GH Group, Inc. and Mercer Park Brand Acquisition Corp. Complete de-SPAC Transaction
Schwazze Acquires Drift (2 Boulder, CO dispensaries) for 3.5x 2021E adjusted EBITDA. Grupo Flor opens Union City (5th in CA). Jane Technologies releases Jane Roots Headless E-Commerce Solution.
Weedmaps Policy. The difference a year can make. In one year, we’ve seen:
8 states legalize adult-use cannabis
2 states legalize medical cannabis
That means that today, more than 70% of Americans live in a jurisdiction that has legalized medical or adult-use cannabis.
Jane Technologies — Releases Jane Roots Headless E-Commerce Solution. The proprietary software launched with Forage, an online cannabis discovery tool developed by Columbia Care to revolutionize the customer shopping experience. Backend infrastructure for e-commerce is complicated to maintain, especially in the cannabis industry's retail landscape marked by rapidly changing inventory, dynamic pricing and diverse promotions. Jane Roots removes this burden on retailers by taking care of the backend integrations, data cleansing, personalization, reviews and automation so they can focus on designing modernized e-commerce experiences specific to their brand. Isolating the frontend allows brands to easily change the customer interface in line with emerging digital trends and quickly update sales content without losing the complicated backend code. For example, if a new product comes into stock, websites using Jane Roots don't need to spend time updating content -- Jane Roots automatically generates the correct product taxonomy, serving size, verified reviews, potency, photos and description into a custom UI design on behalf of the retailer. Over the past year, Jane powered more than 20 million orders and $2 billion in cannabis sales. Jane is the trusted e-commerce partner for over 2,000 dispensaries and brands across 34 U.S. markets.
Grupo Flor — First Cannabis Shop Opens in Major Regional Power Center (Union City). The “FLOR” branded cannabis shop will be Grupo Flor’s 5th store in California and its second shop opened this year. The FLOR shop features a modern aesthetic of crisp marble flooring, soft ambient lighting and a 2,500 square foot interior located in the Union Landing shopping center.
Lowell Farms — Commissioning First-of-its-Kind Cannabis Processing Facility in Salinas Valley. The 10-acre, 40,000 sq ft processing facility will provide drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually. The facility is centrally located in the Salinas Valley with several million square feet of cultivation canopy within a few miles. The new facility will process nearly all the cannabis grown locally by Lowell at our existing cultivation operations. Additionally, Lowell is commissioning a new business unit called Lowell Farms Services (LFS), which will engage in fee-based processing services for regional growers from the Salinas Valley area, one of the largest and fastest growing cannabis cultivation regions in the country.
The facility will initially include eight environmentally-controlled, segregated drying rooms, each capable of accepting ~30,000 pounds of wet cannabis plant material per month. In the facility’s bucking and trimming area, a combination of mechanized and hand trimming services – including a total of 70 flexible trimming stations – will be able to produce up to 800 pounds of flower daily. In addition, in the future, the facility will house one of the country’s first end-to-end, fully-automated pre-roll manufacturing lines, further driving innovation in Lowell’s product offerings and bringing an unprecedented level of choice to the industry’s most discerning customers.
The real property and related assets were acquired from C Quadrant LLC for consideration consisting of $9.0 million cash and 7,997,520 stock. In conjunction with the transaction, Lowell has entered into a loan with affiliates of Viridescent Realty Trust, Inc. to finance the cash portion of the acquisition with a five-year fixed rate loan secured by the acquired assets.
MedMen — Growth Plan Update. “With the significant progress we are making turning the MedMen story from one of turnaround to one of growth, we anticipate sharing more consistent updates on the business trajectory going forward,” said Tom Lynch, Chairman and CEO
Arizona: Following the passage and expeditious roll-out of adult-use sales in Arizona, the Company will reclassify its Arizona operations from discontinued to continuing operations in the fourth quarter of 2021 where it continues to build on its success at its Scottsdale, AZ retail location and in its wholesale operations through its Mesa, AZ cultivation and manufacturing facility.
West Hollywood, CA: On June 1, 2021, after several years of work in partnership with the City of West Hollywood, the West Hollywood Business License Commission voted unanimously to approve MedMen’s Legacy Medical Business application, which will enable the Company to continue operating its flagship location in West Hollywood both as a medical and adult-use retailer. The Company anticipates receiving its new license in the coming weeks.
Oak Park, IL: At its Oak Park, IL location, one of the Company’s highest revenue dispensaries, the Company will open its expanded retail store in July 2021, which includes an additional 3,332 square feet, bringing the location to a total of 7,732 square feet, and a highly visible street facing storefront.
Ontario sold nearly 100 million grams of cannabis last year. The Ontario Cannabis store released their annual year in review, covering April 2020 to March 2021, showing significant industry growth in the province.
Deals / Earnings
GH Group, Inc. and Mercer Park Brand Acquisition Corp. — Complete de-SPAC Transaction, Creating the Largest Cannabis Brand-Building Platform in California.
Glass House Group Transaction Highlights
Expansive cultivation, retail and wholesale footprint:
Cultivation: Currently operates a cultivation footprint of over 500,000 ft2, producing over 110,000 lbs. of biomass per year. Glass House also has an agreement to acquire an additional 5.5 million ft2 state-of-the-art Southern California Greenhouse ("SoCal Greenhouse"), an agricultural producer that will transition in phases to cannabis cultivation. This additional capacity is expected to increase Glass House's current footprint to up to ~2.5 million ft2 by 2023. The Company's total, targeted long-term footprint of 6 million ft2 is expected to be by far the largest cultivation capacity in California.
Retail: Currently operates four dispensaries in California, Glass House generated 365,000 transactions, an average in-store ticket of $65 and an average delivery ticket of $101 in 2020. In addition to its current footprint, Glass House has entered into an agreement to merge with 17 in-process retail licensed entities from Element 7, LLC ("Element 7"), a California company with a proven track record in winning licenses. These licenses, together with two new recent license awards, are expected to bring the Company's retail footprint to a total of 23 open locations by the end of the first half 2022, representing the highest statewide store count of any single California cannabis operator.
Wholesale: Since beginning its CPG business in early 2020, Glass House added 550 retail doors to its CPG distribution, achieving a $50 million annualized revenue run rate for its wholesale business at year-end. Over the long term, the Company aims to build its wholesale network to over 700 dispensaries statewide.
Growing, differentiated brand portfolio:
Glass House Farms: The company's 1st flower brand for the everyday cannabis consumer launched in early 2020, reaching 4% market share and rising from #63 to #2 on BDS' statewide ranking by year-end 2020.
Forbidden Flowers: Bella Thorne's female Millennial- and Gen-Z-targeted brand, spanning THC flower, hemp flower, and soon, vape products.
Mama Sue: Well-known industry activist Sue Taylor's brand offers wellness-focused tincture products targeted to consumers aged 35 and older.
Robust financial profile:
Strong momentum: In 2020, Glass House grew revenue 185% year-over-year to $53 million and generated positive adjusted EBITDA, driven by its expanded cultivation and distribution footprint, improved supply chain and production efficiencies, and enhanced consumer brand profile. Including the assets of the Southern California Greenhouses and proposed Element 7 retail licenses, the combined company expects to generate full-year 2022 revenue and adjusted EBITDA of ~$326 million and $104 million, respectively.
Accelerating cost efficiencies: Glass House has agreed to purchase the additional Southern California Greenhouse capacity at $40 per ft2, or $55 per ft2 on an all-in basis, including capital expenditures required to convert the facility to cannabis cultivation. As its expanded greenhouse facilities ramp over time, Glass House expects to reduce production costs from the current rate of ~$150/lb. to ~$100/lb.
Free cash flow positive: Glass House Group expects to achieve positive cash flow from operations in 2022. Capital expenditure investments to expand cultivation and retail operations are expected to exceed $65 million through 2023 and will be funded from operating cash flow, balance sheet cash and other financing, as needed.
Columbia Care – Closes $74.5M 6.00% Secured Convertible Note. The Notes are senior secured obligations of the Company and will accrue interest payable semi-annually in arrears and mature on June 29, 2025, unless earlier converted, redeemed or repurchased. The conversion rate will be 154 common shares per $1,000 principal amount of Notes (equivalent to ~$6.49/Share), subject to customary adjustments. The conversion price of the Notes represents a premium of ~25% over the closing price of the Common Shares on the NEO Exchange on June 17, 2021.
Schwazze — Signs Definitive Agreement to Acquire Drift. The two dispensaries are located in Boulder, Colorado. This purchase continues Schwazze's expansion and growth plans in Colorado adding to the Company's current dispensary footprint, with nine dispensaries acquired year to date, bringing the total number of dispensaries to nineteen. As part of the purchase, Schwazze will also acquire the assets of Black Box Licensing, LLC, which contains certain intellectual property. Transaction Value: $3.5 million ($1.9 million cash, $1.6 million stock), represents a 3.5x 2021E adjusted EBITDA for the two dispensaries.
Tilray — Asks Stockholders to Support Key Initiatives to Drive Strategic Growth and Strengthen Stockholder Rights. Tilray is seeking to increase the number of authorized shares of common stock, so that it may use its stock to acquire and finance attractive businesses that would help Tilray grow and create value for stockholders. Tilray is also asking stockholders to approve certain amendments and modifications to Tilray’s organizational documents to provide for increased shareholder rights.
Truth Enterprises — Oversubscribed $11.5M Round. Truth Enterprises, the parent corporation behind Sacramento-based lbs. Distribution raised $11.5M. The Company has a distribution arm (lbs. Distribution), cannabis manufacturing, and cultivation. CEO Ross Haley has four successful exits. As CEO of General Hydroponics and CEO/Founder of Vermicrop Organics, he oversaw the 2015 sale to Scotts Miracle-Gro for ~$130 million, and most recently, he sold GrowBiz (co-founder), the nation’s third-largest chain of hydroponic garden centers, to GrowGeneration. Lbs. distributes cannabis products including Puff Pre-rolls, Puff Loaded, and Puff vape pens, West Coast Treez flower and West Coast Treez pre-rolls, Simply Cannabis, High Desert Pure, Elevation Extract, Jerome Baker Designs, Self Baked, No Boundaries tinctures, and Shake. They also offer white-label manufacturing and processing services.
SweetWater Brewing Company and Broken Coast Cannabis Ltd. — Partnership and Introduce Collaborative Craft Brew. SweetWater and Broken Coast announced the launch of SweetWater Broken Coast BC Lager1 — the first collaborative brew between craft beer favorite, SweetWater, and Canada's leading craft cannabis brand, Broken Coast. This new coastal lager is specially brewed to give a nod to one of the most beautiful coastlines in the world. The base lager is refreshing with added twists of key lime and orange.
C21 Investments Inc. — Q1 Results (2/1/21 – 4/30/21):
Revenue: $9.2M – same store sales in Nevada up 28% Y/Y, daily revenue run rate of $98,600/day at the Nevada dispensaries
Gross Profit: $4.8M (49%)
Operating Cash Flow: $2.9M
Adjusted EBITDA: $2.6M
Net Income: $4.4M $0.04 (EPS)