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📁 Canopy Files Revised Proxy Statement, Modifies Canopy USA Structure
TILT Holdings CFO departs. West Australia-based Cannaponics raises $5M. Bright Green raises $3.5M. Genetica raises $500K. StateHouse extends debt obligations. CCIA x Green Flower offers free access.
Canadian cannabis sales rebound in March to CAD $405.5M. Consumer sales of recreational cannabis products rose in every Canadian province in March 2023, according to newly released data by Statistics Canada. — MJBizDaily
It’s the second time Canada’s cannabis sales surpassed the CAD $400M threshold with December 2022 coming in at CAD $425.9M
Ontario’s sales accounted for 40% of the country’s consumer cannabis revenue, which is roughly proportional to its population in Canada
New York Adult-Use Retail Revenue surpassed $16.5M since first dispensary opened in late December. According to data provided at the May 11 Cannabis Control Board Meeting. — Bronx Times
Despite early estimates projecting sales in excess of $1 billion in 2023, lawsuits and bureaucratic delays have meant a slow start to the adult-use market
Weed Wine Is an Underground Favorite. Can It Survive the Gummy Era? It’s delicious, but prohibited commercially, even where cannabis is legal. That hasn’t stopped winemakers from sharing recipes. — New York Times
While cannabis-infused wines or beers are sold commercially, it’s in name only. These beverages are made with drinks that have been dealcoholized
But noncommercial weed wine production, for winemakers and their friends, persists, especially with older winemakers who developed a taste for it during the many years when marijuana use was largely a clandestine affair
SEC Shuts Down WeedGenics $60 Million Cannabis Offering Fraud. The SEC obtained an emergency order to halt an alleged ongoing offering fraud and Ponzi-like scheme by Integrated National Resources Inc. (INR), which does business as WeedGenics. — SEC
Owners, Rolf Max Hirschmann and Patrick Earl Williams, who have raised more than $60M from investors to expand their cannabis operations, but have instead used the majority of funds to make $16.2M in Ponzi-like payments and to enrich themselves
Hirschmann, acting as the face of the company, used the fake name Max Bergmann the entire time he communicated with investors, while Williams, as Vice President of the company, worked behind the scenes while spending investor funds on his more public career as a rap musician known as “BigRigBaby”
Consumers Prefer Higher THC Limits in Edible Packages. In light of Health Canada's recent actions to curb the sale of edible products exceeding 10mg THC per package, Headset took a look at the data to see how these regulations could potentially impact consumers and the industry as a whole. — Headset
Edibles are the fourth most popular product category YTD in Canada. The category is substantially less popular in Canada than in the US market, with nearly half the percentage of total sales
In Canada, some Edible producers have been able to bypass THC limitations by classifying their products as “ingestible extracts.” Three of the top ten Edible Brands—Aurora Drift, Indiva, and Edison Cannabis Co. (collectively accounted for 17.7% of all Edible sales from January through April 2023) have product lines that utilize this alternative product rendering method
Cannaponics raises $5M in crowdfunding. The campaign for the West Australian startup lasted just two weeks with 2,771 investors buying in. The only other company to raise the $5 million maximum was Byron Bay’s plastics reduction startup Zero Co in 2021. The capital is earmarked for developing the company’s 67-hectare site in southwest West Australia, which includes a 4,000 sqm greenhouse, to ramp up production. The greenhouse allows year-round production. According to a report from the University of Western Australia, annual sales could reach up to $686M in WA with legalization and a 25% tax on recreational cannabis.
Genetica raises $500,000 Seed Round. Genetica is an AI powered cannabis retail platform. The round was led by Ensemble, CEO of Talent Resources Ventures and Genetica Adviser Michael Heller, Show Me Organics, Executives from Hara Supply, and Mitchell Harounian. Genetica’s flagship product, Flora Match, leverages Flora AI to deliver personalized product recommendations by analyzing over 650 million data points, including in-store inventory, customers' dietary habits, activity levels, age, medical conditions, and desired effects. The Genetica product suite is set to expand later this year with Flora OS, an all-in-one operating system using AI to optimize all retail operations.
Bright Green $3.5M Private Placement. Bright Green Corporation (NASDAQ: BGXX), one of the very few companies selected by the U.S. government to grow, manufacture, and sell, legally under federal and state laws, cannabis and cannabis-related products for research, pharmaceutical applications and affiliated export, has entered into a securities purchase agreement with a single institutional investor to purchase 3,684,210 shares of common stock and warrants to purchase up to 3,684,210 shares of common stock, at a purchase price of $0.95 per share and accompanying warrant.
TILT Holdings Closes on Funding of up to $4.0M Senior Secured Promissory Notes. This includes an original issue discount of $0.5M, allowing access to funding of up to $4.0M from its existing secured note holders to assist with a transition in payment terms of a trade payable with a primary supplier. The Bridge Notes bear a floating interest rate at the higher of 16% or Prime +8.5% and mature in December 2023. Simultaneous with the issuance of the Bridge Notes, the Company entered into a Waiver Agreement with the noteholders of the February 2023 debt refinancing that allows TILT to suspend interest payments on $38M in aggregate principal amount of amended and restated secured notes and $8.2M in aggregate principal amount of secured notes issued in February 2023 (February Notes) for the shorter of the term of the Bridge Notes or through December 2023. The missed interest payments, penalties and principal of the February Notes will accrue at the default interest rate as set in the February Notes of the higher of 24% or Prime + 16.5% until the February Notes are paid current.
TerrAscend Completes Sale of Facility in Canada for CAD$19.7M. "I am pleased we were able to complete the sale of this facility at an attractive price. This latest debt paydown adds to the substantial progress we have made over the last three quarters in strengthening our balance sheet by reducing our debt and interest expense. The continued improvement of our balance sheet remains a priority. We plan to pay down additional debt in the coming months," Jason Wild, Executive Chairman of TerrAscend.
Lowell Farms Sale Leaseback Transaction for Monterey County Processing Facility. Lowell Farms has closed on the sale leaseback transaction with New Wilston Associates pursuant to which Lowell SR LLC, a subsidiary of the Company, has sold its drying and midstream processing facility in Monterey County California for $19.4M, including the Buyer’s assumption of the existing mortgage on the Facility. Concurrent with the closing of the sale, Lowell SR LLC entered into a 10-year lease agreement with the Buyer for the Facility. The Company will continue its permitted cannabis drying and processing at the Facility, as it has since it acquired the Facility in 2021. The Facility is a 10 acre, ~40,000 square feet facility which the Company utilizes for cultivation and processing of the Company’s cultivation and third-party partners. The Company purchased the Facility in June 2021, for $19.2M.
📄 Company Updates
Note: Earnings are now posted on www.HighlyObjective.com (and below); updated from last week for Curaleaf, Acreage and Cresco Labs.
Canopy Growth Files Revised Proxy Statement, Modifies Canopy USA Structure to Comply with NASDAQ Listing Requirements. The agreed upon structural amendments to the Company's interests in Canopy USA include reducing Canopy Growth's economic interest in Canopy USA to no greater than 90%, adjustments to the composition and nomination rights of Canopy USA's board of managers, and modifications to the terms of the initial protection agreement, amongst other amendments as further described in the revised proxy statement. Mark Hauser points out the difference in comfort level from Canopy Growth / Constellation’s lawyers based on the use of “advice” vs. “opinion” in the proxy statement.
StateHouse Confirms extension of Series A debt obligations to June 5th, 2023. As previously disclosed on December 30, 2022, the Company continues to engage in discussions related to potential future financing options. In addition, the Company's Series A debtholders have granted StateHouse a further extension to June 5, 2023 on repayment of the Company's outstanding debt obligations owing to the Series A Debtholders.
Item 9 Labs Major Restructuring. Michael Weinberger has resigned as CEO and member of the Board of Directors and entered into a Strategic Advisor agreement to focus on the Company’s retail franchise, Unity Rd. Chairman Doug Bowden has been named Interim CEO. Director Jeffrey Rassás has been appointed Strategic Advisor. Chris Wolven, current COO, will now oversee all Company entities and operations and will be the primary Company-facing executive for Item 9 Labs Corp. Michael Keskey has resigned as Chief Legal Officer. Lawrence X. Taylor has resigned as a member of the Board of Directors. Item 9 Labs is a top 10 cannabis brand in the Arizona market, according to BDSA, with products in 65% of Arizona's dispensaries.
CCIA x Green Flower offers free access for California cannabis industry workers. The partnership provides CCIA members with free access to GF Institute Cannabis Certificate programs—a ~$600 value if all three programs are taken—to help their employees level up their cannabis skills and knowledge. The most influential cannabis trade association in California, CCIA represents employees across retail, cultivation, manufacturing, delivery, distribution, testing, and other ancillary services.
BLAZE Enters New Jersey with Earth & Ivy (New Brunswick). Currently at 38 operational dispensaries, New Jersey reported ~$329M in adult-use sales and $226M+ in medical sales since legalizing recreational cannabis in April 2022. Earth & Ivy is one of two new adult-use dispensaries that did not start out as a medical dispensary, with Nova Farms in Woodbury, NJ being the other.
Cannabis rebrands aim to differentiate retail, not alienate shoppers. A push toward familiarity and comfort is in, while cannabis shops that resemble the Apple Store appear to be on the way out. Taking a page from contemporary retailers, groceries and restaurants, cannabis companies are overhauling their store interiors to simplify and accelerate transactions using tablet ordering stations, digital signage and menus, and designated queues for online orders. Some dispensary rebrands (Ayr Wellness) are intended to align retail outlets under one banner, look and feel. Others, such as the Flower Shop in Arizona, sparked wholesale design changes to reflect product innovations, including the introduction of new house brands and SKUs for women.
GTI to open RISE Bristol, VA, its 80th Retail Location in the Nation. The new RISE Bristol dispensary is located off I-81, adjacent to the future Hard Rock Casino. GTI entered the Virginia market in 2021 and currently operates a production facility in Abingdon and other dispensaries in Abingdon, Christiansburg, Lynchburg, and Salem.
TerrAscend Opens Fifth Cookies Dispensary in Oxford, MI. Other locations include Detroit, Ann Arbor, Kalamazoo and Jackson. In addition to the new Cookies provisioning center, the Company has dedicated significant shelf space to the display and sale of Cookies and GAGE products at Gage locations in Adrian, Burton, Battle Creek, Center Line, Detroit, Ferndale, Grand Rapids, Jackson, Kalamazoo, Lansing, and Traverse City.
Trulieve opens Affiliated Medical Marijuana Dispensary in Limerick, PA. Additional Trulieve-affiliated dispensaries in Pennsylvania communities include: Camp Hill, Coatesville, Cranberry Township, Devon, Harrisburg, Johnstown, King of Prussia, Philadelphia, Philadelphia Charter City, Philadelphia Washington Square, Pittsburgh, Pittsburgh North Shore, Reading (on Lancaster), Reading (on 5th St. Hwy), Scranton, Washington, Whitehall, York and Zelienople.
Verano opens MÜV Zephyrhills, the Company’s 67th Florida Location and 127th Retail Location Nationwide. The dispensary is based in Pasco County, a growing region with a population of over 584,000.
seven9 x OOKA Luxury-Lifestyle Inhalation Ecosystem. OOKA, a lifestyle and technology-forward inhalation-device company, introduces a first-of-its-kind consumption ecosystem, the OOKA Sense Station. seven9’s premium cannabis pods, compatible for use with this device, marks the first of many efforts between the synergistic brands, focused on modernizing social consumption traditions through cleaner, smoother methods of inhalation. OOKA is now available for purchase online, and at select retail partners in California. Californians also have access to seven9’s debut line of cannabis pods through seven9’s direct-to-consumer site, which also carries tea-based pods, with plans to expand into more verticals including CBD in the near future.
Presidential Cannabis Launches Products in AZ, MI, NV and OK. According to recent BDSA data, Presidential has become the number one blunt brand and number four infused pre-roll brand on the market as the Company expands into new states. Presidential's launch into these states will also feature collaborations with fellow cannabis operators including Ball Family Farms. Presidential has garnered over 40% of the market share within three months of launching in Nevada.
TerrAscend x Wana Brands Debut Cannabis-Infused Gummies in NJ. TerrAscend serves as Wana's sole manufacturer, supplier, and commercialization partner in New Jersey and is now offering a diverse range of Wana products exclusively at The Apothecarium dispensaries in Lodi, Maplewood, and Phillipsburg.
FLUENT Launches Cannabis-Infused Dark Chocolate Bar in Florida. The bar is made with FLUENT's high quality cannabis extract and Caraïbe 66% chocolate from Valrhona, the legendary French chocolatier.
TILT Holdings CFO departs. Dana Arvidson, who has served as CFO since December 2022, has departed the Company. During this transition period, Brad Hoch, TILT’s former CFO and current Chief Accounting Officer, has been appointed Interim CFO.
4Front Ventures Director steps down. Amit Patel has stepped down as a director and the Chair of the Audit Committee of the Company. The decision was made by Patel to pursue new opportunities outside the organization. Patel had joined the board in June 2022 and has served as Managing Partner of Paceline Partners, a $100M Houlihan Lokey investment fund prior to being spun out in conjunction with its IPO.
Benjamin Ballinger, Diamond Miners Consulting | Highly Objective
Trailblazers in NY cannabis market represent equity in a budding industry | ABC News
Emily goes to D.C. and attends the SAFE Banking Act Hearings | High Rise
POSIBL CEO Jesus Burrola on California’s Market Dynamics | Cannabinoid Connect
Kristi Palmer on Kiva’s East Coast Expansion | Green Market Report
👋 Highly Objective is a weekly Cannabis newsletter and podcast 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.