💰 Trulieve adds $75M to 8% Senior Secured Notes ($425M Aggregate)
💰 Trulieve adds $75M to 8% Senior Secured Notes ($425M Aggregate)
Agrify $27.3M Private Placement. Jushi Holdings $10.0M Private Placement. TSUMo Snacks $4M Seed Round. Chicago Atlantic $25M Senior Secured Credit Facility to Sanctuary Medicinals (FL).
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🌿 Industry
MJUpacked Dates Change after overlap with Hall of Flowers Palm Springs. MJUnpacked sent an email a few days after Hall of Flowers announced it was hosting it’s next event on the same days — “The Hilton double booked our event with another and banked on the other party releasing their dates for our overlapping space. Last week, they shared that the other event wasn't freeing the space we wanted. We don't accept subpar and want the best space, so we changed the dates. The double booking worked out serendipitously. Many of our brand and retail clients had concerns about the event's proximity to 4/20. In addition, Hall of Flowers, a CA event, recently announced that they would hold an event in Palm Springs on May 4-5. We recognize that HOF is an important event to our CA brand and retail partners, and our date change helps them too. We look forward to seeing you at MJU May 18-20.”
Once-high-flying Flow Cannabis Co. falls to earth amid woes, offering lesson for others. By vowing to help underground marijuana farmers in the Emerald Triangle become legal growers, Flow Cannabis Co. became the vanguard of the historic Northern California growing region. The marijuana distributor, which launched in California in 2015, was an early and vocal advocate for small growers in Humboldt, Mendocino and Trinity counties. The company also was a major buyer of their Emerald Triangle cannabis. Within a few years, high-flying Flow Cannabis Co. (Flow Kana) seemed poised to reshape California’s cannabis industry. But those lofty goals are no more, and Flow Cannabis Co.’s future is uncertain given layoffs, executive departures and tight funding. Further accelerating Flow Cannabis Co.’s fall was the fact its high-stakes wager was predicated on the federal government legalizing marijuana. That, of course, hasn’t happened. Ultimately, Steinmetz (CEO) ripped up his company’s business plan amid a fallout with contract growers over the price of marijuana. Flow Cannabis Co. was then forced to do something that ran counter to its original business plan: grow its own marijuana.
LeafLink Releases Wholesale Cannabis Pricing Guide Exploring Data Across Ten Markets. LeafLink released its annual Wholesale Cannabis Pricing Guide, which explores pricing data from ten cannabis markets in the United States across five product categories. LeafLink analyzed over 296,900 SKUs across our top ten national markets in this guide. The study examines 2021’s average wholesale pricing for five categories: flower, cartridges, concentrates, edibles and ingestibles, and pre-rolls. Within each category, the guide highlights pricing on both the national and market level, as well as Y/Y changes. Over $3.2B of wholesale orders placed through LeafLink in 2021 were used to determine the impact of pricing on sales. Across the ten markets analyzed, wholesale cannabis prices declined on average in 2021. The cartridges category was the only one to see Y/Y growth, increasing by 6%. Specific markets saw dramatic Y/Y price shifts, including a 27% decline in Oklahoma concentrates, and a 17% decline in Michigan cartridges. In addition to highlighting market-specific dynamics, LeafLink’s study shares national trends and notable category changes, which can inform cannabis operators’ pricing and purchasing decisions for 2022.
N.J. legal weed growers brace for layoffs, ‘destroying product’ if consumer market doesn’t open soon. For months, Verano along with fellow New Jersey Cannabis Trade Association members have been pressuring the state to allow them to sell to the public. The strategy has increased over the last month. In no uncertain terms, the state agency created to govern the nascent cannabis industry — the Cannabis Regulatory Commission — has said these same companies demanding to open have yet to comply with stipulations in the marijuana law. Some don’t have permission yet to sell recreational weed from the host municipality. Some have not convincingly shown they have enough product to satisfy patients’ needs and the broader market. They also need to show a commitment to operate in a way that reflects the commission’s core values of social equity and safety.
Thailand gives green light to growing cannabis at home. Thailand's narcotics board removed cannabis from its drugs list, paving the way for households to grow the plant. Thailand became the first Southeast Asian country to legalize marijuana in 2018 for medical use and research. Under the new rule, people can grow cannabis plants at home after notifying their local government, but the cannabis cannot be used for commercial purposes without further licenses. The health ministry will present to parliament a separate draft bill which provides details on the legal use of cannabis, including its production and commercial use, including guidelines on recreational use.
Cannabis Events Come Out of Hiding in New York City. As New Yorkers wait for marijuana sales to be legalized, some small businesses are putting down roots. New York may have legalized recreational marijuana in 2021, but the state still has not passed the laws that would allow its sale in stores, or its consumption at club-like lounges — moves that would open doors for a potential $4.2 billion industry. Though licenses and permits are not expected to be issued until later this year, with businesses up and running in 2023, the recreational marijuana industry is already setting down roots, hosting events aimed at educating consumers and drumming up excitement.
💵 Deals
Trulieve — Closes Additional $75M 8% Senior Secured Notes. Together with the first offering of Notes, which closed on October 6, 2021, Trulieve has issued Notes totaling aggregate gross proceeds of $425.0M. The Notes have the same terms as those issued on October 6, 2021.
Agrify — $27.3M Private Placement. The Company will issue and sell 4,020,994 shares of common stock or, in lieu of Common Stock, pre-funded warrants, and accompanying warrants exercisable six months from closing to purchase up to 3,015,745 shares of common stock for a period of five years at an exercise price of $7.48 per share. The Common Stock and Warrants will be sold at a combined purchase price of $6.80. Members of management and the Board, including Raymond Chang, the Chairman and CEO, participated in the Offering on the same terms as the other investors except for a combined purchase price of $6.90.
Chicago Atlantic Real Estate Finance — Funds Senior Secured Credit Facility to Sanctuary Medicinals. The Company funded $10M as the initial advance of a new $25M senior secured credit facility to Sanctuary Medicinals to support their retail and cultivation expansion in Florida. Headquartered in Apopka, Florida, Sanctuary operates a premier cultivation and processing facility with 5 operational dispensaries and plans to open more than 18 additional locations in Florida during 2022.
Jushi Holdings — $10.0M Private Placement with Strategic Asset Manager. The company closed a non-brokered private placement of an aggregate of 2,717,392 subordinate voting shares at a price of $3.68 per share to Graticule Asset Management Asia (GAMA) for gross proceeds of $10M. As of December 31, 2021, the Company's pro forma cash balance, including proceeds from the Offering, was ~$104M.
TSUMo Snacks — $4M Seed Round Led by Casa Verde. TSUMo Snacks aims to elevate the way people consume THC through its innovative salty & savory snack offerings. TSUMo brings consumers a unique and elevated snacking experience by infusing cannabis into familiar flavors and form factors. Low dosed at 10mg of THC per bag, the debut line of snacks features five delicious flavors: Classic Cheese Puffs, Fiery Hot Cheese Crunchers, Zesty Ranch Mini Tortilla Rounds, Hint of Lime Mini Tortilla Rounds, and Salsa Verde Mini Tortilla Rounds.
Icanic Brands — Definitive Agreement to Acquire 100% of LEEF Holdings. LEEF is one of the largest cannabis extraction companies in the state of California and is a leading provider of bulk concentrates to many of the largest brands in the state. It is led by an expert group of legacy operators with decades of experience in organic soil-based farming and sophisticated extraction practices. LEEF’s manufacturing capabilities include a 12,000 sq.ft state of the art extraction and manufacturing facility with up to 45 tons of biomass throughput per month and up to 3,000 liters of distillate extraction capability per month. LEEF also has an edibles production line and is in the process of building out a 45,000 sq.ft mid-stream processing facility which will allow it to dry its own product and provide additional services including processing, distribution and delivery to its customers. LEEF also recently received a 186.7 acre cultivation land use permit, which will make it the owner of one of the largest cannabis cultivation sites in California. The site sits on over 1,900 acres of prime California real estate.
4Front Ventures Corp. — Closes Accretive Acquisition of New England Cannabis Corporation. The Transaction was first announced in the Company's press release dated October 7, 2021. The acquisition of NECC and its licensed, fully operational 55,000 sq. ft. cultivation facility immediately scales 4Front's presence as a dominant wholesaler and producer in Massachusetts. The Transaction more than doubles the Company's total flower canopy in Massachusetts to over 30,000 sq. ft., with expansion potential for an additional 10,000 sq. ft. Furthermore, the NECC facility nearly triples 4Front's kitchen, processing and distribution space in Massachusetts, and will supplement the products currently sold via wholesale distribution and through 4Front's existing "Mission" dispensaries.
Schwazze — Closes acquisition of Drift. This purchase continues Schwazze's expansion plan in Colorado, adding to the Company's current dispensary footprint, and bringing the total number of dispensaries to twenty. The consideration for the acquisition was $3.5M ($1.9M cash, $1.6M stock).
Fire & Flower — Amends Strategic Licensing Partnership and Option to Acquire Fire & Flower Holdings US (formerly American Acres). The Strategic Agreements provide Fire & Flower with a path to acquire corporate-owned cannabis retail stores in major markets in the US and deploys the Hifyre™ technology platform in the US. Under the Strategic Agreements, Fire & Flower has the option to acquire Fire & Flower US, which acquisition is expected to occur upon the federal legalization of adult-use cannabis in the United States or when otherwise permitted by the policies of the TSX or any other stock exchange on which the Company's securities are listed for trading. Completed acquisition of Pineapple Express Delivery. PED is widely recognized throughout the cannabis industry as the largest player in the cannabis delivery space, completing more than 40,000 deliveries per month to recreational and medical cannabis customers across Canada. As consideration for the purchase of Pineapple Express Delivery, Fire & Flower has assumed and repaid approximately $5.15M in debt owed by Pineapple Express Delivery and 1,153,142 shares.
GrowGeneration — acquires Horticultural Rep Group. HRG is a specialty marketing and sales organization of horticultural products based in Ogden, Utah. HRG represents hundreds of product SKU's for GrowGen and other companies that are popular brands in the hydroponics market. In addition, HRG has participated in the sourcing of products across the horticultural and hydroponics industry. HRG will continue to supply the 800+ retail customers it currently services. HRG generated estimated revenue of $10M in 2021 from sales agent commissions and distribution activity.
📄 Company Updates / Earnings
High Tide — Unaudited 2021 Financial Results. Revenue increased by 118% to $181.1M for the year ended October 31, 2021, and increased sequentially by 12% to $53.9M in Q4 2021. The Company is forecasting to generate Q1 Revenue in excess of $70M. Adjusted EBITDA was a record $12.4M for the year ended October 31, 2021, and was $1.6M for Q4 2021. Cash on hand as of October 31, 2021 totaled $14.0M, compared to $7.5M as of October 31, 2020.
Greenlane — Preliminary Q4 and FY 2021 Financial Results. On a preliminary (unaudited) basis, the Company anticipates net sales of between ~$55.5M-$56.5M for Q4 and between ~$165.5M-$166.5M for the full year ended December 31, 2021. The 54% year-over-year increase in net sales was primarily driven by an increase in sales of Greenlane Brands, as well as the KushCo merger. In addition, the Company anticipates Gross Margins (GM) of between 18%-20% for Q4 and between ~15%-16% for the full year ended December 31, 2021.
Cronos Group — Provides Bi-Weekly MCTO Status Update. The Company’s management continues to work diligently to complete the Required Filings and now anticipates, but cannot assure, that the Required Filings will be filed by February 18, 2022.
🏬 Retail
Trulieve — Completes Statewide Retail Rebrand in Pennsylvania. Trulieve's statewide celebration commemorates the rebranding of its affiliated retail dispensaries, located in Camp Hill, Cranberry Township, Devon, Harrisburg, Johnstown, King of Prussia, Pittsburgh, Philadelphia, Reading, Scranton, Washington, Whitehall, York and Zelienople.
Cresco Labs — Expands Sunnyside in Florida’s Gulf Coast With New Clearwater Dispensary. The new store is the Company’s marks its 48th dispensary nationwide. In addition to the Clearwater store opening, Cresco Labs serves patients through its Sunnyside dispensaries in Avon Park, Boynton Beach, Orlando (Fern Park), Jacksonville Beach, Ocala, Port St. Lucie, St. Petersburg, Bonita Springs, Fort Lauderdale, Oakland Park, Tallahassee, Pensacola and Sarasota.
Gage Cannabis & Cookies — Launch Flagship Cannabis Dispensary in Toronto. Cookies Toronto will offer Cookies and Gage branded products cultivated by their exclusive collective production partner, NOYA Cannabis. Cookies Toronto will become the 12th dispensary in North America operated by Gage and the first Cookies store in Canada.
🌱 Product
Crypto Cannabis Club Launches Cannabis Brand and Loyalty Program for NFT Owners.
Crypto Cannabis Club (CCC), the NFT collection and Metaverse community for crypto and cannabis enthusiasts launched the first ever NFT-powered cannabis brand. Members of the CCC will receive significant discounts on premium cannabis flower through a-first-of-its-kind partnership with CampNova (D2C cannabis platform). The CCC has announced partnerships with Cannabis brands Highsman, Old Pal, Dr. Dabber, King Palm, Higher Standards, Vibes Papers and Marley Naturals. CCC now becomes the first NFT collection to provide its members with a real-world cannabis product. Three packages out of the total production run will also include an NFToker NFT—currently valued at more than $600 each.
Kiva rebrands edibles to 'Supply Chain Chaos' flavor after delayed holiday shipments arrive in backlogged California port. The cannabis company's "Holiday Punch" tins were among the thousands of backlogged items recently unloaded from containers at California's Port of Long Beach. According to Kristin Rasmussen, brand marketing director at Kiva Confections, the tins were originally slated to reach Kiva in November before hitting dispensary shelves throughout December, but didn't make it off the boat until early January as a result of the supply-chain crisis. With the holidays come and gone, Rasmussen said the marketing team decided to use the opportunity to rebrand the edibles from "Holiday Punch" to "Post-Holiday Punch: Supply Chain Chaos." In a sign of the times, the packaging's original winter wonderland label was covered with a sticker of hulking container ships stuck at sea.
Cresco Labs — Launch of Khalifa Kush Products at Cookies Dispensaries Throughout California. Through the partnership, the Company’s FloraCal Farms and Continuum distribution platform will be the sole producer and distributor, respectively, of premium branded products featuring Khalifa Kush’s signature "KK" strain in California. An expanded line is expected to arrive at additional retail partners throughout the year.
Clever Leaves — Enters US Consumer CBD Market. Clever Leaves has entered the U.S. CBD market through the launch of its consumer-oriented CBD line JoySol™. JoySol is produced by Arizona-based Herbal Brands, a wholly-owned subsidiary of Clever Leaves. Clever Leaves’ consumer brands division is introducing JoySol with high-quality CBD, minor cannabinoids and proprietary terpene blends at a mass-market-accessible price point. JoySol launches with oil drop blends, gummies and topicals that comprise a unique CBD Daily Care System, with easy-to-use products specific to each segment of the day – morning, mid-day and evening.
Tilray — Expands Medical Cannabis Product Offering in Australia. Tilray's product offering in Australia approved under the Therapeutic Goods Administration (TGA) Special Access and Authorized Prescriber Scheme is centered around its whole flower options ranging from balanced 1:1 whole flower (THC 10 CBD 10), including mid-range (17), and high THC (25) varieties of 15g bag GMP-Certified medical cannabis whole flower.
BioSteel (Canopy) — Expands to additional 15,000 new stores across the United States. The new retailers include Albertsons Company, Food Lion, Giant Food, Publix, Stop & Shop, Rite Aid and Sheetz, as well as over 20 additional national, regional and local grocery, convenience and drug chains.
🧔 People
Influential People of Color in Cannabis. mg Magazine compiled the list, which includes executives from Josephine & Billie’s, Cookies, The WeedHead & Company, New Frontier Data, Simply Pure, California Minority Alliance, SC Labs, Cannabis Cultural Association, Cultiva Law, SF Roots, Suite 420 Access, Minority Cannabis Business Association, Buy Weed From Women, Minorities for Medical Marijuana, Mary & Main, Ciencia Labs, Supernova Women, Arlington Capital Advisors, Curaleaf, National Hispanic Cannabis Council, and Webber Health and Wellness.
Ayr Wellness — Adds Joyce Johnson-Miller to Board. Johnson-Miller previously served as Senior Managing Director and Partner at Relatively Capital from 2008 to 2017 and as a Managing Director at Cerberus Capital Management from 1993 to 2002, in addition to Vice President roles at ING Bank and Citicorp. She sits on the Board of New Lake Capital Partners, SportsTek, and is the Chairwoman of the Board and CIO for Pacific Gate Capital Management, a value-oriented investment manager focused on U.S. private credit investments.
MedMen — Promotes Tyson Rossi to Chief Strategy Officer. Rossi most recently serving as SVP, Product and Revenue. Rossi co-founded a number of cannabis ventures, including Flourish Cannabis; Bōdee Holdings and Edible Solutions.
Perfect Union — Adds Nicole Hanratty as VP Marketing. Hanratty was previously Global Director of Marketing at Bhang and helped the Hippos Medical Marijuana team launch their state-of-the-art dispensary in Missouri.
🎙️ Interviews
Berner Talks Wiz Khalifa Partnership, Cookies Expansion And Healing With Cannabis
Lowell Farms — CEO discusses preparing for the possibility of federal legalization and creating cannabis customer loyalty in California
Entourage Effect Capital — How the firm looks at the sector right now
👋 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.