🪧 13-day Unfair Labor Practice (ULP) strike against GTI ends
Maryland Governor signs Marijuana Regulation Bill into Law. $120M in April Missouri sales. Akerna sells Software Business to MJ Freeway Acquisition Co for $5M. GABY CEO departs.
Update: Correction on the GTI story from a previous released that mentioned a 50% wage increase.
Statement from GTI: “The strike is over, and we are pleased to welcome our team members back to work. Negotiations are still ongoing, and an agreement has yet to be reached. Green Thumb did not offer a wage increase to end the strike or pay employees to cross the picket line.
We continue to be deeply disappointed by the misinformation and self-serving guidance that the Teamsters Union is providing to our employees. Green Thumb has and will continue to respect the rights of our employees while following all applicable federal and state labor laws. We remain available and committed to working toward an agreement.”
BDSA: Cannabis sales up 11.7% sequentially in March after decreasing (2.1%) in February. March sales across the 11 markets tracked totaled $1.74B. — NCV
California: up 11% sequentially but down 14.3% from a year ago at ~$395M
Michigan: up 15% sequentially and 62.4% from a year ago to $249.7M
Florida: up 9% sequentially and 25% from a year ago to $221.4M
Illinois: up 11% sequentially and 0.5% from a year ago to $163.8M
Colorado: up 21% sequentially, down 6.8% from a year ago to $151.4M
Massachusetts: up 12% sequentially and 5.5% from a year ago to $149.9M
Arizona: up 3.4% sequentially, down 2.3% to $109.1M
Pennsylvania: up 14% sequentially, down 1% from a year ago to $103.0M
Oregon: up 12% sequentially, down 8.1% from a year ago to $81.3M
Nevada: up 9% sequentially, down 9.6% from a year ago to $76.5M
Maryland: up 7% sequentially, but down (13.6%) from a year ago to $40.2M
Maryland Governor Signs Marijuana Regulation Bill Into Law, With Sales Set To Begin July 1. — Marijuana Moment
Existing medical cannabis dispensaries will be converted into dual licensees at the same time that legalization takes effect on July 1
There will be a licensing cap of 300 dispensaries, 100 processors and 75 growers. For smaller microbusinesses there will be a limit of 10 dispensaries, 100 processors and 100 growers
Missouri Cannabis sales top $350M during first three months of legalization. Missouri’s recreational sales came in at $91M for April. — Missouri Independent
Up from February’s $71.7M and on par with March’s $93.5M. For Illinois, it took seven months to hit $300M, with its first year ending at $670M
It could take up to a year to see what Missouri sales are capable of, said Tyler Hannegan (Robust Cannabis) since cultivators aren’t at maximum capacity
Economic Analysis Indicates Cannabis Industry Paid $1.8B in Excess Taxes in 2022. This is forecasted to increase to $2.1B in 2023. — Whitney Economics
The effective tax rates often exceed 70% for cannabis retailers
UCLA receives $9.5M across six grants from the California Department of Cannabis Control (DCC). Funding will support research on a broad range of topics, from the potency and effects of cannabis products to the financial health of California’s cannabis market. — UCLA Health
The two-year grants awarded to UCLA researchers represent nearly half of the $20M that the DCC recently provided to 16 academic institutions to further scientific understanding of cannabis and to inform efforts to shape public policy related to the evolving legal cannabis market
Akerna Sells Software Business to MJ Freeway Acquisition Co for $5M, Coinciding with Merger with Gryphon Digital Mining. Alleaves is participating in the financing of the acquisition. MJ Acquisition Co will be acquiring MJ Freeway, including MJ Platform and Leaf Data System brands, and Ample Organics.
Goodness Growth Holdings Closes on initial $2.0M tranche of $10.0M Financing Commitment. This facility is being funded by a separate affiliate of the Company’s senior secured lender and was previously announced as in final discussions on March 31, 2023. The convertible facility has a term of three years, with an interest rate of 12.0%, including 6.0% cash and 6.0% PIK (paid-in-kind). In connection with this financing, the Company will issue 6,250,000 Warrants to purchase shares to the lenders. The Warrants will have a term of five years with a strike price equal to $0.145.
📄 Company Updates / Earnings
Curaleaf Reports Fourth Quarter and Fiscal Year End 2022 Results.
2022 — Revenue of $1.34B and Adjusted EBITDA of $305M, up 12% and 17% from fiscal 2021, respectively. Gross profit of $579M and Gross Margin (GM) of 43%.
Q4 2022 — Revenue of $352.5M, up 14% year-over-year, and Adjusted EBITDA of $73M (21% margin). Gross Profit of $78.1M and Gross Margin (GM) of 22%. Operating Cash Flow (OCF) of $46M. As of December 31, 2022, the Company had $163M of cash and $623M of outstanding debt net of unamortized debt discounts.
GTI Q1 2023 Results. Revenue increased 2% year-over-year to $249M, but down 4% sequentially. GAAP net income of $9M or $0.04 per basic and diluted share. Adjusted EBITDA was $76M (31% margin). Cash flow from operations of $75M. Cash at quarter end totaled $185M. Total debt outstanding was $277.8M.
StateHouse Q4 and 2022 Financial Results. Total net revenues were $108.2M for FY 2022, an increase of 79.4% compared with $60.3M in FY 2021. Total net revenues for Q4 2022 increased 68.8% to $25.5M, compared with $15.1M in Q4 2021, a 17% decline sequentially. In Q3 2022, the company had a 11% sequential decline down to $30.8M Revenue.
springbig Q1 2023 Financial Results. Revenue increased to $7.2 million, up 16% year-on-year. Subscription revenue was up 28% year-on-year. Gross profit was $5.8 million (81% GM). Adjusted EBITDA loss was $(1.3M). Cash and cash equivalents totaled $2.6M as of March 31, 2023.
4Front Ventures Non-Binding Term Sheet for Extension of Senior Secured Debt. The company has entered into a non-binding term sheet with its senior secured lender, LI Lending, LLC to extend the maturity date, reduce the interest payable, and expand the third-party financings available under the December 17, 2020 Amended and Restated Loan and Security Agreement between 4Front and LI Lending. Under the Term Sheet, the Lender would extend the maturity date of the Loan to May 1, 2026 and reduce the interest payable to 12.0% per year, payable monthly.
Aurora Expands Medical Cannabis Portfolio in Germany: New flower varieties for patients with high THC needs. The company is launching two new cannabis flower products for patients: Pedanios 27/1 FRG CA and Pedanios 29/1 SRD CA are dried cannabis flower with high tetrahydrocannabinol (THC) content.
Kiva Sales and Service to Sell and Distributing Garden Society Products in California, While Garden Society to Manufacture All Kiva Confections Products in New Jersey. Kiva Sales and Service will sell and distribute all Garden Society products, including its newest release: solventless hash-infused pre-rolls available as a single 1-gram or a 5-pack of 0.5 grams per pre-roll (2.5 grams total). In addition to the California relationship, later in 2023, Garden Society will manufacture all Kiva Confections products in New Jersey beginning with the company's effects-based Camino and vegan Camino Sours gummies, with other products to follow soon after.
4Front Ventures Launches New Koko Gemz Variety Pack, Cannabis Infused Chocolate. The new product offering features four chocolate flavors—Milk Chocolate, Dark Chocolate, Cookies & Cream and Peanut Butter Milk Chocolate—each made by the Company's master chocolatiers using handcrafted Belgian chocolates. Each variety pack contains a mix of 20 Koko Gemz with 5mg of THC, delivering a tasty tension of chocolate, luscious smoothness and 100mg of THC in each box.
GTI ends 13-day Unfair Labor Practice (ULP) strike led by Teamsters Local 777 members at two Rise Cannabis dispensaries in Joliet, Ill. and one in Niles, Ill by increasing wages 50%. The workers are now returning to their jobs and demanding that the wage increases be made permanent. Federal labor law suggests if an employer makes a unilateral wage increase during collective bargaining, those wage increases are precedent-setting. The company also committed additional ULPs during the ULP strike, including unlawful surveillance and the promise of promotions for those who crossed the picket line.
GABY CEO departs, Appoints Interim CEO. Margot Micallef will take a temporary leave of absence from her role as CEO of the Company. Micallef is temporarily resigning her position as CEO for personal reasons but will continue to represent the Company as its Chair and serve on the Board. The Board has appointed Simon Lileikis, GABY's current President, to serve as the Company's Interim CEO. Lileikis was appointed President of GABY in 2021.
Schwazze adds Chris Driessen as EVP, Commercial Sales. Driessen is tasked with expanding the Schwazze wholesale business by developing a house of brands and gaining material distribution across both of its markets. He replaces Steve Pear who recently left the Company. Driessen previously served as CEO of Front Range Biosciences and President and CEO of Slang.
Kiva Confections, Co-Founder, Kristi Palmer | High Times
Drew Martin | Luxury Meets Cannabis Conference x Different Leaf
👋 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.