💰 Northern Lights SPAC x Safe Harbor Financial ($327M Market Cap)
💰 Northern Lights SPAC x Safe Harbor Financial ($327M Market Cap)
Harborside closes first tranche ($45.4M) of Pelorus Debt Financing. Gold Flora acquires Airfield Supply Co. Shryne Group x UFCW enter into CBA. AWH files amended complaint and motion to dismiss.
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🌿 Industry
California localities detail plans to spend $100M to fix marijuana licensing logjam. California’s Department of Cannabis Control has started to disperse $100M to 17 municipalities and counties to help them transition thousands of marijuana businesses holding temporary licenses over to annual permits. The funding is intended to alleviate a bureaucratic logjam that has left thousands of marijuana companies with temporary, or so-called “provisional,” business licenses. As a result, some provisionally licensed companies are in danger of shuttering, at least temporarily. The 10 cities and seven counties receiving the $100M account for 5,290 of the provisional licenses, or roughly 60%, of the California bottleneck of 8,874 temporary permits, according to an MJBizDaily analysis of state data.
Eaze Insights — State of Cannabis in 2021.
The report provides Eaze’s annual analysis of purchasing choices by age, geography, gender, as well as other consumer the comapny is seeing in California and Michigan. One big trend it is noticing: consistency in product choice across ages and geographies. Consumers know what they like and are sticking with beloved products, year over year! Eaze’s 2022 State of Cannabis report aggregates the Compnay’s proprietary data to illustrate the behavior of the more than 380,000 customers who purchased from Eaze between January 1 and December 31, 2021.
Shryne Group Spearheads Historic Collective Bargaining Agreement with United Food and Commercial Workers. The largest cannabis employer in the state of California, Shryne Group Inc., and the United Food and Commercial Workers International Union (UFCW) have entered into an historic collective bargaining agreement (CBA) for more than 1,200 cannabis retail workers at Shryne Group's STIIIZY, Authentic and Flight retail locations, creating a first of its kind global agreement to benefit retail workers immediately throughout California. While previous California cannabis contracts were negotiated regionally or locally, the new agreement covers retail employees throughout the state, offering quality healthcare benefits, workplace protections, competitive standardized wages with annual increases, pension contributions (from a first-of-its-kind, employer-funded pension plan), generous sick leave policy, and guarantees of hours.
Colorado’s 2021 cannabis sales set another annual record at $2.3B. According to the state Department of Revenue, 2021 set a new bar for the Colorado cannabis industry with sales that were higher than the previous year’s $2.2B. That total also set a record.
Plunging Prices Push Michigan Cannabis Sales 9% Lower in January. Michigan cannabis sales in total decreased 9% to $152.6M in January, which is still up 41% Y/Y. In the Adult-Use market, flower and trim sales represented 57% of the overall market vs. 56% in Q4 and 57% in Q3. As supply continues to expand, flower pricing for adult-use has seen a dramatic decline. In January, the average price of $2,443/pound plunged 17% from December and fell 53% Y/Y. Michigan cannabis sales expanded 82% in 2021 to $1.79B.
💵 Deals
Northern Lights Acquisition Corp. — Enters into Business Combination Agreement with Safe Harbor Financial.
Established in 2015 by PCCU, Safe Harbor was formed to provide compliant access to banking and financial services for the rapidly growing U.S. cannabis industry. Over the past seven years, Safe Harbor has grown to nearly 600 accounts spanning 20 states. Additionally, Safe Harbor has processed over $11B in transactions with $4B in 2021 and has grown deposits at a 73% CAGR since inception. Northern Lights will acquire Safe Harbor for a $185M ($70M cash, $115M stock). The estimated post-transaction equity value of the Company will be ~$327M, assuming no redemptions by the stockholders of Northern Lights. The transaction will provide up to $107M of gross proceeds (assuming no redemptions), including $117M from Northern Lights' cash-in-trust and a fully committed $60M PIPE from institutional investors.
Harborside — Closes First Tranche ($45.4M) of Pelorus Debt Financing ($77.3M Total) Debt Financing for StateHouse Roll Up Financing. Pelorus has funded a total of $45.4M pursuant to the first tranche of the Roll Up Financing, funded through three separate loans to Harborside, Loudpack and Urbn Leaf. Harborside has received ~$15.5M, Loudpack has received ~$16.4M, and Urbn Leaf has received ~$13.5M of the aggregate funds advanced under the first tranche. From its share of the proceeds of the Roll Up Financing, Harborside repaid the $12.0M outstanding under its senior secured revolving credit facility. The closing of the second tranche of the Roll Up Financing, for expected proceeds of $31.9M, will occur at a time of the Company's choosing following the closing of the Company's proposed acquisitions of Loudpack and Urbn Leaf, and will be available for StateHouse's growth initiatives.
Gold Flora — Acquires Airfield Supply Company (San Jose, CA).
Arguably the largest single-site vertically-integrated cannabis retailer in California, both by customer count and annual gross revenue, the San Jose-based Airfield has on-site indoor cultivation facilities that include a 9,000-square-foot canopy and manufactures co-branded products within its 20,000-square-foot location near the San Jose International Airport. The company also has one of only two delivery licenses in Mountain View, CA. Established to serve the medical market as South Bay Healing Center in 2010 and rebranded to Airfield Supply Company in 2015, Airfield regularly sees well over 1,300 customers a day.
Trulieve — Acquires 64,000 sq. ft. Cultivation Facility in Phoenix for $13.75M. Trulieve will pay $13.75 million cash at closing, with potential milestone payments subject to earn-out and escrow requirements. The new cultivation facility immediately improves supply chain capacity and becomes Trulieve's fifth cultivation facility in Arizona, supporting Trulieve's 17 dispensaries in the state of Arizona with flower for medical patients and adult-use customers. Trulieve locations in Arizona include Avondale, Casa Grande, Chandler, Cottonwood, Glendale, Guadalupe, Lake Havasu, Mesa, Peoria, Phoenix, Scottsdale, Tempe and Tucson.
Harborside — Increased Interest in Haight-Ashbury (SF) Dispensary. Harborside is acquiring the increased interest in FGW through the execution of a securities purchase agreement, following the previously announced acquisition of a 50.1% interest in FGW that closed on December 18, 2020. Subject to regulatory approval from the City of San Francisco, the FGW Acquisition will increase the Company's interest in FGW to 80%. Harborside also retains the right of first refusal to purchase, in its discretion, in whole or in part and in one or more closings, the remaining 20% of FGW, subject to regulatory approvals.
Flower One — $10.1M Financing and Successful Loan Modification to Term Debt. The Company and certain of its subsidiaries have entered into a Loan Modification Agreement with RB Loan Portfolio II, LLC, with respect to the Company’s existing $30M term debt, secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. Through the Loan Modification Agreement, the Company would: (i) receive the Term Loan, (ii) capitalize the Payment in Kind (PIK) Interest upon the completion of the loan, and (iii) reduce the monthly interest payable from 14% to 10%, with the balance of interest of 4% to be payable upon the earlier of the Maturity Date (June 30, 2023), in the event of default or earlier payoff of the Term Debt. The Company’s receipt of the Term Loan was facilitated by a participant’s purchase of the interest in the Term Debt from the Term Lender in the amount of $10.1M.
CEA Industries — Raises $24M Selling Units at $4.13. 5,811,138 shares of the Company’s stock at $4.13 per share and warrant for aggregate gross proceeds of $24M. The warrants will have a per share exercise price of $5.00, be exercisable immediately, and expire five years from the date of issuance.
Ayr Wellness — Closes Acquisition of Levia Cannabis Infused Seltzer. The ownership transition was approved by the Massachusetts Cannabis Control Commission (“CCC”) on Thursday, February 10, 2022. Terms of the transaction can be found in the Company’s press release announcing the signing of a definitive agreement, dated September 7, 2021.
McVeigh Global x The Arcview Group — Partnership to Operate Event Business in the Cannabis, Industrial Hemp, and Psychedelics Industries. McVeigh Global Meetings and Events (MGME), an award-winning, top 25 global provider of innovative meeting management, creative services, and event production solutions and The Arcview Group, a vertically integrated events and financial services firm serving the cannabis and hemp industry, today announced a joint venture to operate the digital and in-person event business of Arcview and provide third party event management services to companies in the cannabis, industrial hemp, and psychedelics industries. The joint venture will operate under the name Arcview Events & Experiences.
Red White & Bloom — Closes Acquisition of PharmaCo with 21 Cannabis Licenses. Red White & Bloom (RWB) has received all regulatory approvals and has closed its acquisition of PharmaCo, via RWB Michigan, LLC, the Company’s wholly owned subsidiary, in an all-stock transaction. The transaction was originally announced on July 27, 2020. The PharmaCo acquisition expands RWB’s footprint in Michigan beyond its Warren manufacturing facility and its Platinum Vape® brand. RWB now owns and operates the following: Dispensaries: Five & Dime (Detroit), Shake & Bake (Detroit), Motown Meds (Detroit), Remedii Natural Health, Bay City (Bay City), Dank on Arrival (Bay City), Remedii Natural Health (Battle Creek), The Remedii Station (Vassar), Remedii Natural Health Stateline (Morenci), and two additional dispensary locations that are fully built out and ready to open. Cultivation: Two indoor cultivation facilities (Glendale and Marquette), a 10-acre outdoor cultivation site (Au Gres), Additional Assets: multiple assets for expansion of RWB’s dispensary and cultivation footprint. Consideration for the transaction includes the issuance of 37 million units of RWB at C$0.90 per unit.
Schwazze — Closes Greenleaf (New Mexico) Acquisitions. Total consideration for the acquisition was $42M ($25M cash, $17M 3-year seller note at 5% interest). Greenleaf is a licensed medical cannabis provider with ten dispensaries, four cultivation facilities – three operating and one in development – and one manufacturing location. The dispensaries are located in Albuquerque, Santa Fe, Roswell, Las Cruces, Grants and Las Vegas, New Mexico. Greenleaf's ~70,000 square feet of cultivation as well as 6,000 square feet of manufacturing space are located in Albuquerque.
Schwazze — Closes acquisition of Emerald Fields Cannaboutique Dispensaries in Manitou Springs & Glendale, CO. Total consideration for the acquisition is $29M (60% cash and 40% stock) at an estimated 3.8x multiple on 2021 Adjusted EBITDA.
Unrivaled Brands — Closes Sale of Dyer Property for $13.4M. The sale results in the Company retiring $9.0M of outstanding debt on the property. The Company is continuing to evaluate its options with respect to the license originally connected to the Dyer property, possibly relocating the licenses elsewhere in the city if approved.
📄 Company Updates / Earnings
Ascend Wellness Holding — Files Amended Complaint and Motion to Dismiss.
Earlier today, AWH filed two documents with the court related to their litigation with MedMen. The first document is an Amended Complaint, providing additional allegations showing how MedMen has operated as a bad actor and how it reneged on the deal. The second document is a Motion to dismiss all 6 counterclaims brought by MedMen. In the Motion, AWH refutes MedMen’s claims and provide documentary evidence as to why the claims are fabricated and lack any legal merit.
Canopy Growth — Q3 2022 (ended 12/31/21)
Net revenue increased 7% Q/Q. Net revenue decreased by 8% Y/Y, as strong growth in consumer products revenue was offset by the decline in Canadian cannabis sales
BioSteel and Storz & Bickel “S&B) achieved record quarterly revenue driven by expanded distribution of BioSteel and new products launches for S&B
Actions well underway to drive improved execution in the Canadian cannabis market, with DOJA, 7Acres and Tweed innovation supporting flower strategy and hero brand, Deep Space, line extension
Established cross-functional team to execute North America THC strategy, leveraging early advantages of strong balance sheet, scalable THC brands, established national distribution channels and MSO relationships to expedite entry into the U.S. upon federal permissibility of THC
Clever Leaves — Preliminary Q4 2021 and FY2021 Results. Revenue is expected to increase 25% to ~$4.2M, Gross profit is expected to increase 5% to ~$2.4M (56.8% GM), Net loss is expected to range between ~$17.1—$17.5M, Adjusted EBITDA is expected to range between ~$(7.3M) and $(7.7M), At December 31, 2021, the Company’s cash, cash equivalents, and restricted cash are expected to be ~$37M compared to $79.5M.
Tilray Brands — Consolidates its Global Medical Offering into Tilray Medical, a Comprehensive Portfolio of Brands and Products. Under the Tilray Medical consolidation plan, patients in Canada will have the broadest access to our medical cannabis brands and product choices globally, including Tilray, Aphria, Broken Coast, and Symbios.
Leaf Trade — National Partnership with Curaleaf. As part of its platform Leaf Trade allows companies to showcase all products in a custom, online storefront that enables dispensary operators to order and pay for their wholesale across all their retail locations. This user-friendly online storefront also serves as a centralized ordering hub on the buying side as well eliminating the hassle of placing orders from multiple entry points for their retail locations. Leaf Trade currently works with Curaleaf in 11 states and through the national partnership will now begin to support the company across its 19 US Wholesale Markets, with New York scheduled to launch this month.
The Valens Company — Begins Manufacturing Cannabis-Infused Beverages at Greater Toronto Area (GTA) Facility & Signs Manufacturing Partnership. The 30,000 sq. ft. GTA Facility received a micro-processing license from Health Canada to begin production and manufacturing of cannabis-infused beverages in November 2021. The GTA Facility has the capacity to manufacture more than 8 million units per year of cannabis-infused beverages in a single shift in both resealable cans and PET bottles across various sizes and formats. Products developed and manufactured in the GTA Facility will utilize Valens' powered by SōRSE™ emulsion technology.
Edie Parker — Launches The Weedie Parker Creative Division, a Strategic Arm of Flower by Edie Parker. The newly-formed division will work with emerging and established cannabis companies to develop compliant branding strategies, integrated marketing campaigns and compelling packaging concepts.
🏬 Retail
Embarc — Expands Footprint with Fourth Cannabis Shop in Fairfield. Embarc Fairfield joins Embarc's existing operations in South Lake Tahoe, Alameda, and Martinez and will be joined by half a dozen additional storefronts opening later this year. Embarc is also the leading events concessionaire for cannabis in California, working with jurisdictions, event promoters, and communities to integrate responsible cannabis sales and consumption into mainstream live events.
Trulieve — Open Riverview, FL Dispensary. This is Trulieve's 112th dispensary in Florida and its 161st nationwide.
🌱 Product
Gage Growth — Launches Pure Beauty Products in Michigan Stores. Gage previously announced an exclusive five-year partnership agreement in July 2021 with Pure Beauty to produce, process, wholesale and retail the brand's products in Michigan. The launch will include Pure Beauty's signature product, "Babies", a 10 pack of 100% whole flower mini joints packaged in a sustainable plant starch mylar bag and will be available in Sativa, Hybrid and Indica options. In the coming months, Pure Beauty's full selection of pre-rolls will be available in Gage dispensaries.
SweetWater Brewing Company (Tilray) — Expands Distribution Across California. With this expansion, the nation’s 11th largest craft brewer will now be available for purchase throughout the state at local restaurants, bars, grocery chains, liquor stores and other retail establishments either on draft or in cans. California now becomes the largest state in their brand portfolio.
🧔 People | 💻 Hiring
Clever Leaves — Kyle Detwiler to Step Down as CEO; Andres Fajardo to be Appointed CEO. Andres Fajardo, currently a director and president of the Company, has been selected to succeed Kyle Detwiler as CEO. Prior to Clever Leaves, from 2016 to 2018, Fajardo was a founding partner of Mojo Ventures, a venture capital incubator in Colombia. Fajardo also served as CEO of IQ Outsourcing, a leading Colombian business processing outsourcing firm from 2010 to 2015, and a principal member at Booz & Company from 2000 to 2010.
AWH — Frank Perullo Promoted to President. Perullo will be responsible for AWH’s day-to-day operations, with the Retail, Sales and Marketing, and Operations departments reporting directly to him, in addition to his existing reports.
GTI — Adds Dorri C. McWhorter to Board of Directors. In 2021, McWhorter became President and CEO of YMCA of Metropolitan Chicago. Prior to joining the YMCA, she served as CEO for the YWCA Metropolitan Chicago. McWhorter was also a partner at Crowe Horwath and held senior roles with Snap-on Incorporated and Booz Allen Hamilton.
MedMen — Chief Revenue Officer Resigns. Tracy McCourt joined the company in December 2020 after leading the strategy for the brand affinity team at Zappos. She was also appointed President of Emerald Village West Hollywood last month.
Schwazze — Adds President of New Mexico Division. Steve Pear joins Schwazze as its New Mexico Division President. He comes from Vancouver-based Happy Gut Brands, where he recently served as CEO. He has worked for Coca-Cola Enterprises, Coors and Miller-Coors, Odwalla and Cheribundi.
🎙️ Interviews
Aster Farms CEO Julia Jacobson on Navigating California Cannabis Market Correction
Embarc CEO Lauren Carpenter on Rethinking Cannabis in Retail and Events
Perfect Union CEO Danyelle Bruno on Scaling Companies
Ananda Strategy Founder Hirsh Jain on the Arizona Market
Garden Society CEO Erin Gore on National Expansion
Crypto Cannabis Club CEO Ryan Hunter on launching NFT-powered Cannabis Brand
Glass House Brands CEO Kyle Kazan on Cultivation footprint progress in California
Verano CEO George Archos on Challenges the company has overcome and 2022 plans
Fyllo CEO Chad Bronstein: Data, Synergy and Being the Best
Green Check Verified CEO Kevin Hart on community banking x Cannabis
Farechild Co-Founders on compliance in cannabis event production
👋 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.