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💳 Shryne Group (Stiiizy) receives Senior Secured Term Loan that could go up to $170M
Onfleet raises $23M. Canix raises $10M. Safe Harbor Financial $5M Senior Secured Loan to Solar Cannabis. Flower One receives $5M Loan. Pacific Stone goes to Kiva Sales and Service for Distribution.
Delaware House Upholds Governor’s Marijuana Legalization Veto. The Delaware House of Representatives voted to uphold the governor’s veto of a marijuana legalization bill—a disappointment for advocates that comes on the same day that a rally was held outside the State House to push to overturn the veto. The chamber failed to override Gov. John Carney’s (D) action in a 20-20 vote, with one member not voting. The bill had initially passed with 26 votes—more than the supermajority threshold needed to override a veto—though some members were evidently hesitant to contradict the governor even though they support the reform as a matter of policy. After the legislature sent the measure to the governor’s desk last month, he announced that he was refusing to sign it, a move that wasn’t entirely unexpected given his past comments on the issue but still stands in stark contract to the policy positions of virtually every other Democratic Governor in the country.
Ontario Cannabis Store data breach raises credibility, security concerns. The credibility of the government-run Ontario Cannabis Store is at stake after sensitive industry data was misappropriated and leaked, according to experts. The Ontario Provincial Police (OPP) confirmed it opened an investigation earlier this month into what the OCS alleges is the theft of the business data. The data includes individual cannabis retailers’ sales, their inventory levels and other sensitive information such as store license number and the amount of kilograms and packaged units sold for at least the months of December 2021 and January 2022. As the only legal wholesaler of cannabis in Ontario – Canada’s biggest legal cannabis market by sales – industry sources said it’s imperative the government-run body be seen as credible in the eyes of its clients, the more than 1,500 cannabis stores that can buy their products only from the OCS.
Illinois’ craft grow operators frozen from operations, as 12 craft growers obtain temporary restraining order. Less than a week after Illinois regulators awarded 48 new craft grow licenses, licensees are barred from continuing operations as the result of a temporary restraining order imposed by a Winnebago County judge for one week after twelve craft growers alleged the process was rigged against them. Twelve craft grow applicants led by applicant Sustainable Innovations filed suit last week in the 17th Judicial Circuit, based in Rockford, Ill., protesting that the application process was invalid due to Illinois’ lack of consistent rule enforcement to help social equity applicants. In addition, the applicants argue that an extra set of points awarded to veteran-led teams created an unconstitutional special class. All 48 license winners this round were veteran-led, and were all social equity applicants. License recipients were ordered by Judge Lisa Fabiano to halt plans for operations, including site pre-approvals, construction plans, labeling and packaging. A hearing on a permanent injunction is set for June 15th.
Detroit, Not Again: Another Lawsuit Threatens Motown's Long-Awaited Cannabis Ordinance. Less than a month after a lawsuit challenged Detroit's revised recreational marijuana ordinance, another lawsuit against the city was filed, arguing that the measure violates state law. JARS Cannabis, which has two medical marijuana dispensaries in Detroit and several MMJ and adult-use shops across the state, is asking the court to stop the City of Detroit from moving forward with its ordinance, which was passed in April. JARS Cannabis argues that Detroit's ordinance violates state law in several ways, reported the Detroit Free Press. For starters, JARS says Detroit's scoring system for selecting which applicants receive limited licenses fails to provide a competitive application process, but rather awards points that are unrelated to the applicant's ability to operate in compliance with state law. JARS used the example of the so-called "Good Neighbor Plan," which implies hiring Detroit residents and donating to a Detroit charitable organization. The lawsuit also refers to a line in state law that says: "A municipality may adopt other ordinances that are not unreasonably impracticable and do not conflict with this act or with any rule promulgated pursuant to this act." JARS calls that "unreasonably impracticable" because the scoring method deters them and others from applying, prohibits the issuance of more than one recreational license to any direct or indirect owner and effectively bans the co-location of medical and recreational cannabis facilities.
New Survey Shows Majority of Cannabis Consumption is Attributable to Consumers' Desires to Address Health and Wellness Concerns. A new survey conducted by The Harris Poll (on behalf of Curaleaf) finds that 91% of adults aged 21+ who have ever consumed cannabis have done so for health and wellness purposes. The findings offer important takeaways revealing people's attitudes toward both cannabis and the desire for holistic health and wellness, as 75% of Americans say they would prefer holistic solutions over pharmaceuticals to treat a medical issue when possible, with 62% of people saying they would prefer to use cannabis rather than pharmaceuticals to treat a medical issue. According to the survey conducted online among nearly 2,000 U.S. adults ages 21+ by the independent pollster, the top health and wellness reasons Americans have consumed cannabis include:
to relax (52%)
to help with sleep (49%)
to reduce stress (44%)
to reduce anxiety (41%)
New Mexico cannabis sales level off in May at $38.5M. Combined sales of medicinal and adult-use cannabis topped $38.5M in the second month of New Mexico's regulated marketplace. Despite four additional towns or cities seeing dispensaries open during the month, May sales amounted to $1 million less than the opening month of legal cannabis sales to adults age 21 and over opened on April 1. Medical cannabis sales, which are not taxable, gained slightly as a percentage of total revenue in May with more than 45%, Adult-use made up about 55% of revenue.
Weedmaps becomes the first company in the cannabis space to show up at NYC’s Governors Ball. Weedmaps’ traveling immersive art installation, “Flowers are not a Crime,” will have its East Coast debut at The Governors Ball in New York City from June 10—June 12, making Weedmaps the first company in the cannabis space to show up at the 11-year old festival. Additionally, the title of the installation, “Flowers are not a Crime,” was chosen to bring awareness to the fact that while cannabis continues to be legalized around the U.S. and many can profit from it, there are still over 40,000 people – disproportionately minorities – behind bars for cannabis related crimes. Together, Weedmaps want to ensure those who visit the installation understand Weedmaps’ mission to create a transparent and inclusive cannabis economy.
Cannabis execs and employees are struggling to get mortgages and having their bank accounts canceled — even though the industry is legal in many states. Jeffrey Herold, CEO of MA-based Garden Remedies — ran into trouble when he and his wife were trying to purchase a home last year. Herold told Insider that their mortgage was denied less than a week before when they were supposed to close on their new home. They had already sold their old house, so they were left scrambling. They ended up removing his name from the loan and putting it in his wife's name. But they had to stay in a hotel for a few weeks as they worked to resolve the issue, and they paid extra to restart the mortgage process. Nicholas Vita, CEO of Columbia Care, told Insider in November that a major bank canceled his personal checking account because of his work in the cannabis industry.
Shryne Group (STIIIZY) — Up to $170M Senior Secured Term Loan.
Silver Spike co-led a senior secured term loan of up to $170M to Shryne. Shryne cultivates, manufactures, distributes and retails branded cannabis products at scale, and owns and operates award-winning brands, including Stiiizy, the #1 brand in California and the #3 brand nationally, according to BDS Analytics. [note: a recent BDSA pull I saw for Q1 2022 shows Stiiizy as the #1 brand nationally, well ahead of #2, Rhythm (GTI) and #3 Cresco]
Onfleet — $23M Series B Funding to Help Businesses Optimize and Scale Last Mile Delivery Operations. The new round, led by Kayne Partners, the dedicated growth equity group of Kayne Anderson Capital Advisors, with participation from existing investor Savant Growth, brings the company’s total capital raised to over $40M. Kayne Partner’s Robert Shilton will join Onfleet’s Board of Directors. Onfleet’s automated route optimization reduces the number of drivers needed and miles driven, improving profit margins while reducing carbon emissions. Onfleet’s platform also enhances the customer experience by providing retailers and end consumers with real-time driver tracking and automated communication. Onfleet’s software has powered hundreds of millions of deliveries for thousands of businesses, including companies like Kroger, Total Wine & More, EQ3, Zumiez, and United Supermarkets. And of course a good amount of Cannabis deliveries.
Canix — $10M Series A Raise. The company sees using the capital to expand throughout the United States and Canada, allowing it to scale its cultivation forecasting and production planning ERP platform to meet market-specific regulations. The round was led by an unannounced firm — one that wishes not to be disclosed. Other investors include Altair V.C., Cathexis Ventures and Emles Ventures and other notable angels. The company says its products are currently used by 2,300 licenses across 400 companies through 17 states and six countries.
Safe Harbor Financial — $5M Senior Secured Loan to Solar Cannabis (MA). This transaction marks the evolution of Safe Harbor's senior secured lending program, which was established to provide loans to cannabis operators in states in which cannabis is legal. Solar Cannabis' loan is the first extended by Safe Harbor outside of its home state of Colorado. The terms of the loan were not disclosed.
Flower One — $5M Loan. Flower One received the $5M loan from RB Loan Portfolio II, LLC. The Company and certain of its subsidiaries are parties to an existing loan agreement with the Term Lender with respect to the Company’s existing $45.65M term debt, secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. The Company’s receipt of the Loan was facilitated by the assignment to an insider of the Company, of a portion of the interest owing in the Term Debt from the Term Lender in the amount of $5M. The Loan has made an additional $5M available to the Company with respect to the Term Debt with a maturity date of June 30, 2023.
KindTap x Dispense — Partner on Cashless Cannabis Sales. KindTap, a digital credit payments solution for the cannabis industry, has integrated with Dispense, an eCommerce platform. The integration lets retailers powered by Dispense accept KindTap digital credit and ACH payments from customers in any U.S. state where cannabis is legal. Dispense lets businesses manage and scale dispensaries using eCommerce tools and various integrations. With the help of KindTap, these business’ customers can enjoy cashless transactions without the friction or risks connected to cash payments, the release said. Customers can either pay on the spot through a bank account connection or choose to pay later via a revolving line of credit.
Bhang x Petalfast — Sales & Marketing in CA. In addition to Bhang's award-winning portfolio of cannabis edibles, the Company is excited to be working with Petalfast on the California launch of the Bhang High Roller Nano-Infused Pre-Roll and quick-onset line of chocolate in the coming months.
Aurora Cannabis — Repurchases $20M of Convertible Notes. The purpose of the transaction, which represents a repurchase of a portion of the Notes at a 5.25% discount to par value, was to reduce the Company's debt and annual cash interest costs. Annual cash interest savings from the repurchases of Notes made from Q3 2022 onwards now total $7.5M. The company has ~$455M in cash on the balance sheet.
📄 Company Updates / Earnings
WYLD — Joins Juneteenth Oregon, Pride Northwest & Sacramento Pride. As many brands begin promoting limited-edition packaging & social media posts to commemorate Juneteenth and celebrate Pride Month, it’s important to consider the actions behind it that truly reflect the brand’s commitment. From June 18-19, Wyld will be attending Juneteenth Oregon's 50th Year Anniversary Celebration, sharing educational information with attendees as well as providing CBD sparkling waters. Wyld will also be attending Sacramento Pride from June 11-12 and Pride Northwest in Portland from June 18-19. In addition to sponsoring, Wyld supports the community by promoting its educational information and message through internal company engagement and resource donation.
Green Flower — Cannabis Education Financing Now Available. Green Flower, the leader in cannabis education, and Climb Credit, a new kind of student lending company focused on financing career-building programs, have joined forces to make cannabis education more affordable and accessible to students through a variety of financing options. With Climb, students at any of Green Flower's 18 (and soon to be more) university partners offering online cannabis education certificates can now finance up to their full tuition, removing the upfront cost that has kept so many from being able to enroll. Climb's loan process is simple and fully-online. The application takes less than five minutes to complete with the majority of funding decisions received almost immediately—with no impact on the applicant's credit score until after the loan is funded. This allows students to complete multiple applications and find the best rate. One of the company’s latest certified Ganjier is Ricky Williams.
GTI — Applications Opened for third round of Good Green Grant Program. Green Thumb Industries has opened applications for the third round of its Good Green Grant Program. Launched in 2021, Good Green offers affordable mixed bud flower products. Sales from Good Green products fund grants awarded to nonprofit organizations that give back to marginalized communities disproportionately affected by the War on Drugs. Since launch, Good Green has awarded more than $500,000 in grant money to eight impactful organizations that provide cannabis career training, education and sustainable employment opportunities, as well as expungement legal services.
Icanic — Recapitalization Transaction and Support Agreement. Icanic has entered into a Restructuring Support Agreement with certain holders of its 2019 Secured Convertible Debentures, to effect a proposed recapitalization transaction and to announce a financing of ~$2.0M arranged by insiders of the Company. The Recapitalization Transaction is the next step in the combination and integration of the Icanic and LEEF organizations following the closing of the merger of the companies on April 21, 2022. Assuming Completion of the Recapitalization Transaction, the Company’s pro forma outstanding indebtedness will be reduced from $14.5M to ~$10.9M and its annual interest expense savings will be ~$110K.
urban-gro — Signs Memorandum of Understanding for the Turn-key Design-Build of a 100,000 square foot Cultivation Facility in New York with E29 Labs. E29 Labs is a black, woman-owned commercial cannabis production company, to provide end-to-end assistance with their ~100,000 square foot cannabis production facility located in New York State, working side-by-side during the license application process, facility design, and complete build out.
🏬 Retail / Distribution
Kiva Sales and Service — Secures Distribution Partnership with Pacific Stone. Pacific Stone, the #1 flower brand in California by units sold in the state, signs exclusive partnership with Kiva Sales and Service (KSS). KSS' extensive distribution network will continue growing Pacific Stone's product portfolio to over 900 retailers in the largest adult-use market in the country. Led by sixth-generation Dutch greenhouse growers, Pacific Stone offers premium greenhouse flower, two-count pre-rolls, 14-count pre-roll packs, Smooth Rips™ cured resin sauce, Ready Rips™ all-in-one vaporizers, Roll Your Own Sugar Shakes and diamond-infused pre-roll packs.
CanPay — Expands to Reach Nearly All of Florida's Cannabis Consumers. Florida has fully adopted CanPay, the largest legitimate payment network for cannabis merchants and consumers. The platform is now accepted at 95% of the state's medical marijuana treatment centers (MMTCs). Nearly 100% of Florida's medical cannabis patients can use CanPay to pay for their cannabis purchases. CanPay provides an easy-to-use app that allows consumers to pay for purchases at cannabis retailers with a simple debit from their checking account using the Automated Clearing House (ACH) network. Merchants with a compliant bank account at a CanPay-approved financial institution may join the CanPay network quickly and easily.
Essex Apothecary — Open in Lynn, MA. After over four years, Essex Apothecary opened on June 3rd. The eclectic dispensary will offer a diverse product selection, including flower, tincture, edibles, concentrates, and more to Lynn, MA, visitors and residents. By utilizing a menu segmented and organized by terpenes—natural aromatic compounds found in cannabis that contribute significantly to the feelings cannabis strains impart—customers will have increased foresight into the experience they will have after consumption.
TerrAscend — Debuts Cookies And Gage Brands in New Jersey. Cookies and Gage-branded cannabis products will launch on June 11th. These products will be available exclusively at The Apothecarium locations in Maplewood and Phillipsburg.
Trulieve — Opens Coatesville, PA Dispensary. Patients will have access to a selection of premium whole flower products, including TruFlower and Cultivar Collection, as well as vapes, tinctures, topicals, and ingestibles. Other in-house brands available in Pennsylvania include Avenue, Modern Flower, Moxie, Muse and R.O. In the coming months, TerrAscend plans to offer additional Cookies products including accessories, more cultivars and vape cartridges at its "Cookies Corners" in all three New Jersey Apothecarium dispensaries, subject to regulatory approval.
Columbia Care — Operationalizes Second Cultivation Facility in New Jersey and Expands Adult Use Hours at Both Garden State Cannabist Locations. The company has started operations in its new, ~270,000-square-foot cultivation and production facility in New Jersey, begun using post-harvest automation equipment, and expanded its adult use shopping hours at both of its Cannabist locations in Deptford and Vineland to the maximum number of hours allotted by the New Jersey Cannabis Regulatory Commission (CRC). In addition to the new 270,000-square-foot cultivation, manufacturing and processing facility, the Company also operates a 50,000-square-foot facility, also located in Vineland. The Company has a third retail location in development in New Jersey, which is expected to open later in 2022.
Jushi — Opens 33rd Retail Location Nationwide and Fourth Dispensary in Nevada. Following the opening of NuLeaf Las Vegas The Strip, Jushi’s operations in Nevada will consist of three adult-use and medical dispensaries in Las Vegas, an adult-use and medical dispensary in Lake Tahoe, and 47,000 sq. ft. of cultivation and manufacturing.
Schwazze — Opens Emerald Fields Dispensary in Denver's Highlands Neighborhood. Emerald Fields, formally known as Urban Wellness is located in the Highlands neighborhood of Denver, Colorado. The acquisition and rebrand under the Emerald Fields name are part of an aggressive expansion in Colorado by Schwazze, which has grown the total number of Colorado dispensaries to 23 along with four cultivation facilities.
Highsman — Launch in MA + PA w/ TILT Holdings. Highsman launched in November 2021, aiming to inspire a community of athletes and sports fans. Positioned at the intersection of sports and cannabis, Highsman’s product playbook includes: Pregame, a collection of energizing and attention-grabbing sativas; Halftime, a collection of balanced and restorative hybrids; and Postgame, a collection of restful and recovery-focused indicas. TILT will launch Highsman in both Massachusetts and Pennsylvania in early September to kick off the 2022 football season. The addition of Highsman to the growing team of TILT brand partners is the first to be centered on sports enthusiasts and everyday athletes. TILT will carry the Highsman brand in its retail stores and will offer it throughout MA and PA via TILT’s wholesale channels.
Cann x Weedmaps — “Say Gay” With Diverse Star Studded Campaign Celebrating Queer Joy, Inclusivity and Cannabis. The campaign celebrates the LGBTQ+ community with the launch of its first-ever original song and music video – “Taste So Good,” a rallying cry and anthem for a movement focused on radical inclusivity. The song and video feature an all-star diverse cast, including Gus Kenworthy, Sarah Michelle Gellar, Hayley Kiyoko, Vincint, and LGBTQ+ ally (and co-founder of cannabis consumption lounge Fantom Flower) Patricia Arquette, and are joined by top drag performers from season 14 of RuPaul’s Drag Race: Kornbread, Kerri Colby, Jorgeous, as well as newly crowned winner, Willow Pill. Grammy award-winning singer-songwriter-producer MNEK is also a featured vocalist on the song.
Jeeter — Launches in Michigan. Jeeter, one of the best-selling pre-roll cannabis brands in the U.S., today announced it is expanding into the Michigan market by offering its infused pre-rolls at more than 45 dispensaries throughout the state. In order to support the process in Michigan, Jeeter has set up a headquarters in Detroit at a 17,000-square-foot facility that will have more space added over time. With more than 220 new employees throughout the state, Jeeter will continue to expand in Michigan and intends to hire upwards of 500 employees before year’s end.
Tilray Medical — Launches Sleep-Oriented CBN Night Oil for Medical Cannabis Patients in Canada. Aphria’s CBN-dominant oil is carefully formulated with 30mg CBN per mL and 10mg THC per mL (in a 50mL bottle) and is composed of broad-spectrum cannabis distillate.
Fire & Flower — Appoints Alimentation Couche-Tard Executive as CEO. Prior to his appointment as CEO of the Company, Trudel served as SVP Operations for ACT since January 2018, leading ACT's operations in Canada as well as its investment in the cannabis industry. His previous roles have also included serving as SVP of Growth and Strategy at CST, an international convenience retailer acquired by ACT in 2017.
Harborside — Adds Kavi Bhai as VP FP&A and Angela Pih as VP Marketing. Bhai has over 11 years of relevant experience, having previously worked for BellRock Brands, where he served as CFO. Prior to BellRock, he served as CFO at Mary's Medicinals and led audit and advisory engagements at Frazier & Deeter. Pih was previously CMOat Papa & Barkley and CannaCraft.
The Parent Company — Appoints Roz Lipsey as EVP Operations & Wholesale. In this newly created role, Ms. Lipsey will focus on implementing operational efficiencies and cost-saving initiatives across the Company as well as the continued growth of the Company's omni-channel retail platform. Lipsey previously served as COO at MedMen, where she led the strategic initiative to evolve their California distribution platform to a more cost-effective drop ship model.
Vertosa — Appoints Manon Daoust and James Pelligrini to Board of Directors. Daoust brings more than 30 years of experience in the food and nutritional industry to the company's board. She most recently served as the EVP of Strategy, Custom Flavor Solutions at McCormick & Company, the largest producer of spices and related food products worldwide. Pelligrini joins Vertosa's board with extensive finance and new brand development experience from the alcoholic beverage industry. He currently serves as the co-founder and Managing Partner at Goat Rodeo Capital, a Vertosa investor and VC firm that specializes in the beverage sector. Pelligrini started his career at E&J Gallo Winery.
Glass House Brands — Departure of Jamin Horn, General Counsel & Corporate Secretary. Jamin Horn resigned his roles at Glass House to take a position as Legal Counsel for Triumph Labs, a VC-backed Fintech company. This comes a week after the company’s COO departed.
Dutchie — Lays off ~60 Employees (8% of Company). Dutchie recently reported 718 total employees in a Business Journal survey of the region’s largest cannabis and hemp businesses, with 129 in Oregon, suggesting the cuts could number around 60. GeekWire thinks the cuts affected roles across product and recruiting teams, according to LinkedIn posts written by laid off employees. “I am saddened, frustrated, and genuinely blindsided by this decision,” one laid off employee wrote. “Beyond my frustration, confusion, and disappointment, I’m heartbroken,” another said. In a prepared statement, CEO, Ross Lipson said “Dutchie is in a strong position and we are focused on continued growth. We will continue to hire top talent and pursue growth opportunities that map to our business objectives in order to advance our mission to provide safe and easy access to cannabis while helping to drive the cannabis industry forward.”
Eaze — Lays Off ~25 Employees. The layoffs took place on Wednesday, and the cuts included members of Eaze's engineering team and live operations team, which handles its delivery service. Three former employees described the job cuts to Insider.
George Mancheril, Bespoke Financial, Addressing cannabis industry pain points through fintech lending (From Pot to Popular)
Rajesh Chandran, Backbone, on solving the industry’s supply chain challenges (NCV)
Cyclical Trends amidst Secular Growth (Cannabis Investing Podcast)
Cannabis Investors Just Need A Little Patience (Cannabis Investing Podcast)
Ricky Williams at Cannabis LAB Conference & Expo (Miami Herald)
Vince Ning, NABIS, on how the Company is providing liquidity to the cannabis market, CA challenges and its Amazon-like business model (The Dime)
👋 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.