📈 PharmaCann confidentially files for IPO

Earnings (Q2 Revenue) – Ayr ($91.3M), TPCO ($54.2M), 4Front ($34.4M), MariMed ($32.6M), Schwazze ($30.7M), Glass House ($18.7M), Lowell ($15.2M). TPCO names new CEO. Unrivaled Brands acquires People's

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🌿Industry

PharmaCann plans IPO as New York legalization lifts demand. PharmaCann, one of the 10 original cannabis licensees in New York, has confidentially filed for an IPO that could value it at well over $1 billion, sources familiar with the matter told Reuters. The planned IPO would help PharmaCann raise funds before New York state begins recreational Cannabis sales. The IPO could take place this fall, one of the sources said. Cronos took a 10.5% stake in PharmaCann for $110.4 million in June, valuing the company at $1.1 billion, and the IPO would likely be a higher valuation, the sources said. PharmaCann has received multiple takeover offers in the last few months, including from blank-check firms, the sources added. Despite the confidential filing, PharmaCann could still decide to scrap the IPO and stay private or take a different route to go public.

Dark Heart Data Shows Hop Latent Viroid Drives $4B Annual Losses to Legal Cannabis Crop. Dark Heart Industries, California’s leading cannabis genetics company, has completed 200,000 tissue tests for Hop Latent Viroid (HpLVd) and uncovered startling new statistics about the impact of the disease on America’s legal cannabis industry. Dark Heart performed tests for more than 100 cannabis growers across California from August 2018 until July 2021. Results show that more than 33% of the tests from almost 90% of the cultivation sites were positive for HpLVd and supports projections by cannabis industry analysts that Hop Latent Viroid affects more than 30% of all cannabis plants. This translates into more than $4 billion in annual losses for US growers who are forecast to produce more than seven million pounds of legal cannabis in 2021. “Hop Latent Viroid is impacting legal cannabis crops nationwide, not just here in California. Our new laboratory facility for biotechnology research and innovation in Davis, CA, greatly expands capacity to process viroid assays. We now have the scale to support growers and other laboratory facilities from across the country.” said Dan Grace, founder and CEO of Dark Heart.

N.J.’s Cannabis industry rules will come this week, bringing state a big step closer to legal sales. New Jersey’s commission to regulate the sale of cannabis this week will adopt its initial rules and regulations, marking a milestone in the years-long effort to launch legal Cannabis sales in the Garden State. While the law lays out the types of cannabis business licenses that will be available in New Jersey, the commission still has a lot of power. Once the commission adopts its rules, the real countdown to legal cannabis sales begins. The panel will ultimately decide when sales can start, but must pick a date that falls within 180 days of Aug. 19. New Jersey currently only has businesses licensed to grow, process and sell medical marijuana to authorized patients. But the state can allow these dispensaries to sell to the public, too, once they have enough product to meet both patient demand and that of the 21 and older market. The rules will become available just two days before municipalities must decide if they will allow, restrict or ban weed businesses from their borders. 

Pasadena City Council Amendments to Cannabis Ordinance Will Allow More Dispensaries. The City Council will conduct the first reading of an amended cannabis ordinance that will increase the number of dispensaries allowed in the city and change the distance requirements between those outlets. The new regulations will allow the number of cannabis retailers to increase from one to three in each of the city’s seven council districts and decrease the required distance between retailers from 1,000 feet to 450 feet. 


💵Deals

Unrivaled Brands — Executes Agreement to Acquire People’s First Choice. the Company has executed a definitive agreement to acquire People’s First Choice, which operates an existing dispensary in Santa Ana, and has licenses for two locations with retail sites planned in two additional locations, making five locations in total. Pursuant to the agreement, Unrivaled will take full control of the Santa Ana Dispensary operations and will receive all economic benefits starting September 1, 2021. In addition to the revenue accruing to the Company starting September 1, 2021, management believes that these two new dispensaries, along with the existing Santa Ana location, will add more than $60 million in new revenues to the Company in 2022. In addition, virtually all of the existing People’s corporate SG&A will be eliminated, increasing cash flow.

Village Farms International — Acquires 100% of Balanced Health Botanicals for $75M, a Profitable Leader in the US CBD Category, Providing an Additional Pathway to High-THC Cannabis Market in the US. Balanced Health develops and sells high-quality, CBD-based health and wellness products. With an overriding focus on quality and compliance, Balanced Health has established a diverse portfolio of CBD and other cannabinoid products, including ingestible, edible and topical applications that are distributed via e-commerce and brick and mortar retail channels.  Its e-commerce platform, CBDistillery™ (www.theCBDistillery.com), is a top-five US CBD brand1 and top-ranked web site within the CBD category, with more than 30,000 orders monthly and a significant repeat customer base. The $75 million will be satisfied through $30 million in cash and common shares of the Company equal to $45 million. The company is expected to contribute annualized sales of more than $30 million at an annualized adjusted EBITDA margin of in excess of 15% in 2022.

Dewey Scientific — Raises $3.2M from The Hawthorne Collective (Scotts Miracle-Gro). The startup, which provides scientific services to cannabis cultivators as well as proprietary cannabis genetics, was founded in 2018 by three PhD plant scientists out of Washington State University. Dewey plans to use the funds to acquire new equipment and expand on its research and development. The company will be working with Selway Holdings to secure use of a planned $1.8 million cannabis greenhouse.

NewLake Capital Partners — Closes $101.5M IPO. NewLake Capital Partners, , a leading provider of real estate capital to state-licensed cannabis operators through sale-leaseback transactions, third party purchases and funding for build-to-suit projects, closed its IPO of 3,905,950 shares of common stock at an offering price of $26.00 per share.

Harvest Health & Recreation — Sale Leaseback Transaction with Innovative Industrial Properties. Harvest sold a property in Hancock, Maryland for approximately $16.6 million excluding transaction costs. Concurrent with the sale Harvest entered into a long term lease with IIP. Harvest plans to continue to operate the property as a licensed cultivation and processing facility and expects to recover up to approximately $12.9 million in tenant improvements from IIP. The total proceeds for the transaction are expected to be approximately $29.5 million. Harvest currently operates three medical dispensaries in Halethorpe, Lutherville Timonium and Rockville supported by a cultivation and processing facility in Hancock.

The Flowr Corporation — Partnership With Cookies To Expand Its Global Brand Into the European Union. Flowr, through an indirect wholly-owned subsidiary, to be the exclusive cultivation and retail partner for Cookies in Portugal with a view to bringing Cookies cannabis, clothing and lifestyle products to the E.U. Flowr to cultivate Cookies’ leading strains from its E.U. GMP facility in Sintra, Portugal with a view to domestic retail distribution and international wholesale distribution. Cookies to assist Flowr with the retail distribution strategy in Portugal.


📄Company Updates / Earnings

Ayr Wellness — Second Quarter 2021

  • Revenue up 222% Y/Y to $91.3 Million, up 56% sequentially

  • Adjusted EBITDA of $27.4 million on a US GAAP basis, up 225% Y/Y and 49% sequentially

  • US GAAP Operating Loss of ($24.9 Million) Included Non-Cash, One-Time Expenses, and Non-Operating Adjustments totaling $52.3 Million

  • Increasing 2022 Revenue Target to $800 Million, with $300 Million of AEBITDA

  • Company Provides 3Q21 Guidance for a targeted $100 Million in Revenue, up Over 211% Y/Y and 10% Q/Q, with Adjusted EBITDA Flat Sequentially Over Q2

  • Announced Three Proposed Acquisitions, Including Levia, the Leading Branded Cannabis Beverage Company, Adding Illinois as Eighth State and Significantly Expanding Cultivation Capacity in Nevada

The Parent Company — Second Quarter 2021

  • Net sales were $54.2 million, comprised of $11.9 million in direct-to-consumer revenue and $42.3 million in wholesale revenue

  • Adjusting for a full year of sales beginning January 1, 2021, H1 2021 net sales would have been approximately $99.8 million

  • Gross profit was $8.1 million, or 15% of net sales

  • Adjusted EBITDA loss was ($10.4 million)

  • Cash and equivalents totaled $257.5 million as of June 30, 2021

4Front Ventures — Second Quarter 2021

  • Systemwide Pro Forma Revenue of $34.4 million compared to $31.4 million in Q1 2021, an increase of 85% year over year and 10% over Q1 2021

  • GAAP-reported revenue of $27.1 million compared to $23.0 million in Q1 2021, an increase of 114% year over year and 18% over Q1 2021

  • Adjusted EBITDA increased 27% to $7.5 million compared to $5.9 million in Q1 2021, representing an Adjusted EBITDA margin of 22% as compared to an Adjusted EBITDA margin of 19% in Q1 2021

  • Strong performance in sales and product adoption across retail locations, exceeding all internal projections; positive momentum continues in Q3

  • California — state-of-the-art 170,000 square foot production facility in Commerce, California is complete, and is in the final stages of licensure

  • Illinois — closed the first phase of its multiphase expansion project of an up to 558,000 square foot new cultivation and production facility in Matteson, Illinois

  • Massachusetts — received all final approvals to open and operate its third adult-use dispensary in Massachusetts in the Town of Brookline

MariMed — Second Quarter 2021

  • Revenue: $32.6 million, an increase of 239% Y/Y and an increase of 32% Q/Q

  • Gross profit: $19.4 million, an increase of 215% Y/Y and an increase of 47% Q/Q

  • EBITDA: $12.3 million, the 6th sequential quarter of positive EBITDA growth. Reported EBITDA increased 440% Y/Y, and an increase of 61% Q/Q

  • Adjusted EBITDA: $13.9 million, a 391% increase Y/Y and an increase of 73% Q/Q

  • Net Income: $7.6 million versus a net loss of $1.1 million in Q2 2020, and net income of $4.3 million in Q1 2021

  • Increased working capital as of the end of the second quarter of 2021 to $24.3 million, an increase of $26.5 million versus Q4 2020, and an increase of $7.2 million versus the end of the Q1 2021

  • Reported $10.8 million in positive cash flow from operations, an increase of $9.9 million versus Q2 2020, and an increase of $4.0 million versus Q1 2021

  • Increased 2021 guidance for revenue from $100 million to $118 million and EBITDA from $30 million to $32 million. The Company is also including guidance for the first time of Adjusted EBITDA of $42 million

Schwazze — Second Quarter 2021

  • Revenues of $30.7 million grew 467% over Q2 2020 and 58.9% over Q1 2021

  • Gross Margin of $14.9 million was 48.5%, 576 bps better than Q2 2020 and 1,099 bps over Q1 2021

  • Adjusted EBITDA of $10.0 million was 32.6% of revenue, 239 bps above Q1 2021

  • Net Income was $4.4 million or $0.08 Diluted Earnings per share compared to a Net Loss in Q2 2020 of ($6.6) million or ($0.16) Diluted Net Loss per share and compared to a Net Loss in Q1 2021 of ($3.6) million or ($0.09) Diluted Net Loss per share

  • Cash Flow from operations for the six-month period was $1.4 million

  • Same store sales of the seventeen Star Buds dispensaries when compared to last year were $21.5M up 16%.

    • Average basket size was $61.04 up 6.4%

    • Recorded customer visits were 357,056 up 8.9% 
      Note: Schwazze did not own all the assets in 2020 and are using unaudited numbers for this comparison.

Glass House Brands — Second Quarter 2021

  • Net Sales increased 62% to $18.7 million from $11.6 million in Q2 2020

  • Gross Profit increased 56% to $8.6 million from $5.5 million in Q2 2020

  • Gross Margin of 46% compared to 48% in Q2 2020

  • Adjusted EBITDA increased 100% to $2.2 million from $1.1 million in Q2 2020

  • Adjusted EBITDA Margin was 12% compared to 9% in Q2 2020

  • Cash balance of $134.3 million as of June 30, 2021

Lowell Farms — Second Quarter 2021

  • Revenue: $15.2 million; an increase of 53% Y/Y and an increase of 37% Q/Q

  • Gross margin was 38% compared to negative margin of (13%) in both Q2 2020 and Q1 2021

  • Operating loss of $473K compared to operating loss of $4.8 million and $5.7 million in Q2 2020 and Q1 2021, respectively

  • $2.6 million insurance recovery associated with plant stress incurred in 2020

  • Net income of $731K compared to net loss of $8.8 million and $6.7 million in Q2 2020 and Q1 2021, respectively. The current quarter includes proceeds from insurance claims of $2.6 million

  • Adjusted EBITDA for the three-month period ended June 30, 2021, was $740K, which excludes insurance claim proceeds, compared to negative adjusted EBITDA of $7.2 million in Q2 2020. 

Stem Holdings, Inc. d/b/a Driven By Stem — Third Quarter FY2021 (June 30)

  • Gross sales: $12.4 million and net sales of $10.6 million, a 104% increase and 103% increase, respectively, over the prior year’s $6.1 million gross sales and $5.2 million net sales

  • Gross margin improved 7.6% to 41.8%, reflecting improvements in productivity, mix, and synergies from the Company’s acquisition of Driven Deliveries

RIV Capital — First Quarter Fiscal Year 2022

  • Operating income (before equity method investees and fair value changes) of $0.4 million, net of a provision for expected credit losses of $0.1 million

  • Operating expenses were $2.5 million

  • Cash balance of $212.5 million as at June 30th after completion of multiple monetization events during the quarter

  • PharmHouse Credit Facility fully settled; Company anticipates receiving ~$6.5 million distribution upon termination of CCAA proceedings

Gage Growth — Third Social Equity Grant Recipient, Margaeux Bruner of Holi Smokeables. Margaeux Bruner, Founder of Holi Smokeables, who will be awarded the grant for her product The Holi Flower, an exclusive hemp wrap cone. Gage's social equity grant program consists of 20 total grants, up to $50,000 each, as well as public relations and marketing support. Additionally, the Company will support record expungement clinics and informational sessions, and will collaborate with key community organizations to provide access to cannabis educational workshops, work development programs, and employment fairs. In 2019, Gage awarded its first social equity recipient Ryan Basore, President of Redemption Cannabis. Diop Shumake, founder of Runner's High 5K, received the 2nd grant in December of 2020. Gage will begin accepting applications for their next recipient through its social equity website later this summer. 


🏬Retail

Cresco Labs — Opens Fort Lauderdale Dispensary, Its Ninth Florida Location and First Under the Sunnyside Brand. Sunnyside Fort Lauderdale has nearly 2,500 sq. ft. of retail space and five POS stations. The store will offer products from its One Plant brand as well as new offerings from Cresco Labs’ House of Brands, including FloraCal Farms, Mindy’s, Good News, Wonder Wellness and High Supply.

Columbia Care — Expands New Jersey Footprint with New Dispensary in Deptford, Bringing Scale to South Jersey. The Deptford location will complement Columbia Care’s existing dispensary and 50,000-square-foot cultivation and production facility in Vineland, which completed its first harvest in July. Columbia Care is developing a third dispensary in Hamilton Township that is expected to open by the end of 2021, as well as a second cultivation and production facility in Vineland that will provide 250,000 square feet of additional canopy, manufacturing and distribution space, pending regulatory approval.

4Front Ventures — Open Third Dispensary in Massachusetts. Mission Brookline will initially begin serving adults 21 years and older in the Allston Innovation Corridor, a vibrant community within the wider Boston University and Boston metropolitan area. Having previously received approval for medical and adult-use cannabis sales at its Mission facilities in Georgetown, 4Front already has a strong foothold in Massachusetts. 4Front's Mission Worcester dispensary, along with the Company's cultivation/processing facilities in Worcester, Massachusetts, were also granted authorization to commence adult-use retail and production operations in September 2020.


🌱Product

Papa & Barkley — Launches California's First Cannabis Sleep Solution Infused with Solventless CBN, Supported By California's First CBN Consumer Use Test to Deliver 1 More Hour of Sleep Per Night. The brand takes a holistic approach to sleep, infusing its Sleep Releaf Products with a powerful formula of CBD for relaxation, THC for comfort, and CBN for sedative effects to help consumers fall asleep, stay asleep, and wake up refreshed. Papa & Barkley's Sleep Releaf Collection features four products – Capsules, Tincture, Blackberry Elderberry Gummies, and Pomegranate Dark Chocolate.


🧔People | 💻Hiring

The Parent Company — Appoints Troy Datcher to Serve as New CEO. Datcher's historic appointment represents the first time a Black CEO will lead a major public U.S. cannabis organization.  Current CEO Steve Allan will continue with the Company and assist with the leadership transition. Datcher joins The Parent Company from The Clorox Company, where he most recently served as Senior Vice President and Chief Customer Officer responsible for the Company's worldwide sales organization.  During his tenure, Datcher deployed global sales plans for over $6.7 billion in annual revenue across The Clorox Company's vast portfolio of brands. Datcher first joined The Clorox Company in 1999 as a region sales manager for the Specialty Division before assuming a leadership role for the company's automotive business. In 2006, he joined JTG/Daugherty Racing, where he spent three years as the Director of NASCAR Sponsorship and Marketing for the organization before returning to The Clorox Company in 2009.  Prior to his combined 20-year tenure at The Clorox Company, Datcher served as national sales account manager at The Procter & Gamble Company.

CannaSafe — Departure of CEO, Appoints New Management Team. CEO Aaron Riley will amicably depart from the company to pursue testing ventures in emerging markets. CannaSafe has selected three new members to the leadership team, and Aaron will continue to help facilitate the transition of the Los Angeles lab that began in early 2021. Aaron will be moving on to build out the Oregon and Florida locations but under a new entity. Through this reorganization, partners Bill Scrogins and Greg Balotin are set to become owners, while Gerry Dabkowski will assume the role of incoming CEO. Antonio Frazier and Ini Afia will be retained as President and Chief Science Officer, respectively. Additionally, several members of CannaSafe's original science team have returned to the company in recent months to advance the company's testing capabilities.

HEXO — Appoints Valerie Malone as Chief Commercial Officer. Valerie brings more than 20 years of experience managing businesses across different verticals including consumer packaged goods, technology and electronics, durable goods and consulting to her role at HEXO. Valerie's vast leadership experience includes roles at high-profile organizations including PepsiCo Canada, Whirlpool, LG Electronics and Lixil, with responsibilities spanning from VP Marketing to General Manager and President.


🎙️Interviews

Legal U.S. cannabis sales will triple in the next decade: GTI CEO

“We see a lot of growth coming for US cannabis. And we're sitting inside a protected moat, given the regulatory structure. So there's a huge amount of growth ahead. Just industry-wide, to put it on the map for you, currently US legal cannabis sales is a $24 billion industry. We believe that will triple in the next decade. So that's $50 billion of growth that we're going to be investing into.”

Pot O' Gold? HERBL CEO Outlines Promise, Struggles Of Marijuana Distribution

"If you study the 21st Amendment and the lifting of Prohibition, it really just puts the decision-making process back in the states' hands, and there are still dry states and counties to this day. So I envision a similar world where the federal government will defer to the states and they will set their own regulatory and tax structures for it.”

How Canadian cannabis retailer High Tide plans to enter the US: Q&A with CEO Raj Grover

“If cannabis is legalized or decriminalized at the federal level, we’ll be in a position to enter the U.S. market very quickly through both our bricks-and-mortar and our online businesses. That is why we’re setting up a robust online portfolio right now, that’s established and ready to make online cannabis sales when U.S. legalization takes place. The customer that shops on our platforms today is the exact same customer that spends top dollar on cannabis, and we have data to prove it. We’ve already rehearsed (for U.S. cannabis retail) with approximately 90 stores in Canada. Combine that with our online edge—I don’t even think a multistate operator, or any other cannabis entity in North America, can speak to having such a robust cannabis online ecosystem which High Tide has today.”

Verano CEO on TD Ameritrade Network


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