🌵 Travis Scott Launches Cactus Farms Cannabis Line

Glass House Brands reports Q1 2021 Results. Michigan Cannabis Sales increased 65% to $149M in June. Goodness Growth acquires Charm City (MD) for $8M. Green Check Verified secures $3M Convertible Debt.

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🌿Industry

Travis Scott to Launch Cactus Farms Cannabis Line. Travis Scott is expanding his business portfolio in an exciting new partnership with Connected. This is the rapper’s first official entry into the Cannabis industry. The Cactus Farm inaugural strain will be available today at California dispensaries that stock Connected products as well as Harvest dispensaries in Arizona. The rapper launched Cacti Agave Spiked Seltzer with Anheuser-Busch last year. In an interview on “Closing Bell” back in March, Anheuser-Busch CEO Michel Doukeris said physical retailers are reporting strong sales and that “several of them are saying that they have never seen anything like this before: sold out within one day.” Scott also teamed up with McDonald’s last year in what Forbes  estimates made him ~$20 million—at least $5 million from the traditional endorsement part of the deal and another $15 million from merchandise sales.

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California Cannabis brands begin selling directly to consumers, bypassing retailers. A handful of California cannabis manufacturers and brands have begun selling their products directly to customers through their websites, effectively bypassing traditional brick-and-mortar retail shops and delivery companies that have long been the gatekeepers to Cannabis consumers. The direct-to-consumer (D2C) approach reportedly is being employed by some of the biggest brands in California, including KivaCannaCraft, Cann, and Old Pal. Grassdoor and Amuse have been the popular platforms for Brands D2C offerings. Some retailers are unhappy about the D2C development, however, and say they feel cheated. Chelsea Sutula, owner of Sespe Creek Collective in Ojai, CA, has had a relationship with Kiva since 2011 but said she definitely sees them paring down some SKUs and taking away their presence in the store, replacing them with other edibles brands.

Sha’Carri Richardson Can Outrun Everything Except a Broken System. Richardson was poised to become the breakout star of the Olympics. After testing positive for THC, she won’t get to compete. Her story is cause for outrage—and a reminder of the costs of a system that refuses to change. Bans on recreational drugs in sports have long had more to do with athletes as figures than the effects of the drugs themselves. There is perhaps no greater staple of the integrated athletic marketplace than white leadership structures fretting over the perceptions of the hyper-visible Black and Brown stars who fuel their bottom lines. In recent years, the priggish revulsion to marijuana that once defined domestic drug policy has begun to dissipate. While marijuana was once regarded as a stepping stone to degeneracy, it is now in the middle of a social gentrification. Weed is legal in 18 states. Three of the past five presidents have admitted to consuming it in some form. THC is widely well regarded for its medicinal properties. The stigma is gone, but it remains banned in many sports all the same.

Michigan Cannabis Sales Increase 65% to $149 Million in June. During May, Michigan cannabis sales increased 60% from a year ago to $149.0 million, similar to May despite having one less day. Michigan generated $985 million in cannabis sales in 2020, and the program should continue to expand this year as supply becomes more available and as distribution expands. So far in 2021, year-to-date combined sales are up 123% to $810.9 million.

Georgia marijuana regulator gets closer to issuing licenses. Georgia regulators are getting closer to issuing licenses to grow medical marijuana, but isn’t quite there yet. The Georgia Access to Medical Cannabis Commission voted Wednesday to finalize scores given to grower applications. Those scores will be used to award licenses, but the commission stopped short of awarding them. Nearly 70 companies have applied for six licenses to be issued. The commission previously promised to issue licenses by June 30. Patients and applicants have grown frustrated by the wait. Edwards, who is unpaid as chair, said the commission will publish "intent to award information" at the next meeting, but did not indicate when that will be. Georgia legalized low-THC oil and products for people with medical conditions in 2015, but didn’t create a legal framework for production until last year.


💵Deals

Goodness Growth Holdings — Signs Definitive Agreement to Acquire Charm City Medicus Dispensary in Baltimore, Maryland for $8M. The Company expects total consideration for the transaction at closing of $8.0M ($4.0M cash, $2.0M stock, $2.0M note issued to the seller). Goodness Growth shares issued in conjunction with the transaction will be subject to a one-year lock-up agreement. Upon closing of the transaction, the Company expects to transition Charm City to the Green Goods™ brand of retail dispensaries.

Verano — Maximizes Ohio Footprint by Closing on Acquisition of Dayton Dispensary, Mad River Remedies. With the closing of this transaction the Company now operates five dispensaries across Ohio, the maximum permitted in the state, with existing retail storefronts in Bowling Green, Canton, Cincinnati, and Newark. The Company’s comprehensive offering of premium medical cannabis products, sold under the Verano™, Avexia™, and Encore™ brands, are available to registered Ohio patients through its own five store footprint and more than 40 other licensed retailers across the state.

Green Check Verified — Secures Additional $3M Convertible Note Financing. Green Check Verified, Inc. a regtech provider of compliant cannabis banking solutions and services, closed a $3M Convertible Note Financing, with new investor Robert Wolf, founder of 32 Ventures and former Chairman & CEO of UBS Americas, and lead investor Flatiron Venture Partners. This latest round also featured returning investors Fenway Summer Ventures and Bravos Capital. The new round of funding brings GCV's total funding to $8M+. GCV previously announced $2.4M in Convertible Note Financing back in February. Since going live in 2019 with its technology and advisory services, the company has seen rapid adoption and currently has over 1,000 cannabis-related businesses (CRB) on its cloud-based compliance monitoring platform.


📄Company Updates / Earnings

Glass House Brands First Quarter 2021 Financial Results

  • Net Sales increased 136% to $15.2M compared to $6.4M in Q1 2020

  • Adjusted EBITDA increased $3.3M to $0.6M compared to $(2.7)M in Q1 2020

  • Cash and cash equivalents, were $11.6M as of March 31, 2021, compared to $3.6M as of March 31, 2020. Subsequent to the quarter-end, the Company completed a Preferred Stock offering exchanging both principal and interest accrued to participating investors and issued both Company Preferred Stock and warrants. The completion of the Preferred Stock offering triggered the conversion of all of the Company's outstanding Convertible Promissory Notes, resulting in over $37.6M of notes payable being converted to equity.

Columbia Care — Launch of West Virginia Market Operations. Columbia Care has received approval from the Office of Medical Cannabis, West Virginia Department of Health and Human Resources, to begin cultivation operations in the state at its facility in Falling Waters. As one of only 10 provisionally licensed cultivators in West Virginia, Columbia Care’s facility will utilize the maximum available cultivation space permitted under state regulation. The Company has begun developing all five of its medical dispensaries across West Virginia, which will support the growing community of more than 2,300 enrolled patients in the state’s medical program.


🧔People

Michael Song joins Navy Capital. Song previously spent ~10 years at Freshford Capital (Hedge Fund with $900M+ AUM), after 4 years in the M&A group at Greenhill & Co. He holds a B.A. Finance from Michigan (2000) and an MBA from Wharton (2007), and was an Analyst at Salomon Smith Barney in between undergrad and business school.


👋 Newsletter curated by Dai Truong.