Dai Truong's Cannabis Newsletter - Issue #26


So I was trying to do a separate newsletter on just “Earnings” and had two separate issues of Revue opened and somehow the issue that was just sent only retained a few articles (and combined with the earnings one), so I’m sending this one now (a lot more news).

I’ll still probably do a seperate earnings newsletter because I find it interesting to see who’s actually doing real revenue and actually lives up to the hype / valuation in the Cannabis space. Also interesting to compare cash balances (PLUS actually has more cash than a few MSOs) as funding gets more scarce.


Earnings

MJardin Group Announces Second Quarter 2019 Financial Results and Conference Call Canadian Stock Exchange:MJAR

  • Revenues increased $1.8 million to $7.6 million from the same period a year ago, an increase of approximately 31.0%.

  • MJardin continued the development of the sales of cannabis from its WILL facility, recording $0.5 million in sales in the first quarter.

  • The Company’s Colorado operations continue to provide consistent revenues, generating $7.2 million in revenues.

  • Adjusted EBITDA loss was $4.1 million compared to an adjusted EBITDA loss of $3.2 million for the prior quarter. The decrease was driven primarily by lower sales versus the prior quarter. Adjusted EBITDA is not fully-reflective of cost saving initiatives implemented late in the first quarter of 2019.

TILT Holdings Reports Second Quarter Revenue of US$39 Million, Positive Adjusted EBITDA for July | Business Wire

  • Revenue of US$39.0 million in the second quarter of 2019, a 13% increase from the first quarter of 2019.

  • Narrowed second quarter adjusted EBITDA loss by 49% to US$4.0 million from US$7.9 million in the first quarter of 2019.

  • Preliminary unaudited July revenue of US$15 million and the first-ever month of positive adjusted EBITDA with adjusted EBITDA of US$0.5 million during the month of July.

  • Added 4 new greenhouses in Pennsylvania in mid-June, doubling existing greenhouse footprint.

  • Continued growth in the Company’s SaaS and distribution solutions, specifically in the growing California and Nevada cannabis markets, where Blackbird now distributes wholesale products to 100% of the licensed retailers in California and Nevada and control 90% of cannabis distribution in Nevada.*

  • Completed the full integration of Blackbird’s logistics and distribution operations with Baker’s CRM toolset.

  • TILT ended the second quarter of 2019 with cash and cash equivalents of US$4.5 million.

Plus Products Reports Unaudited 2019 Second Quarter Results Canadian Stock Exchange:PLUS.CN

  • Revenues climbed to $3.6 million in Q2 2019, representing a 125% year-over-year growth over Q2 2018 revenues of $1.6 million.

  • The Company’s cash balance rose to $34.1 million at June 30, 2019, up from $22.4 million as at December 31, 2018. The Company raised $23.68M from the sale of convertible debentures and as a result of warrant exercises in the first six months of 2019.

  • Launched PLUS Mints, the Company’s second product line in California

  • Announced expansion into Nevada through a definitive agreement to partner with TapRoot Holdings, Inc., a vertically integrated cannabis company operating cultivation and manufacturing facilities. The Company expects to market its top selling gummies in Nevada dispensaries in the second half of 2019.

Cannabis

DionyMed Brands Inc. announces Second Quarter 2019 Financial Results

  • The Company generated $12.7 million and $34.4 million total gross revenue (including the value of all product processed) during the three and six months ended June 30, 2019;

  • For the year to date, DionyMed delivered or sold products to 441 out of 624 active retail dispensaries in California and 387 out of over 600 active retail dispensaries in Oregon;

  • The Company raised $8 million through an equity bought deal and a private placement;

  • The Company expanded the “Chill” Direct-to-Consumer delivery platform with 950% order growth during Q2 sequentially over Q1, which at the end of June 2019 was operating at a current $10.3 million annualized run-rate delivering to 14 cities in the Bay Area.

Cannabis Greenhouse Size Comparison: Top 15 by 2020

Smart Money Gains and Harvest Moon Research present an overview of the Top 15 Canadian Cannabis Greenhouses. See the infographic here!

Boston Beer CEO: "We're looking at cannabis after success of hard seltzer business"

The CEO of Boston Beer Company told CNBC on Friday that the brewer is looking to enter the cannabis market next after success in the hard seltzer business.

DionyMed Brands Awarded Three Provisional Licenses in Los Angeles and San Francisco

DionyMed Brands awarded three provisional licenses in California, including two retail (Los Angeles, San Francisco) and one distribution (Los Angeles). DionyMed also holds provisional distribution, manufacturing and non-storefront retail licenses in Oakland, CA and an additional provisional distribution license in Santa Rosa, CA.

MariMed’s Middleborough, MA Dispensary Receives Special Permit for Adult Use

MariMed Inc. (OTCQX: MRMD), a premier cannabis and hemp multi-state operator focused on health and wellness, has received a special permit to allow its Panacea Wellness™ dispensary in Middleborough to merchandise cannabis products under the Massachusetts adult use program. It will now proceed at the Cannabis Control Commission (CCC) for adult use final approval.

Superette Ottawa Exceeds $7M in Sales in Just Five Months of Operations

“At Superette, our vision is to create a better retail experience that encourages organic discovery of cannabis products in a fun and simple way, and to build a community through service and authentic connection. Being able to share that with Ottawa is an amazing feeling,” said Mimi Lam, CEO of Superette Inc. “This is truly an incredible milestone and validates Superette in Wellington West as one of the most productive stores in the country.”

Mountain View relaunches cannabis business applications after major changes

Mountain View is accepting applications to open up to three cannabis businesses in the city, resuscitating a permitting process that was put on ice following an overhaul of the city’s regulations.

Global cannabis trends and game-changers: Q&A with Narbé Alexandrian, CEO of Canopy Rivers

Since taking the helm at Canopy Rivers, the investment affiliate of Canopy Growth, Narbé Alexandrian has seen the cannabis industry go from dipping its toes into global waters to plunging in headfirst.

From Seoul To Smokewear To Pre-Rolls, Introducing Sundae School Cannabis

The New York-based, South Korea-born fashion label’s new line of slow-burning joints is launching in California this month at LAPCG and MedMen.

Woman cannabis entrepreneur takes winding path to Marin-Sonoma delivery venture

Alexa Wall is co-founder of San Rafael-based cannabis company Moonflower Delivery, which picks up products from licensed distributors and drops them off across Sonoma and Marin counties.

420 Central cannabis company accused of breach of contract and fraud

The owners of 420 Central, a high-profile marijuana shop in Santa Ana, California, are accused of defrauding investors and a breach of contract in a lawsuit.

After Breakout Quarter, GTI Looks to Scale and Optimize Its 12-State Footprint

Given the complexity and unpredictability of the industry, GTI has elected not to offer guidance, according to Kovler. But, the company is confident in its ability to deliver. In the second quarter of this year, the company tripled its revenue and reported adjusted positive operating EBITDA. Kovler recommends investors look to the record of closing announced deals, store openings, spend, and revenue to measure the company’s success.

He sees the company’s biggest challenge and opportunity as one and the same: keeping up with demand. The GTI team will be keeping this in mind as the Illinois market transitions to adult-use in 2020.

Planet 13 Announces Customer Traffic for August 2019 - Sep 4, 2019

The Company served 2,027 customers per day in August at an average ticket of $90.25.

Green Thumb Industries Acquires One of New York’s 10 Vertically Integrated Cannabis Licenses

Chicago-based GTI’s $60-million deal follows blockbuster transactions closed by MedMen, Pharmacann and Cresco Labs in New York. As far as the terms of this latest deal, the $59.6M purchase price comes in the form of $46M in cash and 1.7M common shares of GTI stock.

Deals

Tilray to Acquire FOUR20 Adult-Use Cannabis Retailer

FOUR20 owns and operates six stores in Alberta and has secured 16 additional high-traffic store locations. Agreement is for up to C$110M subject to the achievement of performance milestones by FOUR20.

Medicine Man Technologies Unveils its Largest Deal Yet with Entry into a Term Sheet to Acquire a Group of Dispensaries Operating under the Starbuds Brand

DENVER, Sept. 3, 2019 /PRNewswire/ – Medicine Man Technologies, Inc. (OTCQX: MDCL) (“Medicine Man Technologies” or the “Company”), announced today that it has…

Medicine Man Technologies to Bolster Retail Distribution Channels with Planned Acquisition of Colorado Harvest Company

Under the terms of the transaction, Medicine Man Technologies will purchase Colorado Harvest for $12.5 million, or 1.25 times its anticipated 2019 revenue of $10 million. The purchase price will consist of $4 million in cash and $8.5 million in Company stock, equating to 2,881,356 shares issued at $2.95 per share.

TerrAscend (TER) Snaps Up State Flower Brand

Toronto-based TerrAscend (CSE: TER) has agreed to a deal to purchase the Bay Area firm that produces the popular State Flower brand. It will initially acquire 49.9% of ABI SF, LLC for US$2.85 million from the conversion of a previously issued convertible debenture. TerrAscend will then purchase the remaining 50.1% for a consideration based on ABI’s performance during the subsequent 12 months. State Flower is sold at The Apothecarium, the retail chain that TerrAscend is in the process of purchasing. Several of the owners of The Apothecarium and their related entities have an ownership interest in State Flower.

Halo Announces Proposed Purchase of 17.5% of Ukiah Ventures

UVI is a cannabis distribution, processing and manufacturing company providing biomass procurement and value-added services such as drying, trimming, packaging, freezing and storing cannabis.

Halo is a cannabis extraction company that develops and manufactures quality cannabis oils and concentrates, which are the fastest growing segments in the cannabis industry. Halo is a global leader in cannabis oil and concentrates, having produced over 4 million grams of oils and concentrates since inception.

Fire & Flower Enters Into Definitive Agreements to Acquire 8 Additional Cannabis Retail Store Locations in Alberta

“This acquisition will increase Fire & Flower’s retail footprint across the province of Alberta, including three additional high-traffic locations in the major urban market of Calgary,” shared Trevor Fencott, Chief Executive Officer of Fire & Flower. “Adding these additional retail locations is a demonstration of our Company continuing to execute on our growth strategy in key markets.”

Aurora Cannabis Announces Sale of Remaining Shares in The Green Organic Dutchman Sale of Non-Core Holdings Raises $86.5M

Aurora disposed of its remaining 28,833,334 shares, representing 10.5% of the issued and outstanding shares of The Green Organic Dutchman Holdings Ltd (“TGOD”), at a price of $3.00 per share for aggregate gross proceeds of $86.5 million. The completion of the sale of TGOD shares represents an approximate 50% internal rate of return for the Company. As a result of this transaction, Aurora no longer holds any shares of TGOD, however does continue to hold warrants to purchase 16,666,667 shares of TGOD.

Sundial Growers Announces Up To $140M Corporate Credit Facilities with ATB Financial and Bank of Montreal

The Lenders will provide Sundial with an initial C$90 million of secured debt facilities (collectively, the “Credit Facility”), comprised of a C$84 million senior secured term credit facility and a C$6 million senior secured revolving operating facility. Under the Credit Agreement, Sundial also has the right to an additional facility to a maximum of C$50 million (for a total of C$140 million) to finance the construction of additional buildings at its Canadian production facilities, subject to the consent of the Lenders and satisfaction of certain other conditions.

WeedMD - $10M Bought Short Form Prospectus Offering of Convertible Debenture Units

WeedMD (TSXV:WMD) entered into an agreement with Mackie Research Capital Corporation as the lead underwriter and sole bookrunner, on its own behalf and on behalf of a syndicate of underwriters, including Haywood Securities, pursuant to which the Underwriters have agreed to purchase, on a bought-deal basis, 10,000 convertible debenture units for gross proceeds to the Company of $10M at a price of $1,000 per Debenture Unit.

People

Andrew DeFrancesco To Lead Newly Formed SOL Investment Group (SIG) and Step Down From His Roles as Chairman & CIO of SOL Global

SIG will be spun out of SOL Global and operate completely independent of Bluma Wellness and HeavenlyRx. SOL Global intends to spin off all of SOL Global’s non-MSO assets not under the Bluma Wellness umbrella to SIG. Mr. DeFrancesco will serve as Executive Chairman of SIG and take on the role of CIO. SOL Global CEO Brady Cobb will lead the Bluma Wellness team upon the completion of the change of business expected in October of 2019, while former Kellogg’s President Paul Norman will continue to oversee HeavenlyRx. Further details of the spin-off transaction will be provided in the coming weeks as the Company works to conclude its strategic review of its assets.

Golden Leaf Holdings Ltd. Appoints Jeffrey Yapp as New CEO Canadian Stock Exchange:GLH.CN

Golden Leaf Holdings (CSE: GLH) (OTCQB: GLDFF) (“Golden Leaf” or the “Company”), a leading cannabis solutions company and dispensary operator built around recognized brands, announced that Jeffrey Yapp will succeed John Varghese as CEO of Golden Leaf Holdings. Upon the resignation of Gary Zipfel on September 2, Mr. Yapp joined the Board of Directors. Mr. Varghese, who served as Interim CEO, will transition to the role of Executive Chairman and lead all capital markets related activities.

4Front Expands Finance Team With New CFO, Other Key Appointments

New hires reflect 4Front’s prioritization of balancing entrepreneurial spirit and agile leadership with demonstrated capabilities and applicable experience.

Medicine Man Technologies Strengthens Leadership Team with New VP of Finance

Nancy Huber is a senior level executive with a background on multi-functional management, financial and strategic planning, IPOs, M&A, SEC reporting, investor relations, intellectual property, and multiple systems implementation. She was, most recently, the CFO at Forward Foods LLC a consumer packaged goods company, from 2007 to 2019 where she oversaw improvements in revenue, gross margins, net sales margins, and EBITDA.