📰 Biden Signs Medical Marijuana Research Bill, Chatter Around SAFE Banking Passing
📰 Biden Signs Medical Marijuana Research Bill, Chatter Around SAFE Banking Passing
Dutchie co-founders out, Executive Chairman steps into CEO seat and brings former Toast colleagues along. Goodness Growth Holdings appoints Josh Rosen Interim President. Shryne Group has new CFO.
💬 Look forward to catching up with some of you at Arcview Summit in Miami
🌿 Industry
House lawmakers have delayed committee consideration of a large-scale defense bill—which advocates had hoped to see advance with marijuana reform provisions attached—amid disagreements over several key issues that have not been resolved. Advocates are closely watching to see if the National Defense Authorization Act (NDAA) will be used as a vehicle for marijuana banking, expungements and other reform legislation that bicameral and bipartisan lawmakers have been crafting. The House Rules Committee was scheduled to take up the NDAA on Monday afternoon, but Chairman Jim McGovern (D-MA) said at the start of the meeting that the “package is not ready yet,” adding that “our committee remains ready to take it up as soon as the text is finalized.” The cannabis reforms could still make it into NDAA, or be advanced through separate omnibus appropriations legislation, or even as a standalone, before the end of the year. Axios reported that a bipartisan group of senators plans to attach significant marijuana legislation to "must-pass" year-end bills.
Biden Signs Medical Marijuana Research Bill. President Joe Biden turns the Medical Marijuana Research Bill into law, changing how American scientists can do research on marijuana. As anticipated by Marijuana Moment last week, the White House announced on Friday that President Biden signed the Medical Marijuana and Cannabidiol Research Expansion Act, "which establishes a new registration process for conducting research on marijuana and for manufacturing marijuana products for research purposes and drug development." The bipartisan bill was introduced in July, quickly passed in the House in the same month, and unanimously approved by the Senate in November. Under the new law, the federal government has to ensure an adequate, uninterrupted supply of marijuana available to scientists for studies on medical marijuana. Although the new law doesn't implement more reform at the federal level, it may pave the way for new federal legislation on marijuana, such as the SAFE Banking Act, that may ease the federal restrictions on the marijuana industry.
Green Wednesday 2022 Data. Headset saw that between Wed-Fri last week, Green Wednesday had the most sales during the holiday period increasing 48% compared to a typical Wednesday in November. Friday, which is usually the highest performing sales day of a standard week, saw typical sales with a small increase of 1% on Black Friday. With Thanksgiving on Thursday we saw sales drop 65% compared to a typical Thursday.
Jane Technologies saw that nationwide, the average cart size on Green Wednesday 2022 was 8% lower than Green Wednesday 2021. Nationwide, the average store on Green Wednesday 2022 had 20% higher sales than Green Wednesday 2021. Vape Cartridges were the top selling category, beating out Flower by 20%. Flowhub showed that dispensaries offered more discounts on Green Wednesday and Black Friday compared to a typical day in 2022, but significantly fewer transactions included a discount compared to previous years. Black Friday consistently has more transactions with discounts compared to Green Wednesday.
Nevada CCB Announces List of Cannabis Consumption Lounge Prospective License Holders. 20 completed retail cannabis consumption lounge applications submitted to the CCB during the October 2022 application window. There was no competitive selection process required for the issuance of retail cannabis consumption lounge licenses. The CCB also awarded licenses to 10 independent cannabis consumption lounge social equity applicants and 10 independent cannabis consumption lounge non-social equity applicants.
N.J. cannabis panel gives initial green light to consumption lounges. Cannabis consumption lounges could be coming to New Jersey after the state’s cannabis agency approved proposed rules at its monthly meeting. The Cannabis Regulatory Commission’s proposed rules would allow any cannabis retailer to have indoor or outdoor enclosed consumption lounges. If consumption lounges are given final approval, New Jersey will join six other states that allow on-site consumption. New York’s law also allows for consumption lounges, but none currently exist or are approved.
💵 Deals
TerrAscend — Reduces Outstanding Debt by $30M. The Borrowers repaid $55.0M outstanding principal amount under the original Michigan Loan, using $30.0M of cash on hand and $25.0M through borrowing pursuant to the Amendment. Pursuant to the Amendment, the Michigan Loan bears interest on $25.0M at a per annum rate equal to the greater of (i) the U.S. "prime rate" plus 6.00%, and (ii) 13.0%. The Michigan Loan, as amended, matures on November 1, 2024. No prepayment fees are owed if the Company voluntarily prepays the loan after 18 months. The additional $30.0M incremental term loans available under the amendment have not been drawn at this time.
Aurora Cannabis — Repurchases ~$103M Principal Amount of Convertible Notes. The total cost, including accrued interest, was $73.8M in cash. Following completion of this repurchase, Aurora will have ~$110M of Notes outstanding. The purpose of the transaction, which represents a repurchase of a portion of the Notes at a 4.5% discount to par value, was to reduce the Company's debt and annual cash interest costs. Aurora has repurchased an aggregate of $235M principal amount of its convertible senior notes over the last twelve months, resulting in annual cash interest savings of $12.9M.
📄 Company Updates / Earnings
POSaBIT — Q3 2022 Financial Results. Revenue of $10.3M; Up 62% Y/Y and 26% Sequentially. Gross profit was $2.9M (28.0% margin), Adjusted EBITDA was $(290K (2.8 margin)%. Raises 2022 Gross Profit Guidance to $10.0–$10.5M, Reiterates 2022 Revenue Guidance of $37.0–$40.0M, Reiterates 2023 expectation for positive EBITDA. Cash and cash equivalents were $8.2M on September 30, 2022. POSaBIT also intregrated with Onfleet—enabling dispensaries to efficiently route and dispatch delivery orders, verify age, accept payment, and track inventory with support from Onfleet’s platform. The Company is now live with their POS in Vermont, its 21st state.
RIV Capital — Q3 2023 Financial Results. Received New York State Cannabis Control Board (CCB) and New York State Office of Cannabis Management (OCM) approval for Etain change of control request, clearing the path for the Company to complete the final closing of the previously announced acquisition of ownership and control of Etain. Entered into a lease agreement with Zephyr, a CA-based developer, for the development and operation of a planned new flagship cannabis cultivation and manufacturing facility in Buffalo, NY. $165M of cash on-hand to, among other things, support the completion of the Etain Acquisition, the expansion and development of Etain's cultivation and processing facilities, and to pursue new growth opportunities. Reported a net loss of $(142.3M), including a goodwill impairment charge of $138.9M related to the Etain Acquisition.
SLANG Worldwide — Q3 2022 Financial Results. Revenue from continuing operations was $8.2M, compared with $9.4M, representing a 13% decrease Y/Y. The primary drivers of the decrease were due to a reduction of $0.87 million in sales in our non-core markets sales, a reduction of $0.78 million in Firefly 2+ sales and a reduction of $0.29 million in Colorado Core Market sales, offset by a $0.75 million increase in revenue associated with the acquisition of High Fidelity, Inc. ("HiFi") completed on August 11, 2021. Gross profit of $3.6M (44% gross margin) in Q3 2022, compared with $3.5M (37% gross margin) in Q3 2021, up 4% Y/Y. EBITDA of ($3.4M) in Q3 2022, compared with ($5.5M) in Q3 2021$12.2M in cash and restricted cash.
Red White & Bloom — Q3 2022 Financial Results. Revenue for Q3 2022 was $25.5M, up 128% Y/Y. Revenue for the nine months ended September 30, 2022, was $80.9M, up 133% Y/Y. Gross profit before fair value adjustments for biological assets for Q3 was $9.6M, up 65% Y/Y and up 102% sequentially from 2022-Q2. Positive Adjusted EBITDA of $3.3M for Q3. Completed a comprehensive debt restructuring improving its near-term liquidity by over $100M.
🏬 Retail
Ayr Wellness — Three New Jersey Retail Locations Now Operating as AYR (formerly known as Garden State Dispensary). Since acquiring Garden State Dispensary in September 2021, Ayr has made significant progress in elevating key facets of the business, including improvements to the menu and overall retail experience. 2022 has been a pivotal year for the Company in New Jersey, as it opened a large-scale cultivation expansion, launched adult-use sales at its three retail locations, the maximum allowed in the state, and introduced its national brand portfolio in the wholesale market and its retail stores. Ayr’s three New Jersey dispensaries are in Woodbridge, Union, and Eatontown, all within Central New Jersey, a region of 3.4M people. Ayr also started Adult-Use Sales at its Somerville, MA Location.
TerrAscend x Cookies — Opens Jackson, MI Location. The dispensary will be operated by Gage through a partnership with Cookies, and is the fourth location under this agreement. In addition to the new Cookies provisioning center, Gage has dedicated significant shelf space to the display and sale of Cookies products at their Gage locations in Adrian, Burton, Battle Creek, Ferndale, Grand Rapids, Kalamazoo, Lansing, and Traverse City.
Trulieve — Opens Dispensary in Hobe Sound, FL.
Schwazze — Opens 14th R.Greenleaf's Dispensaries in Los Lunas, NM. All locations serve the needs of medical patients as well as recreational adult-use consumers. R.Greenleaf has grown from 10 locations to now 14 in New Mexico since Schwazze purchased the retail banner earlier this year.
Proper Cannabis — Adds St. Louis-area dispensary, 4th in State. Proper's new dispensary, located in Bridgeton, is expected to open sometime in the next 60 days, as it's additionally only awaiting final approval from the state. The St. Louis-based medical dispensary business' newest 2,500-square-foot location is in a building formerly occupied by Bank of America. Proper already operates three medical dispensaries in the St. Louis area: a Crestwood location, a South County location and a Warrenton location.
Remedy Maryland — Opens 10,000 sq ft store in Columbia, MD. Remedy is one of the first licensed medical cannabis dispensaries in Maryland and will include a store-within-a-store concept.
🌱 Product
Wonderbrett — Joins Petalfast for Sales and Distribution and Expands to AZ. Petalfast, a route-through-market platform for the cannabis industry, announced its partnership with Wonderbrett, one of the West Coast’s most beloved cannabis brands best known for its world-renowned genetics, exotic terpene profiles and pioneering cultivation techniques. Wonderbrett joins a growing portfolio of brands represented by Petalfast throughout the state of California and nationwide. Wonderbrett also expanded to AZ with Consensus Holdings and expects to launch eighths and pre-rolls early 2023 with additional product SKU’s introduced later in the year.
LEUNE — Expands to Missouri with Stash House MO. Missouri’s medical consumers can now purchase LEUNE Pre-Rolls, All-In-One Vaporizers and Vape Cartridges in signature profiles Sol Berry, Cloud Berry, Desert Gold, Piña Dream, at licensed medical cannabis dispensary retail locations across the state of Missouri. LEUNE branded products are expected to roll out in 100 licensed medical cannabis dispensary retail locations within the first 60 days of launch.
Sunderstorm — Kanha Cannabis Gummies Brand Goes Global Through Partnership with Thailand's THCG Group Ltd. Through Sunderstorm's semi-exclusive global partnership with Geocann, Kanha will use Geocann's patented VESIsorb® delivery system technology to manufacture and launch the first fast-acting and high bioavailable edible products in Thailand, as well as export the products to additional international markets.
🧔 People
Dutchie — Appoints Tim Barash as new CEO and More Leadership Apointments. Co-founders Ross and Zach Lipson have departed the company. Prior to Dutchie, Tim was the Chief Business Officer and CFO for Toast (NYSE: TOST). He has been Dutchie’s Executive Chairman for two years. The Company also added Nick DeLeonardis as CFO (previously SVP & GM of Employee Cloud and FinTech at Toast. John Kelleher recently joined as General Counsel (previously, Kelleher General Counsel for HubSpot and Endeca Technologies). Michael Lee recently joined as VP Engineering (previously CTO at Notarize and VP of Engineering at Toast).
Goodness Growth Holdings — Josh Rosen appointed Interim President. Rosen has been serving as a director of the Company since August 2021. While he will continue to serve on the Company's board of directors, his position as Interim President will significantly expand his roles and responsibilities. Rosen also serves as Managing Partner at Bengal Capital, and was formerly CEO and Chairman of 4Front Ventures.
SynBiotic SE — Attracts Canopy Growth Founder Bruce Linton as Chairman of Advisory Board. SynBiotic SE is the largest listed group of companies in Europe in the hemp and cannabis sector and pursues a buy-&-build investment strategy focused across the European Union. Linton has been appointed as Chairman of SynBiotic's newly created Advisory Board and has invested capital in the company's most recent financing round. His investment plus options to buy further shares from existing shareholders will bring him to an ownership of ~5% in SynBiotic.
Shryne Group — Names Gregory Fink CFO. He most recently served as the CFO, Treasurer, and CAO of comScore. Prior to that, he served as SVP, Controller and CAO of Fannie Mae and MCI Communication and Deloitte.
TerrAscend — Appoints Ira Duarte to Board of Directors. Duarte currently serves as CFO of Veloxis Pharmaceuticals, a fully integrated specialty pharmaceutical company focused on the global development and commercialization of medications utilized by organ transplant patients. Prior to joining Veloxis, Duarte served as Senior Director of Corporate Finance for Chiesi USA and Director of Accounting and Financial Planning for Cornerstone Therapeutics.
Item 9 Labs — Appoints Mike Weinberger to CEO. A 20-plus year franchise industry veteran, Weinberger launched Item 9 Labs Corp.'s dispensary franchise, Unity Rd., in 2018 and grew the brand to more than 20 entrepreneurial groups driving development across 10 states. In March 2021, he spearheaded the sale of Unity Rd.'s parent company, OCG Inc., to Item 9 Labs Corp. Today, the cannabis franchise has four stores open across three states – Colorado, Oklahoma and South Dakota.
Green Check Verified — Appoints Staci Firios as CMO and Brett Puffenbarger VP Marketing. Firios most recently was CMO of Tier1 Financial Solutions and previously worked as the VP of Marketing Capabilities & Enablement at Prudential.
springbig — 23% Headcount Reduction. The company eliminated 37 positions, or 23% of the company’s headcount through a combination of layoffs and attrition to ensure its long-term health. The company expects a one-time cash restructuring charge for the layoffs of $200K in Q4 of 2022.
Curaleaf — Lays off ~220 Employees. The company laid off around 220 employees ahead of the Thanksgiving holiday, the company confirmed to Insider.
Vangst — Cuts Staff. "Hiring, that's our business, and when our customers aren't hiring, of course that negatively impacts us," the CEO told Denver Business Journal.
🎙️ Interviews
In New York, Covering All Things Cannabis | New York Times
Nevada Cannabis Consumption Lounges | High Rise
Kush Queen, CEO, Olivia Alexander | The Dime
Jane Technologies, CEO, Soc Rosenfeld | Highly Objective
Treez, CEO, John Yang | Highly Objective
👋 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.
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