🗽New York lawmakers agree to legalize Recreational Cannabis
🗽New York lawmakers agree to legalize Recreational Cannabis
Sweet Flower — raises $15M. Harborside — $12M Credit Facility. Verano — acquires Local Joint (AZ) for $17M. Earnings — Trulieve, Cresco Labs, TerrAscend, Vireo Health, MariMed, Akerna, GrowGeneration.
🌿Industry
New York lawmakers agree to legalize Recreational Cannabis. The agreement reached Saturday would expand the state’s existing medical marijuana program and set up a a licensing and taxation system for recreational sales. Lawmakers are expected to vote on the bill Tuesday, the earliest they could consider it. Legislative leaders hope to vote on the budget Wednesday to meet the deadline of having a budget in place by April 1st. It has taken years for the state’s lawmakers to come to a consensus on how to legalize recreational marijuana in New York. Democrats, who now wield a veto-proof majority in the state Legislature, have made passing it a priority this year, and Democratic Gov. Andrew Cuomo’s administration has estimated legalization could eventually bring the state about $350M annually. The legislation would take effect immediately if passed, though sales wouldn’t start until New York sets up rules and a proposed cannabis board. Assembly Majority Leader Crystal Peoples-Stokes estimated Friday it could take 18 months to two years for sales to start. New York would set a 9% sales tax on cannabis, plus an additional 4% tax split between the county and local government. It would also impose an additional tax based on the level of THC, the active ingredient in marijuana, ranging from 0.5 cents per milligram for flower to 3 cents per milligram for edibles. With sales likely beginning in late 2022, the New York market represents a $5B+ opportunity with ~15M adults over 21.
Michigan Cannabis Sales Increase 160% to $105M in February. During February, Michigan cannabis sales increased 160% from a year ago to $105.2M, a 3% decline from January due to 3 fewer days in the month. The Michigan Marijuana Regulatory Agency breaks out sales by medical and adult-use, with medical sales improving 48% from a year ago to $38.1M and adult-use sales soaring 353% to $67.1M. In the larger and more rapidly growing adult-use market, flower and trim sales represented 56% of the market, the same as January and up from 55% in December. As supply continues to expand, flower pricing for adult-use has seen a dramatic decline. In February, the average price of $4275 per pound fell 18% from January and 46% from a year ago. Michigan generated $985M in cannabis sales in 2020.
Other highlights:Marijuana foes seek to impose THC potency caps to curb industry’s growth
💵Deals
Sweet Flower — Raises $15M in Series A Funding led by AFI Capital Partners. The LA-based cannabis retailer plans to expand its manufacturing and distribution across California, as well as launch a flagship in Culver City, Calif., a production hub in downtown L.A. and roll out an in-house label. Launched in early 2018, the company — which also offers a delivery service — has four locations in L.A. in the areas of Melrose, Studio City, Arts District and Westwood. Sweet Flower’s presence and partnerships have been rooted in L.A. County, establishing collaborations with fashion label Free & Easy (launched this past week) and teaming with the likes of entertainer Chelsea Handler, Beverly Hills beauty salon Striiike, Lionsgate’s comedy “Barb and Star Go to Vista Del Mar” and Beats by Dre.
Harborside — Secures $12M Revolving Credit Facility. The Company secured a loan financing arrangement with a commercial federally regulated bank for $12M pursuant to a senior secured revolving credit facility due March 2024. Harborside expects to use the majority of the Loan proceeds to support the purchase of the Company's 47-acre production campus later this year, which includes 200,000 sq. ft. of licensed cultivation space, including 155,000 sq. ft. of flower canopy space and 45,000 sq. ft. of nursery space in Salinas, California. The Credit Facility has a variable interest rate based on the prime rate charged by the Bank plus a premium, with a floor rate of 5.75%, and will be secured by a first-priority security interest on substantially all of the Company's assets. As consideration for the Credit Facility, the Company has agreed to, among other things: (i) deliver a commercial security agreement, an assignment of deposit account, and a security agreement in respect of cash collateral to the Bank; (ii) make an upfront cash payment based on the principal amount of the Credit Facility to the Bank as an original issue discount; and (iii) issue 4,100 warrants to the Bank to purchase multiple voting shares of the Company, which subject to certain conditions, are convertible into subordinate voting shares of the Company at a conversion rate of 100 SVS for each MVS converted. Each Warrant will entitle the Bank to purchase one MVS of the Company at a price of C$369, at any time prior to March 19, 2023.
Verano Holdings — acquires Local Joint (AZ) for $17M. Patient Alternative Relief Center, Inc. d/b/a Local Joint, is a high traffic dispensary in Phoenix, Arizona. The transaction will further elevate Verano’s retail footprint in Arizona — to six operating dispensaries. The total consideration includes cash consideration of $13.5M, with 10.0M payable on the closing date and a $3.5M promissory note payable within 120 days after the closing date, and stock consideration of $3.5M payable in Class A subordinate voting shares of the Company.
Vireo Health — Closes First Tranche of Debt Financing with Green Ivy Capital. The first tranche is $23.5M of a $46M total. The facility is non-convertible with a three-year term, and will bear interest at a fixed annual rate of 13.625%, payable monthly in cash and 2.75% per annum in monthly PIK interest. The lenders and agent will receive warrants at an aggregate rate of 30% coverage based on the gross amount of each tranche advanced, with a warrant strike price equal to the volume weighted average trading price of Vireo's stock for the 10 days prior to closing. Additional advances under the facility are subject to the discretion of the lenders and the proceeds may be used for approved acquisitions or other purposes approved by the lenders.
High Tide — acquires Leading E-commerce Retailer Smoke Cartel. High Tide (TSXV: HITI) (OTCQB: HITIF) has completed the acquisition of Smoke Cartel and now operates both the largest and second largest e-commerce platforms for consumption accessories in the world with a combined total of 33M site visits in 2020. As a result of the acquisition, High Tide has considerably expanded its footprint in the United States market, and is very enthusiastic about its position to begin online cannabis sales should the United States move forward with federal legalization.
Other highlights:GrowGeneration — acquires Agron.io B2B Integrated Platform
urban-gro — continues expansion into European Market (Netherlands, France)
Ayr Wellness — closes acquisition of Blue Camo LLC (AZ)
Alcanna + YSS Corp. — closes RTO and creation of Nova Cannabis
Avicanna + Viola enter strategic partnership to bring Viola products to Canada
HERBL + COOKIES (exclusive CA distribution)
📄Earnings
Trulieve — Q4 2020 & CY 2020
Guidance: $815-850M Revenue / $355-375M Adjusted EBITDA
Cresco Labs — Q4 2020 & CY 2020
Cash: $136M (as of 12/31/20)
TerrAscend — Q4 2020 & CY 2020
Guidance: $290M Revenue / $122MAdjusted EBITDA. PA — expected to benefit from increases in cultivation capacity completed in 2020. NJ — Sales from 40,000 square foot greenhouse and 80,000 square foot indoor cultivation facilities are expected to ramp throughout 2021. Phillipsburg, NJ dispensary will achieve its first full quarter of sales in the Q1 2021 and two additional dispensaries are expected to open in Q2 & Q3 2021. CA — completed an expansion of State Flower cultivation facility in late 2020, increasing annual production capacity by 500%. Retail footprint continued to expand with the opening of two new Apothecarium locations in Berkeley and Capitola in the 2H 2020. Canada — streamlined and targeted product portfolio, optimized cost structure.
Vireo Health — Q4 2020 & CY 2020
Cash: $25.5M (as of 12/31/20)
MariMed — Q4 2020 & CY 2020
Guidance: $100M Revenue / $30M EBITDA
Akerna — Quarter Ended December 31, 2020
Software revenue: $3.4M , up 38% Y/Y
Total revenue: $4.1M (66% GM), up 24% year over year
Adjusted EBITDA: ($1.9M) compared to ($2.7M) Y/Y
Net loss: $12.2M compared to a net loss of $3.8M Y/Y
Cash: $17.8M (as of 12/31/20)
GrowGeneration — Q4 2020 & CY 2020
2020 — Revenue: $193.0M, Adjusted EBITDA: $19.2M, Net Income: $5.3M
Q4 — Revenue: $62.0M, Adjusted EBITDA: $5.6M
Cash: $132M (as of 3/24/21)
Guidance: 2021 — $415-$430M Revenue, $48.0-$51.0M Adjusted EBITDA, Q1 2021 —$86.0-$88.0M Revenue, $9.0-$9.5M Adjusted EBITDA. Expects to reach over 60 Hydroponic garden centers and 15 states and over 100 by 2023.
🧔People
TerrAscend — Management and Board Changes. Jason Ackerman stepping down as CEO and Executive Chairman. Jason Wild, Current Chairman of the Board, to assume role of Executive Chairman. Ed Schutter Appointed Lead Independent Director.
"On behalf of the entire team, I'd like to thank Jason Ackerman for his contributions as CEO and Board Member during his time with TerrAscend, Unfortunately, there were differences in philosophy over management style and culture, and the Board and I decided it is in the best interest of the Company for us to part ways. We wish him the best in all his future endeavors." — Jason Wild, Executive Chairman, TerrAscend
GrowGeneration — Jeffrey Lasher joins as CFO. Lasher's appointment follows the retirement of Monty Lamirato, who has served as the company's CFO since 2016. Lasher previously served as a public company CFO at both West Marine and Crocs (NASDAQ: CROX). Jeff was CFO at Crocs from 2009 to 2014, which grew from $700M to $1.2B during this time. At West Marine, then a publicly traded $700M specialty retailer of boating supplies, apparel, and accessories with 250 stores in 38 states, he became CFO in November of 2015 and then became interim CEO. He helped lead the Company's sale to Monomoy Capital, which was finalized in September 2017. Most recently, Jeff was the CFO at a PE-backed multi-unit services company, International Car Wash Group, Inc. now a division of Driven Brands, Inc. (Nasdaq: DRVN), with over 900 car washes in 14 countries. Since May of 2020, he has served as CFO of Coravin, Inc.
Wonderbrett — Flaunt x Brett Feldman and Cameron Damwijk
“We’re opening our store in the spring! Fans can expect a stunning floor-to-ceiling interior design that plays off our signature colors and flavors. Our store will also be home to our limited edition genetics that we’ll drop without notice, and it won’t be available at other stores.” — Brett Feldman, Co-Founder, Wonderbrett
🏬New Store Openings / New Product Launches
Rise (GTI) — Meadville, PA (56th Retail), Lake in the Hills, IL (55th Retail)
Curaleaf — Select Squeeze. Fast-acting THC-infused beverage enhancer featuring Nano-emulsification technology.
The Parent Company — Fun Uncle Cruisers, $25 1g Vape. 90% of the $500M in 1g vape sales today have an MSRP over $40.
Hydrofarm — New Products for Sustainable Indoor Farming. Catalog features GroStar soil pens and Autopilot high power HID controllers along with elite nutrients from Roots Organics, Plant Success King Crab, and Rock Rootinator.
💻Hiring
SLANG Worldwide — SVP of Sales & Marketing (Denver)
Eaze — VP of Finance and Analytics (SF)
Enlighten — Director Of Sales And Business Development (NY)
🤷♂️Somewhat Relevant
“Instant needs” delivery startup goPuff raises $1.15B at an $8.9B valuation. Last fall, delivery startup goPuff made a big splash by raising $380M in funding and acquiring West Coast beverage retailer BevMo shortly afterwards. Just a few months later, the Philadelphia-based company is announcing that it has raised another $1.15B in funding at an $8.9B valuation (compared to $3.9B in October). Available in more than 650 U.S. cities, goPuff delivers a wide variety of products in under 30 minutes while charging a flat $1.95 delivery fee. Rafael Ilishayev and Yakir Gola, who serve as co-CEOs, founded the company in 2013 while they were students at Drexel University. The company now says its vertically integrated approach is a key advantage. GoPuff buys products directly from manufacturers, then distributes those products through its 250-plus “micro-fulfillment centers” and a network of independent drivers. Ilishayev said this results in rapid deliveries, strong unit economics, and a model that passes delivery fees directly to drivers.