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🐳 $359,130 in sales on day 1 of adult-use sales in Connecticut (7 dispensaries)
Apps for more medical dispensaries open in TX. BLAZE acquires Tymber. Akerna divests 365 Cannabis for $2.8M. Trulieve Chief Accounting Officer resigns. Humble & Fume CEO resigns.
In the “Deals” section, expect M&A announcements to continue, however, those deals will mainly be smaller acquisitions (often where the transaction value is not disclosed). Larger M&A transactions will be limited with lack of substantial cash from Buyers and publicly-traded companies near 52-week lows. We should continue to see smaller companies get acquired (such as BLAZE acquiring Tymber) as financings are harder to come by and companies need to find operational efficiencies to survive and thrive at a later date.
Launch of Adult-Use Cannabis Sales in Connecticut on January 10th.
The locations included Affinity Health & Wellness in New Haven, Rise in Branford, The Botanist in Montville, Fine Fettle in Newington, Stamford and Willimantic, and Willow Brook Wellness by Zen Leaf in Meriden. The Department of Consumer Protection said the first day of sales resulted in $359,130 in revenue for the seven recreational dispensaries that were open (another two were licensed but not ready to open on January 10th).
Applications open for more medical cannabis dispensaries in Texas. The Texas public safety department is starting a business license application process to add more medical cannabis dispensaries to the state’s limited MMJ program. The state’s Department of Public Safety said Monday the business license application window will remain open until April 28th. The agency has not said how many licenses it will approve, only that the decision on the timing for adding licenses would not be made until this summer. Only three MMJ dispensaries, all in central Texas, have been licensed in Texas in the past three years.
Cannabis MSOs Are Refinancing At Higher Costs. Even top MSOs are feeling the impact of the demand and supply capital imbalance faced by the cannabis industry, says Cantor Fitzgerald's Pablo Zuanic, who noted that refinancings are being undertaken at higher than normal costs where debt was either equitized with the resulting dilution, or terms were extended at higher rates with potential dilution. He pointed out three examples—Verano refinancing its $350M debt due in April 2023 (8%) at a 12.75% variable rate (now 14%) to extend maturity to October 2026, Jushi refinancing its $75M of debt at 200bps higher cost and issued 17M warrants (on a share count base of ~197M), and TerrAscend converting C$125.5M in debt to 24.6M exchangeable shares at C$5.10/share (1.7x the closing price at the time), and 22.5M common share purchase warrants to acquire common shares of TRSSF at C$6.07/share.
Nevada's Cannabis Market Contracted in 2022. [Note: I worked on this Nevada Deep Dive with Headset]. Nevada has officially joined the list of legacy cannabis markets facing double-digit sales slumps. A report by data firm Headset posits that the state has likely reached its peak of consumer demand as overcrowded markets cool down from the lockdowns sales boost two years ago. The report pointed to a nearly $100M drop in total revenue last year, a precipitous fall after the state posted more than $800M worth of annual sales through October 2021. The findings come as the Sliver State tees up a statewide rollout of consumption lounges after last month announcing license winners. Las Vegas sees roughly 40M tourists annually and visitor volume in 2022 rose by 27% through October, according to figures released by The Nevada Cannabis Compliance Board (CCB) and the Nevada Department of Taxation (DoT). When normalizing sales totals for population size, Nevada has the second most sales per capita behind Colorado. The (-13.1%) decline in year-over-year sales sits with and behind Washington (-13.1%), Colorado (-16.2%), and Oregon (-17%).
BLAZE acquires Tymber. Tymber is a pure-play e-commerce provider for cannabis retailers. According to BLAZE CEO Chris Violas. "Tymber differentiates itself by enabling retailers to create a unique shopping experience that showcases their brand through a growing catalog of premium e-commerce themes and by empowering the retailer with automated SEO and control of their data."
Akerna divests 365 Cannabis to 365 Holdco LLC for $2.8M. Akerna received a cash payment of $500,000 and the parties agreed to terminate an earn-out payment due and payable to the principals of 365 Holdco LLC with a deemed value of $2.3M. Akerna acquired 365 Cannabis (cannabis ERP and business management software built on Microsoft’s Dynamics 365 Business Central) in October 2021 for $17M.
SNDL Completes Acquisition of The Valens Company. SNDL has completed the previously disclosed acquisition of all of the issued and outstanding common shares of The Valens Company for total consideration of ~C$138M consisting of common shares of SNDL and assumption of Valens' C$60M non-revolving term loan facility. With ~$262.5M in net cash and no debt, SNDL will continue to have one of the strongest balance sheets in the North American cannabis industry.
LEEF Brands closes The Leaf Dispensary in Palm Desert, CA. The transaction was previously announced on September 19, 2022 and paid for through issuance of ~92.9M shares at $0.07/share. The acquisition is inclusive of the premiere dispensary located in the heart of Palm Desert, California and the delivery service that currently serves a population of over 100,000 residents and tourists.
📄 Company Updates / Earnings
Body and Mind — FY2022 (July) Results. Revenues $31.6M , up 17.6 % Y/Y. Gross profit of $ 10.9M (34.5% GM). Adjusted EBITDA Loss of ($1.4M).
Dutchie x Trym Integration. Recent price compression across many major cannabis markets has led cannabis operators to focus on optimizing yields and reducing cultivation operational expenses. The Trym and Dutchie partnership allows operators to streamline operations by leveraging cultivation management and precision agriculture functionality of Trym alongside the processing, distribution, and retail functionality of Dutchie POS.
🏬 Retail / Distribution
Jushi opens 36th Dispensary Nationwide and First Retail Location in Cincinatti, OH. This is Jushi’s first Ohio medical cannabis dispensary as well as its fifth vertically integrated state-level operation. Home to more than 200,000 residents in Clermont County, the new dispensary location is a five-minute drive from EastGate Mall and the Cincinnati Nature Center, which attracts more than 200,000 visitors annually. Jushi opened its 37th Retail Location Nationwide and Fifth Beyond Hello™ Dispensary in Arlington, Virginia. The new Metro-accessible 6,820 sq. ft. dispensary features 14 POSs and 37 parking spots.
Curaleaf serves patients at its four CT dispensaries in Stamford, Hartford, Milford and Groton, and anticipates welcoming adult-use customers in the near future, pending regulatory approvals. Curaleaf will continue to prioritize patient care for individuals registered in the state's medical marijuana program during this period of expansion. Curaleaf opened its Palm Beach Gardens (West Palm Beach, FL) Dispensary. This grows the company's retail presence grows to 56 locations in Florida and 146 nationwide.
Verano’s Zen Leaf Meriden dispensary opens for adutl use in Waterbury, CT. Verano’s Connecticut operations include CTPharma, a state-of-the-art, 217,000 sq. ft. cultivation and processing facility in Rocky Hill, and Caring Nature in Waterbury, a medical dispensary that will soon commence adult use sales under the Zen Leaf retail banner.
The Botanist (Acreage) opens in Montville, CT. The Botanist in Montville is the first Acreage dispensary to launch adult-use sales in Connecticut, with plans for their Danbury and Prime Wellness locations to launch adult-use sales later in 2023.
Fluent by Cansortium Opens 29th Dispensary in Pensacola, FL. The 2,500 sq. ft. dispensary is the company’s 32nd retail location nationwide, the Company plans to open three additional store locations in Florida in the first half of 2023.
Fair State Brewing Cooperative launches Minnesota's first cannabis co-packing distribution center exclusively for hemp-derived beverages. While Fair State Brewing Cooperative is Minnesota's first and largest beer cooperative, launching Chill State Collective involves creating a new model for cannabeverage distribution in the state. Cannabeverage distribution involves different vendors, stores, licenses and rules than beer distribution. In addition to Chill State's own hemp-derived THC beverage, six quality beverage brands signed onto the cooperative partnership with Chill State Collective, including Happi, Plift, Bent Paddle, FIND WUNDER, Offfield and Cann.
Sip Elixirs partners with Petalfast for Sales in CA & AZ. Designed to bring out enjoyable taste and desired effect, Sip’s products are created using nanoemulsion technology to allow for THC to quickly absorb, resulting in a fast and impactful high. The brand offers high-dose (100 mg THC) products at a low volume (52 mL bottles) and low cost to the consumer. Sip’s continually expanding flavor portfolio includes Hurricane (passionfruit and orange juice), Watermelon, Tropical Crush (pineapple, lime and cherry), Wild Berry, Sunset Punch, and Electric Lemon. Other Petalfast partners include AIRO Brands, Auntie Aloha, Bloom Brands, Consensus Holdings, Emerald Sun, Legion of Bloom, Wonderbrett, and Life Cannabis Co.
Rebecca L. Young, VP, Chief Accounting Officer, resigns from Trulieve. The Company named Joy Malivuk VP, Accounting. Young will continue to serve in her role through March 10, 2023 in order to allow time to transition her responsibilities.
Humble & Fume appoints current Chairman of the Board Jakob Ripshtein as CEO. He replaces Joel Toguri, who is stepping down as CEO to pursue other career opportunities. Ripshtein previously served as President of Aphria. Before that, he was President of Diageo Canada, where he oversaw significant growth, which led to him being named CFO of North America.
Todd Williams joins Schwazze as EVP, M&A and Real Estate. Williams has been acting as a Senior Advisor & Consultant for M&A and Real Estate for the past three years. Previously, Williams was VP Corporate Development at Albertsons, where he managed the acquisition of more than 1,600 operating grocery stores with more than $40B in sales and $10B in transaction value, as well as divesting 168 stores with over $3B in sales.
Tilray cutting 25% of jobs at Portugal facility. “A total of 49 jobs will be affected in the production, manufacturing, quality, quality control (laboratory), cultivation, supply chain, facilities, warehousing, logistics, procurement, and IT,” the spokesperson told MJBizDaily via an emailed statement. These changes, which are in line with Tilray’s rightsizing to meet the needs of the current economy and the state of legalization across medical and adult-use cannabis, will take place over the next three months.” according to a company spokesperson in an emailed statement to MJBizDaily.
Urban-gro appoints Jason “JT” Archer as COO. Archer was previously the Company’s EVP, Business Operations. Prior to joining urban-gro, Archer served in numerous operations and sales roles including most recently, as VP of Construction and Market Development for 4Front Ventures.
Bassam Alghanim joins The Green Organic Dutchman (TGOD) Board. He fills the vacancy left by the resignation of Tony Moschella. In the 1980s and 1990s, Alghanim managed and expanded Alghanim Industries, a multi-national conglomerate. Later, Alghanim spearheaded the acquisition of a controlling stake in Gulf Bank, becoming Chairman in 1999. After leading Gulf Bank for over nearly 10 years, during which it experienced profound growth, Alghanim moved on to hold diplomatic posts.
What's The Deal With New York Cannabis? | Cannabis Investing
Chad Bronstein, CEO, Fyllo, Chairman Carma Holding (Tyson 2.0) | The Dime
Marion Mariathasan, CEO, Simplifya | Benzinga Cannabis Insider
Rob Sechrist, President, Pelorus Equity Group | Trade to Black
👋 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.