Dai Truong's Cannabis Newsletter - Issue #6


One Company to keep an eye on (either going to get acquired for some ridiculous price given the hype they’re building or run out of money because it’s more hype than substance) that I came upon recently is Puffy Delivery. I came across the Company on Instagram two weeks ago and this sponsored LA Weekly article this past week. A bit strange that a Company I haven’t heard about touts 200 employees (probably a lot of part-time employees in that number) so take some of these highlights the Company wrote about themselves with a grain of salt:

  • Founded two years ago by co-founders Michael Ng and Patrick Martin, who already had some experience in storefront cannabis, saw a need for a professional, reliable cannabis delivery service in Orange County

  • Currently, no delivery company holds the proper licensing to be able to sell cannabis across all of California. With the exception of eaze, most are smaller, local companies, with smaller service areas and, often, a smaller menu of available items

  • Puffy Delivery, however, has either secured licenses or is on the brink of securing them in Los Angeles, Orange County, San Diego, Sacramento, Oakland, San Francisco, Alameda County, Davis, Palm Springs, Lake Elsinore and Moreno Valley. The company is also already in the process of expanding to Oregon and Nevada and plans on being there before the end of 2019

  • Puffy currently averages about 47 minutes per delivery, one of the fastest delivery times on the market

  • Puffy is the largest service provider for cannabis media giant Weedmaps.com, providing its customers with the largest online marketplace currently available in the digital cannabis world

  • Puffy features a variety of brand names, including Ignite (Dan Bilzarian) and VVS (Ben Baller). Puffy also recently signed an exclusive deal with Berner’s Cookies line

  • What sets Puffy apart from its competitors is its unique marketing approach and strategy, also serving as a launchpad for new brands to put out their product

  • Currently employs 200+ people, including 15+ in-house developer, at its Irvine headquarters


Cannabis

Canadian bank throws cold water on marijuana revenue forecasts

Bank of Montreal (BMO) is warning investors that revenues of adult-use cannabis in Canada could come in lower than expected over the coming quarters due to the slow build-out of retail stores, flat nationwide retail sales and inventory depletion.

TILT Announces Expansion of Blackbird Services in California

TILT, a leading provider of products and services to other businesses operating in the cannabis industry, announced the expansion of Blackbird’s delivery and supply chain services in the greater Los Angeles area. Today, Blackbird distributes wholesale product to 80% of the licensed retailers in California and more than 95% of licensed retailers in Nevada.

Are Nevada cannabis sales beginning to plateau?

Nevada’s marijuana sales advanced in 2018, but the state’s once-sizzling growth rate is showing signs of cooling.

Woman Accused of Running Multi-Million Dollar Weed Delivery Service

A woman in Massachusetts is facing charges after investigators say she ran a wildly successful, but illegal, marijuana company. At its peak, the Company employed 25 people and generated $14M in revenue over the past two years.

Organigram Releases Cross-Platform Mobile Application for Medical Patients

The Organigram Mobile App was created as a direct result of feedback, which suggests cannabis patients are more likely to purchase medication and communicate with licensed producers through a specific application, rather than a web-based browser. The Company continues to explore how to develop tech-based solutions to serve medical and adult recreational consumers.

New Jersey forecasts need for up to 90 more medical marijuana dispensaries by 2022

New Jersey needs to add 50 to 90 medical cannabis dispensaries in the next three years and more cultivation facilities to keep pace with current market demand. The report, released by the New Jersey Department of Health, said the state’s six vertically operated businesses nearly doubled their revenues from $29 million in 2017 to $53 million in 2018. The number of patients has surged 150% since January 2018, to more than 42,000.

25 local governments sue California over marijuana delivery

California has entered a potentially landmark legal fight against some of its own cities over one of the most basic questions in the nation’s largest legal marijuana market: Where can you buy it? 25 local governments sued California regulators Friday to overturn a rule allowing home deliveries statewide, even into communities that banned commercial pot sales. The rule “permits commercial cannabis deliveries to any physical address in the state,” which conflicts with the authority of local governments to prohibit marijuana deliveries within their boundaries, the lawsuit said.

Can Ontario's Legal Cannabis Shops Compete With the Black Market?

Ontario’s ever limping legal cannabis market has shit another snag as shoppers say they province’s legal stores are too expensive.For some potential customers the price of legal weed is simply too high when compared to the black market. Some industry insiders think the problem comes down to consumer education instead of cost. Hamilton-based cannabis consultant, Olivia Brown, explained that the price premium you see at legal cannabis stores also comes with a quality boost. When people complain about the prices at legal shops, Brown tells them you can’t compare “fine wine to moonshine.” “These people aren’t understanding the difference between really fantastic, lab-tested quality-grown, labeled, packaged, beautiful products.”

CBD

Infographic: Current and Potential CBD Consumers

In January, High Yield Insights commissioned a national online survey of 2,000 Americans, aged 21+, asking about their usage of, interest in, and attitudes toward CBD.

Cheeba Chews Launches Collection of Hemp Infused CBD Taffy

Cheeba Chews™, an industry-leading edibles provider and original makers of cannabis-infused taffy, announced the launch of Hemp Cheeba Chews, a premium line of hemp-derived CBD taffy.

Deals

Cresco Labs to buys Origin House for $850M

Cresco Labs’ acquisition of Origin House for ~$850M which will help get the Chicago cannabis company’s products on shelves at more than 725 dispensaries around the country.

Cresco CEO Says Momentum Is Building to Legalize Pot at Federal Level

Cresco Labs CEO Charlie Bachtell discusses the company’s acquisition of Origin House, a delivery service for marijuana products in California. He also talks about the effort to legalize pot at the federal level. Bachtell talks to Bloomberg’s Taylor Riggs.

Harvest Health & Recreation Announces Private Placement of US$500 Million of Convertible Debentures Canadian Stock

Harvest Health & Recreation announced that it has entered into an engagement agreement for a brokered private sale of up to 500,000 convertible debentures of Harvest, at a price of US$1,000 per Debenture, for gross proceeds of US$500M. The Offering is intended to be closed in five tranches of 100,000 Debentures per tranche, over a period of not more than 18 months.

Hemp Spinoff Aims to Raise $50M and List on Nasdaq This Year

Vertical closed its Series A Financing Round at $58M. Vertical upsized the original $20M Series A to $35M late last year due to investor demand. The round formally closed on March 31, bringing the total amount raised by the company to $65M since inception. This capital is being used to build out Vertical’s large scale multi-state infrastructure and bring its brands to market.

48North Closes $28.75M Bought Deal

48North will use the proceeds of the Offering to execute on its business plan, namely developing its proposed 100-acre outdoor cultivation site in Brant County, and the distribution of next-generation cannabis products to consumers for retail sale in Canada come October 2019.

BMO to Provide WeedMD with $39M Secured Debt Financing

WeedMD, a federally-licensed producer and distributor of medical-grade cannabis entered into a credit facility with BMO. Under the terms of the credit facility, BMO will provide WeedMD up to $39M of secured debt financing at a rate of interest that is expected to average in the low-to-high 5% per annum range over a three-year term.

Halo Labs Announces Closing of C$18M Prospectus Offering and Repayment of Debt

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.

Aurora Cannabis Files Preliminary Prospectus to Raise up to $750M

Executive Chairman Michael Singer commented “Although we have no immediate intention of drawing capital against this Shelf Prospectus, we have introduced this option as a prudent and long-term strategic measure to provide us with flexibility in access to growth capital, if or when required, to continue executing on our global expansion and partnering strategy.” “With our recent listing on the NYSE, our successful financing in January 2019 led by U.S. institutional investors, and as we work with Nelson Peltz to explore potential partnership opportunities, this filing is a natural evolution for our company as we rapidly mature into a global and profitable organization.”

Fund

Merida Capital Partners Launches $200M Third Fund; Crosses $125M in AUM

Merida Capital Partners (Merida), a cannabis-focused private equity fund, has launched its $200MM third fund, which will focus on concentrated, high conviction investments in leading companies in the cannabis ecosystem. Since launching its first fund in late 2016, Merida has deployed nearly $80MM across the firm’s first two funds and now has more than $125MM under management. Though only two years old, Merida has accelerated liquidity within its portfolio of 25 investments through public listings for GrowGeneration, Vireo Health and CB2 Insights as well as leading investments in public companies KushCo Holdings and Freedom Leaf Health.

People

Aurora Cannabis Hires BMO Managing Director to Lead Corporate Development and Strategy

In this newly created role, reporting to the Executive Chairman, Carey Squires in collaboration with senior executives across the company will focus on global growth and partnership strategies and investor development. Mr. Squires comes to Aurora with global investment banking experience, having most recently served as Managing Director and Co-Head of Equity-Linked Capital Markets for BMO Capital Markets. In this role, he successfully led the financing for a number of issuers, including Aurora’s recent convertible notes offering.

High Times Names Kraig Fox President and CEO

High Times announced the appointment of veteran media and live entertainment executive Kraig Fox as President and CEO. He has a background in legal and finance with 25 years of experience managing multi-national operations in both the private and public sectors.