📰 Biden to Pardon All Prior Federal Offenses for Simple Marijuana Possession
📣Three GTI Board Members Resign. Biopharmaceutical Research Company (BRC) raises $20M Series A. Curaleaf completes $181M acquisition of Tryke. Wyld launches new Edibles Brand, Good Tide.
👥 It was great to see some of you at the kick-off event on Tuesday with Alpine IQ and Paradise Club, and at Hall of Flowers the past two days. I’m excited to be wrapping up my California trip at Sonoma Hills Farm today. If any of you would like to share feedback about Hall of Flowers, please feel free to send my way as I may do a longer recap. The common feedback I heard was the slightly smaller crowds (including less investors making the trip) vs. years past. But, I appreciate that the show mirrors the current CA Market today (i.e. it’d be weird to see a brand spend $100K+ on their booth in this tough environment for operators).
President Biden on Thursday pardoned thousands of people convicted of marijuana possession under federal law and said his administration would review whether marijuana should still be in the same legal category as drugs like heroin and LSD. The pardons will clear everyone convicted on federal charges of simple possession since it became a crime in the 1970s. Officials said full data was not available but noted that about 6,500 people were convicted of simple possession between 1992 and 2021, not counting legal permanent residents. The pardons will also affect people who were convicted under District of Columbia drug laws; officials estimated that number to be in the thousands. The pardons will not apply to people convicted of selling or distributing marijuana. And officials said there are no people now serving time in federal prisons solely for marijuana possession. But the move will help remove obstacles for people trying to get a job, find housing, apply to college or get federal benefits. Biden urged governors to follow his lead for people convicted on state charges of simple possession, who vastly outnumber those charged under federal laws.
“This is a huge step towards undoing the human cost and damage of the unsuccessful War on Drugs but we expect descheduling cannabis to take significantly longer," he said. "While this is a big step in the right direction, with November elections so close and Democrats expected to lose control of Congress, we think legislative change will face significant political headwinds and likely require two years to be achieved." — Bespoke Financial, CEO, George Mancheril
Marc Hauser suggets on his Cannabis Musings that “the great news is that this is the first time we’ve ever heard a President talk about cannabis scheduling. Already that’s a huge step forward. The not-so-great news is that no one really has any idea what it means.  if cannabis were rescheduled into a lower Schedule controlled substance, it would still be a controlled substance, meaning that cannabis would effectively still only be Federally legal for pharmaceutical and research purposes, and definitely not for adult use. So, let’s say that happens. We’d then presumably have four separate markets competing for cannabis customers:”
Cannabis Sales Decline Sequentially in Most Markets in August (BDSA). In August, Eastern Market Y/Y growth ranged from (12.7%) in Maryland to 29.5% in Florida. In Western Markets, Y/Y growth ranged from (27.2%) in Nevada to (3.8%) in California.
Biopharmaceutical Research Company (BRC) — $20M Series A. BRC is an active Drug Enforcement Administration (DEA) pharmaceutical cannabis license holder. The raise will enable the Company to aggressively scale its operations and increase its product offering, conduct sponsored research, and execute on its go-to-market strategy. The round is being led by Intrinsic Capital Partners, with participation from Argonautic Ventures, Achari Ventures, AFI Capital Partners, Delta Emerald Ventures, Self Health America (SHAC) and a number of preeminent family offices.
Glass House Brands — Closes Second Tranche of Non-Brokered Private Placement of Equity Securities. The second closing of the Offering included ~$4.8M of fresh capital and ~$92,000 face value of additional Series A Preferred Stock exchanged for new Series B Preferred Stock. The combined new cash raised from the first and second closings is ~$19.5M. A total of 42,197 shares of Series B Preferred Stock have been issued, with an aggregate face value of ~$42.2M. Holders of the Series B Preferred Stock will be entitled to an annual dividend at a rate of 20% for the first two years after the date of initial issuance of Series B Preferred Stock, 22.5% for the third year and, thereafter, 25% until the 54-month anniversary of the Initial Issuance.
Akerna — Prices $5.0M Private Placement of Convertible Redeemable Preferred Stock. The Company has entered into a securities purchase agreement with certain institutional investors to purchase 400,000 shares of Series A convertible redeemable preferred stock and 100,000 shares of Series B convertible redeemable preferred stock. Each share of Series A and Series B preferred stock has a purchase price of $9.50, representing an original issue discount of 5% of the $10.00 stated value of each share. Each share of Series A and Series B preferred stock is convertible into shares of the Company’s common stock at an initial conversion price of $0.25 per share. Shares of the Series A and Series B preferred stock are convertible at the option of the holder at any time following the Company’s receipt of stockholder approval of a reverse stock split of the Company’s shares of common stock.
Curaleaf — Completes Acquisition of Tryke Companies. Curaleaf completed its previously announced acquisition of Tryke Companies (dba as Reef Dispensaries), a privately held vertically integrated, MSO. With the close of the transaction, Curaleaf's national footprint has reached 29 cultivation sites and 144 dispensaries nationwide. Tryke has four retail dispensaries in Las Vegas, Sparks, and Sun Valley, Nevada and two retail dispensaries in Phoenix, Arizona; 30,000 sq ft of cultivation with capacity to expand to 80,000 sq ft over the next three years. The transaction consideration includes an initial payment at closing of $10M in cash and 2.7M shares, and additional cash and shares consideration of $75M and 16.5M Subordinate Voting Shares, to be paid in three installments on the first, second and third anniversaries of the closing, for a total consideration of $181M. Contingent consideration of up to 1M Subordinate Voting Shares may be paid in 2023 based on the business exceeding certain EBITDA targets for the year 2022.
📄 Company Updates
Dutchie — #17 on LinkedIn Top Startups 2022: The 50 U.S. companies on the rise. Full-time headcount: 710 | Headquarters: Bend, Ore. | Founded: 2017 | Most common skills: Business Management, Development Tools, Web Development | Most common job titles: Software Engineer, Customer Experience Manager, Product Manager | Largest job functions: Engineering, Customer Success and Support, Information Technology.
StateHouse Holdings — New Distribution Partnership with Nabis. Under the terms of the Partnership, Nabis has assumed all of StateHouse's distribution obligations. The Partnership is expected to create millions of dollars of cost savings for Statehouse. Savings are expected to be achieved through lower headcount and through reduced costs related to insurance, fuel, truck leasing, banking fees and overtime pay.
Agrify — Agrify Issues Statement Refuting Lawsuit from Defaulted Customer. Bud & Mary’s (CO, IA, MI) was notified by Agrify that it was in default of its credit facility and subsequently responded with a meritless lawsuit in an obvious attempt to avoid repayment of the credit facility. Bud & Mary's lawsuit is entirely without merit. Agrify has worked closely and transparently with Bud & Mary’s team throughout the entire design and build process. Agrify fully complied with its contractual obligations under the Agrify TTK Solution agreements. Agrify is taking all necessary steps to pursue repayment from Bud & Mary’s and will take all actions necessary to protect its shareholders’ interests. Three New Rapid Deployment Program Customer Engagements. As per the terms of the RDP agreements with Prairie State Cannabis LLC, LowKey LLC, and MediFlora Cultivation LTD, the combined agreements have an expected base value of over $7.5M in cultivation-related hardware sales, and additionally include future recurring SaaS and production success fees. Agrify will initially be providing each customer with an RDP configuration consisting of 56 VFUs. With this infrastructure, each customer will have the potential to produce an estimated 7.5 pounds of premium quality flowers per VFU, per grow cycle, with approximately 5.2 grow cycles expected to be possible each year.
MariMed — Opens its First Medical Cannabis Dispensary in Maryland. Operated by the Company’s wholly owned subsidiary, Kind Therapeutics USA (Kind), the 5,000 sq ft, Panacea Wellness-branded dispensary features Nature’s Heritage craft flower and concentrates, Betty’s Eddies all-natural fruit chews, and Bubby’s Baked soft baked goods. In addition to Panacea Wellness Annapolis, under state regulations MariMed can own up to three additional dispensaries in Maryland.
Schwazze — Opens R.Greenleaf, located in Clovis, New Mexico. This brings R.Greenleaf's number of New Mexico retail dispensaries to 12.
Wyld — Launches New Cannabis Edibles Brand Good Tide.
Good Tide gummies are made with premium solventless hash rosin that delivers a true-to-plant high. The rosin includes naturally occurring terpenes and minor cannabinoids from the cannabis plant which harmonize with the tropical real-fruit ingredients to create a delicious, full spectrum experience. Good Tide offers a trio of irresistible vegan flavors including Mango, Guava and Pineapple.
TSUMo Snacks — TSUMo Snacks and Snoop Dogg Release Snazzle Os, the Cannabis-infused, Shareable, Savory Edible Chips.
Snoop Dogg is teaming up with TSUMo Snacks to launch Snazzle Os, a new line of brings a THC-infused twist to the legendary rapper’s favorite snack. Crackling with bold flavor and 100mg of THC in each bag, Snazzle Os captures the essence of classic snappy onion snacks and provides a more satisfying snacking experience than most other edibles on the market.
RWB — Launches Platinum Vape Disposables through an Exclusive Agreement with Skybar. Red White & Bloom Brands will utilize vape technology provided by Skybar, a leading innovator in vape des. In addition, the company debuted Platinum Vape™ (PV) Disposables. Platinum Vape and Skybar have extensively collaborated in creating a unique device with a custom tank and flavorful exotic terpenes catered specifically for vape consumers. The product has auto-draw technology with a High-Grade Coil and powerful battery, delivering a smooth and consistent experience without charging or setting adjustments. PV Disposables are currently available in 250 dispensaries across Michigan.
TILT Holdings — Launches Social Impact Driven Brand Black Buddha Cannabis in Massachusetts. The initial experience-based product line, Blyss, could support euphoric and positive effects. The products are primarily built around a sativa-leaning, hybrid flower that creates an uplifting blissful feeling with an array of sweet aromas in the following offerings: Blyss Flower—an eighth of expertly grown, premium cannabis; Blyss Chyllum—a 100% recyclable glass chillum, packed with 0.35g of flower; and Blyss Vape—a vape containing 300mg of a 3:1 THC:CBD ratio that is rich in beta-caryophyllene.
Ayr Wellness — Brings Concentrates Brand HAZE to Florida. HAZE premium live resin concentrates and vapes are formulated for rapid onset and deliver a full-sensory experience. Products available at launch include live resin vape cartridges, live badder and live sugar. Strains include WAP #27, Caesar, 8” Bagel, Gorilla Glue, Mr. Nasty and Ruby Slippers.
Columbia Care — Introduces Hedy, a New Cannabis-Infused Edibles Brand. Hedy features a variety of fast-acting chocolates and gummies are now available in Arizona, Colorado, Delaware, Massachusetts, Missouri and Virginia.
GTI — Changes to Board of Directors. Three board members, William Gruver, Glen Senk and Dorri McWhorter have resigned. The resigning directors informed management that their cause for resignation was not related to GTI’s business performance, operations, financial performance, financial statements or financial controls, but rather over a disagreement as to the Company’s policies and practices related to personal misconduct. It became clear that the former directors and existing management could not find a resolution satisfactory to all parties. Richard Drexler (Bison Gear and Engineering, Quality Products) and Jeff Goldman (Carol’s Cookies, Reed-Union Corporation) will join the Company’s board of directors.
Jushi — Appoints Bill Wafford to Board. Wafford currently serves as CFO of Everlane, a digitally native apparel, footwear and accessories brand. Prior to Everlane, he served as CFO of JCPenney, The Vitamin Shoppe, and Thrasio. Wafford also previously served as Partner of the advisory practice group at KPMG, after holding various executive finance roles with Walgreens Boots Alliance, Target, Archstone Consulting, and Bank of America.
SLANG Worldwide — Appoints John Moynan as CEO and Ruth Chun as Chair. Drew McManigle, former Interim CEO and Chair of the Board, is stepping down as he and MACCO Restructuring Group, who served as financial advisor, have successfully completed the corporate transformation of the Company. Ruth Chun, an independent director of the Company, has been appointed Chair of the Board to replace McManigle. Moynan previously served as COO and General Counsel and he will continue to act as Corporate Secretary. Chun is a lawyer focused on advising regulated businesses in the cannabis, psychedelics, CPG and energy industries.
South Asian Americans Are Coming Out Of The Weed Closet (HuffPost)
How Cann quietly raised millions from big-name investors (Business Insider)
👋 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.