🏙️ NY issues 52 Cannabis Cultivation Licenses
TerrAscend acquires Pinnacle (MI) for $28.5M. Backbone raises $14M. Growthsayer raises $800K. Unrivaled Brands reports Q4/2021. Sweet Flower launches Pasadena Dispensary (6th in LA).
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Look forward to seeing some of you at Benzinga this week, it’s sure to be a busy week all around with 4/20. Some of the highlights I’ve seen around 4/20 events: Leafly ringing the opening bell on the NASDAQ stock exchange on 4/20, Weedmaps guide to 4/20 events, Insa creating a virtual reality of cannabis wonders, on-site Cannabis sales at Hippie Hill 4/20 Celebration, Denver Cannabis “bar” JAD’s Mile High Smoke serving THC-infused beer, and LUCHADOR x Hazy putting on a Live Wrestling & Comedy show in DTLA. New Jersey will begin recreational cannabis sales the day after on April 21st.
New York Approves 52 First Adult-Use Cannabis Conditional Cultivation Licenses to Farms in New York. These are the first adult-use cannabis licenses granted in New York State and they advance the Seeding Opportunity Initiative. The approved licenses are from a pool of more than 150 that have been submitted to the Office of Cannabis Management (OCM) following the March 15 opening of the online application portal. The OCM will continue to review applications on a rolling basis and will work to get them to the Board for approval as quickly as possible. A list of the licenses approved today is available here. In February, Governor Hochul signed legislation creating the Cannabis Conditional Cultivator Licenses.
Detroit’s late arrival to the recreational marijuana industry spells trouble. The recreational marijuana industry is booming in Michigan, exceeding $1.1 billion in annual sales and generating more than $100 million in new taxes a year. But in Detroit, the state’s largest city, not a single dollar has been made since adult-use recreational cannabis sales became legal in December 2019. And it could be many more months before Detroit begins to reap benefits from the lucrative industry. Last week, Detroit City Council finally approved an ordinance that will allow recreational marijuana businesses to open in the city. But not everyone is celebrating. If all goes as planned, which rarely happens in Detroit or in the marijuana industry, new recreational cannabis businesses won’t begin opening until late this year or early next year. That’s three years after the first recreational businesses opened in other towns and cities, which have received millions of dollars in new tax revenue. In total, 110 communities in Michigan have at least one recreational dispensary.
Ben & Jerry's Urges Senate to Improve Country's Half Baked Approach to Cannabis Justice.
Ben & Jerry's and the ACLU have teamed up this 4/20 to provide an easy way for Americans to take action and demand the Senate pass cannabis justice legislation. The joint 4/20 campaign will include a series of digital ads on social media platforms that provide Americans an easy, one-click way to send a message to their Senators.
Rowan University launches MBA concentration in cannabis commercialization. The Rowan University MBA is the first and only AACSB-accredited program in the country offering business-focused cannabis coursework designed to meet the emerging and evolving needs of the cannabis industry. Students enrolled in the customizable MBA program will hone their skills in specific areas of business or build knowledge across sectors by selecting concentrations or elective coursework from a dozen specialty areas including cannabis commercialization.
8 Cannabis Investors Share Their Outlook on the European Market for 1H 2022. According to Europol, illicit spending on cannabis in the EU amounts to €9B each year. However, things are moving on the legal side of the market — it appears medical cannabis still carries most of the momentum, and it is only accelerating. Around €354M worth of unlicensed medical cannabis will be sold in Europe in 2022, according to market intelligence firm Prohibition Partners, and this number is expected to rise to around €2.3B by 2026. TechCrunch spoke with:
Todd Harrison, founding partner and CIO, CB1 Capital Management
Yoni Meyer, partner, Casa Verde Capital
Viken Douzdjian, managing partner and co-founder, Argonautic Ventures
David Bonnier, founding partner, Enexis AB
Will Gibbs, principal, Octopus Ventures
Oliver Lamb, co-founder and investment manager, Óskare Capital
Leah Fletcher, founder and director, Arbutus Innovation Centre
will.i.am, investor, Sanity Group
TerrAscend — Accelerates Michigan Retail Expansion Through Acquisition of Pinnacle for $28.5M. Pinnacle is a MI-based dispensary operator with six retail dispensary licenses, five of which are currently operational and located in the cities of Addison, Buchanan, Camden, Edmore, and Morenci. TerrAscend intends to rebrand each of the dispensaries under either the Gage or Cookies retail brand, depending on location. Total consideration for the transaction is $28.5M, plus earnout amounts payable upon achievement of certain post-closing milestones. Under the terms of the agreement, TerrAscend will pay $10M in cash to pay down all Pinnacle liabilities and encumbrances and $8.5M in stock at closing, with the remaining $10M paid via the promissory notes. The notes will be recourse only to shares and assets of Pinnacle. Following the close of the Transaction, TerrAscend's retail footprint will increase to 17 dispensaries in Michigan and 32 dispensaries nationwide.
Backbone — Raises $14M for Supply Chain Software inspired by Mesh Networks. Backbone has raised $14M in seed funding from Nautilus Ventures, 12/12 Ventures, and individual investors to prove out its technology. The capital raised will be used to onboard new customers, expand into new markets and develop the company’s supply mesh technology as it accelerates growth globally. Backbone, which initially engaged with cannabis and hemp suppliers, tracks production compliance, yields and audit reporting data in one place. The platform translates the components of a company’s supply chain to a browser-based, dashboard, calculating costs associated with items to predict how profitable they’ll be, accounting for supply chain variability.
Growthsayer — Raises $800K Seed. Growthsayer closed its $800,000 pre-seed round backed by Accord Capital with contributions from angel investors. The proceeds from this raise will be used to expand the supply chain optimization platform across domestic and international markets. Growthsayer helps cannabis retailers grow profitably by optimizing their inventory spend.
IIP — Acquires Maryland Property for $25M and Enters Into Long-Term Lease with MCP/District Cannabis. MCP is one of 18 licensed cannabis cultivators in Maryland, focused on the cultivation of premium cannabis products under the brand District Cannabis. With the recent completion of a 48,000-square-foot greenhouse facility next to its existing 36,000-square-foot industrial building at the property, MCP is expected to significantly enhance its production capacity over the balance of 2022, while maintaining the consistent, premium quality District Cannabis product.
SLANG Worldwide — Closes Acquisition of NS Holdings. NSH is the parent company of GNT Oregon, which operates a licensed CO2 extraction and manufacturing facility in Portland, Oregon. The Company issued a non-material amount of common shares as consideration for the NSH Acquisition. The closing of NSH won't affect the Company's decision to wind down manufacturing operations in the unprofitable Oregon market. This acquisition follows SLANG's newly implemented transformational growth strategy focused on tapering its Core Markets to Vermont and Colorado, supporting the Company's goal of reducing non-profitable operations and achieving greater operating efficiencies.
📄 Company Updates / Earnings
Unrivaled Brands — Q4 and Year End 2021 Financial Results
2021 Revenue: $47.7M (25.1% GM), the decrease was due to the inclusion of lower margin distribution operation into the portfolio
$6.9M cash as of 12/31/21
ATACH — Launches Capital Markets Council to Prepare Capital Markets for Plant Touching Listings and Access to Capital. American Trade Association of Cannabis and Hemp (ATACH) announced the formation of the ATACH Capital Markets Council, to help prepare United States capital markets for cannabis stock listings. The Council was founded on the belief that an evolving policy shift will create equal opportunity for public listings of direct cannabis operations, fueling the global cannabis industry's anticipated $35 billion growth in 2022 alone. Through advocacy, education, grass-tops outreach, the ATACH Capital Markets Council will work to raise awareness and facilitate dialogue to promote access to capital markets. Emily Paxhia, Co-Founder of Poseidon will Chair the ATACH Capital Market Council.
Curaleaf — Releases Inaugural "Rooted in Good" Social Impact Report. Since its official launch in February 2021, Curaleaf's Rooted in Good program has focused on setting industry standards around commitment to developing a more equitable, sustainable and diverse cannabis industry. The program focuses on three core pillars: Diversity, Equity & Inclusion (DE&I), Social Equity and Sustainability, and the 2021 Social Impact Report highlights key accomplishments, community partnerships and facts and figures within those key areas.
As outlined in the report, Curaleaf has made the following progress against these key goals:
As part of its 420 x 25 Supplier Diversity commitment, Curaleaf is doing business with 420 new cannabis brands, ancillary suppliers and advocacy organizations from underrepresented communities by 2025. The company is now working with more than 100 new and diverse partners and suppliers after one year of this program.
Curaleaf is actively working towards its goal for 10% of its team members to come from populations touched by low-level cannabis-related offenses. In 2021, 3.7% Percentage of new hires met this criteria, and the company is taking steps to increase that number in 2022.
The company set a goal to contribute at least $1 million in community investment to programs that address collateral consequences associated with marijuana-related offenses. In total, Curaleaf and Select brands contributed over $2,400,000 to partner organizations across the country in 2021.
Agrify — Inks its First Multimillion International VFU Customer Agreement with BioCann Pharmaceutical in Portugal. Under the terms of the Agreement, Agrify will install 190 VFUs for BioCann’s 25,000 sq. ft. state-of-the-art cultivation facility along with access to the Agrify Insights cultivation software. BioCann will be purchasing Agrify’s cultivation equipment for $4 million, and a 5-year SaaS agreement for Agrify Insights for $2.1 million. The first set of 10 VFUs will be installed in the next 3 months, with the remaining 180 units scheduled for Q1, 2023.
🏬 Retail / Cultivation
Sweet Flower — Launches Pasadena Dispensary (6th in LA). After over three years of community engagement and collaboration with the City of Pasadena, numerous community organizations, stakeholders and local community leaders, Sweet Flower has opened its Sweet Flower Pasadena dispensary. Pasadena remains the most competitive merit-based license process undertaken by any municipality in California, Sweet Flower was selected as one of only four stores to open in Pasadena (from a field of 122 original applicants). The store will feature 30% representation of black- and brown-owned cannabis brands, 15x the state average, including numerous social equity brands and Pasadena's African-American owned cannabis brand, Craig Washington, Octavius CEO, said he’s helped support Sweet Flower’s entry into Pasadena for two years. Describing Sweet Flower CEO Tim Dodd as a “driving force of representation and social equity. It’s refreshing to see a Pasadena store open and provide opportunities to people who have lived and resided here since they were born. It’s much more than social equity. It’s Pasadena homegrown.”
Columbia Care — Completes Transformation of Expanded Chicago Dispensary. As part of the Cannabist update, the dispensary expanded its retail footprint by nearly 1,700 square feet to serve the growing number of medical patients and adult use customers. Columbia Care’s Villa Park location flipped to Cannabist in June 2021.
Trulieve — Opens Fort Myers, Florida Dispensary. This is the company’s second location in the city and 114th overall in the State. The Company also opened a dispensary in Zephyrhills, Florida, its 115th overall in the State.
Planet 13 — Nevada Cultivation Expansion. The Company has started expansion of its Nevada cultivation facility adding 22,000 square feet of cultivation space to fuel in-house product growth.
Mesobis — Launches First Line of Latin American Inspired Cannabis Gummies. Mesobis Gomitas are a true celebration of Latin culture and are available in three defining flavors that draw inspiration from cultural classics: Mango con Chile, Tamarindo con Chamoy, and Acai. The Gomitas are uniquely formulated using advanced nano molecular technology that ensures a fast-acting, even dosed experience every time. Each pack includes 10 bite-sized, pyramid-shaped Gomitas, infused with 10mg of THC per piece.
Trulieve x Khalifa Kush — Launches Brand in AZ. Trulieve (who recently acquired Harvest) expanded its partnership with Wiz Khalifa's brand, Khalifa Kush, in Arizona. Khalifa Kush 3.5g Pre-Pack Flower and Khalifa Kush 1g Pre-Rolls will be available at Trulieve’s 17 dispensaries in Arizona. The Khalifa Kush strain is an Indica-leaning Hybrid.
Lowell Herb Co. — Launches BIGS premium flower line and Hash-Wrapped Smoke. BIGS encompasses premium flower offerings at 7g, 14g and 28g, an expansion for the brand in the flower category. Each bag of BIGS contains Lowell’s finest artisan flower, grown sustainably at the company’s mixed-light greenhouse in Monterey County, California. Lowell is also expanding into the infused pre-roll category with the Hash-Wrapped Smoke, a classic Lowell pre-roll that’s been artfully wrapped in premium pressed bubble hash, creating a smooth, bold smoke with every draw.
Cresco Labs — Brings Its FloraCal Farms Brand to Illinois. FloraCal Farms, which features unique genetics in curated flower, live rosin vape and live rosin concentrate formats are now available at all Illinois Sunnyside stores and other retailers. The launch of FloraCal Farms in Illinois rounds out the Company’s wholesale portfolio in Illinois. Other available brands include Cresco, High Supply, Good News, Mindy’s, Wonder Wellness and Remedi.
Curaleaf — Select Brand Celebrates 4/20 With Limited-Edition Cliq Elite Live Strain in California. Curaleaf's Select brand has partnered with Los Angeles based artist James Haunt for the launch of a limited-edition Cliq Elite Live strain in California. The product is now available at dispensaries across the state in celebration of 4/20. Select Cliq Elite Live is available in three states including Arizona, California and Oregon.
HERBL — Exclusive Distribution with dosist™. Through this partnership, HERBL will distribute the brand’s entire product line throughout California. Founded in 2016, dosist™ products include rechargeable and disposable dose pens, fast-acting vegan gummies as well as live resin edibles and cartridges.
C3 Industries — Appoints Valay Shah as CFO. Prior to C3, Shah was a partner at Apollo Global Management, where he executed an array of investments into such global, diverse businesses as AMC Theatres, Cimpress, Norwegian Cruise Line and WR Grace. Shah also played an instrumental role in the formation of Venerable Holdings via its acquisition and carveout of Voya Financial's closed block variable annuity business.
Acreage — Appoints Corey Sheahan as General Counsel. He will replace Jim Doherty, who previously announced his departure from the New York-based company after a successful four-year tenure. Sheahan returns to Acreage after an 18-month tenure as EVP Legal and Chief Legal Officer at Ascend Wellness Holdings. Before Acreage, he practiced transactional and securities business law at Foley & Lardner.
Greenlane — Adds Darsh Dahya as Chief Accounting Officer and Renah Persofsky as Board Director. Dahya previously served as the SVP Accounting at MedMen, Prior to that, he served in several audit and managerial roles at BDO. Persofsky has served as CEO of Strajectory since 2010 and was an Executive Consultant of Canadian Imperial Bank of Commerce from 2011 to 2021. She presently serves as the Vice Chairwoman and Lead Director of Tilray (previously Aphria), from October 2017, as well as Executive Chairwoman of Green Gruff since July 2019. Persofsky is also currently a Board Member of K.B. Recycling (Alkemy) and Hydrofarm.
Leafly — Adds Deidre Boulware as Chief People Officer. Prior to joining Leafly, Deidre served as VP and Head of Talent, Development & Diversity for American Century Investments where she led the development and implementation of key talent initiatives and diversity, equity and inclusion. She also served as Global Head of Human Resources for US Pharmacopeia and has held senior roles at major financial services firms including Willis Towers Watson, Capital One, Ally Financial and Wachovia Securities.
Ayr Wellness Gears Up to Leverage New Assets Following Acquisitive Streak (NCV)
Meet the Flowery, Florida's Only Family-Owned Cannabis Dispensary (Miami New Times)
Friendly Farms and the future of vapes (Investing in Cannabis)
Cirona Labs' Cam MacNeil on Why Product Quality Is Key in Cannabis (Muse by Clio)
Burb Transcends Cannabis Culture In Tribute To ‘Legacy B.C. Bud’ (Forbes)
Inside 4Front’s 170,000-square-foot manufacturing and processing space (Reuters)
👋 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.