📈 WM Holding Company (MAPS) Completes Business Combination w/ Silver Spike
Columbia Care $74.5M 6.00% Secured Convertible Notes, acquires Medicine Man. Terra Tech exits Hydrofarm investment for ~$40M. Leafly $23M / $30M raised. Trait Biosciences C$31M Series A.
Some updates on the newsletter:
Going to attempt to go daily, first attempt at doing so was this past Friday, I plan to automatically subscribe you to the daily emails unless you tell me otherwise
Connecticut lawmakers give final OK to marijuana legalization; possession would be legal July 1, retail sales targeted for May 2022. The Connecticut Senate on Thursday gave final legislative approval to a bill that allows for the cultivation and sale of marijuana in the state. The measure would allow adults 21 or older to purchase and possess up to 1.5 ounces of marijuana (or up to 5 ounces locked away at home or in a vehicle’s glove box or trunk) starting on July 1. Retail sales of recreational cannabis in Connecticut would not start until May 2022, at the earliest. Connecticut is now the 19th state plus the District of Columbia to legalize cannabis for nonmedical use. Lawmakers were tripped up over the “social equity” section, a threatened veto over an equity provision that gave preference to those previously arrested on a marijuana-related charge sent the measure back to the Senate a third time on Thursday. As the bill reads now, people from cities that have borne the brunt of the war on drugs will qualify for expedited licenses, whether or not they have a criminal record.
Detroit’s adult-use marijuana ordinance ‘likely unconstitutional,’ judge says. A judge suspended an ordinance in Detroit that would have given preference to long-term residents applying for adult-use marijuana business licenses. U.S. District Judge Bernard Friedman on Thursday granted an injunction that will temporarily halt processing of recreational cannabis applications in the city. The ordinance, as written, “gives an unfair, irrational and likely unconstitutional advantage to long-term Detroit residents over all other applicants,” Friedman wrote in an opinion. The city intended to issue as many as 75 retail licenses, 35 consumption lounge permits and 35 microbusiness licenses, with at least 50% of the licenses earmarked for so-called “Detroit Legacy” residents.
Alabama could add over $600M to its GDP in first three years of medical cannabis retail sales. Business intelligence from Akerna (Nasdaq: KERN) predicts that Alabama will make $600M in its first three years of medical retail cannabis sales. Akerna data analyzed the average retail sales history of current legal medical-only marijuana markets and then compared those figures to Alabama's population. Based on the study, Alabama is projected to retail around $48 million in its first full year of medical sales, ~$163 million in the second year, and ~$387 million in the third year of legal medical cannabis sales.
Legal Cannabis Market Projected To Reach $43 Billion By 2025.That eye-opening finding is one of several made in a new study conducted and published by top cannabis market researcher New Frontier Data. Entitled “Cannabis in the U.S. 2021 Mid-Year Market Update.” The report finds that 141 million Americans, or 43% of the adult population, reside in 18 adult-use states. And by 2025, 42% of the total annual U.S. cannabis demand is projected to be met by legal purchases in regulated marketplaces. This is a 24% jump from 2020. However, not all the findings were so rosy. The black market is still alive and thriving. For the pandemic-ruled 2020, illicit national cannabis demand and consumption were estimated to be over $65 billion.
These Ads Don't Tell You What They're Selling, and Business Is Booming. A new brand called Smarty Plants will take you down a time-sucking rabbit hole of vintage commercials, ’80s pop culture, fantasy, music and sci-fi on its colorful website, which is decorated with digital UFOs. And through its packaging, it promises “free knowledge” to anyone who scans a QR code. The “Get Smarty Plants” Instagram feed contains thought-of-the-day-style gems like “Betty White is older than sliced bread” and “Vending machines kill more people than sharks.” Meanwhile, outdoor ads show pictures of bears and kittens with taglines such as “Knowledge is happening even when it isn’t.” The content—designed to appeal to nostalgia-loving, Twitch-obsessed Rick and Morty fans everywhere—contains no description of a product or service. So, Smarty Plants is selling…what, exactly? The answer is cannabis. And the tactics aren’t without precedent in the booming industry, as THC-infused beverage Cann and luxury CBD brand Lord Jones have recently debuted their own highly stylized campaigns. And the approach is proving to be successful for Smarty Plants: It has become one of the fastest-growing flower brands since it debuted this winter in about 80 dispensaries in California.
The San Diego region is inexplicably slow on legalizing cannabis commerce. By Oregon’s ratio, San Diego County can support 570 of these retail outlets economically. And there are only 50 open. The city of San Diego has only 22 adult-use retail stores licensed by the state and open to operations. Vista has 11 and they are all medical only. The county of San Diego has several medical storefront dispensaries that are provisionally operating under a sunset clause which the county just voted to amend on Wednesday of last week. The city of Chula Vista has one adult-use store operating. North County has recently licensed a few as well, medicinal only.
BC to allow private cannabis retailers to deliver products to consumers starting July 15th. Building on changes made in 2020 that allowed stores to sell product online for pickup, the newest announcement from the BC government means consumers will be able to purchase product online from a retailer and have it delivered to them directly. Currently, the only legal way to purchase cannabis online in BC is through the BC Cannabis Store’s online portal. Orders are shipped through Canada Post, that has largely adopted a policy of not delivering cannabis directly to people’s homes, but instead directing them to pick up their packages from the BC Cannabis Store in their local postal center. The BC Cannabis Store will continue their online sales platform. Although the details are not finalized, the government also expects to begin their direct delivery program that will allow “small-scale” cannabis producers to sell directly to retailers in 2022. Small-scale is not limited to micro licenses and will also apply to cannabis nurseries.
WM Holding Company — Completes Business Combination With Silver Spike Acquisition Corp. In connection with the closing, SSPK changed its name to WM Technology, Inc. The ticker symbol for the common stock will change from “SSPK” to “MAPS” and began trading as such on the Nasdaq Stock Market on June 16, 2021. The transaction provides $579 million of gross proceeds primarily comprised of $254 million of cash from SSPK’s former trust account and $325 million of cash from a private investment in public equity (PIPE), not including transaction fees. The PIPE is anchored by investors including funds and accounts managed by AFV Partners, the Federated Hermes Kaufmann Funds and Senvest Management LLC along with a $35 million commitment from Silver Spike Capital. $125 million in proceeds will be delivered to the balance sheet of WMH as primary capital, including to pay transaction expenses and used to fund the company’s planned growth, including further scaling its cloud-based WM Business SaaS subscription offering, and growing its active user base and business listings in the U.S. and international markets. $455 million in proceeds will go to existing WMH equity holders. WMH’s executive officers have rolled 100% of their equity holdings as part of the transaction.
Columbia Care — $74.5M Private Placement Offering of 6.00% Secured Convertible Notes Due 2025. The Offering is being conducted on a "best-efforts" basis pursuant to an agency agreement entered into on June 17, 2021 between the Company and a syndicate of agents. The Notes will be senior secured obligations of the Company and will accrue interest payable semi-annually in arrears and mature on June 29, 2025, unless earlier converted, redeemed or repurchased. The conversion rate will be 154 common shares of the Company ("Common Shares") per $1,000 principal amount of Notes (equivalent to a price of ~S$6.49 per Common Share), subject to customary adjustments. The conversion price of the Notes represents a premium of ~25% over the closing price of the Common Shares on the NEO Exchange on June 17, 2021. The Company may redeem the Notes, in whole or in part, on or after June 29, 2023, if the volume weighted average price of the Common Shares trading on the Canadian Stock Exchange or the NEO Exchange for 15 of the 30 trading days immediately preceding the day on which the Company exercises its redemption right, exceeds 120% of the conversion price of the Notes.
Columbia Care — Signs Definitive Agreement to Acquire Medicine Man, a Rapidly Growing, Vertically Integrated Operator in the Denver Metro Area. Medicine Man is outperforming the broader Colorado market, with sales growth of 42 percent in 2020, versus 24 percent for the state, and 64 percent year-to-date through May, versus 25 percent for the state. The acquisition will add one cultivation facility and four dispensaries, including one co-located adult-use and medical location and three adult-use facilities to Columbia Care’s national footprint. The upfront consideration of $42.0 million, comprising $8.4 million in cash and $33.6 million in stock, represents a multiple of ~4.5x projected 2021 EBITDA. The transaction terms also include a potential additional milestone payment in 2022 if certain performance targets are met.
Terra Tech — Entered into an Agreement to Monetize its Investment in Hydrofarm, Resulting in $40M+ Gross Proceeds. The Company originally made a $5 million investment in Hydrofarm in November of 2018. With the expected sale of their investment in Hydrofarm, the Company has added ~$41M to the balance sheet in just the last month, without dilution. Additionally, the Company has a note receivable and puttable equity for ~$13M associated with the sale of two dispensaries in Nevada in early 2020. They expect to be able to monetize the note receivable and the puttable equity over the next twelve months.
Hydrofarm — Enters into Agreement to Acquire Aurora Innovations and its Organic Nutrients and Grow Media Operations for $161M. Hydrofarm will spend $161M using a combination of cash and ~$26 million in newly issued HYFM common stock. The referenced transaction consideration excludes a potential earn out payment estimated at ~$21 million based on achievement of certain performance metrics. Founded in 2000, Aurora is a family-owned business with a strong vertically integrated manufacturing base with three locations across North America. The company is dedicated to ethical and sustainable practices and offers comprehensive plant fertility product lines free from harmful chemical residues and pesticides. Aurora will add to Hydrofarm’s growing proprietary brand nutrient and grow media line-ups, including its first organic nutrient and premium soil brands. Hydrofarm will also gain new domestic manufacturing and distribution capabilities on the east and west coasts along with a peat moss harvesting operation in Canada.
Brains Bioceutical — $31.9M Raise with Lead Investor DSM Venturing. Brains Bioceutical Corp. completed a $31.9M capital raise with DSM Venturing and existing Brains shareholders. DSM Venturing, who acted as lead investor in this round, is the corporate venture arm of Royal DSM (DSM), a global, purpose led science-based company active in health, nutrition and sustainable living. Brains is one of a few companies in the world producing CBD as an Active Pharmaceutical Ingredients (API) for pharmaceutical applications, research, development, and clinical trials. It is also one of the rare few manufacturers in commercial production in Europe with EU-GMDP certification, producing CBD API for both human and veterinary use within a MHRA licensed facility. Brains’ CBD API—its primary offering to the market—contains 99.7% CBD and zero Tetrahydrocannabinol (THC).
Leafly — Raised ~$23M of $30M funding target. Leafly is raising $30 million according to a filing from Wednesday. Leafly has raised ~$23M of the total $30M offering of convertible debt in the latest fundraising from 33 investors. A Leafly spokesperson told MJBizDailythat the company would use the money to “continue to stay focused on building out our consumer marketplace” with initiatives that include “scaling in local markets and ensuring sustained brand dominance on the East Coast as legalization trends accelerate market growth.
Trait Biosciences — Btomorrow Ventures Lead C$31M Series A Financing. Trait Biosciences Inc. is a global leader in cannabinoid research, focused on developing technologies that enable the production of safe, high-quality, low cost, predictable, and efficacious CBD products. The Financing was led by Btomorrow Ventures (BTV), the corporate venturing unit of British American Tobacco (BAT), supported by Gotham Green Partners (GGP) and additional investors from Trait's earlier fundraising rounds. The new funding will accelerate the research and development necessary to commercialize Trait's proprietary 2XGLY Water Soluble Cannabinoid technology and enable Trait to underwrite R&D in an array of technologies designed to strengthen cannabinoid production practices and improve operating margins for cultivators. Trait currently has more than 90 active patent applications focused on innovative cannabinoid technology. Trait's first-to-market product enabling readily available marketplace CBD extract to be converted into a superior, clear, tasteless, and fully water-soluble cannabinoid extract is slated to launch in 2022. The company is also developing a valuable IP portfolio in biomolecular plant transformation technology designed to significantly improve minor cannabinoid productivity in plants and strengthen overall crop yield for hemp cultivators.
Acreage Holdings — Completed sale of $28.0M promissory notes receivable that it received as consideration for the sale of its Acreage Florida subsidiary to Red White and Bloom Brands (CSE: RWB) (OTCQX: RWBYF to Viridescent Realty Trust for total cash proceeds of $26.0M.
The Supreme Cannabis Company — Obtains Final Order for Arrangement with Canopy Growth Corporation
Clever Leaves —Entry into Mexican Market Through Partnership with CBD Life
TILT Holdings — Exclusive Contract to Manufacture and Distribute Old Pal in MA
Red White & Bloom Brands — Provides Update on Financial Statement Filings. As of Friday, June 11, 2021, the Company has engaged Macias Gini & O’Connell LLP (MGO) as the successor auditor to replace MNP LLP (MNP). In connection with the appointment, the Company will be concurrently filing its change of auditor package with the securities commissions to reflect the appointment of MGO as its auditor. As previously disclosed in the May 31, 2021 update, the delay in completing the filing of the Documents was due to the Company’s auditor not completing its audit procedures in advance of the filing deadline.
Fyllo — Former Catalina Executive joins as Chief Data & Analytics Officer. Wes Chaar served as Chief Data & Analytics officer at Catalina for three years, overseeing Catalina's efforts to extend their data and insights division. At Catalina, Chaar was responsible for bringing value to hundreds of millions of shoppers worldwide while increasing the efficiency, predictability and responsiveness of retailer and brand marketing initiatives. In addition to his position at Catalina, Chaar has served in various roles at Delta Air Lines, Turner / TimeWarner and Sabre Holdings. He holds a doctorate of philosophy from The University of Texas at Austin.
SLANG Worldwide — Appoints Hilal Tabsh as Chief Revenue Officer. Before joining SLANG, Tabsh worked as a SVP at BellRock Brands USA. In this role, he led sales, marketing, and distribution efforts, coupled with the development of the company's e-commerce strategy. Prior to this role, Tabsh was a Co-Founder and Partner at Limitless, a lightly caffeinated sparkling water, which was acquired by Keurig Dr. Pepper in less than three years for an undisclosed amount. Previously, Tabsh served eight years as the Head of Sales and Marketing for Red Bull North America, a subsidiary of Red Bull GmbH. In this role, he managed 152 team members and over 200 distribution partners that were key to growing the Red Bull footprint across the U.S. He also worked for seven years at Red Bull UAE, based in Dubai, United Arab Emirates, serving as Director of Sales and Marketing Strategy.
Ayr Wellness Receives Provisional License to Sell Adult-Use Cannabis at Flagship Boston Dispensary. Massachusetts Cannabis Control Commission (CCC) has granted its local partner Sira Naturals a provisional license for the sale of adult-use cannabis at its Boylston Street location in Boston. Ayr’s flagship adult-use dispensary in Boston is located at 829 Boylston Street, in the heart of Boston’s Back Bay.
Harvest Health — Lehigh Acres and North Miami Beach, FL. Additional Harvest dispensaries in Florida are located in Gainesville, Jacksonville, Kissimmee, Longwood, North Port, Olympia Heights, Tallahassee, and West Palm Beach.
Cookies — San Diego, CA (Fashion Valley).
LEMONADE — South Sacramento.
TerrAscend — launches Kind Tree branded products in Maryland. TerrAscend recently entered the Maryland market with the closing of the acquisition of HMS Health this past month. The Maryland facility is already cultivating over 15 strains of flower under the Kind Tree brand and is now launching manufactured form factors of Kind Tree vapes and half gram pre-rolls. Additional cultivation capacity, brands and formulations will come online in the second half of this year.
GABY Owned, Mankind Dispensary Announces State-Wide Launch of New Lifestyle Cannabis Brand, Kind Republic. A successful six-month soft launch of Kind Republic™ at Mankind Dispensary generated over $1.0 million in revenue at a 71% gross margin. The benefits of GABY building its proprietary brands by placing them in its dispensaries substantially increase as GABY continues to execute on its dispensary consolidation strategy across California. Manufactured and distributed by GABY owned Sonoma Pacific Distribution, Kind Republic™ products will soon be available in dispensaries across the State of California.
Sprig’s THC Beverages to be Manufactured on Tinley’s Newly Installed Canning Line in Long Beach, CA.
“I want to build a consumer packaged-good business around brands where the common denominator is cannabis. With brands, you build brand equity and consumer trust that the product has gone through stringent regulatory reviews. If you’re just buying cannabis, who knows what you’re buying?”
“Think about it like alcohol: vodka is not just vodka. There are different alcohol levels and ways to consume it, differences in how it tastes and how it goes down. It’s the same with cannabis. It’s about how it’s grown, the potency, what the flower is like. My view is, I’m not selling marijuana. I’m not selling grass. I’m selling a cannabis product.”
“I don’t envision anything different than the experience of the alcohol, beer or food industry. When legalization happened in Canada, there were more than 500 brands out there. The big guys who can afford to invest and innovate and put the right marketing behind their products will survive. There will be a medium tier, there will be some niche players, and the rest will go away.”
“In the U.S., our beer and hemp-based food businesses have about $150 million in sales, so my objective is to potentially buy other food or drink businesses and when cannabis is legal there — it’s not if, it’s when — I would parlay them into cannabis.”
What’s your personal favorite in Tilray’s product portfolio?
“I love our SweetWater beer.”
Note: My investment bank, Arlington Capital Advisors, advised on the sale of SweetWater to Aphria (Tilray)
What Happened at Canopy Growth? (ft. Chris Murray)
Ember Valley — Controller (LA)
REBUD — Retail Store Manager (LA)
WYLD — National Director of Sales (Toronto)