🔮 U.S. Cannabis Market Forecast up to $45B in 2025, Headset

Tilray Q2 FY 2021: $155M Rev./$13.8M EBITDA (8.9%). MariMed acquires Kind Therapeutics for $20M (MD). ScottsMiracle-Gro/Hawthorne Gardening acquires Luxx Lighting ($215M) and True Liberty Bags ($10M).

Jan 11, 2022

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🌿 Industry

Expansion of Newer Markets Drives U.S. Cannabis Market Forecast Up to $45B in 2025. Headset, updated long-term forecast for the U.S. cannabis market. The forecast compiles an analysis of all 50 states to measure the total potential market in the coming years. By 2025, Headset expects the total annual U.S. cannabis market to reach $45.8B for the first time. To download the full report, click here.

States with significant growth potential, including Florida, New Jersey, New York, Ohio and Virginia, are expected to play a role in expanding the total addressable market. Key takeaways from the U.S. Market Forecast include:

Florida is expected to reach $3.2B sales in 2025, making it the second largest cannabis market in the U.S. behind California
New York, with adult-use licenses expected to be issued in 2023, is projected to be the third largest market in the U.S. with a 21+ population of 15M and sales reaching $2.8B by 2025
New Jersey, with its adult-use transition expected in March 2022, is projected to boast a 21+ population of 7M that will produce $1.6B in sales by 2025
Ohio, an emerging market in 2021, is projected to actualize a majority of its potential and post annual combined sales reaching $1.6B by 2025
Virginia, with an untapped market of a 21+ population nearly as large as New Jersey, is expected to reach $1.3B in spending power by 2025

New Data Shows Top 3 Desired Effects Among Cannabis Consumers In 2022.

Vertosa released the results of its first-ever consumer study which was completed among 1,000 U.S. respondents to showcase an increasing trend in effect-based cannabis products. Key findings from the study are below:

The top three targeted effects that consumers look for in cannabis products are relaxation (35%), sleep (28%) and anxiety relief (27%)
The most important product features that consumers look for are quality of experience (25%), price (24%) and amount of THC (24%)

2022 Regulatory Outlook: What cannabis professionals need to know. The whitepaper, developed by regional regulatory teams at Fyllo, offers a curated view of possibilities ahead for the cannabis industry in 2022. Download the whitepaper to:

Review the 25 ballot measures to watch, state-by-state
Learn when the Northeast market will mature and which other states might be next to legalize
Understand key challenges shaping the industry

Massachusetts Cannabis prices continue to fall, nearing record low. The average monthly cost per one ounce of cannabis is the lowest it’s been in Massachusetts since adult-use sales opened in November 2018, excepting the first two full months of the coronavirus pandemic, according to data from the state Cannabis Control Commission (CCC). The average price for an ounce of cannabis was $341 in December, and appears to be part of a broader downward trend beginning in the second half of 2021. Costs have consistently decreased month-to-month since July, when the average price for an ounce was $371.

Connecticut to start taking adult-use marijuana applications next month. Connecticut marijuana regulators will begin accepting adult-use social equity cultivation and retailer license applications on Feb. 3, with the launch of recreational sales anticipated “by the end of 2022.” MJBizDaily has projected that adult-use sales in Connecticut will reach $250M in the first full year and $750M annually by year four. The program is likely to launch before neighboring New York. Licenses will be selected by lottery except for the social equity cultivation permits. In each category, half the licenses will be issued to social equity applicants. Greenspoon Marder also has an overview here.

California awards $100M to support local Marijuana Business Development. The state has awarded $100M in funding to help develop local marijuana markets, in part by getting cannabis businesses fully licensed. The state Department of Cannabis Control (DCC) distributed the funds to 17 cities and counties where there are a disproportionate number of provisional marijuana licenses, rather than full-year licenses. The department first announced that applications for the Local Jurisdiction Assistance Grant Program had opened in October. Provisional licenses were allowed to be granted to business applicants as a way to more quickly stand up the adult-use market, and that temporary licensing category was set to expire on January 1 but was extended through the passage of legislation last year to give localities more time to complete the permitting process and meet environmental requirements. Now the state is aiming to give those jurisdiction an added boost with the grant funding.

💵 Deals

MariMed — Acquires Kind Therapeutics for $20M (Maryland). The transaction will result in the third state, incremental to Massachusetts and Illinois, in which MariMed will have acquired a licensed cannabis business it manages and assisted in developing. Kind, which holds cannabis licenses for cultivation and production, as well as a provisional license for a dispensary, currently leases from Mari Holdings MD, LLC, a MariMed subsidiary, a 180,000 square foot cultivation and processing facility in Hagerstown, which MariMed developed. Mari Holdings MD, LLC also owns and is developing a dispensary facility for Kind in Annapolis, which is expected to open in early 2022. Under MariMed’s management, Kind has been successfully manufacturing and distributing cannabis and cannabis products into Maryland’s robust wholesale cannabis industry, which has grown to 103 dispensaries. These products include MariMed’s products and brands including Nature’s Heritage™ craft flower, Betty’s Eddies® fruit chews, and k FUSION chewable tablets. The aggregate purchase price to be paid for Kind, in a combination of cash and promissory notes, will be $20M. In addition, the Company will acquire the minority interests of one of the current owners of Kind in two subsidiaries of the Company that own cannabis facilities in Maryland and Delaware for $2M in the aggregate. Further, upon the closing of these transactions, all Kind related litigation will be dismissed with prejudice.

ScottsMiracle-Gro — Expands Hawthorne Gardening Portfolio with Acquisitions of Luxx Lighting ($215M) and True Liberty Bags ($10M). ScottsMiracle-Gro acquired the assets of Luxx for $215M. Hawthorne, which previously did not distribute Luxx, will expand the marketing and distribution of the brand in emerging markets, including the East Coast. The acquisition, which closed December 30, 2021, adds ~$100M in sales and $20M in operating income to Hawthorne on an annualized basis. True Liberty, which was acquired for $10M, introduced storage solutions directly to the hydroponic market, developing a full offering of liners and storage solutions to dry and cure plant products. Hawthorne has been the primary U.S. provider of True Liberty brands, which expands Hawthorne’s harvest portfolio.

Halo Collective — Enters into Unsecured Loan for up to $14M. Halo has entered into a loan agreement with Global Tech Opportunities 6, pursuant to which the Lender will loan up to $14M to Halo in two tranches of $7M each, subject to certain terms and conditions. Amounts advanced under the Loan Agreement are expected to be used to support Halo's expansion into nutraceutical products (including Hushrooms™), the completion of Halo's Budega™ retail stores in North Hollywood, Hollywood, and Westwood, California and for general corporate purposes. The Loan Amount is unsecured and will bear interest at 8.0% per annum, and each tranche will be repayable in six equal monthly instalments (of blended principal and interest) of ~$1,2M per instalment.

High Tide — Acquires Fastendr™ Retail Kiosk and Smart Locker Technology Through Acquisition of Bud Room for C$3.6M. Fastendr™ is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup. High Tide will acquire all rights to the customized Fastendr™ retail kiosk and smart locker technology and Bud Room's retail cannabis store in Ottawa, Ontario.

Chicago Atlantic Real Estate — Funds Senior Secured Credit Facility to MEDfarms. Based in Central Michigan, MEDfarms has four retail dispensaries, two cultivation facilities, and two production facilities, making it among the more established vertically integrated players in Michigan. The MEDfarms family of companies operate under the names “Hashish Boys”, “Fire Creek” and “Dispo”. MEDfarms award-winning brands include “HYMAN”, “Chill Medicated”, and “Covert Cups”, among many more, which MEDfarms distributes through its network to hundreds of dispensaries across the State.

📄 Company Updates / Earnings

Tilray — Q2 FY2022 Financial Results

Net Revenue up ~20% Y/Y to $155M
Net Income improved $95M to $6M Y/Y. Analysts expected Tilray to lose ($.09)/share on revenue of $170.5M, according to FactSet
Adjusted EBITDA of $13.8M
Achieved $70M in Cost Synergies to date; on-track to exceed original plan of $80M ahead of schedule and additional $20M of Synergies in Fiscal 2023
Leading Medical Cannabis Company in Europe, ~20% Market Share in Germany. However, It’s market share in Canada has dropped from ~20% (January 2021) to ~10% (December 2021)
Anheuser-Busch InBev also ended the $100M Joint Venture
Cash: $332M (as of 11/30/21), down from $488M (as of 5/31/21)

Ayr Wellness — Update on Stock Repurchase Program. Under the program to date, the Company has repurchased 568,000 Subordinate Voting Shares (the “Shares”) for a total of over C$11M. The Company previously announced that its Board had authorized the repurchase of up to 5%, or ~2.5M, of the Company’s Shares, the maximum amount allowed for CSE listed companies, for a 12-month period pursuant to a normal course issuer bid.

Curaleaf — Settles 10 lawsuits over Wellness drops tainted with THC. Curaleaf has acknowledged that employees at a Portland facility somehow confused its Select brand of CBD-based wellness drops, which are made from hemp but don’t usually contain intoxicating properties, with THC-based drops. Curaleaf agreed to pay $50,000 to settle a case brought by an Idaho resident, Ayuba Agbonkhese, whose suit alleges he was taken to an emergency room in September after using Select CBD drops that he believed contained no THC. Agbonkhese said he wanted terms of his deal to be public to raise awareness about the incident.

Canopy Growth — Issues Environmental, Social, And Governance Report. To read the report in full, click here.

Key Highlights

Conducted our first-ever baseline assessment of our Scope 1 and Scope 2 energy use and GHG emissions
Invested over $1 million in supporting record-clearing, wrap-around and ancillary services for people impacted by the war on drugs
Registered 23,000 patients for our Compassionate Pricing Program through Spectrum Therapeutics
Hired our first Vice President of Diversity Equity & Inclusion in 2021 and established Employee Resource Groups representing Indigenous, Black and LGBTQ2S+ employees and employees living with disabilities
Achieved near gender parity of women in our global workforce
Trained 93% of Canopy Growth employees on our pharmacovigilance program
Recorded 0 safety-related product recalls globally

🏬 Retail

Trulieve — Opens Affiliate's (Harvest of Southeast, PA, LLC) Philadelphia Dispensary. The dispensary at 1222 Arch St. is in the Center City section of Philadelphia. This location becomes the Company's 160th owned, operated or affiliated dispensary nationwide. Additional Trulieve-affiliated dispensaries in Pennsylvania are located in Camp Hill, Cranberry Township, Devon, Harrisburg, Johnstown, King of Prussia, Pittsburgh, Reading, Scranton, Washington, Whitehall, York and Zelienople.

Gage Growth — Opens Ann Arbor, MI Dispensary. The Company now has 18 provisioning center locations in its retail portfolio. The Company will operate its newest location as a Cookies branded store. Since announcing its exclusive partnership with the international cannabis lifestyle brand in 2019, Gage has opened Cookies dispensaries in Detroit and Kalamazoo. In August 2021, Gage extended its existing agreement as Cookies' exclusive cultivator, manufacturer and distributor in Michigan until 2026.

Lume Cannabis has opened its 30th dispensary in Michigan. Lume saw exponential growth during 2021 with the opening of 16 adult-use stores, putting them closer to their goal of having 100 shops open by 2024.

🌱 Product

Pacific Stone — Infused Pre-Roll Packs. Each pack comes with 7 Diamond Infused Pre-Rolls (3.5G) pack starting at $45.

Trulieve — First in Florida Market to Offer Live Diamonds, Company's Latest Hydrocarbon Extraction Product. Live Diamonds are created using a proprietary blend of propane and butane in Trulieve's hydrocarbon extraction lab via TruFlower that has been frozen immediately at the time of harvest. The result of the "diamond mining" and production process locks in volatile terpenes and produces a strain-specific, full-spectrum cannabis concentrate that exhibits subtle, natural flavors. "Live" products are generally described as a truly enhanced experience in terms of flavor and appear to offer a broader set of effects for users.

El Blunto Partners x Trulieve — Launch Exclusively in Arizona at Harvest Dispensaries. El Blunto’s signature product, The World's Finest Cannabis Cigar, is a tobacco free blunt that features 1.75 grams of top-shelf high-testing cannabis. Full flower is hand-broken, never ground, hand-rolled in an all-natural fiber wrap, cured for 72-hours, and finished with a glass filter. El Blunto will be available at all 17 Trulieve-affiliated Harvest retail locations in Arizona. The dispensary locations in Arizona include Avondale, Casa Grande, Chandler, Cottonwood, Glendale, Guadalupe, Lake Havasu, Mesa, Peoria, Phoenix, Scottsdale, Tempe and Tucson.

YourWay x Old Pal — Arizona Licensee. YourWay has entered into an exclusive multi-year licensing agreement with Old Pal for an exclusive right and license to manufacture, produce, promote, distribute, and sell certain Old Pal-branded cannabis products in Arizona, including whole flower, pre-ground flower, pre-rolls, and distillate cartridges in association with the Old Pal brand. Old Pal is currently available in California, Massachusetts, Michigan, Nevada and Ohio. With a continued focus on expansion, Old Pal is slated to launch its cannabis products in two additional states within the first half of 2022.

🧔 People | 💻 Hiring

Curaleaf — Names Matt Darin President, COO Neil Davidson Retires. Before joining Curaleaf, Matt Darin was Founder and Chief Operating Officer of Grassroots Cannabis, which was acquired by Curaleaf in 2020. Prior to his 8 years in the cannabis industry, Darin was a Founder and Principal with Frontline Real Estate Partners. Since the Grassroots acquisition, Darin has served as Regional President for the Central and Southeast regions. Additionally, COO Neil Davidson is retiring.

TerrAscend — Appoints Ziad Ghanem as President and COO. Ghanem brings nearly two decades of experience in large-scale healthcare services, cannabis, pharmacy, and retail operations to TerrAscend where he will manage and oversee all operations. Most recently, Ghanem served as President of all markets at Parallel. Before entering the cannabis industry, he gained over 15 years of experience in senior leadership roles at Walgreens Boots Alliance.

MWG Holdings — Adds Mansoor Zakaria to Board. Mansoor Zakaria joined New Vernon Wealth Management (formerly SF Investment Advisors) in 2010 after a successful career as an entrepreneur, Silicon Valley CEO, and a private venture investor. Earlier in his career, at Charles Schwab, he led the team that pioneered electronic brokerage. Subsequently, he was a strategic advisor/consultant to top management at Goldman Sachs and JP Morgan and led the firm that developed GS Worldwide equity research service and JP Morgan Advisor Edge service.

Aurora Cannabis — Adds Chitwant Kohli to Board. Kohli joins the Board following a 29 year career as a senior financial executive with significant experience in finance, strategic planning, real estate, and operations. After 29 years of service at Royal Bank of Canada (RBC) where he enhanced the company's industry leading position, Kohli retired as SVP of Enterprise Operations and Payments.

SLANG Worldwide — Eliminates Chief Revenue Officer position. The decision comes as a result of the steps taken to restructure the sales and marketing departments, as the Company furthers its efforts to improve operational efficiencies, drive future revenues, and reduce capital expenditures. Hilal Tabsh joined in June 2021 after a stint as SVP at BellRock Brands.

Grassdoor — DTC Marketing Manager. Feel Free to reach out directly to Nicole Klein if you or someone you know is interested.

🎙️ Interviews

Meet Dutchie, The Shopify Wannabe Of Cannabis, Forbes

MedMen Founder Adam Bierman, Investing in Cannabis

Nabis Co-CEO, Hall of Flowers

“A beverage is also about 1,000 times less weight-efficient than a concentrate, which to me means that it needs to offer 1,000 times better experience in order to be worthwhile. This is a hurdle that needs to be overcome to achieve true success. I love the people behind many of the leading brands in this sector, but they are probably 3 years away from the boom.”

Happi President, Lisa Hurwitz, Fyllo Podcast. Lisa discusses her career transition from one of the country's largest MSOs and building a cannabis beverage brand from the ground up.

Flowhub Aims to Be the Square of Cannabis

Springbig CEO, NCV

How StateHouse is planning to cover the California Cannabis Market

What Emerald X’s $120M acquisition of MJBizDaily means for future of Cannabis industry

Hirsh Jain, Ananda Strategy, breaks down the California Cannabis market for 2022

Humble & Fume Begins to Build its California Supply Chain

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