🍍Houseplant to launch in California

Terra Tech merges with Unrivaled. Schwazze buys 5 remaining CO Starbuds Dispensaries for $72.3M. MariMed $46M Funding Facility. Charlotte's Web acquires Option to purchase Stanley Brothers for $8M.

Mar 8, 2021

🌿Industry

CA Cannabis Sales. California cannabis sales expanded 28.6% in January to $243.5M ($2.9B annualized), up from 25% in December and 24% in November. The sequential decline was 0.4%. Flower sales, which were 35.6% of overall sales, continued to lead growth, expanding 44% during the month, with pre-roll demand strong as well. The pre-roll category, which is more than 10% of the market, grew almost 36% compared to a year ago.

➡️ More data on other States from NCV/BDSA.

Cannabis union organizing surging amid pandemic, uptick in labor peace requirements.

A table listing cannabis industry union activity in the US since January 2020

Union organizing in the marijuana industry has been on the upswing in the past year amid the coronavirus pandemic, particularly in new and emerging adult-use markets such as Illinois, Massachusetts and New Jersey. Several factors are in play, according to union officials and labor experts:

Increased employee anxiety and concerns about workplace health and safety, opening the window for union organizing
More states mandating “labor peace agreements” that prohibit employers from interfering with labor organizing. Labor peace pacts are more likely to lead to unionized workplaces over time.
Unions are being more aggressive in targeting the nascent cannabis industry as they see membership decline in other economic sectors.

Nearly 20 Vermont towns vote to allow recreational cannabis sales. Voters in Vermont’s biggest city, Burlington, as well as the state capital, Montpelier, and at least 16 other towns approved recreational cannabis sales in their communities. At least 27 cities and towns went to the polls Tuesday to decide whether to allow recreational cannabis businesses. The votes were conducted as part of the state’s annual Town Meeting Day, when communities decide local issues such as whether to raise property taxes or how to spend the municipal budget. The Vermont Legislature drafted a recreational marijuana measure that became law last October, but it requires towns and cities to approve of recreational licensees doing business within their boundaries. Recreational sales aren’t expected to begin in Vermont until October 2022 at the earliest.

HERBL is on a Mission to Educate Every Node along the Supply Chain. HERBL has a fleet of thirty-five armored trucks that serves 850+ California retailers with a portfolio of 25+ brands (Select, Raw Garden, and Pacific Stone), generating $250M in GMV in 2020. Along the way, HERBL has a portfolio of 1,000+ SKUs. One of the companies main competitors, Nabis, represents 100+ brands (Buddies, PLUS, Dosist, Nug, Sundae School) and ships to 1,000+ retailers. Nabis distributes ~9%of all legal cannabis in California, an annualized GMV of ~$250M as well.

Other highlights:

Second Pasadena Cannabis Dispensary (GTI/Essence) Set to Open

MedMen co-founders return to Cannabis industry with Santa Barbara-based Coastal

Las Vegas — dispensaries can now operate drive-thru windows

BDSA — Global Cannabis Sales exceeded $21B in 2020, up 48% from $14.4B in 2019. U.S. sales were $17.5B, up 46% from 2019

Illinois sales reach $232M through February ($1.4B annualized)

💵Deals

Terra Tech Corp. — merges with Unrivaled. Terra Tech (OTCQX:TRTC) has executed an agreement to acquire UMBRLA (recently rebranded as Unrivaled). Unrivaled brands include Korova. Unrivaled operates manufacturing and distribution operations in both California and Oregon (distribution to 700+ dispensaries) and dispensaries in California. Through licensing agreements, select Unrivaled brands are also sold in 200+ dispensaries throughout Arizona and Oklahoma. Following the merger, Terra Tech expects to continue its licensing expansion of the Korova brand and integrate the Unrivaled portfolio into its existing operations in California and Nevada. The company expects to generate over $70M in revenues in 2021.

Schwazze — Buys Remaining Colorado Starbuds Dispensaries for $72.3M. Schwazze (OTCQX: SHWZ) closed on the asset purchase of the five Star Buds dispensaries located in Colorado that it had not already previously acquired. The acquired dispensaries are located in Aurora (2), Denver, Louisville, and Westminster. Total consideration was ~$72.3M ($27.5M cash, $26.9M sellers’ notes, and $17.9M in Preferred Stock). Inclusive of this transaction, Schwazze now owns and operates all 13 Star Buds locations in Colorado and its retail footprint now includes 17 dispensary locations in the Denver metro and southern Colorado region. For 2020, the 13 Star Buds retail dispensaries generated total revenue of ~$70M and ~40% net income. Together with Schwazze and the proforma revenue for 2020 Mesa Organics, acquired by Schwazze in April 2020, total 2020 proforma revenue is estimated to be ~$95M on a combined basis.

➡️ Over the last three months, the Company raised a total of $71M in financing, split between a $56M private placement (led by CRW Capital Cann Holding) offering and debt financing of $15M.

MariMed — $46M Funding Facility. Hadron Healthcare Fund has a US cannabis investment portfolio valued at $300M+. The SPA provides for the sale of up to $46M of Series C Convertible Preferred Shares of the Company. At the initial closing, Hadron purchased $23M of Units for $3.70/Unit (one share of Series C Preferred Stock and a Common Stock purchase warrant), each share of Series C Preferred Stock is convertible, into five shares of Common Stock and each warrant is exercisable, at $1.087/share, for one-half of a share of Common Stock for each conversion share (2 ½ warrants shares per Unit). The balance of the committed funds (up to $23M) will be issued on the same terms. In addition, if Hadron exercises all of the warrants for cash, MariMed will receive additional proceeds of ~$34M.

Charlotte's Web — acquires Option to purchase Stanley Brothers USA for $8M. Charlotte's Web (TSX: CWEB) (OTCQX: CWBHF) has entered into an Option with Stanley Brothers USA, a cannabis wellness incubator currently operating in three states (Colorado, California, Florida) with expansion plans underway in eight additional states. The Option has a five-year term (extendable for an additional two years) and provides Charlotte's Web the optionality to acquire Stanley Brothers USA on the earlier of three years from the effective date of the Option and federal legalization of cannabis in the United States, or such earlier time as Stanley Brothers USA and Charlotte's Web may agree (Triggering Event) potentially including when otherwise permitted by the policies of the stock exchange on which the Company's securities are listed for trading. The Option was purchased for $8M cash. The purchase price determination will involve weighted application of 3.5x revenue and 13.5x EBITDA multiples to Stanley Brothers USA's financial statements at the relevant time, or a base amount and earn-out, in certain circumstances.

Fire & Flower — Planned Debt-to-Equity Conversion. Fire & Flower Holdings (TSX: FAF) (OTCQX: FFLWF), plans to convert all of the Company's ~$28.5M outstanding principal amount of 8.0% secured convertible debentures issued in April 2020 as well as the conversion of ~$23.6M principal amount of 8.0% unsecured convertible debentures issued to 2707031 Ontario Inc., as a wholly-owned indirect subsidiary of Alimentation Couche-Tard (collectively ACT), the owners of Circle K, in July 2019. Post conversion, the Company will have converted a total of ~$52M principal amount of debt (plus the accrued and unpaid interest thereon) to equity and ACT will hold 19.9% of the issued and outstanding shares of Fire & Flower.

WeedMD — Amendment of Bought Deal Equity Financing. WeedMD (TSX-V:WMD) (OTCQX:WDDMF), has entered into an amended and restated underwriting agreement dated March 2, 2021 (amending the original bought deal, dated February 11, 2021 for 21,342,000 units at $0.82/Unit for $17.5M), with Eight Capital, Canaccord and INFOR Financial to amend the terms of the Offering to issue to the Underwriters 31,250,000 units of the Company at a price per Unit of $0.48 for $15M. Each Unit will be comprised of one common share of the Company and one-half of one Common Share purchase warrant. Each Warrant shall entitle the holder thereof to purchase one Common Share at an exercise price of $0.60, for a period of 24 months following the closing of the Offering.

MediPharm — $20M Bought Deal Equity Financing. 34,500,000 units at $0.58/Unit (one common share / one warrant at an exercise price of $0.70/Share for 24 month) for $20M.

GTI and Cann — Partnership to Expand Nationally. GTI has signed an exclusive partnership with Cann to manufacture and distribute its cannabis-infused sparkling beverages beginning in Illinois this spring. The partnership will then expand distribution to additional markets including New Jersey.

Other highlights:

Supreme Cannabis — C$30M ATM Program

Hollister Biosciences — $7.9M Private Placement of Special Warrants

The Valens Company — Closes acquisition of LYF Food Technologies (Soft Chews)

The Valens Company — Enters into Extraction and Custom Manufacturing Agreement with Rubicon Organics

Greenlane — acquires Eyce, maker of Silicone Smoking Products

📄Earnings

Columbia Care — Reports Preliminary Q4 and FY 2020 Results; Issues 2021 Guidance

2021E Outlook: $500M—$530M Revenue (47%+ GM), $95M—$105M EBITDA (19%—20% margin)
Q4 2020: $87M Revenue / $8.3M EBITDA
FY 2020: $290M Revenue / ($4M) EBITDA
Balance Sheet: $61M as of 12/31/20. $141M raised subsequent to year-end.

Lowell Farms (Indus Holdings) — Q4 and FY 2020 Results

Revenue: Q4 — $9.2M (8% GM), down 15% Y/Y; 2020 — $42.6M (11% GM); up 15% Y/Y
Adjusted EBITDA: Q4 — ($3.7M) compared to ($13.2M) in Q4 2019; 2020 — ($9.8M) compared to ($36.0M) in 2019
Operating loss: Q4 — ($4.8M) compared to operating loss of ($14.0M) in Q4 2019; 2020 — ($16.1M) loss compared to ($45.8M) in 2019

🧔People

Parallel — Jeremy Kunicki joins as CFO. Kunicki brings public company leadership from a global retail and pharmacy chain as Parallel prepares to go public via SPAC. Kunicki joins Parallel from Walgreens Boots Alliance (NASDAQ: WBA), where he most recently served as CFO for the Walgreens division, one of the largest retail pharmacy companies in the United States. Throughout his 20 years at Walgreens, he played various finance leadership roles with a specific focus on operations, supply chain, real estate, digital and IT. Kunicki has also lead company-wide cost transformation programs, and oversaw finance for M&A integrations.

HERBL — Josh Held joins as Chief Strategy Officer. Held joins HERBL after founding and selling Chemistry Holdings to Cure Pharma. Prior to Chemistry Holdings he was CEO of Made by Science, which later became Form Factory before being acquired by Acreage Holdings. Additionally, Held is executive chairman of Cup Half Full Holdings, a beverage company incubator and holding company that includes hemp & THC beverages, and a board director for Cure Pharma (CURR).

Brian Dewey joins Nabis as Head of Business Development. Prior to joining Nabis, Dewey spent 3 years working at KIVA as VP, Sales for KIVA Sales & Services. Prior to entering the cannabis industry, Dewey spent ~17 years in the alcohol industry working as the Senior Director of Sales for Stone Distributing after creating the national account strategy for Stone Brewing and held positions as Business Development & National Accounts at Sierra Nevada Brewing Co.

🏬New Store Openings / New Product Launches

Houseplant — launches in California. Cy Scott, Headset CEO, did a breakdown of the Company’s CPG strategy, combined with lots of learnings from Canada that may position them well for long-term success.

Seth Rogen @Sethrogen

Almost ten years I go, I envisioned having my own weed company. And today I can say that my company Houseplant's weed will be available in California next week! Also, Houseplant is making lovely Housegoods like ashtrays, lighters, and YES, even ceramics. houseplant.com

Ayr Wellness — Third Las Vegas Location of The Dispensary NV. This is Ayr’s fourth location under The Dispensary NV banner and sixth location in Nevada, including two dispensaries under the Mynt banner in the Reno area. The Dispensary NV Eastern Express is located just across the border of West Henderson, near a high-traffic intersection in the vicinity of McCarren International Airport. Its sister location, The Dispensary NV Henderson, one of the Nevada’s most productive dispensaries with ~1,500 transactions per day, serves East Henderson, approximately seven miles away.

Trulieve — Opens Brand New Tampa and Clearwater Dispensaries (77 in FL)

Verilife — Opens Galena's First Cannabis Dispensary (6th in IL)

Canopy Growth — Launches CBD Beverage Brand Quatreau in the U.S. The stateside launch follows the successful 2020 rollout of Canopy Growth's CBD-infused beverages in Canada, where Quatreau is now the top-selling RTD CBD beverage.

Copperstate Farms — Plans to Expand Cannabis Cultivation to 80-Acres Under Glass in Snowflake, Arizona

💻Hiring

Weedmaps — Director, Strategic Planning (Irvine)

Humboldt Farms — Controller (Remote)

Sherbinskis — Director of Sales (Los Angeles)

710 Labs — Senior Director of Operations and Strategic Planning (Los Angeles)

🤷‍♂️Somewhat Relevant

atai Life Sciences — closes $157 Million Series D. atai Life Sciences, develops clinical-stage biopharmaceutical psychedelic and non-psychedelic compounds for various mental health conditions. The round was led by existing investors Apeiron Investment Group, the family office of atai's founder Christian Angermayer, Thiel Capital, and joined by Woodline Partners LP. The Series D fundraising saw participation from existing and new investors including Fearless Ventures, Falcon Edge Capital, Pura Vida Pro LLC, Catalio Capital Management, Subversive Capital and Highline Capital.

Square acquires majority of Tidal, Jay-Z’s streaming service, in $297M deal. Jay-Z bought Tidal in partnership with other artists in 2015 for $56M. In 2017, Jay-Z sold 33% of the company to Sprint for an undisclosed amount. Earlier this week, Jay-Z bought back the shares from T-Mobile (merged w/ Sprint), and most will be sold to Square as part of the deal.

Highly Objective