🗳️ Biden Doesn’t Plan Any Cannabis Policy Moves Ahead Of Midterms
Ascend Wellness CEO Abner Kurtin charged with battery. Green Check Verified acquires PayQwick. Verano completes acquisition of Sierra Well (NV). Glass House Brands closes NHC acquisitions.
👥 Look forward to seeing readers/friends at the Benzinga Cannabis Capital Conference next week. If you didn’t see my last post but happen to be in Chicago by Monday evening—let me know.
Biden Doesn’t Plan Any Marijuana Moves Ahead Of Midterms. The White House suggested on Friday that President Joe Biden will not be making any marijuana policy moves ahead of the midterm elections, with the press secretary saying that “I don’t have anything else to share in the upcoming weeks” when she was asked about other Democrats’ push for cannabis action by the administration. Jean-Pierre acknowledged that questions about Biden’s plans for cannabis policy have routinely come up in press briefings and then reiterated that his position remains the same: leave adult-use legalization to the states, reschedule marijuana, federally decriminalize the plant and expunge prior records. However, while marijuana reform is a strongly popular issue, especially among Democrats, she implied that he didn’t plan to leverage reform before the election that’s less than 10 weeks away.
Why weed companies can't make any money. An analysis by POLITICO of financial filings from two dozen of the largest publicly traded U.S. operators shows that they collectively lost more than $550M in the first six months of this year on revenues of nearly $4.5B. Arguably the biggest barrier to making money is the sky-high taxes weed companies pay because they’re treated like illegal narcotics traffickers under the federal tax code. The goods also cannot cross state lines, and that lack of interstate commerce means companies must build separate farms, factories and stores in each state where they do business and navigate a rapidly evolving patchwork of state regulations. Finally, raising capital is extremely expensive due to a dearth of financing options, an issue both Republicans and Democrats in Congress recognize but have yet to address. Another factor exacerbating the current financial malaise: Companies spent heavily last year to expand capacity due to misguided optimism about the prospects for loosening federal marijuana restrictions after Democrats won control of Congress and the White House. That’s led to a glut of product and plunging prices in many of the largest state markets like California, Colorado, Michigan and Massachusetts. Those struggles are being compounded by inflation and an illicit marijuana market that remains robust in many states. The end result is that weed companies are in a deep financial funk.
Headset August 2022 Cannabis Market Overview. Headset has released data for six key metrics (total sales, Y/Y sales growth, average item price, average basket size, median store SKU count, and median store like-store-sales-growth MoM) for the previously completed month (August 2022).
Rival cannabis trade associations NCIA, USCC underscore industry rift. A rivalry has emerged between the two largest trade associations in the cannabis industry. On one side, the legacy group, the National Cannabis Industry Association (NCIA), counts more than 1,000 members—this after losing roughly 200 since the pandemic began as well as dropping its annual trade show. The NCIA, which was founded in 2010, calls itself the “oldest” and “most inclusive” cannabis trade association. Its members include small and medium-sized businesses. The NCIA, founded in 2010, calls itself the “oldest” and “most inclusive” cannabis trade association. Its members include small and medium-sized businesses. The U.S. Cannabis Council (USCC), which includes on its roster of around 50 members some of the biggest operators in the country as well as large Canadian producers.
Cannabis producer Tilray news release ‘not correct,’ German lawmaker says. German government officials are questioning the veracity of some key facts in a recent news release by cannabis producer Tilray Brands, telling MJBizDaily their meeting with Tilray representatives was “a one-time conversation” and “not part of the preparatory phase” of marijuana legalization. Tilray, said in a news release dated Sept. 6 it held a “policy roundtable” with German officials on adult-use cannabis legalization, including: Burkhard Blienert, commissioner on narcotic drugs at the Federal Ministry of Health. Kristine Lütke, member of the Bundestag and drug policy spokesperson. Carlos Kasper, Bundestag member and part of the Finance Committee. Martina Stamm-Fibich, Bundestag member and part of the Health Committee.
Green Check Verified — Acquires PayQwick to Power the Cannabis Financial Ecosystem. Green Check Verified (GCV), a fintech provider of compliant cannabis solutions and services to financial institutions, has acquired PayQwick, which has been successfully servicing underbanked cannabis businesses with payments and lending since 2015. The combined entity will serve over 3,000 cannabis operators, over 120 banks and credit unions in 38 states. Together, processing and certifying more than that $4 billion annually, representing over 15% of the US cannabis industry.
Verano — Completes Acquisition of Sierra Well, Bolstering Nevada Footprint with Addition of Two Operating Dispensaries and an Active Cultivation Facility. The acquisition, which was previously announced on July 26, 2021, increases Verano’s vertically-integrated Nevada operations to five active dispensaries and two cultivation and production facilities that are geographically spread across the state’s key population and tourist regions. With the closing of the transaction, Verano’s active operations span 13 states, comprised of 116 dispensaries and 14 cultivation and processing facilities with more than 1 million square feet of cultivation capacity.
Glass House Brands — Closes Grover Beach and Lemoore Natural Healing Center Dispensary Acquisitions. On May 12, 2022, Glass House announced that it had executed definitive agreements to acquire 100% of the equity interests in three Natural Healing Center retail assets: two operating retail dispensaries (Lemoore and Morro Bay) and one retail dispensary (Turlock) scheduled to open in Q4 2022. This was followed by the announcement on August 11, 2022 that Glass House had agreed to acquire Natural Healing Center's flagship Grover Beach operating dispensary for $15.9M ($8.1M of the purchase price in assumed debt, $7.7M in stock and $100K in cash net of working capital. The Grover Beach store is the crown jewel of NHC's dispensary portfolio and netted $16M in revenues in 2021 (one of only four dispensaries in Grover Beach).
Cresco Labs — Closes $45M Sale-and-Leaseback with Aventine Property Group for Brookville, PA Facility. The Brookville, PA property includes approximately 135,000 square feet of existing cultivation, manufacturing, and production capacity. This sale marks Cresco Labs’ first sale-leaseback transaction with Aventine. Concurrent with the closing of the sale, Cresco Yeltrah, LLC, a subsidiary of Cresco Labs, entered into a long-term, triple-net lease agreement with Aventine regarding the property and Cresco Yeltrah will continue to operate the facility as the permitted cannabis cultivation and processing facility, as it has since 2017.
📄 Company Updates / Earnings
Ascend Wellness Holdings — Provides Management Update. AWH announced that the Company is aware of allegations against CEO, Chairman, and Founder Abner Kurtin regarding a domestic-related misdemeanor. The independent members of the Company's Board of Directors, through its Compensation and Corporate Governance Committee, are conducting an investigation of the matter with the assistance of independent legal counsel, Goodwin Procter. Kurtin was arrested in Miami-Dade County, after which he was charged with battery and released on a $1,500 bond. The stock opened at $2.50 on Tuesday and closed today at $2.00.
Jushi — Files Restated Q1 2022 Financial Statements. The Company restated the (i) Right-of use assets - finance leases and Accrued expenses and other current liabilities in the unaudited interim condensed consolidated balance sheet and (ii) cash flows from operating, investing and financing activities in the unaudited interim condensed consolidated statements of cash flows. These errors did not impact the cash balance as of March 31, 2022, and there was no net change in cash flows.
Icanic Brands — Q2 2022 Financial Results. Revenue of $8.1M for the three months ended and $15.5M for the six months ended June 30th, 2022, representing an increase in Icanic Brands year over year revenue of 26.5% and 84.9% respectively. Gross Profit of $2.7M for the three months ended and $5.7M for the six months ended June 30th, 2022. Gross Margin of 33.1% for the three months ended and 37.0% for the six months ended June 30th, 2022, representing an increase in Icanic Brands year over year gross margin of 13.8% and 16.4% respectively. Adjusted EBITDA of ($31,801) for the three months ended and $1.6M for the six months ended June 30, 2022.
🏬 Retail / Cultivation / Distribution
Mint Cannabis — Brings first 24-hour dispensary to Arizona. Mint Cannabis will soon be the first dispensary in Arizona, and one of a handful of dispensaries in the country, to have the ability to offer 24-hour service, 365 days per year to those 21 and older. The Mint will operate 24-hours a day at this location on Thursdays, Fridays, and Saturdays as a starting point and may expand the extended hours to additional days of the week based on demand. The Mint’s Guadalupe dispensary is not only the largest in the state, but it is also the third-largest in the nation. In 2018, the popular cannabis operator introduced the nation’s first full-service cannabis kitchen of its kind, which creates a variety of freshly prepared infused foods—from pizza and wings to brownies and wedding cakes—that are consumed off site. With more than 262 employees at its Guadalupe, Phoenix and Mesa locations, the Mint is poised to open two additional dispensaries in Phoenix within the year, in addition to new cultivation and dispensary locations in Nevada, Missouri, Massachusetts and Illinois.
Ayr Wellness — Partner Wins Provisional Cultivation License in Connecticut. Connecticut Cultivation Solutions, an entity co-owned by Tiana Hercules Esq., a Hartford City Councilwoman, and Ayr, has been awarded a provisional Disproportionately Impacted Area (DIA) cultivator license in Connecticut. Ayr has partnered with Hercules to bring its cultivation experience, knowledge and access to capital. The Company owns a minority stake in Connecticut Cultivation Solutions.
Verano — Opens Zen Leaf New Kensington, the Company’s 15th affiliated Pennsylvania Dispensary and 117th Location Nationwide. Zen Leaf New Kensington is the Company’s 15th affiliated Pennsylvania dispensary and fifth location in the greater Pittsburgh area, joining existing storefronts in Monroeville, Cranberry, Pittsburgh-Robinson and Washington. Zen Leaf New Kensington is located at a thoroughfare that sees an average daily traffic count of 28,000 vehicles.
Schwazze — Opens Star Buds Dispensary in Glendale, CO. The dispensary has undergone extensive remodeling this summer following the acquisition of Smoking Gun in December 2021. The acquisition and rebrand under the Star Buds name are part of an aggressive expansion plan in Colorado led by Schwazze, which has grown the total number of Colorado dispensaries to 23 statewide.
Humble & Fume x Cookies — Exclusive sales and distribution deal. The deal is a continuation of Humble’s ongoing commitment to expansion efforts and will help Cookies products scale throughout California. Humble will distribute all products marketed and sold under the Cookies brand name in California along with any new consumer-branded cannabis products. Sales and marketing support will include multi-channel advertising, promotional activities and the stewardship of a focused brand ambassador team.
Jushi — Debuts Cannabis-Infused Chocolates by Tasteology.
The debut of the Company's latest product line, which has been handcrafted by Jushi’s Director of Manufacturing and Bravo’s Top Chef: Just Desserts finalist, Matt Petersen, in concert with Jushi’s product development team, marks the Company’s entrance into the cannabis-infused chocolates market. Artfully crafted from 100% gourmet chocolate made with responsibly sourced cocoa beans from gourmet French chocolatier, Valrhona, Tasteology Chocolates are currently available in three flavors: Milk Chocolate, Dark Chocolate and Strawberry Blonde Chocolate. These 18-piece bars, which are easily separable for accurate dosing, contain 90mg of THC per bar [5mg per piece].
Veritas — Brings Cannabis 'Four-Packs' to Colorado.
Veritas launched a build-your-own four-pack of eighths of flower, equating it to your own mix and match half-ounce of product. The promotion, which is currently available at more than 200 dispensaries across Colorado and runs through September 18, allows consumers to select three different eighths of flower while receiving the fourth eighth for only 10 cents.
Flowhub — Laid off ~15% of employees this summer. Cannabis tech startup Flowhub has laid off about a dozen employees—or roughly 15% of its workforce, Insider has learned. The layoffs, which occurred in June and early July, were concentrated on the operations side of the company, including employees that worked in sales, partnerships, and customer service, three former employees with knowledge of the layoffs told Insider. The employees requested anonymity to protect future job opportunities in a closely-knit industry. The people told Insider the layoffs were a result of slowing legal cannabis sales in states like Colorado and California, the competitive environment for cannabis tech startups, and the challenging fundraising environment for tech startups more generally.
MariMed — Appoints Jon Levine as President. Levine co-founded MariMed with CEO Bob Fireman over a decade ago. In May, the Company added Susan Villare as CFO, while elevating Levine to Chief Administration Officer.
Icanic Brands — Appoints Micah Anderson as CEO. Anderson founded and is the CEO of LEEF Holdings, which was acquired by Icanic on April 21, 2022. In conjunction with Anderson's appointment, Brandon Kou, the Company's current CEO has resigned from his position and will continue to be a member of the Board.
SC Labs — Adds Hirsh Jain to its Board of Directors. Jain is the founder of Ananda Strategy, a consultancy that serves cannabis brands and retailers across the country, guiding their expansion strategy and competitive licensing efforts. Jain also serves as the Chair of the Los Angeles Cannabis Chamber of Commerce, Vice Chair of the California Cannabis Chamber of Commerce, and the board of California NORML.
RIV Capital — Independent Proxy Advisory Firm Glass Lewis Endorses Board of Directors. Glass Lewis has recommended that RIV Capital shareholders vote for all seven of the Company's board of directors nominees—Laura Curran, Chris Hagedorn, Richard Mavrinac, Joseph Mimran, Amy Peckham, Mark Sims and Dawn Sweeney.
Raids on black market cannabis farms uncover human trafficking victims
A talk with the CEO of Green Sentry about taking over MedMen and the backstory of Sunburn Cannabis — Orlando Weekly
👋 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.