquisitions, the Company plans to be renamed StateHouse.
Estimated pro-forma gross revenue of ~$165Mfor the first 9 months of 2021
Statewide presence with 15 retail locations
#3 ranked brand house in California with nine brands, including top-five ranked brands in the pre-roll (Fuzzies and Kingpen), edible (Smokiez) and value flower (Dime Bag) segments
Manufacturing facilities with annual capacity of more than $400M in branded products revenue at full utilization, with capabilities to produce across all product formats offered by the Company
Fully scaled greenhouses featuring capacity of 230,000 sq ft of cultivation space, with additional near-term expansion capacity of more than 100,000 sq ft
Delta 9 — Closes Transformative Retail Acquisition, $32M Credit Facilities and $10M Strategic Financing. Delta 9 Cannabis has closed a transaction with Uncle Sam’s Cannabis and Wissam El Annan to acquire all or substantially all of Uncle Sam’s assets relating to the operation of seventeen retail cannabis stores in Alberta. The Company will also be closing it’s previously announced $32M in credit facilities from Connect First Credit Union. To provide additional funding, the Company will also complete a private placement of $10M in principal amount of senior secured second-lien convertible debentures by Sundial. The subscription price of $9.6M represents an original discount of 4%. The Sundial Debenture matures on March 30, 2025 and bears an interest rate of 10% per annum, subject to increase on the occurrence of certain events as set forth in the Sundial Debenture, payable monthly.
Sundial Growers — Completes Acquisition of Alcanna. Sundial completed its previously disclosed acquisition of Alcanna pursuant to a plan of arrangement, for total consideration of ~$320M consisting of cash and common shares of Sundial.
📄 Company Updates / Earnings
Tilray Brands — Q3 FY 2022 Financial Results
Net revenue increased 23% to $152M from $124M vs Q3 FY 2021. The increase was driven by 32% growth in cannabis revenue to $55M, 64% growth in beverage alcohol revenue of $20M and wellness revenue of $15M
Gross profit increased 31% to $40M from $30M vs Q3 FY2021. Gross margin increased to 26% from 25% vs Q3 FY2021
Maintained #1 leadership position in Canada with 10.2% cannabis market
$279.2M in cash and cash equivalents as of February 28, 2022
The Parent Company — Q4 and Full Year 2021 Financial Results
Q4 2021 Financial Highlights
Net sales of $39.6M; Gross profit for was $2.3M (6% GM); Net (income) loss and comprehensive (income) loss was $50.6M; Adjusted EBITDA loss for Q4 2021 was ($27.5M). Adjusted EBITDA removes the effects of changes in fair value of financial instruments, impairment charges and other non-cash items
FY 2021 Financial Highlights
Net sales were $173.4M; DTC Revenue was $54.2M (31% of sales); Wholesale revenue was $119.2M (69% of sales); Gross profit was $20.2M (12% GM);
Net (income) loss and comprehensive (income) loss was ($587M); Adjusted EBITDA loss for FY 2021 was $62M
Unrestricted Cash and equivalents totaled $165.3M as of December 31, 2021
TILT Holdings — Q4 and Full Year 2021 Results
Q4 2021 — Revenue increased ~28% to $54.1M compared to $42.3M in the year ago period; Gross profit before fair value adjustments was $11.3M (~21% of revenue), compared to $11.3M (~27% of revenue in the year ago period); Adjusted EBITDA increased to $4.8M compared to $4.5M in the year ago period; At December 31, 2021, cash and cash equivalents was $7.0M; total debt was $86.6M compared to $71.8M. The Company is actively exploring options to address its debt structure.
FY2021 — Revenue increased ~28% to $202.7M compared to $158.4M for FY2020; Gross profit before fair value adjustments was $50.5M (25% GM), compared to $46.7M (29% GM) revenue for FY2020; Adjusted EBITDA increased ~33% to $22.5M compared to $16.9M in FY2020.
4Front Ventures — Q4 and Full Year 2021 Results
Q4 2021 — Systemwide Pro Forma Revenue increased 35% Y/Y, and remained flat sequentially, at $33.8M; GAAP revenue increased 68% Y/Y, and 10% sequentially to $28.5M'; Adjusted EBITDA was $13.2M; Commenced operations at California production facility
FY 2021 — Systemwide Pro Forma Revenue increased 50% Y/Y to $132.7M. GAAP revenue increased 81% Y/Y to $104.6M; Adjusted EBITDA increased 479% Y/Y to $34.0M (32.6% GM); Cash flow from Operations increased to $7.4M in FY 2021 as compared to a loss of ($14.0M) in FY2020
Curaleaf — Named to TIME's List of the World's 100 Most Influential Companies. Curaleaf has been named on the second annual TIME100 Most Influential Companies list – an extension of the annual TIME100 list of the world's most influential people – that highlights 100 companies making an extraordinary impact around the world. Curaleaf was highlighted in the Leaders category for its growth model.
Trulieve — Launching Limited '4.20 for All' NFT Collection. The first cannabis MSO to enter the metaverse, Trulieve's "4.20 for All" NFT Collection will be sold on the OpenSea marketplace. Each NFT features a different hand holding a cannabis product. The campaign celebrates cannabis' diverse community and culture, which includes all types of users and products. Highlighting some of Trulieve's most popular products on dispensary shelves, the "4.20 for All" NFT Collection features 10 different original pieces of digital art. There will be 42 copies of each, which results in 420 total offerings in the collection. Each NFT will be initially offered at .042 Ethereum and every winner will receive a premium, personalized physical gift item.
Sundial Growers — Granted MCTO. The Company applied for the MCTO due to an expected delay in the filing of the audited consolidated financial statements for the year ended December 31, 2021, annual management's discussion and analysis for the same period, annual information form for the same period and management certifications of annual filings beyond the deadline of March 31, 2022 prescribed by Canadian securities laws. The MCTO restricts the CEO and CFO from all trading in securities of the Company until such time as the Filings have been filed by the Company and the MCTO has been lifted. The MCTO does not affect the ability of other shareholders of the Company to trade in securities of the Company.
Verano — Opens Marco Island’s First Cannabis Dispensary, MÜV Marco Island. Verano opened Marco Island’s first cannabis dispensary, MÜV Marco Island, the Company’s 44th location in Florida. As the first medical cannabis dispensary in the island community of more than 15,700 residents, MÜV Marco Island is situated in a popular tourist area. Marco Island, Naples and the Everglades welcomed 175,000 visitors in February 2022, including 24,000 Floridians.
Verano — Opens Zen Leaf Canton, Ohio Dispensary. Zen Leaf Canton is relocating from its former home in an industrial area to a busy thoroughfare situated just over one mile from the Pro Football Hall of Fame that sees average daily traffic of 18,427 vehicles/day. Ohio medical cannabis sales are expected to generate more than $507M in revenue through the end of 2022. Verano’s Ohio footprint includes a cultivation and processing facility and five dispensaries; nationally, the Company’s active operations span 13 states, comprised of 95 dispensaries and 12 cultivation and processing facilities with more than 1 million square feet of cultivation capacity.
Columbia Care — Opens Fourth Cannabist Dispensary in West Virginia; Establishes Wholesale Leadership Position. Cannabist Morgantown is the fourth Columbia Care dispensary to open in the state and the Company’s 84th nationwide. Columbia Care is currently one of two operators in the state manufacturing product, and is the only operator selling to third party dispensaries, with its product now available in 75% of the state’s dispensaries. Since opening its first dispensary, the Company has launched 20 products under the Seed & Strain brand. Additional in-house brands Triple Seven and Classix are anticipated to launch in the state next.
Trulieve — Launch Adult-Use Sales at Napa Retail Location. Trulieve's Harvest of Napa location will be among the first adult-use dispensaries to operate in Napa. Napa's City Council approved a new ordinance on February 1 to allow adult-use cannabis retailers and manufacturers. Harvest of Napa was the first dispensary open to Napa patients in December 2018. Additional Trulieve branded and affiliated dispensaries in California are located in Palm Springs, Downtown Palm Springs, Grover Beach, and Venice.
Trulieve — Opens Framingham, MA Location. At more than 5,000 sq ft, the Trulieve Framingham showroom will offer a fresh, spacious, contemporary look with elegant finishes. The updated configuration allows customers to browse and explore in an interactive space. The dispensary will open as an adult-use dispensary and expand to include medical cannabis later this Spring. This is Trulieve's third and largest retail location in Massachusetts.
TerrAscend x Cookies — Partner to Open Third Cookies Dispensary in Michigan. Located in the heart of Ann Arbor, the new flagship cannabis provisioning center (3,900 sq ft) will be operated by Gage in exclusive partnership with Cookies. Gage is the exclusive partner of Cookies in Michigan for cultivation, processing and retail, with the partnership recently extended until 2026. With the new location, TerrAscend now operates 26 dispensaries serving medical and adult-use cannabis markets in the U.S. and Canada, including 3 Cookies dispensaries in Michigan and 1 in Toronto.
Cloud Cannabis — Expand to seventh Michigan location in Kalamazoo County. Cloud, which also operates recreational dispensaries in Muskegon, Gaylord, Ann Arbor and Utica, as well as medicinal dispensaries in Traverse City and Detroit, recently purchased the KKind brand and is in the process of transitioning both the Kalamazoo retail space and Big Rapids retail space to Cloud Cannabis. Cloud also acquired KKind’s 70,000 sq ft cultivation facility in the sale.
Coast to Coast Cannabis — Opens New Flagship Store in Downtown Los Angeles’ Arts District. The 14,000 sq ft, two floor building, has multiple grow rooms on site that will produce eighty pounds of top shelf cannabis flower per month. Illuminating the lobby and extending through the sales floor is Coast to Coast’s signature grow show—a visible grow room that showcases 160 cannabis plants growing from their first week through harvest. The open floor plan allows customers to shop at their own pace, while the speakeasy style bars create an intimate and personalized purchasing experience with knowledgeable budtenders.
Heavy Hitters — HVY 25 Beverages. Cannabis-native Acapulco Gold terpenes and Liquid Trichomes™, lightly carbonated and canned, HVY 25 mocktails are perfect for lifting your spirits, without actually being one. The beverages are available as four different lifted libations: HVY Seltzer, HVY Mule, HVY Marg, and HVY Tonic.
Kiva — Everything Bagel Bar. Kiva Confections has partnered with Los Angeles' Yeastie Boys Bagels to make a special release celebrating the upcoming 4/20 holiday—an Everything Bagel Seasoning Munchies Bar, which is a Cannabis-infused chocolate bar with everything bagel seasoning.
Adam Devine x Cann — Blue Rhuberry, Exclusively on Eaze. The new, limited-edition flavor, Blue Rhuberry, in partnership with celebrity investor and comedic actor, Adam Devine, and Eaze. Featuring rhubarb, raspberry, blue butterfly pea tea and a microdose of THC, the hi boys (5mg THC) and is available exclusively through Eaze in California. For the first time ever, Cann is launching this celebrity collaboration flavor in a “dry boy” Unspiked format nationwide, offering consumers the same delicious flavor of Cann—without the THC.
Ben Wallace — “Undrafted” Cannabis Line. The line — which is named as a nod to Wallace being the only undrafted player to be inducted into the NBA Hall of Fame — is created in collaboration with Rair, a Jackson, Michigan-based cannabis company with dispensaries in Bay City, Muskegon, Big Rapids, and Lowell. Founded in 2019, Rair says it’s the only Mitten State cannabis company to use aeroponic technology, a method that uses air or mist environments rather than soil or an aggregate to grow healthier marijuana plants with fewer resources.
Ripple — Launches Cannabis Edibles in Michigan. Ripple Michigan, the newly-opened 8,000 sq ft manufacturing and processing facility in Lansing suburb Dimondale, is the company’s first step in a long-term multistate expansion plan. Ripple Michigan will launch with all three Ripple product lines, both for medical and recreational sale — Ripple QuickDissolves, Ripple QuickGummies, and Ripple QuickSticks. With commitments secured in more than 150 dispensaries across the state (and as many more in the pipeline), Ripple products are now available in both medical and recreational dispensaries.
Trulieve — Exclusive Partnership with DeLisioso Cannabis in Florida. DeLisioso is a cannabis marketing and consulting company specializing in high-end adult use and medical cannabis products. Through the agreement, Trulieve becomes the exclusive producer, processor and retailer of DeLisioso branded products throughout the state, with Flamingo Kush by DeLisioso pre-rolls launching on April 15.
Ayr Wellness — New Launches for Secret Orchard, LEVIA, STiX Preroll Co., and Origyn Extracts. In Massachusetts, Ayr is launching its Secret Orchard fruit-forward vapes. The initial launch consists of five flavors: Blue Raspberry, Pineapple, Watermelon, Strawberry, and Mixed Fruit. Additionally in Massachusetts, the Company is launching LEVIA’s latest seasonal flavor, Mellow Mule. In Florida, Ayr is launching STiX Preroll, beginning with its 1g “Walking Stix” pre-roll. In Arizona, Ayr is expanding its offerings under its premium Origyn Extracts brand, introducing a line of concentrates. Beginning on April 8, the Company will begin selling strain-specific live resin “Batter,” “Sugar,” and “Sauce.”
Red White & Bloom — Introduces Platinum Vape Live Resin in Michigan. Platinum Vape™ (PV) Live Resin, previously only available in California and Oklahoma, PV Live Resin will soon be in the nearly 400 Michigan dispensaries that now carry Platinum products. PV Live Resin offers consumers a compact product with multiple consumption options that packs all the benefits of flower and the 80+ cannabinoids that work in synergy to bring the plant’s unique therapeutic qualities to life.
Canopy Growth — Adds new CFO, COO. Canopy added Judy Hong and Jonathan Di Tosto to its Executive Management Team. Hong has been appointed as the Company's CFO. With a proven financial and capital markets background built through more than 20 years of experience at Goldman Sachs, Hong joined Canopy in 2019 as the VP of Investor Relations. The Company is adds Jonathan Di Tosto as the Company's new COO. Di Tosto assumes the role of COO from Andrew MacCorquodale, who is transitioning into a strategic advisory role. Jonathan joined Canopy in May 2021 as VP, Supply Chain, where he has focused on optimizing Canopy's global supply chain organization. Prior to Canopy, Jonathan spent 16 years with George Weston Limited, most recently as VP, Planning & Logistics.
Safe Harbor Financial — Appoints Paul Penney as Chief Investment Officer. Penney brings over 20 years of experience working across multiple verticals in portfolio management, research and investment banking, including the last five years directly investing and advising in the cannabis sector.
Flower One — Add Thomas Gesky to Company’s Advisory Board. Gesky founded Resourcive in 2001, a consultancy delivering strategic IT sourcing solutions to mid-market and enterprise clients.
Matt McGinley, Needham, on the MORE Act finally passing, earnings season, and M&A
Ryan Bartholomew on How Doja’s Cult-Famous Cannabis Brand Succeeds By Not Branding
Cameron Forni, Select Co-Founder, on the Future of Cannabis Consumption Lounges
Jamie Evans, Herbacée, on the Future of Hybrid Beverages
Pat McCutcheon, Power Leaves, on becoming the first Nasdaq-listed Coco leaf company
👋 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.