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📉 Springbig (SBIG) Completes Business Combination with Tuatara SPAC
Germany moves ahead with plans to Legalize. POLITICO takes a deep dive into Parallel. Tilray Brands amends Transaction with HEXO. Tinley's gets $3.5M Strategic Investment from ex-Golden Road CFO/COO.
👥 I’ll be planning an industry networking event in Boston on Thursday, June 30th — please reply to this email if you’re interested in attending, hosting, or co-sponsoring.
Germany moves ahead with plan to legalize cannabis sales. The German government is setting in motion plans to legalize the sale of cannabis for recreational purposes, aiming to have legislation ready later this year. The Health Ministry will start holding expert hearings on various aspects of the issue and expects more than 200 representatives from the medical, legal and other fields will take part, along with officials from various levels of government and unidentified international experts. The pledge to legalize controlled sales of cannabis to adults in licensed shops is one of a series of reforms outlined in last year’s coalition deal between the three socially liberal parties that make up Chancellor Olaf Scholz’s government. Scholz’s coalition took office in December. In early May, Health Minister Karl Lauterbach said that he planned to draw up draft legislation later this year following the hearings with experts.
How a Chewing Gum Heir Fell Into a Sticky Situation With Weed. William “Beau” Wrigley Jr. envisioned building a weed empire that would one day rival his family’s legendary chewing gum business. The former CEO of the Wrigley Company — which was sold to Mars for $23 billion in 2008 — led a $65 million investment in 2018 in Surterra Wellness, which primarily did business in Florida’s fledgling medical marijuana market. Shortly thereafter, Wrigley took over as Surterra’s CEO, but the path forward would prove to be messy. In the ensuing years, the company — eventually rebranded Parallel — expanded its footprint into Massachusetts, Nevada, Pennsylvania and Texas. And it recruited the type of big-time executives that typically shy away from the quasi-legal cannabis industry. By the end of 2022, Parallel boasted that it was on course to have 86 dispensaries across eight markets and revenues in excess of $600 million.
Pennsylvania’s controversial marijuana vape recall is overturned by appeals court judge. A Commonwealth Court judge allowed Pennsylvania medical marijuana companies to resume selling vapes that were taken off the shelves in February in a controversial recall. “We are thrilled about this decision,” said Judith D. Cassel, an attorney for a group of cannabis companies that sued state regulators in February, alleging that the recall was unfounded. The ruling is a blow to the Pennsylvania Department of Health, which in February mandated a massive recall and ban of 670 types of cannabis concentrates for vaping — 330,000 units — that they had previously approved for sale in Pennsylvania’s more than 150 marijuana dispensaries.
Oregon Becomes First State In Nation To Ban Synthetic Cannabis Products: Delta 8 THC Is Out Starting In July. State regulators with the Oregon Liquor and Cannabis Commission (OLCC) say they’re restricting sales of the products over concerns about the chemicals used in their production. Cannabinoids are compounds found in cannabis. A chemical process can be used to isolate them or create them synthetically in abundant quantities, which are used in consumer products. In that the synthetic cannabinoids don’t contain THC, they’ve gone mostly unregulated, which means products like CBN can be sold on the open market, including at supermarkets, gas stations and other retailers. Delta-8, like CBD and CBN, occurs naturally within the plant. However, since it exists in very small amounts, a chemical process is used to extract it from CBD.
Michigan Reports Cannabis Sales Dip 4% Sequentially in May.
Michigan cannabis sales fell 4% compared to April and increased 25% Y/Y to $186.4M in May. As supply continues to expand, flower pricing for adult-use continues to decline. In May, the average price of $2,090/lb fell 1.8% sequentially and 41% from a year ago. Michigan cannabis sales expanded 82% in 2021 to $1.79 billion and are up 27.2% in 2022 compared to the same period (January-May) from 2021.
Jersey City cannabis board approves two applicants, tables two others. The Jersey City Cannabis Control Board has approved two cannabis retail applicants and tabled two others after various concerns were brought up. The two approved applicants, Decades Dispensary and Jersey Leaf, are looking to locate two recreational dispensaries in the Heights and the West Side respectively, while two others, Medusa NJ, which is also proposing the city’s first consumption lounge, and Local Modiv, were tabled.
Springbig — Completes Business Combination with Tuatara Capital Acquisition Corporation, Listed on the Nasdaq as SBIG.
The Business Combination was approved at a special general meeting of TCAC shareholders on June 9, 2022. In connection with the closing of the Business Combination, TCAC has changed its name to SpringBig Holdings, Inc. The ticker symbols for TCAC’s common stock has been changed to “SBIG” and trades on the Nasdaq Global Market. The stock is currently trading around ~$3.60 (vs. ~$10.00 prior to completion of the business combination).
Tilray Brands — Amends Transaction with HEXO. Under the terms of the amended agreements, Tilray Brands would acquire the HEXO Note from HTI, which includes 100% of the current remaining $185M outstanding principal balance of the HEXO Note, plus any accrued and unpaid interest thereon. As consideration for Tilray Brands’ acquisition of the HEXO Note, Tilray Brands will pay 89.2% of the then outstanding principal balance for the HEXO Note. This equates to a 10.8% discount on the outstanding principal amount. The initial conversion price of the HEXO Note will be amended and adjusted down from CAD$0.85 to CAD$0.40 per share. This implies that, as of June 13, 2022, Tilray Brands would have the right to convert into approximately 50% of the outstanding common stock of HEXO (on a non-diluted basis). The Purchase Price shall be satisfied, in part, by the issuance to HTI of a $50M convertible unsecured note and the balance in either cash or Class 2 common stock of Tilray Brands or any combination thereof, at Tilray Brands’ option.
Tinley's — $3.5M Strategic Investment by Blaze Life Holdings Through Convertible Note. The Tinley Beverage Company has issued an up to $3.5M 12% secured convertible note of the Company to Blaze Life Holdings (BLH), an arm's length party to the Company. Blaze Life Holdings was founded in 2017 by LA Real Estate investor Scott Kim and Paul Burgis, former COO and CFO of Golden Road Brewing, which was acquired by Anheuser-Busch InBev in 2015. Tinley’s also finalized the terms of its $612,250 advance from Richard Gillis, President and COO of Tinley's USA, and member of Tinley's Office of the CEO.
📄 Company Updates / Earnings
RIV Capital — Update. The Company's near-term plans include completing the expansion of Etain's current cultivation capacity by tripling the existing canopy size at its Chestertown facility to support the adult-use market at its outset, and preparing its existing retail locations for the expected increase in sales. RIV Capital is also in advanced discussions to construct a new, state-of-the-art flagship indoor cultivation facility that will house premier cultivation and production infrastructure specifically tailored to support the premium New York market. Additionally, the Company has plans to build out four new dispensaries as soon as the Company is permitted to do so under the state's regulations, bringing the total New York footprint to eight retail locations, three of which will be co-located for adult-use. Once adult-use sales are in effect, the Company anticipates a significant ramp in business to occur through the second half of calendar year 2023, with its expanded operations coming fully online during the first half of calendar year 2024.
C21 Investments — Unaudited Year End Results. Fiscal Year (all comparisons to prior year): Revenue of $33.0M, down 1% Y/Y; Earnings Per Share of $0.09, up from a ($0.07) loss. Gross Profit of $18.8M (57% GM—up 310 basis points). Adjusted EBITDA of $12.4M—up 6% Y/Y (38% EBITDA Margin), Cash Flow from Operations of $8.2M, after $3.1M Income Tax paid. Total Liabilities reduced by $16.8M. Q4: Revenue of $7.7M, (52% GM), Adjusted EBITDA of $2.3M, Eleventh consecutive quarter of positive Free Cash Flow, Discontinued and divested of Oregon operations.
Body and Mind — Extends Debt Financing. The Company has entered into a second amendment to the Loan Agreement to extend the maturity date by one year to July 19, 2026. The Amendment No. 2 to Loan Agreement increases the interest rate on the advanced funds from 13% to 15% per annum, which additional 2% interest may be paid in kind. As partial consideration for Amendment No. 2 to Loan Agreement, the Company has issued 1,000,000 common stock purchase warrants (each, a "Warrant") to the Lender.
Chicago Atlantic Real Estate Finance — Increases Quarterly Common Stock Dividend by 17.5% for Q2 2022. Chicago Atlantic announced that its board of directors has declared a 17.5% increase in the Company’s regular quarterly cash dividend to $0.47 per share. The dividend, which equates to an annualized rate of $1.88 per common share, is payable on July 15, 2022 to shareholders of record as of the close of business on June 30, 2022.
AFC Gamma — Increases Dividend For Fourth Consecutive Quarter. The Board of Directors of AFC Gamma declared a quarterly dividend of $0.56 for the quarter ending June 30, 2022 per outstanding share of common stock, payable on July 15, 2022 to the common stockholders of record on June 30, 2022. The June quarterly dividend represents the fourth consecutive increase of AFC Gamma’s quarterly dividend and a 47.4% Y/Y dividend increase.
🏬 Retail / Distribution
Ayr — Begins Adult-Use Sales in its Three New Jersey Dispensaries. Ayr’s adult-use dispensaries are in prime locations in the towns of Woodbridge, Union, and Eatontown, all within Central New Jersey, a region of 3.4 million people. Ayr’s adult-use stores represent 3 of 5 adult-use stores in this highly populated region. Ayr currently operates its New Jersey dispensaries under the Garden State Dispensary banner. Adult-use sales in New Jersey officially began five weeks ago. BDSA expects New Jersey to be the third largest contributor to overall US sales growth by 2026, projected to generate an annual revenue of $2.3 billion in total legal cannabis sales.
Ayr — Receives Final License to Sell Adult-Use Cannabis in Watertown, the Company’s Second Approved Adult-Use Dispensary in Greater Boston. Sira Naturals d/b/a AYR executed a Host Community Agreement (HCA) with the City of Watertown in October 2020. The Company executed two additional HCAs in the Greater Boston area in October and November 2020, respectively -- one in Somerville, where the Company operates a medical dispensary, and the other in Back Bay, where Ayr anticipates opening its doors later this month. Ayr will continue to work closely with the CCC to move toward final approval to commence adult-use operations at all three locations.
TILT Holdings — Receives Approval to Launch Medical Use Cannabis Operations at its Cambridge, Massachusetts Dispensary. CAC’s Cambridge 5,100 square-foot dispensary, located at 1385 Cambridge Street in Inman Square, will offer a wide selection of products from our house brands including flower, concentrates, edibles and topicals, as well as TILT’s cross-business collaborations such as the Jupiter CAC Infinity vaporizer. In addition, the store will have products from partner brands including AIRO, Black Buddha Cannabis, Her Highness, Highsman, Old Pal, and Toast.
Curaleaf — Opens Lancaster, Pennsylvania Dispensary. Curaleaf Lancaster is the Company's fifth new location to open within the Keystone State this year, expanding its retail presence to 17 locations in Pennsylvania and 134 nationwide. In addition to Curaleaf's latest locations, the Company also serves patients in Altoona, Bradford, Brookville, City Avenue, DuBois, Erie, Gettysburg, Greensburg, Harrisburg, Horsham, King of Prussia, Lebanon, Morton, Philadelphia, State College, and Wayne. This summer, Curaleaf plans to open a location in Allentown, further expanding its footprint in Pennsylvania to 18 locations.
Planet 13 — Third Florida Dispensary Located in Ocala. The location in Ocala is in a densly populated, busy retail corridor across the street from a Walmart Supercenter and an IMAX theater. This is the third dispensary location of the Company’s initial six neighborhood dispensaries targeted towards major Florida population centers with underserved local residents.
Michigan cannabis company rolls out Lansing's first drive-through dispensary. The founder of Bazonzoes Provisioning Center said it’s a big step toward destigmatizing marijuana. The south Lansing storefront sits between two fast food chains with a third nearby, each with drive-throughs that are both convenient and quick. Though it’s a familiar concept, Virga said there may be a learning curve for customers using the drive-through as it’s windowless and they need to pre-order ahead of time. Customers pull up to a monitor screen displaying live video of an employee who can verify IDs using two cameras that are pointed at the driver. A metal drawer below the screen is used for transactions.
HERBL — Exclusive Distributor of Rob Dyrdek and Diplo’s Leisuretown Cannabis Seltzers. Leisuretown’s hemp-infused cannabis beverages contain 25 calories, 25 mg of CBD and 4g of sugar per can. The brand’s product expansion builds upon Leisuretown’s initial offerings with the same flavors—Cherry Vanilla, Ginger Berry and Yuzu Lime—this time featuring 2.5mg of THC and 5mg of CBD.
Timeless Refinery Launch Timeless Vapes in Ohio through TILT Holdings. Timeless is a longstanding client of TILT’s subsidiary, Jupiter, and a national cannabis lifestyle house of brands with products available in Arizona, Oklahoma, Missouri, California and now, Ohio through TILT’s subsidiary, Standard Farms. Timeless Vapes provide consumers with a convenient and engaging way to medicate and are now available to Ohio medical patients in the following choices: Energy for an uplifting experience, Chill for balance, and Rest for sleepy relaxation.
C3 Industries Partners with Red White & Bloom to License Platinum Vape Brand. C3 Industries will exclusively license the full line of Platinum Vape products in Missouri and Massachusetts, with items available for sale in High Profile Cannabis shops and third-party retailers across the states. The initial offering will include the following flavors of cartridges: Grease Monkey; Sour Dub; Lime OG; Fire OG; Grape Ape; Paris OG; Maui Wowie; Super Lemon Haze; and Cush.
Puffco — The Proxy. The Proxy’s base unit employs the same cutting-edge 3D heating technology that first debuted as a high-performance add-on to Puffco’s award-winning Peak Pro device. The 3D Chamber optimizes heating on all sides for superior flavor and a better experience, with an Oculus carb cap that features a directional air-path to maximize vapor production. The Proxy has a simple push-button interface, with four programmed heat settings. While it’s configured with an elegant and ergonomic glass pipe that evokes the rich history of cannabis consumption, the Proxy base unit is removable for compatibility and customization with other pipe accessories, for broad flexibility in cannabis consumption experience.
RIV Capital — Appoints Mike Totzke as COO. Before joining RIV Capital, Totzke served in various roles at ScottsMiracle-Gro, most recently as VP at The Hawthorne Collective, where he led a team across legal, finance, and strategy to implement innovative investment structures within the cannabis industry. Previously, he was VP Sales for the National Accounts division of ScottsMiracle-Gro, where he grew annual sales by $200M over three years by activating new retail channels and driving incremental distribution points.
4Front Ventures — New CFO, GC, President of CA Operations, EVP; Board of Directors Appointments. 4Front has added Keith Adams as CFO; Christopher Wimmer as General Counsel; Ray Landgraf as President of California Operations; Brandon Mills as EVP; and Robert Hunt and Amit Patel as new board members. Andrew Thut, who served as interim CFO, will remain in his original capacity as CIO for the Company. Keith Adams previously served as CFO of LPF Holdco, LLC d/b/a Loudpack. Christopher Wimmer served as in-house VP of Legal at Agrify. Ray Landgraf was the founder and CEO of Island and Brandon Mills served as president and COO of Island.
🎙️ Interviews / Opinions
Higher Education: What It Takes To Be A Cannabis Sommelier. NBC’s Savanah Sellers gives an overview of Green Flower’s Certified Ganjier training program.
Casa Verde Capital, Managing Partner, Karan Wadhera (dot.LA)
Jushi Founder, Chairman and CEO, Jim Cacioppo (NCV)
I’m Over Cannabis Brands That Don’t Like Cannabis Users (Jackie Bryant)
Holistic Industries, Founder and CEO, Josh Genderson (NCV)
Al Harrington On the Cannabis Opportunity (NPR)
RIV Capital, President and CEO, Mark Sims (NCV)
👋 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.