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💨Companies report Record Sales Day on 420
Verano acquires two PA companies for $175.5M. Jushi acquires Nature's Remedy (MA) for $110M. TerrAscend acquires Keystone for $63M (PA). Dama Financial $12.6M Series B. Bespoke $8M Series A.
Don't Call Cannabis "Weed" Or "Pot," Say Uptight Ganjapreneurs
Marijuana legalization may appeal to voters in both very blue and red states, in part, because it’s an issue with bipartisan support. According to a recent poll from the Pew Research Center, 72% of Democrats and 47% of Republicans supported marijuana legalization for medical and recreational use. But just because legalization is broadly popular doesn’t mean we should expect federal legislation on the issue soon. For starters, not all Senate Democrats back Schumer’s plan, and Senate Republicans have yet to show any support for legalization. Additionally, while legalizing marijuana is popular, it isn’t a top priority for many voters. That may be, in part, due to the success of legalization efforts at the state level. More than one in three Americans live in states where marijuana is already legal for recreational use, and a sizable majority live in states where marijuana is legal for medical use. For those who already have access to the drug, it may not matter whether it’s their state government or the federal government making that allowance. Finally, electoral politics are increasingly disconnected from policy, meaning that despite the popularity of marijuana legalization, there may simply not be a ton of electoral benefit for Biden for taking up the issue.
25% Of Americans Now Consume Cannabis; Consumption Up 56% Since 2018. Cresco Labs released the results of a survey showing one in four Americans currently consume cannabis, reporting they’ve tried some form of cannabis within the past twelve months. That’s a significant increase since 2018 when just 16% of U.S. adults reported current consumption, representing a 56% increase in just two years. 23% of current cannabis consumers say they tried cannabis for the first time over the past year, suggesting the COVID-19 pandemic, combined with expanded state legalization, has rapidly accelerated cannabis acceptance and adoption in America. The study, conducted in March 2021, examined cannabis consumption, attitudes and purchase behaviors of nearly 5,000 Americans representative of the U.S. population.
New York’s marijuana social equity program eyed as possible game changer. New York recently enacted an adult-use marijuana law that many industry experts believe has the most robust provisions yet for including minorities, women, war veterans and struggling farmers in the state’s newest industry. But when the recreational marijuana market launches in 12 to 18 months, will New York be on the path toward becoming the industry’s new gold standard for social equity? Or will it fall short of its lofty aspirations as so many other social equity programs across the country have? “This is really the strongest bill we’ve seen among all the states taking social equity into consideration,” Brandon Kurtzman, a partner in Vicente Sederberg’s Boston law office, said during a recent VS webinar discussing the new law. Steve Hawkins, executive director of Marijuana Policy Project, agreed. He noted key provisions such as social equity licensing goals and community reinvestment go further than Illinois, previously recognized as the gold standard but now bogged down in legal challenges.
Denver legalizes weed delivery (and other things to know about the biggest overhaul ever to the city’s marijuana laws). Council members unanimously and without discussion approved the new rules:
Create a marijuana delivery license; has long been banned in Denver.
Create a marijuana hospitality license letting people smoke at licensed locations. The city will offer two kinds of “hospitality” licenses: one that would allow smoking inside certain space and another that would allow smoking and sales.
Eliminate the cap on retail and cultivation sites. The city will accept applications for new locations for the first time since 2016, when City Council set a cap on them. Those locations, however, are limited to just about 10% of the city because of other rules that regulate how close dispensaries can be to schools, for example. Finding new locations for these businesses is a top concern.
Give exclusive access to social equity applicants for new dispensary and grow locations and delivery, hospitality, manufacturing and transporter licenses for the next six years.
Make walk-up and drive-thru services at dispensaries permanent. Those options were added as a safety measure during the pandemic.
There are currently 205 dispensaries in Denver, and the city has issued 920 total Cannabis licenses of many types.
CNBS Cannabis ETF Announces Ability to Access MSOs via Swaps. The Amplify Seymour Cannabis ETF (NYSE: CNBS) ($139M AUM as of 4/23/21) now has the ability to access Multi-State Operators (MSOs) via swaps. The ETF recently completed both legal and operational work in order to add portfolio exposure to this group of companies. Amplify ETFs, sponsored by Amplify Investments, has over $4.8 billion in assets across its suite of ETFs (as of 4/15/2021).
Arizona issues 13 new adult-use cannabis store licenses in rural counties. The Arizona Department of Health Services awarded 13 new adult-use cannabis retail licenses across eight rural counties, signaling further growth of the state’s new recreational cannabis market. Nearly 400 applicants paid $25,000 each to apply for the 13 licenses in rural parts of Arizona. The state also plans to issue 26 more recreational marijuana retail licenses as part of a social equity program.
Jushi Holdings — Acquires Nature’s Remedy for up to $110M to enter Massachusetts market. Nature’s Remedy currently operates two retail dispensaries, in Millbury, MA and Tyngsborough, MA, and a 50,000 sq. ft. cultivation and production facility in Lakeville, MA with ~19,500 sq. ft. of high-quality indoor flower canopy and state-of-the-art extraction and manufacturing capabilities (Lakeville Facility). The 50,000 sq. ft. Lakeville Facility is located within a 185,000 sq. ft. industrial complex. Currently, the Lakeville Facility’s flower canopy encompasses approximately 19,500 sq. ft., which Nature’s Remedy expects to expand to approximately 31,000 sq. ft. during the second half of 2021. The Lakeville Facility utilizes CO2 extraction and has a full kitchen for edible production. Current flower production at the Lakeville Facility is approximately 6,800 lbs. / year, which, as part of the expected expansion, Nature’s Remedy could increase to approximately 11,000 lbs. / year based on 31,000 sq. ft. of canopy.
Nature’s Remedy is evaluating further expansion opportunities in the existing Lakeville industrial complex and/or on ten acres of land owned by Nature’s Remedy in Grafton, MA. The Lakeville Facility could potentially accommodate an additional 18,000 to 20,000 sq. ft. of flower canopy through the expansion into approximately 26,000 sq. ft. of adjacent space in the existing building. In Grafton, MA, Nature’s Remedy has a Host Community Agreement in place with the city and recently received a provisional cultivation license from the Commonwealth. The ten acres of land in Grafton, MA could potentially accommodate a 35,000 to 40,000 sq. ft. new facility with approximately 18,000 sq. ft. of flower canopy.
Jushi will pay $100M upfront ($40.0M cash, $55.0M stock, $5.0M unsecured promissory note) and up to $10.0M in earn-out. The $110M purchase price is expected to represent a multiple of ~4.5–5.0x Nature’s Remedy’s full year 2021 EBITDA and ~2.9–3.2x Nature’s Remedy’s full year 2022 EBITDA.
TerrAscend — Doubles Dispensary Footprint in Pennsylvania Through Acquisition of Keystone Canna Remedies. Keystone Canna Remedies (KCR) operates three medical dispensaries in Allentown, Bethlehem, and Stroudsburg, Pennsylvania. TerrAscend currently owns 10% of KCR and will acquire the remaining 90% of the equity for total consideration of $63M ($36M stock, $20.25M cash, $6.75M note). The purchase price is expected to represent a mid-single digit multiple of KCR's 2021 EBITDA.
Verano — acquires Agri-Kind and Agronomed Holdings and Agronomed Biologics for ~$175M to add Cultivation and increase Retail footprint in PA. The two transactions, include an active 62,000 sq. ft. cultivation facility, the equity in a permit for six dispensaries and an additional cultivation facility that is currently under construction through Pennsylvania’s Clinical Registrant program.
Agri-Kind and Agronomed Holdings. $66M cash, $49.5M stock, and an earnout of $31.5M based upon certain performance metrics.
AgronomedBiologics. Agronomed Biologics, a research joint venture between Agronomed Pharmaceuticals, LLC and The Healing Center for $60M in a combination of cash and stock, in addition to earnouts and other adjustments.
General Cannabis — Creates Retail Footprint by Acquiring Trees Dispensaries for $39.5M. Trees currently operates a dispensary in Denver, Colorado and two dispensaries in Portland, Oregon. Revenue for the three existing stores was ~$18M in 2020. In the coming months, Trees anticipates opening one additional dispensary in Denver and one in Portland, which would bring its total dispensary count to 5 locations. The addition of the Trees footprint will make General Cannabis vertically integrated in Colorado. The $39.5M consideration (87% stock, 13% cash paid over 24 months) represents 2.2x 2020A Revenue. To pay the cash at closing, the Company has expanded its convertible debt round by $2.3M, to an aggregate of $6.9M. In total, the Company has raised ~$10M over the past nine months.
Dama Financial — $12.6M Raise. Dama provides access to banking and financial services, powering safe and secure depository solutions for top licensed cannabis operators throughout the United States as well as electronic consumer payment solutions. The $12.6M Series B funding round brings Dama's total funding to ~$24M to date. The round was led by a group of strategic new investors. Dama currently serves ~7% of the legal cannabis businesses in California, operates in 12 states and has over 50,000 consumers with digital wallets in the United States, Dama has processed over $2B in transaction value since inception.
Bespoke Financial — $8M Series A. The $8M Series A bringsthe company's total funding to date to over $28M. The raise was co-led by Casa Verde Capital and Sweat Equity Ventures and includes participation from Ceres Group Holdings, Greenhouse Capital Partners, DoubleLine Capital's Co-Founder & Former President Philip Barach, and New York VC Robert Stavis. Bespoke has financed over $120M in GMV with zero defaults to date while amassing a credit performance database tracking over 2,000 cannabis license holders across the country.
Parallel — Invests $25M in a New State-of-the-Art Cannabis Cultivation, Production and Retail Facility in San Marcos, Texas. This financial commitment expands Parallel's ability to meet the growing patient demand for medical cannabis products in the Lone Star State. The planned 63,000 square-foot facility is expected to create hundreds of new jobs in the San Marcos region. The company is also introducing its goodblend™ retail brand, as it is changing the name of Surterra Texas to goodblend Texas (goodblend). This is the second market where Parallel has introduced the goodblend name, joining goodblend Pennsylvania; over time the company will evaluate opportunities to roll-out the brand in its existing markets.
Canopy Growth x Southern Glazer’s — U.S. Distribution Agreement. Southern Glazer’s Wine & Spirits (Southern Glazer’s), the world’s pre-eminent distributor of beverage alcohol, will serve as the distribution partner for Canopy’s U.S. portfolio of CBD-infused beverages. This partnership announcement follows the recent launch of Quatreau – Canopy’s first line of CBD-infused beverages sold in the U.S. market. Southern Glazer’s will distribute Canopy Growth’s CBD beverages, beginning with its CBD-infused sparkling water brand Quatreau™, across seven states, with additional states in the months to come.
Jushi Holdings — Certain Unaudited Q4 2020 and FY 2020 Financial Results and Advises on Timing of Filing Annual Audited Financial Statements and Management's Discussion and Analysis
Q4 2020 (unaudited)
Revenue: $32.3M (54.5% GM), up 30% Q/Q
Operating Income: $0.4M, a $9.6Mimprovement Y/Y
FY 2020 (unaudited)
Revenue: $80.8M (51.4% GM), up 690% Y/Y
Operating Loss: $10.5M, a $23.7M Y/Y
Q1 2021 (unaudited)
Revenue: $41.6M, up 29% Q/Q
Cash: $168M (as of March 31, 2021)
Vibe — Q4 2020 and CY2020
Revenue: $7.05M (Q4), up 76% Y/Y, and $24.2M (2020), up 92% Y/Y
Gross Margin: 38.5% (Q4), up from 29.4% Y/Y
EBITDA: $0.96M (Q4), $3.4M (2020)
Same Store Dispensary Sales increased 41% Y/Y
Closed acquisition of Portland Asset Holdings Corporation on 11/10/20, adding a new retail store in Portland, Oregon
17.4% of the Company's orders came through its e-commerce platform in Q4
Cresco Labs — Appoints of Tarik Brooks to Board and the Retirement of Dominic Sergi. Brooks currently serves as President of Combs Enterprises, overseeing all business operations and investments owned by Sean “Diddy” Combs. This diverse portfolio includes ventures in spirits (Ciroc Vodka and DeLeon Tequila), media (Revolt TV), music (Bad Boy Records), consumer packaged goods (AquaHydrate), and education (Capital Preparatory Schools).
🏬 Store Openings / Product
Trulieve — Celebrates 50th Anniversary of 420 with Two Store Openings in Eustis (80th in FL) and Palm Beach Gardens (81st in FL)
Verano — MÜV™ Augustine, FL (32nd in FL)
Fire & Flower — 250,000 Spark Perks™ Members
Sundae School — Sales & Marketing Brand Ambassador & Operations & Data Analytics Associate (Los Angeles). Just email me to connect.
LEUNE — Director of Marketing (Los Angeles)
CannaCraft — Director of Digital Marketing (Santa Rosa)
Patagonia — Moves away from adding logos to products. The Company said that using a garment for just over two additional years, for example, cuts its overall footprint by 82%, and they build their gear to be used for decades. Adding an additional non-removable logo reduces the life span of a garment, often by a lot, for trivial reasons. People change jobs, and the extra logo makes for an awkward re-gift. People tend not to pass logo’d gear down to their kids, and not everyone wants to be an advertisement on weekends, even if they’re proud to go into work on weekdays. The result? Perfectly good gear ends up forgotten in the closet—or worse, gets tossed in the trash.