🚙 Eaze's largest shareholder purchased assets for $56M in August auction

Ohio rec. sales of $87.1M in 7 weeks. AFC Gamma/Story Cannabis $41M Credit Facility. TerrAscend Draw Remaining $26M/$140M Debt. Chicago Atlantic & Silver Spike Close Loan Portfolio Acquisition.

🌼 I went to REVELRY this past Friday and felt the excitement in the market from NY operators and brands that have entered/plan to enter the market. It was good to connect with newsletter readers and also compare notes with people who have also been to Hall of Flowers—the consistent sentiment was that this felt like the first few days of Hall of Flower, where ROI was high and this was the most impactful event for brands looking to sell into / maintain relationships with the 200+ operational dispensaries. GMR has photos here. I’ll be collecting more feedback / news around REVELRY, but if you have any thoughts you’d like to share, please reply to this email.

🤝 Now on to Benzinga, which I’m already in Chicago for. Look forward to seeing some of you there and if you’re interested in attending my panel on Cannabis Capital Markets: What do the Industry's Leading Operators Expect from 2025, it’ll be happening at 10a CT Wednesday (Day 2).

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🌿 Industry

New York Office of Cannabis Management releases three-year study report. The Marihuana Regulation and Taxation Act (MRTA) Implementation Report, highlights three years of progress. — CNY Central

• A total of 1,342 Adult-Use Cannabis Licenses have been issued, and over 200 retail dispensaries are now licensed to operate

• To date the Adult-Use market has generated $653.9M in revenue

• $493.2M in adult-use sales for Q1–Q3 2024 sales

Trulieve suit alleges deceptive advertising in adult-use marijuana opposition. Trulieve has filed a defamation lawsuit against the state’s Republican Party and two TV stations for running “deceptive campaigns” aimed to mislead voters on a November ballot initiative to legalize adult-use sales. — MJBizDaily

• The ad in question depicts a “Big Weed” character that tells a farmer: “We wrote the amendment, so we’re the only ones that can grow it.” The lawsuit claims the “Big Weed” character “is reasonably understood” to be Trulieve

• Amendment 3 continues to ban home grows, a major point of contention among consumers and some industry operators

GTI Workers in New Jersey File Petition to Remove UFCW Union for 275 Employees. The National Right to Work Legal Defense Foundation claims union officials bypassed a secret ballot election to gain power over GTI employees via a ‘card check’ campaign — CBT

• The National Right to Work Legal Defense Foundation—a nonprofit, charitable organization providing free legal aid to employees whose human or civil rights have been violated by compulsory unionism abuses—announced that GTI employees have filed a petition seeking an election to remove UFCW Local 360 union officials’ monopoly “representation” over them in New Jersey

• Under card check, union officials can bypass the secret ballot election process that has long been recognized as the most secure and reliable way to determine if a majority of employees want to unionize

• During card check drives, union officials can repeatedly solicit and pressure workers face-to-face to demand they sign union authorization cards, which are then counted as “votes” to impose the union on workers. The process is a breeding ground for coercive and intimidating tactics

• New Jersey’s lack of a Right to Work law lets union officials demand that workers pay union dues or fees just to stay employed. Additionally, union officials in a unionized workplace enjoy monopoly bargaining privileges, which allow them to contract and speak for every worker in the unit—even those who voted against the union or otherwise oppose its presence

California will allow eating, drinking and smoking at Amsterdam-style cannabis cafes. Assembly Bill 1775, which goes into effect Jan. 1, gives California cities the option of allowing dispensaries to prepare and serve hot food and nonalcoholic drinks on site, as well as host live performances. — LA Times

• Customers can already smoke, vape and sample edibles in some dispensaries, but the businesses are only allowed to sell prepackaged snacks and drinks

• Supporters say that a more comfortable recreational weed culture will help reinvigorate California nightlife and boost profits for the state’s highly taxed, highly regulated legal cannabis dispensaries

• Newsom wrote that it will be “critical” for local governments to prioritize worker safety and work to minimize public safety risks. If they don’t, he said, “it could necessitate reconsideration of this limited expansion”

Hemp execs see increasing unity between hemp, marijuana interests. Cantrip CEO Adam Terry believes by this time next year, every cannabis company is also going to be a hemp company. — GMR

• Cycling Frog noted they’ve been actively trying to collaborate with cannabis companies on lobbying policymakers—both at the federal and state level—to help them realize that two industry sectors are only divided by the arbitrary federal definition of hemp as cannabis with only 0.3% delta-9 THC by dry weight

• The path forward also may include more state-level legal battles like those shaping up in both New Jersey as well as in California and Missouri, if the status quo prevails at the federal level

• Hemp operators believe they have a winning legal argument that the 2018 Farm Bill will win out in court over state-level bans of intoxicating hemp products

• “In no state has anybody been able to prove that emergency medical treatment is needed, that children are dying, that anything actually bad is happening. They’re just using these scare tactics”

Paul A. Bilzerian ran cannabis company while owing government more than $180 million, feds allege. Bilzerian was indicted Thursday by a federal grand jury in California for allegedly dodging a decades-old judgment owed to the SEC that now exceeds $180M. — LA Times

• Prosecutors say Bilzerian, described as a corporate takeover specialist, avoided paying the judgment even as he ran Ignite, a cannabis and lifestyle brand company purportedly helmed by his social media influencer son, Dan Bilzerian

• Bilzerian and his accountant, Scott Rohleder, allegedly oversaw Ignite’s operations, strategy, marketing and fundraising, and held daily management meetings, according to the indictment. Bilzerian also had influence in decisions to hire and fire Ignite’s executives and members of its board of directors

• Prosecutors also allege that the defendants misled Ignite’s investors by inflating sales figures

Headset shows that In Q2 2024, pre-rolls have emerged as the leading category in Canada, growing 6.2% YoY. This trend contrasts with the continuing decline in flower sales, highlighting a shift in consumer preferences.

Ohio adult-use sales of $87.1M in 7 weeks (8/6–9/28).

Arkansas medical cannabis campaign sues state over rejected ballot initiative.

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💵 Deals

AFC Gamma Provides Story of Maryland with $41M Senior Secured Credit Facility. Story MD intends to use the proceeds from the credit facility to refinance existing debt and provide working capital. AFC holds the entire credit facility for Story MD, which consists of a first-lien term loan secured by the borrower's real property and the value of its cannabis licenses and operations in Maryland.

TerrAscend Closes on Remaining $26M Draw of $140M Debt Financing. Certain entities consolidated by the Company in Michigan have completed the second draw of $26M in gross proceeds of the Company’s senior secured term loan for total gross proceeds of $140M from funds managed by FocusGrowth Asset Management, along with other members of a loan syndicate, which was previously announced on August 2, 2024. The proceeds from the second draw were used to pay down the Company’s higher interest Michigan debt. The Loan included an initial draw of $114M in gross proceeds, which was completed in August 2024, bringing the total gross proceeds under the Transaction to $140M. The Loan carries an interest rate of 12.75%, matures in August 2028, contains no prepayment penalties and is guaranteed by the Company and TerrAscend USA, Inc. No warrants were issued as part of the Loan. The Loan is secured by the Consolidated Entities in Pennsylvania, California and Michigan, as well as certain entities in Maryland.

Chicago Atlantic and Silver Spike Close Loan Portfolio Acquisition. Chicago Atlantic announced that Silver Spike Investment Corp. (SSIC), a specialty finance company that has elected to be regulated as a business development company, acquired a portfolio of loans (CALP Loan Portfolio) from Chicago Atlantic Loan Portfolio (CALP), a Chicago Atlantic-managed fund, in exchange for newly issued shares of the Company’s common stock (Loan Portfolio Acquisition). As a result of the Loan Portfolio Acquisition, CALP and legacy SSIC stockholders own 72.8% and 27.2%, respectively, of the outstanding shares of the Company’s common stock. The Company is the only publicly listed BDC focused on lending to cannabis companies. As a result of the Loan Portfolio Acquisition, the Company has net assets of ~$300 million and investments in 28 portfolio companies. In connection with the Loan Portfolio Acquisition, the Company was renamed Chicago Atlantic BDC, and its ticker symbol will be changed to “LIEN.”

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📄 Company Updates

Note from Eaze CEO to employees

Eaze has a (not so) new owner after assets are auctioned off. The bundle of Eaze assets were purchased for $56M in August via a telephone auction by a firm owned by Netscape co-founder Jim Clark, who was the company’s largest investor. Clark’s FoundersJT acquired the following assets from Eaze: Accounts, Chattel paper (monetary obligation and security interest), Commercial tort claims, Deposit accounts and cash, Equipment and inventory. FoundersJT did not assume certain liabilities from Eaze, including potential unpaid invoices to brands, manufacturers and other vendors. The acquisition by Clark, follows his foreclosure on the company in May after it defaulted on a loan. “The new ownership group is evaluating the status of each state’s operations and expects to make a decision prior to year end about what will continue to operate or be closed down,” Azzalino wrote in an email to GMR.

FiSai holds $50M of The Cannabist's debt and is getting nervous about the company's poor performance. FiSai US Management, a holder of $50M in The Cannabist Co.’s secured notes due Feb. 2, 2026, formally notified the company’s board and CEO of its concern regarding liquidity management, underperformance and strategic missteps. Now, FiSai is making its concerns publicly known by releasing a letter originally sent to The Cannabist on Sept. 26 that outlines all the bad decisions it says the company has made, including what it called “strategic failures” by CEO David Hart and Chairman of the Board Michael Abbott. The letter also emphasizes FiSai’s view that the executives of The Cannabist are employing a “pray and hope” strategy that macroeconomic events, such as a favorable presidential election or the passage of Florida’s Amendment 3, will provide positive cover for the company.

FundCanna and BLAZE partner to directly address the payment constraint issue in Cannabis by offering an integrated financial solution. With access to financing from FundCanna, dispensaries can smooth out cash flow, ensure timely payments and purchase inventory in larger quantities which will lead to better pricing, improved inventory turnover, and more favorable terms with suppliers.

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🏬 Retail

7 Stars Holistic Healing Center installs 100-foot-wide ‘cannabis dispensary’ mural along I-80. Bay Area sign painter Patrick Piccolo was hired by the dispensary to paint the piece, which features the sans serif font and an icon symbolizing a place marker. The mural further advances the philosophy behind the mission of 7 Stars clearly and succinctly—to challenge people to view cannabis as an ordinary plant like all other plants, and to question the stigma around misperceptions of its illicitness despite its legality in the California market.

Trulieve open 152 Florida dispensary in Hallandale Beach, FL.

Curaleaf opens 65th dispensary in Florida and 151st nationwide. Curaleaf Port St. Lucie is the Company's second medical dispensary in St. Lucie County.

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🌱 Product

1906 Introduces New Cannabis Gummies to Help Those with Pain. 1906 Pain AM and 1906 Pain PM gummies help people stay active during the day and rest comfortably at night. Pain AM features a sour watermelon flavor designed to energize and relieve pain without the sluggishness of traditional treatments. Pain PM, with a soothing plum flavor, helps users relax and recover overnight. Together, they offer a comprehensive solution to chronic pain.

RIV Capital and Cansortium Launch MOODS in New York. MOODS is now available in New York. The carefully formulated line of cannabis products is now available at the Company’s Etain branded dispensaries, with additional third-party dispensary locations expected as wholesale sales have commenced.

Dutchie 2.0: Modernizing Cannabis Retail with Personalization and AI Across Point of Sale, E-commerce, and Loyalty & Marketing. New features include substantial improvements to customization, reporting, cultivation & manufacturing, digital payments, and introduces a deeply integrated loyalty & marketing solution.

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🧔 People

RIV Capital Appoints David E Vautrin to Interim CEO. Mike Totzke, Interim CEO and COO, has resigned from the company, effective October 1st, 2024. The Board of Directors has appointed its current Chief Retail Officer, David E Vautrin, as Interim CEO.

WM Technology Appoints Glen Ibbott to Board of Directors. A seasoned executive with more than 25 years of experience, Ibbott is the founder of GK Financial Ventures, a financial consulting company. He previously spent nearly seven years as CFO of Aurora Cannabis and was CFO at biotechnology company QLT.

TILT Holdings Board Member Adam Draizin Steps Down. Marshall P. Horowitz will replace him on the Board, he previously served as the first General Counsel for TILT.

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🎙️ Interviews

Jason Vedadi, Story Cannabis | GMR

Ohio Continues to Boom | Trade To Black

George Jage, MJ Unpacked | The Green Rush

Who’s Better for Cannabis: Harris or Trump | Higher Exchanges

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👋 Highly Objective is a weekly Cannabis newsletter and podcast curated by Dai Truong, who leads Cannabis Investment Banking at Arlington Capital Advisors. Third-party information presented here and links to third-party content are for informational purposes only and are not intended as a recommendation, offer or solicitation for the purchase or sale of any financial instrument, security or investment.  The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Linking to third-party sites in no way implies an endorsement or affiliation of any kind between Arlington Capital Advisors, LLC, or its affiliates and any third party.  The information in this blog constitutes my own opinions (and any opinions posted by guest bloggers from time to time) and it should not be regarded as a description of services provided by Arlington Capital Advisors, LLC or any affiliate.