📜 South Carolina Republican Nancy Mace Reveals Cannabis legalization Bill

Jushi acquires NuLeaf (NV), $62.5M. Ayr Wellness acquires Dispensary 33 (IL), $55M. AdvisorShares launches Poseidon Dynamic Cannabis ETF (PDSN). Leaflink List 2021. SLANG Worldwide raises $17.3M.

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🌿Industry

South Carolina Republican Nancy Mace Reveals Cannabis legalization Bill She’ll Introduce in Congress. A new Republican-led push to legalize marijuana in the United States was unveiled last Monday by U.S. Rep. Nancy Mace from South Carolina, raising industry hopes that some form of bipartisan marijuana legislation can pass Congress. The 131-page States Reform Act – showcased during a Capitol Hill news conference—would remove marijuana from the list of federally controlled substances and allow state governments to continue leading the way on cannabis reform. The bill would give each state the option to either continue launching new marijuana markets or to maintain a ban. Key differences between this bill and past bills can be read here.

The legislation would also:

  • Establish a new federal regulatory framework to treat marijuana like alcohol by splitting industry oversight between the U.S. Food and Drug Administration for medical usage, the U.S. Department of Agriculture for farmers, and the Bureau of Alcohol, Tobacco, Firearms and Explosives for adult-use MJ products and industry enforcement. The Treasury Department’s Tax and Trade Bureau would also have jurisdiction over interstate cannabis commerce

  • Remove all federal criminal penalties related to marijuana consumption and possession as well as expunge most nonviolent MJ criminal convictions

  • Establish a 3% federal excise tax

  • Give the marijuana sector parity with other industries in the eyes of the Small Business Administration (SBA), including eligibility for benefits such as government financial assistance, grants, micro-loans and the like

  • Set the stage for both interstate and international marijuana trade

  • Ensure that medical marijuana businesses and patients are protected from interference during the federal transition and allow for the continued operation of businesses under state law while the new federal framework is established

Leaflink List — Top Brands on Leaflink in 2021. Categories include Top Selling (MUV, Raw Garden, LivWell, Terrapin, Jeeter), Fastest Growing (Cookies, High Life Farms, Stiiizy, Viola, LEVIA), Brand Profile (1906, CLOVR, KingPen, Wana, Cann), among others.

CDTFA Cannabis Cultivation Tax Increases. The California Department of Tax and Fee Administration (CDTFA) increased the cannabis cultivation tax, effective January 1, 2022. While the cannabis mark-up rate—used to calculate excise tax collection—remains unchanged, the cultivation taxes were increase:

  • Flowers per dry weight ounce — $10.08 (an increase from the previous $9.65)

  • Leaves per dry-weight ounce — $3.00 (an increase from the previous $2.87)

  • Fresh cannabis plant per ounce — $1.41 (an increase from the previous $1.35)

Weedmaps Releases First Data & Insights Report: Cannabis in America. Along with other insights, the below offers some on Cannabis Brand Affinity —

  • More than half (54%) of cannabis consumers have a favorite brand

  • Half (50%) of cannabis consumers believe branded products offer the best results

  • Nearly half (48%) of cannabis consumers always buy branded products

Connecticut set to launch recreational marijuana market before New York. Connecticut’s projected $750 million (2025E) recreational marijuana market is unlikely to match the size of neighboring New York’s, but it’s poised to launch first and might turn out to have as strong – if not stronger – of a social equity program. State regulators said recently they are aiming for a relatively full launch by year-end 2022, while New York’s projected $2 billion-plus market likely is slipping into the spring of 2023. Connecticut’s adult-use marijuana law enables current medical marijuana dispensaries to apply for a hybrid MMJ/adult-use license and then start selling recreational cannabis marijuana products within 30 days, provided cultivators have at least 250,000 square feet of cultivation and processing space.

Future German Coalition Agrees to Legalize Cannabis. The three parties likely to form Germany’s next governing coalition have agreed to legalize the sale of cannabis for recreational purposes, multiple German media outlets reported. The center-left Social Democrats (SPD), the Greens and the liberal Free Democrats (FDP) plan to "introduce the regulated sale of cannabis to adults for consumption purposes in licensed stores," according to the health group's findings paper cited in the media. This ensures quality control, prevents the distribution of contaminated products, and guarantees the protection of minors, it said. However, it is not yet clear whether the cultivation of cannabis within Germany will also be legalized. Legalizing cannabis could bring Germany more than €4.7 billion in additional revenue annually, according to a study by the university of Düsseldorf. Germany would not only gain additional tax revenue, but save money in law enforcement and the judiciary. But German police unions recently warned the likely coalition against legalizing the drug.

AdvisorShares — Launches Poseidon Dynamic Cannabis ETF (Ticker: PSDN). AdvisorShares is a leading sponsor of actively managed ETFs and the largest cannabis fund manager. The AdvisorShares Poseidon Dynamic Cannabis ETF (Ticker: PSDN) began trading on Wednesday, November 17, 2021. PSDN is sub-advised by Poseidon Investment Management, one of the first firms dedicated to investing exclusively in the emerging cannabis industry. The actively managed PSDN seeks long-term capital appreciation by investing globally in companies believed to be strategically positioned to benefit from the cannabis industry and its supporting infrastructure. PSDN's portfolio is diversified across subsectors of the cannabis industry and dynamically managed to tactically overweight or underweight specific countries, subsectors, or individual companies. PSDN may seek to take advantage of specific market opportunities by intelligently using leverage in an effort to maximize potential returns. Tyler Greif, will serve as portfolio managers of PSDN. Note: As of 10/31/21, the MSOS ETF is down (25.7%) YTD vs. up 24.0% for the S&P 500.

The 4th Annual Luxury Meets Cannabis Conference. LMCC welcomed more than 50 brand exhibitors and a robust schedule of speakers. LMCC also announced its newest initiative: The annual Gold Leaf Awards, which honors visionary brands, retailers, and founders that are aiming the highest both in and out of the cannabis space — from beauty and skincare to food and beverage to everyday wellness. The Gold Leaf Awards were voted on by a 100% independent and invite-only volunteer group (officially the LMCC Media Corps) comprised of editors, journalists, and creators across leading mainstream and cannabis outlets. To ensure the utmost integrity of the program, the Gold Leaf Awards were also third-party audited. Here are the inaugural 2021 Gold Leaf Awards winners.


💵Deals

Jushi — Acquires Three Retail Dispensaries, a Cultivation Facility and a Product Manufacturing Facility in Nevada. Jushi will acquire NuLeaf for total consideration of up to $62.5M—$52.5M upfront, comprised of $15.75M cash, $21.0M stock, and a $15.75M unsecured promissory note. The purchase price (inclusive of the full $10.0M of Additional Consideration) is expected to represent a multiple of ~4.5x NuLeaf’s full year 2022E EBITDA. NuLeaf currently operates two adult use and medical retail dispensaries in Las Vegas, NV and Lake Tahoe, NV, in addition to a 27,000 sq. ft. cultivation facility in Sparks, NV, as well as a 13,000 sq. ft. processing facility in Reno, NV. Additionally, NuLeaf owns a third licensed retail dispensary located directly on Las Vegas Boulevard, expected to become operational in early 2022, subject to regulatory approval and other conditions.

Ayr Wellness — Acquires Dispensary 33 (IL) for $55M. Dispensary 33’s two shops in Uptown and West Town are being sold to Ayr Wellness. The terms of the deal include $40 million in stock, $12 million in cash and $3 million in seller’s notes, according to a source close to Ayr. The move comes four months after Ayr announced plans to establish a foothold in Illinois with a $30 million acquisition of two Herbal Remedies Dispensaries in downstate Quincy.

SLANG Worldwide — $17.3M Financing from Trulieve, Pura Vida Investments, and Seventh Avenue Investments. $17.3M financing plus $14.2M in an Uncommitted Accordion to enable growth strategy by accelerating execution of Vermont operations.

Humble & Fume — Completes $8M Private Placement. The $8M investment was led by Green Acre (funded through an option agreement with Johnson Brothers) and includes an additional $2M to form a JV with Humble focused on accelerating the Company's expansion into cannabis distribution operations in California.

Pistil Data — Closes $6.5M Seed Round Led by Casa Verde Capital. Pistil Data, a cannabis market intelligence platform, has closed a $6.5M seed round led by Casa Verde, with participation from JW Partners and several Silicon Valley tech entrepreneurs. Pistil's machine learning technology distills billions of data points to deliver sales opportunities to ~100 clients in Colorado and California. The platform's emergence represents an industry turning point by providing critical information that was previously unavailable to brands. Clients include Connected, Curaleaf, HERBL and Raw Garden. In conversation with Techcrunch, CEO Jeffrey Graham notes that more than 600 sales representatives use the service every week.

Schwazze — Acquires Emerald Fields (MCG). Emerald Fields owns and operates two retail cannabis dispensaries, located in Manitou Springs and Glendale, Colorado. This acquisition is part of the Company's continuing retail expansion plan in Colorado bringing the total number of dispensaries including announced acquisitions to 22. Total consideration for the acquisition will be $29M and will be paid as 60% cash and 40% stock.

Schwazze — Acquires Smoking Gun, LLC & Smoking Gun Land Company, LLC. The Smoking Gun dispensary and assets are located on a prime retail corner on Colorado Blvd. in Glendale, Colorado in the center of the greater Denver metro area. Total consideration for the acquisition will be $4M in cash and 100,000 shares ($200,000 value) in stock upon closing. 

Curaleaf — Distribution Agreement with Southern Glazer's Wine & Spirits for Curaleaf Hemp and Select CBD. Curaleaf Hemp and Select currently offer a broad range of CBD products with consumer-friendly formats and price points. The brands look forward to introducing new innovations to both ancillary lines with confections and beverages that feature minor cannabinoids like CBN and CBG, allowing consumers to personalize their CBD experiences as they continue to learn which products will work best for their unique needs.


📄Company Updates / Earnings

Trulieve — Q3 2021 Results. Net revenue increased 64% Y/Y to $224.1M. Gross profit of $153.9M (68.7% GM) compared to gross profit of $102.2M (75.0% GM) in Q3 2020. Net income of $18.6M, impacted by $16.4M of one-time compensation and transaction costs primarily associated with the Harvest acquisition. Adjusted EBITDA of $98.0M (43.7% margin). Trulieve and Harvest combined Q3 revenue of ~$316M, net loss of ~$9.8M and adjusted EBITDA of ~$121M. Positive cash flow from operations of $75.1M for the nine months ended September 30, 2021. Cash of $213.6M as of September 30, 2021.

Verano — Q3 2021 Results. Revenues were $207M (64% GM), representing 4% sequential growth and 106% Y/Y. Adjusted EBITDA was $111 million (54% margin). Cash flow from operations was $68M and FCF was $35M. $57M Cash as of 9/30/21.

Jushi — Q3 2021 Results. Revenue of $54.0M, up 13.1% sequentially and 116.7% Y/Y. Gross profit of $24.5M. Adjusted EBITDA of $6.4M, up 38.5% sequentially and 124.9% Y/Y. As of September 30, 2021, the Company had $59.1M of cash.

TerrAscend — Q3 Results. Revenue of $49.1M (46% GM) and Adjusted EBITDA of $10.5M (21% GM). $103M Cash as of 9/30/21.

4Front Ventures — Q3 2021 Results. Systemwide Pro Forma Revenue of $33.1M, up 48% Y/Y and down 4% from Q2 2021. GAAP-reported revenue of $25.9M, up 70% Y/Y and down 4% from Q2 2021. Adjusted EBITDA of $7.5M, up 103% Y/Y and flat as compared to Q2 2021, representing an Adjusted EBITDA margin of 23% as compared to an Adjusted EBITDA margin of 22% in Q2 2021.

The Parent Company — Q3 2021 Results. $39.7M Revenue (15% GM). Adjusted EBITDA loss of ($16.2M). Cash of $206.7M as of September 30, 2021, $49.2M cash used for acquisitions and capital investment since closing the Qualifying Transactions.
Non-cash impairment loss of $570.3M, a non-cash balance sheet adjustment which resulted from the assessment of its goodwill and other intangible assets.

MariMed — Q3 2021 Earnings. Revenue of $33.2M (54.8% GM), up 147% Y/Y. Adjusted EBITDA of $12.9M (38.9% GM). $10.7M of Cash as of 9/30/21.

Unrivaled Brands — Q3 2021 Results. $23.4M in revenues (9.8% GM), up 274% sequentially and up 668% Y/Y. ($11.2M) EBITDA Loss. $15.2M in cash as of 9/30/21.

Body and Mind — 2021 Year End Results (July 31, 2021). Consolidated revenue of $26.9M (45% GM), up 332% Y/Y. Adjusted EBITDA of $4.0M. Net Loss of ($2.0M). At July 31, 2021, BaM had $7.4M in cash.

Schwazze — Q3 2021 Results. Revenue of $31.8M (44.1% GM), up 328.4% Y/Y and 3.6% over Q2 2021. Adjusted EBITDA of $8.8M (27.6% margin) compared to a loss of ($0.8M) in Q3 2020. $21.2M in cash as of 9/30/21.

Lowell Farms — Q3 2021 Results. $12.5M Revenue (1% GM), down 12% Y/Y and down 18% sequentially. ($5.2M) Adjusted EBITDA. $17.0M cash as of 9/30/21.

Flower One — Reschedules Release of Q3 2021 Financial Results and Earnings Call. As previously announced on October 11, 2021, Flower One hired its new CFO, Araxie Grant. Since her appointment, Ms. Grant has completely rebuilt the Company’s financial department and implemented financial processes to ensure the Company is operating at an enhanced level of best practices. With the implementation of these processes, the Company has elected to reschedule its Q3-21 filings to a later date within the allotted filing deadline.

Greenlane — Q3 2021 Results. Revenue of $41.3M (0.3% GM). Adjusted EBITDA of ($6.9M). $13.2M Cash as of 9/30/21.

Verano — Release of Last RTO Share Lockups. The last contractual trading restrictions remaining on 35% of the shares it issued in its reverse takeover transaction completed on February 11, 2021 (RTO) has been released. All shares issued in the RTO were subject to a 400-day trading lockup, to be released in periodic installments, with 15% scheduled for release on December 18, 2021, and the remaining 20% balance scheduled for release on March 18, 2022.


🏬Retail / Cultivation

Cresco Labs — Flagship Illinois Dispensary Opens Near Chicago’s Wrigley Field.

The 10,000 sq. ft. store has nearly 5,500 sq. feet of retail space. Sunnyside opened as a medical dispensary at its previous location five years ago and has been operating as a dual-purpose dispensary since Illinois’ launch of adult-use cannabis sales in January 2020. The new location will continue to prioritize medical cannabis patients with express entry and dedicated points of sale.

AWH — Opens Second MA Dispensary in Newton. The ~5,000 square foot dispensary is located <10 miles away from downtown Boston and features an open floor plan to allow for high throughput. The store will carry a selection of premium products from AWH-owned brands Ozone and Ozone Reserve, partner brands Lowell Smokes, Flower by Edie Parker, 1906 and AiroPro.


🌱Product

Columbia Care — Brings Tyson 2.0 Cannabis Brand to Colorado. Tyson 2.0 will debut with 1-ounce bags of flower featuring several strains ranging from mild to high potency, including “Billy White,” “Clementine” and “Maui Wowie” sativa strains; “OG Kush” and “Haymaker” hybrid strains; and “Rocky Mountain Toad,” “Purple Punch” and “Blue Snow” indica strains. New Tyson 2.0 products, including 3.5-gram flower jars and pre-rolls, will be available for purchase at TGS in the coming months. The brand will continue to roll out across the Columbia Care and Cannabist dispensary network in markets such as MD, PA and VA over the next few months.

Lowell Farms x Ascend — Bring Lowell Smokes Brand to Michigan. The expansion, part of a strategic licensing agreement between the two companies, builds on the success of Lowell’s introduction in Illinois and Massachusetts.

Meadow — Launches Dynamic Delivery. The Company launched Ice Cream Truck capabilities. Meadow’s new platform allows operators to set regions for the delivery vehicles. Each vehicle can be its own inventory hub, allowing one van to serve a certain region quickly.


🧔People | 💻Hiring

Canopy Growth — Changes to Executive Management Team. Mike Lee, EVP and CFO, and Rade Kovacevic, President and Chief Product Officer will be stepping down from their respective roles on the Executive Management Committee and will depart from the company on December 31, 2021. In the interim, they will serve in an advisory capacity to support transition. The Company has initiated an external search for both roles and to support a seamless transition has named Judy Hong as interim CFO and Tara Rozalowsky as interim Chief Product Officer.

Parallel — Separates Chairman and CEO Roles. James Whitcomb, the Company's Chief Development Officer and an early founder, has been elected by the Company's Board of Directors to the CEO role. Beau Wrigley, current CEO, has made the decision to remain actively involved in the Company with a concentrated focus as Parallel's Chairman of the Board.

SLANG Worldwide — Drew McManigle appointed as interim CEO. McManigle succeeds Chris Driessen as CEO, upon his departure from the Company. McManigle also succeeds Peter Miller as Chairman of the Board but Miller remains a Director of the Company. McManigle is CEO of MACCO Restructuring Group. As interim CEO and Chairman, he will have oversight over key strategic, operational and financial functions. In addition to existing SLANG management, McManigle will also have the added support of members of MACCO who will provide senior level operating and financial expertise to enable rapid strategic reviews and business plan implementation.

HEXO — Changes to Board of Directors. Sebastien St-Louis has resigned from the Board. President and CEO, Scott Cooper, has been appointed as a Director to replace Sebastien St-Louis.

U.S. Cannabis Council — Appoints Flower One’s CEO and President, Kellen O’Keefe, to Board. USCC is a nonprofit organization whose mission is to build a future of legal access to cannabis delivered through an equitable and values-driven industry, by advancing cannabis legalization at the federal and state level and promoting restorative justice for communities harmed by cannabis prohibition. USCC aims to raise ethical standards within the industry; achieve restorative justice for communities that have been disproportionately impacted by misguided state and federal cannabis policies; and create a healthy, inclusive, and well-regulated cannabis industry with social, financial, and environmental benefits shared by all.


🎙️Interviews

Benzinga — Todd Harrison, Wall Street's Biggest Cannabis Bull #MSOGang

High-Rise: All About the States Reform Act


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