📰 Trulieve Completes Acquisition of Harvest

TPCO acquires Coastal ($56M), lawsuit filed by minority partners (MedMen founders). AFC Gamma/Justice Cannabis $53.4M CF. Ayr Wellness/PA Natural Medicine. AWH/BCCO (OH). Curaleaf/Los Sueños (CO).

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🌿Industry

BDSA Data Indicates Cannabis Sales Weakened in Western States in August. Following two months of softening sales trends, most of the markets that BDSA covers experienced continued weakness in August. Tough comparisons from a year ago, when sales surged during the pandemic, resulted in relatively weak annual growth in most markets, with several even declining. Weak sales of flower compared to a year ago was the underlying theme. BDSA provides coverage for Arizona, California, Colorado, Nevada and Oregon. In August, growth ranged from -7% in California to 26% in Arizona (although growth here is aided by the transition to adult use) compared to a year ago. In the newer markets, the annual rate of growth picked up in all two of the three markets for which BDSA provides data. Note that BDSA has begun providing data for Florida, Michigan and Pennsylvania as of January. Florida sales decreased 0.6% sequentially from to $150.6 million, while Pennsylvania fell 4% from its record month in July to $105.8 million. Michigan, which NCV previously detailed, saw overall sales fall 3% from July to $165.6 million, up 52% from a year ago. BDSA, which includes accessories, reported a slightly higher level of sales for August at $168.8 million.

Seattle Becomes Largest U.S. City To Decriminalize Psychedelics. Seattle’s City Council approved a resolution to decriminalize noncommercial activity around a wide range of psychedelic substances, including the cultivation and sharing of psilocybin mushrooms, ayahuasca, ibogaine and non-peyote-derived mescaline. The landmark measure extends what is already Seattle city policy not to arrest or prosecute people for personal drug possession to further protect the cultivation and sharing of psychedelic plants and fungi for “religious, spiritual, healing, or personal growth practices.” In Santa Cruz, one of the first U.S. cities to decriminalize psychedelic plants and fungi, the City Council last month amended its policy to specifically exclude peyote as well as other cacti that contain mescaline.

Rootz Research claims it's using insights from top Wharton professors to upend cannabis data. The real story is far more complicated. The founder of Rootz Research told Insider he started the company with three Wharton professors. One of the professors told Insider the founder, Eric Spitz, had "grossly misrepresented" his role. The cannabis industry has its share of disingenuous founders and startup failures. Can Rootz chart a different path?


💵Deals

Trulieve — Completes Acquisition of Harvest Health & Recreation Inc. Creating the Largest and Most Profitable U.S. Cannabis Operator.

Key Transaction Highlights and Benefits

  • Increases Scale Across Our Hub Markets – creates the largest U.S. cannabis operator across a combined retail and cultivation footprint basis with depth in key markets;

  • Solidifies Position as the Most Profitable U.S. MSOs – establishes an outstanding platform of profitability and cash generation for continued growth, positioning the Company to execute on near-term opportunities in existing markets as well as future catalysts at both state and federal levels;

  • Provides Leading Financial Metrics – reinforces superior financial performance relative to peers by delivering the strongest public company financial results among any U.S. reporting MSO. In Q2 2021, Trulieve reported revenues of $215.1 million, net income of $40.9 million, and Adjusted EBITDA of $94.9 million, and Harvest reported revenues of $102.5 million, net loss before non-controlling interest of $19.2 million, and Adjusted EBITDA of $28.0 million. On a combined basis, in the second quarter 2021, Trulieve and Harvest had $317.6 million in reported revenue, the highest among U.S. public reporting cannabis companies;

  • Delivers an Exceptional Retail and Wholesale Distribution Model – offers a robust retail network of 149 dispensaries across 11 states and 3 strategic regional hubs, with market leading positions in Arizona, Florida and Pennsylvania;

  • Strengthens Industry Leading Balance Sheet – combines Trulieve and Harvest's strong cash and cash equivalents of $289.0 million and $71.0 million, respectively, as of June 30, 2021, bolstered by Trulieve's recently announced $350.0 million debt financing and Harvest's $55.0 million proceeds from the sale of its Florida license (to Planet 13);

  • Extends Product Selection and Brands – adds successful line of Harvest brands, including Alchemy and Roll One, across multiple form factors to Trulieve's portfolio of in-house brands and national brand partners; and

  • Leverages Experience and Best Practices – combines proven management teams with established track records, enhancing operational excellence across cultivation, manufacturing, and retail.

The Parent Company — Acquires Coastal, Expanding its Retail Network to Eleven Operating Stores and Six Delivery Depots. Founded in 2018 in Santa Barbara, Coastal is a retail dispensary license holder and operator with six retail licensed locations with five locations currently operating and two delivery depots. Coastal's operating dispensaries are located in Santa Barbara, Pasadena, West Los Angeles, Stockton and Vallejo. Coastal is also engaged in construction for another retail license location in Northern California and operating delivery depots in Santa Barbara and San Luis Obispo. TPCO Holdings will pay $16.2 million in cash with contingent consideration of up to $40 million in equity of The Parent Company upon completion of milestone events and a $9 million option to acquire the remaining equity of a  southern California dispensary that Coastal currently holds a minority interest in, as described in more detail below. The M&A is being challenged by Coastal Executives/MedMen co-founders, Adam Bierman and Andrew Modlin, who are suing to stop the sale. The two claim that, as investors and partial owners (through a $3.7M investment) of Coastal, they have the right to approve the sale but have refused to do so. The other owners of Coastal responded in a court filing that Bierman organized the very sale that he and Modlin now want to torpedo.

AFC Gamma — Expands Senior Secured Credit Facility with Justice Cannabis Co. by $53.4M to $75.4M. The credit facility expansion is designed to provide Justice Cannabis Co. with additional capital to purchase assets and develop its operations in New Jersey, further develop its Pennsylvania cultivation facility and refinance existing debt. AFC Gamma has committed an additional $43.4 million under Justice Cannabis Co.’s expanded credit facility, with $10.0 million syndicated to an affiliate. AFC Gamma now holds a total of $65.4 million of the $75.4 million expanded credit facility. The loan is secured by a first-lien mortgage on Justice Cannabis Co.’s owned real-estate in New Jersey and Pennsylvania and other commercial-security interests.

Ayr Wellness — Closes Acquisitions of PA Natural Medicine, LLC; Provides Update on Warrant Acceleration. The acquisition of PA Natural adds key dispensary locations in central PA, including the college towns of Bloomsburg and State College, as well as Selinsgrove. In keeping with the Company’s retail strategy, the stores will be rebranded to “Ayr” from the existing “Nature’s Medicine” banner by year-end. The terms of the transaction include upfront consideration of $80 million ($20 million stock, $25 million seller notes and $35 million cash). An earn-out based on 2021 Adjusted EBITDA, is payable in Q1 2022.

Ascend Wellness Holdings — Expands Vertically Integrated Footprint in Ohio. AWH has completed the acquisition of BCCO, which operates a medical dispensary in Carroll, Ohio, and has entered into a definitive agreement to acquire Ohio Cannabis Clinic (OCC), which operates a medical dispensary in Coshocton, Ohio.

Acreage — Closes Cultivation, Processing, and Retail Operations in Ohio. As previously announced, Acreage entered into purchase agreements for these operations in Ohio during the summer of 2018 for the total purchase price of ~$7.1 million in cash, $7.1 million in notes and 1.1 million shares of High Street, which are convertible into shares of Acreage, with the remaining $3.3 million worth of notes repaid today. Under the terms of the agreements, Acreage acquired all of the membership interests of Greenleaf Gardens, LLC, which operates a cultivation license in Ohio, Greenleaf Therapeutics, LLC, which operates a processing license in Ohio and Greenleaf Apothecaries, LLC, which operates five retail dispensaries in Ohio (together Greenleaf). Upon completion of these acquisitions, Acreage will subsequently consolidate the results of Greenleaf into its consolidated financial statements.

Curaleaf — Completes Acquisition of Los Sueños. Following the successful completion of the Los Sueños acquisition, Curaleaf gains three Pueblo, Colorado outdoor cannabis grow facilities covering 66 acres of cultivation capacity including land, equipment and licensed operating entities; an 1,800 plant indoor grow; and two retail cannabis dispensary locations serving adult use customers. As the largest cannabis biomass producer in the state, the Los Sueños facilities will help fuel the Company's Select brand's already market-leading presence in Colorado with a variety of best-in-class cannabis products distributed to nearly 2,000 locations across 18 states.

Unrivaled Brands — Closes Acquisition of SilverStreak Solutions. SilverStreak is one of the leaders in the Sacramento cannabis delivery market, and the Company plans to deploy the SilverStreak delivery platform, along with certain technology enhancements, to other Unrivaled facilities, starting with San Leandro during this quarter. SilverStreak has in excess of 42,000 customers within a 100-mile operating radius with a 96% repeat customer order rate.

Akerna — Closes $17M acquisition of 365 Cannabis. This add the most robust cannabis-compliant Microsoft ERP on the market, establishing Akerna as the broadest portfolio of technology solutions provider for cannabis operators with a majority of the mainstream mid-market to enterprise finance, inventory, and operations solutions.

Agrify — Acquires Precision Extraction Solutions and Cascade Sciences, Two of the Leading Cannabis and Hemp Extraction, Post-Processing, and Testing Equipment and Services Companies. Agrify acquired Precision and Cascade with a base purchase price of $50 million, consisting of $30 million of cash and $20 million in stock. The two companies have collectively worked with over 30 MSOs and over a thousand cannabis and hemp customers. Precision and Cascade expect to generate ~$40 million in revenue in 2021 with positive EBITDA. As a result of this transaction, Agrify now has a physical presence in seven states with a growing number of clients and business partners distributed throughout the country.

Planet 13 — Completes Acquisition of Florida Cannabis License. Planet 13 Florida has completed the previously announced purchase of a license issued by the Florida Department of Health to operate as a Medical Marijuana Treatment Center in the State of Florida for $55 million in cash.


📄Company Updates / Earnings

Ayr Wellness — Commencement of Noteholder Consent Solicitation. The Company called for a meeting of holders of its 12.5% senior secured notes due 2024, and commenced the solicitation of consents and proxies to consider an amendment to the trust indenture governing the Notes.

MedMen — LitHouse Farms to Manage California and Nevada Cultivation Facilities in Conjunction with Cash Flow Accretive Foundry Works Partnership. LitHouse Farms, one of the most highly‐awarded cultivators in California, has agreed to manage cultivation and manufacturing at each of the two approximately 45,000 square foot, Dutch greenhouse, cultivation and production facilities that MedMen leases in Desert Hot Springs, California (DHS) and Sparks, Nevada. LitHouse will expand its current California production, enter the Nevada market for the first time and produce flower for MedMen’s private label line MedMen Red. Licensed operations at the facilities will be carried on under management agreements with subsidiaries of LitHouse, which management agreements include purchase options for nominal consideration, subject to regulatory approval.

Concurrently with the transaction, Foundry Works, Inc., the parent company of LitHouse Farms, has signed a sublease agreement for DHS worth approximately U.S.$3.2 million per year in its first year, ramping to approximately U.S.$4.6 million per year in its sixth year, subject to 3% annual escalators thereafter through March 2039. At Sparks, Foundry Works has signed a sublease agreement worth approximately U.S.$2.4 million per year in its first year, ramping to approximately $3.4 million per year in its sixth year, subject to 3% annual escalators thereafter through January 2039. In addition, MedMen and Foundry Works also announced a merchandising agreement covering California and Nevada reflective of MedMen’s retail focus in both states and the two companies’ shared brand vision. Subject to performing in the top half of SKUs sold at MedMen, Foundry Works will have the right to occupy shelf space in‐line with MedMen’s current top performing brands. It is expected that Foundry Works will use these rights to feature LitHouse Farms, Sherbinksi’s, Sonder and other future Foundry Works owned brands. MedMen and Foundry Works expect to release exclusive products while supporting these products with marketing and advertising content associated with the merchandising agreements. The two companies also have agreed that Foundry Works will supply the product for the Company’s private label MedMen Red product in California and Nevada.

The Valens Company — Enters into Six Manufacturing Partnerships. The six agreements include three of the top seven Canadian licensed producers by market share and showcase the vast manufacturing capabilities that Valens offers to its customers. The majority of the agreements were signed in the last three weeks, indicative of the significant interest in the capabilities provided by the Valens platform. The collective agreements are expected to commence over the next two quarters, with anticipated revenue generation during the same period. In addition, four of the agreements require deposits that are up to 100% of initial purchase orders.

Fire & Flower — Expansion of Circle K Co-Location Pilot Program. Alimentation Couche-Tard (ACT), the parent company of Circle K stores, will open new Fire & Flower cannabis retail stores adjacent to existing Circle K stores located in new markets across Canada. The expansion of the pilot program between the strategic partners will see new co-located retail stores open over the next several months in the Canadian provinces of Alberta, Saskatchewan and Manitoba. The enhanced agreement also allows for the opportunity to further expand the program into additional high-value markets including Ontario and the United States.  

Australis — Provides Commercial Update. The Company’s majority owned subsidiary ALPS has entered into an agreement with Pure Harvest, the pioneer in controlled-environment agriculture in the Middle East, for the development of a 1,000,000+ square foot, high-tech, fully integrated facility to achieve year-round cultivation of high-quality, fresh fruits and vegetables in Kuwait.


🏬Retail / Cultivation

Cresco Labs — Opens $30M facility in Marshall, MI. The company unveiled its first cultivation and processing facility in Michigan while celebrating the first harvest at its 100,000 square foot property in Marshall. The company said it has invested north of $30 million over three years in redeveloping the former Campbell's Soup manufacturing facility. The company expanded its footprint into Michigan by moving into the Marshall facility in June.


🌱Product

Palms — Partners with Justin Bieber for “Peaches”-Inspired Cannabis Line.

The collection features seven 0.5 gram pre-rolls consisting of premium indoor flower—the specific strains include indica, sativa, and citrus terpenes—and each pack comes with a lighter emblazoned with the word “peaches.” In California, you can find Peaches on shelves at select dispensaries including Haven and MedMen, as well as through delivery partnerships with Eaze and Amuse. In Nevada, expect to see the Peaches line grown by Flower One and sold at MedMen and Planet13. In Massachusetts, Peaches will be sold at NETA Dispensaries and in Florida, it will be found at Surterra Wellness retail stores through a partnership with cannabis cultivators at Parallel in both states. According to Forbes, Palms and Bieber came together through a mutual connection in the industry: Ceres, Scooter Braun’s cannabis fund.

VIOLA x Iverson ‘96. The strain is a result of a cross between Secret Kush Mints and Grape Stomper. This complex flavor profile combines a robust grape candy-like aroma coupled with notes of pine and mint. ‘96 is coated in crystal trichomes and displays a variety of color pulling from Secret Kush Mints’ vivid greens and Grape Stomper’s signature purples.

Artet x Aster Farms — Launch Single Strain, Live Resin Cannabis-Infused Aperitif. The “Founders' Blend” features Aster Farms' Honeydew Funk live resin, derived from the cleanest sun-grown cannabis, which possesses a distinct plant flavor and delivers a uniquely euphoric effect. The live resin aperitif ($48/750ml bottle) combines Artet's original seven botanical blend base, bearing bright citrus notes with the Honeydew Funk's well-rounded indica dominant hybrid effects and fruity, earthy, sour, and piney tasting notes resulting in 5 mg of live resin per 50ml shot.

Karma Beverages Launches CBD Water. This is the first CBD beverage to launch under the Karma wellness and probiotic waters beverage portfolio and has been developed in partnership with Canopy Growth. Karma CBD Water is crafted with Canopy Growth's Broad Spectrum CBD distillate made from US Hemp Biomass and powered by Karma's patented Push Cap technology, which protects the active cannabinoid constituents until seconds before consumption to ensure optimal potency.


🧔People | 💻Hiring

Greenlane — Appoints Director Donald Hunter as Chairman of the Board. Hunter has more than 30 years of public company experience and has served as a board member for several public companies, including Greenlane, where he currently serves as a member of the Audit Committee and the Compensation Committee. Prior to Greenlane, Hunter served as chair of the Audit Committee at KushCo Holdings, and Juniper Pharmaceuticals (Nasdaq:JNP). He currently serves as chair of the Audit Committee at The LGL Group, Inc. (NYSE:LGL).

Next Green Wave — adds Curtis Floyd to Board. During his legal career, Floyd has counseled numerous business owners on business formation, structuring, expansion, financing, compliance and litigation. Personally, Curtis has founded or invested in a vast array of diverse private business ventures, including, but not limited to, educational services, restaurants, farming, real estate development and construction.

NABIS — Director Of Compliance and Licensing (California)

COVA Software — COO (Denver)

Papa & Barkley — Key Account Director (Pasadena)


🎙️Interviews

MJBizDaily — From Grub to Greens: Why Dutchie Took Cannabis Ordering Online

AdAge — Fyllo is in the process of hiring 70 people globally and has seen sales grow 32% over the past 12 months


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