🍺 GTI CEO sends letter to Boston Beer Founder to suggest a Merger
Cansortium (51%) and RIV Capital (49%) to merge. Canopy Growth excercise option to acquire Acreage to help address $138M of ST Debt. Trulieve opens 200th dispensary, gets license for two more in OH.
VP Kamala Harris appeared on Jimmy Kimmel Live and spoke about the DEA reclassifying cannabis as a Schedule 3 drug and a strain named after her, Kamala Kush.
🌿 Industry
GTI Seeks Merger with Boston Beer. GTI CEO Ben Kovler sent a letter to Boston Beer founder and Chairman Jim Koch seeking to discuss a potential combination. — WSJ
Kovler outlined the potential benefits of a combination, including allowing GTI to be listed on a major U.S. exchange, innovation in categories including pre-rolled joints, edibles and drinks, and provide it more power to pursue M&A
WSJ reported late last week that Suntory Holdings (Kovler’s great-grandfather Harry Blum helped build Jim Beam) was in early talks for a possible Boston Beer acquisition, which Suntory denied
Boston Beer has its own cannabis brand, TeaPot, which makes cannabis-infused iced tea and is currently available only in Canada
California legal cannabis market continues to shrink, a pattern that has persisted quarter after quarter for several years now. The $1.2B in Taxable Sales in Q1 2024 is the lowest quarterly figure in California since Q2 2020, almost 4 years ago. — CDTFA
Hirsh Jain points out that "Taxable Sales" includes cannabis accessories, and sales of other non-cannabis items. In Q1 2024, actual "Cannabis Sales" were just $1.0B—meaning California is only a $4B legal cannabis market today
Michigan generated $290M in Cannabis Sales in March 2024, an implied $3.5B cannabis market. While California has 4x Michigan's population (10M vs. 40M), it is in danger of being overtaken by Michigan's cannabis legal market
CA may also likely increase the excise tax from 15% to 19% next year. This will further exacerbate the devastation of California's legal cannabis market
Ohio Applications for medical marijuana dispensaries to begin serving both medical and recreational customers must open by Friday, but don’t expect dispensaries to begin serving adults aged 21 and older as soon as Saturday. The state still needs to verify that businesses have updated security, POS systems that can distinguish between medical and recreational customers, have new employees correctly permitted, etc, before they can sign off on the new dual-use license.
Four more medical marijuana dispensaries have been approved to open in recent weeks—bringing the total number of Ohio retailers to 124 (42 of which are owned by MSOs), Pablo Zuanic forecasts 254 adult-use dispensaries by mid-2025
Dual-licensing applications were published on the Ohio Division of Cannabis Control’s website Tuesday afternoon
Massachusetts bans adding CBD or THC to Food or Drinks. Massachusetts agencies have declared that intoxicating hemp-based products can not be sold outside of licensed dispensaries and have tasked local boards of health to enforce what they say is federal law. — Marijuana Moment
Following the notice, the Alcohol Beverage Control Commission warned its licensees that their licenses could be suspended or revoked if they are caught selling hemp-derived products
South Dakota has collected enough signatures to put a cannabis legalization initiative on the November ballot. It will be the third time South Dakota voters have weighed in on the question. In 2020, voters passed a measure which was ultimately struck down in court. In 2022, voters defeated another attempt.
Illinois Cannabis sales of $144.5M in April, up from $132.0M (9.5%) in March 2023.
Cannabis sales decreased 0.7% sequentially in April after plunging in January, rebounding modestly in February, and then bouncing nicely in the longer March, according to BDSA.
Cannabis Media Council signs on as presenting sponsor for the eight-week Broadway revival of Reefer Madness The Musical. Kiva Brands and Hearst Newspapers, will also be supporting the show produced by the stars of the 2005 musical film featuring Kristen Bell, Christian Campbell, and Alan Cumming.
$6.3 million judgment issued against Rapid Analytics. A medical cannabis dispensary in Hattiesburg, MS and a medical cannabis cultivator in Brookhaven, MS received a default judgment for $6.3M. The judgment was a result of the hold placed on the sale of medical cannabis by Mississippi in December 2023.
Illinois once again debated banning hemp-derived THC products and cafes but, in the end, declined to act. The Senate overwhelmingly passed a bill that would have restricted the hemp products, but even with support from some lawmakers in the House, Speaker Emanuel "Chris" Welch did not call the bill for a vote.
CDPH Warns Consumers Not to Drink Illegal Mary Jones Hemp-Infused Sodas. The state confirmed through laboratory testing that Mary Jones sodas are mislabeled and violate state law by containing Delta-9 THC isolate.
Strict rules over delta-8 and delta-9 likely for Texas’ booming hemp industry. Five years after hemp sales were greenlit by state and federal regulators, Texas is home to more than 7,000 registered consumable hemp retail spots — in gas stations, store fronts, bars, coffee shops, strip malls and mobile trailers.
Alberta Gaming Liquor and Cannabis (AGLC) amends Retail Cannabis Store Handbook to allow private label cannabis sales.
💵 Deals
Cansortium and RIV Capital to merge. The Combined Company’s footprint will provide access to Florida, New York, Texas, and Pennsylvania, with significant growth potential and future regulatory catalysts in all four states Combined Company expected to leverage Cansortium’s robust operating expertise as well as RIV Capital’s ~$66M. The transaction has the support of ScottsMiracle-Gro, which intends to exchange its existing convertible notes in RIV Capital for a new class of non-voting Exchangeable Shares of Cansortium at closing, eliminating $175M of debt. Cansortium is expected to own ~51.25% of the Combined Company while RIV Capital Shareholders and The Hawthorne Collective, together, are expected to own ~48.75% of the Combined Company, each on a fully diluted basis.
Canopy Growth Exercise Acreage Options Paving the Way for Acquisition by Canopy USA. This deal provides a clear solution by significantly improving Acreage's capital structure, positioning Acreage for Ohio, and advancing Acreage's entry into Canopy USA. Canopy Growth (Optioner) entered into various agreements in connection with the Debt Acquisition in order to acquire ~$99.8M of Acreage's outstanding debt from certain Lenders (which includes AFC Gamma) in exchange for $69.8M in cash and the release of ~$30.1M (Option Premium) that was held in escrow pursuant to the Option Agreement.
Trulieve lands two Ohio licenses in settlement with Black-owned Ohio operator who originally had deal with Harvest. In accordance with the settlement, Trulieve will acquire Harvest of Ohio, LLC, which will hold licenses for medical cannabis dispensaries in Columbus and Beavercreek. The Harvest of OH medical dispensary in Athens will be transferred to Ariane Kirkpatrick as 100% owner and will be rebranded under the name Mavuno, a Swahili word for harvest, yield, and provide. Separately, Harvest of OH will divest ownership of its production facility in Ironton to unrelated third parties. Harvest of OH was the result of a unique partnership that Kirkpatrick, 51% majority owner, formed with Harvest Health and Recreation, which later was acquired by Trulieve.
Safe Harbor Financial Originates Lines of Credit Totaling $550,000 for Colorado Cannabis Operators. The three new lines of credit were issued at normalized, non-predatory rates, without real estate collateral, utilizing instead a flexible set of underwriting standards. All three Colorado operators receiving funding are current clients of Safe Harbor. Acreage also entered into a $10M Private Placement at a price of $833.33 per Unit.
AFC Gamma Exits $84M Acreage Holdings Loan. This was AFC Gamma’s largest loan in its portfolio and during their last earnings call, they noted that the borrower failed to make its April interest payment in May. AFC Gamma has sold the loan to a third-party at par plus accrued, which generated a 19.9% IRR over the life of the loan.
📄 Company Updates / Earnings
Miracle in Mundelein music festival returns in 2024. The event will return on Sept. 7-8 in front of RISE Dispensary in Mundelein with Wiz Khalifa as the main headliner.
Canopy Growth Q4 FY2024 Net Revenue of $72.8M, up 7% Y/Y to , or 16% excluding divested businesses. Operating loss from continuing operations of ($229M) in FY2024. Adjusted EBITDA loss was ($59M) in FY2024, representing an improvement of 72% Y/Y. Cash of $203M at March 31, 2024.
RIV Capital Q1 2024 Earnings—opened first adult-use dispensary in White Plains, NY and ended quarter with $65.9M of cash to support growth strategy in New York and other initiatives in connection with proposed business combination with Cansortium.
Acreage Q1 2024 Consolidated revenue of $45.3M, Gross Margin was (3)%, Net loss was ($33.3M), Adjusted EBITDA was $2.0M (4% margin), $7.3M in cash and $238M of debt (hence the Canopy USA rescue).
POSaBIT anticipates Late Filing of Q1 2024 Interim Filings.
🏬 Retail
Trulieve Opens 200th Dispensary in Brooksville, FL.
Insa opens dispensary in New Haven, CT. Insa now has two dispensaries in Connecticut after opening its Hartford location in late April.
Enlite Cannabis Dispensary opens second location in Springfield, MA.
Moja Life opens Trenton, NJ’s first adult-use dispensary.
Dutchess Cannabis Company to replace MedMen dispensary in Oak Park, IL.
The Artist Tree opens Laguna Woods, its 8th dispensary in CA and first in OC.
🌱 Product
Curaleaf Expands Product Portfolio with Launch of Select Fruit Stiq. Select Fruit Stiq is ideal for flavor-first consumers looking to elevate their next vape experience with bold fruity flavors and high-quality potent oil at a competitive price. Select Fruit Stiq recently launched in AZ, ME, MA, NY, and MD, and is expected to roll out in NJ, FL, NV, UT, IL, OH, and MO throughout the summer.
Ric Flair Drip and TYSON 2.0 Broaden Footprint in Missouri with Opus Farms. Carma HoldCo has formed an exclusive manufacturing and distribution partnership with Opus Farms, a wholesale producer of high-quality cannabis products.
AYR Partners with Iconic Kowloon Restaurant to Launch Limited Edition LEVIA Kowloon Mai Tai THC Infused Seltzer. Kowloon Restaurant is one of Boston area’s landmark Asian restaurant and entertainment destination. The LEVIA Kowloon Mai Tai seltzer pays homage to Kowloon's famous Mai Tai cocktail with a fast-acting, expertly formulated infused beverage bursting with vibrant, all-natural flavor.
🧔 People
Ascend Wellness appoint Julie Francis to Board. Francis currently serves as COO for The Schwan's Company, a leading U.S.-based manufacturer and marketer of quality foods. Before joining Schwan's, Francis was SVP, Commercial and Category Development–Total Beverage Alcohol at Constellation Brands and Chief Commercial Officer–North America, Coca-Cola Refreshments.
Scot Lee joins TheraTrue as CEO. Lee previously served as COO at Theory Wellness for the past six years. TheraTrue operates in FL, GA, OH and VA.
STIIIZY appoints Tony Shin as General Counsel. Most recently, Shin served as Associate General Counsel at Aerojet Rocketdyne Holdings, a publicly traded aerospace and defense manufacturer of advanced propulsion and energetics systems. During his tenure with the company, he oversaw the corporate legal function of the business and helped lead the $4.7 billion sale to L3Harris Technologies.
Canix lays off 10 employees as part of a Reduction-In-Force. CEO Stacey Hronowski cites small cultivation customers, California market conditions, worsening AR collection issues as challenges for the company.
🎙️ Interviews
Predictions: Cannabis Rescheduling, Florida, & Elections (ft. Hirsh Jain) | CIN
Canopy CEO says he's 'somewhat given up' on pace of U.S. cannabis legalization | BNN
Wana’s Nancy Whiteman shares 14 years of cannabis business lessons | MJBizDaily
Cannabis vs. craft brewing in Springfield | Crain's Daily Gist podcast
Bayou City Hemp Co. is Situated for a Fabulous Future | CBE