🏦 Verano Upsizes Credit Agreement to $250M at 8.50% Interest with an Additional $100M Option

Jushi secures $100M Acquisition Facility from Sunstream at 9.5% Interest. Columbia Care becomes first to offer whole flower in NY. WYLD Becomes Carbon Neutral Company. Cronos launches CBG gummies.

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🗣️ Only one newsletter from last week given that a good amount of the industry was in Vegas and it was a light news week. Today’s newsletter should capture anything relevant from the last one (Wednesday, 10/20 — Monday, 10/25).

📢 The Denver happy hour I mentioned in a previous newsletter has been changed to Tuesday, 11/30, please fill out this form if you’re interested. We already have a good mix of executives and investors planning to join and will be capping at 50.


🌿Industry

Cannabis sales in Canada set 6th straight monthly record in August.

Spending on recreational cannabis products grew to C$357M ($290M) in August, according to newly released data by Statistics Canada, the sixth consecutive month of record sales. Just two provinces, however, accounted for most of the growth that month. Ontario and British Columbia represented 91.1% of the retail sales growth in August compared to just over half of July’s growth. Ontario’s sales rose 9.9% in August compared to the previous month, to C$139.2M. In British Columbia, consumers spent C$52.3M in the recreational market, up 7.1% over July. Quebec slipped to fourth among all provinces, with C$52.2M in sales, effectively flat compared to the month before. Quebec bans the sale of cannabis vapes and edibles. Quebec also has the slowest rollout of regulated cannabis stores among Canada’s biggest provinces.

WYLD Becomes Carbon Neutral Company. Wyld has achieved Carbon Neutrality by measuring, reducing, and offsetting the greenhouse gas emissions produced by their overall operations, and have transitioned all Wyld facilities to 100% renewable energy. Wyld chose 2020 as their carbon footprint base year and will publish the report once verified by an independent third-party. The Company estimated 2021 emissions based on gross revenue in comparison to the 2020 base year. In order to procure enough Carbon Credits to effectively offset their residual emissions, Wyld worked with South Pole to purchase an additional 30% of credits to be certain that they are covered.

Texas says popular cannabis extract, delta-8, is illegal, sending retailers scrambling. Three years after federal legislation removed the marijuana extract known as delta-8 THC from the nation's list of controlled substances, Texas health officials have put it on its own list of illegal drugs, sending a shockwave through the growing CBD retail industry across the state and making the substance, essentially, illegal. It became the top product for many dispensaries in Texas, as users say it produced the “high” effect of marijuana. The variant became popular after the 2018 Farm Bill changed the definition of “lawful marijuana extracts” and included any extract that has lower than 0.3% THC, including delta-8. Until that notice a week ago, several stores claimed the state had done nothing to notify them that delta-8 was illegal.


💵Deals

Jushi — Secures $100M 9.5% Interest Acquisition Facility from Sunstream. Jushi intends to initially draw $40M from the Acquisition Facility to fund the cash portion of the recently completed acquisition of Nature’s Remedy of Massachusetts and certain of its affiliates. Additionally, the Company will consider borrowing future amounts under the Acquisition Facility for potential strategic expansion opportunities in both its core and developing markets. After being drawn, loans issued under the Acquisition Facility will bear an interest rate of 9.5% per annum, payable quarterly, and will mature five years from the closing date. Jushi will be able to make draws under the facility for an 18-month period, and will have a two-year interest-only period before partial amortization begins on a quarterly basis. Jushi also holds the ability to increase the total commitment of the Acquisition Facility by an aggregate amount of up to $25M, subject to certain conditions of the agreement. The Acquisition Facility is secured by a first lien over certain Company assets and on a pari passu basis with current senior indebtedness on existing assets that are collateralized under Jushi’s current senior debt facility.

Verano — Upsizes Credit Agreement to $250M at 8.50% with an Additional $100M Option. The Company entered into an amendment to its existing credit agreement for additional funding of $120M with an 18-month maturity. The amendment brings the total outstanding senior secured term loans under the credit facility to $250M. The incremental credit provides non-dilutive funding of $120M, at an annual interest rate of 8.50%, with an option for an additional $100M term loan at the same non-dilutive rate. Chicago Atlantic is the lead administrative agent and collateral agent, with participation from AFC Gamma, which funded $50M of the new $120M tranche.


📄Company Updates

Curaleaf — Select Brand and Rolling Stone Expand Strategic Relationship. Curaleaf’s Select brand has reached an agreement with Rolling Stone to expand the co-branded Rolling Stone by Select line to additional markets across the US. The cannabis products that are "Made for Music" will launch in California, Arizona and Massachusetts in early 2022.

Columbia Care — First Operator to Offer Whole Flower in New York. In anticipation of the Cannabis Control Board & Office of Cannabis Management’s decision to expand medical marijuana products to include whole flower, the Company amplified its cultivation and production efforts earlier this year. Through its existing indoor cultivation and production facility in Rochester, and upcoming harvest from its Long Island greenhouse facility which recently began cultivation operations, the Company will offer several high quality, iconic whole flower strain options, beginning with Sour Kush. As one of ten existing Registered Organizations, Columbia Care intends to add an additional four medical dispensaries in New York, for a total of eight dispensaries in the state, three of which will be co-located with adult-use, pending regulatory approval. The Company will also offer flower in the coming months from its suite of brands including Seed & Strain, Classix and Triple Seven pending regulatory approval.

Ayr Wellness — Provides Final Results of Warrant Acceleration and Incentive. A total of 5.85M (91%) of the publicly-held warrants exercised were exercised for cash and received the benefit of the incentive. As a result, Ayr will add ~$49.7M in cash to its balance sheet. The remaining 9% of publicly-held warrants exercised were settled for shares on a net basis, resulting in the issuance of ~357,000 additional shares.

Red White & Bloom — Preferred Stock Shareholders to Lock-Up Over 50M Preferred Shares. Certain Company shareholders, representing over 50 million RWB Series II Preferred Shares have agreed to a non-conversion lock-up period for their Preferred Shares for a term that expires on April 24th, 2022. The Agreement shall provide for the Locked-up Shareholders to maintain their current rights as Preferred Share shareholders, including the 5% accrued dividends that form part of the Preferred Share features, as well as a change of control clause that would accelerate the conversion date in the event that there is a change of control of the Company.

GrowGeneration — Develops Accelerator Program for Social Equity & Micro Licenses. The new national Education & Training program will be the first commitment of this kind in the industry, The GrowGen Micro Cultivation program, in collaboration with H360 will begin in New Jersey, with a GrowGen commitment, of up to $500,000, to provide full scholarships for 25 Cultivation teams, that will establish Micro Grow licenses in the New Jersey Adult-Use Cannabis market. GrowGen will provide scholarships to the program, access to equipment packages and market resources to the applicants.


🏬Retail / Distribution

Trulieve — Reopening of Dispensary in Lehigh Acres and Jacksonville, FL. The location is Trulieve's 101st in the state of Florida and was formerly branded as Harvest House of Cannabis. This Lehigh Acres location joins the Company's 100 medical marijuana dispensaries statewide, including several in nearby Fort Myers, Bonita Springs, and Englewood. The Jacksonville location is Trulieve's 102nd in the state of Florida and was formerly branded as Harvest House of Cannabis.

Trulieve — Opens Harvest Dispensary in Pittsburgh. 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.

Cresco Labs — Opens Sunnyside Dispensary in Wyomissing, PA.

Wyomissing will be Cresco Labs’ fifth dispensary in Pennsylvania and 38th nationwide. The nearly 6,000 sq. foot dispensary is across from The Knitting Mills, a redevelopment mixed-use business and retail campus, and minutes away from U.S. Route 222/US 422.

Jushi — Opens 25th Retail Location Nationwide in Stroudsburg, PA. The 3,000 sq ft dispensary will carry dry leaf, concentrates, cartridges, tinctures, topicals, capsules, pills, and various ancillary products such as approved batteries and devices.

Unrivaled Brands — Signs Exclusive Distribution Agreement with Humboldt Farms. As part of the agreement, Unrivaled will be executing all sales and distribution services of Humboldt Farms branded products throughout California. Humboldt Farms Joins Korova, Sticks, Habit and FlowerShop* as a Marquee Brand in Unrivaled Distribution. The branded flower lineup includes both large and small flower available in eighths, quarters, half-ounces and ounces.

High Tide — Becomes North America’s First Cannabis Discount Club Retailer. All of High Tide’s retail cannabis stores will begin to offer steep club discounts on cannabis products in addition to existing member-only discounts on consumption accessories, as well as other exclusive benefits for members of the Cabana Club, which will remain free to join over the short-term. Members will also be given the exclusive ability to purchase items from High Tide’s catalogue of proprietary consumption accessories, which will only be available in Canada through High Tide’s retail brands, with wholesale sales of proprietary consumption accessories being discontinued in Canada in order to focus on providing value and exclusive high-quality products to Cabana Club members.


🌱Product

Cronos Group — Launches Cultured Cannabinoid Product, SPINACH FEELZ™.

As the only cannabis gummy in Canada to feature cultured cultured cannabigerol (CBG), one of many rare cannabinoids found in small quantities within the cannabis plant, this gummy is formulated to deliver a happy and relaxed experience. The Spinach™ brand’s breakthrough new platform and sub-brand, SPINACH FEELZ™, plans to produce a full line of cannabis products, which will prominently feature rare cannabinoids in a wide range of product formats, designed to deliver unique and enhanced experiences made possible through proprietary blends of rare cannabinoids alongside more common cannabinoids, like THC and CBD.

The Parent Company — Launches DELI Dimes in Three Affordable Flavors. A uniquely affordable option, each DELI Dimes pouch has a retail price of $14 and contains ten (10) sugar dusted gummies, for a total of 100mg THC per pouch. Expanding on the brand's first edible product line – DELI Nickels gummies, which launched in May of 2020 and provides double the THC in every piece, ensuring the brand can meet consumers at every stage of their cannabis journey.

Columbia Care — Partners with Pitbull to Launch N2P, A New Line of Full Spectrum CBD Wellness Products. N2P seeks to change the negative perception of CBD products and to shine a positive light on the potential of these products, which is what N2P stands for: negative to positive. The N2P product line is derived from natural, U.S.-grown hemp. The initial product offerings will feature lip balms, salves, tinctures and sour gummies. Chocolate products will be released later in 2021. N2P products will be available in select states for purchase online at www.n2pwellness.com and in select Columbia Care dispensaries in Delaware, Maryland and New York. They will also be available at The Green Solution dispensaries in Colorado later this year.


🧔People | 💻Hiring

PAX Labs — Collin Lam joins as VP Commercial Strategy. Lam previous served as Regional VP, West for Curaleaf, overseeing Retail and Wholesale across 6 states in the Western Region (AZ, CA, CO, NV, OR and UT), joining the Company through its acquisition of Cura Cannabis/Select where he was the GM for California. He has also worked at Indus and Eaze.

HEXO — Scott Cooper as President & CEO. Scott joins HEXO from Truss Beverage Co., a joint venture between Molson-Coors Canada and HEXO, where he served as President & CEO. Before his time at Truss, Scott held several senior roles at Molson-Coors, including Chief Innovation Officer, as well as Sobeys, Unilever and several other publicly traded CPG companies.

MedMen — Promotes Roz Lipsey to COO. Lipsey previously served on MedMen’s SVP, Business Operations. Prior to MedMen, Lipsey was President of a vertically integrated cannabis operation in Arizona, where she successfully scaled its cultivation, manufacturing, wholesale and retail businesses prior to its acquisition by MedMen. She also held leadership positions at family investment office Jokake Companies, Volkart/Anderson Clayton, and the Foreign Agricultural Service.

Red White & Bloom — Names Chris Ecken as CFO. Ecken brings decades of finance experience, including the last 25 in executive finance at Brown-Forman, a producer of some of the world’s most recognizable alcohol brands; including Jack Daniel’s®, Woodford Reserve® and Herradura®. Appoints Strategic Investor Colby De Zen to Board. He is one of the managing directors of the De Zen Family Office, which has deployed significant capital in the public and private sectors, including real-estate, manufacturing, technology, trucking/logistics and cannabis. Currently he serves as Vice President of Trunkeast Investments which employs over 2,000 people across numerous companies, generating in excess of $1 Billion in annualized revenue.

GrowGeneration — Appoints Becky Gebhardt as SVP Marketing and E-commerce. Prior to joining Grow Generation, Gebhardt served as the Global CMO of PopSockets, EVP, CMO of Lands' End, and VP, Creative Director at Crocs.

urban-gro — Appoints Sonia Lo to Board. Most recently, Lo was CEO of Sensei Ag – Larry Ellison and Dr. David Agus’ AgTech venture in indoor farming. During her tenure she led the acquisition of several farms across North America of varying technology types. Prior to that, she was CEO of Crop One Holdings, a vertical farming company that owns FreshBoxFarms in Millis, MA and a joint venture with Emirates Flight Catering in Dubai.


🎙️Interviews

Branding in U.S. Cannabis with Ascend Wellness, Lowell Farms, and Edie Parker

Cannabis vs. Alcohol—Robust Delivery Data Reveals Generational Gap

Dispense Co-Founder and CEO Kyla Sirni


👋 Highly Objective is curated by Dai Truong. 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.