🗽 NY Approves First 36 Dispensary Licenses
Rhode Island to commence Adult-Use Sales on December 1st. Curaleaf Layoffs. AWH makes changes to its Board (Emily Paxhia resigns). Cansortium (Fluent) CFO resigns. Weedmaps adds new CMO.
💬 Hope everyone that attended MJBizCon last week has now fully recovered, I’ll spare you another recap to read but instead mention the next conference I’ll be at—Arcview Summit in Miami (December 7-9). It was great to catch up with some of you at MJBizCon and I hope to see some of you in Miami next month.
Happy Green Wednesday / Danksgiving!
New York officials approved the state’s first 36 cannabis dispensary licenses on Monday amid a push to begin legal marijuana sales in coming months. A total of 28 Conditional Adult Use Retail Dispensary licenses, or CAURD licenses, went to New Yorkers affected by biased enforcement of the decades-long prohibition on marijuana. Another eight CAURD licenses went to nonprofits with a history of helping incarcerated people. Only eight of the individuals awarded licenses fell outside of New York City and Long Island, spanning the Capital Region, Mohawk Valley, Southern Tier, and North Country regions. New York City and Long Island got 13 and seven dispensaries, respectively. Ultimately, up to 175 CAURD licenses will be granted in total. As many as 150 will go to individual applicants and up to 25 to nonprofit applicants. Several speakers during the public hearing raised concerns the fledgling industry could struggle in the face of rampant black market pot sales, including countless unlicensed stores currently selling pot in New York City. This should help as reports are that New York Cannabis Farms have $750M of Cannabis—and nowhere to sell it.
Rhode Island Set to Commence Adult Use Marijuana Sales on December 1st. Governor Dan McKee and the Rhode Island Department of Business Regulation’s Office of Cannabis Regulation announced this morning that five licensed medical marijuana compassion centers have received state approval to begin selling adult use marijuana on or after December 1st. Pursuant to the Rhode Island Cannabis Act, which was passed by the General Assembly and signed into law by Governor McKee in May, a call for applications for “hybrid retail licenses,” which allow licensed compassion centers to sell both medical and recreational Cannabis. As of this morning, the five compassion centers that have received state approval to commence adult use sales are: Aura of Rhode Island (Central Falls), Thomas C. Slater Center (Providence), Mother Earth Wellness (Pawtucket), Greenleaf Compassionate Care Center (Portsmouth), RISE Warwick (Warwick).
Cannabis banking supporters scramble to reach lame-duck deal. Urgency is building in the Senate to get cannabis legislation passed before the year is over. The specter of a Republican-led House has lit a fire under proponents of cannabis banking legislation, according to three House and Senate staffers involved in discussions on both sides of the aisle. Senate Banking Chair Sherrod Brown (D-Ohio), Sens. Steve Daines (R-Mont.) and Jeff Merkley (D-Ore.) and other lawmakers met with Majority Leader Chuck Schumer last week to talk about the SAFE Banking Act. Lawmakers and staffers all said a concerted effort is underway to find common ground between Republicans and Democrats. The key to passage is twofold. They must find a pairing of financial services and criminal justice reform-centered cannabis legislation that progressive Democrats and conservative Republicans can all accept. And then they must receive signoff from the leaders of the Senate Banking Committee, House Financial Services Committee, and the four corners of party leadership in both chambers.
Dispensaries won't open in Connecticut until 2023. The much-anticipated opening of recreational pot stores in Connecticut will likely be delayed until early next year. The state had targeted the end of this year for retail stores to open but that timeline now seems unrealistic. By law, there must be at least 250,000-square-feet of grow and manufacturing space approved statewide before retail pot shops can open. To start, cannabis sold in the adult-use market is expected to come from the state’s four existing medical marijuana producers, which all have applied for licenses to grow for the recreational market. Three of the producers – Advanced Grow Labs, Connecticut Pharmaceutical Solutions, and Curaleaf – have completed the necessary steps to convert to their facilities to grow both recreational and medical marijuana, the state Department of Consumer Protection announced Tuesday. The remaining producer, Theraplant, applied on Nov. 10 and that application is still under review by DCP.
Jushi — $68M Proposed Debt Financing. The Company received binding subscriptions to date totaling ~$68M for the issuance of 12% second lien notes and warrants to purchase the Company’s subordinate voting shares in a private offering. The Notes will mature four years from the date of issuance, will bear interest of 12.0% per annum, payable in cash quarterly, and will be guaranteed by certain of the Company’s direct and indirect domestic subsidiaries and secured by second priority liens on certain assets of the Company and certain of the Company’s direct and indirect domestic subsidiaries. In connection with the Offering, the purchasers of the Notes will also receive four-year Warrants at 50% coverage with an exercise price to be determined at closing. The Company expects the closing of the Offering to occur in late November or early December of this year. The Company intends to use the net proceeds from the Offering to redeem its outstanding existing 10% senior secured notes due January 2023 and, to the extent there are remaining proceeds, for general corporate purposes, including but not limited to working capital, capital expenditures and potential acquisitions.
SunStream Bancorp — Provides $6.25M Secnior Secured Term Loan to SKYMINT. The Financing, made through Tropics LP, an affiliate of SunStream, increases the Senior Secured Term Loan principal amount advanced to SKYMINT to $81.25M. The Financing is the second follow-on senior secured term loan financing provided by SunStream to SKYMINT, the first being an incremental $5M for general working capital purposes, made in May 2022. In September of 2021, SunStream advanced its initial senior secured term loan to Skymint in the amount of $70M, in connection with SKYMINT's acquisition of 3Fifteen. The use of funds of the Financing will be for general working capital purposes, as SKYMINT finalizes the transfer of the remainder of the cannabis licenses acquired from 3Fifteen. With the acquisition of 3Fifteen, SKYMINT seeks to expand its retail footprint to 24 locations in Michigan. Loans issued under the Financing will bear interest at a rate of 12.5% to 16.5% per annum based on a leverage test and mature on September 17, 2025.
Pelorus Equity Group — $17.3M Debt Financing Agreement with Canapa Valley Farms. The money will be used for building out Canapa’s 90,000 sq ft greenhouse and 8,500 sq ft processing facilities. This agreement will help accelerate Canapa Valley Farms’ cannabis-focused growth initiatives and collaborations, like its exclusive partnership to produce premium-quality flower and pre-rolls for award-winning Exotic Genetix in the Great Lake State.
TILT Holdings — Jupiter Research Enters Into Agreement with House of Blends to Bring Blend Pen™ to the U.S. and Canada. Aiden’s patent-pending Blend Pen™ breaks the standard vape mold by holding two cartridges, side-by-side, within the pen. Each cartridge has adjustable power outputs, allowing consumers to become their own cannabis mixologists, by creating unique THC to CBD blends or combining strains to create their hybrid mixes. Blend Pen™ by Aiden™ also has an accompanying app in development to track and personalize the consumption experience based on usage information. It’s anticipated to be in market end of 2022/early 2023.
📄 Company Updates / Earnings
Cresco Labs — Q3 2022 Results
Revenue of $210M, down 2% Y/Y. Growth in emerging markets was offset by price compression, increased verticality by retailers, and the Company’s strategic exit of 3rd party distribution in California in Q4 of 2021. Adjusted for change in the Company’s California business, non-GAAP Revenue would have been up 2% Y/Y
Gross profit of $100M (47% GM). Adjusted EBITDA of $42M (20% margin)
Retail revenue increased 11% Y/Y, to $118M, or an average of $2.35M per store
Generated $26M in Operating Cash Flow and ended the quarter with $130M cash
StateHouse Holdings — Q3 2022 Results
Net revenues were $30.8M, up 77% from $17.5M in Q3 2021. Growth in revenue was primarily due to the acquisitions of Urbn LeafLoudpack, along with the opening of the Harborside (Haight Ashbury) and the opening of the Urbn Leaf branded retail dispensary in Grossmont in April 2022
Gross profit was $11.1M, up 31% increase as compared to $8.4M in Q3 202
$7.6M cash as of 9/30/22
Green Sentry Holdings — Launches Sunburn Cannabis Brand and Dispensaries in Florida. Green Sentry has rebranded three of its retail locations across Florida (Fort Lauderdale, West Palm Beach and Jacksonville Beach) as Sunburn, where it will exclusively offer Sunburn products. Sunburn Cannabis was created by the teams that built and sold Bluma Wellness and One Plant Florida.
AWH — Opens Second Medical Dispensary in Wayne, PA and Commences Adult-Use Sales at Fort Lee, NJ Dispensary. Situated in a lively suburb of Philadelphia, Ascend Wayne features 1,600+ sq ft of sales space; six POS stations and a private consultation room. The location also features 55 parking spaces. Strategically situated near NYC in a densely populated area of northern New Jersey, Ascend Fort Lee is the Company's flagship location in the state, its third dispensary to open for adult-use sales following Rochelle Park and Montclair locations. The location features 45 parking spots and over 4,000 sq ft of retail space.
Trulieve — Opens Medical Marijuana Dispensary in Lake Worth, FL and Huntington, WV and First Rebranded Dispensary in Glendale, AZ. Trulieve operates medical dispensaries across West Virginia in Belle, Milton, Hurricane, Parkersburg, South Charleston, Weston, and two locations in Morgantown.
Curaleaf — Opens Dispensaries in Orlando and Miami, FL. Company's retail presence now at 54 locations in Florida and 144 nationwide.
Schwazze — Opens Sunland Park, NM Location; Brings Total R.greenleaf Store Count to 13. The Sunland Park store opening continues the intentional expansion throughout the state of New Mexico and comes on the heels of the store openings in Ruidoso and Clovis within the last 60 days. This brings R.Greenleaf's number of New Mexico retail dispensaries to a total of 13.
POSaBIT — Releases POSaBIT 2.0, Their Next-Generation Point of Sale Platform. POSaBIT 2.0’s release includes general interface improvements for a new, clean look and feel, an enhanced preferences engine, more personalized customer recommendations, better till management functionality, and much more. POSaBIT 2.0 is now live for a handful of beta customers and will be rolled out to the entire customer base within the next month.
Curaleaf — Layoffs. Curaleaf is eliminating "several positions" as it follows through on cost-control plans it shared with analysts recently. The company did not provide a specific number of job cuts. Curaleaf cited control costs, driving efficiencies in the face of economic uncertainties, inflation, increased competition and slowing growth in the sector. You’ll probably see more LinkedIn posts in the coming days about those impacted, the first one that’s gotten a lot of attention is from Katherine Steinberg.
AWH — Changes to its Board of Directors. Effective immediately, Dan Neville, AWH's Interim Co-CEO and CFO, and Joshua Gold, Independent, have been appointed to the Board of Directors. In addition, Emily Paxhia has submitted her resignation from the Board, effective today.
Cansortium (Fluent) — CFO, Patricia Fonseca Resigns. The Company has engaged an executive search firm and has narrowed the field for a permanent CFO replacement. Until the position is finalized, Liora Boudin, Corporate Controller, has been appointed as interim CFO.
WM Technology — Names Randa McMinn as CMO. Before joining Weedmaps, McMinn spent three years as CMO at Reali, a real estate and fintech startup that developed an online platform for the homeownership journey. Prior to Reali, Randa was SVP of Marketing at Ten-X, an online commercial real estate exchange.
Fire & Flower — Appoints John Chou Interim CFO. Prior to joining Fire & Flower Chou served as CFO at The Flowr Corporation, CFO at Terrace Global, VP Finance of Gran Colombia Gold Corp. and VP Finance of Frontera Energy Corp.
New York Rolls Out Regulations and its first Set of Licenses | High Rise
Happy Danksgiving from Jackie Bryant | Good Drinks
Cannabis Tech roundtable (NABIS, BLAZE, The Flower Shop) | cannabistech
AlphaNooner with Todd Harrison | Advisor Shares
urban-gro Chairman and CEO Bradley Nattrass | NCV
👋 Highly Objective is 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.