💻 LeafLink acquires Leaf Trade
Florida awards 22 new medical licenses. Kentucky awards 36 licenses. Distru $6M Series A. Cansortium $96.5M, 13% loan from Chicago Atlantic. Agrify raises $25.9M. Canopy Growth gets new CEO.
🗣️ Happy Green Wednesday! We’re less than a week out from MJBizCon, if you’re there next week and want to connect, let me know.
🌿 Industry
Florida approves 22 applicants for medical marijuana dispensary licenses. The 74 applicants in this licensing round initially applied for MMTC permits in April 2023. The licenses issued bring the number of licensees to 47. The successful applicants were: A Good Decision, Alamanda Farms, East Coast Packers, FG Operating Florida, Florida Sports Consultants (doing business as Belushi’s Farm Florida), Gates Housing Group, Global Investment Group (dba Infinite Wellness), Green Point Research, Healing Greene FL, KCOF (dba Klutch Cannabis), King Palms, O’Donnell Landscapes, Pioneer Growers of Florida, Pure Beauty Farms, RAAB (dba Canna Direct), Star Buds Florida, Statewide Property Holdings FL, Stiiizy Florida, Sunfest Herbs, The Flower Shop FL, Theory Wellness of Florida, Wachovia Holdings (dba Greenlight).
The Kentucky Office of Medical Cannabis awarded 36 licenses from a pool of more than 2,500 applicants. The odds of winning varied based on which of the nine Kentucky regions the company applied to set up shop in. Kentucky Public Radio reported Monday that most businesses to win the state’s medical cannabis cultivator and processor licenses from its lottery system are tied to Cannabis companies based in other states. One of the subjects of the reporting that submitted hundreds of applications, Dark Horse Cannabis, won four new licenses.
Donald Trump announced that former Florida Attorney General Pam Bondi (R) would be his new pick for Attorney General. Compared to Gaetz, who has a widely known pro-legalization stance on marijuana—and had even vowed to “go easy” on the cannabis industry if he got the job—Bondi’s record on the issue is far less pro-reform. As Florida’s AG, Bondi opposed efforts to legalize medical marijuana. Cannabis stocks dropped on Matt Gaetz withdrawal. Bradley took a look at how an Attorney General Bondi may affect the cannabis industry.
Millennials Account for Largest Share of Pre-Roll Purchases. Custom Cones USA and Headset released a comprehensive white paper on the pre-roll consumer and their buying habits. Highlights include:
Pre-rolls are the third most popular and fastest-growing cannabis category, with $4.1B in sales from 2023 to mid-2024
In September 2024, Millennials purchased 44.6% of all pre-rolls, totalling $103.9M
Why did California ‘kill’ its booming hemp-derived THC industry? Although many in the legal cannabis industry have in the past opposed intoxicating hemp products because they compete for market share, Jonathan Black, CEO of Cheech and Chong’s Global Holdings, said a recent summit in Sacramento led to a proposed legislative solution with broad support from both sides. They hope to present the idea to state lawmakers in January, when California’s 2025 lawmaking session begins. “We’re working on a comprehensive bill to present to the governor and the state Legislature to benefit both cannabis and hemp, to up the taxable revenue to the state, make sure we follow compliance standards on both, and protect the industry at the same time and protect the consumer.” said Black
Colorado cannabis companies have a new strategy to attract more hesitant customers: weaker weed. In Colorado, several cannabis companies — Dialed In Gummies, Wana Brands and Sun Theory Holding Co. among them — are part of a burgeoning trend of catering to clientele who don’t want their Cannabis so strong. The move to provide more low-dose products allows them to access new market demographics, such as inexperienced cannabis users and people battling anxiety or sleep problems.
Nebraska: District Judge Upholds Voter-Approved Medical Cannabis Access Initiatives. A Nebraska district court judge has rejected a legal challenge that sought to invalidate a pair of citizen-initiated measures regulating the possession, use, and production of medical cannabis. Voters on Election Day overwhelmingly approved both measures, despite the ongoing litigation.
Appeals court upholds Mississippi ban on medical marijuana advertising. A Mississippi appeals court ruled that medical cannabis businesses in the state don’t have the right to advertise on billboards or other places because marijuana is still illegal under federal law.
Lawsuits lead judge to halt Minnesota cannabis business license lottery. The drawing was for the license "preapproval," which would give some business owners who meet the criteria as a social equity applicant a head start before a general licensing period next year. But the Office of Cannabis Management dismissed two-thirds of applications for failing to provide proper documentation as required by law and some, the agency said, were trying to "flood the zone" to game the system.
Max Verstappen jokes 'extreme' cannabis at Las Vegas GP had him 'high in F1 car'
💵 Deals
Distru Raises $6M Series A. The round was led by Poseidon with participation from Global Founders Capital (GFC). Distru raised $3M in July 2019 from Felicis and Global Founders and didn't raise again until this most recent round when Poseidon led the $6M Series A, its first time investing in the Company. See above for link to a conversation I had with CEO, Blaine Hatab, on the funding.
LeafLink Acquires Leaf Trade. With this deal, LeafLink will support the full spectrum of cannabis businesses, from small brands and retailers to MSOs, with robust marketplace offerings and industry-leading tools. The combined companies are estimated to facilitate ~$9 billion in annual wholesale GMV. LeafLink recently upsized its Series D fundraising round from $100M to $125M. Investors in the Series D financing include CPMG, Nosara, L2 Ventures, Thrive Capital, and Tiger Global. Sweed is entering a strategic partnership with LeafLink as part of this transition.
Cansortium Completes New Senior Secured Credit Agreement Ahead of Planned Business Combination Closing with RIV Capital. The company closed on a new senior secured credit agreement of up to $96.5M with Chicago Atlantic, as administrative agent for certain lenders. The Credit Agreement bears a cash interest rate of 12.00% per annum and paid-in-kind (PIK) interest of 1.00% per annum, and is due to mature on November 26, 2028. The Credit Agreement refinances the existing $71.0M senior secured term loan that was set to mature May 29, 2025, thereby eliminating the previously disclosed requirement that the Company prepay $10.0M upon the consummation of the business combination with RIV Capital. Following Cansortium’s recent financing, GTI received ~$23M of principal plus 13% accrued interest, adding to its Q3 ending cash balance of $174M.
Agrify $25.9M Non-Brokered Private Placement. The non-brokered private placement was priced at $22.30/share for aggregate proceeds of ~$25.9M. Benjamin Kovler, Chairman and Interim CEO, participated in the private placement to purchase 10,000 shares of common stock at a purchase price of $38.76 in compliance with applicable Nasdaq requirements. Investors in the private placement will receive pre-funded warrants to the extent any investor’s beneficial ownership of Agrify common stock following the offering would exceed 4.99%.
Canopy USA to complete its acquisition of Acreage in mid-December, 2024. The Company expects that the Exchange Ratio relating to the Fixed Shares will be significantly reduced. The reduction of the Exchange Ratio will result in fewer common shares of Canopy issuable to each holder of Class E subordinate voting shares of the Company. As a result of the material impact of the Offering it is anticipated that the current holders of Fixed Shares will receive zero value upon closing.
📄 Company Updates
Nabis Launches in New York. As the only platform in New York that has invested in dedicated cannabis distribution facilities, Nabis will serve nearly 10% of the state market by end of year, with capacity built for the market’s imminent and rapid scale. The structure in Rochester—a repurposed Kodak manufacturing facility—is upwards of 30,000 square feet, while the Bronx warehouse measures nearly 10,000 square feet. To start, Nabis has partnered with Ayrloom, Etain, Flwr City, Eaton Botanicals, Acreage, Flamer, LIVE, Tarot Tokes, Bristol Extracts, PLUGPLAY, Turn, Bloom, Dime, and more.
Metrc debuts labeling feature. Metrc’s new product, Retail ID, combines QR codes that contain product information with inventory barcodes in a single label that can be affixed to a stock-keeping unit (SKU) after clearing testing requirements. Retail ID also offers proof of authenticity and product transparency by providing access to certificates of analysis (COA) as well as cannabinoid and terpene content. BLAZE’s integration with Metrc Retail ID allows it to act as a barcode for checkout and allows customers to scan the QR code label to direct them to the brand-managed product page where they can view the product description, verified lab results, and images.
BioTrack NY API now available to all licensees. Licensees are not required to use BioTrack as their inventory tracking system. They are free to use any third-party software they want. The only requirement is that the tracking system be able to transmit data to OCM’s BioTrack system.
Cannabis Xpress settles pay-to-play allegations in Ontario for C$100,000. The Alcohol and Gaming Commission of Ontario (AGCO) initially fined Cannabis Xpress CA$200,000 in April for masking a banned “pay-to-play scheme” involving at least 61 licensed producers (LPs) as a “data services program.” The company “refused to stock an LP’s product unless they agreed to enter into prohibited inducement agreements and promoted the sale of cannabis products from producers who entered such inducement deals,” the AGCO said in April.
POSaBIT Q3 2024 Results. $4.1M Revenue, $(940K) EBITDA, $900K Cash, launched POSaBIT’s new eCommerce menu to ~40 merchants and expects to have over 200 merchants using the POSaBIT eCommerce menu in the same period next year.
🏬 Retail
GTI opens RISE Carson, NV and RISE Brooklyn Park, MN. The two new locations represent the 11th and 8th dispensaries to open in Nevada and Minnesota, respectively, and brings the company to 101 dispensaries overall.
Wu-Tang Clan’s Raekwon Debuts Hashstoria Cannabis Dispensary in Newark, NJ. In 2021, the "Ice Cream" emcee co-founded the Hashstoria brand collective alongside Charlamagne tha God, Bakari Sellers, and Jedd Canty, with its first locations launching in Oregon. Hashstoria subsequently opened three locations in the Oregon (Astoria, Gladstone, and Springfield).
Sunburn Cannabis opens Cape Coral location, its 15th in Florida.
Higher Collective opens Hamden, CT location.
The Flowery opens third New York location in SoHo.
Trulieve opens Dispensary in Jacksonville, Dania Beach and Spring Hill.
Beleaf opens second NY dispensary in Calverton, NY.
🌱 Product
Big Pete’s launches Live Rosin Gummies. The gummies use InfusedBySplash™ nano-emulsion and single-origin live rosin, with just 1g of sugar per gummy.
AYR Launches Later Days Fruit-Flavored Vape Collection. Later Days Vapes are launching with a selection of five flavors including Sweet Strawberry, Juicy Mango, Frozen Watermelon, Winter Mint and Georgia Peach. The easy-to-use devices will initially be available in a 1g size in all states, with a 2g size launching in New Jersey and Massachusetts in early 2025.
The 12 Jays of X-Mas Gift Box: A Perfect Way to Support Small Farms of the Emerald Triangle This Holiday Season. This curated box features high-quality cannabis pre-rolls from local farms in Humboldt, Mendocino, and Trinity Counties.
Canopy Growth Launches Claybourne Infused Pre-Rolls in Canada. This initial launch brings Claybourne’s Frosted Flyers Infused Pre-Rolls to Canadian medical and adult-use consumers in five distinct offerings, Blue Dream, Strawberry Cough, Pineapple Express, Grape Gasolina and Banana OG. Each Frosted Flyer is high potency and packed with nonstop flavor from start to finish. Since 2022, the pre-roll joint market in Canada has grown 94%1 – with infused pre-rolls now totalling 9.6% of the total recreational market2.
Ispire Launches VLT: A New Pod System Designed to Enhance the 510-Thread Vaping Experience. VLT's proprietary reload system offers a sustainable and eco-friendly solution that empowers consumers to take control of their vaping devices, addressing key concerns about environmental impact and disposable hardware waste.
Cheech & Chong’s Cannabis Brand Now Available Across Illinois in Partnership With Redemption Botanicals. The distribution includes dispensary retailers like Parkway Dispensary, Stash, High Haven, NuEra, and RISE, covering a range of independently owned social equity-licensed locations and MSOs.
Organigram Launches FAST™ Nanoemulsion Gummies. FAST™ products deliver up to ~50% faster onset and improved bioavailability delivering nearly double the cannabinoids at peak effect compared to traditional edible products. This is made possible as FAST™ is an advanced nanoemulsion technology delivery system that breaks down cannabinoids into tiny particles, allowing them to be absorbed more quickly and efficiently during consumption. These results have been scientifically verified through one of the largest pharmacokinetic studies in the cannabis industry, completed in January 2024 in compliance with Health Canada regulations.
Sensi Brands launches “Chillows by Potluck™”, a THC-infused pouch that is placed between a consumer’s lip and gum area for smoke-free and spit-free consumption. A first to market product, Chillows introduces precise dosing and rapid onset, delivering THC effects within 10 to 15 minutes. This revolutionary and discreet mode of consumption is convenient, and reduces the stigma that may accompany traditional forms of cannabis use.
🧔 People
Canopy Growth appoints Luc Mongeau CEO. He was most recently CEO of ESolutions Furniture, formerly Bestar-Bush, a digital commerce furniture company. Prior to this, he was President of Weston Foods, leading the $2 billion North American bakery, overseeing a team of over 6,000 employees across 40 facilities. Prior to that, he was President of Mars Petcare North America, overseeing a $3 billion organization with more than 3,000 employees, 27 manufacturing sites, and three distinct operating units within both branded and private label categories.
The Scotts Miracle-Gro Company promotes COO to President as CFO departs. Nate Baxter has been named President and COO with responsibilities for executing Company strategies and overseeing brands, sales, supply chain, marketing, R&D and information technology. Chris Hagedorn, division president leading wholly-owned Hawthorne Gardening Company subsidiary, has been named EVP and Chief of Staff to Chairman and CEO Jim Hagedorn with responsibilities for Company strategy and corporate affairs, including corporate communications and government relations, as well as oversight of the Hawthorne business. Matt Garth will depart as CFO. Mark Scheiwer, who has served as VP and treasurer since December 2022, will become interim CFO and chief accounting officer.
Frontier Risk Hires Isaac Bock & Eric Schneider as Managing Directors, Brokerage. Bock and Schneider most recently co-founded and led AlphaRoot, a cannabis-focused insurance platform where they supported the risk management function of cannabis businesses and developed tailor-made insurance solutions for the industry.
🎙️ Interviews
The Future of Cannabis Tech w/ Socrates Rosenfeld, Jane Technologies | High Spirits
Uber Eats weed burritos | High Rise
👋 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.
Source: Canopy Growth Corporation, Internal Sales Data, FY22 ending March 2022
Source: Canopy Growth Corporation, Internal Sales Data, L12M ending August 2024