📈 Tilray reports Q4 & FY2021 Results, stock up 25.8%

Trulieve Instagram account shut down. Houseplant and Canopy Growth terminate Strategic Relationship in Canada. Tilray CEO sees Cannabis legalization in America “over the next 18 to 24 months”

Jul 29, 2021

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🌿Industry

Jackpot: Hundreds of firms now vying for permits in cannabis dispensary lotteries. After a year of turmoil, Illinois is finally on the verge of dishing out precious new dispensary permits — and hundreds of groups are now in the running.
The first of three lotteries for 185 total dispensary licenses is set for Thursday, with the others scheduled next month. Toi Hutchinson, Gov. J.B. Pritzker’s chief adviser on cannabis, told reporters Wednesday that 626 of the more than 900 applicant groups qualified for the first drawing, which will determine the winners of 55 licenses.
The Illinois Department of Financial and Professional Regulation is expected to publicly announce those finalists at some point Wednesday. The second drawing will include 589 contestants (for another 55 licenses) from the original applicant group, Hutchinson said, but the final number of participants in the third lottery hasn’t been set.

While a federal lawsuit that threatened the process was abruptly dropped Tuesday, the judge in another suit filed last year in Cook County issued a last-minute order that could have serious implications. The suit, brought by two firms that qualified for the first two lotteries, holds that the bonus points for veterans creates a special applicant class. Judge Moshe Jacobius ruled Wednesday that the first two drawings can proceed and the winners can be published, but the licenses can’t be issued before an Aug. 9 hearing is held. The plaintiffs will decide whether to move forward after those lotteries have been held, their attorney Mazie Harris said.

Missouri puts kibosh on weed sales events, pitting Missouri industry against regulators. The state’s leading medical marijuana industry group is criticizing a recent warning by Missouri regulators that dispensaries cannot advertise sales events or discounts on products. Andrew Mullins, executive director of the Missouri Medical Cannabis Trade Association, or MoCannTrade, said in a statement Tuesday that the group has asked the Department of Health and Senior Services to “waive this rule, which is neither helpful for patients or dispensaries. If dispensaries want to discount prices on medical marijuana to Missouri patients, they should be able to promote those discounts.” “With more medical marijuana-only dispensaries than all but one state, it’s crucial that Missouri patients can access information about various products and prices, including promotions and loyalty programs,” he said. Mullins said that advertising the availability of discounts was especially important because “patients have so many dispensary locations to choose from.” Others have said Missouri patients lack adequate access to medical marijuana, potentially making sales all the more important to some patients.

Autumn Brands Uses Ladybugs, not Insecticides, to Control Cannabis Pests. Before you get to see the buds, you have to look at the bugs ― the ladybugs, that is. That’s how the farm tour at Autumn Brands in Carpinteria begins, with the admonition to pay attention not so much to the tall cannabis plants that fill these large greenhouses, but rather to the tiny insects and larvae that colonize them. For Hans Brand and his adult children, Hanna and Johnny, the dream of building a successful company out of their greenhouses in Carpinteria depends on maintaining strict standards, many of which relate to government regulations while others are strictly their own, such as their insistence on raising their crops without the use of insecticide sprays. Hans likes to credit Johnny, who has a degree in agricultural science from Cal Poly, with the solution they’ve found. “You can use organic pesticides, but obviously, whatever you spray on the plants, it stays there. You can’t wash your weed.”

Illegal cannabis growers are stealing water amid California’s drought, officials say. California’s deepening drought is creating another big problem for authorities: water theft. Water thieves, many of them illegal marijuana growers, are tapping into fire hydrants and drilling unauthorized water wells, according to officials, threatening the water supply for residents. In a recent sting in Antelope Valley in northern Los Angeles County, federal, state and local law enforcement officers disrupted hundreds of allegedly illegal marijuana cultivations in the area. They arrested 131 people and seized 65 vehicles, including two water trucks. Authorities recovered $28,000, 33,480 pounds of marijuana and dozens of firearms. Nineteen people were charged with water theft. “Most Californians would be shocked and disappointed at the amount of water these unlicensed, illegal grows are using, especially as California suffers from a drought,” Curt Fallin, the Drug Enforcement Administration’s associate special agent in charge, said in a news release as officials unveiled the operation on July 7. “By our calculation, the illegal grows in Los Angeles, Riverside and San Bernardino counties require an astounding 5.4 million gallons of water a day, every day,” Fallin said. Water theft is a long-running issue in California, according to officials, but the severity of the current drought and the increasing number of illegal cannabis operations are exacerbating the problem. In 2020, Narcotics Bureau detectives identified 150 illegal outdoor marijuana growing operations in the Antelope Valley. This year, investigators conducted reconnaissance flights and identified more than 500.

💵Deals

Houseplant and Canopy Growth to Conclude Their Strategic Relationship in Canada. The two companies that created a joint venture three years ago and launched in Canada have mutually agreed to end their collaboration. Since the brand’s launch, the Canadian cannabis market has significantly expanded, thus the parties decided it was time for Houseplant to further evolve on its own while Canopy will continue working on its wholly-owned brands. During their years of working closely together, Houseplant grew to become a popular consumer brand in Canada and is now among the top 10 in the premium cannabis market in Ontario. Among the most successful products are beverages with Houseplant Grapefruit becoming the top-selling cannabis drink in Canada in its first year. In 2020, more than one million cans of Houseplant beverages were sold in Canada. Some Houseplant-branded cannabis products will still be available across Canada until the end of September 2021. The company plans to relaunch in the Canadian market with products similar to its U.S. offerings.

GrowGeneration — Signs Asset Purchase Agreement to Acquire Nation's Third-Largest Chain of Hydroponic Garden Centers. The Company will acquire HGS Hydro, the nation's third-largest chain of hydroponic garden centers, with six stores across Michigan and a seventh store slated to open in the fall of 2021. This transaction is expected to close before the end of fiscal year-end 2021. Founded in 2015 by Rocky Shaeena, HGS Hydro is the largest chain of hydroponic garden centers in the state of Michigan and generated ~$50 million in revenue in 2020. When completed, the transaction will also bring the total number of GrowGen hydroponic garden centers in Michigan to 14 and the total number of stores to 65. The new GrowGen locations will include Shelby Township, Southfield, Sterling Heights, Hazel Park, Walled Lake, Albion, and Imlay City, Michigan.

Harvest One Cannabis — Enters into License Agreement with The Valens Company to Manufacture and Distribute its Leading Infused Topical Brand LivRelief(TM) by Delivra. Harvest One’s wholly-owed subsidiary, Delivra, has granted Valens Agritech, wholly-owned subsidiary of The Valens Company, an exclusive two-year license to manufacture, distribute and sell infused LivRelief branded topicals in Canada. The Company's LivRelief™ CBD cream was the top-selling SKU in the Infused Topicals category in Ontario for the four-month period ended June 2021, by dollars sold, based upon OCS Sales Data. In addition, for the same period, the Company's LivRelief brand captured approximately 27% market share within the Infused Topicals category in Ontario based upon sales revenue.

IM Cannabis — Expands Position in Israel With $4.6 Million Acquisition. IMC Holdings concurrently executed definitive share purchase agreements to acquire all of the outstanding ordinary shares of each of (1) Pharm Yarok, a leading medical cannabis pharmacy located in central Israel; (2) Rosen High Way, a trade and distribution center providing medical cannabis storage, distribution services and logistics solutions for cannabis companies and pharmacies in Israel; and (3) HW Shinua, an applicant for a medical cannabis transportation license from the Israeli Medical Cannabis Unit (IMCU), the receipt of which would permit HW Shinua to transport large quantities of medical cannabis to and from Pharm Yarok’s pharmacy and Rosen High Way’s distribution center and to and from third parties in the medical cannabis sector, including medical cannabis growing facilities, pharmacies, manufacturers and distribution centers across Israel.

Jushi — Collaborates with Actor Colin Hanks to Bring His Namesake Kerchiefs Accessory Line, “Hanks Kerchiefs,” to Cannabis Consumers. The collaboration expands on Jushi’s vision for BEYOND / HELLO™ to work with new and like-minded partners to build the Company's brand into a modern retail leader that blends exclusive and unique offerings with cultural experiences. The line of kerchiefs created by the actor, producer and director is now available for purchase at select BEYOND / HELLO™ dispensary locations, as well as online nationwide at Shop Jushi. In addition, a portion of each Hanks Kerchiefs sold will support several charities such as Homes for Our Troops, a nonprofit organization that builds homes for veterans.

📄Company Updates / Earnings

Tilray — 2021 Fiscal Year and Fourth Quarter Results

📈 The stock (TLRY) was up 25.8% after announcing earnings

Net Revenue Increased 27% to $513M Compared to Prior Year; Net revenue increased 25% to $142.2M during Q4 compared to $113.5M in prior year
Net Income of $33.6M, Adjusted EBITDA of $12.3M, Net Cash from Operating Activities of $8.3M and Positive Free Cash Flow of $3.3M in Q4
Net loss of $336.0M in 2021 compared to net loss of $100.8M in 2020, driven by $63.6M of transaction costs related to consummate business combinations, and $170.5M of non-cash unrealized loss on convertible debentures
Achieved $35M in Synergies To Date w/ Aphria ; On-track for $80M Target
Cannabis Revenue Grew 55% in Q4, #1 Market Share in Canada
Cash and cash equivalents of $488.5 million

🤔The Company achieved Positive Net Income due to a “non-operating income” which could be due to long-term investments which include investments in equity securities of entities over which the Company does not have a controlling financial interest or significant influence and are accounted for at fair value. Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments (referred to as the “measurement alternative”). In applying the measurement alternative, the Company performs a qualitative assessment on a quarterly basis and recognizes an impairment if there are sufficient indicators that the fair value of the equity investments is less than carrying values. Changes in value are recorded in non-operating income (loss).

Trulieve — Instagram account shut down.

Kim Rivers @rivers_kim

This is ridiculous. We are a legal company that just paid over $50m in federal taxes that grows and makes products that save lives. It’s time for change. https://t.co/34jC00zhBn

Trulieve @Trulieve

👋Hey Trulievers👋 Our main Instagram account has been shutdown😢... please follow our backup account @ Trulieve_ 💚🌱 https://t.co/fjwREhpWs0 https://t.co/VPO6vnZuK6

🏬Retail

Lume Cannabis — Kalkaska, MI. This is Lume's 21st adult-use store in Michigan. Lume plans to open 22 new adult-use stores across the state in 2021 bringing its total number of Michigan adult-use stores to 40 by the end of the year. The ambitious effort is part of Lume's goal of having 100 adult-use stores open throughout Michigan by 2024. The Company currently operates stores in Adrian, Bay City, Big Rapids, Cedar Springs, Coldwater, Escanaba, Evart, Honor, Houghton, Iron Mountain, Jackson, Kalamazoo, Lowell, Mackinaw City, Negaunee, Owosso, Petoskey, Petersburg, Sault Ste. Marie, and Walled Lake. Lume's world class indoor cultivation facility and state-of-the art greenhouse and outdoor grow cover over 1 million square feet.

Plesantrees — Easthampton, MA. The location will be its third nationwide retail location. Pleasantrees plans to open two additional locations in Amherst during the Fall of 2021 and Greenfield to follow. The expansion plan also includes a 110,000 square foot cultivation facility in Holyoke.