Dai Truong's Cannabis Newsletter - Issue #7


Interactive LA Licensing Map

Licensing Map | Department of Cannabis Regulation

The interactive map allows you to hover over each neighborhood in the City of L.A. and see how many retail licenses may be issued, how many have been authorized, and how many are available. This release by the Department of Cannabis Regulation (DCR), the local department that oversees cannabis operators, is a great tool for Phase 3 Retail applicants (social equity applicants).

Cannabis

BMO cuts estimates on Canada market to US$5.2B by 2024

The future of Canada’s cannabis industry may not be as rosy as once believed after one research firm cut their estimates for the outlook on the country’s burgeoning pot market. BDS previously forecasted the Canadian market to be worth US$5.9 billion by 2022. The reduced forecast can be attributed to limited physical retail distribution – notably in Ontario and British Columbia – as well as a complex supply chain, low availability of “non-flower” products and an increasingly active illicit market that continues to flourish in the country.

Pennsylvania cracks down on Big Marijuana, threatens to shut out biggest permit holder

The action was prompted by what officials called “blatant misrepresentation” in a statement issued by Harvest Health & Recreation, which announced Tuesday that it is acquiring a Pennsylvania weed company. Individual companies are capped at five medical marijuana dispensary licenses in Pennsylvania, and each license allows that company to operate three storefronts—effectively limiting companies to 15 dispensaries. Harvest mentioned of its existing Pennsylvania footprint: “Harvest currently has seven state licenses allowing up to 21 retail stores throughout the state,”

Cresco Labs Profile

Guided by a taste for highly regulated markets and a consumer-packaged-goods approach to cannabis, Cresco Labs focuses on consistency and quality across 13 production facilities—with more to come. Following their Origin House acquisition, the Company expects to show how they can execute in markets they didn’t help start like AZ and CA.

Step Inside Dosist's Wellness Experience, The First-Ever, Self-Branded Cannabis Boutique

The vaporizer company’s store is now open on Abbot Kinney Boulevard in Venice, California.

As dispensaries in the Cannabis space develop house brands, another brand decides that they should open up shop as well to showcase their brand/products. The move may prove risky as it potentially alienates retailers (why would I go to MedMen down on the street on Abbot Kinney and purchase something else with my dosist pen, when I can just go to dosist). This is the second brand, after Sunday Goods, that I’ve seen do this. Something tells me they’ll be a few more that’ll test this concept out. It’ll be interesting to see what kind of foot traffic the store sees.

KushCo Holdings Reports Second Fiscal Quarter 2019 Results

Revenue for the second fiscal quarter of 2019 was $35.2M (240% YoY growth) with 20% gross profit margin on a non-GAAP basis. The Company raised its revenue guidance from $110-120M to $140-150M for 2019.

Harvest Health and Recreation CMO Kevin George provide insights into Cannabis marketing challenges

On Ad Age’s Marketer’s Brief podcast, George talks about how Harvest is navigating these agency challenges and other barriers still present in the marijuana industry as it continues to creep into the mainstream.

Bags Of Cash, Armed Guards And Wary Banks: The Edgy Life Of A Cannabis Company CFO

Being chief financial officer in a pot business requires lots of workarounds, including hiring heavily armed guards. Few financial firms are willing to service a market that remains federally illegal.

Ontario to vet future pot shop licence applicants in bid to combat black market

The Ontario government plans to introduce new measures to vet applicants for future cannabis stores when it is ready to start awarding new licences for legal pot shops, a move it hopes will set up better operators to help eliminate the black market.

Study predicts fewer licensees needed to meet potential low Missouri patient count

Missouri will need only 24 to 29 medical marijuana cultivators and 114 to 132 dispensaries to meet patient demand, which a new study predicts will fall far below expectations. Only 26,000 (vs. 200,000 anticipated) qualifying patients will exist in Missouri by 2022, predicted an economic study conducted by the University of Missouri.

Canopy Growth heading for large earnings miss

Scotiabank analysts have slashed their revenue estimates for Canopy Growth Corp., (WEED.TO) warning expectations for the company’s next quarter are too optimistic given “tepid post-legalization” sales.

springbig Reaches Five Million Customer Milestone

Springbig, a loyalty marketing technology Company has surpassed 5M customers. The Company offers text messaging, loyalty marketing, and comprehensive analytic tools to encourage repeat business for cannabis retailers. The Company launched in June 2017 and through its partnerships with some of the leading POS providers in the cannabis space (Flowhub, Cova, MJ Freeway, Treez, Greenbits), springbig has worked alongside retailers to send over 50,000 campaigns (90,000,000 text messages and ~600,000 rewards redeemed)

CBD

Your Guide to Legit CBD – Elemental by Medium

Elemental, Medium’s new health and wellness publication launched this this. They launched it to get to know the truth about the best way to live and feel better. It’s very hard to find good, scientifically rigorous health and wellness reporting that is useful, expert-informed, encouraging, and nuanced. Reporting that doesn’t scare readers, or dumb things down, or debunk and throw shade for the sake of debunking and throwing shade.

They wanted to create something that they wished existed in the world. So they created Elemental.

And of course..covered CBD in this first publication.

Unilever is the latest consumer giant to break into the Hemp and CBD space with a new line of deodorants

Unilever subsidiary Schmidt’s Naturals is rolling out a line of hemp, or cannabis sativa, oil deodorants in retailers including Target in the fall. A CBD-infused deodorant line will follow shortly after, said Michael Cammarata, Schmidt’s Naturals CEO and co-founder.

Rite Aid will start selling CBD products in 2 states, stop selling e-cigarettes in all stores

Rite Aid will start selling CBD creams, lotions and lip balms in Washington and Oregon this month, the company announced Thursday.

Deals

Wildflower Announces Letter of Intent for Acquisition of City Cannabis Corp.

City Cannabis is a cannabis retailer holding two of the three City of Vancouver licences to sell cannabis and the only company with multiple licences in the Province of British Columbia. City Cannabis has been profitably operating various dispensaries in Vancouver since Vancouver commenced licencing cannabis retailers. Pursuant to the terms of the LOI, the Company will acquire 100% of the issued and outstanding common shares in the capital of City Cannabis in exchange for the issuance of 60,000,000 common shares of the Company (“Consideration Shares”) at a deemed price per Consideration Share of $0.75 for aggregate consideration of $45,000,000. The LOI also contemplates that, upon the closing of the Acquisition, Krystian Wetulani, City Cannabis’ founder and chief executive officer, will join Wildflower as a director and as the chief development officer. You

Greenlane Sets IPO Range at $14.00 - $16.00

Greenlane will sell 5,333,333 shares of its Class A common stock, of which Greenlane will be offering 4,666,666 shares and the selling stockholders will be offering 666,667 shares. In addition, the selling stockholders will also grant the underwriters a 30-day option to purchase up to an additional 800,000 shares. The price range for the initial public offering is currently estimated to be between $14.00 and $16.00 per share. Greenlane has applied to list its Class A common stock on the Nasdaq Global Market under the ticker symbol “GNLN”

Mile High Labs Raises $65M

Mile High Labs, the largest extractor of CBD in the world, closed a $65MM term loan facility. “Following the signing of the Farm Bill in late 2018, we started seeing speculators take out significant portions of the available hemp supply. So we acted decisively to secure the single largest source of high-quality biomass available,” said Jon Hilley, CFO of Mile High Labs. “It is quite literally a mountain of hemp – millions of pounds – and this funding guarantees we can continue to meet the increasing demand for CBD from our customers.”

Northern Swan Raises $58M Series D

Northern Swan Holdings, an investment firm focused on making transformative investments in the international cannabis industry, completed a $58M Series D financing, bringing the total amount of capital raised to date to $96M.

MPX International Acquires HolyWeed, a Swiss Premium Organic Cannabis Company

MPX International Corporation purchased HolyWorld SA (“HolyWeed”). This acquisition represents a major step in MPXI’s expansion strategy, adding a highly recognized brand to its portfolio, as well as one of the largest Western European outdoor cultivators of high-CBD flowers.

Eve & Co Announces $10M Special Warrant Bought Deal Financing

Eve & Co, through its wholly-owned subsidiary Natural MedCo Ltd., holds cultivation and processing licenses under the Cannabis Act (Canada) for the production and sale of various cannabis products, including dried cannabis, cannabis plants and cannabis oil.

Heritage Cannabis Holdings Announces $10M Bought Deal

The Company is focused on becoming a vertically integrated cannabis provider that currently has two Health Canada approved licenced producers, through its subsidiaries Voyage Cannabis Corp. and CannaCure Corp. both regulated under the Cannabis Act Regulations. Working under these two licences, Heritage has two additional subsidiaries, Purefarma Solutions, which provides extraction services, and BriteLife Sciences which is focused on cannabis based medical solutions.

High Tide Announces CAD $10M Offering of Convertible Debentures

High Tide, an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products announced for gross proceeds of up to CAD$10M, with Aphria contributing CAD $4.5M. The net proceeds of the Offering will be used by the Company to fund the construction of Canna Cabana, KushBar and Smoker’s Corner stores, complete strategic acquisitions as well as for general working capital purposes.

Tony Hawk Enters the CBD Industry with 1933 Industries Inc.

House of Hawk will be working with Infused MFG to launch several co-branded products, including CBD recovery creams and lotions, as well as hemp-only recovery creams and lotions. In addition to the Canna Hemp™ and Canna Hemp X™ brands, there will even be a line of hemp-derived CBD products sold under the Birdhouse Skateboards™ brand.

Cansortium Announces Private Placement of $25M of Convertible Debentures

Cansortium announced that it has entered into an agreement with Canaccord Genuity and Paradigm Capital to issue on a private placement basis up to $25M aggregate principal amount of convertible debenture units at $1,000 per Convertible Debenture Unit. Each Convertible Debenture Unit will consist of (i) 12.0% per annum and (ii) 229 common share purchase warrants. Each Warrant will be exercisable to acquire one common share of the Company at any time prior to March 21, 2021 at an exercise price of US$2.40 per Warrant Share, subject to adjustment in certain events.

Westleaf - CAD $12M Bought Deal Financing

Westleaf is a vertically integrated cannabis company focused on innovative retail experiences and engaging cannabis brands as well as cultivation, production and extraction of cannabis products. Westleaf is rolling out a national retail footprint for its retail concept Prairie Records, with stores planned for British Columbia, Alberta, Saskatchewan and potentially Ontario.

POSaBIT Begins Trading on the Canadian Securities Exchange

POSaBIT Systems Corporation, a leading financial technology company that delivers unique blockchain-enabled payment processing and point-of-sale (POS) systems for cash-only businesses with a focus on the cannabis industry, today announced that following the completion of its reverse takeover transaction it has begun trading on the Canadian Securities Exchange (CSE) under the ticker “PBIT”