🏪 PharmaCann Acquires LivWell, Enters Colorado and Michigan Markets

Flowhub — $19M Series B (Headline, Poseidon, Jay-Z). AceCann (Casa Verde, Lince Capital) — $15M Seed. Michigan Cannabis Sales — down 2.5% M/M, up 53% Y/Y to $161.4M in September. Flower One — new CFO.

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🏙️ I’ll be at the Benzinga Cannabis Capital Conference Thursday/Friday, looks like a solid list of companies are attending (use code: HIGHLY for 30% off).

🚙I’m also planning an event in Denver next month (November 9th and 10th) for a deep dive into the market given recent Funding and M&A news. If you’re interested in attending, please let me know. We will keep this to a medium-sized group but should be a great opportunity to meet companies, executives, and investors in the market.


I’ve seen a lot of THC-beverage concepts lately and I’m sure more will come..but unlike hard seltzers right now, there’s still plenty of room for new brands/concepts and I’m here for it.


🌿Industry

Lawsuits against cannabis firm Coastal withdrawn after sale disclosure. Only days after The Parent Company said it was purchasing Coastal Holding, former MedMen co-founders Andrew Bierman and Andrew Modlin withdrew multiple state and federal lawsuits they had filed in an attempt to halt the sale. The dismissals of the suits bring to a quick end a legal fight that had the potential to completely upend the acquisition. They also likely clear the path for a smooth sale closing. Court records didn’t provide any reason for why the cases were withdrawn. In related news, the civil jury trial based on the lawsuit brought against the pair by former CFO James Parker almost three years ago is set to begin.

Arizona unveils applicant criteria for new recreational cannabis retail permits. The Arizona Department of Health Services filled in the final blank, announcing the geographic requirements for people who plan to apply for "social equity" licenses to run dispensaries. The Smart and Safe Arizona Act voters passed last year calls for 26 new dispensary licenses to go to people "from communities disproportionately impacted by the enforcement of previous marijuana laws." Defining exactly which communities fit that description was not detailed in the ballot measure but was left to the ADHS officials to define. Essentially, ADHS has defined those communities as 87 of the state's ~500 ZIP codes. ADHS posted a list of those ZIP codes online Friday without publishing an explanation as to how the agency determined those areas were the most impacted by previous marijuana laws.

N.J. cannabis commission will announce long-awaited licenses for new medical Cannabis businesses. The state will award several new licenses to operate medical marijuana business this Friday, October 15th, marking the beginning of the end for a two-year saga that has slowed growth of the New Jersey’s cannabis industry. The Cannabis Regulatory Commission will announce the winners of licenses to grow cannabis as well as for businesses to be vertically-integrated — growing, processing and selling it during its public meeting. The expansion could put New Jersey in a better position to begin adult-use sales. While these will be businesses licensed to handle medical marijuana, they can eventually pay fees and go through a process to become eligible to sell marijuana to anyone over the age of 21. The commission will set a date by which legal sales can begin. But companies who want to sell to the public must first certify they can meet patient and public demand, something that could be challenging without new cultivators entering the market.

Long Beach prepares to allow more cannabis dispensaries—but with higher taxes. Long Beach could soon have more cannabis dispensaries if the City Council moves forward with a recommendation to allow up to eight new storefronts that would be reserved for applicants who were penalized by former laws against the drug, are low-income or come from underserved parts of the city. A successful ballot measure to legalize cannabis sales in 2016  capped the number of dispensary licenses at 32, all of which have been claimed. The City Council is considering creating new opportunities for “equity” applicants who meet certain criteria.

Senators Push U.S. Attorney General To Decriminalize Marijuana ‘Now’ As Congress Debates Reform Bills. As congressional lawmakers pursue marijuana legalization, a pair of U.S. senators is calling on Attorney General Merrick Garland to use his own authority to swiftly end federal cannabis prohibition. Sens. Elizabeth Warren (D-MA) and Cory Booker (D-NJ) sent a letter on last Wednesday making the case that the Justice Department should initiate a descheduling process in order to “allow states to regulate cannabis as they see fit, begin to remedy the harm caused by decades of racial disparities in enforcement of cannabis laws, and facilitate valuable medical research.” Warren and Booker requested that Garland respond to their request by October 20.

Michigan Cannabis Sales — Down 2.5% M/M, up 53% Y/Y to $161.4 Million in September. Flower and trim sales represented 57% of the market, similar to July and August but down from 58% in the prior three months and up from 56% in January and February.


💵Deals

PharmaCann — Acquires LivWell. Upon completion of the planned merger, PharmaCann and LivWell will operate approximately 60 dispensaries and 11 cultivation and production facilities across eight states. It is anticipated that LivWell CEO, John Lord, will join the PharmaCann Board of Directors following the closing of the transaction. LivWell operates 21 dispensaries in Colorado and one in Michigan. Livwell completed a $42M sale-leaseback with IIP back in October 2019 for a 156,000 sq ft cultivation and processing facility. Jeremy Unruh, PharmaCann’s VP of public and regulatory affairs, told MJBizDaily that LivWell will represent about 35%-40% of the combined company once the merger is completed.

Flowhub — $19 Million Funding Led by Headline, Poseidon and Jay-Z. Flowhub, a cannabis retail point-of-sale platform for dispensaries, closed an additional $19 million in funding, bringing the total amount of capital raised to ~$50 million with a valuation of over $200 million. The financing was led by Headline and Poseidon, and included a personal investment from Jay-Z. Flowhub processes more than $3 billion in cannabis sales annually and is trusted by over 1,000 dispensaries. Built specifically to serve the highly regulated cannabis industry, Flowhub helps dispensaries operate compliantly, effortlessly expand, and deliver exceptional guest experiences.

AceCann — $15M in Seed Financing to Produce First Premium, Organic Flower and Extracts for Europe. The funding round was led by venture firm Casa Verde with participation from Portuguese venture capital firm, Lince Capital, along with public funding and debt capital. Additional investors participating in the round include Chris Mayle and Marc Gare, co-founders of Advanced Grow Labs (acquired by GTI); Frank Cid, CEO of Royal Life Centers; and angel investor Sebastian de la Rosa of Whistler Medical Marijuana Corporation (acquired by Aurora). The Company will use the proceeds to develop a state-of-the-art production facility located in Vendas Novas, Portugal dedicated to the organic cultivation, processing and extraction of premium medical cannabis products. Construction started in September. With the European cannabis market expected to reach $3.4B (USD) by 2024, AceCann is distinguished by its unique cultivation process and pharmaceutical manufacturing expertise. Through its focus on smaller, scalable, indoor farming methods, AceCann will be able to precisely manage temperature, humidity and other variables to ensure each plant receives daily care while meeting the quality standards associated with premium medical cannabis products.


📄Company Updates / Earnings

The Parent Company — Effectiveness of Form 10 Registration Statement. The Company’s amended registration statement on Form 10 (Registration Statement) originally filed with the SEC on August 9, 2021 became effective on October 8, 2021. As a result of the registration of the Securities, the Company will, among other things, now file periodic (Forms 10-K and 10-Q) and current (Form 8-K) reports with the SEC.

Red White & Bloom — Florida Subsidiary Receives Cannabis Cultivation License at Apopka Greenhouse Site; Immediately Begins Grow Operations. The Company acquired a 45,000 sq. ft. greenhouse with 4.7 acres in Apopka, Florida in July 2021. Phase one of the company’s initial plans for cultivation in Florida is now complete. In addition, the site received regulatory approval to commence operations on Sept. 29, 2021. The flower production in the initial Apopka licensed area is capable of producing 85 g per plant, with projected annual revenue from this area is in excess of $10M and operations commenced on Sept 30, 2021. Additionally, the newly designed grow will supply phase two of the Florida plans with the activation of thirty 16’ x 40’ customized, self-contained growing pods. With a targeted Q4 launch, the pods are anticipated to yield almost 10,000 pounds of dried flower per year representing a current medical market value of $30M. Phase three of the Company’s initial launch in the State will be the activation of the 113,000 sq. ft. indoor grow facility in Sanderson, Florida.

Unrivaled Brands — Letter to Shareholders. Highlights include:

  • Buying out Company’s founders, retired issued preferred stock and simplified the capitalization table, cut expenses, and improved corporate governance and operating processes

  • Monetized investment in Hydrofarm stock in June—recognizing $40 million in proceeds from the sale of Hydrofarm stock

  • Expect additional proceeds from the sale of two dispensaries in Las Vegas in early 2020, buyer of those dispensaries, Mystic Holdings, owes the Company $4.2 million at the end of December and Unrivaled has 8.3 million puttable shares wherein they have the right, starting in January 2022, to sell in the public markets or put the shares back to Mystic for no less than $8.3 million

  • Deployed much of the proceeds from the sale of the Hydrofarm stock to expand existing foundation — Merger with UMBRLA, Acquisition of SilverStreak Solutions, Acquisition of People’s First Choice

Hollister Biosciences — Strategic Initiatives (rebrand), executive and board updates. The Company has initiated a rebrand, including seeking a new corporate name and visual identity. Effective immediately, Carl Saling has resigned as CEO and Director of the Company and has been appointed Senior Advisor to the Board. Jake Cohen, COO, has been appointed as CEO and a member of the Board effective immediately. Eula Adams, has been appointed as Interim CFO, effective immediately and will be nominated for election at the AGM to serve as a member of the Board. Chris Lund has been appointed as the Chief Commercial Officer of the Company effective immediately. Jill Karpe has been promoted to SVP Finance and Administration of the Company effective immediately. In connection with the Company's efforts to improve governance, investor confidence and market performance, the Board has been refreshed and is now comprised of primarily independent directors.

Treez — Enters Colorado Cannabis Market with the Go-Live Implementation of its Cloud Retail Commerce Platform at Mighty Tree Dispensary. The company also operates in Arizona, Michigan, Missouri, Oklahoma and Washington. As part of its expansion in Colorado,

Charlotte's Web — Achieves Organic Certification.

The Company’s corporate farm acreage, and its 137,000 sq. ft. Louisville, CO-based manufacturing and R&D facility, earned U.S. Department of Agriculture (USDA) organic certification. This certification paves the way for several product lines to carry the USDA Organic Seal. In compliance with federal regulations for certified organic practices and with the Company's own strict quality and safety standards, these products are produced without genetically modified organisms (GMOs) and made from hemp grown on U.S. hemp farms with no synthetic pesticides or herbicides. Charlotte's Web farmers use cover crops and crop rotation to build healthy soils. The Company maintained USDA certified organic practices on its farm over a three-year transition period with on-farm inspections by a USDA accredited organic certification agency before being formally approved as 'USDA Certified Organic.'


🏬Retail

Trulieve — Reopening of Longwood, Florida Dispensary. The location is Trulieve's 94th in the state of Florida and was formerly branded as Harvest House of Cannabis.


🌱Product

WYNK — Cannabis-Infused Seltzer drops in Missouri.


🧔People | 💻Hiring

Flower One — Hires Araxie Grant as CFO. Grant joins Flower One with almost two decades of finance and accounting experience. Grant’s experience spans over diverse industries including professional sports, gaming, entertainment and non-profits. Most recently, Grant was the VP/Controller for the Las Vegas Raiders football team, the CFO for the Arena Football League (AFL) and previously was a key financial executive at Las Vegas Sands Corporation, where she spent seven years building the company’s finance department.


🎙️Interviews

Allen Iverson, Al Harrington Talk Cannabis: ‘This Is Definitely A Lifestyle’

NCV — Body and Mind CEO Michael Mills and COO Trip Hoffman


👋 Highly Objective is curated by Dai Truong. 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.