Dai Truong's Cannabis Newsletter - Issue #16


Cannabis

MedMen Announces Florida Expansion, Opens First Location in West Palm Beach

MedMen (CSE: MMEN) announced its expansion into Florida with the opening of a retail location in West Palm Beach at 539 Clematis Street (7,550 sq ft). MedMen expects retail locations in Key West and Orlando to follow. Florida is the third most populous state with a robust medical cannabis program serving over 200,000 qualified patients. Of the 15 new locations MedMen plans to open across the U.S. in 2019, 12 will be in Florida, where the Company is licensed for up to 35 retail locations.

Cannabis business applicants question evaluation scores - File appeals with City of South Lake Tahoe

Three businesses that were not selected to go further in the process of vying for one of three cannabis retail store licenses have filed appeals with the City of South Lake Tahoe. Two of the three winners were South Lake Tahoe City Council Cannabis Sub-Committee which was established around September 2017 and had more time to work on their application.

Akerna (KERN), merged MJ Freeway / MTech Acquisition Corp. entity, up big after merger closes

The stock jumped 38% after-hours Wednesday (6/19), adding to a moonshot 224% gain during the regular session.

Columbia Care Announces National Launch of the CNC Card – the Nation’s First Cannabis Industry Credit Card

Recent expansion of the program into the Company’s Delaware and Pennsylvania markets from New York will be followed later this month by availability in Illinois and Arizona, with expansion to all Columbia Care locations by the end of 2019. Available initially at Columbia Care dispensaries exclusively, the Company is evaluating opportunities through targeted partnerships for broader market adoption as the premier and only credit payment option available to the cannabis industry. Home delivery in New York currently represents over 10% of the Company’s revenue in the state, with an average basket size 40% greater than those in-store. Upon introducing the CNC Card in New York, home delivery users became the fastest growing segment of the CNC program, increasing 25% month-over-month in 2019.

HEXO MED, an affiliate of HEXO Corp, secures medical cannabis license in Europe

HEXO announced that its affiliate, HEXO MED S.A. has received a medical cannabis installation license. The license, issued by the Greek government, will allow HEXO MED to establish cultivation, processing and manufacturing facilities in the region of Thessaly, Greece. With HEXO Corp’s experience in the industry, HEXO MED is poised to become a leader in the European cannabis landscape. HEXO MED’s large-scale high-tech greenhouse and world-class EU GMP facilities will be based on a 67,000 square meter (or 721,182 sq. ft.) plot in Larissa, Greece. The new facilities are expected to initially create 150 jobs in the local community which will continue to scale up as HEXO MED further expands. Construction of the approximately 30,000 square meter (or 323,000 sq. ft.) facility is expected to begin in Q4 2019.

Colorado Has Generated Over $1B In Marijuana Revenue, State Announces

Colorado’s licensed cannabis retailers have sold more than $6.6B worth of marijuana products since legal sales began in 2014.

iAnthus Resets 2019 Option Issuance for Senior Management to Strongly Align with Shareholders

iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCQX: ITHUF), which owns, operates, and partners with regulated cannabis operations across the United States, has announced the cancellation of recent stock options granted to iAnthus executive management.

Approximately 60% of the options that have been issued in 2019 will be cancelled effective June 17th. The board plans to reissue the options in 30 days, subject to regulatory requirements and the terms and conditions of the Company’s omnibus (stock option) incentive plan. The strike price of the new stock options will be: (i) the higher of the closing price the day prior to issuance or (ii) C$7.50. This will affect all 2019 options grants of the Company’s CEO, President and CFO, in addition to certain grants to six other members of the executive management team.

The stock closed at C$4.20 on 6/20/19.

Weed Map: Status of Pot Legalization Across America

Curious about the status of cannabis? Here’s a map of where marijuana legalization stands across the country — and a deeper look into some places with disparate approaches to pot

Stifel to expand GMP’s cannabis business with eye on future M&A

Stifel Financial Corp.’s move to buy GMP Capital Inc.’s capital markets business for ~$70M will expand the Canadian investment banking firm’s ability to make more cannabis deals south of the border, executives from both companies said.

Molson Coors to Brew Cannabis Drinks in Canada, CBD Versions in the U.S.

Molson Coors’ CEO expects that cannabis beverages will be a $3 billion sector in Canada, and the company has warned shareholders that legal cannabis is a threat to beer companies’ profit margins. The North American beer giant plans to sell a variety of cannabis drinks in accordance with Canada’s new regulations, starting on December 16th, the earliest date possible, before moving into the United States, with a line of CBD beverages.

Surplus of unsold cannabis may lead to industry-wide writedowns

A glut of unsold pot stuck in Canadian licensed cannabis producer vaults may wind up being worthless, and could lead to industry-wide writedowns, according to analysts from BMO Capital Markets. As of March there were more than 150,000 kilograms of unfinished inventory – defined by regulators as cannabis that is not packaged, labelled or ready for sale – held by Canadian pot companies, according to the most recent Health Canada figures. That’s up from about 101,000 kilograms on Oct. 17, 2018, the first day of legalization.

Shopify And ParcelPal To Integrate For Cannabis Delivery In Canada

Within the next few weeks, users of Shopify’s digital platform will be able to order cannabis through an integration with ParcelPal Technology.

CBD

Billionaire-backed Chinese firm plans Asia’s first e-commerce CBD platform

The pair are part of a group of investors in Hong Kong-headquartered Regent Pacific that is closing in on a $15M all-stock takeover of the e-commerce platform Yooya, also based in the city. Regent plans to start selling CBD through Yooya within 90 days of closing the acquisition. Yooya currently does not sell any CBD products.

1933 Industries Delivers on Strong CBD Brand Distribution Strategy by Surpassing 800 Retail Outlets in the US

1933 Industries (CSE: TGIF), a vertically-integrated cannabis CPG company that owns licensed cultivation and manufacturing assets to support its brands, is continues to deliver on its expansion strategy, reaching over 800 retail outlets with its premium Canna Hemp™ brand of wellness products, with coast-to-coast distribution in the United States.

Deals

Cannabis Education Company Green Flower Media Closes $20M Series A Financing

Green Flower Media, a cannabis education platform, announced the closing of its $20M Series A financing round led by Tuatara Capital, with additional funding from Poseidon Asset Management and Phyto Partners. The funds are earmarked toward developing additional industry-leading Certificate programs; expanding the subscription service with new original content; forming deeper strategic partnerships with both corporations and associations; and expanding the Green Flower team.

Ionic Brands Enters Las Vegas, Nevada With Acquisition of Vegas Valley Growers North

IONIC Brands (CSE: IONC) announced that it has completed the acquisition of Vegas Valley Growers North (“VVG”) located in Las Vegas, Nevada, previously announced on April 2, 2019. VVG is a vertically-integrated, cash flow positive opportunity with projected 2019 revenue of $6.6M, gross profits of $3.1M and EBITDA of US$2.0M. The VVG acquisition includes the lease for a 1,700 square foot production facility, situated on 3.42 acres of land. VVG is currently building a 60,000 square foot manufacturing facility with expected completion date of Q3 2019. A second 80,000 square foot facility is planned for Q4 2019. The VVG acquisition also includes four state licenses in hand for cultivation and manufacturing for both medical and recreational cannabis. The applications for the medical and recreational cannabis distribution licenses are being processed and are anticipated to be granted in Q2 2019. In 2018, VVG revenues were $2.6M, with an EBITDA of $0.8M. VVG’s flagship product is the Vegas M Stick and the Reno M Stick branded vape pens that have current market penetration of over 75% of stores in Nevada.

Additional Equity Investment by Tilray and High Park

Inner Spirit (CSE:ISH), a Canadian company establishing a national network of adult-use cannabis stores under its Spiritleaf brand, announced the completion for the second tranche of its previously announced cross-investment with Tilray (NASDAQ:TLRY) and its wholly owned subsidiary High Park. Pursuant to the terms of the investment agreement entered into in December 2018, as amended, Tilray Inc. and Inner Spirit have exchanged shares valued at $1.5M.

Slang Worldwide acquires Lunchbox Alchemy

Lunchbox operates a 9,000-square-foot production facility in Bend, OR. It employs about 40 people making gummy candies, hard candies and cookies that BDS surveys ranks second-best in Oregon sales. The firm also makes CBD products that are sold in 40 states. Also part of Lunchbox is Hydra, a company that distributes Lunchbox products to 400 Oregon retailers.

Lunchbox launched expansion plans in Santa Rosa, California last year with the construction of an 11,000-square-foot manufacturing facility. That building has been permitted, but has not begun manufacturing product yet.

Nabis Expands National Footprint with California Acquisition of Desert's Finest

Desert’s Finest is a 6,000 sq. ft. dispensary located in Desert Hot Springs, California - a city strategically-located less than two hours east of Los Angeles and north of San Diego. Currently, the dispensary has more than 37,000 registered patients and generated more than $5.7M in sales over the past 12 months with a 47% GM. Nabis paid 1.0x revenue @ $5.7M in consideration.

The Company’s goal is to be in 18 states within 18 months of inception. The company began its quest only 6 months ago and is currently on pace to meet its ambitious targets. Nabis Holdings Inc. has signed definitive agreements on assets in Michigan, Arizona, Washington and now California.

Intrexon Corporation and Surterra Wellness Partner in $100M Deal to Advance Commercial Scale Fermentation-based Cannabinoid Production

Intrexon Corporation (Intrexon) (NASDAQ: XON), a leader in the engineering and industrialization of biology to improve quality of life and health of the planet, and Surterra Wellness (Surterra), one of the fastest growing health and wellness companies in the United States today announced an exclusive global licensing agreement. The companies will join forces to advance Surterra’s cannabinoid production at a reliable, efficient, cost-effective, industrial scale utilizing Intrexon’s proprietary yeast fermentation platform. The $100 million deal, including milestones and royalties, will leverage each company’s expertise to ultimately bring new cannabis products to market to meet growing, and more selective, future consumer demand, with greater supply chain security, in a more consistent, efficient and cost effective way.

Canopy Rivers invests $10M in plant genetics innovator Zeakal

Canopy Rivers invests in ZeaKal, a plant science innovator with proprietary
technologies that sustainably increase photosynthesis, improve plant yield
and enhance nutritional profiles for a variety of agricultural crops.

People

Harvest Health & Recreation Bolsters Legal Team with Appointment of General Counsel and Assistant General Counsel

Harvest Health & Recreation Bolsters Legal Team with Appointment of General Counsel Nicole Stanton and Assistant General Counsel Allyson Wilcox. Nicole Stanton and Allyson Wilcox join Harvest’s growing seven-member legal division with significant regulatory, compliance, management and corporate ethics experience as the company acquires new licenses adding to leading national footprint

Khiron Announces Changes to Leadership Team with Appointment of Wendy Kaufman as CFO

Khiron (TSXV: KHRN), a cannabis company with core operations in Latin America, announced the appointment of Wendy Kaufman as CFO, effective July 2, 2019. Ms. Kaufman, a CPA, brings over 20 years of international financial experience, having served most recently as CFO at Pasinex Resources Limited

iAnthus Adds Key Members to Operations, Marketing and Legal Teams

Hires include:

Pat Tiernan, EVP of Operations;

Todd Karnig as Senior Vice President of Western Operations;

Mike Woolston as the Senior Vice President of Manufacturing, Supply Chain and Quality;

Mike Medor as Vice President and General Manager of all Florida operations, leading GrowHealthy into the next stage of its evolution;

Matan Cohen as Senior Director of Marketing;

Todd Easley as the Senior Director of Integration and Continuous Improvement;

Randy Pruitt joined as Western Director of Facilities and Construction Management;

Caroline Billet, Esq., as Vice President and Associate Counsel

TILT Announces New CEO and Board

TILT (CSE: TILT), a US-focused cannabis company, announced the appointment of current Board member and interim Chief Executive Officer, Mark Scatterday, as Chairman of the Board of Directors of the Company.

The Company’s first quarter pro forma revenue increased 169% year-over-year to $40M, pro forma Adjusted EBITDA margin continues to improve.

TILT is a leading provider of products and services to businesses operating in the cannabis industry. The Company offers the contract manufacturing of marijuana in a variety of form factors, vaporizer and inhalation devices, business and consumer delivery services and a broad suite of software products for over 1,500 retailers and brands throughout the United States (“U.S.”), Canada and Europe.

GTI Announces Alex Yemenidjian Joins Board of Directors

Green Thumb Industries Inc. (GTI) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of the retail chains Rise™ and Essence, announced that Alex Yemenidjian has joined its Board of Directors. Mr. Yemenidjian has served as Chairman of the Board and Chief Executive Officer of Armenco Holdings, LLC, a private investment company, since January 2005, and co-founded Integral Associates, recently acquired by GTI.