🍎 New York to Begin Accepting License Applications on August 25th
🍎 New York to Begin Accepting License Applications on August 25th
Jeeter/CNBC Make It. Curaleaf forced to remove products from NY dispensaries. Curaleaf acquires 55% of Germany's Four 20 Pharma. Earnings – Curaleaf, Trulieve, TerrAscend, WM Technology, Leafly, more
🌿 This past weekend, I was able to check out Grass Lands at Outside Lands (and it did not disappoint). Although Grass Lands blends in on the festival map and requires a tunnel detour, it didn’t seem to impact volme, as most “shops” had consistent lines. It seemed like a place brands needed to be in order to reach certain types of customers / potential customers and build brand equity. Additional music festivals will likley look to adopt on-site sales and consumption (BottleRock allowed a cannabis-inspired lounge, without sales).
🍺 I’ll be in Seattle on Tuesday (8/16, 5pm) for drinks with Cy Scott (Headset) as a part of a Seattle/Portland trip this upoming week. If you’re in the area and interested in joining, let us know. I’ll also organize something small in SF on Thursday (8/25), so let me know if there is interest then as well.
🌿 Industry
Tracz, 37, and Solano, 38, are co-CEOs and co-founders of Jeeter, a brand they launched in 2018 with their siblings — together, they’re part of two sets of twins. In just four years, Tracz and Solano have built Jeeter into one of the cannabis industry’s most successful retail brands, selling more pre-rolled joints than any other brand in the market. In 2019, Jeeter made $19 million in total revenue, according to the company. That number is poised to jump exponentially this year—the company projects sales of more than $400 million in 2022. Customers smoke about 3.5 million Jeeter pre-rolls each month, the company says. To get Jeeter off the ground, though, Tracz and Solano tell CNBC Make It they had to learn some things the hard way. A series of false starts in a new industry meant that the first two years of trying to establish Jeeter — even as the company brought in millions — were “some of the toughest, worst years of our life,” Solano says.
New York to begin accepting cannabis license applications. New York cannabis regulators will begin accepting retail licenses on Aug. 25, the Office of Cannabis Management on Thursday announced. License applications will be accepted for a month after an online portal opens.
Curaleaf forced to remove thousands of products from NY dispensaries. Curaleaf has pulled tens of thousands of units of cannabis from dispensary shelves after the company switched to an unauthorized way of labeling potency that led patients to believe the cannabis they purchased was much stronger than usual. Curaleaf began displaying “dry weight” measurements on its products in July without approval from the Office of Cannabis Management and without alerting customers. While all products in NY show “wet weight” measurement, the “dry weight” method shows significantly higher THC percentages, making the marijuana more enticing for buyers looking for the biggest bang for their buck. For example, the same product could show a THC percentage of 20% using wet weight measurement—but as high as 37% using dry weight testing. Stephanie Cunha, a Curaleaf spokesperson, told NY Cannabis Insider that dry weight “is considered the most accurate metric for THC content on any type of cannabis sample.” “Neighboring states such as Connecticut, New Jersey and Maryland all require testing based on dry weight,” Cunha said, and explained that the company made the switch to provide “a more accurate and consistent metric of THC content” to consumers.
Colorado Cannabis Industry Experiences First-Ever Decline. As of July, taxes and fees collected from retail cannabis reached $198.3 million, which is down $53.7 million, 21% from 2021. Colorado saw record sales in 2021, as dispensaries reached $2.2 billion and brought in $423.5 million in taxes, but this year is significantly lower. In 2021, cannabis flower was selling for $1,300 a pound, and the trim used for tinctures and oils was $425 a pound. Now, the latest market rates from the Colorado Department of Revenue claim that flower is selling at closer to $700/lb, and trim is down to $225/lb. These are the lowest prices have been since 2014.
Arkansas medical marijuana sales increase to $23.3 million in July. Medical marijuana patients spent $23.3 million in July at Arkansas’ 38 dispensaries to obtain 4,171 pounds. According to a report from the Arkansas Department of Finance and Administration, the Natural Relief Dispensary in Sherwood had the largest month with 392 pounds sold while The Releaf Center in Bentonville followed with 308 pounds. The Arkansas Department of Health reports that there are 88,893 active patient cards.
New Mexico cannabis sales topped $40 million in July. One of New Mexico's largest cannabis producers and retailers, Ultra Health, signaled concern over the progress over the fledgling industry. The July numbers represented an increase following a dip in June, but gross medical cannabis sales have deteriorated since April while recreational cannabis sales have grown by 5.8 percent since April as more retailers have entered the market. In July, medical products accounted for $16.8 million of total sales reported to New Mexico's Cannabis Control Division. That's on a level with $16.5 million reported in June, which declined nearly $1M from April and May.
💵 Deals
Curaleaf — €19.7M for 55% Stake in Germany's Four 20 Pharma. The unique partnership creates a strategic pathway for Curaleaf to acquire complete control of Four 20 Pharma within two years (through a put/call option) of the commencement of adult use in Germany and ensures alignment between Curaleaf and Four 20 Pharma's current management team to rapidly build a best-in-class German business and a strong platform for Germany's eventual adult use market. Four 20 Pharma is among the largest cannabis operators in Germany, with a greater than 10% market share.
MariMed — Acquires Fifth Adult-Use Dispensary License in Illinois. The dispensary license is for the BLS District #16, which is situated in the Central-Eastern part of Illinois, bordering Indiana. The closing of the acquisition is dependent on certain conditions, including resolution of any remaining legal challenges affecting nearly 200 social equity dispensary licenses, and regulatory approval for the acquisition. Upon closing of the acquisition, MariMed will commence operation of its fifth Thrive adult-use dispensary in Illinois, which is expected in 2023. MariMed currently owns and operates four adult-use dispensaries in Anna, Harrisburg, Metropolis, and Mt. Vernon. Additionally, the Company is constructing a state-of-the-art craft cultivation and processing facility in Mt. Vernon, Illinois, making MariMed a full vertical operator in the state when completed. The Mt. Vernon facility can house up to 14,000 square feet of canopy, an extraction lab to produce concentrates, and a production kitchen for the manufacture of edibles and other derivative products.
Heritage Cannabis — Expands Entry to the U.S. Cannabis Market in West Virginia Through Relationship with Harvest Care Medical. Similar to Heritage’s relationship in Missouri, under the agreement Heritage will supply production equipment to Harvest Care as well as provide training and supervision of staff on the proprietary methods of extraction and manufacturing of Heritage developed and branded products. The relationship will provide favourable shelf allocation for Heritage’s branded products in Harvest Care’s West Virginia dispensaries. The production equipment is currently being installed at Harvest Care’s facility and is expected to be operational by September.
Greenlane — $15M Asset-based Loan. The loan is for a term of three years and will support Greenlane's strategic initiatives and working capital needs.
📄 Company Updates / Earnings
Curaleaf — Q2 2022 Financial Results
Revenue of $338 Million, an increase of 8% sequentially and YoY
Adjusted EBITDA of $86 Million, an increase of 18% sequentially and 2% YoY
Generated $12 Million of Positive Operating Cash Flow for H1 2022
As of June 30, 2022, the Company had $187 million of cash and $587 million of outstanding debt net of unamortized debt discounts, which had a weighted average interest rate of 7.3% per annum
During the first-half of 2022, Curaleaf invested $60 million net in capital expenditures mostly attributable to cultivation, processing, and retail sites development activities. The Company expects to invest approximately $125 million in capital expenditures for the full year 2022
Trulieve — Q2 2022 Financial Results
Revenue increased 49% Y/Y to $320.3M from $215.1M and 1% sequentially
Retail revenue increased 3% to $298.6 million and wholesale, licensing and other revenue declined by 22% sequentially to $21.7 million
Gross profit of $182.2 million and GAAP gross margin of 57% in the second quarter compared to gross profit of $178.2 million and GAAP gross margin of 56% in the first quarter of 2022
Net loss of $22.5 million, a sequential improvement of 30%. Adjusted net loss of $1.1 million* excludes $11.8 million of transaction, acquisition, integration, and other non-recurring charges primarily associated with the Harvest acquisition, a $5.2 million earnout payment for acquired cultivation in Arizona, $4.3 million in asset impairments associated with the closing of redundant cultivation facilities in Florida and a loss of $0.7 million due to the repurposing of a development stage production site in Arizona
Adjusted EBITDA grew 17% Y/Y to $111.0 million*, or 35% of revenue in the second quarter compared to Adjusted EBITDA of $105.5 million*, or 33% of revenue in the first quarter of 2022
Cash at quarter end of $181.4 million
TerrAscend — Q2 2022 Financial Results
Net Sales increased 31% sequentially to $65 million as compared to $50 million in Q1 2022
Gross Profit Margin was 35.5% as compared to 30.4% in Q1 2022
Adjusted Gross Profit Margin1 was 47.1% as compared to 38.4% in Q1 2022
Adjusted EBITDA was $5.8 million as compared to $3.3 million in Q1 2022
Adjusted EBITDA Margin was 8.9% as compared to 6.6% in Q1 2022
GAAP Net Income was $14.2 million as compared to net loss of ($16 million) in Q1 2022
Cash and Cash Equivalents totaled $49 million as of June 30, 2022
MariMed — Q2 2022 Financial Results
Revenue of $33M (45% GM) vs. $32.6M (60%) in Q2 2021
EBITDA of $8.9M (27%) vs. $13.9M (43%) in Q2 2021
Revised financial targets for 2022: Revenue of $135–$140M vs. previous range of $145–$150M. Gross margin of ~50% vs. previous range of 54%–55%. Non-GAAP Adjusted EBITDA of $35–$40M vs. previous range of $47–$52M. CapEx of $18M vs. previous target of $25M
Glass House Brands — Q2 2022 Financial Results
Net Sales of $16.5 million decreased 12% from $18.7 million in Q2 2021 and increased 18% sequentially from $14.0 million in Q1 2022
Gross Profit was $0.3 million compared to $8.6 million in Q2 2021 and $2.3 million in Q1 2022
Gross Margin was 2%, compared to 46% in Q2 2021 and 17% in Q1 2022
Adjusted EBITDA was $(9.8) million, compared to $2.2 million in Q2 2021 and $(6.4) million in Q1 2022
Cost per Equivalent Dry Pound of Production1,4 was $158 at Casitas and Padaro farms, a decrease of 18% compared to Q2 2021 and down 34% sequentially versus Q1 2022. Equivalent Dry Pound Production was 25,188 pounds, up 9% year-over-year and 51% sequentially
Cash balance was $17.5 million at quarter-end compared to $24.8 million at Q1 2022 quarter end. Glass House is announcing a private placement of preferred equity shares with a target raise of approximately $26.5 million. We intend to use $10 million of the proceeds to retire the bridge loan from WhiteHawk, and the remainder for working capital, including cap ex to complete the buildout of the new Farmacy stores
Lowell Farms — Q2 2022 Financial Results
Revenue of $13.2 million; an increase of 6% sequentially and down 13% from Q2 2021, reflecting a 51% reduction in bulk flower pricing year over year
CPG revenue declined 18% sequentially and 23% from the prior year, as the company held pricing stable and reorganized its CPG offering.
Gross margin as reported was 11.3% in the second quarter compared to 12.7% sequentially and 37.9% Y/Y, reflecting strong bulk pricing in the prior year
Adjusted EBITDA in the first quarter was negative $1.1 million compared sequentially to adjusted EBITDA of negative $0.9 million and positive adjusted EBITDA of $0.7 million Y/Y
$2.2M cash as of June 30, 2022
Schwazze — Q2 2022 Financial Results
Revenues of $44.3 million increased 44% compared to $30.7 million in Q2 2021
Retail sales were $38.1 million up 77% when compared to Q2 2021
Gross Margin of $25.2 million was up 69% compared to $14.9 million in Q2 2021, this quarter was affected by $0.2M in purchase accounting
Net Income was $33.8 million compared to a Net Income of $4.4 million for the same period last year
Adjusted EBITDA of $15 million was 33.9% of revenue, compared to $10 million for the same period last year
Ccash and cash equivalents of $33.9 million at the end of Q2 2022
WM Technology — Q2 2022 Financial Results
Revenue increased to $58.3 million, up 24% from the Q2 2021
Monthly active users increased to 17.4 million at June 30, 2022, up 41% compared to the prior year period
Average monthly revenue per paying client decreased to $3,509, a 5% decrease compared to the prior year period
Average monthly paying clients increased to 5,537, a 31% increase compared to the prior year period
Gross Profit was $54.4 million implying a 93% margin rate, which reflects a 250bps margin reduction from the prior year given investments made in new client solutions, our WM AdSuite offering and continued investment in data initiatives
Net income was $19.8 million as compared to net income of $16.8 million from the prior year period
Adjusted EBITDA was $(0.6) million as compared to $8.5 million from the prior year period
Cash totaled $47.6 million as of June 30, 2022, with no long-term debt
Leafly — Q2 2022 Earnings
Total revenue was $12.1 million, up 13.8% over Q2 2021 driven by growth in retailer and brand revenues
Gross margin was 88.0%, compared to 88.5% in Q2 2021
Total operating expense was $19.5 million, up 83.9% over $10.6 million in Q2 2021, and included investments in platform, product development and sales and marketing to position the business for long-term growth
Net Income was $14.8 million, and included $24.4 million of gains on derivative liabilities, compared to net loss of $1.3 million in Q2 2021
Adjusted EBITDA loss was $8.4 million, compared to adjusted EBITDA loss of $0.8 million in Q2 2021
Ended the quarter with $35.4 million of cash and $31.9 million of restricted cash. Effective August 1, 2022, holders of the forward share purchase agreements exercised their options to have the Company repurchase all of their remaining shares underlying the agreements, for a total purchase price of approximately $31.7 million
Curaleaf / Jushi — Settles Lawsuit. Jushihas entered into a confidential settlement agreement with Curaleaf and with Jushi’s former CFO, Edward Kremer, to resolve claims Jushi asserted in a lawsuit filed on July 15, 2022, including a claim asserted against Mr. Kremer for breach of his employment agreement and a claim asserted against Curaleaf for tortious interference. Under the terms of the settlement agreement: 1) Mr. Kremer has reaffirmed and agreed to abide by his other continuing obligations to Jushi under the terms of his employment agreement in exchange for a limited waiver of his non-compete to allow him to accept employment with Curaleaf, and 2) Curaleaf has made certain commitments to strengthen the commercial relationship between Jushi and Curaleaf.
Far & Dotter — Selection of First Franchisees. Since the 2021 announcement of the Far & Dotter franchise model, the company has received nearly 800 applications from potential franchisees. These highly-qualified individuals are the first recipients of support from Curio Wellness’s Investment Fund, which expands diverse ownership and enables economic empowerment through start-up capital for minority business owners to open their own Far & Dotter. The inaugural class of franchisees include Sederia Gray (Mississippi) and Haider Rizvi (New Jersey). Each candidate participated in an extensive, mutual vetting process and demonstrated their drive, community leadership and commitment to wellness. Far & Dotter will assist these franchisees with the dispensary licensing process in each state.
Petalfast — Expands Cannabis Brand Sales & Trade Marketing Services to East Coast. The Company’s sales and retail engagement services help emerging and growing cannabis brands sell-in and sell-through retail channels in competitive markets. With proven success in California, Petalfast will help cannabis brands achieve rapid growth in the expanding, competitive East Coast markets.
Akanda x Cansativa — Supply Agreement. Akanda has signed a multi-year supply agreement with European medical cannabis leader Cansativa GmbH ("Cansativa Group" or "Cansativa") to supply EU-GMP quality THC dried flower strains cultivated from its Portuguese operations at Holigen. This new supply agreement marks one of the largest for medical cannabis to be exported from Portugal to serve the emerging European medical cannabis market.
Unrivaled Brands — Corporate Update. The company has closed several under-performing assets (Los Angeles, San Leandro, and Sacramento), significantly reduced management and workforce positions, reduced SG&A run rate by ~$5M a year, shifted strategy to focus on operations in Oregon, retail stores in Oakland and Santa Ana, and marketing/licensing of Korova.
🏬 Retail
Cookies / TRP — Opens Its First Florida-Based Dispensary (52nd overall) in Miami. The new 3,100 square-foot location will host a unique menu featuring Cookies’ highly sought after genetics and custom Cookies SF local reserve merchandise. The Company’s partner in Florida is TRP (which it also works with in other States), ertically integrated cannabis holding and operating company. TRP leverages its platform to scale its exclusive brand partners including Cookies, Dr. Greenthumb's, and Insane, while respecting their culture and brand identity.
AWH — Commences Operations at Third New Jersey Dispensary. Ascend Fort Lee is the Company's third Ascend dispensary in the state, located in a prime position directly across the Hudson River from New York City and accessible to many major highways and thoroughfares in New Jersey. Ascend Fort Lee features over 3,400 sq ft of dispensary floor space and ample parking. The Ascend Fort Lee dispensary features 29 registers and is anticipated to transition to adult-use sales later this Fall.
Verano — Opens MÜV Palatka, the Company’s 55th Florida Location. The dispensary is located at a busy commercial intersection that sees an average daily traffic count of 9,400 vehicles. MÜV Palatka is the first MÜV retail location to open in this Northeast Florida city of more than 10,500 residents. Palatka is also home to one of Verano’s two Florida cultivation and processing facilities.
Ayr Wellness — Opens 50th Retail Store in Jacksonville, Florida. Since acquiring Liberty Health Sciences in 2021, Ayr has rapidly their footprint in Florida, adding an additional 19 dispensaries. The 50th store spans 4,500+ sq. ft. of retail space and reflects the elevated retail design showcased at the two recently opened AYR adult use dispensaries in Greater Boston and representing the future of the Company’s presence in Florida.
🌱 Product
WM Technology — Launches Weedmaps for Business, the Fully Integrated Suite of End-to-End SaaS Solutions for Cannabis Retailers and Brands.
Formerly WM Business, the Company’s reconfiguration and renaming of its SaaS offerings better reflects the comprehensive B2B and B2C suite of products that affords cannabis retailers and brands of all sizes with fully integrated tools to run their businesses. This realignment includes the integration of WM Technology’s recent acquisitions — Sprout, Enlighten, Cannveya, and CannCurrent — and enables the technology company to provide an interconnected suite of logical, end-to-end solutions. With the addition of these companies, WM Technology now supports businesses at every stage in the consumer funnel.
Players Only — Chris Webber Launches Players Only Cannabis Brand With Strain Collaborations From Quavo, Raekwon, and More. Chris Webber has announced the official roll out of Players Only—a cannabis lifestyle brand he co-founded with business partner Lavetta Willis. Players Only will offer a wide range of products, including cannabis flower strains, all-natural oil cartridges, pre-rolls, vapes, as well as branded apparel and footwear. The company will also deliver strain collaborations with heavy-hitters across the entertainment and sports worlds; we’re talking everyone from Quavo and Raekwon to Matt Barnes, and Jason Williams.
Vic Mensa/93 Boyz — "Premium Gas." The company, 93 Boyz, is helmed by Vic Mensa, making the rapper’s line of Cannabis products the first Chicago-based, Black-owned brand to get a foothold in the city’s recreational cannabis industry. 93 Boyz, which Mensa co-owns with Preston Oshita, also known as rapper Towkio, has already launched a selection of pre-rolled joints at several dispensaries. The pre-rolls come in three different strains curated for the “tastemaker cannabis brand,” that 93 Boyz is aiming to bring to Chicago’s “dry” weed scene, Mensa said.
Verano — Releases Signature Reserve and Essence Branded Product Lines in Four Additional Core Cannabis Markets. Verano flower is now available in new markets including Arizona, Florida, Massachusetts and Pennsylvania, with an additional launch planned in West Virginia during the second half of 2022. Across the Company’s national footprint, Verano Reserve and Essence product catalogs, including Swift Lift mini pre-roll packs, are now distributed to more than 500 dispensaries across nine states.
TILT Holdings — Launches 1906™ in Pennsylvania. The initial product offering in Pennsylvania includes 1906’s all-new Boost Discovery Pouch, which contains two 30mg THC “Drops” that are 100% THC and Boost tins with 10 Drops totaling 300mg THC. In Ohio, Standard Farms will offer a suite of 1906 Drops that combines moderately dosed cannabis with medicinal plants in discrete pill forms.
🧔 People
Curaleaf — Adds CFO, CIO and CSO. Newly appointed Chief Financial Officer Ed Kremer has most recently been working in the cannabis industry and brings a wealth of experience as a public CFO and leader at companies such as Oakley, Beats by Dre, and Oliver Peoples. Neil Davidson, Curaleaf's Interim CFO, will work closely with Mr. Kremer during the transition period. Camilo Lyon will lead Capital Markets and Investor Relations as Curaleaf's first Chief Investment Officer. Mr. Lyon most recently worked as a Managing Director at BTIG, where he covered the consumer and cannabis sectors. He brings over 20 years of finance experience and a wealth of knowledge and relationships to the role. In the newly created Chief Strategy Officer Role, Mitch Hara will oversee the company's strategy functions including mergers and acquisitions, international, and research and development. Mr. Hara brings years of experience as a seasoned strategist, operator, and dealmaker on Wall Street and in cannabis, most recently as Head of M&A and Business Development at Clever Leaves International.
Bhang — Jamie Pearson Steps Down as President. Under Pearson's leadership, Bhang went from a California into five additional states, established a multi-state deal with Trulieve and expand Bhang into Canada. A search for Pearson's replacement is expected to begin shortly. In the meantime, Simmonds will assume the role of interim CEO. Simmonds is also chair of Plant-Based Investment Corp, Bhang's largest shareholder. In addition to holding multiple board seats on Canadian-listed publicly traded companies, Simmonds is also an experienced CEO and entrepreneur.
The Greenrose Holding Company — New CFO and Board Member. Bernard Wang joins Greenrose as the Company’s new CFO following the resignation of its former CFO, Scott Cohen, on July 14, 2022. Prior to joining Greenrose, Wang served as the interim corporate controller and director of accounting at Fat Brands(Nasdaq: FAT), where he led multiple projects to improve corporate reporting processes. He previously served as the corporate controller and vice president of finance at Canndescent, a California-based luxury cannabis flower brand company. Benjamin Rose has been appointed to Greenrose’s board of directors. He is the founder and managing partner of Boundary Peak Advisors LLC, a cannabis-focused investment and advisory firm. Through his role at Boundary Peak, Mr. Rose helped facilitate Greenrose’s $105 million senior secured credit facility from DXR Finance, LLC to assist in the completion of the Company’s qualifying transaction with Theraplant. He also served as chairman of the board for MedMen, where he spearheaded several restructuring and governance improvements, as well as facilitated a backstopped $100M equity private placement led by Serruya Private Equity.
Audacious — Appoints Roger Sykes as COO, Replaces Duke Fu. COO and Director, Duke Fu, resigned, effective Thursday August 4, 2022. Sykes previously served as President of MedPPE Canada, a provider of essential personal protective equipment. Prior to that he served as SVP Projects at Aurora Cannabis.
🎙️ Interviews
Casa Verde Capital, Managing Partner, Karan Wadhera (Cannabis Europa)
Cookies, CEO, Berner (FlowerHire). Emjay, CEO, Chris Vaugh (Alchemy). Aeropay, CEO, Daniel Muller (Pot to Popular). Eaze, COO, Cory Azzalino (The Dime). “Weed lite” aka Delta-8 products (High Rise). Lantern, CEO, Meredith Mahoney (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.