🌿 Industry

*Note: Gray shading denotes 15 largest counties in Missouri (75,000+ population).*

Missouri ends February with $102.9M in Cannabis Sales. $71.7M for adult use and $31.2M being for medical use (~25 days of sales as the first day of sale was 2/3). Hirsh Jain, CEO, Ananda Strategy, predicted before adult-use sales kicked off that the market could match or exceed Illinois sales at some point in the near future, he told me that March should probably end around $125M given the shorter month in February. This would put Missouri at a $1.5B annualized run-rate (Illinois sales were at ~$1.5B for 2022), in a state with half the population (6.2M vs. 12.7M). Only California ($334.9M) and Arizona ($109.8M) performed better in the first month of adult-use sales.

New York to double number of retail cannabis dispensary licenses. The New York state Cannabis Control Board and the Office of Cannabis Management (OCM) will double the number of adult-use licenses in the state from 150 to 300. The office received ~900 applications for licenses and have issued 66 provisional ones. OCM will make recommendations in April to the board on the majority of the remaining applications in the areas of the state not impacted by a court-ordered injunction. The licenses will increase proportionally in each region of the state (i.e. Brooklyn from 19 to 38, Manhattan from 22 to 44, Queens from 16 to 32).

Opinion on New York Cannabis from NY Cannabis Insider Editor Brad Racino:

Brad Racino @bradracino

Here's an unsolicited thread of how things are going in NY cannabis: 1. At this point, there should have been at least 60 CAURD stores open across NYS, according to @GovKathyHochul. There are four, and only one of them is a justice-involved licensee.

Patient sues Arkansas medical marijuana growers, lab over alleged THC inflation. A new civil lawsuit accuses Arkansas’ largest cannabis testing lab of conspiring with medical marijuana cultivators to inflate the amount of THC in certain products. Cultivators BOLD Team, Osage Creek Cultivation and Natural State Medicinals as well as Steep Hill testing lab are named in the litigation. The complaint points to third-party test results and statistical analysis to raise questions about Steep Hill’s test results, which are printed on individual products sold at dispensaries. The suit alleges that Steep Hill inflates the amount of THC in the cultivators’ cannabis products, and in return, the cultivators have an incentive to use Steep Hill’s lab.

January Cannabis Sales Slip. According to BDSA, cannabis sales decreased 7.0% sequentially in January after increasing 5.3% in December. In total, BDSA estimates that sales across the 11 markets that the company tracks totaled $1.6B for the month.

Florida declined (3.1%) to $200.1M, but is up 31.4% from a year ago
Illinois slightly lower at $154.9M, down (11.6%) M/M and up 5.4% Y/Y. The state reported January sales of $127.9M (down from $143.9M in December but up from $117.3M in January 2022) so not sure where the discrepancy is
Maryland down (7.3%) sequentially and down (13.7%) from a year ago to $38.0M
Massachusetts down 9.4% sequentially, up 3.1% from $139.9M Y/Y
Michigan was down (6.5%) M/M to $207.3M but up 36.8% Y/Y
Pennsylvania fell 3.3% M/M to $91.0M but up 11.3% Y/Y
Arizona down 2.8% M/M to $105.6M and up 3.4% Y/Y
California down 9.1% M/M to $380M and down (15.2%) Y/Y
Colorado down 3.3% M/M to $134.5M, down 11% Y/Y
Nevada up 0.4% M/M to $61.0M, down (21.1%) Y/Y
Oregon down (4.8%) M/M to $75.5M and down (9.8%) Y/Y

💵 Deals

Chicago Atlantic Real Estate Finance Amends its Revolving Credit Facility to Extend Maturity to December 2024. The Revolving Loan bears interest at the Prime Rate plus an Applicable Margin, based upon Chicago Atlantic Lincoln’s leverage ratio. The Applicable Margin ranges from 0% to 1.25% over the Prime Rate, subject to a 3.25% Prime Rate floor. Based on Chicago Atlantic’s current leverage, the pricing is equal to the Prime Rate.

BGP Acquisition Corp. completes Qualifying Transaction Craft Global. Concurrent with the closing of the Qualifying Transaction, the Corporation changed its name to CRAFT 1861 Global Holdings Inc. Through its exclusive long-term strategic licensing rights partnerships for all cannabinoids with leading global organizations including the World Boxing Council, Moto GP, Maserati Venturi/Formula E, and Premier League football teams, Craft Global aims to capture what management believes is a once-in-a-generation opportunity to build the first globally recognized and trusted CBD brand. Prior to Closing, Craft Global entered into an amending agreement to its line of credit agreement and line of credit promissory note dated October 22, 2022 with Brott Ltd., which provides an additional $900M to Craft Global on the same terms and conditions as the original facility, for total availability of $1B, which, together with the proceeds of the recently closed $100M private placement, will be used to fund Craft Global's ongoing operations and working capital needs.

Cansortium (Fluent) closes $3M Private Placement. The Company closed a non-brokered private placement offering of 30,000,000 units of the Company at a price of $0.10 per Unit for aggregate gross proceeds of $3M. Each Unit is comprised of one common share and one-half of one common share purchase warrant, which entitles the holder to purchase one share at an exercise price of $0.15/Share for a period of 36 months.

Atlas Global Signs Exclusive Partnership with Snoop Dogg to Launch Cannabis Brands Internationally. The Company entered into an exclusive international licensing agreement with Calvin Broadus Jr. a.k.a “Snoop Dogg”. The Agreement, which lasts up to five years, grants Atlas Global the exclusive right to use the Artist’s name, likeness, logos, trademarks or other approved intellectual property to produce, package, manufacture, distribute, sell, advertise, promote and market cannabis flowers, pre-rolls, concentrates, oils and edibles, and personal vaporizers for medical purposes in Germany, Israel, and Australia and recreational purposes in Canada.

📄 Company Updates / Earnings

GTI — Q4 and Full Year 2022 Results.

Q4 ended December 31, 2022:

Revenue of $259M, up 6% year-over-year and decreased 1% sequentially
Cash flow from operations of $70M
GAAP net loss of ($51M) or ($0.22) per basic and diluted share; Adjusted net income of $12M or adjusted basic and diluted earnings per share of $0.05, excluding non-cash impairment charges.
Adjusted Operating EBITDA of $81M (31% margin)
Cash of $178M, debt of $275.7M

Year ended December 31, 2022:

Revenue of $1B, up 14% Y/Y
Cash flow from operations of $159M
GAAP net income of $12M or $0.05 per basic and diluted share, Adjusted net income of $75M or adjusted basic and diluted earnings per share of $0.32, excluding non-cash impairment charges recognized in Q4
Adjusted Operating EBITDA of $311M (31% margin)

RIV Capital — FY Q3 2023 Financial Results. $1.9M Net Revenue (41.5% GM), ($9.9M Net Loss). The Company ended December 21, 2022 with $125.6M of cash.

MariMed — Q4 and Full Year 2022 Financial Results.

Q4 ended December 31, 2022:

Revenue of $35.8M (44% GM)
Adjusted EBITDA of $4.5M (12.5% margin)
$9.7M cash, $29.7M debt

Year ended December 31, 2022:

Revenue of $134.0M (48% GM)
Adjusted EBITDA of $32.4M (24% margin)
2023 Guidance: Revenue of $150M+, GM in line with 2022, Adjusted EBITDA of $35M+, Capital expenditures of $30M. In 2023, the Company anticipates opening four new dispensaries; one each in Ohio and Illinois, and two in Massachusetts. The Company also anticipates opening new wholesale facilities in both Illinois and Missouri.

Olla shuts down. The founders shared an epilogue explaining that they “failed to establish a viable business model. Simply put - the costs associated with providing this product to our customers outweighed the price the market was willing to bear.” The company was started in 2018 and had facilitated over $1 billion in online orders.

Pelorus Equity Group — Q4 Full Year 2022 Financial Results. The fund recorded two new originations in Q4, for a total value of $63M ($45.5M with TerrAscend), taking the total portfolio of loan commitments from $301M to $372M. The Pelorus Fund completed 2022 with a 10.52% net annualized internal rate of return (IRR).

Glass House Brands plans to retrofit an additional greenhouse to expand production, targeting an incremental one million square feet capable of producing 250,000 pounds of high quality sun grown cannabis annually. Commercial cultivation to begin by the end of 2023. This expansion plan follows the completion of the company's Phase I SoCal Farm expansion in 2022. Glass House cited this as a good time to bring on additional capacity given challenges its cultivation competitors are facing (51% non-renewal rate of cultivation licenses in February).

🏬 Retail

Curaleaf Begin Adult-Use Cannabis Sales in Hartford, CT. In January, Curaleaf began adult-use cannabis sales at its Stamford location. The Company currently serves medical patients at two of its other Connecticut dispensaries in Milford and Groton, and anticipates welcoming adult-use customers at additional locations in the future, pending regulatory approvals.

Trulieve opens Medical Cannabis Dispensary in Beckley, WV. Trulieve operates medical dispensaries across West Virginia in Belle, Huntington, Hurricane, Milton, Parkersburg, South Charleston, Weston, and two locations in Morgantown.

Verano Opens MÜV Winter Springs, FL. This is the Company’s 66th Florida Location and 125th Retail Location Nationwide. MÜV is the first medical cannabis dispensary in Winter Springs, a city with a population of over 38,000 while the location sees average daily traffic count of 34,000 vehicles.

Cresco Labs Opens Sunnyside Dispensary Opening in South Orlando, FL. The new store is the Company’s 26^thdispensary in the state and 61^stnationwide.

🌱 Product

BLAZE Cannabis Retail Software Announces Launch of E-Commerce Solution, BLAZE ECOM™. BLAZE ECOM allows dispensaries to provide their customers with the option to prepay for online orders and choose between pickup or delivery. BLAZE ECOM is a native e-commerce technology that indexes retailer product menus, improving retail sites' SEO and driving more organic traffic.

MAKR House partners with Four Leading Black-owned Brands to Launch ‘Black in Business Box’ across select California Dispensaries. The box features an exclusive, curated selection of prime cannabis products from, Dose Of Saucy, Queen Mary, Farmer Don, SF Roots and Landrace Origins, the first specialty coffee brand offering unique pairing suggestions matching tasting notes of coffee to full cannabis flower. The limited edition box is on sale now at all 7 Embarc dispensary.

Flower by Edie Parker Partners with Ascend Wellness, Curio Wellness and Buckeye Relief to Expand Cannabis Line to NJ, MD, MO and OH. Flower by Edie Parker first partnered with Ascend Wellness in 2021 to introduce the brand to consumers across Illinois and Massachusetts. The latest expansion of this partnership will launch Flower By Edie Parker's "Main Squeeze" 1g pre-rolls and the BOMA disposable 0.5g vape pen in both existing markets. Additionally, the partnership with Ascend Wellness will introduce a collection of the company's products across New Jersey, including the BOMA disposable 0.5 vape pen, "Main Squeeze" 1g pre-rolls and "Best Buds" twin pack 0.5g pre-rolls. Flower By Edie Parker's partnership with Curio Wellness will establish the brand's presence in Maryland and Missouri. Maryland will offer a wide array of the brand's products, including the "Best Buds" twin pack 0.5g pre-rolls, "Lil Edie's" five-pack 0.5g pre-rolls, and eighth ounce jar "Flower Pots." With the launch of adult use, the offering will expand to include Flower By Edie Parker's BOMA disposable 0.5g vape pen and 0.8g 510 thread cartridges. Buckeye Relief's partnership with Flower by Edie Parker will launch the brand's collection in dispensary locations across Ohio. Products available will include the BOMA disposable 0.5g vape pen and 0.8g 510-thread cartridge.

StateHouse Launches Dime BagLiquid Diamond Infused Pre-Rolls. The new liquid diamond pre-rolls are available across all of the Company's 14 dispensaries, and in the California wholesale market. Liquid diamonds are developed through a process where whole nug cannabis is flash frozen, live resin is extracted and then converted to THCa as it begins to crystallize. These crystals (diamonds) are then melted down into its active form to liquid THC. THCa diamonds contain ~96-99% pure THCa.

Veteran-Owned American Weed Co. Joins Petalfast’s California Portfolio. Inspired by the legendary military units of World War II, American Weed Co.’s one-of-a-kind product offerings include indica-leaning Bombed Buzz, sativa-leaning Devil’s Dawn, Rockets pre-rolls, and a first-to-market CBN sleep joint Armored Angel. Unique in the industry, the company’s product lineup uses all natural “terpene stacking” to ensure their branded flower and pre-rolls taste, smell and have the same efficacy every time.

TILT Holdings Enters into Licensing Agreement to Bring Thredz™, A New Stackable 510 Cartridge, to Market Through Subsidiary Jupiter Research. Thredz is a unique adaptation of a 510 cartridge, enabling consumers to connect two cartridges in series to create a custom blend of oils drawn from the cartridges simultaneously. The stackable design of Thredz will allow for brands to diversify the vaporization experience while giving consumers the ability to personalize oil combinations. Thredz cartridges will integrate with existing 510 cartridges and power supplies.

🧔 People

RIV Capital CEO, Mark Sims, Departs. The Board has appointed COO Mike Totzke as interim CEO, and the Board will conduct a comprehensive search for a new CEO. Totzke has been with the Company since June 2022. Pursuant to its investor rights agreement with the Company, Hawthorne is entitled to fill the Board seat formerly held by Sims and has initiated a selection process to fill that seat.

MariMed appoints Edward Gildea as Chairman and Jon Levine as CEO. Gildea has served as an independent director of the Company since 2013. Levine, Co-Founder and President, has served as interim CEO since the December passing of Co-Founder, Chairman, and CEO Bob Fireman.

Natura’s Ori Bytton Lists L.A. Mansion for $38M. Bytton estimates he spent around $100,000 to ventilate the basement-level room for a Custom Smoking Room. He acquired the Bel-Air site for $1.775M in in 2014, and said he intended to build a house there for himself and his family, starting construction in October 2018. The ~13,600 sq ft house was finished in the past few weeks. The family never moved in, however, because they relocated to the Sacramento, where Natura has a large cannabis production campus.

🎙️ Interviews

Erykah Badu Talks Cannabis Line ‘That Badu’ with Cookies | Forbes

Erykah Badu's Doula Work Inspired Her Entry Into The Cannabis World | Essence

Aurora Cannabis “transformation” offers lessons for rivals | MJBizDaily

Cannabis legalization in Missouri | Chillinois

👋 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.

Highly Objective

🧾 $102.9M in February sales for Missouri