🏙️New York State Passes Adult Use Cannabis Legislation

NM close to legalization as well. GTI faces pay-to-play allegations. Greenlane + KushCo merger. Trulieve acquires Keystone (PA) for $60M. Parallel acquires Windy City (IL) for $100M.


🌿Industry

Schumer: Senate will act on marijuana legalization with or without Biden. President Joe Biden has been a conspicuous outlier among Democrats when it comes to supporting marijuana legalization. But Schumer said Biden’s reticence won’t deter the Senate from taking aggressive action to loosen federal restrictions. “I want to make my arguments to him, as many other advocates will,” Schumer said in an interview with POLITICO. “But at some point we're going to move forward, period.“ Schumer pointed to the decade-long experiment with state legalization as evidence that the worst fears of what would happen were overblown. “The legalization of states worked out remarkably well,“ he said. “They were a great success. The parade of horribles never came about, and people got more freedom.“ Schumer was so enthusiastic to get to the cannabis policy discussion that he started sharing his thoughts before a question was posed.

Cuomo Signs N.Y. Cannabis Bill, With Sales Due as Soon as 2022. Once fully rolled out, New York’s program is anticipated to generate tens of thousands of jobs and about $4.2B in sales, trailing only California, which had about $4.4B in sales last year. The legislation limits the number of licenses for large corporations, and imposes sales and excise taxes that are estimated to eventually bring in about $350M a year. A single company won’t be allowed to handle all parts of a recreational transaction — cultivation, processing, distributing, and dispensing — with the exception of micro businesses. A cultivator or processor will be barred from having a direct or indirect financial interest in a retail dispensary.

New Mexico Takes First Step On Marijuana Implementation Before Governor Even Signs Legalization Bill. New Mexico isn’t wasting any time setting up its adult-use marijuana market, with regulators launching a website to provide information about the state’s impending new cannabis policy before the governor has even signed a legalization bill into law. Lawmakers sent legislation to establish a recreational marijuana to Gov. Michelle Lujan Grisham (D) last week during a special session that she had convened. Under the proposal, retail sales wouldn’t start until April 2022, but the state Regulation and Licensing Department is getting a head start providing information to consumers and businesses. The new website features a timeline for when the Cannabis Control Division (CCD) would have to create an advisory board, when business licenses would begin to be issued and when the retail market is expected to launch. It also provides an overview of the fees associated with various license types. Finally, there’s a page for “important terms” that define components of the legalization legislation. Even though the governor hasn’t signed the bill yet, she has pledged to do so shortly after legislative staffers properly format it and send it to her desk.

New York and New Jersey have legalized recreational marijuana. What will it take in PA? In order for that to happen, the idea would need to gain backing among the Republican lawmakers who control both the state House and Senate. House Speaker Bryan Cutler, R-Lancaster, opposed medical cannabis when it passed in 2016 and said in 2019 that legalization wasn’t the “right move in helping the thousands of Pennsylvanians who are battling drug addiction.” More recently, Cutler’s chief of staff told PennLive it wasn’t a priority, as the state continued to grapple with the coronavirus pandemic, while a spokesperson for House Majority Leader Kerry Benninghoff, R-Centre, told the York Daily Record in February there isn’t support within the caucus. Democrats in the chamber, as they have in past sessions, are still pushing for legalization, but with one major difference this spring — a Republican sponsor. That lawmaker is Sen. Dan Laughlin, of Millcreek Township, R-49th Dist. When asked by Spotlight PA why he thinks Pennsylvania hasn’t moved toward legalization, he said many of his colleagues represent districts that don’t support recreational cannabis.

GTI part of federal pay-to-play investigation. The Chicago Tribune kicked off quite a stir reporting that GTI is under federal investigation for possible pay-to-play violations during its push for coveted state licenses, according to unnamed sources. Investigators have been scrutinizing campaign donations and other steps GTI took as it sought to secure growing and distribution licenses in Illinois and several other states, sources told the Chicago Tribune.

In its statement, GTI said it “first learned of the alleged probe into supposed violations regarding obtaining licenses from a Chicago Tribune reporter who cited unnamed sources shortly before the article was published. Federal authorities have made no effort to initiate contact with Green Thumb,” the statement went on to say. Green Thumb demanded an immediate retraction of the article by the Chicago Tribune. In response — According to the story, which was based on information from sources, investigators have been scrutinizing campaign donations and other steps GTI took as it sought to secure growing and distribution licenses in Illinois and several other states. “The Tribune stands by its reporting and will continue to pursue the story,” said Colin McMahon, editor-in-chief. A deeper dive is available from @BetterBruiser.

Other highlights:

Illinois March Cannabis reach $144.8M, up 120% Y/Y

Riding the Green Rush: A Road Map for Cannabis Brands in 2021

Urbn Leaf: Spreading San Diego Chic

STIIIZY: The Next Big Name in Cannabis?

Australian cannabis sales to surpass $150M in 2021


💵Deals

Greenlane and KushCo — Transformative Merger, Creating the Leading Ancillary Cannabis Company and House of Brands. The Transaction will bring together two of pioneering Cannabis ancillary product and services companies. The combined companies project over $250M of Pro Forma 2020 Revenue and improved operating leverage to Drive ~$15-$20M in expected cost-saving synergies and increased profitability. Robust and innovative offerings including proprietary owned brands and exclusive third-party products. The highly complementary portfolio of products and services provides potential for cross-selling opportunities.

Trulieve — Expands Pennsylvania Footprint with Acquisition of Keystone Shops. Anna Holdings LLC is a dispensary license operating under Keystone Shops with locations in Philadelphia, Devon, and King of Prussia. Trulieve will pay $60M upfront ($40M stock / $20M cash). The transaction is expected to close during the second quarter of 2021. The Trulieve Shares issued in conjunction with the transactions are subject to lockup periods of up to 18 months following the closing date of the transaction. Trulieve — Proposed Public Offering of Subordinate Voting Shares. The Company is offering to sell 4,400,440 subordinate voting shares in an underwritten public offering with an additional 660,066 subordinate voting shares. The offering could raise up to $228M based on TRUL’s closing price of $45.10 on April 5th.

Parallel — Expands into Illinois with acquisition of Windy City for $100M. Parallel has agreed to acquire Windy City for $100M ($60M cash, $40M stock), with total potential consideration of up to $155M inclusive of certain performance-based earn-out payments payable through 2023. Windy City is expected to generate $75M+ annualized net revenue in 2021 (1.33x 2021E EV/Revenue). The transaction is expected to close in the second half of 2021. Windy City Cannabis comprises of Posen Dispensary Holding Company, LLC, Homewood Holding Company, LLC, Homewood 2nd Site Holding Company, LLC, Posen 2nd Site Holding Company, LLC and Compass Dispensary Holdings, LLC (collectively, "Windy City"). Windy City is a leading operator of adult use and medical cannabis dispensaries in the state of Illinois. 

BLAZE — Raises $8M Series A. The round was led by Delta Emerald Ventures and joined by Act One Ventures and SOJE Capital; the company plans to bolster its software development, sales, and customer success functions with the new funds. BLAZE is experiencing rapid growth, facilitating over $1B in annualized GMV with over 300 operators across 10 states now using the platform.

Verano — acquires Mad River Remedies, LLC, a Dayton, Ohio-based dispensary. Assuming closing of this accretive transaction, and in combination with other pending transactions, Verano will operate five dispensaries, the maximum permitted in the state of Ohio, with other retail storefronts in Bowling Green, Canton, Cincinnati, and Newark. The closing of the transaction is conditional upon receipt of regulatory approval from the Ohio Board of Pharmacy as well as other customary closing conditions. Verano expects closing to occur in Q2 2021. The Company’s full suite of premium medical cannabis products, sold under the VeranoTM, AvexiaTM and EncoreTM brands, are expected to be available to patients across their five store footprint.

Canopy Growth — completes acquisition of Cannabis Brand Ace Valley. Ace Valley holds top 5 and top 10 market positions in Ontario across its range of SKUs and complements Canopy Growth's existing portfolio of premium vapes, pre-roll joints, and gummies. Ace Valley has carved out a leading position and a particularly strong following among millennial and Gen-Z consumers. This success to date is a perfect example of the continued value of consumer-focused brands, confirming that many cannabis consumers are looking for premium brands they connect with.

Other highlights:

Cansortium — Closes $12M Private Placement

Golden Leaf Holdings — $8.3M Private Placement

KushCo — Retires $17M in Senior Unsecured Term Debt

Ayr Wellness — Closes Acquisition of Ohio Medical Solutions from Vireo. Closes Acquisition of Parma Wellness Center (OH) for $17M.

Jushi — completes acquisition of Franklin Bioscience NV

IIP/Jushi — $45.8M for 129,000 sq ft PA grower-processor facility

Hollister Biosciences/Nabis — Exclusive Distribution Partnership for CA

Gage (CSE: GAGE) — commence trading on Tuesday, April 6th


📄Earnings

Harvest Health & Recreation — Q1 2021 & CY 2020

  • Total revenue increased 98% to $231.5M in 2020 from $116.8M in 2019

  • Q4 Revenue was $69.9M, up 85% Y/Y and 13% Q/Q

  • 2020 Net loss: $59.6M compared to $168.8M in 2019

  • 2020 adjusted EBITDA: $15.3M, compared to ($43.7M) in 2019

  • Guidance: $380M 2021 Revenue, $87M Q1 Revenue

Planet 13 — Q1 2021 & CY 2020

  • Q1 2021 Revenue: $23.8M (accounted for 8.2% of all Nevada cannabis dispensary revenue), including $9.7M in March

  • Q1 2021 GM: 37.1% GM

  • 2020 Revenue: $70.5M

  • 2020 EBITDA: $8.9M (12.6% margin)

  • Cash: $79M (as of 12/31/20)

urban-gro — Q4 & CY2020

  • 2020 Revenues: $25.8M, up 7% over 2019

  • Q4 2020 Revenue: $9.2M, up 30% Y/Y

  • Ended fiscal year 2020 with a backlog of over $14M in signed contracts

  • Achieved positive Adjusted EBITDA for the second quarter in a row

  • Signed 77 new engineering and design project contracts in 2020, including six new projects in Europe, and the first horticulture commissioning project


🧔People

New Frontier Data appoints new CEO. Giadha A. DeCarcer, who founded New Frontier Data in 2014 and has served as its only CEO to date, will become Executive Chair and continue to lead the company’s strategic direction and planning, M&A activities, and global expansion efforts. DeCarcer appointed Gary Allen, previously New Frontier Data’s COO, to serve as CEO, will continue executing on the company’s data and tech-enabled product strategy and leading its recently launched AdTech division, NXTecK, the largest provider of cannabis consumer profile data in the world.

Prominent executive at NETA parent company (Parallel) fired after husband opens competing marijuana store. Some members of the state’s cannabis community are calling for a boycott of NETA after the parent company of the Massachusetts dispensary has fired Kim Napoli, a member of its leadership team. Napoli’s husband, Jonathan Napoli, is listed in Northampton city records as the treasurer of The Hempest, a recreational cannabis dispensary. The Hempest received authorization to open in February from the state Cannabis Control Commission. The Hempest at 2 Conz St. is about 0.4 of a mile, or a one-minute drive, from NETA’s shop at 118 Conz St.


🏬New Store Openings / New Product Launches

Curaleaf — new Curaleaf branding for the Company's recently acquired retail locations and the imminent opening of its 10th store in Illinois. Curaleaf successfully closed its acquisition of Grassroots on July 23, 2020 and has obtained final regulatory approval from the state of Illinois for the transfer of nine Greenhouse and Windy City Cannabis retail licenses. In accordance with state guidelines, Curaleaf has begun the rebranding of Windy City Cannabis retail locations in Worth, Justice, and on Weed Street in Chicago in addition to Greenhouse dispensaries located in Deerfield, Mokena, Skokie, Northbrook, Melrose and Morris. At the nine rebranded Illinois retail locations, Curaleaf's signature teal logo will be prominently displayed and as part of the new interior design, will feature hyper-local cityscape murals that capture each store's unique location, further enhancing the experience and connection to the community. The Westmont, IL store opening will bring Curaleaf to 103 retail locations nationwide.

Eaze — 7M Deliveries + Major Menu Expansion Featuring Private Label Brands CIRCLES, Everyday, and Lost Lotus. Eaze, completed its seven millionth delivery by announcing custom private-label cannabis brands created in partnership with respected California growers, manufacturers, and equity licensees. This marks a significant expansion of Eaze’s vertical operations, broadens the company’s retail footprint, and brings even more choice to every type of customer. Eaze’s private label brands CIRCLESEveryday, and Lost Lotus are managed by the company’s separate plant-touching subsidiary, Stachs. Eaze carries over 100 brands and 600 products on its menu, showcasing the work of hundreds of businesses across California’s cannabis supply chain. Eaze’s private label brands are produced and distributed in cooperation with licensees including Telos, Kush Collective, Bear Flag, 101 Cannabis, and THC Design.

Old Pal — Grow Your Own Kits. Old Pal and Ladybug Farms’ Grow Your Own kit is available in one powerful auto-flowering variety, Tri-Cross hybrid. The plants are already half grown and arrive from participating delivery or dispensary partners. Each plant comes in an Old Pal decorated one-gallon pot, so no transplanting is required, and each plant will already be growing in nutrient-dense soil with some organic bloom nutes to ensure bigger buds. In addition to the shortcuts in growing your own cannabis, Ladybug Farms pros include tips, tricks and care instructions to ensure a healthy grow including temperatures, lighting, and harvesting. After 30-45 days with one of the Old Pal all-in-one home-grow auto flowering kits, you can yield one to two ounces of dense, and potent buds that you can proudly say you grew yourself.

PAX Labs™ — Era Life™ Compact Cannabis Vaporizer.

Acreage — Opens Third The Botanist Dispensary in New Jersey


💻Hiring

LEUNE Director of Marketing (LA)

710 Labs Director Of Operations (LA)

ELYON CANNABIS Senior Controller (Santa Rosa)


🤷‍♂️Somewhat Relevant

More retail pain ahead: UBS predicts 80,000 stores will close in the U.S. by 2026. There were 115,000 shopping centers — a figure that includes strip centers, malls, outlet and other lifestyle centers — across the U.S. at the end of 2020, compared with 112,000 in 2010 and 90,000 in 2000, about 59 square feet of shopping center space per household. UBS is estimating that 80,000 retail stores will shut across the country by 2026. That assumes e-commerce sales rise to represent 27% of total retail sales, up from 18% today.


👋 Newsletter curated by Dai Truong.